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EXHIBIT 10.36
SETTLEMENT AGREEMENT
This Settlement Agreement (this "Agreement") is made and entered into
as of the 21st day of May 1999, by and among Xxxx Xxxxx ("X. Xxxxx"), Xxxxx
Xxxxx ("X. Xxxxx") and Xxxxxx Xxxxx ("X. Xxxxx" and together with X. Xxxxx and
X. Xxxxx, the "Shareholders") and Mobility Electronics, Inc. (f/k/a Electronics
Accessory Specialists International, Inc), a Delaware corporation (the
"Company").
W I T N E S E T H :
WHEREAS, Xxxxx International Inc., a Minnesota corporation ("Xxxxx"),
has been liquidated, and its assets have been distributed to the Shareholders;
and
WHEREAS, an Event of Default has occurred under that certain Promissory
Note, dated July 3, 1997, payable by Xxxxx to X. Xxxxx in the original principal
amount of $400,000 (the "Note"), which Note was assumed by the Company as an
assumed liability under that certain Asset Purchase Agreement and Plan of
Reorganization, dated July 29, 1997, by and among Xxxxx, the Shareholders and
the Company (the "Purchase Agreement"); and
WHEREAS, the parties hereto have reached an agreement concerning the
waiver of the Event of Default, the terms upon which payment of the Note shall
be made and termination of that certain Preemptive Rights Agreement, dated as of
July 29, 1997, by and among Xxxxx, the Shareholders and the Company executed in
connection with the Asset Purchase Agreement (the "Preemptive Rights
Agreement").
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Settlement Terms.
a. Waiver of Defaults. The Company failed to make required
payments under the Note on January 1, 1999 and April 1, 1999, which failures are
Events of Default (as that term is defined in the Note) under the Note. Xxxxx
hereby waives such Events of Default, but such waiver shall not constitute a
waiver of any future Events of Default.
b. Amendments to the Note. The Note shall be amended as
follows:
(i) The Note shall continue to accrue interest at the
rate of 8% per annum until paid in full. All
principal and accrued but unpaid interest due and
payable under the Note shall be deferred until
January 31, 2000, and the principal and all accrued
but unpaid interest of the Note shall be due and
payable in three
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equal installments on January 31, 2000, April 30,
2000 and July 31, 2000; and
(ii) In the event the Company (i) closes an initial public
offering of its common stock, par value $.01 per
share ("Common Stock"), or (ii) closes on $10 million
or more in a single private offering of its stock
(which may have one or more closings) after the date
hereof, then the Company shall pay all of the
principal and accrued but unpaid interest of the Note
within 10 days of such closing.
c. Issuance of Common Stock. The parties agree that the rights
of Xxxxx under Section 2.2(b) of the Purchase Agreement are hereby settled,
modified, amended and changed to provide that, upon execution of this Agreement
by the parties hereto, the Company will issue an aggregate of 77,000 shares of
Common Stock to the Shareholders upon the execution of this Agreement, in the
amounts set forth on Exhibit A attached hereto; and the Company shall have no
further obligations to Xxxxx or the Shareholders under the Purchase Agreement
(including, without limitation, Section 2.2(b) of the Purchase Agreement).
d. Termination of Preemptive Rights Agreement. The parties
agree that the Preemptive Rights Agreement shall terminate upon the execution of
this Agreement by the parties hereto; and that any rights or obligations of the
parties thereunder (past, present or future) shall be deemed to have been waived
and terminated.
2. Representations and Warranties.
a. Representations and Warranties of the Shareholders. The
Shareholders hereby represent and warrant that the following are true and
correct as of the date hereof: (i) each Shareholder has the power and authority
to execute, deliver and perform his obligations under this Agreement, and this
Agreement constitutes the valid and binding obligation of each Shareholder
enforceable against him in accordance with the terms hereof; (ii) each
Shareholder has consulted or has had sufficient opportunity to discuss with any
person, including an attorney of his choice, all provisions of this Agreement,
that he has carefully read and fully understands all the provisions of this
Agreement, that he is competent to execute this Agreement, and that he is
voluntarily entering into this Agreement of his own free will and accord,
without reliance upon any statement or representation of any person or parties
released, or their representatives, concerning the nature and extent of the
damages and/or legal liability therefor; and (iii) Xxxxx has been liquidated and
the Shareholders were the only shareholders of Xxxxx at the time of such
liquidation. X. Xxxxx also represents and warrants that he is the holder of the
Note, and he covenants and agrees that: (i) he will attach a copy of this
Agreement to the Note; and (ii) he will not sell or otherwise transfer the Note
without the prior written consent of the Company, which consent shall not be
unreasonably withheld.
b. Representations and Warranties of the Company. The Company
hereby represents and warrants that the following are true and correct as of the
date hereof: (i) the Company
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is a corporation validly existing and in good standing under the laws of the
State of Delaware; (ii) the Company has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement, and the
execution, delivery and performance by it of this Agreement has been duly
authorized by all necessary action, and this Agreement constitutes the valid and
binding obligation of the Company, enforceable against it in accordance with the
terms hereof; and (iii) none of the Company Releasors have assigned, sold,
conveyed or otherwise transferred all or any portion of the Company Claims.
3. Amendment and Assignment. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all the parties
hereto. This Agreement shall extend to and be binding upon each of the parties
and their respective heirs, successors, assigns, legal representatives and any
corporation or other entity into or with which any party hereto may merge or
consolidate. Notwithstanding the above, neither this Agreement nor any right
created hereby shall be assignable to any party hereto.
4. Notice. Any notice or communication must be in writing and given by
depositing the same in the United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person or by facsimile. Any such notice
or communication shall be deemed received, if not earlier received, on the third
business day following the date on which it is mailed, or on the day on which it
is hand delivered or delivered by facsimile, as the case may be. For purposes of
notice, the addresses of the parties shall be as set forth opposite in the
Purchase Agreement. Any party may change its address for notice by written
notice similarly given to the other parties.
5. Entire Agreement. This Agreement contains the entire agreement of
the parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings, oral or written, relating to the subject
matter hereof.
6. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable by a court of competent jurisdiction, such
provisions shall be deemed severable and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provisions did not
comprise a part hereof unless the loss of such provision causes this Agreement
to fail of its essential purpose; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom except as
aforesaid. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, the parties agree to meet to determine in good faith, or will ask the
court to determine, a provision as similar in its terms to such illegal, invalid
or unenforceable provision as may be possible and be legal, valid and
enforceable and such provision so determined shall then be added as part of this
Agreement.
7. Governing Law. 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.
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8. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
/s/ XXXX XXXXX
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Xxxx Xxxxx
/s/ XXXXXX XXXXX
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Xxxxxx Xxxxx
/s/ XXXXX XXXXX
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Xxxxx Xxxxx
MOBILITY ELECTRONICS, INC.
By: /s/ XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx,
Chief Executive Officer
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Exhibit A
Name of Shareholder Number of Shares
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Xxxx Xxxxx 33,000
Xxxxx Xxxxx 4,000
Xxxxxx Xxxxx 40,000
Total
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77,000
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