PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of April 15, 2011, between XXXXX X. XXXXXXX (“Pledgor”) and XXXXXX XXXXX (“Purchasers’ Representative”).
Recitals
A.
Pursuant to that certain Series A Preferred Stock Purchase Agreement and Senior Secured Loan Purchase Agreement dated as of the date hereof between HeatwurxAQ, Inc., a Delaware corporation (the “Company”), and the Purchasers named therein (the “Purchase Agreement”), Purchasers have agreed to make a loan to the Company evidenced by the Senior Secured Promissory Note issued by the Company in the aggregate principal amount of $1,500,000 (the “Senior Note”). As provided in the Purchase Agreement, Purchasers’ Representative has been designated as the representative of the Purchasers.
B.
Pledgor is the record and beneficial owner of 100,000 shares of Common Stock $.001 par value, of the Company (the “Pledged Shares”).
C.
In order to induce Purchasers to make the loan as provided for in the Purchase Agreement, Pledgor has agreed to pledge the Pledged Shares to Purchasers’ Representative (as agent for Purchasers) and to grant Purchasers’ Representative (as agent for Purchasers) the right to purchase the Pledged Shares in accordance herewith.
Agreement
In consideration of the premises and mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.
Pledge. Pledgor hereby pledges to Purchasers’ Representative (as agent for Purchasers), and grants to Purchasers’ Representative (as agent for Purchasers) a first priority security interest in, the Pledged Shares and the certificates representing the Pledged Shares, as security for payment of the Senior Note. All certificates evidencing the Pledged Shares shall be delivered to and held by Purchasers’ Representative (as agent for Purchasers) pursuant hereto. The Pledgor will notify the Company to add a notation to the stock registry book of the Company, containing a notation stating that the Pledged Shares have been pledged in favor of the Purchasers’ Representative, and will cause to be delivered to the Purchasers’ Representative a certificate signed by the Secretary of the board of directors of the Company indicating that such pledge has been registered as provided herein and that the Secretary is aware of the contents of this Agreement.
2.
Defaults and Remedies. If the Company is in default in making any mandatory payment of principal on the Senior Note, and such default is not cured within 15 days after written notice from Purchasers’ Representative to the Company and Pledgor, Purchasers’ Representative is hereby authorized and empowered to transfer and register in its name or in the name of its nominee the whole or any part of the Pledged Shares, to sell in one or more sales after thirty (30) days' notice of the time and place of any public sale or of the time at which a private sale is to take place (which notice Pledgor agrees is commercially reasonable) the whole or any part of the Pledged Shares and to otherwise act with respect to the Pledged Shares as though Purchasers’ Representative was the outright owner thereof. Any sale shall be made at a public or private sale at Purchasers’ Representative's place of business, or at any place to be named in the notice of sale, either for cash or upon credit or for future delivery at such price as Purchasers’ Representative may deem fair, and Purchasers’ Representative (as agent for Purchasers) may be the purchaser of the whole or any part of the Pledged Shares so sold. Each sale shall be made to the highest bidder, but Purchasers’ Representative reserves the right to reject any and all bids at such sale that, in its discretion, it shall deem inadequate.
3.
Proxy; Voting. Pledgor hereby irrevocably constitutes and appoints Purchasers’ Representative as the proxy and attorney-in-fact of Pledgor with respect to the Pledged Shares, including the right to vote the Pledged Shares, with full power of substitution to do so. The appointment of Purchasers’ Representative as proxy and attorney-in-fact is coupled with an interest and shall be irrevocable until the termination date. In addition to the right to vote the Pledged Shares, the appointment of Purchasers’ Representative as proxy and attorney-in-fact shall include the right to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged Shares would be entitled (including giving or withholding written consents of stockholders, calling special meetings of stockholders and voting at such meetings). Such proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Shares on the record books of the Company) by any person. Notwithstanding the foregoing, Purchasers’ Representative shall not have any duty to exercise any such right or to preserve the same and shall not be liable for any failure to do so or for any delay in doing so. Notwithstanding the foregoing, Purchasers’ Representative agrees that until the occurrence of an Event of Default under the Senior Note, Purchasers’ Representative shall vote the Pledged Shares in accordance with the provisions of the Voting Agreement dated as of April 15, 2011 among the Company, Pledgor, Purchaser and other stockholders of the Company.
4.
Power of Attorney. The Pledgor hereby irrevocably appoints the Purchasers’ Representative as the Pledgor’s special attorney-in-fact, with full authority in the place and stead of the Pledgor and in the name of the Pledgor or otherwise, from time to time in the Purchasers’ Representative’s discretion, to take any action and to execute any instrument that the Purchasers’ Representative may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:
(a)
to ask for, demand, collect, xxx for, recover, compromise, receive and give acquaintance and receipts for moneys due and to become due under or in respect of any of the Collateral,
(b)
to receive, endorse and collect any drafts or other instruments and documents in connection with clause (a) above, and
(c)
to file any claims or take any action or institute any proceedings that the Purchasers’ Representative may deem necessary or desirable for the collection of any of the Collateral in terms of this Agreement, or otherwise to enforce compliance with the rights of the Purchasers’ Representative with respect to any of the Collateral.
5.
Indemnity and Expenses.
(a)
The Pledgor agrees to pay on demand all reasonable and documented out-of-pocket costs and expenses of the Purchasers’ Representative in connection with the enforcement of this Agreement and any proceeding ancillary thereto (including, without limitation, the reasonable and documented fees and expenses of counsel for the Purchasers’ Representative).
(b)
The Pledgor agrees to indemnify and hold harmless the Purchasers’ Representative, and each of its affiliates and their officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable and documented fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any litigation or proceeding or preparation of a defense in connection therewith) this Agreement, any of the transactions contemplated herein, except to the extent such claim, damage, loss, liability or expense results from such Indemnified Party’s gross negligence or willful misconduct.
6.
Termination. This Pledge Agreement and the pledge of the Pledged Shares to Purchasers’ Representative and the right to purchase the Pledged Shares shall terminate upon payment in full of the Senior Notes. Immediately following the Termination, Purchasers’ Representative shall deliver the Pledged Shares to Pledgor, free and clear of the liens hereof and all of Pledgor's obligations hereunder shall terminate at such time.
7.
Notices
. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim or other communication hereunder will be deemed duly given (a) upon delivery, if delivered personally to the recipient or (b) upon the first business day after the date sent, if sent to the intended recipient by reputable express courier service (charges prepaid) and addressed to the intended recipient as set forth below:
If to Pledgor, to:
Xxxxx X. Xxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxx 00000
If to Purchasers’ Representative, to:
Xxxxxx Xxxxx
0 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Any party hereto may send any notice, request, demand, claim or other communication hereunder to the intended recipient at the address set forth above using any other means, but no such notice, request, demand, claim or other communication will be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party hereto may change the address (or add new parties and their addresses) to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other parties hereto notice in the manner set forth in this Section 7.
8.
Successors and Assigns. This Agreement and all obligations of Pledgor hereunder shall be binding upon the successors and assigns of Pledgor and shall, together with the rights and remedies of Purchasers’ Representative hereunder, inure to the benefit of Purchasers’ Representative and its successors and assigns; provided, that except as specifically provided in this Agreement Purchasers’ Representative may not assign, sell, hypothecate or otherwise transfer any interest in or rights under this Agreement or in the Pledged Shares.
9.
Counterparts. This Agreement may be executed in any number of separate counterparts, each of which shall collectively and separately constitute one agreement.
10.
Complete Agreement. This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior drafts, understandings, agreements or representations by or among the parties written or oral, which may have related to the subject matter hereof in any way.
11.
Further Instruments. At any time and from time to time, the Pledgor shall promptly execute and deliver further instruments and documents, and take all further action, that may be necessary or that the Purchasers’ Representative may reasonably request, in order to perfect and protect the security interest granted hereby, or to enable the Purchasers’ Representative to exercise its rights and remedies hereunder.
12.
Governing Law. This Agreement will be governed by and construed in accordance with the domestic laws of the State of Utah, without giving effect to the choice of law provisions thereof.
13.
Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of Pledgor and Purchasers’ Representative, and no course of conduct or failure or delay in enforcing the provisions of this Agreement will affect the validity, binding effect or enforceability of this Agreement or any provision hereof.
14.
Severability; Reformation. If any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue to full force and effect without said provision; provided that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.
[Signature Page Follows]
In Witness Whereof, Pledgor and Purchasers’ Representative have executed and delivered this Pledge Agreement as of the date first set forth above.
PLEDGOR:
/s/ Xxxxx Xxxxxxx
Xxxxx X. Xxxxxxx
PURCHASERS’ REPRESENTATIVE:
/s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx
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