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EXHIBIT 4.17
CONTRIBUTION AND INDEMNIFICATION AGREEMENT
THIS CONTRIBUTION AND INDEMNIFICATION AGREEMENT (this "Agreement")
dated as of April 20, 1998, is executed by and among Xxxxxx X. Breeze
("Breeze"), Xxxxxxx X. Xxxx ("Xxxx"), Xxxxxxx X. Xxxxx ("Xxxxx"), Xxxxxxx
Xxxxxx ("Xxxxxx" and collectively with Breeze, Xxxx and Xxxxx, the
"Guarantors"), Electronics Accessory Specialists International, Inc., a
Delaware corporation (the "Company"), and the stockholders of the Company set
forth on the signature pages hereto (the "Stockholders").
WITNESSETH:
WHEREAS, the Company has obtained from NationsBank, N.A. ("Lender"),
certain working capital lines of credit and will in the future obtain such
additional lines of credit (the "Loans") as evidenced by certain notes (the
"Notes"); and
WHEREAS, as a condition to the funding of the Loans, Lender has
required and may require in the future that Guarantors execute and deliver
individual guaranties (the "Guaranty Agreements"), by which Guarantors agree to
guaranty payment of all or part of the Loans subject to the provisions therein
(all amounts owed by Guarantors under the Guaranty Agreements are referred to
herein as the "Guaranteed Sums"); and
WHEREAS, the Guarantors and Stockholders have agreed to indemnify any
Indemnitee (as defined below) against amounts paid with respect to the
Guaranteed Sums in excess of that Indemnitee's pro rata share set forth on
Exhibit A;
WHEREAS, in consideration of the agreements herein the Company has
agreed to issue to the Guarantors and Stockholders as a group purchase warrants
to purchase in the aggregate 225,000 shares of common stock of the Company, par
value $.01 per share (the "Common Stock"), at a price of $5.75 per share for a
period of five years (the "Warrants"); and
WHEREAS, the parties hereto have determined that valuable benefits
will be derived by each party hereto as a result of the extensions of credit to
be made available to the Company pursuant to the Loans.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, each of the
undersigned agree as follows:
ARTICLE I.
TERMS OF CONTRIBUTION AND INDEMNIFICATION
1.01 Contribution and Indemnification. In connection with the Loans,
and as a condition to Lender providing funds under the Notes, Guarantors have
guaranteed, or in the future will guarantee, repayment of the Guaranteed Sums
pursuant to the Guaranty Agreements. In the event that any Guarantor (in such
capacity, each an "Indemnitee") pays any amounts on the Guaranteed
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Sums, whether through direct payments or as a result of providing collateral
for the Guaranteed Sums (the "Guaranty Payment"), Indemnitee shall be entitled
to receive from each Stockholder and Guarantor (in such capacity, each an
"Indemnitor"), such Indemnitor's pro rata percentage, as set forth in Exhibit
A, of the Guaranty Payment (the "Contribution Percentage"). If any Indemnitor
is unable to pay the Contribution Percentage of the Guaranty Payment, each
Stockholder and Guarantor agrees to make a contribution to Indemnitee to the
extent necessary so that each Stockholder and Guarantor shares pro rata (based
on the percentages set forth in Exhibit A) the liability for such nonpayment.
IN SUCH REGARD, TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH STOCKHOLDER AND
GUARANTOR SHALL INDEMNIFY, DEFEND, AND HOLD HARMLESS INDEMNITEE FROM AND
AGAINST ANY AND ALL LIABILITY, CLAIMS, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES AND EXPENSES) ARISING WITH RESPECT TO THE OBLIGATIONS AND
CONSTITUTING A GUARANTY PAYMENT.
1.02 Payments. Any amount due to Indemnitee by an Indemnitor under
this Agreement shall be due and payable within ten (10) days of demand
therefore by Indemnitee. Interest shall accrue at the Default Rate (as defined
in the Notes) on amounts past due; provided, however, that in no event shall
interest accrue on such amounts at a rate in excess of the maximum rate of
interest permitted by applicable law and interest shall accrue from the date
payment is due to, but not including, the date payment is made and on the basis
of a year of three hundred sixty-five (365) or three hundred sixty-six (366)
days, as the case may be. All payments to be made by any Indemnitor under this
Agreement shall be made to Indemnitee at the address set forth under the names
set forth below, in immediately available funds, not later than 2:00 p.m.,
Scottsdale, Arizona time, on the date on which such payment shall come due
(each such payment made after such time on such due date shall be deemed to
have been made on the next succeeding business day and interest shall continue
to accrue until such time). If the due date of any payment under this Agreement
would otherwise fall on a day that is not a business day, such payment date
shall be extended to the next succeeding business day and interest shall be
payable for any principal so extended for the period of such extension.
1.03 Non-Exclusive Remedy. The remedies available to Indemnitee
pursuant to the provisions of this Article I are not exclusive and, in such
regard, Indemnitee shall be entitled to join any Guarantor or Stockholder as a
party to any proceeding involving Indemnitee, any Guarantor, any Stockholder or
the Lender, including for purposes of enforcement of the provisions of this
Agreement.
1.04 Term. The term of this Agreement (the "Term") shall commence as
of the date hereof and continue in effect until the earlier of: (a) the
Guaranteed Sums are terminated or extinguished (but not by reason of the
payment of the Guaranteed Sums by any party hereto in a proportion other than
as specified in Section 1.01); or (b) the two-year anniversary of the date of
this Agreement. Notwithstanding the above: (a) if the Company is unable to
terminate the Guaranty Agreements prior to the expiration of the Term, the
Guarantors shall have the right to demand payment of the Guaranteed Sums, in
which event, each Stockholder shall pay its portion of the Guaranteed Sums; and
(b) if any claim for payment of any Guaranteed Sums is made hereunder prior to
the expiration
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of the Term, Stockholders' obligation hereunder as to payment of their share of
such Guaranteed Sums shall continue until the resolution of such claim.
1.05 Limitations. Notwithstanding anything in this Agreement to the
contrary: (a) the Guaranteed Sums will not exceed $4.7 million, unless
otherwise agreed to in writing by all Stockholders; and (b) after the second
anniversary of the date of this Agreement, the Company will use its best
efforts to cause the Guaranty Agreements to be terminated (whether by
refinancing or otherwise).
ARTICLE II.
WARRANTS
2.01 Issuance and Cancellation of Warrants. The Company hereby agrees
to issue to each of the Guarantors and Stockholders the pro rata share of the
Warrants set forth on Exhibit A. If any Guarantor or Stockholder breaches their
obligations set forth in Article I of this Agreement, the unexercised portion
of the Warrants held by such person shall be canceled and the remaining
unexercised portion of those Warrants shall be reissued (pro rata based on
Exhibit A) by the Company to the nonbreaching Guarantors and Stockholders.
MISCELLANEOUS PROVISIONS
3.01 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective heirs, legal
representatives, and assigns.
3.02 Amendments Waivers. Neither this Agreement nor any provision
hereof may be amended, waived, discharged, or terminated verbally, but only by
an instrument in writing signed by the party against whom enforcement of the
amendment, waiver, discharge, or termination is sought.
3.03 Non-Waiver. It is understood and agreed that any delay, waiver,
or omission by any party hereto to exercise any right or power arising
hereunder shall not be construed to be a waiver by such party of any
subsequently arising right or power hereunder.
3.04 Notices. Any notice, demand, offer, or other written instrument
required or permitted to be given pursuant to this Agreement shall be in
writing signed by the party giving such notice and shall be hand delivered or
sent by overnight courier, certified mail (return receipt requested), or
telefax to the other party(ies) at the relevant address set forth on the
signature pages below. Any party shall have the right to change the address to
which notice shall be sent or delivered to it hereunder by similar notice sent
in like manner to the other parties. A notice shall be deemed to be duly
received (a) if sent by hand, on the date when left with a responsible person
at the address of the recipient; (b) if sent by certified mail or overnight
courier, on the date of receipt by a responsible person at the address of the
recipient; or (c) if sent by telefax, upon receipt by the sender of an
acknowledgment or transmission report generated by the machine from which the
telefax was sent indicating that the telefax was sent in its entirety to the
recipient's telefax number.
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3.05 Attorneys' Fees. In the event any dispute between the parties to
this Agreement should result in litigation or any other proceeding (including
arbitration and mediation), the prevailing party shall be reimbursed by the
nonprevailing party for all reasonable costs and expenses, including reasonable
attorneys' fees, incurred by the prevailing party in connection with such
litigation or other proceeding and any appeal or enforcement thereof.
3.06 Severability. If any term or provision of this Agreement or
application thereof to any person or circumstance shall to any extent be
invalid or unenforceable, the remainder of this Agreement, or the application
of such terms or provisions to persons or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by applicable law.
3.07 Time of the Essence. The parties to this Agreement agree that
time is of the essence to the performance of the obligations of the parties
hereunder.
3.08 Counterparts. The parties hereto may execute this Agreement in
multiple counterparts, all of which taken together shall constitute one and the
same instrument and each of which shall be deemed to be an original instrument
as against any party who has signed it.
3.09 ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
OF THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES
ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, BOTH WRITTEN AND VERBAL, BETWEEN THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF.
3.10 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH RESPECT
TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR
FROM THIS AGREEMENT SHALL BE LITIGATED IN COURTS HAVING SITUS IN SCOTTSDALE,
ARIZONA AND EACH PARTY HERETO HEREBY SUBMITS TO THE JURISDICTION OF ANY SUCH
COURT IN ANY SUCH ACTION AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER
OR CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST IT IN
ACCORDANCE WITH THIS SECTION 3.10.
3.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF ARIZONA, WITHOUT REGARD TO CHOICE
OF LAW PRINCIPLES OF SUCH LAWS.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first hereinabove written.
ELECTRONICS ACCESSORY SPECIALISTS
INTERNATIONAL, INC
/s/ XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx
Chief Executive Officer
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
GUARANTORS:
/s/ XXXXXX X. BREEZE
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Xxxxxx X. Breeze
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/s/ XXXXXXX XXXX
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Xxxxxxx Xxxx
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/s/ XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx
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/s/ XXXXXXX XXXXXX
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Xxxxxxx Xxxxxx
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STOCKHOLDERS:
/s/ XXXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Empire Nationale II L.L.C.
By: /s/ XXXXXX XXXXXXX
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Its:
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/s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx, Manager
Xxxxxx Family, LLC
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/s/ XXXXXXX X. XXXXXX
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New Vistas Investments
By: Xxxxxxx X. Xxxxxx
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Its: President
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/s/ XXXXXXX STEEL, JR.
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Xxxxxxx Steel, Jr.
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/s/ XXXXXXX X. XXXXX, MANAGER
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Xxxxx Family LLC
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/s/ XXXXXX X. BREEZE, MANAGER
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Breeze Family LLC
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EXHIBIT A
MOBILITY ELECTRONICS, INC.
LOAN GUARANTEE PARTICIPATION
% Loan
Participation Guarantee Warrants
Breeze Family LLC 6.72% 168,100 15,114
Xxxxxxx, Xxxxxxx X. 2.79% 69,800 6,277
Xxxx, Xxxxxxx X. 12.46% 311,600 28,039
Empire National II LLC 23.00% 575,100 51,759
Xxxxxx Family LLC 5.73% 143,500 12,903
Xxxxx Family LLC 14.95% 373,900 33,646
New Vistas Investment Cor 19.57% 489,200 44,019
Steel, Xxxxxxx Xx. 1.59% 39,800 3,574
Xxxxxx, Xxxxxxx 13.19% 329,700 29,669
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100.00% 2,500,700 225,000
