GUARANTEE AND PLEDGE AGREEMENT
This Agreement is between the Xxxxxx X. Xxxxx Trust as
Guarantor ("Trust") and Xxxxxx Industries, Inc., its successors
and assignees as Borrower ("Xxxxxx") effective this 10th day of
August, 1998.
WHEREAS, the Trust has been requested to pledge to US
Bank, NA ("Bank"), on behalf of Xxxxxx, a Certificate of
Deposit in the amount of $25,000 (the "CD") as collateral to
guarantee the repayment of a secured line of credit issued to
Xxxxxx by Bank.
WHEREAS, Xxxxxx desires to compensate the Trust and to
provide security for the return of the $25,000 collateral to be
advanced by the Trust; and
WHEREAS, the Parties hereto desire to set forth their
agreement with respect to the foregoing in writing hereby.
NOW THEREFORE, IT IS AGREED:
1. The Xxxxxx X. Xxxxx Trust agrees to advance the sum of
$25,000 to Xxxxxx in the form of a pledge of a Certificate of
Deposit in such amount to collateralize a secured line of
credit to Xxxxxx granted by the Bank for a period of one (1)
year from the date of the advance.
2. The Trust shall be entitled to all interest on the CD until it is
either returned to the Trust, transferred to Xxxxxx by the
Trust as provided herein, cancelled or surrendered to the
Bank.
3. The Trust shall be paid Two Million Five Hundred
Thousand (2,500,000) shares of Xxxxxx common stock, as
pre-paid interest on the advance, which shall be unrestricted
shares under the private offering exemption provided by
Rule 504 promulgated by the U.S. Securities and Exchange
Commission.
4. The CD shall be returned to the Trust or repaid in cash on or
before one (1) year from the date of pledge to the Bank.
Xxxxxx' obligation to repay $25,000 to the Trust on default
or maturity of this Agreement shall be on a full recourse
basis to Xxxxxx and the Trust shall not be deemed to have
made an election of remedies by exercise of any one or
more enforcement or collection remedies provided herein,
until the Trust shall have fully recovered its principal,
interest, collection costs and reasonable attorneys fees for
collection on any default.
5. Xxxxxx agrees to pledge the following security for the return
of the CD or repayment of the $25,000 principal amount
thereof:
a) Two Million Five Hundred Thousand (2,500,000) shares
of common stock of Xxxxxx which can be sold by the
Trust at maturity of this Agreement in lieu of cash
repayment or, upon default, put to Xxxxxx for cash
repayment, or withheld by the Trust pending exhaustion
of other available remedies, to ensure payment in full,
all at the sole option of the Trust; and
b) a secured position in assets of the company including
cash, accounts, accounts receivable, furniture, fixtures
and equipment, trademarks and trade names, and
intangible assets now owned or hereafter acquired and
secured by the execution and filing of a security
agreement and financing statement in the states of
Colorado and Iowa and junior to existing security
positions known and of record at the time of filing of
such security agreement and financing statement.
6. At any time following the advance of the CD, the Trust may
elect to transfer the CD to Xxxxxx and liquidate or hold the
shares of Xxxxxx Common Stock in full payment and
satisfaction of this Agreement. At such time, the security
and collateral agreements provided for herein shall
terminate. Xxxxxx shall be under a continuing obligation to
ensure that the shares will be subject to resale without
restriction under federal or state securities laws. In this
connection, all securities issued to the Trust hereunder will
be deemed fully paid and non-assessable, and fully vested as
of the date issued. The securities will be issued in a
transaction exempt from registration under the federal or
state securities laws in a qualified transaction under Rule
504 and will, as such not be deemed to be restricted
securities under Rule 144 of the federal securities laws. In
the event that for any reason, such exemption from
registration and from resale without registration is deemed
inapplicable to the current transaction, the Trust's election
to keep the shares under this paragraph may be revoked and
the Trust shall be entitled to proceed against the other
collateral or otherwise proceed against the Company for
repayment. The Trust is granted conditional piggy-back
registration rights with respect to the shares issued under
this Agreement to demand that such shares be covered by
any pending or effective registration statement filed by
Xxxxxx subsequent to the date hereof.
7. The Trust represents and warrants to Xxxxxx that in
connection with his/its acquisition of the shares that (i) he/it
is acquiring such securities for his/its own account, for
investment purposes only and not with a view to the public
resale or distribution thereof; (ii) he/it will not sell, transfer
or otherwise dispose of the Shares except in transactions
which are not in violation of the Act; and (iii) he/it is a
sophisticated and an accredited investor as those terms are
defined under Regulation D under the '33 Act.
8. All representations and warranties made herein shall survive
the closing. This Agreement shall bind the parties, their
heirs, legal representative and permitted assigns. The Trust
may assign its right to receive all or a portion of the
consideration being received or the rights being granted
hereunder to any party in his/its sole discretion, however,
Xxxxxx xxx not assign all or any portion of its rights or
obligations under this Agreement without the express
written consent of the Trust. Every representation herein
shall be deemed repeated at the closing which shall occur on
the date the CD is created and pledged on behalf of Xxxxxx
or funds to purchase the CD are advanced by the Trust
whichever is sooner. The parties shall execute such
additional instruments as may from time to time be
necessary to accomplish the objectives hereof. This
Agreement constitutes the entire agreement between the
Parties and may not be modified or cancelled except in
writing signed by the Seller and Purchaser.
9. By executing this Agreement on behalf of the respective
party who is a corporate and/or trust entity, the individual so
executing this Agreement on such party's behalf represents
and warrants that he/she has been duly authorized to do so
by the Trust's beneficiaries or Trustees and the
corporation's board of directors, as the case may be, and
that such signature is sufficient without more to bind such
Trust or corporation. Either party shall be entitled to receive
any further documentation validating such authority after
the fact, but shall at all times be entitled to rely upon the
agent's signature as evidence of authority from the
principal.
10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the state of
Colorado. This Agreement may be executed at different
times and places, in counterparts and shall be effective as of
the date first above written.
IN WITNESS WHEREOF, the Parties have executed this
Agreement, effective as of the date first above written.
XXXXXX INDUSTRIES, INC.: XXXXXX X. XXXXX, TRUST:
By: By:
Xxxx Xxxxxxxxx, Director, Xxxxxx X. Xxxxx, Trustee
Secretary/Treas.
