EXHIBIT 10.15
STOCK PURCHASE AGREEMENT
BETWEEN
XATA CORPORATION
AND
XXXX DEERE SPECIAL TECHNOLOGIES GROUP, INC
AUGUST 30, 2000
CONTENTS
ARTICLE I PURCHASE AND SALE OF SHARES 1
AND CONVERSION OF DEBT TO EQUITY
ARTICLE II CLOSINGS: DELIVERIES 2
ARTICLE III REPRESENTATIONS AND WARRANTIES 3
OF THE COMPANY
ARTICLE IV REPRESENTATIONS AND WARRANTIES 13
OF THE INVESTOR
ARTICLE V CONDITIONS TO CLOSING 15
OF THE COMPANY
ARTICLE VI CONDITIONS TO CLOSING 15
OF THE INVESTOR
ARTICLE VII COVENANTS OF THE COMPANY 18
ARTICLE VIII INDEMNIFICATION 22
ARTICLE IX MISCELLANEOUS 23
ARTICLE X TERMINATION 27
EXHIBIT "A" LIST OF SCHEDULES
EXHIBIT "B" STOCK SUMMARY
EXHIBIT 1.2 FORM OF NOTE OPTION NOTICE
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of
the 30th day of August, 2000, by and between XXXX DEERE SPECIAL TECHNOLOGIES
GROUP, INC., a Delaware corporation (the "Investor"), and XATA CORPORATION, a
Minnesota corporation (the "Company).
WHEREAS, the Investor desires to purchase from the Company, and the
Company desires to issue and sell to the Investor, up to an aggregate of three
million six hundred thousand (3,600,000) shares (3,147,000 shares from the sale
of new stock, 253,000 shares from the conversion of the Promissory Note and
200,000 shares from XATA Investment Partners, LLC (Selling Shareholder) of
Common Stock, $.01 par value (the "Common Stock") of the Company on the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations hereafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
intending to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES AND CONVERSION OF DEBT TO EQUITY
1.1. Sale of New Shares of Common Stock
(a) Sales of New Shares of Common Stock. Subject to the terms and
conditions hereof, at the Closing the Company shall issue and sell to the
Investor, and the Investor shall purchase from the Company, three million one
hundred forty seven thousand (3,147,000) shares of Common Stock (the "Purchased
Shares") as noted on Exhibit "B", attached hereto, for the purchase price
provided in Section 1.1(b) below.
(b) Purchase Price. The purchase price for the Purchased Shares
shall be 82 percent (82%) of the average of the daily Bid and Ask (4:00 p.m.
closing) price for the Company's common stock, as reported by the Nasdaq
Smallcap Market quotation, for the 30 day period preceding the date of this
Agreement (the "Purchase Price").
1.2. Conversion of Debt.
(a) Note Option. At the option of the Investor (the "Note
Option"), which option shall be exercisable by the Investor after Shareholder
Approval (as defined in Article VI herein) but not before August 1, 2001 nor
after August 1, 2002 (the "Option Period"), that certain $1,000,000 Promissory
Note from the Company to the Investor (the "Note") shall be converted into
shares of Common Stock (the "Note Shares") based upon the then unpaid note
balance and the Purchase Price.
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(b) Mechanics. At any time during the Option Period, the Investor
may exercise the Note Option by delivering a written notice (the "Note Option
Notice") to the Company setting forth its intention to exercise the Note Option
in substantially the form attached hereto as "Schedule 1.2."
1.3. Reservation of Shares. The Company shall reserve and keep
available for issuance such number of its authorized but unissued shares of its
Common Stock as will be sufficient to permit the issuance of the Note Shares.
All shares of Common Stock that are so issuable shall, when issued upon
conversion, be duly and validly issued and fully paid and non-assessable.
1.4. Use of Cash Proceeds. The Company shall use the cash proceeds from
the sale of the Purchased Shares for working capital and general corporate
purposes.
1.5. Agreements. Each of the parties hereto agrees at the Closing to
enter into the respective agreements described in Article VI to which they are
indicated as a party.
1.6. Purchase of Additional Shares. Investor agrees, for a period of
one (1) year from the date of this Agreement, it will not purchase additional
shares of the Company without the prior approval of the Company's Board of
Directors.
ARTICLE II
CLOSINGS; DELIVERIES
2.1. Closings. The closings of the purchase and sale of the Purchased
Shares (the "Closings") shall occur on August 31, 0000 ("xxx 0xx Xxxxxxx"), as
to the purchase of six hundred thirty thousand (630,000) Purchased Shares and
following Shareholder Approval and approval of Deere and Company but before
December 31, 2000 (the 2nd Closing"), for the remaining Purchased Shares. The
Closings will be held at the offices of Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P.,
Atlanta, Georgia, or at such other place or on such other date as the parties
may agree (the 1st and 2nd closings are collectively referred to as the
"Closings").
2.2. Deliveries. At the Closings, the Company shall deliver to the
Investor certificates, registered in the Investor's name, representing the
Purchased Shares, against payment of the Purchase Price. The Company shall also
deliver such other instruments and documents as are described in Article VI.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Investor as follows:
3.1. Organization and Standing; Articles of Incorporation and Bylaws.
The Company is a corporation duly organized and validly existing under, and by
virtue of, the laws of the State of Minnesota and is in good standing under such
laws. The Company is qualified to do business as a foreign corporation in every
jurisdiction in which the failure to so qualify would have a material adverse
effect on the business, assets, operating results, prospects or financial
condition of the Company (a "Material Adverse Effect"). The Company has the
requisite corporate power and authority to own and operate its properties and
assets and to carry on its business as presently conducted and as proposed to be
conducted. The Company has previously delivered to the Investor true and
accurate copies of the Restated Articles of Incorporation and Bylaws, as
presently in effect, of the Company.
3.2. Corporate Power. The Company has all requisite legal and corporate
power and authority to enter into this Agreement and the Registration Rights
Agreement (the "Transaction Documents") and to sell the Purchased Shares and the
Note Shares.
3.3. Subsidiaries and Affiliates. Except as set forth on Schedule 3.3,
the Company does not own or control, directly or indirectly, any interest or
investment in any corporation, partnership, association or other form of
business entity. For purposes of this Agreement, all references to the Company
shall include references to the subsidiaries listed on Schedule 3.3, unless the
context requires otherwise.
3.4. Capitalization. The authorized capital stock of the Company
consists of 8,333,333 shares of Common Stock, $.01 par value, 4,537,028 shares
of which are issued and outstanding as of June 30, 2000, and 333,333 shares of
preferred stock, of which 40,000 shares have been issued as Series A 8%
Convertible Preferred Stock (the "Series A Preferred Stock") and are outstanding
as of June 30, 2000,. All such issued and outstanding shares have been duly
authorized and validly issued, are fully paid and non-assessable, and have been
offered, issued, sold and delivered by the Company in compliance with applicable
federal and state securities laws. Except as set forth in Schedule 3.4 attached
hereto, there are no outstanding rights, options, warrants, conversion rights or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock or other securities other than rights created by this Agreement.
3.5. Authorization. All corporate action on the part of the Company and
its directors, officers and shareholders necessary for the authorization,
execution, delivery and performance of all obligations of the Company under the
Transaction Documents and any document contemplated hereby, for the
authorization, issuance and delivery of the Purchased Shares, has been (or will
be) taken prior to the Closings with respect to issuance of the Purchased Shares
and/or Note Shares issued by the Company at the Closings. The Agreement
constitutes a valid and binding obligation of the Company and are enforceable
against the Company in accordance with their terms, except as enforceability may
be limited by bankruptcy, insolvency or other laws
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affecting the enforcement of creditors' rights generally, and except that the
availability of the remedy of specific performance or other equitable relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.
3.6. Validity of Stock. The Purchased Shares and the Note Shares, when
issued, sold and delivered in compliance with the provisions of this Agreement
and will be validly issued, fully paid and nonassessable, will be free of any
liens or encumbrances, and will not be subject to any preemptive rights, rights
of first refusal or redemption rights, other than as provided herein and in the
Restated Articles of Incorporation and the Bylaws (the "Bylaws") of the Company.
The Purchased Shares and the Note Shares are not subject to any preemptive
rights or rights of first refusal or redemption rights (other than as provided
herein and in the Restated Articles of Incorporation and the Bylaws) and, upon
issuance, will be validly issued, fully paid and non-assessable.
3.7. Material Liabilities. Except as disclosed on Schedule 3.7 attached
hereto, the Company has no liabilities or obligations, absolute or contingent
(individually or in the aggregate), except obligations and liabilities incurred
in the ordinary course of business that are not individually or in the aggregate
material to the Company.
3.8. Contracts and Commitments. Except as disclosed on Schedule 3.8,
other than this Agreement, the Company has no contracts, agreements or
instruments to which it is a party and that involve a commitment by, or revenue
to, the Company in excess of $20,000 annually. All contracts, agreements or
instruments to which the Company is a party are valid and binding upon the
Company and, to best knowledge and belief of the Company, the other parties
thereto, and are in full force and effect and enforceable in accordance with
their terms. Neither the Company nor, to best knowledge and belief of the
Company, any other party to any such contract, agreement or instrument, has
breached any provision of, or is in default under, the terms thereof, and, there
are no existing facts or circumstances that would prevent the work in process of
the Company or its contracts and agreements from maturing in due course into
fully collectible accounts receivable.
3.9. Intellectual Property Rights. Schedule 3.9 hereto sets forth a
complete and correct list of (i) all patents (the "Patents"), trademarks, trade
names (including all federal and state registration pertaining thereto) and
registered copyrights owned by the Company or any subsidiary of the Company
(collectively, the "Proprietary Intellectual Property") and (ii) all patents,
trademarks, trade names, copyrights, technology and processes used by the
Company or any subsidiary of the Company in their businesses which are material
to their businesses and are used pursuant to a license or other right granted by
a third party (collectively, the "Licensed Intellectual Property," and together
with the Proprietary Intellectual Property referred to as "Intellectual
Property"). A true and complete list of all such licenses and agreements with
respect to Licensed Intellectual Property is set forth in Schedule 3.9. Each of
the federal, state and other governmental registrations with any country
pertaining to the Proprietary Intellectual Property is valid and in full force
and effect. The Company owns, or has the right to use pursuant to valid and
effective agreements, all Intellectual Property, and the consummation of the
transactions contemplated hereby will not materially adversely alter or impair
any such rights. No claims are pending against the Company by any person with
respect to the use of any
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Intellectual Property or challenging or questioning the validity or
effectiveness of any license or agreement relating to the same that would be
likely to result in a Material Adverse Effect, and the current use by the
Company of the Intellectual Property does not in any material respect infringe
upon the rights of any third party. Schedule 3.9 sets forth a list of all
jurisdictions in which the Company is operating under a trade name, and each
jurisdiction in which any such trade name is registered. No Patent has been or
is now involved in any interference, reissue, reexamination or opposition
proceeding, nor is the Company aware of any potentially interfering patent or
patent application of any third party. To the knowledge of the Company, no
person or entity is presently selling or marketing a product which is covered by
the Patents, and the Patents have not been challenged or threatened in any way.
Further, no current or former Company employee is named as an inventor on any
pending patent application. All the Patents are currently in compliance with
formal legal requirements (including payment of filing, examination and
maintenance fees and proofs of working or use), and to the best knowledge of the
Company, there is nothing which would render the Patents invalid or
unenforceable, and they are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the date of Closing.
3.10. Company Computer Software and Hardware.
(a) Schedule 3.10(a) hereto sets forth a true and complete list
as of June 30, 2000 of: (a) all software and associated documentation owned by
the Company material to the business of the Company, other than custom-developed
software developed for and assigned to a Company customer, owned by the Company,
(such items set forth on Schedule 3.10(a) together with all software and
associated documentation material to the business of the Company developed by
the Company since the date of its incorporation are hereinafter referred to as
the "Company Proprietary Software"); (b) all software (other than the Company
Proprietary Software and "shrink-wrap" software) used in connection with the
business of the Company (the "Company Licensed Software" and together with the
Company Proprietary Software, the "Company Software"). Subject to any
limitations described in Schedule 3.10(a), the Company has all rights that are
necessary or appropriate to distribute, license or sublicense the Company
Software to third parties and to appoint others to do any of the foregoing.
Except as described in Schedule 3.10(a) the Company has all technical and
descriptive materials to run its business in accordance with its historical
practices, except as would not have a Material Adverse Effect. The Company
Proprietary Software consists of: (a) source and object code embodied in
magnetic media; and (b) all development and procedural tools, documentation, and
manuals necessary to maintain, enhance, develop derivative works, support and
service the Company Proprietary Software, including licenses to use compilers,
assemblers, libraries and other aids.
(b) The Company has a valid right, title and interest in and to
all intellectual property rights in the Company Proprietary Software, including
all worldwide copyrights, trade secrets, trademarks, moral rights, and
proprietary and confidential information rights therein. The Company Proprietary
Software is free and clear of all liens, claims and encumbrances, except as
noted in Schedule 3.10(b). The use of the Company Licensed Software and the use
and distribution of the Company Proprietary Software does not breach any terms
of any contract or agreement and is in compliance with all applicable laws,
regulations and codes of any foreign, U.S., state or local authority, including
without limitation, all U.S. Export Administration
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Regulations. The Company has been granted under the license agreements relating
to the Company Licensed Software (the "Company License Agreements") valid and
subsisting license rights with respect to all software comprising the Company
Licensed Software. The Company is in compliance with each of the terms and
conditions of each of the Company License Agreements except to the extent
failure to so comply, individually or in the aggregate, would not have a
Material Adverse Effect. To the knowledge of the Company, in the case of any
commercially available "shrink-wrap" software programs (such as Lotus 1-2-3 or
Microsoft Word), the Company has not made and is not using any unauthorized
copies of any such software programs and, to the knowledge of the Company, none
of the employees, agents or representatives of the Company have made or are
using any such unauthorized copies, except as would not have a Material Adverse
Effect.
(c) The Company Proprietary Software and, to the best knowledge
and belief of the Company, the Company Licensed Software does not infringe the
patent, copyright, or trade secret rights or any other intellectual property
right of any third party which may exist anywhere in the world.
(d) Except as set forth in Schedule 3.10(d), the Company has not
granted rights in the Company Software to any third party except for rights
granted to customers in the ordinary course of business pursuant to contracts
with customers.
(e) To the knowledge of the Company, the Company Software and the
related computer hardware used by the Company in its operations (the "Company
Hardware") are adequate in all material respects, when taken together with the
other assets, resources and personnel of the Company, to run the business of the
Company in the same manner as such business has operated, except as would not
result in a Material Adverse Effect. Schedule 3.10(e) contains a summary
description of any problems experienced by the Company in the past six months
with respect to the Company Software or Company Hardware and the provision of
services to Company clients which have arisen outside the ordinary course of
business and would result in a Material Adverse Effect.
(f) To the knowledge of the Company, the Software is "Millennium
Compliant" (defined below). For the purposes of this Agreement "Millennium
Compliant" means:
(i) the functions, calculations, and other computing
processes of the Software (collectively, "Processes") perform in a consistent
manner regardless of the date in time on which the Processes are actually
performed and regardless of the date input to the Software, whether before, on,
or after January 1, 2000 and whether or not the dates are affected by leap
years;
(ii) the Company Software accepts, calculates, compares,
sorts, extracts, sequences, and otherwise processes date inputs and date values,
and returns and displays date values, in a consistent manner regardless of the
dates used, whether before, on, or after January 1, 2000;
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(iii) the Company Software will function without
interruptions caused by the date in time on which the Processes are actually
performed or by the date input to the Software, whether before, on, or after
January 1, 2000;
(iv) the Company Software accepts and responds to two-digit
year-date input in a manner that resolves any ambiguities as to the century in a
defined, predetermined, and appropriate manner; and
(v) the Company Software stores and displays date information
in ways that are unambiguous as to the determination of the century.
3.11. Compliance with Other Instruments. The Company is not in
violation of any term of its Restated Articles of Incorporation or Bylaws or any
provision of any mortgage, indenture, contract, agreement or instrument to which
it is a party or by which it or its assets are bound; any judgment, decree or
order binding upon the Company; or, in any material respect, any statute, rule
or regulation applicable to the Company. The execution, delivery and performance
of and compliance with the Transaction Documents, the issuance of the Purchased
Shares and the Note Shares on the terms set forth in this Agreement will not
result in any such violation or be in conflict with or constitute a default
under any of the terms or provisions described in the first sentence of this
section, or result in the creation of any mortgage, pledge, lien, encumbrance or
charge upon any of the properties or assets of the Company pursuant to any such
term or provision. There is no such provision that materially and adversely
affects the business, financial condition, affairs, operations, properties or
assets of the Company taken as a whole. To the knowledge of the Company, no
employee of the Company is in violation of any term of any employment contract,
patent or trade secret disclosure agreement or any other contract or agreement,
by reason of such person's employment by the Company and the nature of the
business conducted or to be conducted by the Company.
3.12. Litigation and Other Proceedings. Except as disclosed on Schedule
3.12 attached hereto, there are no actions, proceedings or investigations
pending against the Company, or its respective properties (or any basis therefor
or, to the Company's knowledge, threat thereof) that, either in any case or in
the aggregate, might result in any Material Adverse Effect 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 that challenges the validity of this Agreement
or any action taken or to be taken in connection herewith. The foregoing
includes, without limiting its generality, actions pending or, to the knowledge
of the Company, threatened (or any threat thereof) involving the prior
employment of any of the Company's employees, or their use in connection with
the Company's business of any information or techniques allegedly proprietary to
any former employers.
3.13. Employees. Except as disclosed on Schedule 3.13 attached hereto,
the Company has no employment contracts with any of its employees not expressly
terminable at will, and has no collective bargaining agreements covering any of
its employees. The Company is not aware of any proposed, threatened or actual
union organization activity affecting the Company's current or prospective
operations.
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3.14. Registration Rights. Except as disclosed on Schedule 3.14
attached hereto, and except as provided for in the Registration Rights
Agreement, the Company is under no obligation to register any of its presently
outstanding securities or any of its securities that may hereafter be issued
pursuant to this or any other existing agreement.
3.15. Governmental Consents. No consent, approval or authorization of,
or registration, declaration, designation, qualification or filing with, any
governmental authority on the part of the Company, other than the Shareholder
Approval and the filing of the Certificate of Amendment, is required in
connection with the valid execution and delivery of the Transaction Documents,
the offer, sale or issuance of the Purchased Shares and the Note Shares, or the
consummation of any other transaction contemplated hereby other than as provided
by applicable securities laws.
3.16. Title to Property and Assets. Except as disclosed on Schedule
3.16 attached hereto, the Company has good and marketable title to its
respective properties and assets and has good title to all its leasehold
interests, in each case subject to no mortgage, pledge, lien, lease, encumbrance
or charge.
3.17. Customers and Suppliers. As of June 30, 2000, the Company has no
knowledge that any customer or supplier of the Company has taken or contemplates
taking any steps that could disrupt the business relationship of the Company
with such customer or supplier or could result in a diminution in the value of
the Company, in either case in a manner that would have a material adverse
effect on business or financial condition of the Company.
3.18. Minute Books. The minute books of the Company provided to the
Investor contain a materially complete summary of all meetings of directors and
shareholders since January 1, 1998, and reflect all transactions referred to in
such minutes accurately in all material respects.
3.19. Licenses and Permits; Compliance with Law. The Company holds all
licenses, certificates, permits, franchises and rights from all appropriate
federal, state or other public authorities necessary for the conduct of its
business and the use of its assets. The Company is presently conducting its
business so as to comply in all material respects with all applicable statutes,
ordinances, rules, regulations and orders of any governmental authority.
Further, the Company is not presently charged with or, to the knowledge of the
Company, under governmental investigation with respect to, any actual or alleged
violation of any statute, ordinance, rule or regulation. The Company is not
presently the subject of any pending or, to the Company's knowledge, threatened
adverse proceeding by any regulatory authority having jurisdiction over its
business, properties or operations. None of the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will
result in the termination of any such license, certificate, permit, franchise or
right held by the Company.
3.20. Employment; No Conflicting Agreements. None of the officers,
directors, or key employees of the Company are obligated under any contract
(including licenses, covenants, or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would conflict with his or her obligation to use his
or her
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best efforts to promote the interests of the Company or that would conflict with
the business of the Company as presently, or proposed to be, conducted.
3.21. Indebtedness to Directors and Officers. Except as disclosed on
Schedule 3.21, the Company is not indebted to any of its directors or officers
or party to any contract with any affiliate of its directors or officers, and,
to the knowledge of the Company, none of such directors or officers has a claim
of any nature against the Company.
3.22. Disclosure. No representation or warranty by the Company in the
Transaction Documents or in any written statement or certificate furnished to
the Investor in connection with the transactions contemplated by the Transaction
Documents contains, or will contain, any untrue statement of a material fact or
omits, or will omit, to state a material fact necessary to make the statements
made not misleading in light of the circumstances under which they were made.
3.23. Tax Matters. The Company has accurately prepared and timely filed
all income and other tax returns, if any, that are required to be filed, and has
paid, or made provision for the payment of, all taxes that have or may have
become due pursuant to said returns or pursuant to any assessment that has or
may be received from any taxing authority. There are no outstanding agreements
by the Company for the extension of time for the assessment of any tax. The
United States income tax returns of the Company have not been audited by the
Internal Revenue Service. No deficiency assessment or proposed adjustment of the
Company's United States income tax or state or municipal taxes is pending, nor
is the Company liable for any tax to be imposed upon the Company's properties or
assets for which there is not an adequate reserve reflected in the Financial
Statements, as defined in Section 3.28.
3.24. Environmental Laws.
(a) The Company (i) is in substantial compliance with any and all
applicable foreign, Federal, state and local laws and regulations relating to
the protection of human health and safety or emissions, discharges, releases,
threatened releases, removal, remediation or abatement of pollutants,
contaminants, chemicals or industrial, hazardous or toxic substances or wastes
into or in the environment (including air, surface water, ground water or land)
or otherwise used in connection with the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants, hazardous or toxic substances or wastes, as defined under such
applicable laws ("Environmental Laws" ), (ii) has received all permits, licenses
or other approvals required of it under applicable Environmental Laws to conduct
its business and (iii) is in compliance with all terms and conditions of any
such permit, license or approval, except to the extent that the matters within
clauses (i), (ii) or (iii) above would not result in a Material Adverse Change.
(b) There is no substance designated a "hazardous substance,"
"hazardous waste" or "hazardous constituent" by any Environmental Law, including
asbestos, petroleum, urea formaldehyde insulation and petroleum by-products
("Hazardous Substance") present at any of the real property currently owned or
leased by the Company, except to the extent that such presence could not
reasonably be expected to result in a Material Adverse Change; and with
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respect to such real property, to the knowledge of the Company, there has not
occurred (i) any release or any threatened release of a Hazardous Substance or
(ii) any discharge or threatened discharge of any Hazardous Substance into the
ground, surface or navigable waters, which discharge or threatened discharge
violates any Federal, state, local or foreign laws, rules or regulations
concerning water pollution.
(c) The Company has not disposed of, transported or arranged for
the transportation or disposal of any Hazardous Substance where such disposal,
transportation or arrangement would give rise to liability pursuant to any
Environmental Law other than any such liabilities that could not reasonably be
expected to result in a Material Adverse Change.
3.25. Employee Benefit Plans; ERISA.
(a) Except as set forth on Schedule 3.25(a), there are no and
have never been any "employee pension benefit plans" as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
covering employees (or former employees) employed in the United States,
maintained or contributed to by the Company or any ERISA Affiliate (as
hereinafter defined), or to which the Company or any ERISA Affiliate contributes
or is obligated to make payments thereunder or otherwise may have any liability
("Pension Benefit Plans"). For purposes of this Agreement, "ERISA Affiliate"
shall mean any person (as defined in Section 3(9) of ERISA) that is a member of
any group of persons described in Section 414(b), (c), (m) or (o) of the Code,
of which the Company is a member. With respect to any Pension Benefit Plan, the
Company has delivered or made available to the Investor hereto true, complete
and correct copies of each Pension Benefit Plan, related trust agreement,
annuity contract, summary plan description, plan document, most recent IRS
determination letter and Form 5500 filings for the past three (3) reporting
years. Each Pension Benefit Plan has been administered in accordance with its
terms and in compliance with the applicable provisions of ERISA and the Code. No
Pension Benefit Plan is subject to funding or termination insurance under Title
IV of ERISA. During the last five years, to the Company's knowledge, there has
been with respect to any Pension Benefit Plan no "prohibited transaction" within
the meaning of Section 406 of ERISA and Section 4975 of the Code that was not
otherwise exempt from the provisions thereof.
(b) Except as set forth on Schedule 3.25(b), the Company has not
and has never had any "welfare benefit plans" (as defined in Section 3(1) of
ERISA and including medical, dental, life insurance and disability benefits)
covering employees (or former employees) employed in the United States,
maintained or contributed to by the Company and, to the extent covering
employees (or former employees) employed in the United States, any plans,
policies, programs, agreements, understandings or arrangements providing
compensation or other benefits to employees and former employees, including all
stock bonus, stock option, restricted stock, stock appreciation right, stock
purchase, bonus, incentive, deferred compensation, severance and vacation plans
maintained or contributed to by the Company ("Welfare Plans"). With respect to
each Welfare Plan, the Company has delivered or made available to the Investor
true, complete and correct copies of each Welfare Plan, insurance contract,
summary plan description, plan document, ADP/ACP test reports and Form 5500
filings for the past three (3) reporting years. Each Welfare Plan has been
administered in accordance with its terms and in compliance with
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the applicable provisions of ERISA and the Code. With respect to any Welfare
Plan that is an employee welfare benefit plan (as defined in Section 3(1) of
ERISA), no such Welfare Plan provides benefits including death or medical
benefits beyond termination of employment or retirement, except as otherwise
required by law, and each Welfare Plan may be amended or terminated without
liability at any time by the Company. To the extent required, the Welfare Plans
have complied with the continuation coverage requirements of Sections 601
through 609 of ERISA and Sections 162(k) and 4980B of the Code and with the
notice and coverage certification requirements of Section 701 of ERISA and
Section 9801 of the Code with respect to all employees, their dependents and
beneficiaries. During the last five years, to the Company's knowledge, there has
been with respect to any Welfare Plan no "prohibited transaction" within the
meaning of Section 406 of ERISA and Section 4975 of the Code that was not
otherwise exempt from the provisions thereof.
(c) Neither the Company nor any ERISA Affiliate is required to
contribute, and neither has ever been required to contribute, to any
multi-employer plan within the meaning of Section 3(37)(A) of ERISA. Neither the
Company nor any ERISA Affiliate has ever withdrawn (in a partial or complete
withdrawal) from or incurred any liability (including any contingent liability
under Section 4204 of ERISA) with respect to any such multi-employer plan
covering employees (or former employees) employed in the United States.
3.26. Brokers. Except as disclosed on Schedule 3.26 attached hereto,
neither the Company nor any of the officers, directors, employees or
stockholders of the Company has employed any broker or finder in connection with
the transactions contemplated by this Agreement.
3.27. Common Stock. The Company has registered its Common Stock
pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange
Act"), and the Company has maintained all requirements for the continued listing
or quotation of its Common Stock, and such Common Stock is currently listed or
quoted on the Nasdaq SmallCap Market.
3.28. SEC Documents. The Company has delivered or made available to the
Investor true and complete copies of its filings with the Securities and
Exchange Commission for the fiscal years ended September 30, 1998 and 1999 (the
SEC Documents) including, without limitation, proxy information and solicitation
materials. The Company has not provided to the Investor any information that,
according to applicable law, rule or regulation, should have been disclosed
publicly prior to the date hereof by the Company, but which has not been so
disclosed. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and other federal, state and local laws, rules and
regulations applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents (the "Financial Statements") comply as to form and substance in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto. Such Financial Statements have been prepared in accordance with
generally accepted accounting
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principles applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such Financial Statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they may
include summary notes and may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
3.29. Changes. Except as disclosed on Schedule 3.29 attached hereto,
since the date of the Financial Statements, there has not been:
(a) any change in the assets, liabilities, financial condition,
or operations of the Company considered in the aggregate from that reflected in
the Financial Statements, except changes in the ordinary course of business that
would not constitute, either individually or in the aggregate, a Material
Adverse Effect;
(b) any change (individually or in the aggregate), in the
contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty, or otherwise;
(c) any damage, destruction, or loss, whether or not covered by
insurance, that could constitute a Material Adverse Effect;
(d) any loans made by the Company to its employees, officers, or
directors other than travel advances made in the ordinary course of business;
(e) any increases in the compensation of any of the Company's
employees, officers, or directors;
(f) any declaration or payment of any dividend, other than the
dividend related to the Series A Preferred Stock, or other distribution of the
assets of the Company;
(g) any issuance or sale by the Company of any shares of Common
Stock or other securities;
(h) any other event or condition of any character that could
result in a Material Adverse Effect; or
(i) any agreement or commitment by the Company to do any of the
things described in this Subsection 3.29.
3.30. Exemption from Registration; Valid Issuances. The sale and
issuance of the Purchased Shares and the Note Shares in accordance with the
terms and on the bases of the representations and warranties set forth in this
Agreement, may and shall be properly issued pursuant to Rule 4(2), Regulation D
and/or any applicable state law.
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3.31. No General Solicitation or Advertising in Regard to this
Transaction. Neither the Company nor any of its affiliates nor any distributor
or any person acting on its or their behalf (i) has conducted or will conduct
any general solicitation (as that term is used in Rule 502(c) of Regulation D)
or general advertising with respect to the Purchased Shares or the Note Shares,
or (ii) made any offers or sales of any security or solicited any offers to buy
any security under any circumstances that would require registration of the
security under the Securities Act.
3.32. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, other than pursuant to this Agreement, under circumstances
that would require registration of the security under the Securities Act.
3.33. Material Non-Public Information. Except as disclosed on Schedule
3.33 attached hereto, the Company is not in possession of, nor has the Company
or its agents disclosed to the Investor, any material non-public information
that (i) if disclosed, would, or could reasonably be expected to have, an effect
on the price of the Common Stock and (ii) according to applicable law, rule or
regulation, should have been disclosed publicly by the Company prior to the date
hereof but which has not been so disclosed.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company that:
4.1. Intent. The Investor is entering into this Agreement for its own
account and the Investor has no view to the distribution of the Purchased Shares
or the Note Shares, and has no present arrangement (whether or not legally
binding) at any time to sell the Purchased Shares or the Note Shares, to or
through any person or entity.
4.2. Sophisticated Investor. The Investor is a sophisticated investor
(as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor
(as defined in Rule 501 of Regulation D), and the Investor has such experience
in business and financial matters that it is capable of evaluating the merits
and risks of an investment in the Common Stock. The Investor acknowledges that
an investment in the Common Stock is speculative and involves a high degree of
risk.
4.3. Authority. Each of the Transaction Documents has been duly
authorized by all necessary corporate action and no further consent or
authorization of the Investor, or its Board of Directors or stockholders is
required. Each of the Transaction Documents was validly executed and delivered
by the Investor and each is a valid and binding agreement of the Investor
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable principles
of general application.
4.4. Not an Affiliate. The Investor is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the
Company.
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4.5. Organization and Standing. The Investor is a corporation duly
organized, validly existing, and in good standing under the laws of Delaware.
4.6. Absence of Conflicts. The execution and delivery of the
Transaction Documents and any other document or instrument contemplated hereby,
and the consummation of the transactions contemplated thereby, and compliance
with the requirements thereof, will not (a) violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on the Investor, or,
to the Investor's knowledge, (b) violate any provision of any indenture,
instrument or agreement to which the Investor is a party or is subject, or by
which the Investor or any of its assets is bound, (c) conflict with or
constitute a material default thereunder, (d) result in the creation or
imposition of any lien pursuant to the terms of any such indenture, instrument
or agreement, or constitute a breach of any fiduciary duty owed by the Investor
to any third party, or (e) require the approval of any third-party (that has not
been obtained) pursuant to any material contract to which the Investor is
subject or to which any of its assets, operations or management may be subject.
4.7. Disclosure; Access to Information. The Investor has received all
documents, records, books and other information pertaining to the Investor's
investment in the Company that have been requested by the Investor. The Investor
has received and reviewed copies of the SEC Documents.
4.8. Manner of Sale. At no time was the Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising.
4.9. Resale Restrictions. It is acknowledged by the Investor that any
Common Stock to be acquired by the Investor have not been registered under the
federal securities laws or any applicable state securities laws in reliance upon
exemptions available for non-public or limited offerings. The Investor
understands that it must bear the economic risk of the investment in the Common
Stock because it has not been so registered and therefore are subject to
restrictions upon transfer such that they may not be sold or otherwise
transferred unless registered under the applicable securities laws or an
exemption from such registration is available. The Investor will not reoffer,
sell, assign, transfer, pledge, encumber, hypothecate or otherwise dispose of
any Common Stock in the absence of an effective registration statement,
qualification or authorization relating thereto under federal and applicable
state securities laws or an opinion of qualified counsel satisfactory to the
Company to the effect that the proposed transaction will neither constitute or
result in any violation of the federal or state securities laws. Subject to
Section 7.3 of this Agreement, any certificate or other document that may be
issued representing any shares of Common Stock may be endorsed with a legend to
this effect.
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ARTICLE V
CONDITIONS TO CLOSING OF THE COMPANY
The obligations of the Company to sell the Purchased Shares and the
Note Shares are subject to the fulfillment on or prior to each of the Closings
of such sales on the following conditions:
5.1. Representations. The representations made by the Investor in
Article IV hereof shall be true and correct in all material respects when made
and shall be true and correct on each of the Closings with the same force and
effect as if they had been made on and as of said date.
5.2. Performance. All covenants, agreements and conditions contained in
this the Transaction Documents to be performed by or complied with by the
Investor on or prior to the date of each of the Closings shall have been
performed or complied with in all material respects.
5.3. Delivery of Purchase Price. The Investor shall have delivered to
the Company, against delivery of certificates evidencing the Purchased Shares,
the Purchase Price.
ARTICLE VI
CONDITIONS TO CLOSING OF THE INVESTOR
The obligation of the Investor to purchase the Purchased Shares is
subject to the fulfillment, on or prior to the date of each of the Closings of
such purchases, of the following conditions:
6.1. Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Company in Article
III shall be true and correct in all material respects when made, and shall be
true and correct on the date of each of the Closings with the same force and
effect as if they had been made on and as of said date.
6.2. Performance. All covenants, agreements and conditions contained in
this the Transaction Documents to be performed or complied with by the Company
on or prior to the date of each of the Closings shall have been performed or
complied with in all respects.
6.3. Certificate of Designation. With respect to the 2nd Closing only,
the Company shall have obtained Shareholder Approval and the Amendment of
Restated Articles shall have been filed with the Secretary of State of the State
of Minnesota.
6.4. Opinion of the Company's Counsel. The Investor shall have received
the opinion of Xxxx & Xxxxxxx, PA, counsel for the Company, dated as of each of
the Closings, in form and substance reasonably satisfactory to the Investor and
the Investor's counsel covering such matters as the Investor and its counsel may
reasonably request.
-15-
6.5. Authorizations. All authorizations, approvals or permits of any
Governmental Authority that are required in connection with the lawful issuance
and sale of the Purchased Shares shall have been duly obtained and shall be
effective on and as of the date of each of the Closings.
6.6. Registration Rights Agreement. The Company and the Investor shall
have entered into the Registration Rights Agreement.
6.7. Certificates. The Company shall have delivered to the Investor a
certificate representing the Purchased Shares which shall be issued in the
Investor's name.
6.8. Compliance Certificate. The Company shall have delivered to the
Investor a certificate, executed by an authorized executive officer or director
of the Company, dated the date of each of the Closings, certifying to the
fulfillment of the conditions specified in Sections 6.1 and 6.4 of this Article
VI.
6.9. Shareholder Approval. With respect to the 2nd Closing, the holders
of the Company's Common Stock and Series A Preferred Stock shall have approved
the amendment of the Company's Restated Articles of Incorporation and the
issuance of the Shares in excess of 982,463 shares (19.9%) to the Investor, and
the Company shall have delivered satisfactory evidence thereof ("Shareholder
Approval").
6.10. Business Combination. The Company shall have complied with the
requirements of Section 302A.673 of the Minnesota Business Corporation Act, and
the Company shall have delivered satisfactory evidence thereof.
6.11. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
form and substance to the Investor and its legal counsel.
6.12. Qualification Under State Securities Laws. All registrations,
qualifications, permits and approvals required under applicable state securities
laws shall have been, or will be obtained within the legally required time
period for the lawful execution, delivery and performance of the Transaction
Documents.
6.13. Supporting Documents. The Investor shall have received (a) copies
of resolutions of the Board of Directors and, as to the 2nd Closing only, the
shareholders, certified by the Secretary of the Company, authorizing the
execution, delivery and performance of this Agreement and all other documents
and instruments to be delivered pursuant hereto and thereto; and (b) a
certificate of incumbency executed by the Secretary of the Company certifying
the names, titles and signatures of the officers authorized to execute the
documents referred to in Section 6.12 above and further certifying that the
Restated Articles of Incorporation, and the Bylaws delivered to the Investor at
the time of the execution of this Agreement have been validly adopted and have
not been amended or modified, except to the extent provided in the Certificate
of Amendment.
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6.14. No Suspension of Trading In or Delisting of Common Stock. The
trading of the Common Stock shall not have been suspended by the SEC, the Nasdaq
SmallCap Market or the NASD and shall not have been delisted from the Nasdaq
SmallCap Market.
6.15. Shareholder Vote. The issuance of the Purchased Shares shall not
violate the shareholder approval requirements of the Nasdaq SmallCap Market.
6.16. No Adverse Events. Neither the business, assets or condition,
financial or otherwise, of the Company taken as a whole shall have been
materially adversely affected in any manner.
6.17. Due Diligence and Other Documents.
(a) With respect to the 1st Closing, the Investor shall have
satisfactorily completed due diligence in regards to intellectual property
matters of the Company and shall, in its sole discretion, be satisfied with the
results thereof.
(b) With respect to the 2nd Closing, the Company shall have
delivered to the Investor such other documents, certificates and opinions as the
Investor reasonably requests, including without limitation copies of each
agreement and other document, list or statement requested by the Investor or
required to be disclosed in each Schedule to this Agreement. In the reasonable
exercise of the Investor's judgement, the Investor's due diligence investigation
of the Company as provided in Section 7.9 hereof shall have been satisfactorily
completed and the Investor shall, in its sole discretion, be satisfied with the
results thereof.
6.18. Appropriations Committee Approval.
(a) With respect to the 1st Closing, the Appropriations Committee
of Deere and Company shall have approved this Agreement.
(b) With respect to the 2nd Closing, the Appropriations Committee
and the Board of Directors of Deere and Company shall have approved the 2nd
Closing.
6.19. Beta Testing of Javalan Product. With respect to the 2nd Closing,
the Company shall have provided to the Investor a beta version of the Javalan
product, and the Investor shall have completed beta testing of such product and
shall, in its sole discretion, be satisfied with the results thereof.
6.20. Xxxx-Xxxxx-Xxxxxx. With respect to the 2nd Closing and the
exercise of the Note Option, any filings necessary under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act") shall have been
made and any waiting periods shall have expired or been terminated by the
Federal Trade Commission.
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ARTICLE VII
COVENANTS OF THE COMPANY
7.1. Special Meeting of Shareholders.
(a) The Company shall call and hold a special meeting of
shareholders (the "Special Meeting") as promptly as practicable after the date
hereof for the purpose of voting upon the following matters:
(i) an amendment to the Restated Articles of Incorporation
(the "Certificate of Amendment") increasing the number of shares of authorized
Common Stock to 12,000,000 shares and removing the reservation of voting rights
solely to common shares; and
(ii) the sale and issuance by the Company of securities equal
to 20% or more of the Common Stock outstanding at less than the market value of
the Common Stock in accordance with the requirements of the Nasdaq SmallCap
Market.
(b) Immediately following the approval by the shareholders of
the Certificate of Amendment, if such approval is obtained, the Company shall
file the Certificate of Amendment with the Secretary of State of the State of
Minnesota.
(c) The Company shall use its best efforts to ensure that its
directors and officers vote in favor of the matters described in subsection
(a)(i) and (ii) of this Section 7.1.
7.2. Listing of Common Stock. The Company shall exercise best efforts
to maintain the listing of the Common Stock on the Nasdaq SmallCap Market and
will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the NASD and the Nasdaq SmallCap
Market.
7.3. Legends. The certificates evidencing the Purchased Shares and the
Note Shares shall be free of legends, except as provided for in Section 9.11.
7.4. Corporate Existence. The Company shall take all steps necessary to
preserve and continue the corporate existence of the Company.
7.5. Additional SEC Documents. The Company shall deliver to the
Investor, as and when the originals thereof are submitted to the SEC for filing,
copies of all SEC Documents so furnished or submitted to the SEC.
7.6. Consolidation; Merger. The Company shall not, at any time after
the date hereof, and prior to the earlier of December 31, 2000 or the 2nd
Closing, effect any merger or consolidation of the Company with or into, or a
transfer of all or substantially all of the assets of the Company to, another
entity(i) without the prior written consent of the Investor and (ii) unless the
resulting successor or acquiring entity (if not the Company) assumes by written
instrument the obligation to deliver to the Investor such shares of stock and/or
securities as the Investor is entitled to receive pursuant to this Agreement.
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7.7. Issuance of Shares. The sale of the Purchased Shares and the Note
Shares shall be made in accordance with the provisions and requirements of
Regulation D and any applicable state law.
7.8. Nominations to Board of Directors. The Investor shall have the
right to nominate two individuals (the "Initial Investor Designees") for
election to the Board of Directors, which number shall increase to three
individuals upon the 2nd Closing (the "Additional Investor Designee", together
with the Initial Investor Designees, the "Investor Designees"). As promptly as
practicable after the 1st Closing, the Company shall use its best efforts to
obtain the resignation of one current member of the Board of Directors and cause
the nomination and election to the two vacant director positions the Initial
Investor Designees. Upon the 2nd Closing, the Company shall use its best efforts
to obtain the resignation one member of the Board of Directors, which member
shall not be an Investor Designee, and cause the nomination and election of the
Additional Investor Designee to the vacant director position thereby created,
and at the next annual or special meeting of stockholders of the Company held
for the purpose of electing directors, the Company shall use its best efforts to
cause the nomination and election of the Investor Designees. In connection
therewith, the Company agrees to solicit proxies for, and recommend that its
stockholders vote in favor of, the Investor Designees. If an Investor Designee
shall cease to be a member of the Board of Directors for any reason other than
expiration of his or her term, the Company shall promptly, upon the request of
the Investor, use its best efforts to cause the election or appointment of a
person selected by the Investor to replace such designee.
7.9. Full Access. From the date hereof to the earlier of December 31,
2000 or the 2nd Closing, the Investor may, through its employees, agents and
representatives, make or cause to be made such investigation of the Company as
the Investor deems necessary or advisable and shall have full access to the
auditors and attorneys of the Company. The Company shall permit the Investor and
its employees, agents and representatives, on reasonable notice, to have access
during normal business hours to its premises, personnel and books and records.
The Company shall cooperate to provide access to its customers, clients,
suppliers, lenders and such other parties as the Investor may reasonably
request. The Company shall, and shall cause its officers, attorneys and
accountants to furnish the Investor with such financial and operating data and
other information as the Investor from time to time shall reasonably request. No
investigation by the Investor shall in any way affect or otherwise diminish the
representations, warranties and covenants of the Company hereunder.
7.10. Restrictions Pending the 2nd Closing. The Company shall not, at
any time after the date hereof, and prior to the earlier of December 31, 2000 or
the 2nd Closing, except as expressly provided for in this Agreement or as
consented to in writing by the Investor:
(a) amend its Restated Articles of Incorporation or Bylaws, except
as contemplated in section 7.1;
(b) split, combine or reclassify any shares of the Company's
capital stock;
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(c) declare or pay any dividend or distribution (whether in cash,
stock or property) in respect of its Common Stock;
(d) take any action, or knowingly omit to take any action, that
would, or that would reasonably be expected to, result in (i) any of the
representations and warranties of the Company set forth in Article III becoming
untrue or (ii) any of the conditions to the obligations of the Investor set
forth in Article VI not being satisfied; or
(e) enter into any agreement or commitment to do any of the
foregoing.
7.11. Additional Affirmative Covenants. In addition, the Company shall,
or shall cause each of its subsidiaries, as applicable, to:
(a) promptly pay and discharge, or cause to be paid and
discharged, when due and payable, all lawful taxes, assessments and governmental
charges or levies imposed upon the income, profits, property or business of the
Company or any subsidiary; provided, however, that any such tax, assessment,
charge or levy need not be paid if the validity thereof shall currently be
contested in good faith by appropriate proceedings and if the Company shall have
set aside on its books adequate reserves with respect thereto; and provided,
further, that the Company shall pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien that
may have attached as security therefor;
(b) promptly pay, or cause to be paid, when due, in conformance
with customary trade terms, all other indebtedness incident to the operations of
the Company and its subsidiaries, if any;
(c) keep its properties and those of its subsidiaries in good
repair, working order and condition, reasonable wear and tear excepted, and from
time to time make all needful and proper repairs, renewals, replacements,
additions and improvements thereto;
(d) comply, and cause its subsidiaries, if any, to comply, in all
material respects, at all times with the provisions of all leases to which any
of the Company and its subsidiaries is a party or under which any of them
occupies real property;
(e) keep its assets and those of its subsidiaries that are of an
insurable character insured by reputable insurers against loss or damage by fire
and explosion in amounts customary for companies in similar businesses similarly
situated; and maintain, with financially sound and reputable insurers, insurance
against other hazards and risks and liability to persons and property to the
extent and in the manner customary for companies in similar businesses similarly
situated;
(f) keep true records and books of account in which full, true
and correct entries will be made of all dealings or transactions in relation to
its business and affairs in accordance with generally accepted accounting
principles applied on a consistent basis;
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(g) duly observe and conform to, and cause its subsidiaries, if
any, to so observe and conform to, in all material respects, all valid
requirements of governmental authorities relating to the conduct of their
businesses or to their property or assets; and
(h) maintain in full force and effect its corporate existence,
rights and franchises and use its commercially reasonable efforts to maintain in
full force and effect all licenses and other rights to use patents, processes,
licenses, trademarks, service marks, trade names or copyrights owned or
possessed by it or any subsidiary and necessary to the conduct of its business.
7.12. Negative Covenants. The Company shall not, without the Investor's
prior written consent, do any of the following:
(a) merge, consolidate or exchange shares with another
corporation or entity or otherwise dispose of any of its assets other than in
the ordinary course of business;
(b) incur any debts, outside the ordinary course of business,
which would have a material adverse effect on the Company;
(c) pay or declare any dividends on its Common Stock (except for
stock dividends) or redeem, retire or otherwise acquire any of its capital
stock;
(d) make any change in the Company's capital structure which
would have a material adverse effect on the Company;
(e) during any calendar year (i) pay to any officer or senior
manager compensation (including salary, bonus and benefits) which materially
exceeds the compensation customarily paid to management in companies of similar
size, of similar maturity and in similar businesses or (ii) change the
compensation for any officer or senior manager other than such changes as are
approved by a majority of the disinterested members of the Board of Directors or
any compensation committee thereof;
(f) enter into any transaction, including, without limitation,
any loans or extensions of credit, with any employee, consultant, officer,
director or holder of five percent (5%) of any class of capital stock of the
Company, or any member of their respective immediate families or any corporation
or other entity directly or indirectly controlled by one or more of such
employees, consultants, officers, directors or 5% stockholders or members of
their immediate families (i) on terms less favorable to the Company than it
would obtain in an arms-length transaction between unrelated parties, or (ii)
except in the case of any transaction or series of transactions entered into in
the ordinary course of business and involving less than $5,000 in the aggregate;
(g) except as provided for or approved in an annual budget
approved by the Board of Directors, (i) enter into any agreement, commitment or
plan involving an acquisition, investment or expenditure in excess of $50,000,
or (ii) incur, assume, guarantee, endorse or
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otherwise become directly or contingently liable for any obligation in excess of
$50,000, in a transaction or series of transactions;
(h) enter into any material transaction outside the ordinary
course of business; or
(i) agree to do any of the foregoing.
7.13. Issuance of Additional Shares. The Company shall not, without the
approval of a majority of Board of Directors, which approval shall include the
affirmative vote of at least one of the Investor Designees, authorize or issue,
or obligate itself to issue, any additional shares of any class or series of
capital stock of the Company or any obligation or security exercisable for,
convertible into or exchangeable for shares of any class or series of capital
stock of the Company, other than as contemplated by this Agreement; provided,
however, that the provisions of this Section 7.13 shall not apply to the
issuance of shares of Common Stock or stock options or other rights exercisable
for Common Stock issued on or after the date hereof to directors, officers,
employees or consultants of the Company pursuant to any currently existing stock
option plan or agreement, employee stock ownership plan or employee benefit
plan.
ARTICLE VIII
INDEMNIFICATION
8.1. Obligation to Indemnify. Subject to the limitations set forth in
this Article VIII, each party hereto shall indemnify and hold the other party
harmless from and against any and all losses, claims, damages, expenses or
liabilities (including, without limitation, the costs of any investigation or
suit and counsel fees related thereto) ("Damages") asserted against, imposed
upon or incurred by such other party resulting from a breach by the indemnifying
party of any of its representations, warranties or covenants made in the
Transaction Documents or from any misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished pursuant to the
Transaction Documents.
8.2. General Indemnification Procedures.
(a) A party seeking indemnification pursuant to Section 8.1 (an
"Indemnified Party") shall give prompt notice to the party from whom such
indemnification is sought (the "Indemnifying Party") of the assertion of any
indemnifiable claim for Damages or the commencement of any action, suit or
proceeding, in respect of which indemnity may be sought hereunder and will give
the Indemnifying Party such information with respect thereto as the Indemnifying
Party may reasonably request, but failure to give such notice shall not relieve
the Indemnifying Party of any liability hereunder (except to the extent that the
Indemnifying Party has suffered actual prejudice thereby). If any Indemnifying
Party shall be obligated to indemnify an Indemnified Party hereunder, such
Indemnifying Party shall pay to such Indemnified Party the amount to which such
Indemnified Party shall be entitled.
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(b) The Indemnifying Party shall have the right exercisable by
written notice to the Indemnified Party within fifteen (15) days of receipt of
notice from the Indemnified Party of the commencement of or assertion of any
claim or action, suit or proceeding by a person not a party to this Agreement
(other than an Affiliate (as defined in Section 9.3) of any party hereto) in
respect of which indemnity may be sought hereunder (a "Third Party Claim"), to
assume the defense and control the settlement of such Third Party Claim. The
Indemnifying Party or the Indemnified Party, as the case may be, shall have the
right to participate in (but not control), at its own expense, the defense of
any Third Party Claim which the other is defending as provided in this
Agreement. The Indemnifying Party, if it shall have assumed the defense of any
Third Party Claim as provided in this Agreement, shall not consent to a
settlement of, or the entry of any judgment arising from, any such Third Party
Claim without the prior written consent of the Indemnified Party (which consent
shall not be unreasonably withheld or delayed).
(c) No action or claim for indemnification under Section 8.1
arising out of or resulting from a breach of representations and warranties
contained in Articles III and IV herein shall be brought or made until such time
as all indemnifiable claims of a party exceed $20,000 or after the period
concluding on the third anniversary of the Closing Date (the "Expiration Date");
provided, however, that the foregoing time limitations shall not apply to: (i)
any of the representations and warranties contained in Sections 3.2, 3.4, 3.5
and 3.6., each of which shall survive indefinitely; (ii) any such claims that
have been the subject of a good faith written notice from the Indemnified Party
to the Indemnifying Party, prior to the Expiration Date, which notice specifies
in reasonable detail the nature and basis for such claim (which shall survive
until the final resolution of such claim), or (iii) the warranties and
representations set forth in Section 3.23 hereof, which shall survive until such
time as the limitations period has run for all tax periods ended prior to the
Closing Dates, which shall be deemed to be the Expiration Date for Section 3.23.
ARTICLE IX
MISCELLANEOUS
9.1. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Georgia.
9.2. Survival. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Investor and
the closings of the transactions contemplated hereby.
9.3. Successors and Assigns. Except as otherwise expressly provided in
this Article IX, the provisions of this Agreement shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors and
administrators of the Investor. The rights, remedies and entitlements of the
Investor under this Agreement may be assigned in full or in part at any time
after the date of this Agreement to an Affiliate (as defined below). Any
assignment to a non-Affiliate shall require prior written consent of the
Company. No such assignment, whether to an Affiliate or a non-Affiliate, shall
be effective unless the transferee, as a condition to such transfer, agrees in
writing that he or it will receive and hold such securities subject to the
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provisions of this Agreement. In all cases of assignment, the Investor shall
give the Company written notice, stating the name and address of said transferee
and identifying the securities that are being assigned. For purposes of this
Article IX, an "Affiliate" shall mean any direct or indirect general or limited
partner or member, and a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Investor. The Company may not assign its rights hereunder.
9.4. Entire Agreement; Amendment. This Agreement, the Registration
Rights Agreement and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement among the parties with regard to
the subjects hereof and thereof. Neither this Agreement nor any term hereof may
be amended, waived, discharged or terminated orally, but only by a written
instrument signed by the holders of at least a majority of the shares of
Purchase Shares then issued and outstanding and a representative of the Company
so authorized by its Board of Directors.
9.5. Notices. All notices and other communications required or
permitted hereunder shall be given in writing and shall be deemed effectively
given upon personal delivery or three (3) business days following upon deposit
with the United States Postal Service, by certified mail, return receipt
requested, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to the Investor, at
Xxxx Deere Special Technologies Group, Inc.
000 Xxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
ATTN: Xxxxx X. Xxxxxx
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P.
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
ATTN: Xxxxxxx X. Xxxxxxx, Esq.
or at such other address as the Investor shall have furnished to the Company or
(b) if to the Company, at
Xata Corporation
000 Xxxx Xxxxx Xxxx, Xxx 00
Xxxxxxxxxx, XX 00000
ATTN: Xxxx X. Xxxxxx
with a copy to
Xxxx & Xxxxxxx, PA
4800 Xxxxx Fargo Center
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, Xx 00000
ATTN: Xxxxx X. Xxxxxxxxx
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or at such other address as the Company shall have furnished to the Investor.
9.6. Delays or Omissions: Remedies Cumulative. No delay or omission to
exercise any right, power or remedy accruing to the Investor, upon any breach or
default under this Agreement, shall impair any such right, power or remedy of
the Investor or 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. All
of the Investor's remedies, either under this Agreement, or by law or otherwise
afforded to the Investor, shall be cumulative and not alternative.
9.7. Agent's Fees. Except as set forth in Schedule 3.26, each party (i)
represents and warrants that it has retained no finder or broker in connection
with the transactions contemplated by this Agreement (except as disclosed to the
other parties hereto as of the date hereof) and (ii) hereby agrees to indemnify
and to hold the other parties harmless of and from any liability for commissions
or compensation in the nature of an agent's, finder's or broker's fee to any
broker or other person or firm (and the cost and expenses of defending against
such liability or asserted liability) for which said party is responsible.
9.8. Expenses. Each party shall bear its own expenses and legal fees
(and expenses and disbursements of its legal counsel) incurred on its behalf
with respect to this Agreement and the transactions contemplated hereby.
9.9. Construction of Certain Terms. The titles of the articles,
sections, and subsections of this Agreement are for convenience of reference
only and are not to be considered in construing this Agreement. Wherever the
words "including," "include" or "includes" are used in this Agreement, they
shall be deemed followed by the words "without limitation." References to any
gender shall be deemed to mean any gender.
9.10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.11. Legends. Each of the Purchased Shares and the Note Shares will
bear the following legend:
The securities represented by this certificate and the securities
issuable upon conversion hereof have not been registered with the
United States Securities and Exchange Commission under the
Securities Act of 1933 (the "Securities Act"), or the securities
commission of any state under any state securities law. The
securities represented by this certificate may not be offered,
sold or otherwise transferred unless (i) a registration statement
under the Securities Act and any applicable state securities laws
shall have become effective with regard thereto, or (ii) in the
opinion of counsel
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acceptable to the Company, registration under the Securities Act
and applicable state securities laws is not required in
connection with such proposed transfer.
9.12. Timely Performance. Time is of the essence as to the performance
of the obligations required of the respective parties under this Agreement.
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ARTICLE X
TERMINATION
10.1. Termination.
(a) This Agreement may be terminated at any time prior to the 2nd
Closing whether before or after the Special Meeting:
(i) by mutual written consent of the Company and the
Investor, effective as of the date specified in the mutual consent; or
(ii) by either the Company or the Investor, effective as of
the date of mailing or other transmission of notice, if a court of
competent jurisdiction or other governmental entity has issued a
nonappealable final order, decree or ruling or taken any other
nonappealable final action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the
purchase by the Investor or the issuance by the Company of the
Purchased Shares or Note Shares; or
(iii) by the Company or the Investor, effective as of the
date of mailing or other transmission of notice, at any time prior to
the 2nd Closing, if there has been a material breach of any
representation, warranty, covenant or agreement, or a failure to
satisfy any condition precedent to closing on the part of the other
party set forth in the Agreement, which breach or failure would impair
the ability of the breaching party to consummate the transactions
contemplated by the Agreement and which, in the case of a failure of a
condition precedent, is such that it cannot be cured prior to the date
fixed for closing; provided, however, that such termination shall not
limit limitation for such breach of the Agreement.
(b) If not terminated prior to the 2nd Closing as provided in
this Article X, this Agreement shall terminate if the 2nd Closing does not occur
on or before December 31, 2000, or such later date to which the parties may
reasonably agree.
(c) This Agreement shall terminate, with the exception of the
provisions of Article VIII herein, at such time after the 2nd Closing as the
Investor owns less than ten percent (10%) of the issued and outstanding Common
Stock of the Company.
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IN WITNESS WHEREOF, the Company and the Investor have executed and
delivered this Agreement as of the day and year first above written.
COMPANY:
Xata Corporation
By:
-------------------------------------
Its:
------------------------------------
INVESTOR:
Xxxx Deere Special Technologies Group, Inc.
By:
-------------------------------------
Xxxxxxx X. Xxxxx, Xx., President
"EXHIBIT A"
List of Schedules
SCHEDULE NUMBER DESCRIPTION
3.3 SUBSIDIARIES AND AFFILIATES
3.4 OUTSTANDING OPTIONS, WARRANTS OR OTHER AGREEMENTS
TO PURCHASE CAPITAL STOCK
3.7 MATERIAL LIABILITIES
3.8 CONTRACTS AND COMMITMENTS
3.9 INTELLECTUAL PROPERTY RIGHTS
3.10(a) OWNED SOFTWARE
3.10(b) LIEN, CLAIMS OR ENCUMBRANCES ON OWNED SOFTWARE
3.10(d) THIRD PARTY RIGHTS TO OWNED SOFTWARE
3.10(e) KNOWN PROBLEMS WITH HARDWARE AND SOFTWARE
3.12 LITIGATION OR PROCEEDINGS
3.13 EMPLOYMENT CONTRACTS
3.14 REGISTRATION RIGHTS
3.16 TITLE TO PROPERTY AND ASSETS
3.21 INDEBTEDNESS TO DIRECTORS OF OFFICERS
3.25(a) PENSION PLANS
3.25(b) WELFARE BENEFIT PLANS
3.26 AGENTS/BROKER FEES
3.29 CHANGES TO FINANCIAL STATEMENTS
3.33 MATERIAL NON-PUBLIC INFORMATION
Exhibit B
SUMMARY OF COMMON & PREFERRED STOCK, OPTIONS, AND
WARRANTS OF XATA CORPORATION
AS OF 30 JUNE 2000
(SUBJECT TO NORMAL CHANGES PRIOR TO CLOSING)
ITEM QUANTITY
---- --------
A) Common Shares Outstanding 4,537,028
B) Preferred Stock 400,000
(Total after conversion)
C) Stock Options
Priced less than $/option 349,172
Priced greater than $/option 187,311
---------
Total Options 536,483
D) WARRANTS
Priced less than $/warrant 40,812
Priced greater than $/warrant 56,000
---------
Total Options 96,812
GROSS TOTAL 5,570,323
1st Closing Amount 630,000
2nd Closing 2,517,000
Total New Shares 3,147,000
Note Conversion (after 08/01/01) 253,000
Selling Shareholder 200,000
Total Shares Acquired 3,600,000
"EXHIBIT 1.2"
Form of Note Option Notice
NOTICE OF EXERCISE
Xxxx Deere Special Technologies Group, Inc. (the "Investor") hereby
notifies Xata Corporation (the "Company") of its intention to exercise its Note
Option to convert that certain $1,000,000 Promissory Note from the Company to
the Investor into ___________ shares of Common Stock, based on an unpaid note
balance of $___________ and a Purchase Price of $____ per share, pursuant to
Section 1.2 of that certain Stock Purchase Agreement, dated as of _________,
2000, between the Investor and the Company.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Notice of Exercise this __ day of _______, 200_.
Xxxx Deere Special Technologies Group, Inc.
By:
---------------------------------------
Its:
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