Exhibit 10.2
STOCK PLEDGE AGREEMENT
----------------------
THIS IS A STOCK PLEDGE AGREEMENT between UNITED SAFETY ACTION, INC., herein
called "Pledgor", and SAF T LOK INCORPORATED, herein called "Pledgee".
Background of this Agreement
----------------------------
Pledgor has received from Pledgee One Million (1,000,000) shares of common
stock in the Pledgee in connection with the Non-Exclusive Distribution and
Pricing Agreement dated this date (the "Distribution Agreement"). Pledgor is
obligated under the Distribution Agreement to make certain advertising
expenditures and to perform numerous other obligations.
In order to secure the obligation to make the advertising expenditures and
other obligations under the Distribution Agreement, Pledgor has agreed to pledge
one million (1,000,000) shares of common stock in the Pledgee pursuant to the
terms of this Stock Pledge Agreement.
Agreement
---------
The parties agree as follows:
1. Pledgor hereby grants to Pledgee a first priority security interest in
the collateral described in Paragraph 2 of this Agreement and pledges such
collateral to secure the performance all of Pledgor's obligations under the
Distribution Agreement. A copy of the Distribution Agreement is attached hereto
as Exhibit "A". As certain obligations of the Pledgor are performed, Pledgee
will release certain portions of the collateral as set forth in Paragraph 6
below.
1
2. The collateral of this Stock Pledge Agreement is One Million
(1,000,000) shares of common stock in Saf T Lok incorporated, evidenced by Stock
Certificate No. _______ issued in the name of Pledgor, together with Assignments
Separate from Certificate executed in blank with respect to each such
certificate, which collateral is, contemporaneously with the execution of this
Agreement, hereby delivered to and deposited with Pledgee, to be held by Pledgee
in accordance with the terms of this Agreement. The collateral shall also
include any and all additional shares of Saf T Lok Incorporated common stock or
may be issued by Saf T Lok Incorporated from time to time in connection with
stock splits or stock dividends relating to the Saf T Lok Incorporated common
stock. In the event the collateral is exchanged for other securities in
connection with a merger or acquisition of Saf T Lok Incorporated, the
securities for which such collateral is exchanged shall serve as substitute
collateral.
3. The obligations secured by this Stock Pledge Agreement are the
obligations of the Pledgor in the Distribution Agreement, to make the
Advertising Expenditures (as defined in the Distribution Agreement) within 24
months following the date of the Distribution Agreement.
4. The Pledgee, and any successor to the Pledgee, shall hold and have
possession of the collateral described in this Agreement in accordance with the
terms of this Agreement.
5. For those shares which remain part of the collateral under this Pledge
Agreement and are not released pursuant to paragraph 6, Pledgor irrevocably
constitutes and appoints Pledgee, whether or not the collateral has been
transferred into the name of Pledgee or his nominee, as Pledgor's proxy, with
full power to (a) attend all meetings of
2
stockholders of Saf T Lok Incorporated held after the date of this Agreement and
to vote the collateral at those meetings in such manner as the Pledgee shall in
his sole discretion deem appropriate including, without limitation, in favor of
liquidation of Saf T Lok Incorporated; (b) to consent, in the sole discretion of
the Pledgee, to any action by or concerning Saf T Lok Incorporated for which the
consent of the stockholders of Saf T Lok Incorporated is or may be necessary or
appropriate; and (c) without limitation, to do all things which the Pledgor
could do as a stockholder of Saf T Lok Incorporated, giving to the Pledgee full
power of substitution and revocation. Notwithstanding the foregoing, the Pledgor
alone shall have the rights under this paragraph and the Pledgee may not
exercise those rights (whether or not the collateral has been transferred into
the name of the Pledgee or his nominee) so long as no event of default has
occurred. The proxy contained in this paragraph shall terminate when the Stock
Pledge Agreement terminates, as provided in Paragraph 6. The Pledgor hereby
revokes all proxies heretofore given to any person or persons and agrees not to
give any other proxies in derogation of this proxy so long as this Stock Pledge
Agreement is in force.
6. Provided that Pledgor is not in default of any material obligation
under the Distribution Agreement, Pledgee will release from this Stock Pledge
Agreement and release its security interest in those shares of stock set forth
below upon receipt by Pledgee of a written report signed by the Chief Executive
Officer of the Pledgor that Advertising Expenditures have been made in
accordance with the Distribution Agreement in the month or months prior to such
written report, with the written report setting forth the amount of such
Advertising Expenditures made. For each Five Dollars ($5.00) of Advertising
Expenditures made by the Pledgee on a cumulative basis, up to Five Million
Dollars
3
($5,000,000) of Advertising Expenditures, Pledgor shall release from this Stock
Pledge Agreement one share of stock within five business days after receipt of
each written report. As an example, if Pledgor receives a written report from
the Pledgee, signed by the Chief Executive Officer of the Pledgor, reporting
that during the month of July, 1998, the Pledgee made Advertising Expenditures
of $500,000, the Pledgor shall release from this Stock Pledge Agreement 100,000
shares of stock and deliver the stock certificate for such shares to Pledgee
within five days after receiving the written report. Release of shares from this
Stock Pledge Agreement will not act as a waiver or release of any obligations of
Pledgor under the Distribution Agreement.
7. In the event that Pledgor has not made Advertising Expenditures equal
to or exceeding Five Million Dollars ($5,000,000) within 24 months from the
date of this Agreement, the Pledgor shall be in default under this Agreement.
8. Upon default under this Agreement by Pledgor, Pledgee shall notify
Pledgor of the amount by which Pledgor's Advertising Expenditures fell short of
Five Million Dollars ($5,000,000) and shall give Pledgor 30 days from the
receipt of such notice to cure such default by making Advertising Expenditures
within such 30 days so as to bring the cumulative Advertising Expenditures to at
least Five Million Dollars ($5,000,000). In the event that Pledgor fails to make
the Advertising Expenditures necessary to bring the cumulative Advertising
Expenditures to at least Five Million Dollars ($5,000,000) within such 30 day
period, Pledgee shall have the right to take any remaining collateral into its
own name and Pledgor shall have no further rights in such collateral. Pledgor
agrees that Pledgee shall have this right as a form of liquidated damages
regardless of the market value of the stock held as collateral at such time.
Such liquidated damages shall apply only
4
as to the failure of Pledgor to make Advertising Expenditures as required and
shall not affect Pledgee's right to receive damages for any other failure of
Pledgor to perform any other of Pledgor's material obligations under the
Distribution Agreement, provided, however, that nothing in this Pledge Agreement
shall give Pledgee any right to damages not otherwise available under the
Distribution Agreement or applicable law.
9. Upon the Pledgor's default under this Agreement, Pledgee, in addition
to any other rights provided by law, shall at any time thereafter have all of
the rights and remedies provided to it by the Uniform Commercial Code in the
State of Florida and this Agreement shall be governed under the laws of the
State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
____ day of ______, 1998.
PLEDGOR:
UNITED SAFETY ACTION, INC.
BY: _____________________________(SEAL)
PLEDGEE:
SAF T LOK INCORPORATED
By: _____________________________(SEAL)
5
