EXHIBIT 10.6
PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement"), dated as of November __,
2002, is entered into by and between Xxxxxxx X. Xxxxxxx ("Xxxxxxx") and Mobility
Electronics, Inc., a Delaware corporation ("Mobility"). Each of the parties
hereto is sometimes referred to herein as a "Party", and collectively, as the
"Parties".
1. Background. Mobility, Portsmith, Inc., a Delaware corporation ("Old
Portsmith"), certain stockholders of Old Portsmith and Mobility Europe Holdings,
Inc., a Delaware corporation and wholly-owned subsidiary of Mobility ("New
Portsmith"), are parties to that certain Agreement and Plan of Merger, dated as
of February 20, 2002 (the "Merger Agreement"). Pursuant to the terms of the
Merger Agreement, among other things, Old Portsmith was merged with and into New
Portsmith and the stockholders of Old Portsmith (the "Stockholders") received an
aggregate of 800,000 shares of the common stock, par value $0.01 per share, of
Mobility (the "Common Stock"), of which 400,000 shares are currently held in
escrow by Xxxxxxx Xxxxxx L.L.P. ("JW") under a Stock Escrow Agreement, dated as
of February 20, 2002, by and among Mobility, JW and Xxxxxx Xxxxx as the
representative of certain persons listed on Schedule I thereto (the "Escrow
Agreement"). In addition, pursuant to the terms of the Merger Agreement, the
Stockholders are entitled to receive under the Merger Agreement a Performance
Earn Out (as defined in the Merger Agreement) and a Revenue Earn Out (as defined
in the Merger Agreement). Under the Merger Agreement, Xxxxxxx, as a Stockholder,
has received 53,647 shares of Common Stock (the "Xxxxxxx Held Stock"), is
entitled to receive up to 53,646 shares of Common Stock held by JW under the
Escrow Agreement (the "Xxxxxxx Escrowed Stock"), is entitled to receive
6.1156748% (the "Xxxxxxx Earn Out Share") of the 45.6000000% Performance Earn
Out which may be paid under the Merger Agreement, and is entitled to receive
13.4115675% (the "Xxxxxxx Revenue Share") of the 100.0000000% Revenue Earn Out
which may be paid under the Merger Agreement (collectively and together with any
and all rights, titles and interests related thereto, the "Xxxxxxx Interests").
2. Sale of the Xxxxxxx Interests. Xxxxxxx hereby sells, assigns and
transfers to Mobility the Xxxxxxx Interests, in consideration for which Mobility
shall issue to Xxxxxxx a Convertible Subordinated Promissory Note, in the
original principal amount of $990,000.00, and otherwise in the form of Exhibit A
attached hereto (the "Promissory Note"). Contemporaneously with the execution
and delivery of the Promissory Note, Xxxxxxx shall deliver to Mobility a stock
certificate representing the Xxxxxxx Held Stock, either endorsed over to
Mobility or with appropriate stock powers, executed in blank. The Parties also
agree that: (i) the Merger Agreement shall be amended to reflect the assignment
from Xxxxxxx to Mobility of the Xxxxxxx Escrowed Stock, the Xxxxxxx Earn Out
Shares and the Xxxxxxx Revenue Shares; and (ii) the Escrow Agreement shall be
amended to reflect the assignment from Xxxxxxx to Mobility of the Xxxxxxx
Escrowed Stock.
3. Representations and Warranties of the Parties.
(a) Xxxxxxx hereby represents, warrants and covenants to Purchaser
as follows:
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(i) this Agreement is a legal, valid and binding obligation of
Xxxxxxx, enforceable against Xxxxxxx in accordance with its terms;
(ii) Xxxxxxx is the legal and beneficial owner of the Xxxxxxx
Interests, free and clear of any liens, claims or encumbrances;
(iii) Xxxxxxx has the right, power and authority to execute and
deliver this Agreement and to consummate the transactions set forth
herein;
(iv) the delivery of the Xxxxxxx Interests to Mobility will
convey to Mobility legal, valid and marketable title to the Xxxxxxx
Interests, free and clear of all liens, security interests, or
other encumbrances of any character whatsoever; and
(v) Xxxxxxx is an "accredited investor" within the meaning of
Rule 501(a) of Regulation D under the Securities Act of 1933, as
amended. Xxxxxxx, by reason of his business and/or financial
experience, can be reasonably assumed to have the capacity to
protect his own interests in connection with this transaction.
(b) Mobility hereby represents, warrants and covenants to Xxxxxxx as
follows:
(i) this Agreement and the Promissory Note are legal, valid and
binding obligations of Mobility, enforceable against Mobility in
accordance with their respective terms;
(ii) Mobility has the right, power and authority to execute and
deliver this Agreement and the Promissory Note and to consummate the
transactions set forth herein and therein; and
(iii) Mobility has reserved from its authorized but unissued
shares of Common Stock sufficient shares to be issued upon
conversion of the Promissory Note.
(c) THE PARTIES ACKNOWLEDGE THAT THEY HAVE HAD THE OPPORTUNITY TO
OBTAIN, AND HAVE OBTAINED, ADVICE ON THE TERMS OF THIS AGREEMENT FROM
INDEPENDENT LEGAL COUNSEL RETAINED TO REPRESENT THEM IN THIS MATTER AND ARE
EXERCISING THEIR OWN INDEPENDENT JUDGMENT IN EXECUTING THIS AGREEMENT. EACH OF
THE PARTIES HAS CONDUCTED ITS OWN ANALYSIS REGARDING, AND DUE DILIGENCE
CONCERNING, THIS AGREEMENT, AND IN THE CASE OF XXXXXXX, THE COMPANY, INCLUDING
WITHOUT LIMITATION, ITS FINANCIAL CONDITION AND OPERATIONS. ALTHOUGH ONE PARTY
OR THE OTHER MAY HAVE PREPARED CERTAIN OF THE LANGUAGE IN THIS AGREEMENT, THIS
AGREEMENT IS THE PRODUCT OF ARMS-LENGTH NEGOTIATIONS BETWEEN SOPHISTICATED
PARTIES. EACH PARTY WAIVES ANY RULE OF CONTRACT CONSTRUCTION WHEREBY AN
AMBIGUITY WOULD BE CONSTRUED AGAINST THE DRAFTING PARTY.
(d) THE PARTIES FURTHER EACH WARRANT AND REPRESENT THAT NO PROMISE
OR INDUCEMENT HAS BEEN OFFERED EXCEPT AS SET FORTH HEREIN. THIS AGREEMENT IS
EXECUTED WITHOUT RELIANCE UPON ANY ORAL, WRITTEN, EXPRESS OR IMPLIED
REPRESENTATIONS, STATEMENTS, PROMISES, WARRANTIES OR OTHER INDUCEMENT OF ANY
NATURE OR SORT MADE BY ANY PERSON OR PARTY OTHER THAN AS IS EXPRESSLY SET FORTH
IN THIS AGREEMENT, THE PROMISSORY NOTE AND THE SETTLEMENT AGREEMENT
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(AS DEFINED IN SECTION 4 BELOW). EACH OF THE PARTIES AGREES THAT ANY OMISSIONS
OF FACTS CONCERNING THE MATTERS COVERED BY THIS AGREEMENT ARE OF NO CONSEQUENCE
IN THE DETERMINATION TO EXECUTE THIS AGREEMENT.
4. Entire Agreement. This Agreement, the Promissory Note and the
Compromise Settlement Agreement, dated ________, 2002, by and among Xxxxxxx, the
Company and certain other persons and entities (the "Settlement Agreement"),
contains the entire agreement among the Parties with respect to the transactions
contemplated herein, and supercedes all prior agreements, written or oral, and
letters with respect hereto. This Agreement may be amended or superseded, and
the terms and conditions hereof may be waived only by a written instrument
signed by each of the Parties, or, in the case of a waiver, by the Party waiving
compliance.
5. Governing Law and Venue. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. The Parties
agree that any action arising from this Agreement shall be filed in the Superior
Court of the State of California, County of Orange, and the Parties further
agree to submit to the jurisdiction of that Court.
6. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which together
shall be considered one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
date first written above.
MOBILITY ELECTRONICS, INC.
By:
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Xxxxxxx X. Xxxxxxx
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