EXHIBIT 10.11
PLEDGE AGREEMENT
This PLEDGE AGREEMENT ("Agreement") is entered into effective as of October
15, 1997 ("Effective Date") by and between Xxx Xxxxxxx ("Pledgor") and Boatracs,
Inc., a
California corporation ("Pledgee"), with reference to the following facts.
A. The Pledgor and the Pledgee have entered into a Restricted Stock
Purchase
Agreement of even date herewith (the "Stock Purchase Agreement") whereby the
Pledgee has
agreed to issue and sell certain shares of its Common Stock (the "Stock") to the
Pledgor.
B. In partial payment of the purchase price of the Stock, the
Pledgor is
delivering
to the Pledgee the Pledgor's Promissory Note of even date herewith (the "Note").
C. The Pledgor wishes to grant further security and assurance to
the Pledgee
in
order to secure the payment of the principal and interest on the Note and to
that effect to
pledge to the Pledgee the Stock to be acquired by him pursuant the Stock
Purchase Agreement
as described herein.
NOW, THEREFORE, in consideration of the foregoing and for other
good and
valuable consideration, the receipt and adequacy are hereby acknowledged, the
parties hereto
agree as follows:
1. Creation of Security Interest. As security for the payment of
the principal
of
and interest on the Note, and further in order to secure the Pledgor's
obligations under the
Stock Purchase Agreement, the Note and this Pledge Agreement, the Pledgor hereby
grants to
the Pledgee a security interest in all of the Pledgor's right, title and
interest in and to the
Collateral (as defined in Section 2) and hereby delivers, pledges and assigns
the Collateral to
the Pledgee.
2. Collateral. The Collateral under this Pledge Agreement is:
(a) The Unvested Shares, as such term is defined in the
Stock Purchase
Agreement, as of the Effective Date;
(b) All securities, certificates and instruments
representing or evidencing
ownership of the Collateral hereunder, and all proceeds and products of any
Collateral
hereunder, including, without limitation, stock, cash, property or other
dividends, securities,
rights and other property now or hereafter at any time or from time to time
received,
receivable or otherwise distributed or distributable in respect of or in
exchange for any or all
of such Collateral; provided, however, that any cash distribution shall be
applied in accordance
with Section 5; and
(c) Any substituted or additional Collateral required to
be supplied under
the
terms of this Pledge Agreement.
3. Release of Collateral. The Pledgee hereby agrees that any
shares of Stock
pledged as Collateral which become Vested Shares under and pursuant to the
provisions of the
Stock Purchase Agreement shall be automatically released from the security
interest created in
this Agreement unless as of the date of such release an Event of Default (as
defined in the
Note) shall have occurred and is continuing. The Pledgee also agrees to
promptly
deliver to the
Pledgor a certificate or certificates representing the Stock so released,
which
certificate or
certificates shall bear only the legend described in Section 2(e)(iii) of the
Stock Purchase
Agreement.
4. Covenants of Pledgor. The Pledgor covenants that:
(a) The Pledgor will deliver to the Pledgee each
item of Collateral
hereunder immediately upon the Pledgor's acquisition thereof, and will defend
the
Collateral against all claims and demands of all persons claiming the same or
any
interest therein;
(b) The Pledgor will, promptly upon request by the
Pledgee, procure
or execute and deliver any documents, deliver to the Pledgee any instruments,
give any
notices, execute any proxies, execute and file any financing statements or
other
documents, all in form satisfactory to the Pledgee, and take any other actions
which are
necessary or, in the judgment of the Pledgee, desirable to perfect or continue
the
perfection and first priority of the Pledgee's security interest in the
Collateral, to
protect the Collateral against the rights, claims or interests of third persons
or to effect
the purposes of this Pledge Agreement, and will pay all costs incurred in
connection
therewith.
(c) The Pledgor will not, without the prior
written consent of the
Pledgee, in any way hypothecate or create or permit to exist any lien, security
interest
or encumbrance on or other interest in the Collateral except that created by
this Pledge
Agreement, nor will the Pledgor sell, transfer, assign, exchange or otherwise
dispose
of the Collateral or any interest therein. If any Collateral, or any interest
therein, is
sold, transferred, assigned, exchanged or otherwise disposed of in violation of
these
provisions, the security interest of the Pledgee shall continue in such
Collateral or part
thereof notwithstanding such sale, transfer, assignment, exchange or other
disposition,
and the Pledgor will hold the proceeds thereof in a separate account for the
Pledgee's
benefit. The Pledgor will, at the Pledgee's request, transfer such proceeds to
the
Pledgee in kind.
(d) The Pledgor will pay and discharge all taxes,
assessments and
governmental charges or levies against the Collateral prior to the delinquency
thereof
and will keep the Collateral free of all unpaid charges whatsoever.
(e) If, while this Pledge Agreement is in effect,
any stock dividend,
stock split, reclassification, readjustment, reorganization, merger,
consolidation or
other change in the capital structure, including the creation of any
subscription or other
rights or other Collateral, is made or declared, or proposed to be made or
declared, by
the Pledgee or any issuer of the Collateral, all substituted and additional
securities
issued with respect to the Collateral and received by Pledgor shall be endorsed
in blank
by the Pledgor promptly upon receipt thereof or otherwise appropriately
transferred to
the Pledgee in negotiable form, and all certificates and instruments evidencing
such
securities shall be delivered to the Pledgee to be held under the terms of this
Pledge
Agreement in the same manner as and as a part of the Collateral.
5. Cash Distributions. So long as no Event of Default (as defined
in the
Note),
and no condition or event which with notice or lapse of time, or both, would
constitute an
Event of Default, shall have occurred or exist under this Pledge Agreement, the
Pledgor shall
be entitled to receive all cash dividends and distributions with respect to the
Collateral. Upon
the occurrence of an Event of Default or any condition or event which with
notice or lapse of
time, or both, would constitute an Event of Default, the Pledgee shall
thereafter apply all cash
dividends and distributions against the indebtedness secured hereunder.
6. Defaults. The occurrence of any one or more of the following
events or
conditions effecting the Pledgor shall constitute a default under this Pledge
Agreement:
(a) The Pledgor fails to pay any indebtedness, perform any
obligation
required to be performed by him, or discharge any liability to the Pledgee in
accordance with the terms upon which such indebtedness, obligation or liability
was
incurred or created.
(b) Any lien (other than for property taxes which are not
delinquent) or
encumbrance other than that created by this Pledge Agreement is placed on or any
levy
is made on the Collateral or the Collateral or any portion thereof is seized or
attached
pursuant to legal process, unless such lien, encumbrance, levy, seizure or
attachment is
removed or released within thirty (30) days from the time such lien or
encumbrance
was placed thereon or such levy, seizure or attachment was effected.
7. Remedies. Upon the occurrence of a default hereunder, the
Pledgee may, at
its
option, without notice to or demand upon the Pledgor, do any one or more of the
following:
(a) Declare all advances made by the Pledgee to the Pledgor
hereunder and
all other indebtedness of the Pledgor to the Pledgee to be immediately due and
payable,
whereupon all unpaid principal and interest on said advances and all other
indebtedness
shall become and be immediately due and payable.
(b) Take possession of all items of Collateral hereunder
not then in its
possession.
(c) Exercise any or all of the rights and remedies provided
for by the
applicable Uniform Commercial Code.
Neither failure nor delay on the part of the Pledgee to exercise any right,
remedy, power or
privilege provided for herein or by statute or at law or in equity shall
operate as a waiver
thereof, nor shall any single or partial exercise of any such right, remedy,
power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, remedy,
power or privilege.
8. Pledgor's Obligations Not Affected. The obligations of the
Pledgor under
this
Pledge Agreement shall remain in full force and effect without regard to, and
shall not be
impaired or affected by:
(a) Any subordination, amendment or modification of or
addition or
supplement to the Stock Purchase Agreement or the Note, or any assignment or
transfer
of either thereof;
(b) Any exercise or non-exercise by the Pledgee of any
right, remedy,
power or privilege under or in respect of this Agreement, the Stock Purchase
Agreement or the Note, or any waiver of any such right, remedy, power or
privilege;
(c) Any waiver, consent, extension, indulgence or other
action or inaction in
respect of this Agreement, the Stock Purchase Agreement or the Note; or
(d) Any bankruptcy, insolvency, reorganization, arrangement,
readjustment,
composition, liquidation or the like of the Pledgee or its successor whether or
not the
Pledgor shall have notice or knowledge of any of the foregoing.
9. Transfer by Pledgor. The Pledgor shall not sell, assign,
transfer or
otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber the
Collateral or any interest therein except as provided in the Stock Purchase
Agreement. If the
Pledgor shall transfer any shares of the Stock in accordance with the Stock
Purchase
Agreement, the Collateral shall remain subject to the terms of this Agreement.
10. Attorney-In-Fact. The Pledgee or its successors is hereby
appointed the
attorney-in-fact of the Pledgor for the purpose of carrying out the provisions
of this Pledge
Agreement, collecting any Collateral, conveying any item of Collateral to any
purchaser
thereof and taking any action and executing any instrument which the Pledgee
reasonably may
deem necessary or advisable to accomplish the purposes hereof, including without
limitation
the execution of any applications or other instruments necessary for the
disposition of the
Collateral. The appointment of the Pledgee as the Pledgor's attorney-in-fact is
irrevocable as
one coupled with an interest.
11. Termination. Upon payment in full of the principal of and
interest on the
Note,
this Agreement shall terminate and the Pledgor shall be entitled to the return
of such of the
Collateral as has not theretofore been released or otherwise applied pursuant to
the provisions
of this Agreement.
12. Notices. All notices or other communications required or
permitted to be
given
hereunder shall be made or delivered as provided in the Stock Purchase
Agreement.
13. Waiver. No provision of this Agreement may be modified, waived
or
discharged unless such modification, waiver or discharge is agreed to in
writing by the party
against whom enforcement is sought. No waiver by either party hereto at any
time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No
agreement or representations, oral or otherwise, express or implied, with
respect to the subject
matter hereof have been made by either party which are not expressly set forth
in this
Agreement.
14. Severability. Whenever possible, each provision of this
Agreement shall
be
interpreted in such manner as to be valid and effective under applicable law,
but if any
provision of this Agreement is found to be prohibited or invalid under
applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating
the remainder of such provision or the remaining provisions of this Agreement.
15. Entire Agreement. This Agreement, the Promissory Note and the
Stock
Purchase Agreement constitute the entire agreement between the parties hereto
and supersedes
all prior agreement, understandings and arrangements, oral or written between
the parties
hereto with respect to the subject matter hereof.
16. Governing Law. This Agreement shall be governed by and
interpreted in
accordance with the internal laws, excluding conflicts and choice of laws, of
the State of
California.
17. Attorneys' Fees. If any party to this Agreement brings an
action to
enforce its
rights under this Agreement, the prevailing party shall be entitled to
recover its costs and
expenses, including without limitation reasonable attorneys' fees, incurred in
connection with
such action, including any appeal of such action.
18. Counterparts. This Agreement may be executed in several
counterparts,
each of
which shall be deemed to be an original but all of which together will
constitute one and the
same instrument.
19. Captions and Section Headings. Captions and section headings
used herein
are
for convenience only, are not a part hereof and shall not be used in construing
this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be executed and delivered as of the date set forth above.
Pledgor: BOATRACS, INC.
a California corporation
By: /S/ XXXXXXX XXXXXXXXX
Name: Xxxxxxx Xxxxxxxxx
Title: Chairman
Pledgee: /S/ XXX XXXXXXX
Xxx Xxxxxxx
