EXHIBIT 10.7
SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
by and among
AMERICAS POWER PARTNERS, INC.
and
▇▇▇▇▇▇▇▇▇ INTERNATIONAL, INC.
JUNE 28, 2001
TABLE OF CONTENTS
-----------------
SECTION 1 Authorization and Sale of Securities ................................ 1
1.1 Authorization ......................................................... 1
1.2 Sale of Shares ........................................................ 1
SECTION 2 Closing Date, Delivery .............................................. 1
2.1 Closing Date .......................................................... 1
2.2 Delivery .............................................................. 1
2.3 Use of Proceeds ....................................................... 1
SECTION 3 Representations and Warranties of the Company ....................... 2
3.1 Organization and Standing; Articles and Bylaws ........................ 2
3.2 Corporate Power; No Contravention ..................................... 2
3.3 Subsidiaries .......................................................... 2
3.4 Capitalization ........................................................ 2
3.5 Authorization, Validity of Stock ...................................... 3
3.6 Financial Statements .................................................. 3
3.7 No Material Adverse Change ............................................ 4
3.8 Assets ................................................................ 5
3.9 Patents and Other Intangible Assets ................................... 5
3.10 Material Contracts and Commitments .................................... 6
3.11 Compliance with Other Instruments, None Burdensome, Etc ............... 6
3.12 Litigation, Etc ....................................................... 7
3.13 Employees ............................................................. 7
3.14 Insurance ............................................................. 7
3.15 No Registration Rights ................................................ 7
3.16 Governmental Consent, Etc ............................................. 7
3.17 Company Transactions with its Officers, Directors, or Shareholders .... 8
3.18 Taxes Paid ............................................................ 8
3.19 Offering .............................................................. 8
3.20 Brokers or Finders .................................................... 8
3.21 Disclosure ............................................................ 8
3.22 Environmental Matters ................................................. 9
3.23 Bankruptcy ............................................................ 9
3.24 Issuance Taxes ........................................................ 10
3.25 Compliance with Laws .................................................. 10
SECTION 4 Representations and Warranties of the Purchaser ..................... 10
4.1 Experience ............................................................ 10
4.2 Investment ............................................................ 10
4.3 Rule 144 .............................................................. 10
4.4 No Public Market ...................................................... 11
4.5 Access to Data ........................................................ 11
4.6 Authorization .................................................. 11
4.7 Compliance with Other Instruments .............................. 11
4.8 Governmental Consent, Etc ...................................... 11
4.9 Status ......................................................... 12
SECTION 5 Conditions to Closing of Purchaser ............................ 12
5.1 Representations and Warranties Correct ......................... 12
5.2 Covenants ...................................................... 12
5.3 Articles of Amendment .......................................... 12
5.4 Charter Documents, Good Standing Certificates .................. 12
5.5 Proof of Corporate Action, Approvals ........................... 12
5.6 Incumbency Certificate ......................................... 12
5.7 Consents ....................................................... 13
5.8 Approvals ...................................................... 13
5.9 Due Diligence .................................................. 13
SECTION 6 Conditions to Closing of Company .............................. 13
6.1 Representations ................................................ 13
6.2 Covenants ...................................................... 13
SECTION 7 Covenants of the Company ...................................... 13
7.1 Maintenance of Corporate Status ................................ 13
7.2 Compliance with Articles and Bylaws ............................ 13
7.3 Reservation of Stock ........................................... 13
7.4 Compliance with Laws, Licenses and Permits, No Infringement .... 14
7.5 Discharge of Obligations ....................................... 14
7.6 Maintenance of Properties ...................................... 14
7.7 Maintenance of Proprietary Information ......................... 14
7.8 Insurance ...................................................... 14
7.9 Books and Records .............................................. 15
7.10 Further Assurances ............................................. 15
SECTION 8 Rights of First Refusal ....................................... 15
SECTION 9 Miscellaneous ................................................. 16
9.1 Governing Law .................................................. 16
9.2 Survival ....................................................... 16
9.3 Successors and Assigns ......................................... 16
9.4 Entire Agreement, Amendment .................................... 16
9.5 Notices, Etc ................................................... 16
9.6 Delays or Omissions ............................................ 17
9.7 Counterparts ................................................... 17
9.8 Severability ................................................... 17
9.9 Titles and Subtitles ........................................... 17
9.10 Further Assurances .................................. 17
9.11 Amendment to Agreement .............................. 17
EXHIBIT A Disclosure Schedule .................................... 19
EXHIBIT B Material Contracts ..................................... 20
EXHIBIT C Articles of Amendment to Articles of Incorporation ..... 21
AMERICAS POWER PARTNERS, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
This SERIES B PREFERRED STOCK PURCHASE AGREEMENT is made as of June 28,
2001, by and between AMERICAS POWER PARTNERS, INC., a Colorado corporation (the
"Company"), with principal offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇▇▇▇ INTERNATIONAL, INC., a Michigan
corporation, with principal offices at ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Purchaser").
SECTION 1
Authorization and Sale of Securities
1.1 Authorization. The Company will authorize the sale and issuance of
-------------
3,000,000 shares of its Series B Preferred Stock (the "Shares"). The Shares are
sometimes referred to as the "Securities."
1.2 Sale of Shares. Subject to the terms and conditions hereof, the
--------------
Company will issue and sell the Shares to the Purchaser and the Purchaser agrees
to buy the Shares from the Company in exchange for the following: (i) the
Purchaser becoming a guarantor of certain indebtedness of ▇▇▇▇▇▇▇▇▇-Americas-I,
L.L.C., a joint venture by and between the Purchaser and the Company, pursuant
to a commercial guaranty dated May 22, 2001; (ii) additional consideration for
Purchaser's agreement to provide certain short-term financing for additional
equity investment in ▇▇▇▇▇▇▇▇▇-Americas-I, L.L.C., a joint venture between the
Company and the Purchaser; (iii) cancellation of indebtedness of the Company to
the Purchaser in the amount of $468,000, which arose from advances by Purchaser
to the Company for development and other business expenses.
SECTION 2
Closing Date, Delivery
2.1 Closing Date. The purchase and sale of the Securities hereunder
------------
shall be held at a closing ("Closing") at 10:00 a.m. (Central Time) on June 28,
2001, at the offices of Chuhak & ▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other time and place as the Company and
the Purchasers shall agree. The date of the Closing is hereinafter referred to
as the "Closing Date".
2.2 Delivery. At the Closing, the Company will deliver to Purchaser a
--------
certificate registered in the name of the Purchaser or its nominee, representing
the Shares to be purchased by Purchaser.
2.3 Use of Proceeds. The Company will use the proceeds from the sale
---------------
of the Shares, if any, for capital acquisitions and general corporate purposes.
SECTION 3
Representations and Warranties of the Company
Except as set forth on the Disclosure Schedule attached as Exhibit A
hereto, the Company represents and warrants to the Purchasers as follows:
3.1 Organization and Standing; Articles and Bylaws. The Company is a
----------------------------------------------
corporation duly organized and validly existing under, and by virtue of, the
laws of the State of Colorado and is in good standing under such laws. The
Company has requisite corporate power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted. The
Company is qualified to do business as a foreign corporation in those
jurisdictions in which the failure to be so qualified would have a material
adverse effect on the Company's business as now conducted or as now proposed to
be conducted. The states in which the Company is qualified to do business are
listed in Item 3.1 of Exhibit A. The Company has furnished Purchasers with
copies of its Articles of Incorporation and its Bylaws, which copies are true,
correct and complete and will contain all amendments through the Closing Date.
3.2 Corporate Power; No Contravention. The Company will have at the
---------------------------------
Closing Date all requisite legal and corporate power and authority to execute
and deliver this Agreement and the Company's Articles of Amendment ("Articles")
to the Articles of Incorporation, enacted without shareholder action, in the
form attached as Exhibit D hereto which amends the Company's Articles of
Incorporation, to sell and issue the Securities hereunder and to carry out and
perform its obligations under the terms of this Agreement and the Articles of
Incorporation. This Agreement will not conflict with or contravene the terms of
the Company's Articles of Incorporation, Bylaws or any amendment thereof, and
will not result in any material breach of any contractual obligations or law,
rule or regulation to which the Company is subject.
3.3 Subsidiaries. The Company has no subsidiaries or affiliated
------------
companies and does not otherwise own or control, directly or indirectly, any
equity interest in any corporation, association or business entity, other than
joint ventures entered or to be entered into by the Company and the Purchaser.
3.4 Capitalization. The authorized capital stock of the Company
--------------
consists or will immediately prior to the Closing Date, consist solely of the
following:
Class Authorized Issued and Outstanding
----- ---------- ----------------------
Common 40,000,000 9,742,100
Preferred (all series) 10,000,000 5,709,519 - see below
Series A Preferred 2,725,000 2,709,519
Series B Preferred 3,000,000 3,000,000 (per this Agreement)
In addition, 5,000,000 shares of Common Stock have been reserved for
issuance to key employees and consultants pursuant to the Company's 2000 Equity
Incentive Plan, of which 3,360,000 remain available for issuance under such
plan. Further, as to the 2,709,519 shares of Series
2
A Preferred Stock issued and outstanding, they are convertible into 3,391,708
shares of Common Stock. As of the Closing Date, the outstanding shares of Common
Stock, Series A Preferred Stock and Series B Preferred Stock have been duly
authorized and validly issued, and are fully paid and nonassessable. The Company
has reserved 3,000,000 shares of Common Stock for issuance upon conversion of
the Shares (the "Conversion Shares"). Except as described herein and in Item 3.4
of the Disclosure Schedule, there are no options, warrants, convertible
securities or other rights to purchase or acquire any of the Company's
authorized and unissued capital stock and, further, there are no preemptive
rights, tag along rights, rights of first refusal, rights of co-sale or other
similar rights with respect to the Company's capital stock or other contracts or
agreements which, through anti-dilution protection or otherwise, obligate or
allow the Company to issue or redeem any of its capital stock. Upon the Closing
contemplated herein, the Ownership Percentage, as defined in the Articles, will
be 16.88%.
3.5 Authorization, Validity of Stock. All corporate action on the part
--------------------------------
of the Company, its directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company, the
authorization, sale, issuance and delivery of the Shares and the Conversion
Shares and the performance of all of the Company's obligations hereunder has
been taken or will be taken prior to the Closing. This Agreement and the
Articles, when executed and delivered by the Company, shall constitute valid and
binding obligations of the Company, enforceable in accordance with their terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies. The Shares and the Conversion
Shares, when issued in compliance with the provisions of this Agreement, will be
validly issued, fully paid and nonassessable and will be free of any liens or
encumbrances; provided, however, that the Shares and the Conversion Shares may
be subject to restrictions on transfer under the state and/or federal securities
laws as set forth herein. The Shares and the Conversion Shares are not subject
to any preemptive rights or rights of first refusal. The Company has duly
reserved 3,000,000 Conversion Shares.
3.6 Financial Statements. The Company has delivered to the Purchasers
--------------------
its audited balance sheet and statement of operations (the "Financial
Statements") as of and for the fiscal year ended March 31, 2001 (the "Balance
Sheet Date"). The Financial Statements are complete and correct in all material
respects and they have been prepared in accordance with generally accepted
accounting principles ("GAAP") on a consistent basis throughout the periods
indicated. The Financial Statements accurately describe the respective financial
condition and operating results of the Company as of the dates, and during the
periods indicated. Except as set forth in the Financial Statements, the Company
has no material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business after the Balance Sheet Date, and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under GAAP to be reflected in the Financial
Statements, which, in both cases, individually or in the aggregate, are not
material to the financial condition or operating results of the Company. Except
as disclosed in the Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with GAAP.
3
3.7 No Material Adverse Change. Since the Balance Sheet Date:
--------------------------
(a) The Company has not entered into any transaction which was
not in the ordinary course of its business except as contemplated by this
Agreement or as set forth in Exhibits or Schedules to this Agreement.
(b) There has been no change in the condition (financial or
otherwise), business, business prospects, property, assets, or liabilities of
the Company other than changes in the ordinary course of its business, none of
which, individually or in the aggregate, is material.
(c) There has been no damage to, destruction of or loss of
physical property (whether or not covered by insurance) materially adversely
affecting the business or operations of the Company.
(d) Except as known by the Purchaser, there has been no
resignation or termination of employment of any officer or key employee of the
Company, and the Company does not know of the impending resignation or
termination of employment of any officer or employee of the Company that would
have a materially adverse effect on the business of the Company.
(e) There have been no loans made by the Company to employees,
officers or directors other than travel advances and sales commission advances
made in the ordinary course of business;
(f) There has been no waiver or compromise by the Company of a
valuable right or of a material debt owed to it;
(g) There has been no satisfaction or discharge of any lien,
claim, or encumbrance or payment of any obligation by the Company, except in the
ordinary course of business and that is not material to the business,
properties, prospects, or financial condition of the Company (as such business
is presently conducted and as it is presently proposed to be conducted);
(h) There has been no material change to a material contract or
arrangement by which the Company or any of its assets is bound or subject except
for certain options granted by the Company as provided in the Disclosure
Schedule;
(i) There has been no material change in any compensation
arrangement or agreement with any employee, officer, director or shareholder;
(j) There has been no sale, assignment, or transfer of any
patents, trademarks, copyrights, trade secrets, or other intangible assets;
(k) There has been no receipt of notice that there has been a
loss of, or material order cancellation by, any major customer of the Company;
4
(l) There has been no mortgage, pledge, transfer of a security
interest in, or lien, created by the Company, with respect to any of its
material properties or assets, except liens for taxes, mechanics or materialmen
not yet due or payable or being contested in good faith;
(m) There has been no declaration, setting aside, or payment
of any dividend or other distribution of the Company's assets in respect of any
of the Company's capital stock, or any direct or indirect redemption, purchase,
or other acquisition of any of such stock by the Company;
(n) To the best of the Company's knowledge, there has been no
other event or condition of any character that might materially and adversely
affect the business, properties, prospects or financial condition of the Company
(as such business is presently conducted and as it is presently proposed to be
conducted); and
(o) There has been no agreement or commitment by the Company to
do any of the things described in this Section 3.7.
3.8 Assets. The Company has good and, with respect to real property,
------
marketable, title to all of its real and personal property, including all assets
reflected on the balance sheets included in the Financial Statements or acquired
by the Company since the Balance Sheet Date, all of which are in good operating
condition subject to ordinary wear and tear, and free and clear of material
restrictions on or conditions to transfer or assignment, and free and clear of
all liens, claims, mortgages, pledges, charges, equities, easements, rights of
way, covenants, conditions, security interests, encumbrances, or restrictions,
except for liens for current taxes, mechanics, or materialmen not yet due and
payable or being contested in good faith. Set forth on Item 3.8 of the
Disclosure Schedule is a correct and complete list of all real property owned by
the Company and a list (including the amount of monthly rents called for and a
summary description of the leased property) of all leases for real property
under which the Company is a lessee. The properties and leases listed on Item
3.8 of the Disclosure Schedule are sufficient for the conduct of the Company's
business as now being and presently planned to be conducted. The Company holds a
valid leasehold interest in all leases listed on Item 3.8 of the Disclosure
Schedule, free of any liens, claims, or encumbrances granted by the Company, and
is not in default under any such lease. The Company enjoys peaceful and
undisturbed possession of all premises owned by it, or leased to it from others,
and does not occupy any real property in material violation of any law,
regulation, or decree.
3.9 Patents and Other Intangible Assets.
-----------------------------------
(a) The Company (i) to the best of its knowledge, owns or has
the right to use, free and clear of all liens, claims and restrictions, all
patents, trademarks, service marks, trade names, copyrights, licenses and other
intellectual property rights used in the conduct of its business as now
conducted or as proposed to be conducted (the "Proprietary Information")
without, to the best of its knowledge, infringing upon or otherwise acting
adversely to the right or claimed right of any person under or with respect to
any of the foregoing, and (ii) is not obligated or under any liability
whatsoever to make any payments by way of royalties, fees or otherwise to any
owner of, licensor of,
5
or other claimant to, any patent, trademark, tradename, copyright or other
intangible asset, with respect to the use thereof or in connection with the
conduct of its business or otherwise.
(b) To the best of its knowledge, the Company owns or has the
unrestricted right to use all trade secrets, including know-how, inventions,
designs, processes, computer programs, security buy or sell research models and
technical data required for or incident to the development, manufacture,
operation and sale of all products and services sold or proposed to be sold by
the Company (the "Trade Secret Information"), free and clear of any rights,
liens or claims of others, including without limitation former employers of all
employees of the Company.
(c) True and complete copies of all papers and documents
relating to the Proprietary Information and Trade Secret Information have been
made available to Purchaser, including all patent application file histories,
trademark and service ▇▇▇▇ application file histories, copyright registration
file histories, license and option negotiation papers, purchase negotiation
papers, and all licenses, assignments and agreements relating to the Proprietary
Information and Trade Secret Information.
(d) There is no pending or, to the Company's knowledge,
threatened claim or litigation against the Company relating to the Proprietary
Information or Trade Secret Information, or asserting the infringement or other
violation of any intellectual property rights of any third party or past or
current employee of the Company.
(e) To the Company's knowledge, there is no claim that can be
asserted by or against a third party for infringement, misappropriation, breach
or otherwise relating to the Proprietary Information or Trade Secret
Information.
3.10 Material Contracts and Commitments. Each of the contracts,
----------------------------------
agreements and instruments and each compensation arrangement or any other
agreement with officers, consultants, shareholders or affiliates which is
material to the business or financial condition of the Company is listed on
Exhibit B attached hereto. All contracts, agreements and instruments to which
the Company is a party are valid and binding obligations of, enforceable
against, and in full force and effect in all material respects against, the
Company and, to the best knowledge of the Company, the other parties thereto,
subject to the laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
3.11 Compliance with Other Instruments, None Burdensome, Etc. The
-------------------------------------------------------
Company is not in violation of any material term or provision of any material
mortgage, indebtedness, indenture, contract, agreement, instrument, judgment or
decree, and is not in violation of any order, statute, rule or regulation
applicable to the Company which would have a material adverse effect on the
Company. The execution, delivery and performance of and compliance with this
Agreement and the Articles, and the issuance of the Securities have not resulted
and will not result in any violation of, or conflict with, or constitute a
default under, any of the terms of any corporate restriction or of any
indenture, mortgage, deed of trust, pledge, bank loan or credit agreement,
corporate charter, bylaw or any instrument, document or agreement by which the
Company or its properties may be bound or
6
affected, or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of the Company or result in the
acceleration of any indebtedness or obligation.
3.12 Litigation, Etc. There are no complaints, writs, orders,
---------------
injunctions, judgments, actions, suits, proceedings or investigations pending
against the Company or its properties before any court or governmental agency
(nor, to the best of the Company's knowledge, is there any basis therefor or
threat thereof), which, either in any case or in the aggregate, might result in
any material adverse change in the business or financial condition of the
Company or any of its properties or assets, or in any material impairment of the
right or ability of the Company to carry on its business as now conducted or as
proposed to be conducted, or in any material liability on the part of the
Company, and none which questions the validity of this Agreement or any action
taken or to be taken in connection herewith. The Company is not in default of
its obligations under any complaints, writs, orders, injunctions or judgments to
which it is subject.
3.13 Employees. To the best of the Company's knowledge, no employee of
---------
the Company is in violation of any term of any contract or agreement relating to
the relationship of any such employee with the Company or any other party
because of the nature of the business conducted or to be conducted by the
Company. The Company does not have any collective bargaining agreements covering
any of its employees. The Company does not have or otherwise contribute to or
participate in any employee retirement benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended.
3.14 Insurance. The Company has fire, casualty and liability insurance
---------
policies, with extended coverage, adequate to protect against all risks against
which it is customary to issue by companies engaged in businesses the same or
similar to the business conducted by the Company.
3.15 No Registration Rights. Except as set forth in the Articles,
----------------------
the Company is not under any obligation to register any of its presently
outstanding securities or any of its securities which may hereafter be issued.
3.16 Governmental Consent, Etc. No consent, approval or authorization
-------------------------
of or designation, declaration or filing, with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement or the offer, sale or issuance of the Securities,
except for the filing of the Articles and the qualification (or taking such
action as may be necessary to secure an exemption from qualification, if
available) of the offer and sale of the Securities under applicable Blue Sky
laws, which filings and qualifications, if required, will be accomplished in a
timely manner prior to or promptly upon the completion of the Closing.
3.17 Company Transactions with its Officers, Directors, or
-----------------------------------------------------
Shareholders. Except for amounts due Purchaser from the Company, the Company is
------------
not indebted, either directly or indirectly, to any of its officers, directors
or shareholders or to their respective spouses or children, in any amount
whatsoever, other than for payment of salary for services rendered and
reasonable expenses. None of the Company's officers, directors, or shareholders
or any members of their immediate families is indebted to the Company, nor do
any officers, directors or, to the best of the knowledge of the
7
Company, shareholders have any direct or indirect ownership interest in any firm
or corporation which controls, is controlled by or under common control with the
Company or which competes with the Company. Except for consulting agreements or
arrangements as listed on Exhibit B, no officer, director or shareholder or any
member of their immediate families is, directly or indirectly, interested in any
material contract with the Company. The Company is not a guarantor or indemnitor
of any indebtedness of any other person, firm or corporation.
3.18 Taxes Paid. The Company has timely filed all tax returns that are
----------
required to have been filed by it with appropriate federal, state, county and
local governmental agencies or instrumentalities. The Company has paid or
established reserves for all income, franchise, payroll and other taxes due as
reflected on those returns. There is no pending dispute with any taxing
authority relating to any of the Company's returns. The Company has no knowledge
of any proposed material liability for any tax to be imposed upon its properties
or assets for which there is not an adequate reserve reflected in the Financial
Statements.
3.19 Offering. Subject to the accuracy of Purchasers' representations
--------
in Section 4 hereof, the offer, sale and issuance of the Securities to be issued
in conformity with the terms of this Agreement constitute transactions exempt
from the registration requirements of Section 5 of the Securities Act of 1933,
as amended (the "Securities Act") and applicable Blue Sky laws. The Company has
not issued any securities in violation of applicable federal or state securities
laws except for such violations, if any, which in the aggregate do not and will
not have a material adverse affect on the Company or the Shares.
3.20 Brokers or Finders. The Company has not incurred, and will not
------------------
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
3.21 Disclosure. No representation or warranty of the Company contained
----------
in this Agreement and any exhibit attached hereto, or any written statement or
certificate furnished or to be furnished to the Purchasers pursuant hereto or in
connection with the transactions contemplated hereby (when read together)
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
3.22 Environmental Matters.
---------------------
(a) The Company is in compliance in all material respects with
all Environmental Laws (as defined) and, to its knowledge, no material
expenditures are or will be required in order to comply with any Environmental
Law. The Company has not knowingly handled, stored or released, or exposed any
person to, any Hazardous Substances (as defined) except in compliance with
Environmental Laws. The Company is not, and has not been notified that it will
be in the future, liable or responsible for clean-up costs, remedial work or
damages in connection with the handling, storage, release, or exposure by the
Company of any Hazardous Substances or in connection with any Environmental Law.
8
(b) As used in this Section 3.22, "Environmental Laws" means any
and all present and future laws (whether common or statutory), compacts,
treaties, conventions or rules, regulations, codes, plans, requirements,
criteria, standards, orders, decrees, judgments, injunctions, notices or demand
letters issued, promulgated or entered thereunder by any foreign, federal,
tribal, state or local governmental entity relating to public or employee health
and safety, pollution or protection of the environment, including without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendment and Reauthorization
Act of 1986 ("CERCLA"), the Resource Conversation and Recovery Act ("RCRA"), the
Federal Safe Drinking Water Act, the Federal Water Pollution Control Act, the
Used Oil Recycling Act of 1980, the Solid Waste Disposal Act, the Emergency
Planning and Community Right-To-Know Act of 1986, the Clean Air Act and any and
all of the foreign, federal, state, tribal and local laws, rules, regulations
and orders relating to reclamation of land, wetlands and waterways or relating
to use, storage, emissions, discharges, clean-up, release or threatened releases
of pollutants, contaminants, chemicals or industrial, toxic or Hazardous
Substances on or into the workplace or the environment (including without
limitation, ambient air, oceans, waterways, wetlands, surface water, ground
water (tributary and non-tributary), land surface or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation or handling of pollutants, contaminants,
chemicals or industrial, toxic, hazardous or similar substances, as all of the
foregoing may be amended, supplemented or reauthorized from time to time, and
"Hazardous Substances" means (i) any and all "wastes" and "hazardous wastes," as
defined by CERCLA; (ii) "solid wastes" and "hazardous wastes," as defined by
RCRA; (iii) any pollutant, contaminate or hazardous, dangerous or toxic
chemicals, materials or substances within the meaning of any Environmental Law;
(iv) any radioactive material, including any source, special nuclear or
by-product material as defined at 42 U.S.C. (S)2011 et seq. as amended; and (v)
asbestos in any form or condition.
3.23 Bankruptcy. The Company has not filed or consented to the filing
----------
against it of a petition in bankruptcy or a petition to take advantage of any
insolvency act, made an assignment for the benefit of creditors, consented to
the appointment of a receiver for itself or for the whole or any substantial
part of its property, or had a petition in bankruptcy filed against it, been
adjudicated a bankrupt, or filed a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other law or statute of the
United States of America or any other jurisdiction.
3.24 Issuance Taxes. All taxes (other than those based on income of
--------------
the Purchaser) imposed by law in connection with the issuance, sale and
delivery of the Shares will have been fully paid, and all laws imposing such
taxes (other than those based on income of the Purchaser) shall have been fully
complied with, as of the Closing Date.
3.25 Compliance with Laws.
--------------------
(a) The Company has complied with and is in compliance in all
material respects with all foreign, federal, state and local statutes, laws,
ordinances, regulations, rules, judgments, orders and decrees applicable to it
and its assets, business and operations, and
9
(b) The Company has not received written notice of any claim
of default under or violation of any statute, law, ordinance, regulation, rule,
judgment, order or decree except for any such noncompliance or claim of default
or violation, if any, which in the aggregate do not and will not have a material
adverse effect on the property, operations, financial condition or prospects of
the Company.
SECTION 4
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Company with
respect to the purchase of the Securities as follows:
4.1 Experience. It has substantial experience in evaluating and
----------
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests.
4.2 Investment. It is acquiring the Securities and the Conversion
----------
Shares for investment for its own account, not as a nominee or agent, and not
with the view to, or for resale in connection with, any distribution thereof. It
understands that the Securities and the Conversion Shares have not been, and
will not be when issued, registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act, the
availability of which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of such Purchaser's representations as
expressed herein. Purchaser was not formed solely for the purpose of acquiring
the Securities or the Conversion Shares.
4.3 Rule 144. It acknowledges that the Securities and the
--------
Conversion Shares must be held indefinitely unless subsequently registered under
the Securities Act or unless an exemption from such registration is available.
It is aware of the provisions of Rule 144 promulgated under the Securities Act
which permit limited resale of shares purchased in a private placement subject
to the satisfaction of certain conditions, including, among other things, the
existence of a public market for the shares, the availability of certain current
public information about the Company, the resale occurring not less than one
year after a party has purchased and paid for the security to be sold, the sale
being effected through a "broker's transaction" or in transactions directly with
a "market maker" and the number of shares being sold during any three-month
period not exceeding specified limitations.
4.4 No Public Market. It understands that no public market now
----------------
exists for the Securities but shares of Common Stock are sold on the over-the-
counter bulletin board.
4.5 Access to Data. It has had an opportunity to discuss the
--------------
Company's business, management and financial affairs with its management and the
opportunity to review the Company's facilities and business plan.
10
4.6 Authorization. All action (corporate or partnership, as
-------------
appropriate) on the part of the Purchaser necessary for the authorization,
execution, delivery and performance of this Agreement by Purchaser and the
performance of all of the Purchaser's obligations hereunder has been taken or
will be taken prior to the Closing. This Agreement when executed and delivered
by such Purchaser will constitute a valid and legally binding obligation of such
Purchaser, enforceable in accordance with its terms, except as indemnification
provisions may be limited by principles of public policy, and subject to laws of
general application relating to bankruptcy, insolvency, and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies.
4.7 Compliance with Other Instruments. The execution, delivery and
---------------------------------
performance of and compliance with this Agreement, and the issuance of the
Securities or the Conversion Shares have not resulted and will not result in any
violation of, or conflict with, or constitute a default under, any of the terms
of any corporate or partnership restriction or of any indenture, mortgage, deed
of trust, pledge, bank loan or credit agreement, corporate charter, bylaw or any
instrument, document or agreement by which the Purchaser or its properties may
be bound or affected, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Purchaser.
4.8 Governmental Consent, Etc. No consent, approval or authorization of
-------------------------
or designation, declaration or filing with any governmental authority on the
part of the Purchaser is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Securities or
the Conversion Shares, except for the qualification (or taking such action as
may be necessary to secure all exemption from qualification, if available) of
the offer and sale of the Securities under applicable Blue Sky laws, which
filings and qualifications, if required, will be accomplished by the Company in
a timely manner prior to or promptly upon the completion of the Closing.
4.9 Status. ▇▇▇▇▇▇▇▇▇ International, Inc. is validly existing under the
------
laws of the state of Michigan, is resident in Florida and has all power and
authority to enter into and perform this Agreement and any related agreements.
The Purchaser is an "accredited investor" within the meaning of Regulation D
promulgated under the Securities Act.
SECTION 5
Conditions to Closing of Purchaser
The Purchaser's obligation to purchase the Securities at the Closing
are, at the option of the Purchaser, subject to the fulfillment of the following
conditions:
5.1 Representations and Warranties Correct. The Representations and
--------------------------------------
Warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects as of the Closing Date.
5.2 Covenants. All covenants, agreements and conditions contained in
---------
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects.
11
5.3 Articles of Amendment. The Company shall have duly filed the
---------------------
Articles with the Colorado Secretary of State in the form of Exhibit C hereto.
5.4 Charter Documents, Good Standing Certificates. Purchaser shall have
---------------------------------------------
received a copy, certified by a duly authorized officer of the Company to be
true and complete as of the Closing Date, of the Articles of Incorporation and
bylaws of the Company, as amended prior to the filing of the Articles, a copy of
the Articles file stamped by the Colorado Secretary of State, and a certificate
of the Secretary of the State of Colorado as to the Company's good standing.
5.5 Proof of Corporate Action, Approvals. Purchaser shall have received
------------------------------------
from the Company copies, certified by a duly authorized officer thereof to be
true and complete as of the Closing Date, of the records of all corporate action
taken to authorize the execution, delivery and performance of this Agreement and
all other actions and agreements required in connection with this Agreement, and
further certifying that all representations and warranties made by the Company
in Section 3 of this Agreement are true, correct and complete as of the Closing.
5.6 Incumbency Certificate. Purchaser shall have received from the
----------------------
Company an incumbency certificate, dated the Closing Date, signed by a duly
authorized officer of the Company and giving the name and bearing a specimen
signature of each individual who shall be authorized to sign, in the name and on
behalf of the Company, this Agreement and each related agreement, and to give
notices and to take other action on the Company's behalf.
5.7 Consents. All necessary agreements and consents of any third
--------
parties (including those listed on the Disclosure Schedule) to the consummation
of the transactions contemplated by this Agreement shall have been obtained by
the Company and delivered to Purchasers.
5.8 Approvals. All necessary approvals or authorizations of any
---------
governmental authority of the United States or of any state therein or of any
foreign governmental authority that are required in connection with the
execution and performance of this Agreement, including the issuance and sale of
the Shares, shall have been obtained and shall be effective as of the Closing
Date.
5.9 Due Diligence. Purchaser shall have conducted and completed all due
-------------
diligence reviews and examinations of the business and any other due diligence
reviews as necessary, and the results of such investigations shall be
satisfactory to Purchaser in its sole discretion.
12
SECTION 6
Conditions to Closing of Company
The Company's obligation to sell and issue the Securities at the
Closing Date is, at the option of the Company, subject to the fulfillment as of
the Closing Date of the following conditions:
6.1 Representations. The representations made by Purchaser in Section 4
---------------
hereof shall be true and correct when made, and shall be true and correct on the
Closing Date.
6.2 Covenants. All covenants, agreements and conditions contained in
---------
this Agreement to be performed by the Purchaser on or prior to the Closing Date
shall have been performed or complied with in all material respects.
SECTION 7
Covenants of the Company
7.1 Maintenance of Corporate Status. The Company shall maintain its
-------------------------------
corporate existence in good standing or effective under the laws of its
jurisdiction of organization and any other states or jurisdictions in which its
failure to qualify as a foreign corporation or entity would have a material
adverse effect on its operations or financial condition.
7.2 Compliance with Articles and Bylaws. The Company shall comply in
-----------------------------------
all material respects with its Articles of Incorporation, including the
Articles, and Bylaws.
7.3 Reservation of Stock. The Company shall reserve and keep available
--------------------
out of its authorized but unissued shares of Common Stock, for the purpose of
issuance upon the conversion of the Shares, that number of shares of Common
Stock issuable upon conversion of all outstanding Shares (subject to adjustment
as provided by the terms thereof). The Company shall take all commercially
reasonable actions necessary for all Conversion Shares to be issued without
violation in any material respect of any applicable state and federal laws or
regulations or any requirements of any domestic securities exchange upon which
shares of Common Stock may then be listed (except for official notice of
issuance, which the Company shall transmit to the Purchasers promptly upon
receipt).
7.4 Compliance with Laws, Licenses and Permits, No Infringement. The
-----------------------------------------------------------
Company shall comply with all applicable federal, state, local, foreign and
other laws, regulations and ordinances, and with all applicable federal, state,
local and foreign governmental licenses and permits necessary for conducting its
business, except to the extent that any noncompliance would not have a material
adverse effect upon the Company. The Company shall not knowingly engage in any
activities that infringe upon the intellectual property rights of any other
person, corporation, partnership or other entity which could have a material
adverse effect upon the Company.
7.5 Discharge of Obligations. The Company shall pay and discharge all
------------------------
taxes, assessments, and governmental charges lawfully levied or imposed upon it
(in each case before they become
13
delinquent and before penalties accrue), all lawful claims for labor, materials,
supplies and rents, and all other debts and liabilities that if unpaid would, by
law, be a lien or charge upon any of the assets or properties of the Company or
lead to suspension of the business of the Company (except to the extent
contested in good faith by the Company and for which adequate reserves are
established).
7.6 Maintenance of Properties. The Company shall maintain all real and
-------------------------
personal property used in the business of the Company in good operating
condition, and shall make all repairs, renewals, replacements, additions and
improvements to those properties as are necessary or appropriate in the ordinary
course of business.
7.7 Maintenance of Proprietary Information. The Company shall maintain
--------------------------------------
all Proprietary Information and Trade Secret Information, and all applications
and registrations therefor owned or held by the Company, in full force and
effect, except as otherwise determined in the ordinary course of business. The
Company shall not encumber or license others to use the Proprietary Information
owned by it except in the ordinary course of the Company's business, and shall
maintain the confidentiality and trade secret status of all Proprietary
Information that is confidential and trade secret except where disclosure would
not have a material effect on the Company's business, is necessary to obtain
copyright registrations or patents, or is necessary or desirable in the ordinary
course of the Company's business.
7.8 Insurance. The Company shall maintain in full force and effect (a)
---------
adequate insurance policies to protect its assets and businesses covering
property damage by fire, business interruption or other casualty, sufficient in
amount to allow it to replace any of its properties damaged or destroyed; and
(b) insurance policies to protect against all liabilities, claims, and risks
against which it is customary in amounts customary for companies similarly
situated with the Company.
7.9 Books and Records. The Company shall keep proper books of records
-----------------
and account, in which full and correct entries shall be made of all financial
transactions and the assets and business of the Company in accordance with GAAP.
The Company shall provide Purchaser with access to all such books and records
and allow Purchaser to make copies and abstracts thereof at reasonable times.
7.10 Further Assurances. The Company will execute and deliver promptly
------------------
to the Purchaser upon request all such other and further documents, agreements
and instruments in compliance with or pursuant to its covenants and agreements
herein, and will make any recordings, file any notices, and obtain any consents
as may be necessary or appropriate in connection therewith.
SECTION 8
Rights of First Refusal
The Purchaser agrees that if the Purchaser desires to sell, assign,
transfer or otherwise dispose of any Shares , then such Purchaser (the
"Transferor") shall first deliver to the Company and each other shareholder of
the Company holding more than ten percent (10%) of the outstanding shares
("Shareholders") a written notice (the "Notice") stating its desire to sell such
stock ("Offered Stock").
14
The Notice must be in connection with a bona fide offer from an unrelated party
---- ----
to purchase the Shares owned by Transferor and must specify the amount of such
Shares to such offer, the price and terms of the offer and the name and address
of the prospective purchaser. The Company shall provide written notice to the
Transferor of the Company's intent to purchase all or part of the Offered Stock
within fifteen (15) days of its receipt of the Notice. Within fifteen (15) days
after termination of the original fifteen (15) day period or after notice from
the Company of the number of Shares it will not purchase, the Shareholders who
have received the Notice may elect to purchase such portion of the remaining
Offered Stock as the number of shares of Common Stock owned by them (on an
as-converted basis) on the date of receipt of the Notice shall bear to the total
number of shares of common stock of the Company owned by all such other
Shareholders (on an as-converted basis), excluding the Transferor. If any
Shareholder does not purchase the proportionate number of shares to which it is
entitled, the remaining Shareholders may purchase a pro rata portion of the
shares not purchased (the proportion to be based upon the shares of Common Stock
owned by the remaining such Shareholders (on an as-converted basis) who wish to
purchase) at any time within fifteen (15) days after the termination of the
second fifteen (15) day period, or after notice from such other Shareholders of
the number of shares which it will not purchase. The Company's or a
Shareholder's election to purchase shares of Offered Stock at the designated
offering price shall be reflected in a written notice to the Transferor during
the appropriate election period. The closing of the purchase will take place on
a date selected by the Transferor and those purchasing shares not more than
twenty (20) days after the end of the latter election period. At the closing,
the Shareholders purchasing the Shares shall pay in cash the purchase price of
the Offered Stock. If shares of Offered Stock are not the subject of an election
to purchase by the Company or a Shareholder, or if the Company or a Shareholder
has elected to purchase such stock and fails to do so within the applicable
period for such purchase, the Transferor may within ninety (90) days after the
end of the latter election period sell the Offered Stock which has not been
purchased to the person specified in the Notice and on the terms and at a price
the same as set forth in the Notice. Any and all such shares so sold shall
remain subject to the terms and conditions of this Agreement. The provisions of
this section shall not apply to (i) a bona fide gift or transfer without
---- ----
consideration of any stock of the Company owned by the Shareholder; (ii) the
transfer or distribution of shares to a partner or affiliate of any Shareholder;
(iii) transfers between Shareholders; (iv) repurchases by the Company of stock;
(v) transfers of shares of Common Stock which a holder of Series B Preferred may
happen to own, or into which any shares of Series B Preferred have been
converted; or (vi) transfers where the Series B Preferred shall be converted
into Common Stock on or before the date of the closing of the transfer.
SECTION 9
Miscellaneous
9.1 Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of the State of Colorado without giving effect to principles of
conflicts of law.
9.2 Survival. The representations, warranties, covenants and agreements
--------
made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby.
15
9.3 Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided, however, that the rights of Purchaser to purchase the Securities shall
not be assignable without the consent of the Company.
9.4 Entire Agreement, Amendment. This Agreement and the other documents
---------------------------
delivered pursuant hereto at the Closing constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
9.5 Notices, Etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to Purchaser, at the Purchaser's address set forth on the first
page of this Agreement, or at such other address as such Purchaser shall have
furnished to the Company in writing, with a copy to the addresses set forth
below, or (b) if to any other holder of any Securities, at such address as such
holder shall have furnished the Company in writing, or, until any such holder so
furnishes an address to the Company, then to and at the address of the last
holder of such Securities who has so furnished an address to the Company, or (c)
if to the Company, one copy should be sent to its address set forth on the cover
page of this Agreement and addressed to the attention of the corporate
secretary, or at such other address as the Company shall have furnished to
Purchaser. Each such notice or other communication shall for all purposes of
this Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid.
9.6 Delays or Omissions. Except as expressly provided herein, no delay
-------------------
or omission to exercise any right, power or remedy accruing to any holder of any
Securities, upon any breach or default of the Company under this Agreement,
shall impair any such right, power or remedy of such holder nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any holder of any
breach or default under this Agreement, or any waiver on the part of any holder
of any revisions or conditions of this agreement, must be in writing and be
executed by the party to be bound thereby, and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any holder, shall be cumulative and
not alternative.
16
9.7 Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be enforceable against the party actually executing such
counterparts, and all of which together shall constitute one instrument.
9.8 Severability. In the event that any provisions of this Agreement
------------
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provisions provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
9.9 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
9.10 Further Assurances. The Company will execute and deliver promptly
------------------
to the Purchaser upon request all such other and further documents, agreements
and instruments in Compliance with or pursuant to its covenants and agreements
herein, and will make any recordings, file any notices, and obtain any consents
as may be necessary or appropriate in connection therewith.
9.11 Amendment to Agreement. This Agreement may be altered, amended or
----------------------
waived by a writing signed by the Company and by the Purchaser.
17
The undersigned have executed this Series B Preferred Stock Purchase
Agreement as of the date first above written.
AMERICAS POWER PARTNERS, INC.
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, CEO
▇▇▇▇▇▇▇▇▇ INTERNATIONAL, INC.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
By: _______________________________
Its: ______________________________
EXHIBIT A
---------
Disclosure Schedule
Item 3.1 - Illinois
Item 3.4 - Owner Options Convertible Securities
----- ------- ----------------------
Series A Preferred Shareholders 3,391,708 (as converted)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 600,000
▇▇▇▇▇ ▇▇▇▇▇ 255,000
▇▇ ▇▇▇▇▇▇▇ 255,000
MPI Ventures Management, LLC 300,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 90,000
Board of Directors (Anticipated) 140,000
Item 3.8 - Real Property Owned: None.
Real Property Leased: A portion of the building commonly known as
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, is leased from MPI
Ventures pursuant to an oral month-to-month lease.
EXHIBIT B
---------
Material Contracts
1. Leased Employment Agreement by and between the Company and the Purchaser,
for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
2. Lease of computer equipment pursuant to lease agreement number
008558322-003 with Dell Financial Services, L.P. dated November 18, 1999.
3. Joint Operating Agreement dated September 12, 2000, between Purchaser
and the Company.
4. Limited Liability Company Operating Agreement dated July 1, 2000 for
▇▇▇▇▇▇▇▇▇-Americas-I, LLC.
5. Loan documents with ABN AMRO as they relate to (i) a $500,000 secured
term loan, and (ii) a loan for the Mallicrodt Chemical facility.
6. Security Agreement dated February 23, 2001, by and between the Company
and the Purchaser, securing the Company's membership interest of
▇▇▇▇▇▇▇▇▇-Americas-I, LLC.
7. Various promissory notes made by the Company to Purchaser.
8. Customer/Service Agreements with each of ▇.▇. ▇▇▇▇▇, Mallicrodt
Chemical, Flex a Tex, and ▇▇▇▇▇ ▇▇▇▇.
EXHIBIT C
---------
Articles of Amendment to Articles of Incorporation