Exhibit 10.3
Execution Form
SUBSCRIPTION AND NOTE PURCHASE AGREEMENT
THIS SUBSCRIPTION AND NOTE PURCHASE AGREEMENT (the "Agreement") dated
as of ________________, 1999, by and between FieldWorks, Incorporated, a
Minnesota corporation (the "Company"), and ____________________ (the
"Investor"), a resident of the State of ________________________ /a organized
under the laws of the State of ________________.
RECITALS:
a) Whereas, the Company needs financing to provide working capital for
its operations; and
b) Whereas, the Investor desires to lend funds to the Company on the
terms and conditions set forth in this Agreement; and
c) Whereas, other investors may lend funds to the Company on terms and
conditions equivalent to those set forth in this Agreement ("Other Investors")
and in the offering materials delivered in connection with this Agreement (the
"Offering Materials").
Accordingly, in consideration of the foregoing, the mutual promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Promissory Note: The Investor agrees to purchase from the Company a
Subordinated Promissory Note in the principal amount of $___________, and the
Company agrees to deliver and issue such Note to the Investor, in the form
attached hereto as Exhibit A (the "Note"), in such amount. The Note shall be in
the minimum denomination of $100,000, and additional increments of $50,000,
unless waived at the Company's option. The delivery of the Note shall be made
concurrently with delivery of funds to the Company in the amount set forth
above. The principal amount of the Note shall bear interest from the date
thereof at the rate of eleven percent (11%) per annum.
2. Subordination: Amounts due pursuant to the Note shall be
subordinated to all "Senior Debt", which term shall mean all liabilities and
obligations of the Company to all institutional lenders to which the Company is
indebted for borrowed money secured by security interests in assets of the
Company (collectively, "Senior Creditors"), howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising or incurred. Investor will not ask,
demand, xxx for, take or receive from the Company or any other person liable for
all or any part of any Senior Debt, by setoff or in any other manner, the whole
or any part of payment of the obligations under the Note or any monies which may
now or hereafter be owing in respect of the Note (whether such amounts represent
principal or interest, or obligations which are due or not due, direct or
indirect, absolute
or contingent), including, without limitation, taking any security for any of
the foregoing, or the taking of any negotiable instrument therefor, unless and
until all of the Senior Debt shall h-6- ave been fully paid and satisfied and
all financing arrangements between the Company and Senior Creditors have been
terminated, provided that, as long as no default has occurred with respect to
the Senior Debt, the Company may pay, and the Investor may receive, payments of
accrued interest and principal of the Note as originally scheduled under the
terms of this Agreement and the Note, and, with the prior written consent of the
Senior Creditors in their sole discretion, prepayments of the Note. The Investor
acknowledges and agrees that the Note is unsecured and agrees that (a) the
Investor hereafter will not accept any security therefor from the Company, or
from any third person for the benefit of the Company; and (b) in the event the
Investor does obtain any security for the Note, (i) all liens and security
interests of the Investor in any assets of the Company or any assets securing
the Senior Debt shall be and hereby are subordinated to the rights and interests
of the Senior Creditors, if any, in those assets, (ii) the Investor shall have
no right to possession of any such assets or to foreclose upon any such assets,
whether by judicial action or otherwise, unless and until all the Senior Debt
shall have been fully paid and satisfied and all financing arrangements between
the Company and Senior Creditors have been terminated, and (iii) at the request
of the Senior Creditors, the Investor shall execute and deliver to the Senior
Creditors such termination statements and releases as the Senior Creditors shall
reasonably request to release the Investor's security interest in or lien
against such property. The Investor, prior to the payment in full and discharge
of the Senior Debt and the termination of all financing arrangements between the
Company and the Senior Creditors, shall have no right to enforce any claim with
respect to obligations under the Note, or to take any action against the Company
or the property of the Company or of any other person liable for all or any part
of the Senior Debt for the benefit of the Company.
3. Repayment: The Note will be dated its date of issuance and bear
interest from such date at 11% per annum. Accrued interest shall be paid
monthly, commencing October 15, 1999, and on the 15th day of each month
thereafter. All principal and accrued interest is due and payable on
______________, 2001 (the "Maturity Date.") The Note may be prepaid in whole or
in part at any time and from time to time without premium or penalty, at the
option of the Company, subject to Section 2 hereof. In the event Other Investors
lend funds to the Company, all prepayments shall be applied to the original
aggregate principal amount of the Note and all notes issued to Other Investors,
pro rata, and shall be applied first to the payment of any costs of collection,
then to payment of accrued interest, and thereafter to principal.
4. Warrants: In consideration of the Note purchase, the Company shall
issue to the Investor, concurrently with delivery of the Note, a warrant to
purchase common stock of the Company in the form attached hereto as Exhibit B
(the "Warrant").
5. Representations and Warranties of the Company:. The Company
represents and warrants to the Investor that:
a) Organization and Standing. The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Minnesota, has full corporate power and authority to own or lease its
properties and conduct its business as presently conducted, and is duly
qualified as a foreign corporation and is in good standing in all
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jurisdictions in which the character of the property owned or leased or the
nature of the business transacted by it makes qualification necessary (except
where the failure to be so qualified would not have a material adverse effect on
the business, properties, financial condition or results or operations of the
Company).
b) Corporate Power; Authorization. The Company has all requisite
corporate power, and will have taken all requisite corporate action, to execute
and deliver this Agreement, to sell and issue the Note and to carry out and
perform all of its obligations hereunder. This Agreement constitutes the legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors' rights generally, (ii) as limited by equitable
principles generally, and (iii) as rights to indemnity or contributions
hereunder may be limited by federal or state securities laws or principles of
public policy.
c) SEC Documents; Financial Statements. The Company has filed in a
timely manner all documents that the Company was required to file with the
Securities and Exchange Commission ("SEC") under Sections 13, 14(a) and 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") during the
12 months preceding the date of this Agreement. As of their respective filing
dates (or, if amended, when amended), all documents filed by the Company with
the SEC, whether under the Exchange Act or under the Securities Act of 1933, as
amended (the "Securities Act"), during such 12-month period (the "SEC
Documents") complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be. None of the SEC
Documents as of their respective dates contained any untrue statement of
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of the Company included in the SEC Documents (the "Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. The Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied and fairly
present the consolidated financial position of the Company at the dates thereof
and the results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring adjustments
(unless otherwise disclosed in the SEC Documents) and the absence of footnotes).
There is no material liability or commitment of the Company which is not
reflected in the most recent Financial Statements except commitments made since
the date of such Financial Statements in the ordinary course of business. There
have not been any changes in the assets, liabilities, financial condition or
operations of the Company from those reflected in the most recent Financial
Statements, except changes in the ordinary course of business that have not had
and are not reasonably expected to have a material adverse effect on the
business, properties, financial condition or results of operations of the
Company.
d) Litigation. There is no pending or, to the Company's knowledge,
threatened, action, suit or other proceeding to which the Company is a party or
to which the property or assets of the Company is subject which might result in
a material adverse effect on the business, properties, financial condition or
results of operations of the Company.
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e) Listing. The Company's Common Stock is traded on The Nasdaq National
Market.
f) The execution, delivery and performance by the Company of this
Agreement and the will not (i) violate any provision of any law, statute, rule
or regulation or any order, writ, judgment, injunction, decree, determination or
award of any court, governmental agency or arbitrator presently in effect having
applicability to the Company, (ii) violate or contravene any provision of the
Articles of Incorporation or bylaws of the Company, or (iii) result in a breach
of or constitute a default under any agreement, lease or instrument to which the
Company is a party or by which it or any of its properties may be bound, except
for such breaches or defaults which have been waived or for which consents have
been obtained.
g) The Company has filed all federal, state and local tax returns
required to be filed and has paid or made provision for the payment of all taxes
due and payable pursuant to such returns and pursuant to any assessments made
against it or any of its property and all other taxes, fees and other charges
imposed on it or any of its property by any governmental authority (other than
taxes, fees or charges the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in accordance with generally accepted accounting principles have been
provided on the books of the Company.
h) The Company has reviewed and assessed its business operations and
computer systems and products with respect to the "year 2000 problem" (that is,
that computer applications and equipment may not be able properly to perform
date-sensitive functions, before, during and after January 1, 2000) and, based
on those reviews and inquiries, the Company will have taken all necessary steps
to ensure that the year 2000 problem will not result in a material adverse
effect on the Company.
i) The Company has no subsidiary.
6. Representations and Warranties of the Investor: The Investor
represents and warrants to the Company as follows:
(a) The Investor has had the opportunity to ask questions of and
receive answers from the Company, or an agent of the Company, concerning the
terms and conditions of the investment and the business and affairs of the
Company, and to obtain any additional information necessary to verify such
information, as the Investor considers necessary or advisable in order to form a
decision concerning an investment in the Company.
(b) The Note, the Warrant, and the Warrant Shares (collectively, the
"Securities") are being acquired for investment for the Investor's own account
and not with the view to, or for resale in connection with, any distribution or
public offering thereof the Investor understands that these Securities have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), or any state securities laws by reason of the contemplated issuance in
transactions exempt from the registration requirements of the Securities Act and
applicable state securities laws and that the reliance of the Company and others
upon these exemptions is predicated in part upon this representation by the
Investor. The Investor further understands that
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the Securities may not be transferred or resold without registration under the
Securities Act and any applicable state securities laws, or an exemption from
the requirements of the Securities Act and applicable state securities laws.
(c) The Investor's principal residence is as described on the signature
page hereof.
(d) The Investor has carefully reviewed the Offering Materials. The
Investor is relying solely on the Offering Materials and the Investor's
investigation of the Company in making the investment decision and is not
relying on Xxxxxxxxx Summit Securities LLC, the Company's placement agent, or
any officer, employee or agent thereof.
(e) The Investor is able to bear the loss of the entire investment in
the Note, the Warrant, and the Warrant Shares without any material adverse
effect on the Investors' financial position or prospects, and the Investor has
such knowledge and experience of financial and business matters to be capable of
evaluating the merits and risks of the investment to be made pursuant to this
Agreement. Without limiting the foregoing, the Investor understands that the
securities offered hereby are highly speculative, involve a high degree of risk
and immediate substantial dilution, and should be purchased by persons who can
afford the loss of their entire investment. The Investor has carefully
considered the risks and speculative factors described in the cautionary
statement filed as Exhibit 99.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended January 3, 1999 (the "Cautionary Statement"), which
Cautionary Statement is included in the Offering Materials. Without limiting the
foregoing, the Investor recognizes and acknowledges that, in order to repay the
Note, the Company will be required to improve its current cash flow, refinance
the Note, or raise additional capital.
(f) The Investor is (check all that apply):
______ (i) A natural person whose individual net worth (assets
less liabilities), or joint net worth with his or her
spouse, exceeds $1,000,000.
______ (ii) A natural person whose individual income was in
excess of $200,000, or whose joint income with his or
her spouse was in excess of $300,000, each of the two
most recent years, and who has a reasonable
expectation of reaching the same income level for the
current year.
______ (iii) A bank, insurance company, registered investment
company, business development company, small business
investment company, or employee benefit plan.
______ (iv) A savings and loan association, credit union, or
similar financial institution, or a registered broker
or dealer.
______ (v) A private business development company.
______ (vi) An organization described in Section 501 (c)(3) of
the Internal Revenue Code with assets in excess of
$5,000,000.
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______ (vii) A corporation, Massachusetts or similar business
trust, or partnership with assets in excess of
$5,000,000.
______ (viii) A trust with assets in excess of $5,000,000.
______ (ix) A director or an executive officer of the Company
______ (x) An entity in which all of the equity owners are
accredited investors. If exemption is claimed all
equity owners must complete and execute this
Agreement. (Not available for an Irrevocable Trust).
______ (xi) A self-directed XXX, Xxxxx, or similar plan of which
the individual directing the investments qualifies as
an "accredited investor" under one or more items
(i)-(x), above. Also check the item(s) (i)-(x) which
applies.
(g) This Agreement has been duly authorized by all necessary action on
the part of the Investor, has been duly executed and delivered by the Investor,
and is a valid and binding agreement of the Investors.
(h) If the Investor is an entity, the Investor was not organized for
the specific purpose of acquiring the Note, the Warrant, or the Warrant Shares.
(i) The Investor is NOT subject to backup withholding provisions of
Section 3406(a)(i)(C) of the Internal Revenue Code of 1986, as amended (note:
Investor is subject to backup withholding upon the following : (i) failure to
furnish the Investor's Social Security number or taxpayer identification number
herein; (ii) notification from the Internal Revenue Service to the Company that
the Investor furnished an incorrect Social Security number or taxpayer
identification number, (iii) notification that the Investor is subject to backup
withholding; or (iv) failure to certify that the Investor is not subject to
backup withholding; or failure to certify the Investor's Social Security number
or taxpayer identification number).
7. Affirmative Covenants of the Company: Until the outstanding
principal balance of the Note is paid in full, the Company will:
a) Furnish to the Investor:
(i) Within 120 days after the and of each fiscal year of the
Company, a copy of Form 10-K filed by the Company with the
Securities and Exchange Commission pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended;
(ii) Within 45 days after the end of each fiscal quarter, a
copy of Form 10-Q filed by the Company with the Securities and
Exchange Commission pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended;
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b) Permit the Investor and its representatives access to, and the right
to make copies of the books, records, and properties of the Company at all
reasonable times upon prior written request to the Company;
c) Pay when due all taxes, assessments, and other liabilities against
it or its properties except those which are being contested in good faith and
for which an adequate reserve has been established, and make all withholding
payments when due;
d) Pay when due all amounts necessary to fund in accordance with its
terms any employee benefit plan or other class of benefits covered by Title IV
of "ERISA" (which term shall mean the Employee Retirement Income Security Act of
1974, as the same may from time to time be amended, and the rules and
regulations promulgated thereunder by any governmental agency or authority, as
from time to time in effect), in either case whether now in existence or
hereafter instituted, of the Company;
e) Comply in all material respects with all laws, acts, rules.
regulations and orders of any legislative, administrative or judicial body or
official applicable to the Company's business operation or any part thereof;
provided, however, that the Company may contest any such law, act, rule,
regulation or order in good faith by appropriate proceedings; and
f) Promptly notify the Investor of any default by the Company in its
obligations under this Agreement.
8. Negative Covenants: Until the outstanding principal balance of the
Note is paid in full, the Company agrees that it will not, without the
Investor's prior written consent:
(a) Purchase or redeem any shares of the Company's capital stock, or
declare or pay any dividends (other than dividends payable in capital stock);
(b) Incur or permit to exist any indebtedness, secured or unsecured,
for money borrowed, except: (i) borrowings under this Agreement; (ii) borrowings
from Other Investors; (iii) borrowings, if any, which are existing on the date
of this Agreement and which are disclosed on Schedule I attached hereto; or (iv)
indebtedness, not exceeding $250,000 at any one time in the aggregate
outstanding;
(c) Effect any recapitalization; or be a party to any merger or
consolidation; or, except in the normal course of business, sell, transfer,
convey or lease all or any substantial part of its property;
(d) Make any loans to any person or entity except as otherwise
permitted hereunder; or purchase any shares of stock of, or similar interest in,
or make any capital contribution to or investment in, any entity;
(e) Permit more than $150,000 to be owing at any one time to the
Company by all of the Company's employees, officers, directors, or shareholders,
or members of their families, as a result of any borrowings, purchases, travel
advances or other transactions or events;
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(f) Become a guarantor or surety or pledge its credit or its assets on
any undertaking of another;
(g) In any fiscal year pay excessive or unreasonable salaries, bonuses,
fees, commissions, fringe benefits or other forms of compensation;
(h) Permit any default to occur under the terms of any loan document,
note, loan agreement, lease, mortgage, contract for deed, security agreement, or
other contractual obligation binding upon the Company which is not cured or
waived within 60 days after the date of the occurrence of such default;
(i) Take any action to wind down, liquidate or close substantially all
of its business; or
(j) Enter into any transaction with any affiliate of the Company upon
terms and conditions less favorable to the Company than the terms and conditions
which would apply in a similar transaction with an unrelated third party.
9. Events of Default: If any one or more of the following events
("Events of Default") shall occur, then, in any such event, the Investor may, at
its option, declare the Note to be immediately due and payable, together with
all unpaid interest accrued hereon, without further notice or demand, but in the
case of any of the occurrence of any of events described in paragraph (d) below,
the Note shall become automatically due and payable, including unpaid interest
accrued hereon, without notice or demand:
(a) The Company shall default in the due and punctual payment of any
installment on the Note when the same shall become due and payable, and such
default continues for ten (10) days after written notice thereof from the
Investor;
(b) Any representation or warranty made by the Company under or in
connection with the Note or this Agreement shall prove to have been incorrect in
any material respect when made;
(c) Default in the due observance or performance of any covenant,
condition or agreement on the part of the Company to be observed or performed
pursuant to the terms of the Note and this Agreement, and such default continues
for thirty (30) days after written notice thereof from the Investor; or
(d) The Company shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator of any of Company's properties or assets, (ii)
admit in writing Company's inability to pay Company's debts as they mature,
(iii) make a general assignment for the benefit of creditors, (iv) be
adjudicated a bankrupt or insolvent, (v) file a voluntary petition in
bankruptcy, or a petition or an answer seeking reorganization or an arrangement
with creditors to take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute, or an answer
admitting the material allegations of a petition filed against Company in any
proceeding under any such law, or (vi) a petition in bankruptcy, reorganization,
debt arrangement or other proceedings under any bankruptcy or insolvency law
shall be instituted against the Borrower and shall remain undismissed for 60
days.
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10. Other:
(a) This Agreement and the rights and obligations of the parties
hereunder shall not be assignable, in whole or in part, by any party without the
prior written consent of the other party.
(b) This Agreement, including the appendices attached hereto,
constitutes the entire agreement of the parties relative to the subject matter
hereof and supersedes any and all other agreements and understandings, whether
written or oral, relative to the matters discussed herein.
(c) This Agreement shall be construed and enforced in accordance with
the laws of the State of Minnesota.
(d) 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.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date set forth above.
Investor:
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Telephone Number
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Signature(s), if joint Taxpayer ID Number(s)
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Print Name(s) Social Security Number(s)
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Address
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FieldWorks, Incorporated
By:-------------------------------
Its:------------------------------
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Exhibit A to
Subscription and
Note Purchase Agreement
SUBORDINATED PROMISSORY NOTE
NOTWITHSTANDING ANY TERM HEREOF TO THE CONTRARY, ANY PAYMENT OR OTHER
SATISFACTION OF CLAIMS ARISING HEREUNDER IS SUBORDINATED AS SET FORTH
IN THE NOTE PURCHASE AND SUBSCRIPTION AGREEMENT BETWEEN THE MAKER AND
HOLDER OF EVEN DATE HEREWITH
THIS NOTE IS SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH AT THE
BOTTOM OF THE LAST PAGE HEREOF
$________________
Minneapolis, Minnesota
_________________, 1999.
FOR VALUE RECEIVED, the undersigned, FieldWorks, Incorporated, a
Minnesota corporation, (the "Company"), promises to pay to the order of (the
"Holder"), at Holder's address specified in the Subscription and Note Purchase
Agreement referred to below, or such other place as the Holder may designate in
writing from time to time, the principal sum of _____________ ($____________),
in lawful money of the United States, together with simple interest from the
date hereof on the unpaid principal balance outstanding from time to time at the
rate of eleven percent (11%) per annum (calculated on the basis of the actual
number of days elapsed and a 360 day year), payable as provided in the
Subscription and Note Purchase Agreement (as defined below). All outstanding
principal and accrued interest on this Note shall be due and payable on
___________ 2001, subject to the provisions set forth in the Subscription and
Note Purchase Agreement (defined below).
1. Subscription and Note Purchase Agreement. This Note has been issued
pursuant to and is subject to the terms and provisions of a
Subscription and Note Purchase Agreement (the "Agreement"), dated as of
______________, 1999, between the Company and the Holder. The Holder is
entitled to all the benefits provided for in the Agreement. The
provisions of the Agreement are incorporated herein by reference with
the same force and effect as if fully set forth herein.
2. Restrictions on Transfer. Other than pursuant to registration under
federal and any applicable state securities laws or an exemption from
such registration, the availability of which is determined in an
opinion of counsel reasonably acceptable to the Company, this Note may
not be sold, pledged, or otherwise disposed of unless the Company has
received from the transferee hereof such representations and agreements
as the Company shall
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determine in its sole discretion may be necessary to permit such
transfer. The Holder, by acceptance hereof agrees to give written
notice to the Company before transferring this Note of the Holder's
intention to do so, describing the manner of any proposed transfer.
Within thirty (30) days after receiving such written notice, the
Company shall notify the Holder as to whether such transfer may be
effected and of the conditions to any such transfer.
3. Notices. All demands and notices to be given hereunder shall be
delivered or sent by certified mail, return receipt requested; in the
case of the Company, addressed to its corporate headquarters, 0000
Xxxxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxxxxxx, 00000, and in the case of the
Holder, addressed to the address written above, in either case, until a
new address shall have been substituted by like notice.
4. Expenses. The Company agrees to pay all expenses (including, without
limitation, reasonable attorneys' fees and disbursements) in connection
with the Holder's enforcement of the obligations of the Company
hereunder.
5. Waiver. Presentment and demand for payment, notice of dishonor, protest
and notice of protest are hereby waived.
IN WITNESS WHEREOF, the Company has caused this Note to be executed on
its behalf by its duly authorized officer on the day and year first above
written.
FieldWorks, Incorporated
By:
Its:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS. THIS NOTE HAS BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE LAWS OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE LAWS THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY
WHOSE AUTHORIZED OFFICER HAS SIGNED THIS NOTE ABOVE.
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Exhibit B to
Subscription and
Note Purchase Agreement
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS. ACCORDINGLY, THIS WARRANT
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT (i) AN OPINION OF
COUNSEL SATISFACTORY TO FIELDWORKS, INCORPORATED THAT SUCH SALE, TRANSFER OR
OTHER DISPOSITION MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR (ii) SUCH REGISTRATION.
FIELDWORKS, INCORPORATED
WARRANT
TO PURCHASE
SHARES OF COMMON STOCK
For value received, _____, successors or assigns ("Holder"), is
entitled to purchase from FieldWorks, Incorporated, a Minnesota corporation (the
"Company"), up to _____ fully paid and nonassessable shares of the Company's
common stock, $.001 par value per share or such greater or lesser number of such
shares as may be determined by application of the anti-dilution provisions of
this warrant, at the price of $1.00 per share, subject to adjustments as noted
below (the "warrant exercise price").
This warrant may be exercised by Holder at any time or from time to
time prior to the close of business on , _____________ 2004.
This warrant is subject to the following terms and conditions:
1. Exercise. The rights represented by this warrant may be exercised by
the Holder, in whole or in part, by written election, in the form set forth
below, by the surrender of this warrant (properly endorsed if required) at the
principal office of the Company, and by payment to it by cash, certified check
or bank draft of the warrant exercise price for the shares to be purchased. The
shares so purchased shall be deemed to be issued as of the close of business on
the date on which this warrant has been exercised by payment to the Company of
the warrant exercise price. Certificates for the shares of stock so purchased,
bearing the restrictive legend set forth at the end of this warrant, shall be
delivered to the Holder within fifteen (15) days after the rights represented by
this warrant shall have been so exercised, and, unless this warrant has expired,
a new warrant representing the number of shares, if any, with respect to which
this
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warrant has not been exercised shall also be delivered to the Holder hereof
within such time. No fractional shares shall be issued upon the exercise of this
warrant.
2. Shares. All shares that may be issued upon the exercise of the
rights represented by this warrant shall, upon issuance, be duly authorized and
issued, fully paid and nonassessable shares. During the period within which the
rights represented by this warrant may be exercised, the Company shall at all
times have authorized and reserved for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this warrant a sufficient
number of shares of its common stock to provide for the exercise of the rights
represented by this warrant.
3. Adjustment. The warrant exercise price shall be subject to
adjustment from time to time as hereinafter provided in this Section 3:
(a) If the Company at any time divides the outstanding shares
of its common stock into a greater number of shares (whether pursuant
to a stock split, stock dividend or otherwise), and conversely, if the
outstanding shares of its common stock are combined into a smaller
number of shares, the warrant exercise price in effect immediately
prior to such division or combination shall be proportionately adjusted
to reflect the reduction or increase in the value of each such common
share.
(b) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of
its assets to another corporation shall be effected in such a way that
holders of the Company's common stock shall be entitled to receive
stock, securities or assets with respect to or in exchange for such
common stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, the Holder shall have
the right to purchase and receive upon the basis and upon the terms and
conditions specified in this warrant and in lieu of the shares of the
common stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby, such
shares of stock, other securities or assets as would have been issued
or delivered to the Holder if Holder had exercised this warrant and had
received such shares of common stock immediately prior to such
reorganization, reclassification, consolidation, merger or sale. The
Company shall not effect any such consolidation, merger or sale unless
prior to the consummation thereof the successor corporation (if other
than the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument
executed and mailed to the Holder at the last address of the Holder
appearing on the books of the Company the obligation to deliver to the
Holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, the Holder may be entitled to purchase.
(c) If and whenever the Company shall (1) issue or sell any
shares of its common stock for a consideration per share less than the
warrant exercise price in effect immediately prior to the time of such
issuance or sale, (2) issue or sell any warrants, options or other
rights to acquire shares of its common stock at a purchase price less
than the warrant purchase price in effect immediately prior to the time
of such issuance or sale or (3) issue or sell any other securities that
are convertible into shares of its common stock for a purchase or
exchange price less than the warrant exercise price in effect
-13-
immediately prior to the time of such issuance or sale (except for the
issuance or sale of shares of the Company's common stock pursuant to
stock option plans, purchase plans or other employee stock incentive
programs adopted by the Company's Board of Directors, or pursuant to
business acquisition or lease financing transactions), then, upon such
issuance or sale, the warrant exercise price shall be reduced to the
price (calculated to the nearest cent) determined by dividing (A) an
amount equal to the sum of (1) the number of shares of the Company's
common stock outstanding immediately prior to such issue or sale
multiplied by the then existing warrant exercise price and (2) the
consideration, if any, received by the Company upon such issue or sale
plus the consideration to be received by the Company upon the exercise
of such stock purchase rights by (B) an amount equal to the sum of (1)
the number of shares of its common stock outstanding immediately prior
to such issue or sale and (2) the number of its shares of common stock
thus issued or sold or issuable or saleable upon the exercise of such
purchase rights or the conversion of such convertible securities;
provided, however, that in the event that any such purchase right
expires or is terminated prior to the exercise of this warrant, the
warrant exercise price shall be recalculated by deleting such purchase
right and provided further that if an adjustment is made to the warrant
exercise price as a result of the issuance or sale of any such purchase
rights or convertible securities, no further adjustment shall be made
to the warrant exercise price at the time such purchase rights are
exercised or convertible securities are converted.
(d) If the Company shall default in the due and punctual
payment of any payment of principal or interest on the subordinated
promissory note issued by the Company to the Holder pursuant to that
certain Subscription and Note Purchase Agreement dated as of ________,
1999 by and between the Company and the Holder, the warrant exercise
price shall be reduced to fifty percent (50%) of the warrant exercise
price then in effect. Following any such adjustment pursuant to this
Section 3(d), the other provisions of this Section 3 shall continue to
apply.
(e) Upon each adjustment of the warrant exercise price, the
Holder shall thereafter be entitled to purchase, at the warrant
exercise price resulting from such adjustment, the number of shares
obtained by multiplying the warrant exercise price in effect
immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the warrant exercise price resulting
from such adjustment.
(f) Upon any adjustment of the warrant exercise price, the
Company shall give written notice thereof to the Holder stating the
warrant exercise price resulting from such adjustment and the increase
or decrease, if any, in the number of shares purchasable at such price
upon the exercise of this warrant, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is
based.
4. No Rights as Shareholder. This warrant shall not entitle the Holder
to any voting rights or other rights as a shareholder of the Company.
5. Registration Rights. Holder shall be entitled to participate in any
registered offering of shares of the Company's common stock. Holder's
participation in any such offering
-14-
shall be in accordance with the procedures, and subject to the limitations, set
forth on Exhibit A to this warrant.
6. Transfer. This warrant and all rights hereunder are transferable, in
whole or in part, at the principal office of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this warrant properly
endorsed to any person or entity who represents in writing that such person or
entity is acquiring the warrant for investment and without any view to the sale
or other distribution thereof. Each holder of this warrant, by taking or holding
the same, consents and agrees that the bearer of this warrant, when endorsed,
may be treated by the Company and all other persons dealing with this warrant as
the absolute owner hereof for any purpose and as the person entitled to exercise
the rights represented by this warrant, or to the transfer hereof on the books
of the Company, any notice to the contrary notwithstanding; but until such
transfer on such books, the Company may treat the registered owner hereof as the
owner for all purposes.
7. Notices. All demands and notices to be given hereunder shall be
delivered or sent by first class mail, postage prepaid; in the case of the
Company, addressed to its corporate headquarters, Attention: Chief Financial
Officer, 0000 Xxxxxxx Xxxxx, Xxxx Xxxxxxx, XX 00000, until a new address shall
have been substituted by like notice; and in the case of Holder, addressed to
Holder at the address written below, until a new address shall have been
substituted by like notice.
[The remainder of this page intentionally is left blank; signature page follows]
IN WITNESS WHEREOF, the Company has caused this warrant to be executed
and delivered by a duly authorized officer.
Dated:__________, 1999
FIELDWORKS, INCORPORATED
By
--------------------------------
Its
-----------------------------
----------------------------------
----------------------------------
----------------------------------
[Name and Address of Holder]
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RESTRICTION ON TRANSFER
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
state and may not be sold, transferred or otherwise disposed of except pursuant
to an effective registration statement or exemption from registration under the
foregoing laws. Accordingly, the shares represented by this certificate may not
be sold, transferred or otherwise disposed of without (i) an opinion of counsel
satisfactory to FieldWorks, Incorporated that such sale, transfer or other
disposition may lawfully be made without registration under the Securities Act
of 1933 and applicable state securities laws or (ii) such registration.
-16-
WARRANT EXERCISE
(To be signed only upon exercise of this warrant)
The undersigned, the Holder of the foregoing warrant, hereby
irrevocably elects to exercise the purchase right represented by such warrant
for, and to purchase thereunder, __________ shares of common stock of
FieldWorks, Incorporated, to which such warrant relates and herewith makes
payment of $__________ therefor in cash, certified check or bank draft and
requests that the certificates for such shares be issued in the name of, and be
delivered to ____________________, whose address is set forth below the
signature of the undersigned.
Dated:______________
________________________________
Signature
If shares are to be issued Social Security or other Tax
other than to Holder: Identification No.
_____________________________________ ________________________________
_____________________________________
_____________________________________
_____________________________________
Please print present name and address
-17-
WARRANT ASSIGNMENT
(To be signed only upon transfer of this warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________ the right represented by the foregoing warrant to purchase
the shares of common stock of FieldWorks, Incorporated, and appoints
____________________ attorney to transfer such right on the books of FieldWorks,
Incorporated, with full power of substitution in the premises.
Dated:_______________
__________________________________
Signature
______________________________________ Social Security or other Tax
Identification No.
______________________________________
__________________________________
______________________________________
Please print present name and complete
address
-18-
EXHIBIT A
TO
WARRANT
ISSUED BY
FIELDWORKS, INCORPORATED
Registration Rights
1. Definitions. As used in this Exhibit A, the following terms shall
have the following respective meanings:
"Company" means FieldWorks, Incorporated, a Minnesota corporation.
"Holder" means (i) any person owning of record Registrable Securities
that have not been sold to the public or (ii) any transferee of record of such
Registrable Securities in accordance with Section 6 of the Warrant.
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"Registrable Securities" means (i) Common Stock of the Company issued
or issuable upon exercise of the Warrants, and (ii) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, such above-described
securities. Notwithstanding the foregoing, Registrable Securities shall not
include any securities sold by a person to the public either pursuant to a
registration statement or Rule 144 or sold in a private transaction in which the
transferor's rights under Section 6 of the instrument to which this Exhibit A is
attached are not assigned.
"Registrable Securities then outstanding" shall be the number of shares
determined by calculating the total number of shares of the Company's Common
Stock that are Registrable Securities and either (i) are then issued and
outstanding or (ii) are issuable pursuant to then exercisable or convertible
securities.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Warrants" shall mean those warrants issued by the Company in the
offering described in the Summary of the Offering dated as of August 16, 1999.
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2. Piggyback Registration Rights. Each time the Company shall determine
to proceed with the actual preparation and filing of a registration statement
under the Securities Act in connection with the proposed offer and sale for
money of any of its securities by it (other than a registration on Form S-8 or a
successor form), the Company will give written notice of its determination to
the Holders. Upon the written request of any Holder given within thirty (30)
days after receipt of any such notice from the Company, the Company will, except
as herein provided, cause all Registrable Securities owned by such Holder and
with respect to which Holder has requested registration to be included in such
registration statement, all to the extent requisite to permit the sale or other
disposition by such Holder of the Registrable Securities to be so registered;
provided, however, that nothing herein shall prevent the Company from, at any
time, abandoning or delaying any such registration initiated by it. If any such
registration pertains to an underwritten offering in whole or in part, the
Company may require that the shares requested for inclusion by any Holder
pursuant to this section be included in the underwritten offering on the same
terms and conditions as the securities otherwise being sold through the
underwriters. In the event that if, in the good faith judgment of the managing
underwriter of such underwritten offering, as evidenced in writing delivered to
the Company, the inclusion of all of the shares originally covered by a request
for registration made by a Holder would reduce the amount of securities to be
offered by the Company or interfere with the successful marketing of the
securities to be offered by the Company, the number of shares of stock owned by
such Holder and otherwise to be included in the underwritten offering may be
reduced; provided, however, that any such required reduction shall be pro rata
among all persons (other than the Company) who are participating in such
underwritten offering. Those shares which are thus excluded from the
underwritten offering shall be withheld from the market by such Holder for a
period, not to exceed 180 days, that the managing underwriter reasonably
determines is necessary in order to effect the underwritten offering.
3. Demand Registration Rights.
(a) Subject to the conditions of this Section 3, if the
Company shall receive a written request from the Holders of a majority
of the Registrable Securities then outstanding (the "Initiating
Holders") that the Company file a registration statement under the
Securities Act covering the registration of Registrable Securities,
then the Company shall, within thirty (30) days of the receipt thereof,
give written notice of such request to all Holders, and subject to the
limitations of this Section 3, use its best efforts to effect, as soon
as practicable, the registration under the Securities Act of all
Registrable Securities that the Holders request to be registered.
(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their
request made pursuant to this Section 3 and the Company shall include
such information in the written notice referred to in Section 3(a). In
such event, the right of any Holder to include its Registrable
Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such
Holder) to the extent
A-2
provided herein. All Holders proposing to distribute their securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders (which
underwriter or underwriters shall be reasonably acceptable to the
Company). Notwithstanding any other provision of this Section 3, if the
underwriter advises the Company that marketing factors require a
limitation of the number of securities to be underwritten (including
Registrable Securities) then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant
hereto, and the number of shares that may be included in the
underwriting shall be allocated to the Holders of such Registrable
Securities on a pro rata basis based on the number of Registrable
Securities held by all such Holders (including the Initiating Holders).
Any Registrable Securities excluded or withdrawn from such underwriting
shall be withdrawn from the registration.
(c) The Company shall not be required to effect a registration
pursuant to this Section 3:
(i) prior to __________, 2000;
(ii) after the Company has effected one (1)
registration pursuant to this Section 3, and such registration
has been declared or ordered effective; or
(iii) if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section
3, a certificate signed by the Chairman of the Board stating
that, in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company
and its shareholders for such registration statement to be
effected at such time, in which event the Company shall have
the right to defer such filing for a period of not more than
ninety (90) days after receipt of the request of the
Initiating Holders.
4. Registration Procedures. If and whenever the Company is required by
the provisions of Section 2 or Section 3 to effect the registration of any
shares under the Securities Act, the Company will:
(a) prepare and file with the Commission a registration
statement with respect to such shares, and use its best efforts to
cause such registration statement to become and remain effective for
such period as may be reasonably necessary to effect the sale of such
shares, not to exceed three (3) months;
(b) prepare and file with the Commission such amendments to
such registration statement and supplements to the prospectus contained
therein as may be necessary to keep such registration statement
effective for such period as may be reasonably necessary to effect the
sale of such securities, not to exceed six (6) months;
(c) furnish to the Holders of, and to the underwriters of, the
securities being registered such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus and
such other documents as such Holders and underwriters may reasonably
request in order to facilitate the public offering of such securities;
A-3
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as the underwriters may reasonably
request within twenty (20) days following the original filing of such
registration statement, except that the Company shall not for any
purpose be required to execute a general consent to service of process
or to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified; and
(e) prepare and promptly file with the Commission and promptly
notify Holders of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to
such securities is required to be delivered under the Securities Act,
any event shall have occurred as the result of which any such
prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading.
5. Expenses. With respect to any registration of shares pursuant to
Section 2 or Section 3, the Company shall bear the following fees, costs and
expenses: all registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, fees and disbursements
of counsel for the underwriter or underwriters of such securities (if the
Company and/or selling security holders are required to bear such fees and
disbursements), all internal Company expenses, the premiums and other costs of
policies of insurance against liability arising out of the public offering, and
all legal fees and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the securities to be
offered are to be registered or qualified. Fees and disbursements of counsel and
accountants for Holders, underwriting discounts and commissions and transfer
taxes for Holders and any other expenses incurred by Holders not expressly
included above shall be borne by Holders.
6. Indemnification. In the event that any shares owned by Holders are
included in a registration statement under Section 1:
(a) The Company will indemnify and hold harmless Holders and
any underwriter (as defined in the Securities Act) for Holders from and
against any and all loss, damage, liability, cost and expense
(collectively, "Losses") to which Holders or any such underwriter may
become subject under the Securities Act or otherwise, insofar as such
Losses are caused by any untrue statement or alleged untrue statement
of any material fact contained in such registration statement, any
prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading; provided, however, that the
Company will not be liable in any such case to the extent that any such
Loss arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity
with information furnished by Holders or such underwriter.
A-4
(b) Holders will indemnify and hold harmless the Company and
any underwriter from and against any and all Losses to which the
Company or any underwriter may become subject under the Securities Act
or otherwise, insofar as such Losses are caused by any untrue or
alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was so made in reliance upon and in strict conformity
with information furnished by Holders.
(c) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) or (b) of this section of notice of the
commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to the
provisions of said paragraph (a) or (b), promptly notify the
indemnifying party of the commencement thereof; but the omission to so
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than hereunder. In
case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, if the
defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interest which would
prevent counsel for the indemnifying party from also representing the
indemnified party, the indemnified party or parties shall have the
right to select separate counsel to participate in the defense of such
action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party pursuant to the provisions of
paragraph (a) or (b) for any legal or other expense subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the
proviso of the preceding sentence, (ii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the
notice of the commencement of the action or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party in
respect of any Losses, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such Losses in such
proportion as appropriate to reflect the relative fault of the Company,
on the one hand, and such Holder of Registrable Securities, on the
other hand, and to reflect the parties' relative intent, knowledge,
access to information and opportunity to correct or mitigate the damage
in respect of or to prevent any untrue statement or omission giving
rise to
A-5
such indemnification obligation. The Company and the Holders of
Registrable Securities agree that it would not be just and equitable if
contributions pursuant to this Section 6(d) were determined by pro rata
allocation (even if the Holders of Registrable Securities were treated
as one entity for such purpose) or by any other method of allocation
which did not take account of the equitable considerations referred to
above in this Section 6(d). No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
is not guilty of such fraudulent misrepresentation.
7. Termination of Registration Rights. A Holder's registration rights
under this Exhibit A shall terminate and be of no further force and effect if
all the Registrable Securities held by and issuable to such Holder may be sold
under Rule 144 during any ninety (90) day period.
A-6
