NOTE RESTRUCTURE AGREEMENT
THIS AGREEMENT is made and entered into this 26th day of January, 2001
by and between Xxxxxx X. Xxxxxx ("Xxxxxx"), Xxxxxx Holdings, Inc., a Utah
corporation, ("Xxxxxx Holdings") and Headwaters Incorporated, a Delaware
corporation ("Headwaters").
RECITALS
X. Xxxxxx and Xxxxxxx XxXxxx issued to Headwaters, then known
as Covol Technologies, Inc., a Promissory Note dated "August __, 1996" in the
original principal amount of Five Million Dollars (the "Original Note").
Pursuant to an Unlimited Guaranty dated April 29, 1998, Xx. XxXxxx was released
from the Original Note and Xxxxxx became the sole obligor thereunder.
X. Xxxxxx has requested that the Original Note be restructured
such that (i) Headwaters accept certain Headwaters securities owned by Xxxxxx
and Xxxxxx Holdings in partial payment, (ii) Headwaters forgive any remaining
balance over One Million Seven Hundred Fifty Thousand Dollars, (iii) Headwaters
will be given a security interest in certain collateral to secure the remaining
balance, as described below, and (iv) the payment schedule for the remaining
balance be changed to a single balloon payment in December, 2003, subject to
mandatory prepayment in certain circumstances. Headwaters is willing to accede
to such request on the terms and conditions described below.
NOW THEREFORE, in consideration of the premises, the covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree to be
legally bound as follows:
1. Xxxxxx and Xxxxxx Holdings shall deliver to Headwaters, and
Headwaters shall accept from Xxxxxx and Xxxxxx Holdings, in full satisfaction of
the Original Note, the following:
(a) A Stock Option Agreement dated January 1, 1995
(the "Option Agreement") which by its terms entitled Xxxxxx to
purchase 25,000 shares of Headwaters common stock at an
exercise price of $1.50 (as adjusted for a 1:10 reverse stock
split). Upon the effective date of the restructure (as defined
below) the Option Agreement shall be canceled by Headwaters
and all rights of Xxxxxx thereunder shall be forever
relinquished.
(b) Certificate(s) for 150,000 shares of Headwaters
common stock, registered in the name of Xxxxxx (the "Shares")
which Shares Xxxxxx transferred to Xxxxxx Holdings as of
January 12, 1999, duly endorsed for transfer to Headwaters.
Upon the effective date of the restructure (as defined below)
the Shares shall be canceled by Headwaters and all rights of
Xxxxxx and/or Xxxxxx Holdings thereunder shall be forever
relinquished.
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(c) A new Promissory Note in the original principal
amount of $1,750,000 (the "Restructured Note") in the form
attached hereto as Exhibit "A" signed by Xxxxxx and guaranteed
by Xxxxxx Holdings.
(d) A Stock Pledge and Security Agreement from Xxxxxx
pledging all of the outstanding capital stock of Xxxxxx
Holdings to secure the Restructured Note in the form attached
hereto as Exhibit "C". The pledged stock shall also be
delivered to Headwaters in accordance with the terms of such
agreement.
(e) A Stock Pledge and Security Agreement from Xxxxxx
Holdings pledging all of the outstanding capital stock of
Xxxxxx Limestone Company, Inc. ("Limestone") to secure the
Restructured Note in the form attached hereto as Exhibit "B".
The pledged stock shall also be delivered to Headwaters in
accordance with the terms of such agreement.
2. The effective date of the restructure shall be such time as
Headwaters has received the documents set forth in Paragraphs 1(a) through (e)
duly executed in form acceptable to it. Upon the effective date of the
restructure, Headwaters will xxxx the Original Note as "paid in full" or
"canceled" and deliver it to Xxxxxx. Xxxxxx and Headwaters acknowledge that the
balance of the principal and accrued interest of the Original Note exceeds the
sum of (i) the original balance of the Restructured Note, (ii) the value of the
Option Agreement and (iii) the value of the Shares. This excess amount will be
forgiven by Headwaters upon the effective date of the restructure and may
constitute forgiveness of indebtedness income to Xxxxxx.
3. If the effective date of the restructure does not occur by March 31,
2001, Headwaters may notify Xxxxxx that it is terminating this Agreement and
Headwaters may immediately thereafter enforce its rights and remedies under the
Original Note.
4. Xxxxxx acknowledges that the Restructured Note represents his full
recourse, personal obligation and that Headwaters may enforce its rights as a
creditor against Xxxxxx and his assets notwithstanding the Stock Pledge and
Security Agreements described above.
5. Xxxxxx represents and warrants that he is the sole record and
beneficial owner of the Option Agreement and the Shares, that the Option
Agreement and Shares are free of any claim, charge, lien or encumbrance of any
person or entity whatsoever other than Headwaters and that Xxxxxx has the power
and authority to transfer the Option Agreement and Shares to Headwaters without
the consent or approval of any other person whatsoever.
6. Prior to agreeing to deliver the Option Agreement and Shares to
Headwaters, Xxxxxx and Xxxxxx Holdings have had the opportunity to review all
filings made by Headwaters with the Securities and Exchange Commission and to
ask questions of management of Headwaters. Xxxxxx and Xxxxxx Holdings each
represents and warrants that he/it is an
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"accredited investor" (as defined in Rule 501 of Regulation D promulgated by the
Securities and Exchange Commission) and has the financial and business
experience necessary to evaluate the merits and risks of his/its investment
represented by the Option Agreement and Shares. Xxxxxx and Xxxxxx Holdings each
acknowledges that the market value of Headwaters common stock may increase
following the effective date of the restructure and that Xxxxxx and Xxxxxx
Holdings will not benefit from such increase with respect to the Option
Agreement or the Shares.
7. The parties to this Agreement will execute, acknowledge and deliver
all such instruments and take all such action as may be reasonably requested by
the other party in order to further effectuate the purposes of this Agreement
and to carry out the terms hereof.
8. This Agreement shall inure to the benefit of and shall be binding
upon the heirs, personal representatives and successors of the parties hereto.
9. This Agreement and the rights and obligations hereunder shall be
construed in accordance with and governed by the laws of the State of Utah
without regard to principles of conflicts of law.
10. This Agreement, together with the Restructured Note, Xxxxxx
Holding's Guaranty, Xxxxxx'x Stock Pledge and Security Agreement, and Xxxxxx
Holding's Stock Pledge and Security Agreement (together, the "Transaction
Documents") contain all covenants, terms, provisions, and agreements between the
parties hereto or thereto relating to the subject matter of the Transaction
Documents. No prior agreement with respect to the same shall be of any force or
effect, and no covenant, term, provision, or agreement of any Transaction
Document may be modified except in a writing executed by all parties to the
Transaction Documents.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
HEADWATERS INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxx
XXXXXX HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxx
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