Exhibit 10.2
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this “Pledge
Agreement”) is made and entered into as of the 15
th day of December 2008, by and between Environmental
Energy Services, Inc., a Delaware corporation (the
“Borrower”), and A. Leon Blaser and Bruce Blaser
(collectively, the “Lender”).
R E C I T A L S
:
A.
The Borrower is the owner of 73,724,378
shares of common stock (the “Blaze Shares”) of Blaze
Energy Corp. (the “Company”).
B.
On the date of this Pledge Agreement,
Borrower has executed a promissory note (the “Note”) in
favor of Lender to evidence the terms under which Borrower has
agreed to repay a loan of $5,554,134.48 from the Lender to the
Borrower, and Borrower has agreed to pledge 15,000,000 of the Blaze
Shares (the “Collateral”) to Lender to secure the
Note.
A G R E E M E N T S
:
In consideration of the foregoing
Recitals and of the mutual agreements contained herein, the parties
agree as follows:
SECTION 1. GRANT OF SECURITY
INTEREST; PLEDGE .
1.1 Pledged Collateral .
The Borrower hereby grants a security interest to the Lender
in, and pledges, assigns and sets over to the Lender, all of the
Collateral, together with any certificates representing the same,
and all substitutions therefor, proceeds thereof and therefrom, and
all cash dividends in respect thereof, as well as all stock or
other securities at any time and from time to time receivable or
otherwise distributable in respect thereof, exchanged therefor,
derived therefrom, substituted therefor, or otherwise issued
pursuant to stock split, recapitalization, stock dividend or
similar corporate act affecting the Collateral and all
distributions, whether cash or otherwise, in the nature of a
partial or complete liquidation affecting the Collateral (all of
which Collateral, dividends, cash, property, securities, and
liquidating distributions are herein called the “Pledged
Collateral”).
1.2 Possession of Pledged
Collateral . Except as otherwise expressly permitted
herein, all of the Pledged Collateral (to the extent it is
certificated form) shall be held by the Lender, in its capacity as
a first lienholder on the Pledged Collateral, accompanied by proper
instruments of assignment duly executed in blank by the Borrower
and by such other instruments or documents as the Lender or its
counsel may reasonably request sufficient to transfer the title
thereto to the Lender or its nominee.
1.3 Obligations Secured .
The security interest of the Lender under this Pledge
Agreement secures (a) the full and prompt performance of all of the
obligations of Borrower under the Note, whether now existing or
hereafter arising (including, in each case, interest accruing in
respect of any of such obligations after the commencement of any
case or proceeding under any federal or state bankruptcy or
insolvency law (a “Proceeding” and “Post-Petition
Interest”, respectively)); (b) performance by the Borrower of
the covenants and agreements set forth herein; (c) all
payments
made or reasonable expenses incurred by
the Lender, including, without limitation, reasonable
attorney’s fees and legal expenses incurred by the Lender in
the collection or enforcement of the aforementioned obligations;
and (d) any renewals, supplements, substitutions, continuations or
extensions of any of the foregoing ((a) through (d) described above
are referred to as the “Pledge
Obligations”).
SECTION 2. VOTING RIGHTS;
DIVIDENDS; ETC . So long as no Event of Default (as
defined in Section 6 hereof) shall have occurred:
(a)
The Borrower shall have the right, from
time to time, for any purpose not inconsistent with this Pledge
Agreement, to vote and give proxies and consents in respect of the
Pledged Collateral and to consent to or ratify action taken at, or
waive notice of, any meeting of shareholders or partners with the
same force and effect as if such Pledged Collateral were not
pledged hereunder; and
(b)
The Borrower shall be entitled to retain
and use any and all cash dividends paid on the Pledged Collateral
in a manner consistent with this Pledge Agreement; provided,
however, that any and all Pledged Collateral and/or liquidating
distributions, other distributions in property, return of capital
or other distributions made on or in respect of the Pledged
Collateral, whether resulting from a subdivision, combination or
reclassification of stock of the Company or received in exchange
for Pledged Collateral or any part thereof or as a result of any
merger, consolidation, acquisition or other exchange of assets or
on the liquidation, whether voluntary or involuntary, of the
Company, or otherwise, any and all of which shall be and become
part of the Pledged Collateral pledged hereunder and, if received
by the Company or the Borrower, shall forthwith be delivered to the
Lender to be held subject to the terms of this Pledge
Agreement.
SECTION 3. WARRANTIES AND
AGREEMENTS . The Borrower represents and warrants and,
where appropriate, covenants as follows:
(a)
The pledge of the Pledged Collateral
hereunder will not contravene any agreement binding upon the
Borrower;
(b)
The Borrower has good right and legal
authority to pledge the Pledged Collateral in the manner hereby
done or contemplated and the Borrower will warrant and defend his
title thereto and the lien created hereunder against the claims of
any persons whomsoever;
(c)
The pledge of the Pledged Collateral
hereunder is effective to vest in the Lender the rights of the
Lender in the Pledged Collateral as set forth herein;
(d)
The Borrower is the owner of the Pledged
Collateral free and clear of all liens of every kind and nature
whatsoever; and
(e)
The Borrower shall not sell, assign,
transfer or otherwise dispose of, or grant any option in respect
of, the Pledged Collateral, nor will the Borrower create, incur
or
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permit to exist any lien in respect of
the Pledged Collateral, or any interest therein, or the proceeds
thereof, other than the lien provided for in this Pledge
Agreement.
SECTION 4. RIGHTS OF LENDER
UPON DEFAULT . Upon (i) the occurrence of an Event of
Default (hereinafter defined) hereunder and so long as such Event
of Default is continuing and (ii) compliance with all applicable
requirements of the law, the Lender shall have all of the rights
and remedies of a secured party under the Uniform Commercial Code
and, without limiting the generality of the foregoing, shall also
have the rights set forth in this Section 4:
4.1 Voting Rights .
The Lender shall have the right (but not the obligation) to
vote any and all Pledged Collateral and to give all consents,
waivers and ratifications in respect thereof, and in such event and
for such purpose, the Borrower hereby irrevocably constitutes and
appoints the Lender, as the Borrower’s proxy and
attorney-in-fact (which appointment shall be coupled with an
interest) with full power of substitution, to do so. To
evidence such appointment, the Borrower shall execute and deliver
to the Lender an Irrevocable Proxy in favor of the Lender in the
form of Exhibit A attached hereto.
4.2 Sale of Pledged
Collateral .
(a)
Upon compliance with any mandatory
requirements of law, and upon at least ten (10) days prior written
notice to the Borrower (except as provided below) of the time and
place of any public sale thereof or of the time after which any
private sale or other intended disposition thereof is to be made,
the Lender shall have the right to sell, assign and deliver the
whole or any part of the Pledged Collateral, at any time or times,
within or without Boise, Idaho, at public or private sale or at any
broker’s board or on any securities exchange, for cash, on
credit, or for other property, for immediate or future delivery,
and for such price or prices and on such terms as are commercially
reasonable and not in violation of any applicable securities law,
and in connection therewith the Lender at any sale may bid for or
purchase the whole or any part of the Pledged Collateral so offered
for sale, free from any right of redemption, stay or appraisal on
the part of the Borrower, all of which rights the Borrower hereby
waives and releases. The Borrower hereby agrees that the ten
(10) day notice of sale provided for in this subsection 4.2(a) is
commercially reasonable.
(b)
The Lender shall be authorized at any
sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and
agree that they are purchasing the Pledged Collateral for their own
account in compliance with the Securities Act of 1933, the rules
and regulations thereunder, and all applicable state “Blue
Sky” laws. the Lender may take all such further acts as
it may in its sole good faith discretion deem necessary or
advisable for the Lender’s protection or for compliance with
any provision of law, even if such act might, whether by limiting
the market or by adding to the costs of sale or otherwise,
depreciate prices that might otherwise be obtained for the Pledged
Collateral being sold or otherwise restrict the net proceeds
available from the sale thereof. Upon consummation of any
such sale, the Lender shall have the right to assign, transfer,
endorse and deliver to the purchaser or purchasers thereof the
Pledged Collateral so sold. Each such purchaser
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at any such sale shall hold the property
sold absolutely free from any claim or right on the part of the
Borrower, and the Borrower hereby waives, to the extent permitted
by law, all rights of stay or appraisal which the Borrower now has
or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. For purposes of
this subsection 4.2(b), an agreement to sell all or any part of the
Pledged Collateral shall be treated as a sale of such Pledged
Collateral, and the Lender shall be free to carry out the sale of
any Pledged Collateral pursuant to any such agreement and the
Borrower shall not be entitled to the return of any such Pledged
Collateral subject thereto, notwithstanding that after the Lender
shall have entered into such an agreement, all Events of Default
may have been remedied.
(c)
The proceeds of any sale of Pledged
Collateral shall be applied first to the Lender’s costs and
expenses of
