STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement (this "Agreement") is made as of
the 5th day of November, 2003 by and between Xxxxxx X. Xxxxxx
("Pledgee") and Solico International, Inc., a Texas corporation
("Pledgor").
RECITALS
Pledgor owns 200,000 shares (the "Shares") of the issued and
outstanding common stock, par value $0.01 per share (the "ABC
Common Stock"), of American Building Control, Inc., a Delaware
corporation (the "Company").
Pledgor purchased the Shares from Pledgee by delivery of
that certain Note Secured By Stock Pledge Agreement dated of even
date herewith in the original principal amount of $400,000 (the
"Note").
Pledgor desires to pledge the Shares to Pledgee as security
for its payment of the Note, and to grant Pledgee a security
interest in the other Collateral described herein.
AGREEMENT
The parties, in consideration of the mutual covenants,
agreements and understandings herein contained, and intending to
be legally bound, hereby agree as follows:
1. GRANT OF SECURITY INTEREST. Pledgor hereby grants to
Pledgee a security interest in, and assigns, all of Pledgor's
right, title and interest in and to the following securities and
other property (collectively, the "Collateral"):
(a) the Shares delivered to and deposited with
Pledgee, together with a duly executed Assignment Separate from
Certificate, the form of which is attached as Annex A, all in
accordance with the provisions of Section 3 below, as collateral
for the Note;
(b) any and all new, additional or different
securities or other property subsequently distributed in respect
of the Shares which are to be delivered to and deposited with
Pledgee pursuant to the requirements of Section 3 of this
Agreement;
(c) any and all other property and money which is
delivered to or comes into the possession of Pledgee pursuant to
the terms of this Agreement; and
(d) the proceeds of any sale, exchange or disposition
of the property and securities described in subparagraphs (a),
(b) or (c) above.
2. REPRESENTATIONS AND WARRANTIES. Pledgor hereby
represents and warrants to Pledgee as follows:
(a) Authority; No Conflict.
(i) Upon the execution and delivery by Pledgor of
this Agreement, the Note and the Assignment Separate from
Certificate (collectively, the "Loan Documents"), each such Loan
Document will constitute the legal, valid and binding obligation
of Pledgor, enforceable against Pledgor in accordance with its
terms, except (A) as limited by applicable bankruptcy,
insolvency, reorganization,
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moratorium and other laws of general application affecting
enforcement of creditors' right generally and (B) as limited by
laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
(ii) Pledgor will not be required to give any
notice to or obtain any consent from any Person in connection
with the execution and delivery of the Loan Documents or the
consummation or performance of any of the transactions
contemplated hereby and thereby (the "Contemplated
Transactions"), and neither the execution and delivery of the
Loan Documents nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
(A) contravene,conflict with or result in a
violation of any federal, state, local or foreign law, ordinance,
regulation, statute, treaty or order to which it or any of the
assets owned or used by it is subject ("Legal Requirement");
(B) contravene, conflict with or result in a
violation of any of the terms or requirements of, or give any
federal, state, local or foreign governmental or quasi-
governmental authority of any nature or body exercising any
administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature
("Governmental Body"), the right to revoke, withdraw, suspend,
cancel, terminate or modify, any approval, consent, license,
permit, waiver or other authorization issued, given or otherwise
made available by or under the authority of such Governmental
Body or pursuant to any Legal Requirement ("Governmental
Authorization") that is held by Seller or that otherwise relates
to his business or any of the assets owned or used by him;
(C) contravene, conflict with or result in a
violation or breach of any provision of, or give any person the
right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel,
terminate or modify, any agreement, contract, obligation, promise
or other legally biding undertaking of Pledgor ("Contract"), or
result in the imposition or creation of any Encumbrance (as
defined below) upon or with respect to any of the assets owned or
used by him.
(b) Legal Proceedings; Orders.
(i) There is no pending action, arbitration,
audit, hearing, investigation, litigation or suit (whether civil,
criminal, administrative, investigative or informal) commenced,
conducted or heard by or before any Governmental Body or
arbitrator ("Proceeding") that challenges, or that may have the
effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions. To the
Knowledge of Pledgor, no such Proceeding has been threatened and
no event has occurred or circumstance exists that may give rise
to or serve as a basis for the commencement of any such
Proceeding.
(ii) There is no award, decision, judgment, order,
ruling, subpoena or verdict entered, issued, made or rendered by
any Governmental Body or arbitrator ("Order") to which Pledgor,
or any of the assets owned or used by Pledgor, is subject that
may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions.
3. ESCROW.
(a) Deposit. Upon execution and delivery of this
Agreement and the Note by Pledgor, the certificates for the
Shares shall be deposited in escrow with Pledgee to be held in
accordance
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with the provisions of this Section 3. Each deposited
certificate shall be accompanied by a duly executed Assignment
Separate from Certificate in the form attached as Annex A. The
deposited certificates, together with any other assets or
securities from time to time deposited with Pledgee pursuant to
the requirements of this Agreement, shall remain in escrow until
such time or times as the certificates (or other assets and
securities) are to be released, transferred to Pledgee pursuant
to Section 11, or surrendered for cancellation in accordance with
Section 8.
(b) Recapitalization/Reorganization. Any new,
additional or different securities, or other property which are
issued or distributed in respect of or in exchange for the Shares
shall be immediately delivered to Pledgee to be held in escrow
under this Section 3, but only to the extent the Shares are at
the time subject to the escrow requirements hereunder.
(c) Duty to Deliver. Any new, additional or different
securities or other property which may now or hereafter become
distributable with respect to the Collateral by reason of (i) any
stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the ABC
Common Stock as a class without the Company's receipt of
consideration or (ii) any merger, consolidation or other
reorganization affecting the capital structure of the Company
shall, upon receipt by Pledgor be promptly delivered to and
deposited with Pledgee as part of the Collateral hereunder. Any
such securities shall be accompanied by one or more duly executed
Assignments Separate from Certificate as provided under this
Section 3.
(d) Stockholder Rights. So long as Pledgee has not
foreclosed upon the Shares pursuant to the terms hereof, Pledgor
alone shall exercise all voting rights and other shareholder
rights with respect to the Shares.
4. PAYMENT OF TAXES AND OTHER CHARGES. Pledgor shall pay,
prior to the delinquency date, all taxes, liens, assessments and
other Encumbrances against the Collateral. In the event of
Pledgor's failure to do so, Pledgee in its discretion may pay any
or all of such taxes and other Encumbrances without contesting
the validity or legality thereof. The payments so made shall
become part of the indebtedness secured hereunder and until paid
shall bear interest at the minimum per annum rate as set forth in
the Note.
5. RIGHTS AND POWERS OF PLEDGEE. Pledgee may, without
obligation to do so, exercise at any time and from time to time
one or more of the following rights and powers with respect to
any or all of the Collateral:
(a) subject to the applicable limitations of Section
8, accept in its discretion other property of Pledgor in exchange
for all or part of the Collateral and release Collateral to
Pledgor to the extent necessary to effect such exchange, and in
such event the other property received in the exchange shall
become part of the Collateral hereunder;
(b) perform such acts as are reasonably necessary to
preserve and protect the Collateral and the rights, powers and
remedies granted with respect to such Collateral by this
Agreement; and
(c) transfer record ownership of the Collateral to
Pledgee or its nominee and receive, endorse and give receipt for,
or collect by legal proceedings or otherwise, dividends or other
distributions made or paid with respect to the Collateral,
provided and only if there exists at the time an outstanding
Event of Default under Section 9 of this Agreement. Any cash
sums that Pledgee may so receive shall be
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held in Escrow and become part of the Collateral hereunder, or
paid over to Pledgor, in Pledgee's sole discretion.
(d) Any action by Pledgee pursuant to the provisions
of this Section 5 may be taken without notice to Pledgor.
Expenses reasonably incurred in connection with such action shall
be payable by Pledgor and form part of the indebtedness secured
hereunder as provided in Section 13.
6. CARE OF COLLATERAL.
(a) Pledgee shall exercise reasonable care in the
custody and preservation of the Collateral. However, Pledgee
shall have no obligation to (a) subject to Pledgor's rights as a
stockholder of the Company, initiate any action with respect to,
or otherwise inform Pledgor of, any conversion, call, exchange
right, preemptive right, subscription right, purchase offer or
other right or privilege relating to or affecting the Collateral,
(b) preserve the rights of Pledgor against adverse claims or
protect the Collateral against the possibility of a decline in
market value or (c) take any action with respect to the
Collateral requested by Pledgor unless the request is made in
writing and Pledgee determines that the requested action will not
unreasonably jeopardize the value of the Collateral as security
for the Note and other indebtedness secured hereunder.
(b) Subject to the limitations of Section 8, Pledgee
may at any time release and deliver all or part of the Collateral
to Pledgor, and the receipt thereof by Pledgor shall constitute a
complete and full acquittance for the Collateral so released and
delivered. Pledgee shall accordingly be discharged from any
future liability or responsibility for the Collateral, and the
released Collateral shall no longer be subject to the provisions
of this Agreement.
7. RELEASE OF COLLATERAL. Provided all indebtedness
secured hereunder shall at the time have been paid in full and
there does not otherwise exist any Event of Default under Section
9, the Shares, together with any additional Collateral which may
hereafter be pledged and deposited hereunder, shall be released
from pledge and returned to Pledgor in accordance with the
following provisions:
(a) Upon payment or repayment of principal under the
Note, together with payment of all accrued interest to date, one
or more of the Shares held as Collateral hereunder shall (subject
to the applicable limitations of Section 8(c) below) be released
to Pledgor immediately after such prepayment. The number of the
Shares to be so released shall be equal to the number obtained by
multiplying (i) the total number of Shares held under this
Agreement at the time of the payment or prepayment, by (ii) a
fraction, the numerator of which shall be the amount of the
principal paid or prepaid and the denominator of which shall be
the unpaid principal balance of the Note immediately prior to
such payment or prepayment. In no event, however, shall any
fractional shares be released.
(b) Any additional Collateral which may hereafter be
pledged and deposited with Pledgee (pursuant to the requirements
of Section 3(c)) with respect to the Shares shall be released at
the same time the particular Shares to which the additional
Collateral relates are to be released in accordance with the
applicable provisions of Section 8(a).
(c) Under no circumstances, however, shall any Shares
or any other Collateral be released if previously applied to the
payment of any indebtedness secured hereunder, including, without
limitation, pursuant to Section 10 below. In addition, in no
event shall any Shares or other Collateral be released pursuant
to the provisions of Sections 8(a) or 8(b) if, and to the extent,
the fair market value of the ABC Common Stock and all other
Collateral which would otherwise remain in pledge hereunder after
such release were effected would be less than the unpaid
principal under the Note; provided, however that
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the Collateral may be released to be sold, subject to applicable
securities laws, and any proceeds shall be applied first to the
payment of the Note, second to any other indebtedness secured
hereunder, and third any surplus proceeds shall be paid over to
Pledgor.
8. EVENTS OF DEFAULT. The occurrence of one or more of
the following events shall constitute an event of default under
this Agreement (each an "Event of Default"):
(a) the failure of Pledgor to pay when due at maturity
of the Note all principal and accrued and unpaid interest
thereon;
(b) the occurrence of the insolvency of the Pledgor,
the commission of any act of bankruptcy by the Pledgor, the
execution by the Pledgor of a general assignment for the benefit
of creditors, the filing by or against the Pledgor of any
petition in bankruptcy or any petition for relief under the
provisions of the federal bankruptcy act or any other state or
federal law for the relief of debtors and the continuation of
such petition without dismissal for a period of 30 days or more,
the appointment of a receiver or trustee to take possession of
any property or assets of the Pledgor;
(c) the failure of Pledgor to perform any material
obligation, other than those specified in subparagraph (d) below,
imposed upon Pledgor by reason of this Agreement or any of the
Loan Documents; or
(d) the material breach of any material representation
or warranty of Pledgor contained in this Agreement or the other
Loan Documents.
Upon the occurrence of any such Event of Default,
Pledgee may, at its election, immediately declare the Note and
all other indebtedness secured hereunder to become immediately
due and payable and may exercise any or all of the rights and
remedies granted to a secured party under the provisions of the
Texas Business and Commerce Code (as now or hereafter in effect),
including (without limitation) the power to dispose of the
Collateral by public or private sale or to accept the Collateral
(valued at fair market value) in full payment of the Note and all
other indebtedness secured hereunder. In the event of a private
sale, Pledgee shall use its best efforts to obtain the fair
market value of the Collateral.
Any proceeds realized from the disposition of the
Collateral pursuant to the foregoing power of sale shall be
applied first to the payment of expenses incurred by Pledgee in
connection with the disposition, then to the payment of the Note
and finally to any other indebtedness secured hereunder. Any
surplus proceeds shall be paid over to Pledgor. However, in the
event such proceeds prove insufficient to satisfy all obligations
of Pledgor under the Note, the Pledgor shall remain personally
liable for the resulting deficiency.
9. INDEMNIFICATION.
(a) Survival; Right to Indemnification not Affected by
Knowledge. All representations, warranties, covenants, and
obligations in this Agreement and the other Loan Documents will
survive until the payment in full of the Note. The right to
indemnification, payment of Damages (as defined below) or other
remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being
acquired) at any time, whether before or after the execution and
delivery of this Agreement or payment in full of the Note, with
respect to the accuracy or inaccuracy of or compliance with, any
such representation, warranty, covenant, or obligation. The
waiver of any condition based on the accuracy of
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any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the
right to indemnification, payment of Damages, or other remedy
based on such representations, warranties, covenants and
obligations.
(b) Indemnification. Subject to the limitations set
forth in Section 11(c) below, Pledgor (the "Indemnifying Party")
will indemnify and hold harmless Pledgee and his representatives
and affiliates (collectively, the "Indemnified Persons") for, and
will pay to the Indemnified Persons the amount of, any loss,
liability, claim, damage (including incidental and consequential
damages), expense (including costs of investigation and defense
and reasonable attorneys' fees) or diminution of value, whether
or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with any
breach of any representation, warranty, covenant or agreement
made by the Indemnifying Party in this Agreement or any Loan
Document. The remedies provided in this Section 11(b) will not
be exclusive of or limit any other remedies that may be available
to the parties.
(c) Defense of Claims. An Indemnified Person seeking
indemnification under this Section 11 shall give written notice
to the Indemnifying Party of the facts and circumstances giving
rise to the claim. In that regard, if any Proceeding shall be
brought or asserted by any third party which, if adversely
determined, would entitle the Indemnified Person to indemnity
pursuant to this Section 11, the Indemnified Person shall within
thirty (30) days notify the Indemnifying Party of the same in
writing, specifying in detail the basis of such claim and the
facts pertaining thereto; provided that the failure to so notify
an Indemnifying Party shall not relieve the Indemnifying Party of
its obligations hereunder except to the extent such failure shall
have harmed the Indemnifying Party. The Indemnifying Party, if
it so elects, shall assume and control the defense of such
Proceeding (and shall consult with the Indemnified Person with
respect thereto), including the employment of counsel reasonably
satisfactory to the Indemnified Person and the payment of
expenses; provided that in the event any Proceeding shall be
brought or asserted by any third party which, if adversely
determined, would not entitle the Indemnified Person to full
indemnity pursuant to this Section 11, the Indemnified Person may
elect to participate in the joint defense of such Proceeding (a
"Joint Defense Proceeding") for which the expenses of such joint
defense will be shares equally by such parties and the employment
of counsel shall be reasonably satisfactory to both parties. If
the Indemnifying Party elects to assume and control the defense
of a Proceeding, it will provide notice thereof within thirty
(30) days after the Indemnified Person has given notice of the
matter and if such Proceeding is not a Joint Defense Proceeding,
the Indemnified Person shall have the right to employ counsel
separate from counsel employed by the Indemnifying Party in any
such action and to participate in the defense thereof, but the
fees and expenses of such counsel employed by the Indemnified
Person shall be at the expense of the Indemnified Person unless
(a) the employment thereof has been specifically authorized by
the Indemnifying Party in writing or (b) the Indemnifying Party
has failed to assume the defense and employ counsel reasonably
satisfactory to the Indemnified Person. Neither the Indemnified
Person nor the Indemnifying Party may consent to the entry of any
judgment with respect to the matter or enter into any settlement
with respect to the matter which judgment or settlement does not
release the other Party from all liability to the third party
with respect thereto without the consent of the other Party,
which consent shall not be unreasonably withheld (it being
understood that the extent to which any Party will be obligated
to pay for Damages resulting from such matter as compared to the
other Party shall be considered in determining whether it is
reasonable for such Party to withhold its consent from the entry
of any judgment or settlement with respect to such matter);
provided that no settlement of a Joint Defense Proceeding may be
effected without the consent of both parties. If there shall be
a settlement to which the Indemnifying Party consents or a final
judgment for the plaintiff in any Proceeding, the defense of
which the Indemnifying Party elected to assume, the Indemnifying
Party shall indemnify the Indemnified Person with respect to the
settlement or judgment.
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(d) Payment of Indemnification Damages. Any payment
pursuant to a claim for indemnification shall be made not later
than thirty (30) days after receipt by the Indemnifying Party of
written notice from the Indemnified Person stating the amount of
the claim, unless the claim is subject to a defense as provided
in Section 11(c), in which case payment shall be made not later
than thirty (30) days after the amount of the claim is finally
determined. Any payment required under this Section 11(d) shall
bear interest at the rate of eighteen percent (18%) per annum,
or, if less, the maximum rate permitted by applicable usury laws
from the date that the Indemnified Person incurred the Damages
for which indemnification is sought. Interest on any unpaid
amount shall be compounded monthly, computed on the basis of a
365-day year and shall be payable on demand. In addition, such
party shall reimburse the other party for any and all costs and
expenses of any nature or kind whatsoever (including, without
limitation, all attorneys' fees) incurred in seeking to collect
such Damages following repeated refusal by the owing party to pay
such Damages and the non-existence of any good faith defense to
payment.
10. OTHER REMEDIES. The rights, powers and remedies
granted to Pledgee pursuant to the provisions of this Agreement
shall be in addition to all rights, powers and remedies granted
to Pledgee under any statute or rule of law. Any forbearance,
failure or delay by Pledgee in exercising any right, power or
remedy under this Agreement shall not be deemed to be a waiver of
such right, power or remedy. Any single or partial exercise
thereof, and every right, power and remedy of Pledgee under this
Agreement shall continue in full force and effect unless such
right, power or remedy is specifically waived by an instrument
executed by Pledgee.
11. COSTS AND EXPENSES. All reasonable costs and expenses
(including attorneys fees) incurred by Pledgee in the exercise or
enforcement of any right, power or remedy granted it under this
Agreement shall become part of the indebtedness secured hereunder
and shall constitute a personal liability of Pledgor payable
immediately upon demand and bearing interest until paid at the
minimum per annum rate, compounded semi-annually, required to
avoid the imputation of interest income to Pledgee and
compensation income to Pledgor under the federal tax laws.
12. APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas
without resort to that State's conflict-of-laws rules.
13. SUCCESSORS. This Agreement shall be binding upon
Pledgee and his successors and assigns and upon Pledgor and the
executors, heirs and legatees of Pledgor's estate and Pledgor's
successors and assigns. Pledgor may not assign his rights or
obligations under this Agreement without Pledgee's prior written
consent.
14. SEVERABILITY. If any provision of this Agreement is
held to be invalid under applicable law, then such provision
shall be ineffective only to the extent of such invalidity, and
neither the remainder of such provision nor any other provisions
of this Agreement shall be affected thereby.
15. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
16. NOTICES. All notices and other communications provided
for hereunder shall be in writing (including telecopier or telex
communication) and mailed, telecopied, telexed or delivered (i)
if to the Pledgor, to the following address: 922 Xxxx, Xxx
Xxxxxxx, Xxxxx 00000, or at such other address as shall be
designated by Pledgor by notice to Pledgee; and (ii) if to
Pledgee, to the following address: Xxxxxx Xxxxx #000, Xxxxxxx,
Xxxxx 00000, Telecopy 000-000-0000, or at such other address as
shall be designated by Pledgee by notice to Pledgor. Each such
notice or communication shall be effective (a) if
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mailed, when deposited in the mail certified, return receipt
requested, (b) if delivered by hand, upon delivery with written
receipt, and (c) if telecopied, when receipt is confirmed by
telephone.
17. AMENDMENTS; NO WAIVERS. Any term of this Agreement may
be amended and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and
either retroactively or prospectively), only with the written
consent of Pledgee and Pledgor. The failure of Pledgee in any
instance to exercise any right hereunder shall not constitute a
waiver of any other rights that may subsequently arise under the
provisions of this Agreement, the Note or any other agreement
between Pledgee and Pledgor. No waiver of any breach or
condition of this Agreement shall be deemed to be a waiver of any
other or subsequent breach or condition, whether of like or
different nature. Any amendment or waiver effected in accordance
with this Section 19 shall be binding upon Pledgor and Pledgee.
18. ENTIRE AGREEMENT. This Agreement and the Note
constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and
thereof and supersedes any and all prior agreements relating to
the subject matter hereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement has been executed by
Pledgor and Pledgee effective as of the date first set forth
above.
PLEDGOR:
SOLICO INTERNATIONAL, INC.
By: /s/ X. XXXXXXX SPARKS
-----------------------------
Name: X. Xxxxxxx Xxxxxx
---------------------------
Title: President
--------------------------
PLEDGEE:
/s/ XXXXXX X. XXXXXX
--------------------------------
Xxxxxx X. Xxxxxx
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ANNEX A
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ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, Solico International, Inc. hereby
assigns and transfers unto ______________________________,
____________ shares of the Common Stock of American Building
Control, Inc., a Delaware corporation (the "Company"), standing
in its name on the books of the Company represented by
Certificate No. _____ herewith, and does hereby constitute and
appoint ____________________, with full power of substitution and
resubstitution in the premises, to transfer said stock on the
books of the Corporation.
Dated: ___________________.
SOLICO INTERNATIONAL, INC.
By:_________________________
Name:_______________________
Title:______________________
Address:
_____________________________
_____________________________
Instruction: Please do not fill in any blanks other than the
signature line. Please sign exactly as you would like your name
to appear on the issued stock certificate.
