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EXHIBIT 10.16
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made as of the 1st day of
December, 1999, by and between Xxxxxxx X. Xxxx ("Debtor"), and Mobility
Electronics, Inc., a Delaware corporation ("Secured Party").
RECITALS
WHEREAS, concurrently with the execution and delivery of this
Agreement, Debtor has executed and delivered to Secured Party a Promissory Note
(the "Note") in the original principal amount of $300,000.00, bearing interest
and payable as to principal and interest as therein set forth; and
WHEREAS, the Note evidences the purchase price payable to Secured Party
by Debtor for 50,000 shares of Series C Preferred Stock, par value $0.01 per
share, of Secured Party (the "Preferred Shares"), and a warrant (the "Warrant")
to purchase up to 100,000 shares of the common stock, par value $0.01 per share,
of Secured Party (the "Common Stock"); and
WHEREAS, Debtor has agreed, on the terms set out herein, to secure the
payment and performance of the Note by granting a security interest in the
Pledged Securities (as hereinafter defined) to the Secured Party;
NOW, THEREFORE, the parties hereto hereby agree as follows:
AGREEMENT
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the meaning indicated:
(a) "Pledged Securities" means the Preferred Shares, the
Warrant and the shares of Common Stock underlying the Preferred
Shares and the Warrant, and any and all substitutes, replacements,
accessions, attachments and other additions thereto, and any and
all proceeds from the sale thereof.
(b) "Secured Indebtedness" means all sums payable under
the Note and any substitutions, extensions, renewals or
re-amortizations of the Note.
2. GRANT OF SECURITY INTEREST IN THE PLEDGED SECURITIES. To secure the
full and punctual payment of the Secured Indebtedness, and upon and subject to
the terms, provisions and conditions of this Agreement, Debtor does hereby grant
Secured Party and its successors and assigns, a security interest (the "Security
Interest") in the Pledged Securities.
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3. DELIVERY OF SECURITIES TO SECURED PARTY. Simultaneously with the
execution of this Agreement: (i) the stock certificate representing the
Preferred Shares and the Warrant and all other stock certificates and
instruments in registered form which may constitute or evidence at any time or
from time to time a part of the Pledged Securities shall be delivered to the
Secured Party and shall be endorsed in blank for transfer or be accompanied by
proper instruments of assignment and transfer in blank upon delivery; and (ii)
Debtor shall execute and deliver to Secured Party five stock powers, executed in
blank, and one warrant assignment, executed in blank, each in a form acceptable
to Secured Party. Until the happening of an event of Default hereunder, all
certificates and instruments representing the Pledged Securities shall remain
registered in the name of Debtor. So long as the Secured Indebtedness, or any
part thereof, remains outstanding and unpaid, the certificate and instruments
representing the Pledged Securities, shall be held by Secured Party, and Debtor
shall not have the right to procure the release of any of the Pledged Securities
from the lien hereby created except upon and in compliance with the terms and
conditions herein set forth.
4. COVENANTS OF DEBTOR. Debtor covenants and agrees that Debtor shall
promptly pay and discharge the Secured Indebtedness and any and all other debts,
obligations or liabilities, including expenses and reasonable attorneys' fees,
incurred or paid by Secured Party in exercising or protecting its interests,
rights and remedies hereunder as and when the same shall become due and payable,
either by their own terms or by the exercise by Secured Party of any right or
option which they may ever have to accelerate the maturity thereof.
5. VOTING OF PLEDGED SECURITIES. Until the occurrence of an event of
Default, the Pledged Securities shall be treated as shares of Debtor and Debtor
shall be entitled to vote at any meeting of the stockholders of Secured Party.
Until the occurrence of an event of Default, no cash dividends shall be payable
to Secured Party on or with respect to the Pledged Securities. Debtor hereby
grants to Secured Party, upon the occurrence of an event of Default hereunder,
the right to vote the Pledged Securities during the continuance of such Default
whether or not Secured Party seek any other remedies available to it under this
Agreement or any applicable law or in equity.
6. DEFAULT. The term "Default" means an "Event of Default" under the
Note, all of the terms, covenants, conditions and provisions of which are
incorporated in this Agreement by reference the same as if set forth verbatim,
and such terms, covenants, conditions, and provisions shall continue in full
force and effect under this Agreement until the Secured Indebtedness is paid in
and performed in full.
7. REMEDIES UPON DEFAULT.
(a) If any event of Default set forth in Paragraph 6 above
shall occur, Secured Party may seek any remedies available to them
under any applicable law.
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(b) Except as otherwise provided herein or in the Note, Debtor
hereby waives notice of Default, presentment for payment, demand,
notice of dishonor and protest of the Note.
(c) In addition, full power and authority are hereby given to
Secured Party to sell, assign and deliver the whole or any part of the
Pledged Securities at any broker's board, or at public or private sale,
at the option of Secured Party, either for cash or on credit or for
future delivery without assumption of any credit risk, and without
either demand or advertisement of any kind, both of which are hereby
waived, and no delay on the part of Secured Party in exercising any
power of sale or any other rights or option hereunder, and no demand,
which may be given to or made upon the undersigned by Secured Party to
a power of sale or other right or option hereunder, shall constitute a
waiver thereof, or limit or impair the right of Secured Party to take
any action or to exercise any power of sale or any other rights
hereunder, without demand, or prejudice the rights of Secured Party as
against the undersigned in any respect. At any sale of the Pledged
Securities in accordance with the preceding sentence, Debtor may itself
purchase the whole or any part of the Pledged Securities sold. In event
of any sale or other disposition of any of the Pledged Securities,
after deducting all costs or expenses of every kind for care,
safekeeping, collection, sale, delivery or otherwise, Secured Party
shall, after applying the residue of the proceeds of the sale, or other
disposition thereof, as hereinabove authorized, return any excess to
Debtor. Secured Party shall notify Debtor in writing of their intent to
exercise its right to sell the Pledged Securities in accordance with
this Section 7(c) at least five (5) days prior to any such sale.
Because of the Securities Act of 1933, as amended (the
"Securities Act"), or any other laws or regulations, there may be legal
restrictions or limitations affecting Secured Party in any attempts to
dispose of certain portions of the Pledged Securities in the
enforcement of its rights and remedies hereunder. For these reasons,
Secured Party is hereby authorized by Debtor, but not obligated, in the
event any Default hereunder, to sell, bid upon, and purchase all or any
part of the Pledge Securities at private sale, subject to investment
letter or in any other commercially reasonable manner which will not
require the Pledged Securities, or any part thereof, to be registered
in accordance with the Securities Act, or the rules and regulations
promulgated thereunder, or any other law or regulation. Debtor
acknowledges Secured Party may in its discretion approach a restricted
number of potential purchasers and that a sale under such circumstances
may yield a lower price of the Pledged Securities or any part or parts
thereon than would otherwise be obtainable if same were registered and
sold in the open market.
8. FURTHER ASSURANCES. Debtor agrees to execute such stock powers and
assignments, endorse such instruments, or execute such additional pledge
agreements or other documents as may be reasonably requested by Secured Party in
order effectively to grant to
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Secured Party the Security Interest in (and pledge and assignment of) the
Pledged Securities and to enforce and exercise Secured Party's rights regarding
same.
9. ASSIGNABILITY. The rights, powers and interests held by Secured
Party hereunder, together with the Pledged Securities, may be transferred and
assigned by Secured Party in whole or in part. This Agreement may not be
assigned, in whole or in part, by Debtor.
10. DELIVERY OF PLEDGED SECURITIES. When the Secured Indebtedness has
been paid in full or otherwise satisfied, Secured Party shall deliver the
Pledged Securities to Debtor concurrently with its receipt of such payment or
satisfaction and this Agreement shall terminate.
11. WAIVER OF DEFAULT. The acceptance by Secured Party at any time and
from time to time of partial payment of the aggregate amount of the Secured
Indebtedness then matured shall not be deemed to be a waiver of any Default then
existing. No waiver by Secured Party of any Default shall be deemed to be a
waiver of any subsequent Default, nor shall any such waiver by Secured Party be
deemed to be a continuing waiver. No delay or omission by Secured Party in
exercising any right or power hereunder, except for the failure by Secured Party
to give notice as provided herein or in the Note or under any other writings
executed by Debtor as security for or in connection with the Note or the Secured
Indebtedness, shall impair such right or power or be construed as a waiver
thereof or any acquiescence therein, nor shall any single or partial exercise of
any such right or power preclude other or further exercise of any other right or
power of Secured Party hereunder.
12. LAWS APPLICABLE. This Agreement and the rights and obligations of
the parties hereto shall be governed, construed and enforced in accordance with
the laws of the state of Delaware.
13. NOTICES. Any notice, request, instruction or other document to be
given hereunder or to any party shall be delivered to the address stated below
that party's signature hereto, and shall be deemed to have been given and
received (i) when actually received by the other party, if delivered in person
or by facsimile or (ii) if mailed, on the earlier of the date actually received
or (whether ever received or not) three Business Days (as hereinafter defined)
after a letter containing such notice, certified or registered, with postage
prepaid, addressed to the other party, is deposited in the United States mail.
The address of Secured Party is 0000 Xxxx Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx
00000, Attention: President. The address of Debtor is 0000 Xxxx Xxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxx 00000. "Business Day" means every day which is not a
Saturday, Sunday or legal holiday. Either party may change his address for the
purposes of this section by giving notice to that other party.
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14. COVENANT OF ASSISTANCE. Debtor agrees to execute all such further
documents and take all such further action as may reasonably be requested by
Secured Party in order to better confirm the Security Interest herein granted in
the Pledged Securities.
15. AMENDMENT. None of the terms or provisions of this Agreement may be
waived, modified or amended, except in writing signed by both parties hereto.
16. BINDING EFFECT. This Agreement shall be binding on Debtor and
Debtor's successors and assigns and shall inure to the benefit of Secured Party
and its successors and assigns.
EXECUTED as of the day and year first above written.
/s/ XXXXXXX X. XXXX
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Xxxxxxx X. Xxxx
MOBILITY ELECTRONICS, INC.
By: /s/ XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx, President
