EXHIBIT 99.17
PLEDGE AGREEMENT
PLEDGE AGREEMENT (this "Agreement"), dated as of March 3, 2001,
between ▇▇▇▇ ▇. ▇▇▇▇▇▇ (together with his heirs, executor, legal representatives
and assigns, "Savage") and Savage Interests, L.P. (together with its successors
and assigns, and collectively with Savage, the "Pledgor") and ▇▇▇▇ ▇. ▇▇▇▇▇▇
(together his heirs, executor, legal representatives and assigns, the
"Pledgee").
Recitals. The Pledgor has given the Pledgee a promissory note, of even
---------
date herewith, in the original principal amount of $887,000 (the "Note"). The
Pledgor owns 1,774,000 shares (the "Shares") of the common stock, $0.01 par
value per share ("Common Stock"), of Netpliance, Inc., a Delaware corporation
(together with its successors, the "Company"), and has pledged the Shares and
granted a security interest in the Shares to the Pledgee to secure the repayment
of the Note, as set forth below. This Agreement is made to set forth the terms
and conditions of such pledge and security interest.
1. Pledge of the Pledged Stock.
----------------------------
(a) In order to secure and to provide for the performance of the
obligations of the Pledgor owing to the Pledgee under the Note (the "Secured
Obligations"), the Pledgor hereby pledges, conveys, transfers, delivers and sets
over unto the Pledgee, and hereby grants to the Pledgee a continuing security
interest in the following, whether now owned or existing or hereafter acquired
or arising, and regardless of where located (all of the following indicated in
clauses (i) and (ii) being referred to as the "Collateral"):
(i) the Shares, and all of the rights and privileges of the
Pledgor with respect thereto, and all liquidating distributions and other
payments and distributions (other than ordinary dividends paid thereon)
with respect thereto and any other shares of the Common Stock and any other
securities issued with respect thereto or in substitution or exchange
therefor (collectively, the "Pledged Stock"); and
(ii) all proceeds of any of the foregoing.
(b) Concurrently with the execution and delivery of this Agreement,
the Pledgor shall deliver to the Pledgee the certificates representing the
Pledged Stock in pledge hereunder, together with duly executed instruments of
transfer or assignments in blank, or a letter of instruction to the Company's
transfer agent in form and substance satisfactory to Pledgee.
(c) In the event that the Company issues any additional or substitute
shares of capital stock of any class to the Pledgor in respect of the Pledged
Stock, whether as a result of a stock split, reorganization or otherwise, and
delivers to the Pledgor certificates representing such shares, the Pledgor shall
immediately pledge and deposit with the Pledgee all such certificates as
additional collateral security for the Secured Obligations (together with duly
executed instruments of transfer or assignments in blank). All such shares
constitute Pledged Stock and are subject to all provisions of this Agreement.
(d) Notwithstanding the security interest granted by the Pledgor to
the Pledgee hereunder or any other provision hereof, the Pledgor shall, so long
as no Event of Default (as defined in the Note) shall have occurred and be
continuing, be entitled, subject to the provisions of Section 6 hereof, to
exercise all rights of the owner of the Pledged Stock (including, without
limitation, the right to vote such stock and give consents, ratifications and
waivers with respect to such stock), and the Pledgee agrees that, unless an
Event of Default shall have occurred and be continuing, the Pledgee shall not
exercise any of such rights.
2. Representations of the Pledgor. The Pledgor represents and warrants
-------------------------------
that as of the date hereof that the Pledgor owns all of the Pledged Stock, free
and clear of any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or with respect to any property or asset of the Pledgor
(including in the case of stock, stockholder agreements, voting trust agreements
and all similar arrangements) (each a "Lien") other than the Lien created by
this Agreement and the Lien created by that Pledge Agreement of even date
herewith, by and between Pledgor and Pledgee, relating to all of the shares of
Common Stock held by Pledgor, including the Shares (the "Other Pledge
Agreement"), and has not assigned any of its rights in the Pledged Stock to any
individual, partnership, corporation, limited liability company, association,
trust, unincorporated organization, or a government or agency or political
subdivision thereof (each a "Person"), except pursuant to this Agreement and the
Other Pledge Agreement. None of the Pledged Stock is subject to any options to
purchase or similar rights of any Person. The Pledgor is not, and will not
become, a party to or otherwise bound by any agreement, other than this
Agreement and the Other Pledge Agreement which restricts in any manner the
rights of any present or future holder of any of the Pledged Stock with respect
thereto.
3. Information. The Pledgor shall, promptly upon request, provide to the
-----------
Pledgee all information and evidence the Pledgee may reasonably request
concerning the Collateral to enable the Pledgee to enforce the provisions of
this Agreement.
4. Transfers Subject to Security Interests. Any transfer by the Pledgor
----------------------------------------
of all or any portion of the Pledged Stock shall be subject to the pledge and
security interests granted in the Collateral by this Agreement and the rights of
the Pledgee hereunder (the "Security Interests").
5. Record Ownership of Pledged Stock. After the occurrence of an Event
---------------------------------
of Default, the Pledgee may, in its sole discretion, cause all or any of the
Pledged Stock to be transferred of record into the name of the Pledgee or its
nominee, as pledgee hereunder. After such time, the Pledgee will promptly give
to the Pledgor copies of any notices and communications received by the Pledgee
with respect to the Pledged Stock registered in its name or in the name of a
nominee.
6. Action After Event of Default. If an Event of Default shall have
------------------------------
occurred and be continuing, the Pledgee shall have the right to the extent
permitted by law, and the Pledgor shall take all such action as may be requested
by the Pledgee, to vote and to give consents, ratifications and waivers, and
take any other action with respect to any or all of the Pledged Stock with the
same force and effect as if the Pledgee were the absolute and sole owner
thereof.
7. General Authority. The Pledgor hereby irrevocably appoints the
-----------------
Pledgee its true and lawful attorney, with full power of substitution, in the
name of the Pledgor, for the sole use and benefit of the Pledgee, but at the
Pledgor's expense as provided in Section 9 hereof, to the
extent permitted by law to exercise and, subject to the terms of this Agreement,
at any time and from time to time while an Event of Default has occurred and is
continuing, all or any of the following powers with respect to all or any of the
Collateral: (i) to demand, ▇▇▇ for, collect, receive and give acquittance for
any and all monies due or to become due thereon or by virtue thereof; (ii) to
settle, compromise, compound, prosecute or defend any action or proceeding with
respect thereto; (iii) to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof, as fully and effectually as if the
Pledgee were the absolute owner thereof; (iv) to extend the time of payment of
any or all thereof and to make any allowance and other adjustments with
reference thereto; and (v) to exercise all voting rights (as directed by the
appropriate parties hereunder) with respect to the Pledged Stock and to take all
actions permitted or required to be taken by the owner of the Pledged Stock;
provided, that the Pledgee shall give the Pledgor not less than 10 days' prior
notice of the time and place of any sale or other intended disposition of any of
the Collateral. The Pledgor and the Pledgee agree that such notice constitutes
"reasonable notification" within the meaning of Section 9-504(3) of the Uniform
Commercial Code as in effect in the State of Texas from time to time (the
"UCC").
8. Remedies Upon Default. If an Event of Default shall have occurred and
---------------------
be continuing, the Pledgee may exercise all the rights of a secured party under
the UCC (whether or not in effect in the jurisdiction where such rights are
exercised) and, in addition, the Pledgee may, without being required to give any
notice, except as herein provided or as may be required by mandatory provisions
of law, (i) apply the cash, if any, then held by it as Collateral as specified
in Section 10 and (ii) if there shall be no such cash or if such cash shall be
insufficient to pay all the Secured Obligations in full, sell the Collateral or
any part thereof at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery, and at such
price or prices as the Pledgee may deem satisfactory. The Pledgee may be the
purchaser of any or all of the Collateral so sold at any such sale. The Pledgee
is authorized, in connection with any such sale, if it deems it advisable so to
do, (i) to restrict the prospective bidders on or purchasers of any of the
Pledged Stock to sophisticated investors who will represent and agree that they
are purchasing for their own account for investment and not with a view to the
distribution or sale of any of such Pledged Stock, the number of which shall be
limited as necessary to comply with all applicable securities laws, (ii) to
cause to be placed on certificates for any or all of the Pledged Stock or on any
other securities pledged hereunder a legend to the effect that such security has
not been registered under the Securities Act of 1933 and may not be disposed of
in violation of the provisions of said Act, and (iii) to impose such other
limitations or conditions in connection with any such sale as the Pledgee deems
necessary or advisable in order to comply with said Act or any other law. The
Pledgor will execute and deliver such documents and take such other action as
the Pledgee deems necessary or advisable in order that any such sale may be made
in compliance with law. Upon any such sale the Pledgee shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold.
Each purchaser at any such sale shall hold the Collateral so sold absolutely and
free from any claim or right of whatsoever kind, including any equity or right
of redemption of the Pledgor which may be waived, and the Pledgor, to the extent
permitted by law, hereby specifically waives all rights of redemption, stay or
appraisal which it has or may have under any law now existing or hereafter
---
adopted. The notice (if any) of such sale required by Section 7 shall (i) in
the case of a public sale, state the time and place fixed for such sale, (ii) in
the case of a sale at a broker's board or on a securities exchange, state the
board or exchange at which such sale is to be made and the day on which the
Collateral, or the portion thereof so being sold, will first be offered for sale
at such board or exchange, and (iii) in the case of a private sale, state the
day after which such sale may be consummated. Any such public sale shall be
held at such time or times within ordinary business hours and at such place or
places as the Pledgee may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as the
Pledgee may in its sole discretion determine. The Pledgee shall not be
obligated to make any such sale pursuant to any such notice. The Pledgee may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned. In the case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Pledgee until the selling price is paid by the purchaser
thereof, but the Pledgee shall not incur any liability in the case of the
failure of such purchaser to take up and pay for the Collateral so sold and, in
the case of any such failure, such Collateral may again be sold upon like
notice. The Pledgee, instead of exercising the power of sale herein conferred
upon it, may proceed by a suit or suits at law or in equity to foreclose the
Security Interests and sell the Collateral, or any portion thereof, under a
judgment or decree of a court or courts of competent jurisdiction.
9. Expenses. If an Event of Default shall have occurred and be
--------
continuing, the Pledgor shall forthwith upon demand pay to the Pledgee the
amount of out-of-pocket expenses, including the fees and disbursements of
counsel and of any other experts, to the extent that the Pledgee has made a good
faith determination that the incurrence of such expenses is necessary or
appropriate from and after such Event of Default in connection with (a) the
administration or enforcement of this Agreement, including such expenses as are
incurred to preserve the value of the Collateral and the validity, perfection,
rank and value of the Security Interest, (b) the collection, sale or other
disposition of any of the Collateral, (c) the exercise by the Pledgee of any of
the rights conferred upon it hereunder or (d) any Event of Default. Any such
amount not paid on demand shall bear interest at the rate as announced from time
to time by Chase Bank of Texas, N.A. as its "prime rate" and shall be an
additional Secured Obligation hereunder.
10. Application of Proceeds. Upon the occurrence and during the
-----------------------
continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral and any cash held shall be
applied by the Pledgee in the following order of priorities: first, to the
-----
Pledgee for the payment of any obligations of the Pledgor under Section 9
hereof; second, to the payment of all other Secured Obligations, until all
------
Secured Obligations shall have been paid in full; and third, to the Pledgor.
-----
The Pledgee may make distributions hereunder in cash or in kind or, on a ratable
basis, in any combination thereof.
11. Limitation of Liability; No Deficiency. Notwithstanding anything to
--------------------------------------
the contrary contained in this Agreement, but without in any manner affecting
the validity of the Note or this Agreement, the recourse of Pledgee shall be
solely by the exercise of Pledgee's rights in and to the Collateral, together
with interest thereon, as a secured party under the UCC; there shall be no
personal liability of the Pledgor for the payment of amounts that may become due
and payable under the terms of the Note or this Agreement. The Pledgee shall
look solely to the security of the Collateral; and no deficiency judgment for
amounts unsatisfied after the application of such security shall ever be
instituted, sought, taken, or obtained against the Pledgor for any amounts that
become due and owing in respect of the Note, this Agreement or otherwise.
12. Amendments, Modifications, Waivers and Consents. No amendment,
------------------------------------------------
modification, supplement, termination or waiver of or to any provision of this
Agreement, nor
any consent to any departure by the Pledgor from any provision of this
Agreement, shall be effective unless in a writing executed by each party hereto.
13. Miscellaneous.
--------------
13.1 Further Assurances. The Pledgor agrees that it will join with the
------------------
Pledgee in executing and, at its own expense, file and refile or permit the
Pledgee to file and refile, such financing statements, continuation statements
and other documents (including this Agreement) in such offices as the Pledgee
may deem necessary or appropriate and wherever required or permitted by law in
order to perfect and preserve the rights and interests granted to the Pledgee
hereby, and hereby authorizes the Pledgee to file financing statements and
amendments thereto and continuation statements relative to all or any part
thereof without the signature of the Pledgor where permitted by law, and agrees
to do such further acts and things, and to execute and deliver to the Pledgee
such additional assignments, agreements, powers and instruments, as the Pledgee
reasonably determines to be necessary to perfect and preserve the rights and
interests granted to the Pledgee hereunder.
13.2 No Waiver. No course of dealing and no delay on the part of the
---------
Pledgee in exercising any right, power or remedy shall operate as a waiver
thereof. No right, power or remedy conferred by this Agreement upon the Pledgee
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise.
13.3 Notices. All notices to be given hereunder shall be in writing and
-------
shall be deemed given at the earlier of when actually received or three days
after being deposited in the United States mails, return receipt requested, (a)
to Pledgor at ▇▇ ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or (b) to Pledgee
at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. Either party may
change that party's above listed notice information by giving written notice of
the changed information to the other party at least ten days prior to such
change.
13.4 Termination. This Agreement, and the assignments, pledges and
------------
security interests created or granted hereby, shall terminate when all Secured
Obligations shall have been fully performed, at which time the Pledgee shall
deliver all Collateral then held by the Pledgee to the Pledgor and, if requested
by the Pledgor, shall execute and deliver to the Pledgor for filing in each
office in which any financing statement relative to the Collateral or agreements
relating thereto or any part thereof shall have been filed, a termination
statement under the relevant UCC releasing the Pledgee's interest therein, and
such other documents and instruments as the Pledgor may reasonably request, all
without recourse upon or warranty whatsoever by, the Pledgee.
13.5 Successors and Assigns. All covenants and other agreements contained
----------------------
in this Agreement by or on behalf of any of the parties hereto bind and inure to
the benefit of their respective successors and permitted assigns whether so
expressed or not.
13.6 Execution in Counterparts. This Agreement may be executed in any
-------------------------
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
13.7 Severability of Provisions. Any provision of this Agreement which is
--------------------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
13.8 Integration. This Agreement and the Note represent the agreement of
-----------
the Pledgee and the Pledgor with respect to the subject matter hereof, and there
are no promises, undertakings, representations or warranties by the Pledgee
relative to subject matter hereof not expressly set forth or referred to herein.
13.9 Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with, and the rights of the parties shall be governed by, the law of
the State of Texas excluding (except for matters governed by the UCC) choice-of-
law principles of the law of such State that would require the application of
the laws of a jurisdiction other than such State.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
PLEDGOR:
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
SAVAGE INTERESTS, L.P.
By: ▇.▇. ▇▇▇▇▇▇ Interests G.P. L.L.C.
Its: General Partner
By:
----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
PLEDGEE:
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
