PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT is made and entered into
this 26th day of January, 2001 by and between Xxxxxx Holdings, Inc., a Utah
corporation ("Pledgor") and Headwaters Incorporated, a Delaware corporation
("Secured Party").
RECITALS
Pledgor has guaranteed a Promissory Note (the "Note") of even
date from Xxxxxx X. Xxxxxx, as maker, to Secured Party in the original principal
amount of $1,750,000.00. Pledgor has agreed to grant Secured Party a security
interest in certain collateral described below to secure its guaranty of the
Note.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound, the parties hereto agree as follows:
1. Pledge of Securities.
(a) Pledgor hereby pledges, assigns and delivers
to Secured Party and grants to Secured Party a security interest in 50,000
common shares of Xxxxxx Limestone Company Incorporated (the "Corporation"),
together with all proceeds and substitutions of any thereof, all cash, stock and
other monies and property paid thereon, all rights to subscribe for securities
declared or granted in connection therewith, and all other cash and non-cash
proceeds of the foregoing (all hereinafter called the "Pledged Collateral"), as
security for the prompt repayment of the Note (collectively, the "Secured
Indebtedness"). The term Pledged Collateral shall also include any securities,
instruments or distributions of any kind issuable, issued or received by Pledgor
upon conversion of, in respect of, on account of, or in exchange or substitution
for any other Pledged Collateral, including, but not limited to, those arising
from a stock dividend, stock split, reclassification, reorganization, merger,
consolidation, sale of assets or other exchange of securities or any dividends
or other distributions of any kind upon or with respect to the Pledged
Collateral.
(b) Contemporaneously with the execution of this
Agreement, the certificate or certificates for the securities included in the
Pledged Collateral, duly endorsed in blank by Pledgor with signature guaranteed
or accompanied by an instrument of assignment duly executed in blank by Pledgor
with signature guarantee, have been delivered to Secured Party. Secured Party
may hold such certificate(s) for disposition pursuant to this Agreement without
transfer into its name or it may at any time cause such certificate(s) to be
transferred into its own name with or without notation of Pledgor's beneficial
interest therein.
(c) Pledgor warrants and represents to Secured
Party that the Pledged Collateral represents 100% of the issued and outstanding
capital stock of the Corporation.
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2. Covenants. Pledgor hereby covenants that, until all of the
Secured Indebtedness has been satisfied in full, he will not sell, convey or
otherwise dispose of any of the Pledged Collateral or any interest therein or
create, incur or permit to exist any pledge, mortgage, lien, charge or
encumbrance or any security interest whatsoever in or with respect to any of the
Pledged Collateral other than that created hereby.
3. Voting Prior to Default. Unless an Event of Default
hereunder shall have occurred and be continuing, Pledgor shall be entitled to
exercise any voting rights with respect to the Pledged Collateral and to give
consents, waivers and ratifications in respect thereof, provided that no vote
shall be cast or consent, waiver or ratification given or action taken which
would be inconsistent with any of the terms of this Agreement, or which would
constitute or create any violation of any of such terms.
4. Events of Default. Each of the following shall
constitute an event of default ("Event of Default") hereunder:
(a) The occurrence of an event of default under
the Note; or
(b) Failure by Pledgor to observe or perform any
of the provisions of this Agreement and such failure shall continue unremedied
for a period of 30 days after the Secured Party shall give notice to Pledgor of
such failure.
5. Secured Party' Remedies Upon Default.
(a) Upon the occurrence of an Event of Default,
Secured Party shall have the right to exercise all such rights as a secured
party under the Uniform Commercial Code of Utah (the "U.C.C.") as he, in his
sole judgment, shall deem necessary or appropriate, without demand of
performance or other demand, advertisement, or notice of any kind (except the
notice specified below of time and place of public or private sale) to or upon
Pledgor or any other person (all of which are to the extent permitted by law,
hereby expressly waived by Pledgor), including the right to sell all or any part
of the Pledged Collateral at one or more public or private sales at any
exchange, through any interdealer quotation system; and any such sale or sales
may be made for cash, upon credit, or for future delivery, and in connection
therewith, Secured Party may grant options, provided that any such terms or
options shall, in the best judgment of Secured Party, be extended only in order
to obtain the best possible price. Secured Party need not give more than five
days notice of the time and place of any public sale or of the time after which
a private sale or other disposition of the Pledged Collateral may take place,
which notice Pledgor hereby deems reasonable.
(b) Pledgor recognizes that Secured Party may be
unable to effect a public sale of all or a part of the Pledged Collateral by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended (the "Act"), so that Secured Party may be compelled to resort to one or
more private sales to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire the Pledged Collateral for their own
account, for investment and without a view to the distribution or resale
thereof. Pledgor understands that private sales so made may be at prices and on
other terms less favorable to the seller than if the Pledged Collateral were
sold at public sales, and agrees that Secured Party has no obligation to delay
the sale of any of the Pledged Collateral for the period necessary to register
such securities for sale under the Act. Pledgor agrees that private sales made
under the foregoing circumstances shall be deemed to have been made in a
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commercially reasonable manner. On any sale of the Pledged Collateral, Secured
Party is hereby authorized to comply with any limitation or restriction,
compliance with which is necessary, in the view of Secured Party's counsel, in
order to avoid any violation of applicable law or in order to obtain any
required approval of the purchaser by any applicable governmental authority.
(c) After the sale of any of the Pledged
Collateral, Secured Party may deduct all reasonable legal and other expenses and
attorney's fees for preserving, collecting, selling and delivering the Pledged
Collateral and for enforcing his rights with respect to the Note and shall apply
the residue of the proceeds to, or hold it as a reserve against, the amount
owing under the Note in such manner as Secured Party in his sole discretion
shall determine, and shall pay the balance, if any, to Pledgor in proportion to
his respective interests in the Pledged Collateral. To facilitate the exercise
of Secured Party's remedies following an Event of Default, Pledgor hereby
appoints Secured Party as his attorney-in-fact to collect and receive all
payments in respect of the Pledged Collateral, and to endorse the name of
Pledgor thereto for such purpose, and to apply such receipts to the amount owed
under the Note and to execute on behalf of Pledgor all financing statements and
other documents necessary to perfect and maintain Secured Party's security
interest in the Pledged Collateral. The remedies provided herein in favor of
Secured Party shall not be deemed exclusive, but shall be cumulative, and shall
be in addition to all other legal and equitable remedies which Secured Party may
have, and no delay on the part of Secured Party in exercising any of his powers
or rights, or any partial or single exercise thereof, shall constitute a waiver
thereof.
6. Release of Pledged Collateral. When the Note has
been paid in full, Secured Party will return to Pledgor the Pledged Collateral.
7. Notices. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if delivered,
telegraphed or mailed by certified or registered mail:
To Secured Party:
Headwaters, Incorporated
00000 X. Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
To Pledgor:
Xxxxxx Holdings, Inc.
0000 X. Xxxxxxxx Xxxx
Xxxx, XX 00000
8. Miscellaneous.
(a) Other than the exercise of reasonable care
to assure the safe physical custody of the Pledged Collateral while held by
Secured Party hereunder, Secured Party shall have no duty or liability,
including without limitation, any obligation or duty to collect any sums due in
respect thereof or to protect or preserve any rights against prior parties or
any other rights pertaining thereto and shall be relieved of all responsibility
for the Pledged Collateral upon surrendering it or tendering surrender of it to
Pledgor.
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(b) Pledgor, at his expense, will execute,
acknowledge and deliver all such instruments in form satisfactory to Secured
Party and take all such action as Secured Party from time to time may reasonably
require in order further to effectuate the purposes of this Agreement and to
carry out the terms hereof.
(c) This Agreement shall inure to the benefit of
and shall be binding upon the heirs, personal representatives and successors of
the parties hereto.
(d) 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.
(e) The paragraph headings used herein are for
convenience only and do not affect or modify the terms and conditions hereof.
(f) If any provision hereof is found by a court
of competent jurisdiction to be prohibited or unenforceable, it shall be
ineffective only to the extent of such prohibition or unenforceability, and such
prohibition or unenforceability shall not invalidate the balance of such
provision to the extent it is not prohibited or enforceable, nor invalidate the
other provisions hereof.
(g) This Agreement, together with the Note
Restructure Agreement, Restructured Note, Xxxxxx Holdings, Inc.'s Guaranty, and
Xxxxxx Xxxxxx'x 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.
XXXXXX HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, President
HEADWATERS INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxx
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