PLEDGED STOCK AND SECURITY AGREEMENT
This agreement is made this 24th day of February, 1999, at Logan, Utah
between NACO Industries, Inc. (hereinafter "Secured Party"), and Xxx Xxxx
and Rimshot, LLC of Ogden, Utah (hereinafter "Indemnitor").
WHEREAS, on even date herewith the Indemnitor hereto has executed a
certain "Assumption and Indemnification Agreement"; and
WHEREAS, the parties desire to allow Secured Party the use of Xxx Xxxx'x
shares of Secured Party as collateral for the "Assumption and Indemnification
Agreement;
NOW, THEREFORE, IT IS AGREED as follows:
1. PLEDGE OF SHARES: Xxx hereby assigns and delivers to the Secured
Party Stock Certificates numbered 1246 of the Corporation representing 12,500
shares therein, duly noted on the books of the Corporation to be held by
Secured Party and registered in the name of Xxx Xxxx. Xxx Xxxx grants
Secured Party a security interest in the above-described shares to secure the
performance and payment of all obligations and indebtedness to the Secured
Party relating to the Assumption and Indemnification Agreement entered into
by and between the parties on even date herewith.
2. VOTING RIGHTS: Provided that Indemnitor is not in default in the
performance of any terms of the Assumption and Indemnification Agreement or
this Agreement, Indemnitor shall retain all voting rights of the pledged
shares.
3. DIVIDENDS: All amounts paid as dividends on the pledged shares
shall be the property of Secured Party and shall be applied to the payment of
principal and interest indebtedness of Secured Party.
4. ADJUSTMENTS: In the event that any options, warrants, or other
rights are issued in connection with the pledged shares during the terms of
this agreement, such options, warrants, or rights may be exercised by
Indemnitor and if so executed, all new shares or other security so acquired
shall be assigned to the Secured Party to be held in the same manner as the
shares originally pledged hereunder. In the event that a share
reclassification, readjustment, or other change is made in the capital
structure of the Corporation, any additional or substituted shares issued
with respect to the shares pledged hereunder shall be assigned to the Secured
Party to be held in the same manner as the shares originally pledged under
this agreement.
5. DEFAULT: In the event that the Indemnitor defaults in the
performance or payment of any of the terms of this agreement not secured
hereby, the Secured Party shall have all the rights and remedies provided in
the Uniform Commercial Code as effective in the State of Utah at the date of
this agreement.
IN WITNESS WHEREOF, the parties have signed this agreement on the date
first above written.
INDEMNITOR: SECURED PARTY:
/s/ Xxxxxx Xxxx by /s/ Xxxxxxx X. Xxxxx
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XXX XXXX, INDIVIDUALLY
/s/ Xxxxxx Xxxx
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MEMBER OF RIMSHOT, LLC
