UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ) *
BOATRACS, INC.
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
096662 10 1
(CUSIP Number)
Scott Wolfe, Esq.
Latham & Watkins
701 B Street, Suite 2100
San Diego, CA 92101 (619) 236-1234
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
October 15, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box ( ).
Note: Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties
to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in
a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 096662 10 1 Page 2 of 6
1. Name of Reporting Person - Jon Gilbert
S.S. or I.R.S. Identification No. of Above Person
2. Check the Appropriate Box if a Member of a Group *
(a) N/A (b) N/A
3. SEC Use Only
4. Source of Funds *
PF SC 00
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(E)
N/A
6. Citizenship or Place of Organization
U.S.
NUMBER OF SHARES BENEFICIALLY OWNED
BY EACH REPORTING PERSON WITH
7. Sole Voting Power
3,882,600
8. Shared Voting Power
9. Sole Dispositive Power
3,882,600
10. Shared Dispositive Power
11. Aggregate Amount Beneficially Owned by Each Reporting Person
3,882,600 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares *
N/A
13. Percent of Class Represented by Amount in Row (11)
25%
14. Type of Reporting Person *
IN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 3 of 6
ATTACHMENT TO SCHEDULE 13D
Item 1. Security and Issuer.
This Schedule 13D relates to shares of the common stock
(the "Common Stock") of Boatracs, Inc., a California corporation,
(the "Company") whose principal executive offices are located
at 6440 Lusk Boulevard, Suite D201, San Diego, California 92121.
Item 2. Identity and Background.
(a) The person filing this Schedule 13D is Jon Gilbert.
(b) - (c) Mr. Gilbert's principal occupation is serving as the
President and Chief Executive Officer of the Company. Mr. Gilbert
also serves as a Director of the Company. The Company's principal
business is the distribution in the marine market of a satellite-
based communications and tracking system, and its address is
6440 Lusk Boulevard, Suite D 201, San Diego, California 92121.
(d) Mr. Gilbert has not been convicted during the past five
years in a criminal proceeding (excluding traffic violations
or similar misdemeanors).
(e) Mr. Gilbert was not a party, during the last five years,
to any civil proceeding of a juducial or administrative body
of competent jurisdiction as a result of which proceeding he was
or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds and Other Consideration.
Mr. Gilbert obtained 2,900,000 shares from Boatracs, Inc.
in accordance with the terms of a Restricted Stock Purchase Agreement
dated October 15, 1997 pursuant to which Mr. Gilbert paid $389,085
in cash and entered into a full recourse Promissory Note in the
principal amount of $1,930,915.33. The shares are subject to a
Pledge Agreement.
In addition, Mr. Gilbert obtained 700,000 shares from
Mr. Michael Silverman pursuant to a Stock Purchase Agreement
dated October 15, 1997, paying $140,000 in cash and entering
into a Promissory Note in the principal amount of $560,000.
The shares are subject to a Pledge Agreement.
<PAGE>
Page 4 of 6
Item 4. Purpose of Transaction.
Mr. Gilbert was appointed as President and Chief Executive
Officer of Boatracs, Inc. by the Board of Directors on October 2, 1997.
Mr. Gilbert was also appointed to the Board of Directors.
Except as disclosed in or otherwise contemplated by this
Schedule 13D, the reporting person does not have any plans or
proposals which relate to or would result in any of the following:
(a) the acquisition by any person of additional securities
of the Company, or the disposition of securities of the Company;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its
subsidiaries;
(c) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries;
(d) any change in the present Board of Directors or
management of the Company, including any plans or proposals to
change the number or term of directors or to fill any existing
vacancies on the Board;
(e) any material change in the present capitalization or
dividend policy of the Company;
(f) any other material change in the Company's business or
corporate structure;
(g) changes in the Company's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Company by any person;
(h) causing a class of securities of the Company to be
delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of
a registered national securities association;
(i) a class of equity securities of the Company becoming
eligible for termination of registration pursuant to Section
12(g) (4) of the Act; or
(j) any action similar to any of those enumerated above.
<PAGE>
Page 5 of 6
Item 5. Interest in Securities of the Issuer.
(a) As of the date of this Schedule 13D, the number and
percentage of the class of securities identified
pursuant to Item 1 above held by the reporting person
is as follows:
Shareholder No. of Shares Percentage of Class
Jon Gilbert 3,882,600 25%
(b) The reporting person has the sole power to vote and the
sole power to dispose of all of such shares.
(c) The reporting person effected the following transactions
within the last 60 days:
Number of Price How Transaction
Date Shares per Share was Effected
9/97 92,600 $1.62 Private Purchase
10/97 2,900,000 $.80 Private Purchase
10/97 700,000 $1.00 Private Purchase
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
The 2,900,000 shares purchased by the reporting person are
subject to a Pledge Agreement and a 30 month vesting schedule
as set forth in the Restricted Stock Agreement. Transfer of such
shares is restricted by the terms of the Restricted Stock Agreement
and are subject to right of first refusal by Boatracs, Inc.
The 700,000 shares purchased by the reporting person from
Mr. Silverman are subject to a Pledge Agreement and also subject
to right of first refusal by Mr. Silverman for a period of 30 months.
Item 7. Material to be Filed as Exhibits.
I) Restricted Stock Purchase Agreement between Jon Gilbert and
Boatracs Inc. dated October 15, 1997.
II) Pledge Agreement between Jon Gilbert and Boatracs, Inc.
dated October 15, 1997.
III) Stock Purchase Agreement between Jon Gilbert and Michael
Silverman dated October 15, 1997.
(IV) Pledge Agreement between Jon Gilbert and Michael Silverman
dated October 15, 1997.
<PAGE>
Page 6 of 6
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
Statement is true, complete and correct.
Dated: October 23, 1997
/S/ JON GILBERT
Jon Gilbert
<PAGE>
EXHIBIT I
RESTRICTED STOCK PURCHASE AGREEMENT
This RESTRICTED STOCK PURCHASE AGREEMENT (this
"Agreement"), dated as of October 15, 1997, is made by and
between Boatracs, Inc., a California corporation ("Company"), and
Jon Gilbert ("Executive"), with reference to the following facts:
A. Company has appointed Executive as the Chief Executive
Officer of the Company.
B. Company desires to grant to Executive the ability to
purchase and own up to 2,900,000 shares of Company's common stock
on the terms and conditions hereafter set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
1. Restricted Stock.
(a) Purchase of Restricted Stock. In consideration of
Executive's current and future services during employment with
Company, Company irrevocably agrees to sell, and Executive
irrevocably agrees to purchase, on the date of this Agreement at
a purchase price of eighty cents ($0.80) per share, a total of
2,900,000 shares (the "Restricted Shares") of the Company's
common stock, no par value (the "Common Stock"), upon the terms
and conditions set forth in this Agreement, for a total purchase
price of two million three hundred twenty thousand dollars
($2,320,000) (the "Total Purchase Price").
(b) Consideration to Company. In consideration of the
execution of this Agreement by Company, Executive agrees to
render faithful and efficient services to Company. Nothing in
this Agreement shall confer upon Executive any right to continue
in the employ of Company or shall interfere with or restrict in
any way the rights of Executive to resign at any time or the
rights of the Company to discharge Executive at any time for any
reason whatsoever, with or without cause, in any employment
agreement between the Company and Executive.
(c) Payment of Total Purchase Price. The payment of
the Total Purchase Price shall be made on the date hereof and
shall be paid as follows:
(i) Executive shall pay to Company by personal
check an amount equal to three hundred eighty six thousand
six hundred sixty-eight dollars and no cents ($386,668.00),
which amount represents payment in full for four hundred
eighty-three thousand three hundred thirty-five (483,335)
Restricted Shares (the "Paid Restricted Shares"), which
shall be fully paid and nonassessable and not subject to the
Company's repurchase obligation described herein below;
(ii) Executive shall pay to Company by personal
check an amount equal to two thousand four hundred sixteen
dollars and sixty-seven cents ($2,416.67), which amount
represents payment of one one-thousandth of one cent
($0.001) per share for two million four hundred sixteen
thousand six hundred sixty-five (2,416,665) Restricted
Shares;
(iii) Executive shall execute and deliver to
Company a full recourse promissory note (the "Promissory
Note"), substantially in the form of the attached Exhibit A,
with respect to the balance of the Total Purchase Price, in
an original principal amount of one million nine hundred
thirty thousand nine hundred fifteen dollars and thirty-
three cents ($1,930,915.33). The Promissory Note shall be
secured by a security interest in the unvested Restricted
Shares pursuant to a Pledge Agreement, substantially in the
form of Exhibit B hereto, as the same may be amended,
modified and supplemented from time to time (the "Pledge
Agreement"); and
(iv) Executive shall pay to Company by personal
check an amount equal to the amounts which, under federal,
state, or local tax law, Company is required to withhold
upon the purchase of Restricted Shares pursuant to this
Agreement.
(d) Issuance of Stock Certificates. Upon execution of
this Agreement and payment of the Total Purchase Price for the
Restricted Shares as described above, the Company shall issue and
deliver to Executive one or more certificates representing the
Paid Restricted Shares. The Company shall also issue to
Executive one or more additional certificates representing the
Unvested Shares (as hereinafter defined), which certificates
shall immediately be delivered to and held by the Company as
collateral pursuant to the Pledge Agreement and shall be released
to Executive as provided therein. All certificates shall bear
the legend described in Section 2 below.
2. Investment Representation, Warranties and
Acknowledgements of Executive. Executive represents and warrants
to Company as follows:
(a) That Executive is acquiring the Restricted Shares
for investment and for his own account and not with a present
view to, or for sale or any disposition in connection with, any
distribution or other transfer thereof, nor with any present
intention of selling or otherwise transferring the Restricted
Shares.
(b) That Executive has such knowledge and experience
in financial and business matters that he is capable of
evaluating the merits and risks of his investment hereunder, and
that he understands and has taken cognizance of all of the risk
factors related thereto.
(c) That Executive's financial condition is such that
he can afford to bear the economic risk of holding the
unregistered Restricted Shares for an indefinite period of time
and suffer a complete loss of his investment hereunder.
(d) That Executive has been given adequate
opportunities (i) to obtain any additional information and
documents relating to his investment in the Restricted Shares and
(ii) to ask questions and receive answers about such documents,
the Company and its business and prospects; and that these
opportunities have provided the Executive with all additional
information necessary or desirable to an evaluation of the merits
and risks related to his investment hereunder.
(e) Executive acknowledges the following:
(i) That the Restricted Shares have not been
registered under the Securities Act or under the securities
laws of any state and that the Company is under no
obligation to register any of the Restricted Shares except
as provided herein.
(ii) That the certificates representing the
Unvested Shares shall be held by the Company as collateral
for the Promissory Note and only certificates representing
Vested Shares shall be delivered to the Executive.
(iii) That the certificates representing any
of the Restricted Shares shall bear a legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF A
RESTRICTED STOCK PURCHASE AGREEMENT DATED AS OF
OCTOBER 15, 1997 (A COPY OF WHICH IS ON FILE WITH
THE SECRETARY OF THE COMPANY). IF TRANSFER IS
PERMITTED BY THE TERMS OF SUCH AGREEMENT, NO
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY
THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR (B)
IF THE COMPANY HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER
THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS (1) AN
EXEMPT TRANSACTION UNDER THE ACT OR THE RULES AND
REGULATIONS IN EFFECT THEREUNDER AND (2) AN EXEMPT
TRANSACTION UNDER THE APPLICABLE SECURITIES LAWS
OF ANY STATE."
(f) That this Agreement and Executive's employment
agreement with the Company will not cause or require Executive to
breach any obligation to, or agreement with, any other party.
3. Vesting of Rights to Restricted Shares.
(a) Definitions. For purposes of this Agreement, the
following terms shall have the meanings provided:
(i) "Cause" means (A) the conviction of a felony
or a crime involving moral turpitude or fraud; (B)
substantial and repeated failure to perform duties as
reasonably directed by the Board of Directors of the
Company; or (C) gross negligence or wilful misconduct which
brings the Company into substantial public disgrace or
disrepute.
(ii) "Good Reason" means the occurrence of any of
the following events without Executive's express written
consent: (A) any material adverse change in Executive's
title of Chief Executive Officer, authorities or
responsibilities which were in effect immediately prior to
such change; (B) a reduction by the Company in the base
compensation paid to Executive; (C) the failure by the
Company to provide to Executive compensation and benefits
(including without limitation, incentive, bonus and other
compensation plans and any vacation, medical,
hospitalization, life insurance, dental or disability
benefit plan), on similar terms and conditions which are
made available to other senior managerial employees of the
Company; or (D) any material breach of this Agreement by the
Company which has not been cured within seven (7) days after
notice of such breach has been delivered by Executive to the
Company.
(iii) "Permanent Disability" means the
inability of Executive to reasonably perform his duties and
responsibilities for a period of six (6) consecutive months
due to a medical or mental disability.
(iv) "Unvested Shares" means any Restricted Shares
which are not Vested Shares.
(v) "Vested Shares" means, as of any date, any
Restricted Shares which have vested on or prior to such date
pursuant to the provisions of Section 3(b).
(b) Vesting. The Unvested Shares shall vest in
accordance with the following provisions (the "Vesting
Schedule"):
(i) On the date of this Agreement and upon
payment therefor as described in Section 1(c)(i), the Paid
Restricted Shares shall become Vested Shares;
(ii) on the date which is six (6) months after the
date of this Agreement and upon payment of the first
Installment (as defined in the Promissory Note), an
additional four hundred eighty-three thousand three hundred
thirty-three (483,333) Unvested Shares shall become Vested
Shares;
(iii) on the date which is twelve (12) months
after the date of this Agreement and upon payment of the
second Installment (as defined in the Promissory Note), an
additional four hundred eighty-three thousand three hundred
thirty-three (483,333) Unvested Shares shall become Vested
Shares;
(iv) on the date which is eighteen (18) months
after the date of this Agreement and upon payment of the
third Installment (as defined in the Promissory Note), an
additional four hundred eighty-three thousand three hundred
thirty-three (483,333) Unvested Shares shall become Vested
Shares;
(v) on the date which is twenty-four (24) months
after the date of this Agreement and upon payment of the
fourth Installment (as defined in the Promissory Note), an
additional four hundred eighty-three thousand three hundred
thirty-three (483,333) Unvested Shares shall become Vested
Shares; and
(vi) on the date which is thirty (30) months after
the date of this Agreement and upon payment of the fifth
Installment (as defined in the Promissory Note), the
remaining four hundred eighty-three thousand three hundred
thirty-three (483,333) Unvested Shares shall become Vested
Shares.
(c) Employment Termination: Option to Repurchase. In
the event Executive's employment with the Company is terminated
(i) by the Company for Cause; or (ii) due to Executive's
voluntary resignation without Good Reason; the Company shall have
the option (the "Company Option") to repurchase all Unvested
Shares from Executive, which option must be exercised within
thirty (30) days of the date of such employment termination. In
the event the Company elects to exercise the Company Option, the
repurchase price for the Unvested Shares shall be equal to the
outstanding principal balance and all accrued but unpaid interest
under the Promissory Note as of the date of exercise of the
Company Option, which shall be paid though the cancellation of
the Promissory Note and a deemed satisfaction of all amounts due
thereunder, including without limitation outstanding principal
and all accrued interest. In the event the Company does not
exercise the Company Option as provided herein, the Unvested
Shares shall continue to vest in Executive in accordance with the
vesting schedule set forth in Section 3(b) above.
(d) Employment Termination: Executive's Option. In
the event Executive's employment with the Company is terminated
(i) by the Company without Cause; (ii) by Executive for Good
Reason; (iii) due to Executive's death; or (iv) by the Company
due to Executive's Permanent Disability, Executive shall have the
option (the "Executive Option"), exercisable at any time within
ninety (90) days after such termination of employment (the
"Executive Option Period"), to accelerate the vesting of all
Unvested Shares by paying all outstanding principal under the
Promissory Note and the accrued but unpaid interest thereon,
calculated to the date the Executive Option is exercised;
provided, however, that in the event of any termination of
employment due to Executive's death or Permanent Disability, the
Executive Option shall only be exercisable if (x) the per share
fair market value of the Common Stock is greater than or equal to
three dollars ($3.00) per share and (y) such termination of
employment occurs one (1) year or more after the date of this
Agreement (the foregoing conditions are collectively referred to
as the "Threshold Conditions"). Upon the payment of all
principal and interest under the Promissory Note in accordance
with the previous sentence, all remaining Unvested Shares shall
become Vested Shares. In the event that the Executive Option is
not exercised within the Executive Option Period, or upon written
notice from Executive that Executive will not exercise the
Executive Option (the "Executive Notice"), whichever occurs
first, the Company shall have the obligation to repurchase all
Unvested Shares as described in Section 4 below.
4. Obligation to Repurchase Unvested Shares. (i) In the
event of any termination of Executive's employment with the
Company due to Executive's death or Permanent Disability and the
Threshold Conditions have not been met as of the date of such
employment termination, or (ii) in the event the Executive Option
is not exercised by Executive within the Executive Option Period,
Company shall have the obligation ("Repurchase Obligation"), to
repurchase all of the Unvested Shares from Executive. The
Repurchase Obligation shall become effective (the "Repurchase
Obligation Effective Date") immediately upon the earlier of (i)
any termination of Executive's employment with the Company
described in Section 3(d) above, (ii) receipt of the Executive
Notice, or (iii) Executive's non-exercise of the Executive Option
within the Executive Option Period. The repurchase price for the
Unvested Shares shall be equal to the outstanding principal
balance and all accrued but unpaid interest under the Promissory
Note as of the Repurchase Obligation Effective Date, which shall
be paid though the cancellation of the Promissory Note and a
deemed satisfaction of all amounts due thereunder, including
without limitation outstanding principal and all accrued
interest.
5. Acceleration of Vesting. Anything to the contrary
herein notwithstanding, upon the occurrence of any (i) merger or
consolidation involving the Company whereby the Company is not
the surviving entity; (ii) sale of all or substantially all of
the assets of the Company or 50% or more of the Company's then
outstanding voting securities; or (iii) the liquidation or
dissolution of the Company (collectively, "Acceleration Event");
at Executive's option all Unvested Shares shall become Vested
Shares and all amounts due under the Promissory Note shall become
due and payable as of the date of the closing of the Acceleration
Event.
6. Rights as to Unvested Shares. Effective as of the date
of this Agreement, Executive shall have full rights of ownership
with respect to all of the Restricted Shares, except as expressly
limited by the terms of the Pledge Agreement. Such rights shall
include without limitation (i) voting rights on all matters which
the holders of Common Stock are entitled to vote thereon, and
(ii) rights to receive dividends and all distributions of any
type or description made with respect to Common Stock.
7. Registration Rights.
(a) Definitions. For purposes of this Agreement, the
following terms shall have the meanings provided:
(i) "Registrable Securities" means all Vested
Shares held by Executive and all other shares of the
Company's Common Stock held by Executive which are not
subject to a repurchase right or option held by a third
party.
(ii) "SEC" means the Securities and Exchange
Commission.
(iii) "Securities Act" means the Securities
Act of 1933, as amended from time to time.
(b) Demand Registrations. At any time subsequent to
the first anniversary of the date of this Agreement, Executive
shall have the right to make a written request to the Company for
registration under and in accordance with the provisions of the
Securities Act of all or part of the Registrable Securities held
by Executive (a "Demand Registration"). Such written request
shall specify the aggregate amount of Registrable Securities to
be registered and shall also specify the intended method or
methods of disposition thereof. Within one hundred eighty (180)
days of receipt of such written request, the Company shall make a
registration under this Section 6 on such appropriate
registration form of the SEC (x) as shall be selected by the
Company and as shall be reasonably acceptable to Executive, and
(y) as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods of
disposition specified in the written request for such
registration. Executive shall have the right to make up to and
including two (2) Demand Registrations.
(i) Expenses. The Company will pay any and all
costs, fees and expenses relating or incident to the
performance of the Company's obligations pursuant to Demand
Registrations; provided, however, that any underwriters
commission or discount shall be borne pro-rata by all
holders of securities being registered under such Demand
Registration.
(ii) Effective Registration Statement. The
Company shall be deemed to have effected a Demand
Registration if the registration statement relating to such
Demand Registration is declared effective by the SEC;
provided, however, that no Demand Registration shall be
deemed to have been effected if (x) such registration, after
it has become effective, is interfered with by any stop
order, injunction or other order or requirement of the SEC
or other governmental agency or court by reason of an act or
omission by the Company or (y) the conditions to closing
specified in the purchase agreement or underwriting
agreement entered into in connection with such registration
are not satisfied because of an act or omission by the
Company.
(c) Piggyback Registrations. If, at any time, the
Company determines to register, whether for its own account or
pursuant to a request by any third party, any of its equity
securities (including securities convertible into equity
securities), other than a registration on Form S-4 or S-8 or any
successor form to such Forms, for its own account or for the
account of others under the Securities Act, the Company shall, at
each such time, promptly give Executive written notice of such
determination (the "Initial Notice") and Executive shall be
entitled to include in such registration statement the
Registrable Securities held by Executive ("Piggyback
Registration"). The Company shall include in such registration
statement such shares of Registrable Securities for which the
Company has received written requests to register such shares
within 15 days after the date of the Initial Notice. If the
total amount of securities that are to be included by either the
Company for its own account or any other person who is entitled
to include securities held by such person in the proposed
registration, exceeds the amount of securities that the
underwriters reasonably believe compatible with the success of
the offering, then the Company will include in such registration
only the number of securities which in the opinion of such
underwriters can be sold, selected from the securities to be
registered by the Company and the securities requested to be
included by Executive and all other persons holding securities to
be registered pro rata based on the number of securities which
each of them proposes to register. The Company will pay all any
and all costs, fees and expenses relating or incident to the
performance of the Company's obligations pursuant to Piggyback
Registrations; provided, however, that any underwriters
commission or discount shall be borne pro-rata by all holders of
securities being registered under such Piggyback Registration.
8. Restrictions on Transfer. Executive acknowledges and
agrees that any transfer of the Restricted Shares by Executive
shall comply with the requirements of the Securities Act of 1933,
as amended, and the terms and conditions of this Agreement.
9. Right of First Refusal. If, at any time prior to April
13, 2000, Executive desires to sell and transfer any Restricted
Shares to any person other than (i) any trust or custodianship,
the beneficiaries of which include only Executive, his spouse, or
his lineal descendants, provided that Executive shall exercise
control over such trust or custodial arrangement; (ii) a
corporation or limited liability company or other entity under
the sole control of Executive; (iii) the Company pursuant to the
terms of this Agreement; or (iv) pursuant to the laws of devise
and descent; and further provided in each case that the
transferee acknowledges and agrees to be bound by the terms of
this Agreement, Executive shall give notice of such sale and
transfer (the "Transfer Notice") to the Company. The Transfer
Notice shall state the terms and conditions of such transaction,
including the name of the prospective purchaser, the number of
shares of such Restricted Shares to be transferred (the "Offered
Shares"), the proposed purchase price for the Offered Shares (the
"Offer Price"), payment terms and the type of disposition. The
Transfer Notice shall further state that the Company has the
option to acquire, in accordance with the provisions of this
Agreement, any of the Offered Shares in accordance with the terms
and conditions set forth in the Transfer Notice, except that (x)
the Company may not purchase any of such Offered Shares unless
the Company purchases all of such Offered Shares, and (y) the
Company shall be extended the benefits of any credit terms
contained in the Transfer Notice provided that the Company has
substantially the same credit rating as the offeror or the
Company posts security reasonably acceptable to Executive. The
Company shall have a period of fifteen (15) business days after
receipt of the Transfer Notice (the "Option Period") in which to
close the purchase of Offered Shares and pay the Offer Price. In
the event the Company elects not to exercise the foregoing option
or if the closing does not take place within the Option Period,
Executive may sell and transfer such Restricted Shares pursuant
to the terms of the Transfer Notice; provided, however, that the
closing of such sale and transfer must occur within sixty (60)
days of the date of the Transfer Notice. In the event such
closing does not occur within said period, the Offered Shares
must be re-offered to the Company in the manner described above.
10. Notices. Any notice to be given under the terms of
this Agreement to Company shall be addressed to the Secretary of
the Company at 6440 Lusk Blvd., Suite D-201, San Diego,
California 92121, and any notice to be given to Executive shall
be addressed to him at the address given beneath his signature
hereto. By a notice given pursuant to this Section, either party
may hereafter designate a different address for notices to be
given to him. Any notice shall be deemed duly given: at the time
delivered by hand, if personally delivered; 3 business days after
being deposited in the United States mail, first class postage
prepaid, if mailed; when receipt acknowledged by addressee, if by
facsimile transmission; and on the next business day if timely
delivered to an air courier guaranteeing overnight delivery.
11. Covenant Regarding 83(b) Election. Executive hereby
covenants and agrees that he will make an election provided
pursuant to Treasury Regulation 1.83-2 with respect to the
purchase of Restricted Shares hereunder; and Executive further
covenants and agrees that Executive will furnish Company with
copies of the forms of election Executive files with the Internal
Revenue Service within 30 days after the date of such purchase.
For purposes of such election and any tax returns filed by the
Company or Executive relating thereto, Company and Executive
agree that the fair market value of the Restricted Shares on the
date of this Agreement is eighty cents ($0.80) per share.
12. 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.
13. 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.
14. Entire Agreement. This Agreement, the Promissory Note
and the Pledge 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.
15. 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.
16. 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.
17. 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.
18. 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.
IN WITNESS WHEREOF, this Restricted Stock Purchase
Agreement has been executed and delivered by the parties hereto
as of the date first written above.
Company: BOATRACS, INC.
a California corporation
By: /S/MICHAEL SILVERMAN
Name: Michael Silverman
Title: Chairman
Executive: Signature: /S/ JON GILBERT
Name: Jon Gilbert
Address: 2572 Calle del Oro
La Jolla, CA 92037
<PAGE>
EXHIBIT II
PLEDGE AGREEMENT
This PLEDGE AGREEMENT ("Agreement") is entered into
effective as of October 15, 1997 ("Effective Date") by and
between Jon Gilbert ("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]
<PAGE>
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/ MICHAEL SILVERMAN
Name: Michael Silverman
Title: Chairman
Pledgee: /S/ JON GILBERT
Jon Gilbert
<PAGE>
EXHIBIT III
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated
as of October 15, 1997, is made by and between Michael Silverman
("Seller") and Jon Gilbert ("Buyer"), with reference to the
following facts:
A. Seller is a shareholder of Boatracs, Inc., a California
corporation (the "Company"). Buyer has been offered employment
with the Company as its Chief Executive Officer and Buyer will be
entering into a Restricted Stock Purchase Agreement with the
Company, of even date herewith (the "Company Stock Purchase
Agreement").
B. Buyer desires to purchase from Seller, and Seller
desires to sell and transfer to Buyer, seven hundred thousand
(700,000) shares of the Company's outstanding Common Stock owned
by Seller (the "Shares").
NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
1. Purchase and Sale of the Shares. Upon the terms and
conditions of this Agreement, Seller hereby sells, transfers and
conveys to Buyer, and Buyer hereby purchases and acquires from
Seller, the Shares. As total consideration for the transfer of
the Shares, Buyer agrees to pay to Seller, and Seller agrees to
accept, the sum of seven hundred thousand dollars and no cents
($700,000.00) (the "Purchase Price"). The Purchase Price shall
be payable upon the full execution and effectiveness of this
Agreement by (i) a personal check in the amount of $140,000.00
and (ii) a promissory note (the "Promissory Note"), substantially
in the form of the attached Exhibit A, with respect to the
balance of the Purchase Price, in an original principal amount of
five hundred sixty thousand and no cents ($560,000.00). The
Promissory Note shall be secured by a security interest in five
hundred sixty thousand Shares pursuant to a Pledge Agreement,
substantially in the form of Exhibit B hereto, as the same may be
amended, modified and supplemented from time to time (the "Pledge
Agreement").
2. Condition Precedent. The effectiveness of this
Agreement is contingent upon the execution and delivery of the
Company Stock Purchase Agreement by all parties thereto.
3. Representation, Warranties and Acknowledgements of
Buyer. Buyer represents and warrants to Seller as follows:
(a) That Buyer is acquiring the Shares for investment
and for his own account and not with a present view to, or for
sale or any disposition in connection with, any distribution or
other transfer thereof, nor with any present intention of selling
or otherwise transferring the Shares.
(b) That Buyer has such knowledge and experience in
financial and business matters that he is capable of evaluating
the merits and risks of his investment hereunder, and that he
understands and has taken cognizance of all of the risk factors
related thereto.
(c) That Buyer's financial condition is such that he
can afford to bear the economic risk of holding the unregistered
Shares for an indefinite period of time and suffer a complete
loss of his investment hereunder.
(d) That Buyer has been given adequate opportunities
(i) to obtain any additional information and documents relating
to his investment in the Shares and (ii) to ask questions and
receive answers about such documents, the Company and its
business and prospects; and that these opportunities have
provided Buyer with all additional information necessary or
desirable to an evaluation of the merits and risks related to his
investment hereunder.
(e) Buyer acknowledges the following:
(i) That the Shares have not been registered
under the Securities Act of 1933, as amended, in connection
with this transaction and that resales of the Shares may be
undertaken only in compliance with Rule 144 under the
Securities Act of 1933, as amended and that the Company is
under no obligation to register any of the Shares except as
provided in the Company Stock Purchase Agreement.
(ii) That the certificates representing the Shares
shall bear a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF A
STOCK PURCHASE AGREEMENT DATED AS OF OCTOBER 15,
1997. IF TRANSFER IS PERMITTED BY THE TERMS OF
SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("ACT"), OR (B) IF THE COMPANY HAS BEEN
FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL
FOR THE HOLDER THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION IS (1) AN EXEMPT TRANSACTION UNDER THE
ACT OR THE RULES AND REGULATIONS IN EFFECT
THEREUNDER AND (2) AN EXEMPT TRANSACTION UNDER THE
APPLICABLE SECURITIES LAWS OF ANY STATE."
4. Representations and Warranties of Seller. Seller
hereby represents and warrants to Buyer as follows:
(a) Seller owns the Shares free and clear of all
liens, claims, charges, restrictions, equities, taxes and
encumbrances of every kind or description (collectively
"Encumbrance"). Upon payment in accordance with this Agreement,
Buyer will own the Shares free and clear of any Encumbrance
created by or relating to Seller, except for Seller's repurchase
rights described in Section 5 herein.
(b) Seller has the full power and authority to enter
into this Agreement and perform Seller's obligations hereunder.
5. Seller's Repurchase Rights.
(a) Definitions. For purposes of this Section, the
following terms shall have the meanings provided:
(i) "Cause" means (A) the conviction of a felony
or a crime involving moral turpitude or fraud; (B)
substantial and repeated failure to perform duties as
reasonably directed by the Board of Directors of the
Company; or (C) gross negligence or wilful misconduct which
brings the Company into substantial public disgrace or
disrepute.
(ii) "Good Reason" means the occurrence of any of
the following events without Buyer's express written
consent: (A) any material adverse change in Buyer's title of
Chief Executive Officer, authorities or responsibilities
which were in effect immediately prior to such change; (B) a
reduction by the Company in the base compensation paid to
Buyer; (C) the failure by the Company to provide to Buyer
compensation and benefits (including without limitation,
incentive, bonus and other compensation plans and any
vacation, medical, hospitalization, life insurance, dental
or disability benefit plan), on similar terms and conditions
which are made available to other senior managerial
employees of the Company; or (D) any material breach of the
Company Stock Purchase Agreement by the Company which has
not been cured within seven (7) days after notice of such
breach has been delivered by Executive to the Company.
(iii) "Permanent Disability" means the
inability of Buyer to reasonably perform his duties and
responsibilities for a period of six (6) consecutive months
due to a medical or mental disability.
(b) Termination of Employment. In the event Buyer's
employment with the Company is terminated (a "Termination") (i)
by the Company for Cause; or (ii) due to Buyer's voluntary
resignation without Good Reason, Seller shall have the option
(the "Repurchase Option"), exercisable within thirty (30)
business days of the date of Termination (the "Exercise Period"),
to repurchase the Shares in accordance with the following
schedule:
(i) If the date of the Termination is within
eighteen (18) months of the date of this Agreement, the
Seller shall have the option to repurchase any or all of the
Shares sold to Buyer hereunder at a repurchase price equal
to one dollar $1.00 per share. The total repurchase price
shall be payable by Seller to Buyer immediately upon
exercise of the Repurchase Option, which repurchase price
may be offset by the amount of the unpaid balance of the
Note, if any, by cancellation the Note. Subject to Section
5(c), in the event the Repurchase Option is not exercised by
Seller within the Exercise Period, the Repurchase Option
will terminate and be of no further force or effect.
(ii) If the date of the Termination is greater
than or equal to eighteen (18) months after the date of this
Agreement but less than thirty (30) months after the date of
this Agreement, the Seller shall have the option to
repurchase up to and including fifty percent (50%) of the
Shares sold to Buyer hereunder at a repurchase price equal
to one dollar $1.00 per share. The total repurchase price
shall be payable by Seller to Buyer by certified check
immediately upon exercise of the Repurchase Option. Subject
to Section 5(c), in the event the Repurchase Option is not
exercised by Seller within the Exercise Period, the
Repurchase Option will terminate and be of no further force
or effect.
(iii) If the date of the Termination is
greater than or equal to thirty (30) months after the date
of this Agreement, the Seller shall not have any option or
right to repurchase any of the Shares.
(c) Extension of Repurchase Period. In the event (i)
the date of Termination is less than thirty (30) months after the
date of this Agreement and Seller is entitled to repurchase all
or part of the Shares pursuant to the terms of the Repurchase
Option and (ii) Buyer has a purchase transaction which is covered
by Section 16(b) of the Securities Act of 1934, as amended (a
"Section 16(b) Purchase"), which Section 16(b) Purchase is within
six (6) months of the date of the Termination which gave rise to
the Repurchase Option, then the Seller shall not be entitled to
exercise the Repurchase Option and repurchase the Shares (or any
part thereof) until the expiration of a period of six (6) months
and one (1) day after the date of the Section 16(b) Purchase (the
"Waiting Period") and the Exercise Period shall be extended until
the end of the Waiting Period.
6. Accelerated Termination of Repurchase Option. Anything
to the contrary herein notwithstanding, upon the occurrence of
any (i) merger or consolidation involving the Company whereby the
Company is not the surviving entity; (ii) sale of all or
substantially all of the assets of the Company or 50% or more of
the Company's then outstanding voting securities; or (iii) the
liquidation or dissolution of the Company (collectively,
"Acceleration Event"); the Repurchase Option shall terminate and
be of no further force or effect as of the date of the closing of
the Acceleration Event.
7. Restrictions on Transfer. Buyer acknowledges and
agrees that so long as the Shares are subject to the Repurchase
Option, the Shares so encumbered may not be transferred, assigned
or conveyed to any person or entity except (i) to any trust or
custodianship, the beneficiaries of which include only Buyer, his
spouse, or his lineal descendants, provided that Buyer shall
exercise control over such trust or custodial arrangement; (ii)
to a corporation or limited liability company or other entity
under the sole control of Buyer; (iii) to the Seller pursuant to
the terms of this Agreement; or (iv) pursuant to the laws of
devise and descent; and further provided in each case that the
transferee acknowledges and agrees to be bound by the terms of
this Agreement (in each case, a "Permitted Transferee").
8. Right of First Refusal. If, at any time prior to April
13, 2000, Buyer desires to sell and transfer any Shares to any
person other than a Permitted Transferee, Buyer shall give notice
of such sale and transfer (the "Transfer Notice") to the Seller.
The Transfer Notice shall state the terms and conditions of such
transaction, including the name of the prospective purchaser, the
number of such Shares to be transferred (the "Offered Shares"),
the proposed purchase price for the Offered Shares (the "Offer
Price"), payment terms and the type of disposition. The Transfer
Notice shall further state that the Seller has the option to
acquire, in accordance with the provisions of this Agreement, any
of the Offered Shares for the price and upon the other terms and
conditions, except that (i) the Seller may not purchase any of
such Offered Shares unless the Seller purchases all of such
Offered Shares, and (ii) the Seller shall be extended the
benefits of any credit terms contained in the Transfer Notice
provided that the Seller has substantially the same credit rating
as the offeror or the Seller posts security reasonably acceptable
to Buyer. The Seller shall have a period of fifteen (15)
business days after receipt of the Transfer Notice (the "Option
Period") in which to close the purchase of Offered Shares and pay
the Offer Price. In the event the Seller elects not to exercise
the foregoing option or if the closing does not take place within
the Option Period, Buyer may sell and transfer such Restricted
Shares pursuant to the terms of the Transfer Notice; provided,
however, that the closing of such sale and transfer must occur
within sixty (60) days of the date of the Transfer Notice. In
the event such closing does not occur within said period, the
Offered Shares must be re-offered to the Seller in the manner
described above.
9. Notices. Any notice to be given under the terms of
this Agreement to Seller or Buyer shall be addressed to the
address given beneath the respective signature lines hereto. By
a notice given pursuant to this Section, either party may
hereafter designate a different address for notices to be given
to him. Any notice shall be deemed duly given: at the time
delivered by hand, if personally delivered; 3 business days after
being deposited in the United States mail, first class postage
prepaid, if mailed; when receipt acknowledged by addressee, if by
facsimile transmission; and on the next business day if timely
delivered to an air courier guaranteeing overnight delivery.
10. 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.
11. 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.
12. Entire Agreement. This Agreement constitutes 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.
13. 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.
14. 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.
15. 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.
16. 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]
<PAGE>
IN WITNESS WHEREOF, this Stock Purchase Agreement has
been executed and delivered by the parties hereto as of the date
first written above.
Seller: /S/ MICHAEL SILVERMAN
Michael Silverman
Address: 6440 Lusk Blvd. Ste D-201
San Diego, CA 92121
Buyer: /S/ JON GILBERT
Jon Gilbert
Address: 2572 Calle Del Oro
La Jolla, CA 92037
CONSENT OF SPOUSE
I, Ilana Silverman, the spouse of Michael Silverman,
have read and understand the attached Stock Purchase
Agreement, and hereby consent to all the terms and conditions
therein, including without limitation the sale and transfer of
any and all community property or other interest I have or may
have in the Shares to the Buyer.
/S/ ILANA SILVERMAN
Ilana Silverman
<PAGE>
EXHIBIT IV
PLEDGE AGREEMENT
This PLEDGE AGREEMENT ("Agreement") is entered into
effective as of October 15, 1997 ("Effective Date") by and
between Jon Gilbert ("Pledgor") and Michael Silverman
("Pledgee"), with reference to the following facts.
A. The Pledgor and the Pledgee have entered into a Stock
Purchase Agreement of even date herewith (the "Stock Purchase
Agreement") whereby the Pledgee has agreed to sell certain shares
of the Common Stock of Boatracs, Inc. owned by Pledgee (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) Five Hundred Sixty Thousand (560,000) shares of
Stock;
(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. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. Termination. Upon payment in full of 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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.
17. 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.
18. 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.
IN WITNESS WHEREOF, the parties hereto have caused this
Pledge Agreement to be executed and delivered as of the date set
forth above.
Pledgor: /S/ MICHAEL SILVERMAN
Michael Silverman
Pledgee: /S/ JON GILBERT
Jon Gilbert
