EXHIBIT 10.2
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PURCHASE AND OPTION AGREEMENT
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FIELDWORKS, INCORPORATED
FWRKS ACQUISITION CORP.
June 29, 2000
TABLE OF CONTENTS
Page
1. Acquisition of Securities................................................-1-
1.1 Sale and Issuance of Notes and Warrant............................-1-
1.2 Acquisition of First Option.......................................-1-
1.3 Acquisition of Second Option......................................-2-
2. Representations and Warranties of the Company............................-2-
2.1 Organization, Qualification, Authorization and Enforcement........-2-
2.2 Capitalization and Voting Rights..................................-3-
2.3 Valid Issuance, Grant and Reservation.............................-4-
2.4 SEC Documents.....................................................-4-
2.5 Absence of Undisclosed Liabilities................................-4-
2.6 Absence of Certain Developments...................................-5-
2.7 Governmental Consents.............................................-6-
2.8 Litigation........................................................-6-
2.9 Patents and Trademarks............................................-6-
2.10 Compliance with Other Instruments.................................-7-
2.11 Agreements........................................................-8-
2.12 Title to Property and Assets......................................-8-
2.13 Labor Agreements and Actions; Employee Benefits...................-8-
2.14 Insurance.........................................................-9-
2.15 Tax Matters.......................................................-9-
2.16 Regulations G, T and X............................................-9-
2.17 No Default; Compliance with Applicable Laws......................-10-
2.18 Seniority........................................................-11-
2.19 Takeover Statutes...............................................-11-
2.20 Private Offering.................................................-11-
2.21 Warranties.......................................................-11-
2.22 No Misrepresentations............................................-12-
3. Representations and Warranties of the Purchaser.........................-12-
3.1 Authorization....................................................-12-
3.2 Purchase for Investment..........................................-12-
3.3 Purchaser's Investment Decision..................................-12-
4. Deliveries by the Company...............................................-12-
4.1 Secretary's Certificate..........................................-12-
4.2 Opinion of Company Counsel.......................................-13-
4.3 Consents and Waivers.............................................-13-
4.4 Note Certificate.................................................-13-
4.5 Warrant Certificate..............................................-13-
4.6 Registration Rights Agreement....................................-13-
5. Deliveries by the Purchaser.............................................-13-
5.1 Note and Warrant Purchase Price..................................-13-
5.2 Registration Rights Agreement....................................-13-
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6. Affirmative Covenants of the Company....................................-13-
6.1 Reservation of Securities........................................-13-
6.2 Rank of Notes. ..................................................-14-
6.3 Transfer Pursuant to Rule 144A...................................-14-
6.4 Inspection.......................................................-14-
6.5 Further Assurances...............................................-14-
6.6 Board Observer...................................................-14-
6.7 Conduct of Business..............................................-15-
6.8 Right of First Refusal...........................................-15-
7. Negative Covenants of the Company.......................................-15-
8. Additional Covenants of the Company.....................................-17-
8.1 Pre-Emptive Rights...............................................-17-
8.2 Special Meeting of Shareholders..................................-17-
8.3 Repayment of Notes and Loans; Reimbursement of Expenses..........-17-
8.4 Directors........................................................-18-
9. Covenant of IWHC........................................................-18-
10. Covenants of the Purchaser..............................................-18-
10.1 Exercise of Warrant..............................................-18-
10.2 Working Capital Loans of Purchaser...............................-19-
11. Exercise Date Deliveries by the Company to the Purchaser................-19-
11.1 Secretary's Certificate..........................................-19-
11.2 President's Certificate..........................................-19-
11.3 Good Standing Certificate........................................-19-
11.4 Opinion of Company Counsel.......................................-19-
12. Conditions Precedent to Effectiveness of Exercise.......................-19-
13. Closing.................................................................-20-
14. Closing Deliveries by the Company to the Purchaser......................-20-
14.1 Secretary's Certificate..........................................-20-
14.2 President's Certificate..........................................-21-
14.3 Good Standing Certificate........................................-21-
14.4 Certificates.....................................................-21-
14.5 Consents and Waivers.............................................-21-
14.6 Charter Amendment................................................-22-
14.7 Resignations.....................................................-22-
14.8 Other Instruments................................................-22-
15. Closing Deliveries by the Company to IWHC...............................-22-
16. Closing Deliveries by IWHC..............................................-22-
17. Closing Deliveries by the Purchaser.....................................-22-
18. Conditions Precedent to Closing Date Obligations........................-23-
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18.1 Conditions to Obligations of the Purchaser.......................-23-
18.2 Conditions to Obligations of the Company.........................-23-
19. Indemnity...............................................................-24-
20. Termination.............................................................-25-
21. Definitions.............................................................-26-
22. Miscellaneous...........................................................-32-
22.1 Additional Agreements; Cooperation...............................-32-
22.2 Survival of Representations, Warranties and Covenants............-32-
22.3 Successors and Assigns...........................................-32-
22.4 Governing Law; Jurisdiction......................................-33-
22.5 Counterparts.....................................................-33-
22.6 Titles and Subtitles.............................................-33-
22.7 Notices..........................................................-33-
22.8 Finder's Fee.....................................................-34-
22.9 Entire Agreement; Amendments and Waivers.........................-34-
22.10 Severability.....................................................-34-
22.11 Specific Performance.............................................-34-
22.12 Expenses and Taxes...............................................-34-
22.13 Waiver of Trial By Jury..........................................-35-
22.14 Independence of Covenants........................................-35-
22.15 IWHC Waiver of Preemptive Rights.................................-35-
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PURCHASE AND OPTION AGREEMENT
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THIS PURCHASE AND OPTION AGREEMENT (the "Agreement") is made this 29th
day of June, 2000, by and between FieldWorks, Incorporated, a Minnesota
corporation (the "Company"), and FWRKS Acquisition Corp., a Delaware corporation
(the "Purchaser"), which is a wholly-owned subsidiary of Kontron Embedded
Computers AG, a German corporation. Certain capitalized terms used herein are
defined in Section 21 hereof.
W I T N E S S E T H:
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WHEREAS, the Purchaser desires to purchase and to acquire the right to
purchase certain securities of the Company and the Company is willing to sell
and to grant or issue the right to acquire such securities, upon the terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
1. Acquisition of Securities.
1.1 Sale and Issuance of Notes and Warrant. The Company hereby
issues and sells, and the Purchaser hereby purchases and acquires, the
Notes and Warrant. Concurrently herewith, the Company is delivering to
the Purchaser the Notes and the Warrant against wire transfer of the
Note and Warrant Purchase Price to an account heretofore designated by
the Company.
1.2 Acquisition of First Option. The Company hereby grants to
the Purchaser, and the Purchaser hereby acquires from the Company, the
First Option, which shall expire at 5:00 P.M., Central Time, on August
15, 2000. The aggregate number and kind of shares subject to the First
Option and the exercise price of the First Option shall be subject to
adjustment as provided in Exhibit A hereto. The First Option may be
exercised by the Purchaser at any time prior to its expiration by
delivery to the Company of notice to such effect, which notice (i)
shall set forth the Exercise Date, and (ii) shall be irrevocable and
shall constitute the Purchaser's agreement, subject only to the
conditions herein provided, to
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purchase the First Option Shares on the Closing Date. If the Purchaser
does not exercise the First Option prior to its expiration, then the
First Option shall be null and void and of no further force and effect.
1.3 Acquisition of Second Option. Concurrently herewith, the
Purchaser and IWHC are executing and delivering the Second Option
Agreement pursuant to which IWHC is acquiring the Second Option.
2. Representations and Warranties of the Company. For the purposes of
this Section 2, references to the "Company" shall be deemed references to the
Company and the Subsidiaries, unless such a reference would be inappropriate in
the context in which it is made. The Company hereby represents and warrants to
the Purchaser that, except for the exceptions set forth in Exhibit B (the
"Schedule of Exceptions") attached hereto and furnished to the Purchaser (which
exceptions shall be deemed to be representations and warranties as if made
hereunder):
2.1 Organization, Qualification, Authorization and
Enforcement.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Minnesota and has all requisite corporate power and
authority to own and use its properties and to carry on its
business as currently conducted and as proposed to be
conducted. The Company has no Subsidiaries other than those
that are identified in Section 2.1 of the Schedule of
Exceptions. Each of the Subsidiaries is a corporation, duly
incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, with all
requisite corporate power and authority to own and use its
properties and assets and to carry on its business as
currently conducted and as proposed to be conducted. Each of
the Company and the Subsidiaries is duly qualified to transact
business as a foreign corporation in each jurisdiction in
which it is required to so qualify, except for such
jurisdictions where the failure to so qualify would not have a
Material Adverse Effect. True and correct copies of the
Company's Charter and Bylaws, each as amended through the date
hereof, have been provided by the Company to the Purchaser.
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(b) The Company has all requisite legal and corporate
power and authority to enter into and to consummate the
transactions contemplated hereby (including without
limitation, the issuance and sale of the Notes and Warrant,
the grant of the First Option and the issuance of the Reserved
Shares) and by the Registration Rights Agreement and otherwise
to carry out its obligations hereunder and thereunder. The
execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all
necessary action on the part of the Company. Each of the
Transaction Documents has been duly executed and delivered by
the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its respective terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable
principles of general application.
2.2 Capitalization and Voting Rights. The authorized capital
of the Company consists of:
(a) 5,000,000 shares of Preferred Stock, 4,250,000 of
which have been designated as Series B Preferred Stock and
500,000 of which have been designated as Series C Preferred
Stock and all of which Series B Preferred Stock and Series C
Preferred Stock are issued and outstanding on the date hereof.
No shares of any other series of Preferred Stock are
outstanding. The designation, powers, preferences and rights
and the qualifications, limitations and restrictions of the
Series B Preferred Stock and the Series C Preferred Stock are
as stated in the Charter.
(b) 30,000,000 shares of Common Stock, of which
8,894,426 shares are issued and outstanding on the date
hereof.
Except as set forth in Section 2.2 of the Schedule of Exceptions and
for the right to acquire securities pursuant to the Warrant and the
First Option, there are no outstanding options, warrants, rights
(including conversion, exchange or preemptive rights) or agreements for
the purchase or acquisition from or sale or disposition by the Company
of any shares of its capital stock. The Company is not a party or
subject to any agreement, arrangement or
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understanding, and, to the Company's Knowledge, except as set forth in
Section 2.2 of the Schedule of Exceptions, there is no agreement,
arrangement or understanding between Persons other than the Company,
that affects or relates to the voting or giving of written consents
with respect to any security or by any director of the Company. Except
as set forth in Section 2.2 of the Schedule of Exceptions: (i) the
Company has no obligation to purchase, redeem or otherwise acquire any
of its securities or to make any distribution, in cash, securities or
otherwise, in respect thereof; and (ii) there are no voting trusts or
agreements, shareholders agreements, rights of first refusal,
preemptive rights or proxies relating to securities of the Company.
2.3 Valid Issuance, Grant and Reservation. The issuance, sale
and delivery of the Notes and the Warrant, the grant of the First
Option and the reservation for issuance of the Reserved Shares have
been duly authorized by all required corporate action on the part of
the Company and, when issued, sold, and delivered in accordance with
the terms hereof for the consideration expressed herein, the Notes and
the Warrant will be duly and validly issued. The Reserved Shares have
been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Warrant, the First Option and the
Second Option, shall be duly and validly issued, fully paid and
non-assessable. The Notes, Warrant and First Option issued or granted
hereunder are, and the Reserved Shares when issued will be, free and
clear of any Encumbrances other than those created by, or imposed upon,
the holders thereof through no action of the Company. The issuance of
the Notes, the Warrant and the First Option is, and the Reserved Shares
will be, free of preemptive or any other similar rights.
2.4 SEC Documents. The Company has furnished the Purchaser
with true and complete copies of all SEC Documents. The Company has
filed all SEC Documents on a timely basis, or has received a valid
extension of the time for such filing. As of their respective dates,
the SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and none of
the SEC Documents, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
financial
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statements of the Company included in the SEC Documents comply as to
form in all material respects with applicable accounting requirements
and the published rules and regulations of the Commission with respect
thereto. Such financial statements have been prepared in accordance
with GAAP applied on a consistent basis during the periods involved,
except as may be otherwise indicated in such financial statements or
the notes thereto, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as
of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited
statements, to normal, recurring year-end audit adjustments.
2.5 Absence of Undisclosed Liabilities. The Company has no
debt, obligation or liability (whether accrued, absolute, contingent,
liquidated or otherwise, whether due or to become due, whether or not
known to the Company) arising out of any transaction entered into at or
prior to the date hereof, or any act or omission at or prior to the
date hereof, or any state of facts existing at or prior to the date
hereof, including taxes with respect to or based upon the transactions
or events occurring at or prior to the date hereof, and including,
without limitation, unfunded past service liabilities under any
pension, profit sharing or similar plan, except liabilities disclosed
in the Company's Quarterly Report on Form 10-Q for the quarter ended
April 2, 2000, current liabilities incurred since April 2, 2000, and
obligations under agreements entered into in the usual and ordinary
course of business, none of which (individually or in the aggregate)
could have a Material Adverse Effect.
2.6 Absence of Certain Developments. Since January 2, 2000,
except as disclosed in the SEC Reports or in Section 2.6 of the
Schedule of Exceptions, there has been no: (a) event, occurrence or
development with respect to the Company that has had a Material Adverse
Effect; (b) declaration or payment of any dividend or other
distribution of the assets of the Company or any direct or indirect
redemption, purchase or acquisition of any securities of the Company;
(c) increase in compensation of any of the Company's officers, or the
rate of pay of the Company's employees as a group, except as part of
regular compensation increases in the ordinary course of business; (d)
resignation or termination of employment of any officer or key employee
of the Company; (e) change in the accounting methods or practices
followed
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by the Company; (f) issuance of any stock, bonds, or other securities
of the Company or options, warrants, or rights or agreements or
commitments to purchase or issue such securities or grant such options,
warrants or rights, except for those issuances pursuant to the exercise
of options, warrants, or convertible securities outstanding at such
date or as contemplated by the Transaction Documents; (g) damage,
destruction or loss, whether or not covered by insurance, materially
and adversely affecting the properties, operation or business of the
Company; (h) acceleration or prepayment of any Debt of the Company or
the refunding of any such Debt, (i) waiver by the Company of a valuable
right or of a material Debt owed to it; (j) loans made by the Company
to its employees, officers, or directors, other than advances of
expenses made in the ordinary course of business; (k) labor
organization activity or organized labor trouble; (l) sale, transfer,
or lease of any of the Company's assets, except in the ordinary course
of business or any mortgage or pledge of or lien imposed upon any of
the Company's assets; (m) notification by a material customer or
supplier of the Company of its intention to terminate its relationship
with the Company; or (n) any other material transaction by the Company
otherwise than for fair value in the ordinary course of business. No
event that would constitute an Event of Default (as defined in the
Notes) has occurred, whether or not continuing on the date hereof.
2.7 Governmental Consents. Except for (a) the filing of any
notice subsequent to the date hereof that may be required under Federal
and/or applicable state securities laws (which, if required, shall be
filed on a timely basis as may be so required), (b) if required, the
filings required by the Company and the Purchaser under the HSR Act or
(c) as listed in Section 2.7 of the Schedule of Exceptions hereto, no
consent, approval, order or authorization of, or declaration to, or
filing, registration, qualification or declaration with, any Person
(governmental or private) is required for the valid authorization,
execution, delivery and performance by the Company of the Transaction
Documents or for the valid authorization, issuance, sale, delivery and
grant of the Notes, the Warrant or the First Option or for the valid
authorization, reservation, issuance, sale and delivery of the Reserved
Shares.
2.8 Litigation. Except as described in Section 2.8 of the
Schedule of Exceptions: (a) there is no action, suit, notice of
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violation, proceeding, or investigation pending or, to the Company's
Knowledge, currently threatened against the Company that questions the
validity or enforceability of the Transaction Documents or the right of
the Company to enter into such agreements or instruments, or to
consummate the transactions contemplated thereby, or that might result,
either individually or in the aggregate, in any Material Adverse
Effect, or any change in the current ownership of securities of the
Company, including, without limitation, actions pending or threatened
involving the prior employment of any of the Company's employees, their
use in connection with the Company's business of any information or
techniques allegedly proprietary to any of their former employers, or
their obligations under any agreements with prior employers; (b) the
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment, or decree of any court or government agency or
instrumentality; and (c) there is no action, suit, proceeding or
investigation by the Company currently pending or that the Company
presently intends to initiate.
2.9 Patents and Trademarks. The Company has sufficient title
and ownership of all Intellectual Property Rights necessary for its
business as now conducted without any conflict with or infringement of
the rights of others. Section 2.9 of the Schedule of Exceptions
contains a complete list of all Intellectual Property Rights held or
made by the Company. Except as disclosed in Section 2.9 of the Schedule
of Exceptions: (a) there are no outstanding options, licenses, or
agreements of any kind relating to the foregoing, nor is the Company
bound by or a party to any options, licenses, or material agreements
with respect to the Intellectual Property Rights of any other Person;
(b) the Company has not received any communications or claims alleging
that the Company has violated or, by conducting its business as
proposed, would violate, any of the Intellectual Property Rights of any
other Person; (c) the Company is not aware that any of its employees is
obligated under any contract (including licenses, covenants, or
commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that
would materially interfere with the use of such employee's best efforts
to promote the interests of the Company or that would materially
conflict with the Company's business as proposed to be conducted; (d)
neither the execution and delivery of the Transaction Documents, nor
the carrying on of the Company's business as currently proposed, will
conflict with or result in a
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breach of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument under which any of
such employees is now obligated; and (e) the Company does not believe
that it presently is or that it will be necessary to utilize any
inventions of any of its employees (or people it currently intends to
hire) made prior to their employment by the Company.
2.10 Compliance with Other Instruments. Except as set forth in
Section 2.10 of the Schedule of Exceptions, the Company is not in
violation or default of any provisions of its Charter or Bylaws or of
any instrument, judgment, order, writ, decree, or agreement to which it
is a party or by which it or any of its assets may be bound or, of any
provision of federal or state statute, rule or regulation, license, or
permit applicable to the Company, the violation or default of which
could have a Material Adverse Effect. The execution, delivery, and
performance of the Transaction Documents and the consummation of the
transactions contemplated thereby will not result in any such violation
or be in conflict with or constitute, with or without the passage of
time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree, or agreement or an event
that results in the creation of any Encumbrance upon any assets of the
Company or trigger any anti-dilution provisions, provisions for the
right to purchase stock, or preemptive rights in any agreements to
which the Company is a party. The Company does not have any Knowledge
of any termination or material breach by the other parties to any
material agreement, arrangement or understanding to which it is a party
or to which any of its assets is subject. To the Company's Knowledge,
there are no warranty claims or other uninsured claims against the
Company under completed agreements that might involve a material
liability that are not reserved against in the financial statements
contained in the SEC Documents.
2.11 Agreements. Section 2.11 of the Schedule of Exceptions
lists each of the following agreements, arrangements or understandings
to which the Company is a party: (a) those required to be filed as
exhibits to the SEC Documents in accordance with the rules and
regulations under the Securities Act and Exchange Act; (b) those (other
than purchase and sales orders entered into in the ordinary course of
business) providing for payments to or by the Company in excess of
$100,000 annually; and (c) those between the Company and any Affiliate
thereof. Each of the foregoing listed in
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such Section 2.11 is valid, binding, in full force and effect and
enforceable against the Company, and to the Knowledge of the Company,
the other party or parties thereto, in accordance with its respective
terms.
2.12 Title to Property and Assets. The Company has good and
marketable title to all of its material property and assets, free and
clear of all Encumbrances, except as disclosed in Section 2.12 of the
Schedule of Exceptions or such Encumbrances that arise in the ordinary
course of business and do not materially impair the Company's ownership
or use of such property or assets. With respect to the property and
assets it leases, the Company is in material compliance with such
leases and holds a valid leasehold interest, free of any Encumbrances.
All of the Company's material properties and assets are in good
operating and usable condition, subject to normal wear and tear.
2.13 Labor Agreements and Actions; Employee Benefits. The
Company is not bound by or subject to (and none of its assets or
properties is bound by or subject to) any written or oral, express or
implied, contract, commitment, or arrangement with any labor union, and
no labor union has requested or, to the Knowledge of the Company, has
sought to represent any of the employees, representatives, or agents of
the Company. There is no strike or other labor dispute involving the
Company pending, or, to the Knowledge of the Company, threatened, that
could have a Material Adverse Effect, nor is the Company aware of any
labor organization activity involving its employees. Except as
disclosed in Section 2.13 of the Schedule of Exceptions, the Company
has no employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974) covering employees of
the Company, whether or not currently employed, or under which the
Company has any obligation or liability. Section 2.13 of the Schedule
of Exceptions lists all Benefit Arrangements. True and complete copies
of all Benefit Arrangements have been provided or made available to the
Purchaser prior to the date hereof. The Benefit Arrangements are and
have been administered in compliance with their terms and with the
requirements of applicable law. All payments to current or former
employees of the Company pursuant to the Benefit Arrangements are and
have been fully deductible under the Code.
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2.14 Insurance. The Company has in full force and effect fire,
casualty and liability insurance policies, with extended coverage, in
such amounts and with such coverage as is reasonable and prudent in
view of the business and operations of the Company.
2.15 Tax Matters. The Company (a) has timely filed all tax
returns that are required to have been filed by it with all appropriate
governmental agencies (and all such returns are true and correct and
fairly reflect its operations for tax purposes); and (b) has timely
paid all taxes owed or assessments by it (other than taxes the validity
of which are being contested in good faith by appropriate proceedings
and in respect of which appropriate reserves are reflected in the
financial statements contained in the SEC Documents). The assessment of
any additional taxes for periods for which returns have been filed is
not expected to exceed the recorded liability therefor and there are no
material unresolved questions or claims concerning the Company's tax
liability. To the best of the Company's Knowledge and belief, the
Company's tax returns have not been reviewed or audited by any taxing
authority. There is no pending dispute with any taxing authority
relating to any of such returns which, if determined adversely to the
Company, would result in the assertion by any taxing authority of any
valid deficiency in a material amount for taxes. The reserve for taxes
and tax liabilities on the most recent balance sheet included in the
SEC Documents is fully adequate to cover all liabilities of the Company
for taxes with respect to periods ending on or before the date hereof.
2.16 Regulations G, T and X. The Company does not own or have
any present intention of acquiring any "margin security" within the
meaning of Regulation G (12 C.F.R. Part 207) of the Board of Governors
of the Federal Reserve System (herein called "margin security"). None
of the proceeds of the Notes will be used, directly or indirectly, by
the Company for the purpose of purchasing or carrying, or for the
purpose of reducing or retiring any indebtedness that was originally
incurred to purchase or carry, any margin security or for any purpose
that might cause the Transaction Documents or the transactions
contemplated thereby to violate any of Regulation G, T, U or X, or any
other regulation, of the Board of Governors of the Federal Reserve
System.
2.17 No Default; Compliance with Applicable Laws.
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(a) The Company is not in default under any term of
any mortgage, indenture, deed of trust, or other material
agreement, commitment, understanding, arrangement to which it
or its properties is a party or by which it or any of the
assets or properties owned by it may be bound.
(b) The Company is in compliance with, and is not in
violation or default under, any federal, state or local laws,
ordinances, government rules and regulations applicable to
their business operations, properties, or assets, including
without limitation laws or regulations relating to: the
environment; occupational health and safety; employee
benefits; ERISA plans; wages; work place safety; equal
employment opportunity and race; and religious, sex and age
discrimination, except in respect of all of the foregoing for
such non-compliance, violation or default as would not have a
Material Adverse Effect. The Company does not have any
Knowledge of any actual or claimed violation or default with
respect to any of the foregoing. No material expenditures are
or will be required in order to cause the current operations
or assets and properties of the Company to comply with any
applicable laws, ordinances, governmental rules or
regulations. The Company heretofore has delivered to the
Purchaser a copy of any audit, survey, assessment or report
prepared by or for the Company during the five-year period
prior to the date hereof relating to compliance or
non-compliance with any of the foregoing laws, ordinances and
governmental rules and regulations.
(c) The Company has all Approvals necessary to the
ownership of its assets and properties and to the conduct of
its business, which if violated or not obtained would have a
Material Adverse Effect. The Company has not been finally
denied any application for any Approvals. There is no action
pending, or to the best Knowledge of the Company, threatened
or recommended by federal, state or local governmental
authorities having jurisdiction thereof, either to revoke,
withdraw, or suspend any Approvals, that would have a Material
Adverse Effect on any Approvals, nor has any such governmental
authority determined not to renew any Approvals.
(d) The Company is and has operated in material
compliance with all Government Contracts. Except as set forth
in the SEC Documents, neither the Company nor any of the
Subsidiaries
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is subject to any claim, penalty, fine, return of premium,
repayment of costs charged, or renegotiation of charges or
fees as a result of any audit, adjustment, charge, retroactive
restatements of costs or charges, or other liability with
respect to any Government Contract, except for any such claim,
penalty, fine, return of premium, repayment or renegotiation
as would not have a Material Adverse Effect.
2.18 Seniority. Except as disclosed in Section 2.18 of the
Schedule of Exceptions, the Company does not have any equity or debt
securities that are senior to the Notes in right of payment, whether
upon liquidation, dissolution or otherwise.
2.19 Takeover Statutes. A committee of all "disinterested
members" of the Company's Board (as such term is defined for purposes
of Section 302A.673 of the MBCA) has approved this Agreement and the
transactions contemplated hereby and the Company has completed all
other actions and satisfied all other conditions necessary and
sufficient to negate any application of Section 302A.673 to the
Purchaser. Accordingly, with respect to Section 302A.673 of the MBCA
the Purchaser may purchase more than 10% of the Company's voting stock
pursuant to this Agreement and will not further be restricted from
purchasing additional capital stock of the Company thereafter by virtue
of such provision. Upon obtaining the Special Meeting Approvals, the
Second Option Shares to be received by the Purchaser upon IWHC's
exercise of the Second Option will have the same voting rights as the
other shares of Common Stock in accordance with Section 302A.671 of the
MBCA. Except as set forth above, no other state or federal "fair
price," "moratorium," "control share acquisition" or other similar
antitakeover statute or regulation is applicable to the transactions
contemplated hereby.
2.20 Private Offering. Neither the Company nor anyone acting
on its behalf shall offer the Notes, the Warrant or the First Option,
for issue or sale to, or solicit any offer to acquire any of the same
from, any Person so as to bring the issuance and sale of the Notes, the
Warrant or the First Option, or any part thereof, within the provisions
of Section 5 of the Securities Act. Based upon the representations of
the Purchaser set forth in Sections 3.2 and 3.3, the offer, issuance
and sale of the Notes, the Warrant, the First Option and the Reserved
Shares are and will be exempt from the registration and prospectus
delivery
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requirements of the Securities Act, and have been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable
state securities laws.
2.21 Warranties. Section 2.21 of the Schedule of Exceptions
describes the terms of all warranties and guarantees, written or oral,
made or given within the five-year period preceding the date hereof in
connection with the products and services of the Company. The reserve
for warranty claims in the most recent balance sheet included in the
SEC Documents has been fixed in accordance with GAAP consistently
applied and is adequate to cover all liabilities for warranties with
respect to periods ending on or before the date hereof.
2.22 No Misrepresentations. The representations and warranties
made by the Company in or pursuant to the Transaction Documents
(including the Exhibits and Schedules thereto) are true, complete and
correct in all material respects and do not contain any untrue
statement of a material fact or omit to state any material fact
necessary to make any such representation, warranty or statement, under
the circumstances in which it is made, not misleading.
3. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company that:
3.1 Authorization. This Agreement constitutes its legally
binding obligation, enforceable against the Purchaser in accordance
with its terms and the Purchaser has full power and authority to enter
into this Agreement.
3.2 Purchase for Investment. The Purchaser is purchasing the
Notes for its own account, for investment purposes and not with a view
to, or for resale in connection with, any distribution or public
offering thereof within the meaning of the Securities Act.
3.3 Purchaser's Investment Decision. The Purchaser is an
"accredited investor" as that term is defined in Rule 501 of Regulation
D under the Securities Act or has such Knowledge and experience in
financial and business matters that it is capable of
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evaluating the merits and risks of the investment contemplated hereby.
4. Deliveries by the Company. Contemporaneously with the execution of
this Agreement and the performance by the Purchaser of its obligations
hereunder, the Company is delivering to the Purchaser the following:
4.1 Secretary's Certificate. A certificate of the Secretary of
the Company certifying: (a) that attached thereto is a true and
complete copy of the Company's Charter as in effect on the date hereof;
(b) that attached thereto is a true and complete copy of the Bylaws of
the Company as in effect on the date hereof; (c) that attached thereto
is a true and complete copy of all resolutions adopted by the Board (or
any committee thereof) authorizing or relating to the transactions
contemplated by the Transaction Documents and that such resolutions are
in full force and effect and have not been amended or revoked as of the
date hereof; and (d) to the incumbency and specimen signatures of each
officer of the Company executing the Transaction Documents and the
other agreements and certificates contemplated hereby.
4.2 Opinion of Company Counsel. An opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, counsel for the Company, in the form attached hereto as Exhibit C.
4.3 Consents and Waivers. Executed copies of any and all
consents and waivers necessary or appropriate for consummation of the
purchase and sale of the Note and Warrant.
4.4 Note Certificate. The Notes, dated the date hereof, in the
principal amount of $2,500,000.
4.5 Warrant Certificate. The Warrant, dated the date hereof.
4.6 Registration Rights Agreement. A counterpart of the
Registration Rights Agreement.
5. Deliveries by the Purchaser. Contemporaneously with the execution of
this Agreement and performance by the Purchaser of its obligations hereunder,
the Purchaser is delivering to the Company the following:
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5.1 Note and Warrant Purchase Price. The Note and Warrant
Purchase Price, by wire transfer of immediately available funds.
5.2 Registration Rights Agreement. A counterpart of the
Registration Rights Agreement.
6. Affirmative Covenants of the Company. The Company covenants and
agrees that so long as the First Option shall remain outstanding, provided that
if the First Option is exercised, such period shall be extended, without further
action of the parties hereto, to and including the Closing Date (except that the
Company's covenants and agreements contained in Sections 6.2 and 6.3 hereof
shall be effective so long as any of the Notes are outstanding):
6.1 Reservation of Securities. The Company shall at all times
duly reserve for issuance the Reserved Shares and any other securities
of the Company issuable pursuant to the terms of the Warrant, the First
Option Shares and the Second Option Shares.
6.2 Rank of Notes. The Notes shall at all times rank on a
parity with all other Debt of the Company other than the Bank Debt.
6.3 Transfer Pursuant to Rule 144A. From and after August 15,
2000, the Company shall provide to the Purchaser and, upon the
Purchaser's request, to any prospective purchaser designated by the
Purchaser the financial and other information specified in Rule
144A(d)(4) under the Securities Act and to take any other action
reasonably requested by the Purchaser or to execute any certificates
necessary to permit a transfer of the Notes by Purchaser to qualify for
the exemption set forth in Rule 144A.
6.4 Inspection. The Company shall permit the Purchaser, its
nominee, assignee, and its representative to visit and inspect any of
the properties of the Company and its Subsidiaries, to examine all its
books of account, records, reports and other papers not contractually
required of the Company to be confidential or secret, to make copies
and extracts therefrom, and to discuss its affairs, finances and
accounts with its officers, directors, key employees and independent
public accountants or any of them (and by
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this provision the Company authorizes said accountants to discuss with
the Purchaser, its nominees, assignees and representatives the finances
and affairs of the Company and any Subsidiaries), all at such
reasonable times and as often as may be reasonably requested.
6.5 Further Assurances. At any time or from time to time upon
the request of any holder of the Notes, the Warrant, the First Option
Shares and the Second Option Shares, the Company shall execute and
deliver such further documents and do such other acts and things as
such holder may reasonably request in order to effect fully the
purposes of the Transaction Documents.
6.6 Board Observer. The Purchaser shall have the right to send
an observer (who need not be the same individual from meeting to
meeting) to observe each meeting of the Board. The Company shall give
the Purchaser advance written notice of each meeting of the Board and
provide the Purchaser with an agenda and minutes of each meeting no
later than the time it gives such notice and provides such agenda to
the other members of the Board. Such observer shall be entitled to
receive reimbursement for his reasonable costs incurred in attending
such meetings, including, without limitation, meals, lodging and
transportation.
6.7 Conduct of Business. The Company shall continue to engage
in business of the same general type as now conducted by it, and
preserve, renew and keep in full force and effect its corporate
existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct
of its business.
6.8 Right of First Refusal. The Company shall not directly or
indirectly, without the prior consent of the Purchaser, effect a
Subsequent Financing, except (a) the granting of options under, and the
issuance of shares upon exercise of options granted under, any stock
option plan heretofore adopted by the Company; and (b) shares issued
upon exercise of any currently outstanding warrants and upon conversion
of any currently outstanding convertible preferred stock, unless (i)
the Company provides the Purchaser a Subsequent Financing Notice of its
intention to effect such Subsequent Financing, which Subsequent
Financing Notice shall describe in reasonable detail the proposed terms
of such Subsequent Financing and the amount of proceeds intended to be
raised thereby and (ii) the Purchaser shall not have notified the
Company by 5:00
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P.M., Central Time, on the fifth Business Day after its receipt of the
Subsequent Financing Notice of its good faith agreement to provide (or
to cause its designee to provide) financing to the Company on
substantially the terms set forth in the Subsequent Financing Notice.
If the Purchaser shall fail to notify the Company of its intention to
provide such financing within such time period, or shall fail to
provide such financing within 30 days thereafter, the Company may
effect the Subsequent Financing substantially upon the terms and to the
Persons set forth in the Subsequent Financing Notice; provided, that
the Company shall provide the Purchaser with a second Subsequent
Financing Notice, and the Purchaser shall again have the right of first
refusal set forth above in this Subsection 6.8, if the Subsequent
Financing subject to the initial Subsequent Financing Notice shall not
have been consummated for any reason on the terms set forth in such
Subsequent Financing Notice within 30 days after the date that the
initial Subsequent Financing Notice is given to the Purchaser.
7. Negative Covenants of the Company. The Company covenants and agrees
that:
(a) Until August 16, 2000 and, if the First Option is
exercised, the Closing Date, without the consent of the Purchaser, the
Company shall not take any of the following actions: (i) the entry into
any agreement, arrangement or transaction with an Affiliate of the
Company other than those currently in effect and disclosed in the SEC
Documents; (ii) the amendment, modification or repeal of any provision
of the Charter or Bylaws; (iii) the creation, authorization or issuance
of any securities of the Company, provided that the Company may issue
Common Stock (x) upon exercise of options granted under any stock
option plan, agreement or arrangement heretofore adopted by the
Company, (y) upon exercise of warrants outstanding on the date hereof,
and (z) upon conversion of any security outstanding on the date hereof;
(iv) the recapitalization of the Company or the reclassification of any
authorized or issued capital stock of the Company; (v) the
establishment of any new Subsidiary; (vi) the sale, lease, transfer or
other disposition (in a transaction or related series of transactions)
of any material assets of the Company or its Subsidiaries;(vii) the
purchase, lease or acquisition by the Company of a material amount of
assets; (viii) the making of any material change in the business
conducted by the Company or its Subsidiaries or the failure to conduct
such business in the
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ordinary course; (ix) the increase of the annual compensation of any
Person employed by the Company or any Subsidiary by greater than 10% in
any fiscal year of the Company or the hiring of any such employee whose
annual compensation would exceed $125,000 in any such fiscal year; (x)
the commencement by the Company or any Subsidiary of a voluntary case
under any federal or state bankruptcy or reorganization, moratorium,
relief of debtors, insolvency law, or the commencement of an
involuntary case against the Company or any Subsidiary under any such
law, which case is not opposed by the Company or such Subsidiary within
15 days thereafter or is not dismissed within 60 days thereafter or
(xi) the entry into any agreement, arrangement or understanding to do
any of the foregoing.
(b) In addition to those covenants set forth in (a) above, so
long as any of the Notes, the Warrants, or the First Option shall
remain outstanding, without the consent of the Purchaser, the Company
shall not take any of the following actions: (i) the creation,
incurrence, guarantee, issuance, or assumption of any Debt other than
the Debt evidenced by the Notes, unless (x) such Debt is Bank Debt and
(y) immediately thereafter, and after giving effect thereto, the total
Debt of the Company (other than the Debt evidenced by the Notes) does
not exceed $4,000,000; (ii) the repurchase, redemption or other
acquisition of equity securities of the Company; (iii) the declaration
of any dividends or the making of any distribution by the Company
(other than dividend distributions of its Common Stock); (iv) the
merger or consolidation of the Company or any Subsidiary with any other
Person; (v) the liquidation or dissolution of the Company; or (vi) the
entry into any agreement, arrangement or understanding to do any of the
foregoing.
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8. Additional Covenants of the Company.
8.1 Pre-Emptive Rights. If the Company issues any shares of
Common Stock upon the exercise of options or warrants at any time on or
before the Closing Date, the Purchaser shall have the right for a
period of 30 days following the Closing Date upon notice by the Company
to it of any such issuance to purchase from the Company that number of
shares of Common Stock as equals the number of shares of Common Stock
issued upon such exercise at a price per share equal to the Market
Value of the Common Stock. If the Company shall fail to notify the
Purchaser of any such issuance, the 30-day period during which the
Purchaser may exercise the right provided in the next preceding
sentence shall commence upon discovery by the Purchaser of such
issuance.
8.2 Special Meeting of Shareholders. The Company shall
prepare, and as promptly as practicable after exercise by the Purchaser
of the First Option, shall file with the Commission the Proxy
Statement, respond to comments of the staff of the Commission, clear
the Proxy Statement with the staff of the Commission and promptly
thereafter mail the Proxy Statement to the appropriate holders of
record of the Common Stock. The Company shall comply in all respects
with the requirements of the Exchange Act and the rules and regulations
thereunder applicable to the Proxy Statement and the solicitation of
proxies for the Special Meeting (including any amendment or supplement
to the Proxy Statement) and each party hereto shall furnish such
information relating to it and to the transactions contemplated by the
Transaction Documents as shall be required by such rules and
regulations. The Proxy Statement shall include such information about
the Purchaser, its Affiliates and nominees, as is required by Section
14(f) of the Exchange Act and Rule 14f-1 thereunder and the
recommendation of the Board in favor of the transactions contemplated
by the Transaction Documents.
8.3 Repayment of Notes and Loans; Reimbursement of Expenses.
If (a) the Purchaser exercises the First Option but at the Special
Meeting the Special Meeting Approvals are not obtained, or (b) if the
Special Meeting Approvals are obtained, but the Closing Date does not
occur on or before November 15, 2000 otherwise than by reason of the
breach by the Purchaser of its obligations under this Agreement or the
failure by the Purchaser to
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provide the information required by applicable rules and regulations to
be included in the Proxy Statement, the Company shall repay the Notes
and any Working Capital Loans made to it pursuant to Sections 9 and
10.2 hereof, together with accrued interest thereon, within 30 days
after the earlier to occur of the failure to obtain the Special Meeting
Approvals at the Special Meeting or November 15, 2000.
8.4 Directors. Concurrently with the transactions effected on
the Closing Date, the Purchaser shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Board
as is equal to the product of the total number of directors on the
Board (giving effect to the directors designated by Parent pursuant to
this provision) multiplied by the percentage that the aggregate number
of shares of Common Stock beneficially owned (as determined in
accordance with Rule 13d-3 under the Exchange Act) by the Purchaser and
its Affiliates bears to the total number of shares of Common Stock then
outstanding (such number being the "Board Percentage") provided,
however, that if the number of shares of Common Stock beneficially
owned by the Purchaser and its Affiliates equals or exceeds 50.01% of
the outstanding shares of Common Stock, the Board Percentage will in
all events be at least a majority of the members of the Board. The
Company and IWHC shall each, upon request of the Purchaser, use its
respective best efforts to cause the Purchaser's designees to satisfy
the Board Percentage, including without limitation increasing the size
of the Board and securing resignations of such number of its incumbent
directors as is necessary to enable the Purchaser's designees to be so
elected to the Board, and shall promptly cause the Purchaser's
designees to be so elected.
9. Covenant of IWHC. If during the period from the date hereof to and
including August 15, 2000, after the application of available proceeds of Bank
Debt, the Notes and other sources of liquidity then available to the Company,
the Purchaser in its reasonable discretion determines that the Company has
insufficient cash to pay in the ordinary course its obligations that are due on
or before August 15, 2000, upon notice from the Purchaser, IWHC shall make one
or more Working Capital Loans to the Company in the maximum aggregate principal
amount of $2,500,000.
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10. Covenants of the Purchaser.
10.1 Exercise of Warrant. On the Closing Date, the Purchaser
shall exercise the Warrant in accordance with its terms. It shall be a
condition to such exercise, which may be waived by the Company in its
sole discretion, that the Purchaser purchase the First Option Shares
and Second Option Shares concurrently. The Purchaser shall not transfer
the Warrant to any other Person without the prior written consent of
the Company and IWHC, and any Person to whom the Warrant is transferred
shall agree in writing to be bound by the provisions of this Section
10.1. Between the date hereof and the Closing Date, the Purchaser shall
not exercise any other warrant to purchase shares of Common Stock.
10.2 Working Capital Loans of Purchaser. If the Purchaser
exercises the First Option and during the period from August 16, 2000
to and including the earlier of the date of the Special Meeting (if the
Special Meeting Approvals are not obtained) or the Closing Date, it
determines in its reasonable discretion, after the application of
available proceeds of Bank Debt, the Notes, the IWHC Working Capital
Loans and other sources of liquidity then available to the Company,
that the Company has insufficient cash to pay its obligations in the
ordinary course, the Purchaser shall make one or more Working Capital
Loans to the Company in the maximum aggregate principal amount of
$5,000,000.
11. Exercise Date Deliveries by the Company to the Purchaser. On or
prior to the Exercise Date, the Company shall deliver to the Purchaser, duly and
properly executed:
11.1 Secretary's Certificate. A certificate of the Secretary
of the Company certifying: (a) that attached thereto is a true and
complete copy of the Company's Charter as in effect on the date
thereof; (b) that attached thereto is a true and complete copy of the
Bylaws of the Company as in effect on the date thereof; (c) that
attached thereto is a true and complete copy of all resolutions adopted
by the Board (or any committee thereof) authorizing or relating to the
transactions contemplated by the Transaction Documents, and that such
resolutions are in full force
-21-
and effect and have not been amended or revoked as of the date hereof;
and (d) to the incumbency and specimen signatures of each officer of
the Company executing the Transaction Documents and the other
agreements and certificates contemplated thereby.
11.2 President's Certificate. A certificate of the President
of the Company in accordance with Section 12(a) hereof.
11.3 Good Standing Certificate. A long-form certificate of the
Secretary of State of the State of Minnesota dated as of a recent date
as to the existence and good standing of the Company in such state.
11.4 Opinion of Company Counsel. An opinion of ▇▇▇▇▇▇ &
Whitney LLP, counsel for the Company, in the form attached hereto as
Exhibit C.
12. Conditions Precedent to Effectiveness of Exercise. The
effectiveness of exercise by the Purchaser of the First Option shall be subject
to the satisfaction as of or before the Exercise Date of the following
conditions (unless waived in writing by the Purchaser):
(a) Except as may be set forth in Exhibit A to the certificate
referenced in this Section 12(a), the Company's representations and
warranties set forth in Article 2 of the Agreement shall have been true
and correct in all material respects when made and shall be true and
correct in all material respects at and as of the Exercise Date as if
such representations and warranties were made as of the Exercise Date,
and the Purchaser shall have received a certificate to that effect and
as to the matters set forth in Section 12(b) hereof, dated the Exercise
Date, from the Company.
(b) All covenants, conditions and other obligations under this
Agreement that are to be performed or complied with by the Company and
IWHC prior to the Exercise Date shall have been performed and complied
with in all material respects at or prior to the Exercise Date.
(c) If the certificate delivered pursuant to Section 12(a)
shall include Exhibit A, then the matters set forth
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in such Exhibit A shall be satisfactory to the Purchaser in its sole
and absolute discretion.
(d) There shall be no pending or threatened claim, action,
litigation or proceeding, judicial or administrative, or governmental
investigation against the Purchaser or the Company for the purpose of
enjoining or preventing the consummation of the Transaction Documents,
or otherwise claiming that the Transaction Documents or the
consummation thereof is illegal.
(e) No Material Adverse Effect shall have occurred.
13. Closing. The consummation of the purchase of the First Option
Shares and Second Option Shares and the exercise of the Warrant (the "Closing")
shall take place at 10:00 A.M., Eastern Time, on the Closing Date at the offices
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as may be agreed upon by the parties
hereto.
14. Closing Deliveries by the Company to the Purchaser. At or prior to
the Closing, the Company shall deliver to the Purchaser, duly and properly
executed:
14.1 Secretary's Certificate. A certificate of the Secretary
of the Company certifying: (a) that attached thereto is a true and
complete copy of the Company's Charter as in effect on the date
thereof; (b) that attached thereto is a true and complete copy of the
Bylaws of the Company as in effect on the date thereof; (c) that
attached thereto is a true and complete copy of all resolutions adopted
by the Board (or any committee thereof) and shareholders of the Company
(A) authorizing or relating to the transactions contemplated by the
Transaction Documents and (B) electing members of the Board in
accordance with the provisions of Section 8.4 hereof, and that such
resolutions are in full force and effect and have not been amended or
revoked as of the date thereof; and (d) to the incumbency and specimen
signatures of each officer of the Company executing the Transaction
Documents and the other agreements and certificates contemplated
thereby.
14.2 President's Certificate. A certificate of the President
of the Company in accordance with Section 18.1(a) hereof.
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14.3 Good Standing Certificate. A long-form certificate of the
Secretary of State of the State of Minnesota dated as of a recent date
as to the existence and good standing of the Company in such state.
14.4 Certificates. Certificates representing the Warrant
Shares and the First Option Shares, registered in such names and in
such denominations as the Purchaser shall have directed by notice to
the Company given not later than two Business Days prior to the Closing
Date.
14.5 Consents and Waivers. Executed copies of (a) any and all
consents and waivers necessary or appropriate for consummation of the
transactions contemplated by the Transaction Documents; (b) a consent
executed by the holders of the outstanding shares of Series B Preferred
Stock (i) to the transactions contemplated by the Transaction
Documents; (ii) amending Section 6 of the Certificate of Designation of
Series of Preferred Stock relating to the Series B Preferred Stock to
provide that the prior affirmative written consent of the holders of at
least a majority of the Series B Preferred Stock shall be required to
take any of the actions specified in paragraphs (d) (insofar as it
relates to the merger of the Company with the Purchaser or any
Affiliate thereof), (i) and (l) thereof; (iii) amending Section 5 of
the Certificate of Designation of Series of Preferred Stock relating to
the Series C Preferred Stock to provide that the prior affirmative
written consent of the holders of at least a majority of the Series C
Preferred Stock shall be required to take any of the actions specified
in paragraphs (d) (insofar as it relates to the merger of the Company
with the Purchaser or any Affiliate thereof), (i) and (l) thereof, and
(iv) amending each of the sections referenced in clauses (ii) and (iii)
of this Section 14.5 to provide that the protective provisions
contained in such sections shall terminate as to any shares of such
Preferred Stock transferred and that the approval of holders of
Preferred Stock required by such sections be calculated without
reference to the Preferred Stock transferred.
14.6 Charter Amendment. An executed copy of an amendment to
the Charter in appropriate form under applicable laws giving effect to
the amendments to the Charter as to which consent shall have been
obtained from the holders of the outstanding shares of Series B
Preferred Stock and Series C Preferred Stock as contemplated by Section
14.5 hereof.
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14.7 Resignations. Resignations, effective as of the Closing
Date, of those directors necessary to give effect to the provisions of
Section 8.4 hereof.
14.8 Other Instruments. Such other separate instruments or
documents that the Purchaser deems necessary or appropriate in order to
consummate the transactions contemplated by the Transaction Documents.
15. Closing Deliveries by the Company to IWHC. At or prior to the
Closing, the Company shall deliver to IWHC an amount equal to the sum of all
amounts due and payable by the Company to IWHC under the Working Capital Loans,
by wire transfer to an account designated by IWHC not later than two Business
Days prior to the Closing Date.
16. Closing Deliveries by IWHC. If the Second Option is exercised, at
or prior to the Closing, IWHC shall deliver to the Purchaser certificates
representing the Second Option Shares, accompanied by separate stock powers duly
executed in blank, with signatures guaranteed by a commercial bank, trust
company or New York Stock Exchange member firm.
17. Closing Deliveries by the Purchaser. At or prior to the Closing,
(a) the Purchaser shall deliver to the Company (i) an amount equal to the excess
of the purchase price for the Warrant Shares and First Option Shares over the
sum of all amounts due and payable by the Company to the Purchaser under the
Notes and the Working Capital Loans, by wire transfer to an account designated
by the Company not less than two Business Days prior to the Closing Date, and
(ii) the Notes and the notes evidencing the Working Capital Loans; and (b) if
the Second Option is exercised, the Purchaser shall deliver to IWHC the
consideration for the Second Option Shares as more fully set forth in the Second
Option Agreement.
18. Conditions Precedent to Closing Date Obligations.
18.1 Conditions to Obligations of the Purchaser. Each and
every obligation of the Purchaser to be performed at the Closing shall
be subject to the satisfaction as of or before the
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Closing Date of the following conditions (unless waived in writing by
the Purchaser):
(a) Except as set forth in Exhibit A to the
certificate referenced in Section 12(a) hereof, the Company's
representations and warranties set forth in Article 2 of this
Agreement shall have been true and correct in all material
respects when made and as of the Exercise Date as if such
representations and warranties were made as of the Exercise
Date, and the Purchaser shall have received a certificate to
that effect and as to the matters set forth in Section 18.1(b)
hereof, dated the Closing Date, from the Company.
(b) All covenants, conditions and other obligations
under this Agreement that are to be performed or complied with
by the Company and IWHC shall have been performed and complied
with in all material respects at or prior to the Closing.
(c) No preliminary or permanent injunction or other
order (including a temporary restraining order) of any
federal, state or local court or other governmental agency or
of any foreign jurisdiction that prohibits the consummation of
the Transaction Documents shall have been issued or entered
and remain in effect.
(d) After giving effect to the exercise of the
Warrant and the purchase of the First Option Shares and Second
Option Shares, the Purchaser shall own of record and
beneficially securities of the Company having a combined
voting power comprising a majority of the combined voting
power of all then outstanding securities of the Company.
(e) The Special Meeting Approvals shall have been
obtained.
(f) If the HSR Act is applicable to the consummation
of the transactions contemplated under the Transaction
Documents, all waiting periods thereunder shall have expired
or been terminated.
18.2 Conditions to Obligations of the Company. Each and every
obligation of the Company to be performed at the Closing shall be
subject to the satisfaction as of or before the Closing of the
following conditions (unless waived in writing by the Company):
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(a) The Purchaser's representations and warranties
set forth in Article 3 of this Agreement shall have been true
and correct in all material respects when made and as of the
Exercise Date as if such representations and warranties were
made as of the Exercise Date.
(b) All covenants, conditions and other obligations
under this Agreement that are to be performed or complied with
by the Purchaser shall have been performed and complied with
in all material respects at or prior to the Closing.
(c) No preliminary or permanent injunction or other
order (including a temporary restraining order) of any
federal, state or local court or other governmental agency or
of any foreign jurisdiction that prohibits the consummation of
the Transaction Documents shall have been issued or entered
and remain in effect.
(d) If the HSR Act is applicable to the consummation
of the transactions contemplated under the Transaction
Documents, all waiting periods thereunder shall have expired
or been terminated.
19. Indemnity. (a) Subject to the provisions of Section 19(b) hereof,
the Company shall, with respect to the representations, warranties, covenants
and agreements made by the Company in the Transaction Documents indemnify,
defend and hold the Purchaser and the holders of the Notes (and their respective
shareholders, directors, officers, employees, agents, Affiliates and controlling
parties) (each, an "Indemnified Party") harmless from and against all liability,
loss or damage, together with all reasonable costs and expenses related thereto
(including reasonable legal and accounting fees and expenses), arising from or
in connection with the untruth, inaccuracy or breach (or any facts or
circumstances constituting the untruth, inaccuracy or breach) of any such
representations, warranties, covenants or agreements of the Company contained in
this Agreement or the assertion of any claims relating to the foregoing. In
addition, the Company shall indemnify and hold harmless each Indemnified Party
against any losses, claims, damages or liabilities, joint or several, to which
any of the foregoing persons may become subject, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any alleged violations by the
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Company, the Board or any Indemnified Party or (ii) any actual violations by the
Company or the Board of the provisions of (x) Securities Act or state securities
or "blue sky" laws applicable to the Company relating to action or inaction
required of the Company in connection with the Securities Act or registration or
qualification under such state securities or blue sky laws, and (y) the MBCA,
the Securities Act or the Exchange Act, applicable to the transactions
contemplated by the Transaction Documents, including without limitation, those
implicated in any claim, action, suit or proceeding that may hereafter be
commenced by a shareholder of the Company; provided, however, that the Company
shall not be liable hereunder to the extent that any such loss, claim, damage or
liability (or actions in respect thereof) arises out of or is based on an untrue
statement or omission in reliance on and in conformity with written information
furnished by the Purchaser to the Company; and shall reimburse each such
Indemnified Party for any reasonable legal or other expenses incurred by any of
them in connection with investigating or defending any such loss, claim, damage,
liability or action. In case any such action is brought against an Indemnified
Party, the Company shall be entitled to participate in and assume the defense
thereof with counsel reasonably satisfactory to such Indemnified Party, and
after notice from the Company to such Indemnified Party of its election to
assume the defense thereof, the Company shall be responsible for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof, provided that if any Indemnified Party shall have reasonably
concluded that there may be one or more legal defenses available to such
Indemnified Party that conflict in any material respect with those available to
the Company, or that such claim or litigation involves or could have an effect
upon matters beyond the scope of the indemnity agreement provided in this
Section 19, the Company shall not have the right to assume the defense of such
action on behalf of such Indemnified Party and the Company shall reimburse such
Indemnified Party and any person controlling such Indemnified Party for that
portion of the fees and expenses of any counsel retained by the Indemnified
Party that are reasonably related to the matters covered by the indemnity
agreement provided in this Section 19. The Company shall not make any settlement
of any claims indemnified against hereunder without the written consent of the
Indemnified Party or Parties, unless such settlement shall include an
unconditional release of the Indemnified Party or Parties.
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(b) Notwithstanding the provisions of Section 19(a) hereof, no
Indemnified Party shall be entitled to assert a claim thereunder unless and
until the aggregate amount of all claims thereunder by all Indemnified Parties
equals or exceeds $25,000.
20. Termination. This Agreement may be terminated as follows
(notwithstanding receipt of the Special Meeting Approvals): (a) by mutual
written consent of the Purchaser and the Company at any time; (b) by the
Purchaser or the Company if the Closing shall not have occurred on or before
November 15, 2000, provided that the party seeking to exercise such right is not
then in breach of any of its material obligations under this Agreement; (c) by
either the Company or the Purchaser if there shall be any law or regulation that
makes consummation of the transactions contemplated by the Transaction Documents
illegal or otherwise prohibited or if any judgment, injunction, order or decree
enjoining the Purchaser or the Company from consummating such transactions is
entered and such judgment, injunction, order or decree shall become final and
non-appealable; or (d) by either the Company or the Purchaser if, at the Special
Meeting or any adjournment thereof at which the Transaction Documents are
submitted for approval, the Special Meeting Approvals shall not have been
obtained. The party desiring to terminate this Agreement pursuant to this
Section 20 shall give written notice of such termination to the other party in
accordance with Section 22.7. If this Agreement is terminated pursuant to
Section 20, this Agreement shall become void and of no effect with no liability
on the part of any party hereto or such party's officers, directors, employees
or representatives, except (i) that the agreements contained in Sections 6.1,
6.2, 6.3, 7(b), 8.3, 19, 22.4, 22.8 and 22.12 hereof shall survive the
termination hereof and (ii) nothing herein shall relieve any party from
liability for any breach of this Agreement.
21. Definitions. All capitalized terms used in this Agreement shall
have the meanings assigned to them elsewhere in this Agreement or as specified
below:
"Accommodation Obligation" shall mean, as applied to any
Person and without duplication of amounts, any obligation of such
Person guaranteeing or intended to guarantee (whether guaranteed,
endorsed, co-made, discounted, or sold with recourse to such Person)
any indebtedness, lease, dividend, letter of credit, or other
obligations ("primary obligation") of any Person in any
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manner whether directly or indirectly, including any obligation of such
Person or on behalf of any other Person (irrespective of whether
contingent), or to otherwise assure or hold harmless the owner of such
primary obligation against loss in respect thereof. The amount of any
Accommodation Obligation shall be deemed to be an amount equal to the
maximum amount of a Person's liability with respect to the stated or
determinable amount of the primary obligation for which such
Accommodation Obligation is incurred.
"Affiliate" means, with respect to any Person, any other
Person, directly or indirectly, controlling, controlled by, or under
common control with, such Person. For the purposes of this definition,
"control" when used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
"Approvals" shall mean licenses, permits, franchises and other
governmental approvals and authorizations.
"Bank Debt" shall mean senior commercial bank debt without
equity features.
"Benefit Arrangement" shall mean all plans, contracts,
bonuses, commissions, profit sharing, pension, savings, stock option,
severance, medical, insurance, deferred compensation or similar fringe
or employee benefits covering employees of the Company, whether or not
currently employed, or under which the Company has any obligation or
liability.
"Board" shall mean the Board of Directors of the Company.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in Minneapolis, Minnesota
are authorized or required to close under Federal law or the laws of
the State of Minnesota.
"Capitalized Lease" shall mean any lease of an asset by the
Company or any subsidiary as lessee which would, in conformity with
GAAP, be required to be accounted for as a capital lease on the balance
sheet of the Company or such subsidiary.
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"Capitalized Lease Obligations" shall mean the aggregate
amount which in accordance with GAAP is required to be reported as a
liability on the balance sheet of the Company or any subsidiary at such
time in respect of its respective interest as lessee under a
Capitalized Lease.
"Charter" shall mean the certificate of incorporation of the
Company.
"Closing Date" shall mean the date on which the following
concurrent transactions shall occur: (a) the acquisition by the
Purchaser from the Company of the Warrant Shares; (b) the acquisition
by the Purchaser from the Company of the First Option Shares; and (c)
the acquisition by the Purchaser from IWHC of the Second Option Shares.
The Closing Date shall be October 1, 2000, provided that if all of the
conditions to the obligation of the Purchaser to effect the
transactions set forth in the next preceding sentence shall not have
been satisfied or waived, then the Closing Date shall be the date
selected by the Purchaser that is not later than three Business Days
after the satisfaction or waiver of all of such conditions, but in no
event later than November 15, 2000.
"Commission" shall mean the Securities and Exchange
Commission.
"Common Stock" shall mean the Company's Common Stock, par
value $.001 per share.
"Debt" shall mean, with respect to any Person, without
duplication: (a) all obligations of such Person for borrowed money; (b)
all obligations of such Person evidenced by bonds, debentures, notes,
or other similar instruments; (c) all obligations of such Person in
respect of letters of credit, bankers acceptances, interest rate swaps
or other financial products or similar instruments (including
reimbursement with respect thereto), except such as have been issued to
secure payment of trade payables; (d) all obligations of such Person to
pay the deferred purchase price of property or services, except trade
payables; (e) all Capitalized Lease Obligations of such Person; (f) all
obligations or liabilities of others secured by a lien on any asset
owned by such
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Person, whether or not such obligation or liability is assumed by such
Person; and (g) all Accommodation Obligations of such Person.
"Encumbrances" shall mean liens, claims, charges, mortgages,
pledges, security interests or encumbrances of any kind or character
whatsoever.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exercise Date" shall mean the date designated by the
Purchaser on which the exercise of the First Option shall be effective
and which shall in no event be later than August 15, 2000.
"First Option" shall mean the right and option to purchase the
First Option Shares for an exercise price of $1.00 per share.
"First Option Shares" shall mean 7,750,000 shares of Common
Stock.
"GAAP" shall mean generally accepted accounting principles in
the United States of America.
"Government Contracts" shall mean contractual, statutory,
regulatory, and other requirements applicable to entities furnishing
coverage to employees of federal, state and local governments and
subdivisions and to beneficiaries under programs sponsored or
administered by any such governments or subdivisions thereof.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder.
"IWHC" shall mean Industrial-Works Holding Co., LLC, a
Delaware limited liability company.
"Intellectual Property Rights" shall mean all worldwide
intellectual property rights, including without limitation, each
patent, patent right and application, license, trademark, trade name,
and trademark right and application, copyright, copyright
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registration and application, service ▇▇▇▇, brand ▇▇▇▇ and name, and
trade secrets relating to or arising from any proprietary process or
formula.
"Knowledge" shall mean with respect to the Company all
information that is actually known, or in the exercise of reasonable
diligence in the normal course of their employment should have been
known, by ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇.
"Market Value" shall mean with respect to a share of Common
Stock that may be purchased by the Purchaser in accordance with Section
8.1 hereof, the average closing price (or if there shall be no
published closing price, the average of the closing bid and asked
prices) of a share of Common Stock in the principal securities market
in which the Common Stock is traded during the 20 most recent trading
days ended three trading days prior to the exercise of the option or
warrant that resulted in such purchase of Common Stock by the
Purchaser.
"Material Adverse Effect" shall mean a material adverse effect
on the assets, condition (financial or otherwise), affairs, business,
results of operations or prospects of the Company, but shall not
include general economic conditions, conditions affecting the Company
and its competitors generally or those matters disclosed in Section 2.6
of the Schedule of Exceptions.
"MBCA" shall mean the Minnesota Business Corporation Act.
"1999 Notes" shall mean the Company's subordinated notes dated
in September 1999 in the aggregate principal amount of $3,000,000.
"Note and Warrant Purchase Price" shall mean the sum of
$2,500,000.
"Notes" shall mean the Company's Subordinated Promissory Notes
in the original aggregate principal amount of $2,500,000, in the form
set forth as Exhibit D hereto.
"Person" shall mean an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority
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or other entity of whatever nature, including, as appropriate, the
Company or any subsidiary thereof.
"Proxy Statement" shall mean the proxy statement relating to
the Special Meeting.
"Registration Rights Agreement" shall mean the agreement dated
the date hereof between the Company and the Purchaser in the form
attached hereto as Exhibit E.
"Reserved Shares" shall mean the aggregate of the shares of
Common Stock issuable (a) upon exercise of the Warrant and the First
Option, and (b) upon conversion of the Second Option Shares.
"SEC Documents" shall mean (a) all reports filed by the
Company under the Exchange Act, including those filed pursuant to
Section 13(a) or 15(d) thereof, and (b) all registration statements
filed by the Company under the Securities Act, whether or not declared
effective by the Commission, in each case for the three years preceding
the date hereof.
"Second Option" shall mean the right and option of IWHC to
sell the Second Option Shares to the Purchaser pursuant to the Second
Option Agreement.
"Second Option Agreement" shall mean that certain agreement of
even date herewith between IWHC and the Purchaser.
"Second Option Shares" shall mean 2,428,600 shares of Series B
Preferred Stock and 285,700 shares of Series C Preferred Stock.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Series B Preferred Stock" shall mean the Company's Series B
Convertible Participating Preferred Stock, $.001 par value.
"Series C Preferred Stock" shall mean the Company's Series C
Convertible Participating Preferred Stock, $.001 par value.
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"Special Meeting" shall mean a special meeting of shareholders
of the Company, the agenda for which shall include all approvals
required for the transactions contemplated by the Transaction
Documents, including without limitation, those required under Sections
302A.671 and 302A.673 of the MBCA and the rules of the Nasdaq Stock
Market (the "Special Meeting Approvals").
"Subsequent Financing" shall mean the offer, sale, grant of an
option to purchase, or other disposition (or the announcement of an
offer, sale, grant of an option to purchase or other disposition) of
any equity or equivalent security of the Company or any Subsidiary.
"Subsequent Financing Notice" shall mean a written notice of a
Subsequent Financing.
"Subsidiaries" shall mean those corporations of which more
than 50% of the outstanding shares of stock of each class having
ordinary voting power is owned or controlled, directly or indirectly,
by the Company.
"Transaction Documents" shall mean this Agreement, the Notes,
the Warrant and the Registration Rights Agreement.
"Warrant" shall mean the warrant to purchase 1,250,000 shares
of Common Stock, in the form set forth as Exhibit F hereto.
"Warrant Shares" shall mean the Common Stock issuable upon
exercise of the Warrant.
"Working Capital Lender" shall mean IWHC or the Purchaser, as
the case may be.
"Working Capital Loan" shall mean a loan made by either of
IWHC or the Purchaser to the Company, which shall represent the
purchase of a subordinated note substantially in the form of the Notes
in the principal amount of such Working Capital Loan. Each such Note
shall be delivered to the Working Capital Lender against wire transfer
of such Working Capital Loan to an account designated by the Company.
22. Miscellaneous.
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22.1 Additional Agreements; Cooperation. Subject to the terms
and conditions herein provided, each of the parties hereto shall use
its reasonable commercial efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement, and to cooperate with
each other in connection with the foregoing, including using its
reasonable efforts (i) to obtain all necessary waivers, consents and
approvals from other parties, (ii) to obtain all necessary consents,
approvals and authorizations as are required to be obtained under any
federal, state or foreign law or regulations, (iii) to defend all
lawsuits or other legal proceedings commenced or instituted by persons
or entities other than the parties hereto challenging this Agreement or
the consummation of the transactions contemplated hereby, (iv) to lift
or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions
contemplated hereby, and (v) to fulfill all conditions to this
Agreement.
22.2 Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Company and the
Purchaser contained in or made pursuant to this Agreement shall survive
the execution and delivery of this Agreement and the Closing and shall
in no way be affected by any investigation of the subject matter
thereof made by or on behalf of the Purchaser or the Company; provided,
however, that the representations and warranties of the parties shall
not survive beyond the third anniversary of the Closing.
22.3 Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of
the parties (including transferees of the Notes sold hereunder or the
Reserved Shares). Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except
as expressly provided in this Agreement. The Company may not assign or
transfer any of its rights under this Agreement without the prior
written consent of the Purchaser. The Purchaser may assign and transfer
its rights
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under this Agreement, in whole or in part, to any of its Affiliates at
such times and upon such conditions as the Purchaser shall determine in
its sole discretion subject to the obligations imposed on the Purchaser
by this Agreement.
22.4 Governing Law; Jurisdiction. This Agreement and the other
Transaction Documents shall be governed by, construed, applied and
enforced in accordance with the laws of the State of Delaware,
including the Uniform Commercial Code, except that no doctrine of
choice of law shall be used to apply any law other than that of
Delaware, and no defense, counterclaim or right of set-off given or
allowed by the laws of any other state or jurisdiction, or arising out
of the enactment, modification or repeal of any law, regulation,
ordinance or decree of any foreign jurisdiction, shall be interposed in
any action hereon. Any action or proceeding to enforce any right
arising out of the Transaction Documents may be commenced in the courts
of the State of Delaware or in the United States District Court in the
State of Delaware, and the Company consents to such jurisdiction,
agrees that venue will be proper in such courts in any such matter,
agrees that New Castle County is the most convenient forum for
litigation in any such suit, action or legal proceeding, and agrees
that a summons and complaint commencing an action or proceeding in any
such court shall be properly served and shall confer personal
jurisdiction if served by registered or certified mail to the Company,
or as otherwise provided by the laws of the State of Delaware or the
United States of America. The Company agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other manner
provided by law.
22.5 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
22.6 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
22.7 Notices. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall
be deemed effectively given upon personal
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delivery (which shall include delivery by responsible overnight
carrier)to the party to be notified or five days after deposit with the
United States Post Office, by registered or certified mail, postage
prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other
address as such party may designate by written notice hereunder to the
other parties, with a copy (which shall not constitute notice) to (a)
in case of notices to the Company, to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇▇▇▇▇▇▇
Center South, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., (b) in case of notices to the
Purchaser, to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., and
(c) in the case of notices to IWHC to Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
22.8 Finder's Fee. Each party represents that except as set
forth in Section 22.8 of the Schedule of Exceptions, it neither is nor
will be obligated for any finder's fee or commission in connection with
the transactions contemplated by the Transaction Documents. The Company
agrees to indemnify and hold harmless the Purchaser from any liability
for any commission or compensation in the nature of a finder's fee (and
the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees, or
representatives is responsible.
22.9 Entire Agreement; Amendments and Waivers. This Agreement
constitutes the full and entire understanding and agreement between the
parties with regard to the subject hereof. Any term of this Agreement
may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the
parties hereto.
22.10 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such
provision shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provision were so excluded
and shall be enforceable in accordance with its terms.
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22.11 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this
Agreement were not performed in accordance with the terms hereof and
that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity, without the
necessity of demonstrating the inadequacy of money damages.
22.12 Expenses and Taxes. Each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if
any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this
Agreement, except (a) as set forth in the Registration Rights Agreement
and (b) that such expenses of the Company shall be limited to $650,000
payable to ▇▇▇▇▇▇▇▇▇, Agio, ▇▇▇▇▇ & ▇▇▇▇▇▇ at the Closing plus other
expenses not to exceed $250,000 in the aggregate. The Company shall pay
any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and
recording of this Agreement and agrees to save the Purchaser harmless
from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes and fees.
22.13 Waiver of Trial By Jury. TO THE EXTENT THEY MAY LEGALLY
DO SO, THE PARTIES HERETO HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING
ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTION
DOCUMENTS OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL
TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT,
THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS RELATED HERETO AND
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. TO THE
EXTENT THEY MAY LEGALLY DO SO, THE PARTIES HERETO HEREBY AGREE THAT ANY
SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE
DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 22.13 WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES
HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.
22.14 Independence of Covenants. All covenants under this
Agreement shall be given independent effect so that if a particular
action or condition is not permitted by any one
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covenant, the fact that it would be permitted by another covenant, by
an exception thereto, or would otherwise be within the limitations
thereof, shall not avoid the occurrence of breach of this Agreement if
such action is taken or condition exists.
22.15 IWHC Waiver of Preemptive Rights. By its signature to
this Agreement, IWHC (as the holder of all issued and outstanding
shares of the Company's Series B Preferred Stock and Series C Preferred
Stock), hereby irrevocably waives, solely with respect to the
transactions contemplated by this Agreement (including without
limitation, the issuance of the First Option, the Warrant and the
Reserved Shares), the preemptive rights provisions set forth in Section
8 of the Certificate of Designation of Series of Preferred Stock
relating to the Series B Preferred Stock and Section 7 of the
Certificate of Designation of Series of Preferred Stock relating to the
Series C Preferred Stock.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
FIELDWORKS, INCORPORATED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FWRKS ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Address: Teknor Applicom Inc.
▇▇▇ ▇▇▇▇-▇▇▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇
ACKNOWLEDGED AND AGREED SOLELY
WITH RESPECT TO THE PROVISIONS
OF SECTIONS 8.4, 9, 16 AND 22.15
HEREOF:
INDUSTRIAL-WORKS HOLDING CO., LLC
By: /s/ ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
Title: Managing Director
Address: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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