PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is made and into, as
reformed on June 19, 1998, by and between FX ENERGY, INC., a Nevada corporation
(hereinafter referred to as "Creditor"), and XXXXXX X. XXXXXX, an individual
resident of the state of Utah (hereinafter referred to as "Debtor").
FOR AND IN CONSIDERATION of the mutual promises and covenants hereinafter
set forth, it is agreed as follows:
1. Creation of Security Interest. To secure the due and timely
performance of the payment by Debtor to Creditor of the obligation represented
by a promissory note dated this date in the principal amount of $769,924 and
payable, together with interest thereon at the rate of 7.7% per annum, on or
before December 31, 1999, a copy of which is attached hereto as Exhibit A and
incorporated herein by reference, and all accessions, renewals, extensions, and
modifications thereto (the "Note"), Debtor hereby pledges, hypothecates,
assigns, transfers, sets over, and grants a security interest in and to only
104,397 shares of common stock of Creditor included in and represented by
certificate(s) no. 1880 for 150,000 shares registered in the name of Debtor,
herein called the "Collateral." The Collateral shall be delivered as hereinafter
provided to be held for and on behalf of Creditor and to be disposed of in
accordance with the terms hereof.
Unless otherwise defined, words used herein shall have the meanings given
them in the Utah Uniform Commercial Code as now adopted and as hereafter amended
from time to time.
2. Delivery of Collateral. So long as any of the Note remains
outstanding, Debtor, will, unless Creditor shall otherwise consent in writing,
(a) at its expense, promptly deliver to Agent, as provided in paragraph 5 below,
for holding on behalf of Creditor such stock powers and other documents,
satisfactory in form and substance to Agent, with respect to the Collateral as
Agent may reasonably request to preserve and protect, and to enable Agent to
enforce, Creditor's rights and remedies hereunder; (b) not sell, assign,
exchange, or otherwise transfer any of his right in any of the Collateral; (c)
not create or suffer to exist any lien, security interest, or other charge or
encumbrance against the Collateral, except for the pledge hereunder; (d) not
make or consent to any amendment or other modification or waiver with respect to
any of the Collateral or enter into any agreement or permit to exist any
restriction respecting any of the Collateral other than pursuant hereto; and (e)
not take or fail to take any action which would in any manner impair the value
or enforceability of Creditor's security interest in any of the Collateral. Any
transfer by Debtor of the Collateral shall be subject to the interest of
Creditor as a secured party therein.
3. Power to Vote Shares. During the term of this Agreement and so long
as Debtor is not in default in the performance of any of the terms of this
Agreement or the Note, Debtor shall have the sole right to vote the Collateral
on all corporate questions.
4. Adjustments. In the event that, during the term of this Agreement,
any share dividend, reclassification, readjustment, or other change is declared
or made in the capital structure of Creditor, all new, substitute, and
additional shares, or other securities, issued by reason of any such change
shall be delivered to Agent to be held for and on behalf of Creditor under the
terms of this Agreement in the same manner as the shares of stock originally
pledged hereunder.
5. Agreement to Hold Collateral. Simultaneously with the execution of
this Agreement, Creditor and Debtor shall enter into an agreement in the form
attached hereto as Exhibit B and incorporated herein by reference, providing for
the deposit of the Collateral with an agent of Debtor, which shall hold and
dispose of the Collateral in accordance with the terms thereof.
6. Ownership of Collateral. Debtor owns all the Collateral absolutely,
and no other person has or claims any interest in the Collateral. Debtor will
defend any proceeding which may affect the title to or Creditor's security
interest in any Collateral, and will indemnify Creditor for all costs and
expenses of Creditor's defense.
7 Charges. Liens. and Encumbrances on Collateral. Debtor will pay,
when due, all future charges, liens, obligations, or encumbrances on, and all
taxes and assessments hereafter imposed on or affecting the Collateral.
8 Procedure on Default. In the event of default, at Creditor's
option, without demand or notice, all or any part of the principal of and
interest on the Note shall immediately become due and payable, and Creditor or
any officer of the law may take immediate possession of the Collateral without
demand. Creditor may resell the Collateral at public or private sale, with or
without the Collateral being at the place of sale, and upon such terms and in
such manner as Creditor may determine, and Creditor may become the purchaser
thereof at any public sale, all provided that the foregoing is completed in a
commercially reasonable manner. From the proceeds of any such sale Creditor
shall deduct all expenses of retaking and selling such Collateral, including a
reasonable attorneys' fee. The balance shall be applied to the amount due; any
surplus shall be paid to Debtor.
9. Limitation on Recourse. Except to the extent of the exercise
price of options of $125,000, which shall be a full recourse obligation of
Debtor, the Note shall be without recourse to Debtor, and Creditor will look
solely to the Collateral for payment of the principal and interest due thereon
and shall not seek a deficiency or other personal judgment against Debtor in
the event that any proceeds from the Collateral shall be insufficient to
satisfy the Note.
10. Events of Default. Upon the occurrence or during the continuance of
any one or more of the events hereinafter enumerated, Creditor may forthwith or
at any time thereafter during the continuance of any such event, by notice in
writing to Debtor, declare the unpaid balance of the principal and interest on
the Note to be immediately due and payable, without presentation, demand,
protest, notice of protest, or other notice of dishonor, all of which are hereby
expressly waived by Debtor, such events being as follows:
(a) Default in the payment of the principal and interest of the
Note or any portion thereof when the same shall become due and payable,
whether at maturity as herein expressed, by acceleration, or otherwise,
unless cured within ten days after notice thereof by Creditor of the Note
to Debtor;
(b) Debtor shall file a voluntary petition in bankruptcy or a
voluntary petition seeking reorganization, or shall file an answer
admitting the jurisdiction of the court and any material allegations of an
involuntary petition filed pursuant to any act of Congress relating to
bankruptcy or to any act purporting to be amendatory thereof, or shall be
adjudicated bankrupt, or shall make an assignment for the benefit of
creditors, or shall apply for or consent to the appointment of any receiver
or trustee for Debtor, or of all or any substantial portion of its
property, or Debtor shall make an assignment to an agent authorized to
liquidate any substantial part of its assets; or
(c) An order shall be entered pursuant to any act of Congress
relating to bankruptcy or to any act purporting to be amendatory thereof
approving an involuntary petition seeking reorganization of Debtor, or an
order of any court shall be entered appointing any receiver or trustee of
or for Debtor, or any receiver or trustee of all or any substantial portion
of the property of Debtor, or a writ or warrant of attachment or any
similar process shall be issued by any court against all or any substantial
portion of the property of Debtor, and such order approving a petition
seeking reorganization or appointing a receiver or trustee is not vacated
or stayed, or such writ, warrant of attachment, or similar process is not
released or bonded within 60 days after its entry or levy.
11. Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if personally delivered to it or if sent
by facsimile transmission or other electronic communication, confirmed by
registered or certified mail, postage prepaid, or if sent by prepaid telegram or
overnight courier addressed as follows:
If to Creditor, to: FX Energy, Inc.
Attn: Xxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Telecopy (000) 000-0000
If to Debtor, to: Xxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Telecopy (000) 000-0000
12. Remedy Cumulative. All remedies provided in this Agreement are
distinct and cumulative to any other right or remedy under this Agreement or
afforded by law or equity, and may be exercised concurrently, independently,
or successively.
13. Waiver. No failure to exercise and no delay in exercising, any right,
power, or privilege hereunder shall operate as a waiver thereof. Any single or
partial exercise of any right, power, or privilege hereunder shall not preclude
any other or further exercise thereof, or the exercise of any other right,
power, or privilege. No wavier of any provision of this Agreement or of any
right or remedy afforded by laws shall be deemed, or shall constitute, a waiver
of any other provision, right, or remedy, whether or not similar, nor shall any
waiver constitute a continuing waiver. No waiver shall be binding unless
evidenced by a writing which contains an express reference to this Agreement and
which is signed by the party against whom enforcement of the waiver is sought.
14. Modification. This Agreement may not be supplemented, varied, or
rescinded, except by a writing which contains an express reference to this
Agreement and which is signed by the party against whom enforcement of the
supplement, variance, or rescission is asserted.
15. Governing Law. This Agreement is being executed and delivered and is
intended to be performed in, and the execution, validity, construction, and
performance of this Agreement shall be CONSTRUED and enforced in accordance
with, the laws of the state of Utah.
16. Successors and Assigns. This Agreement shall bind and shall inure to
the benefit of the respective successors, assigns, heirs, beneficiaries, and
personal representatives of the parties hereto.
17. Headings. The headings or captions of the paragraphs, sections, or
articles herein are inserted for convenience only and shall not be deemed to
constitute a part of this Agreement for any purpose, and in particular shall not
be construed to limit, define, or explain the subject matter or modify the
meaning of any part or all of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Creditor:
FX ENERGY, INC.
By /s/ Xxxxxx X. Xxxxxxx, Chairman
Debtor:
/s/ XXXXXX X. XXXXXX
