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ELITE LOGISTICS, INC.
COMMON STOCK
PURCHASE AGREEMENT
Dated as of October 13, 2000
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ELITE LOGISTICS, INC.
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is entered into
as of October 13, 2000, by and among Elite Logistics, Inc., an Idaho corporation
(the "Company"), and the parties listed on the Schedule of Investors attached
hereto (each, an "Investor"), with reference to the following facts:
WHEREAS, the Company has authorized the sale and issuance of up to
1,125,926 shares of its Common Stock (the "Common Stock") pursuant to the terms
of this Agreement.
WHEREAS, the Investors hereto wish to purchase, and the Company wishes
to sell to those Investors, shares of the Common Stock on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions set forth in this Agreement, the parties agree
as follows:
1. Authorization and Sale of the Shares.
1.1 Authorization. The Company has authorized the issuance and
sale pursuant to the terms and conditions hereof of up to 1,125,926 shares of
its Common Stock.
1.2 Issuance and Sale of Common Stock. Subject to the terms
and conditions hereof, each Investor agrees, severally but not jointly, to
purchase, and the Company agrees to issue and sell to each such Investor, at
each Closing (as such term is hereinafter defined), the respective number of
shares of Common Stock specified opposite the name of such Investor on the
Schedule of Investors at a purchase price of $1.35 per share.
1.3 Issuance and Sale of Warrants. Subject to the terms and
conditions hereof, the Company agrees to issue to each Investor participating in
the applicable Closing a warrant to purchase shares of Common Stock equal to
one-half the number of shares of Common Stock that Investor acquires in such
Closing. The warrants will be in the form of Exhibit A hereto (each, a "Warrant"
and collectively, the "Warrants"). The exercise price of each Warrant will be
$2.70 per share of Common Stock issuable on exercise of the Warrant.
1.4 Closings; Delivery.
(a) Closing. Upon satisfaction of the conditions set
forth in Sections 4 and 5, the closing of the purchase and sale of the shares of
Common Stock listed in Part I of the Schedule of Investors attached hereto and
the issuance of the Warrants related thereto shall take place at Shartsis,
Friese & Ginsburg LLP, 18th Floor, One Maritime Plaza, San Francisco 94111, on
or before October 13, 2000 (the "First Closing Date"), at 10:00 a.m., or at such
other time and place as the parties may agree (the "First Closing"). The First
Closing Date and all subsequent closing dates referred to Section 1.4(c) of this
Agreement are collectively referred to herein as the "Closing Dates" and each
individually as a "Closing Date." The First Closing and all subsequent closings
referred to Section 1.4(c) of this Agreement are collectively referred to herein
as the "Closings" and each individually as a "Closing."
COMMON STOCK PURCHASE AGREEMENT
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(b) Delivery at the First Closing. Subject to the
terms of this Agreement, at the First Closing the Company will deliver to each
Investor listed in Part I of the Schedule of Investors a stock certificate
representing the number of shares of Common Stock set forth beside such
Investor's name on the Schedule of Investors and a Warrant exercisable into the
applicable number of shares of Common Stock against delivery to the Company by
each such Investor at the First Closing of a check or wire transfer of funds for
the purchase price of the shares of Common Stock.
(c) Subsequent Sale of Shares. At any time on or
before the date that is 60 days after the First Closing Date, Koyah Partners,
L.P., Koyah Leverage Partners, L.P. and any other entity or account managed by
or under common investment management with ICM Asset Management, Inc.
(collectively, the "Approved Investors") have the exclusive right, upon the
election of one or more of the Approved Investors, as the case may be, to
purchase, and the Company agrees to sell to such Approved Investor or Approved
Investors, as the case may be, upon such election, up to an additional 555,556
shares of such Common Stock not sold in the First Closing at a purchase price of
$1.35 per share. All such subsequent sales shall be made on the terms and
conditions set forth in this Agreement, including, without limitation,
satisfaction of the conditions set forth in Sections 4 and 5. Any shares of
Common Stock sold pursuant to this Section 1.4(c) shall be deemed to be "Common
Stock" for all purposes under this Agreement and any investors thereof shall be
deemed to be "Investors" for all purposes under this Agreement and under the
Investors' Rights Agreement, dated as of the date hereof, by and among the
Company and the Investors, the form of which is attached hereto as Exhibit B
(the "Investors' Rights Agreement"), and such investors shall automatically
become parties to this Agreement and the Investors' Rights Agreement and shall
have the rights and obligations of an Investor hereunder and thereunder.
(d) Delivery at each Subsequent Closing. Subject to
the terms of this Agreement, at each Closing after the First Closing, the
Company shall deliver to each Investor acquiring shares of Common Stock at such
Closing a stock certificate representing that number of shares of Common Stock
set forth beside such Investor's name on the Schedule of Investors and a Warrant
exercisable into the applicable number of shares of Common Stock against
delivery to the Company by each such Investor participating in such Closing of a
check or wire transfer of funds for the purchase price of the shares of Common
Stock. After each such Closing, the Company will update the Schedule of
Investors by adding the investors in such Closing to a new Part to the Schedule
of Investors.
1.5 Additional or Other Sales of Shares. At any time prior to
October 12, 2001, the Company may not, without the prior written consent of
holders of at least 80% of the then issued and outstanding shares of Common
Stock acquired pursuant to this Agreement, (i) issue or sell any shares of the
Company's Common Stock for a purchase price of less than $1.35 per share of such
Common Stock, (ii) issue or sell any shares of the Company's equity securities
that are convertible or exercisable into share(s) of the Company's Common Stock
(referred to herein as "Common Stock Equivalents") for a purchase price of less
than $1.35 per share of such Common Stock Equivalent (based on the per share
price of the number of shares of Common Stock into which such Common Stock
Equivalent is convertible or exercisable), or (iii) issue or sell a combination
of Common Stock and Common Stock Equivalents at any price. The prohibition set
forth in this Section 1.5 does not apply to the issuance of (a) 1,000,000 shares
of
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COMMON STOCK PURCHASE AGREEMENT
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Common Stock issuable upon conversion of options which are outstanding or
reserved for issuance as of the First Closing Date under the Elite Logistics,
Inc. 2000 Equity Incentive Plan or (b) 1,817,202 shares of Common Stock issuable
on exercise of warrants (outstanding as of the First Closing Date) and the
Warrants.
1.6 Effect of Change in Company's Capital Structure. For
purposes of this Section 1, appropriate adjustments shall be made in the price,
number and class of shares in the event of a stock split, reverse stock split,
combination, reclassification or like change in the capital structure of the
Company after the date of this Agreement.
2. Representations, Warranties and Agreements of the Company. The
Company (expressly including for purposes of this Section 2 its wholly owned
subsidiary, Elite Logistics Services, Inc. a Texas corporation) hereby
represents and warrants to each Investor that except as set forth on the
Schedules attached hereto (which exceptions shall be deemed to be
representations and warranties as if made hereunder):
2.1 Organization; Standing and Power. The Company (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation, (b) has all requisite corporate power and
authority to own and operate its properties and to carry on its businesses as
presently conducted and as proposed hereafter to be conducted, and (c) is duly
qualified and in good standing to do business as a foreign corporation in each
and every jurisdiction where its assets are located and wherever such
qualification is necessary to carry out its business and operations except where
the failure to so qualify or be in good standing would not have a material
adverse effect on the condition (financial or otherwise), business, operations,
assets or prospects of the Company (the "Condition of the Company"). The Company
has all requisite corporate power and authority to execute and deliver, and
perform all of its obligations under this Agreement and the other Related
Documents (as defined in Section 8).
2.2 Capitalization; Reserved Stock, Preemptive Rights. The
total authorized capital stock of the Company immediately prior to the First
Closing consists of 50,000,000 shares of Common Stock and 10,000,000 shares of
Preferred Stock, of which 12,343,223 shares of Common Stock are issued and
outstanding and 2,445 shares of Series A Preferred Stock are issued and
outstanding. All capital stock of the Company that is outstanding immediately
prior to the First Closing have been duly and validly issued, are fully paid and
nonassessable and have been issued in accordance with all applicable federal and
state securities laws. Except for (a) the 1,000,000 shares of Common Stock
issuable upon conversion of options which are outstanding or reserved for
issuance under the Elite Logistics, Inc. 2000 Equity Incentive Plan and (b)
1,817,202 shares of Common Stock issuable on exercise of the warrants, including
the Warrants, no other shares have been reserved for issuance on the First
Closing Date and there are no outstanding options, warrants or other rights to
subscribe for or purchase from the Company any shares of its capital stock or
any securities convertible into or exchangeable for its capital stock. There are
no preemptive rights or rights of first refusal or similar rights which are
binding on the Company permitting any person to subscribe for or purchase from
the Company shares of its capital stock pursuant to any provision of law, the
articles of incorporation or bylaws of the Company or by agreement or otherwise.
The designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital
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COMMON STOCK PURCHASE AGREEMENT
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stock of the Company are as set forth in the certificate or articles of
incorporation of the Company, and all such designations, powers, preferences,
rights, qualifications, limitations and restrictions are valid, binding and
enforceable against the Company and in accordance with all applicable laws,
rules and regulations.
2.3 Authorization and Binding Obligation.
(a) The execution and delivery by the Company of this
Agreement, the other Related Documents, the performance of the Company's
obligations hereunder and thereunder, and the consummation of the transactions
contemplated hereby and thereby (including the issuance and delivery of the
shares of Common Stock and the Common Stock issuable on exercise of the
Warrants) have been duly authorized by all necessary corporate action and will
not, either prior to or as a result of the consummation of the transactions
contemplated by this Agreement: (i) violate any law or any governmental rule or
regulation applicable to the Company, any provision of the certificate or
articles of incorporation or bylaws of the Company, or any contract, indenture,
agreement or other instrument to which the Company is a party, or by which the
Company or any of its assets or properties are bound, or (ii) be in conflict
with, result in a breach of, or constitute (after the giving of notice or lapse
of time or both) a default under, or result in the creation or imposition of any
lien of any nature whatsoever upon any of the property or assets of the Company
pursuant to the provisions of any contract, indenture, agreement or other
instrument to which the Company is a party or by which its assets or property is
bound. The Company is not required to obtain any approval, consent or
authorization from, or to file any declaration or statement with, any
governmental instrumentality or agency in connection with or as a condition to
the execution, delivery or performance of this Agreement (including the issuance
and delivery of the shares of Common Stock and the Common Stock issuable on
exercise of the Warrants), or the other Related Documents, other than (i)
approval of the board of directors of the Company, which has been obtained, and
(ii) the filing of the Form D and any applicable state securities law filings,
which filing or filings, as the case may be, will be made in accordance with
applicable laws and regulations.
(b) Each of the Agreement and the other Related
Documents has been duly executed and delivered by the Company and is the legally
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
(c) The Common Stock that is being issued hereunder,
when issued, sold, paid for and delivered in accordance with the terms of this
Agreement will be duly and validly issued, fully paid and non-assessable, and
free and clear of any restrictions on transfer (other than any restrictions
under the Securities Act of 1933, as amended (the "Securities Act"), and state
securities laws) and any taxes, security interests, options, warrants, purchase
rights, preemptive rights, contracts, commitments, equities, claims or demands.
The shares of Common Stock issuable on exercise of the Warrants, when issued in
accordance with the terms of the Warrants, will be duly and validly issued,
fully paid and non-assessable, and free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act and state
securities laws) and any taxes, security interests, options, warrants, purchase
rights, preemptive rights, contracts, commitments, equities, claims or demands.
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COMMON STOCK PURCHASE AGREEMENT
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2.4 Securities Law Exemption. The offer, sale and issuance of
the shares of the Common Stock and Warrants as contemplated by this Agreement
are exempt from the registration requirements of the Securities Act and
applicable state securities laws, and neither the Company nor any authorized
agent acting on its behalf has taken or will take any action hereafter that
would cause the loss of such exemption.
2.5 Non-contravention. Except as set forth on Schedule 2.5
hereof, the Company is not in violation or breach of or in default with respect
to, any material provision of any contract, agreement, instrument, lease,
license, arrangement or understanding to which it is a party, and each such
contract, agreement, instrument, lease, license, arrangement and understanding
is in full force and effect and is the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
2.6 SEC Reports. The Company has filed all required reports,
schedules, forms, statements, and other documents with the Securities and
Exchange Commission (the "SEC") since September 25, 2000, the effective date of
the Company's Form 10-SB (together with other documents that revise or supersede
earlier filed documents, the "SEC Reports"). The Company has delivered or made
available to the Investors true and complete copies of the SEC Reports. As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the 1933 Act or the 1934 Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such SEC
Reports. None of the SEC Reports 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 Reports complied as of their respective dates of
filing with the SEC in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by
Regulation S-X promulgated by the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto), and fairly
present the financial position of the Company as of the dates thereof and the
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments). As of
the date hereof, the Company has on a timely basis made all filings required to
be made by the Company with the SEC.
2.7 Litigation. Except as set forth in the SEC Reports, there
is no action, suit or litigation, administrative proceeding, arbitration or
other proceeding to which the Company is a party or of which the Company is
aware, pending or threatened, which might materially and adversely affect the
Condition of the Company, and none of which questions the validity or impairs
the ability of the Company to perform on a timely basis any obligation under
this Agreement or the or the other Related Documents or any action taken or to
be taken in connection herewith or therewith. None of the transactions
contemplated hereby or by any of the other Related Documents has been enjoined
by any Authority and no suit or other proceeding challenging the transactions
contemplated by the Related Documents (of which the Company has been served or
is aware) has been instituted or, to the best of the Company's knowledge,
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COMMON STOCK PURCHASE AGREEMENT
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threatened and no investigative demand on the Company related to such
transactions has been made by any Authority. There are no unsatisfied judgments
or outstanding orders, injunctions, decrees, stipulations or awards against the
Company or any of its properties or assets that, individually or in the
aggregate, exceed $10,000 or otherwise have a material adverse effect on the
Condition of the Company.
2.8 Financial Statements. The financial statements of the
Company included in the SEC Reports and an unaudited income statement and
balance sheet for the three-month period ending August 31, 2000, attached hereto
as Schedule 2.8 (the "Financial Statements") (a) have been prepared (i) in
accordance with generally accepted accounting principles ("GAAP") (except that
the unaudited Financial Statements have not been reviewed by the independent
public accountants of the Company, and are expected to have adjustments as
described on Schedule 2.8(a), and do not contain footnotes and are subject to
year-end adjustments, which adjustments will not be material, individually or in
the aggregate), (ii) on a consistent basis for all periods presented, and (iii)
in accordance with the books and records of the Company, (b) are complete and
correct in all material respects, and (c) fairly present in all material
respects the financial condition of the Company as at said dates, and the
results of operations for the periods stated. As of the date hereof, there are
no liabilities or obligations of the Company ("Liabilities"), whether known or
unknown, accrued, absolute, contingent or otherwise, and whether due or to
become due, other than Liabilities that are reflected in the SEC Reports or the
Financial Statements or Liabilities incurred since the date of the Financial
Statements that are not and would not be, individually or in the aggregate,
material to the Condition of the Company. The Company is not aware of any
reasonable basis for the assertion against the Company of any other debt, duty,
liability, obligation or loss contingency other than Liabilities that are not
and would not be, individually or in the aggregate, material to the Condition of
the Company.
2.9 Use of Proceeds. The proceeds from the sale of the shares
of Common Stock shall be used solely for general corporate purposes. The
proceeds from the sale of the shares of Common Stock may not be used to redeem,
repurchase or otherwise acquire any shares of preferred stock, common stock or
other equity securities issued by the Company.
2.10 Intellectual Property.
(a) The Company owns, or has the contractual right to
use, sell or license all intellectual property necessary or required for the
conduct of its business as presently conducted and as proposed to be conducted,
including, without limitation, all trade secrets, processes, source code,
licenses, trademarks, service marks, trade names, logos, brands, copyrights,
patents, franchises, domain names, permits and Proprietary Information (all such
intellectual property and the rights thereto are collectively referred to as the
"Company IP Rights"), except for any failure to own or have the right to use,
sell or license that would not have a material adverse effect on the Condition
of the Company. Set forth in the SEC Reports or on Schedule 2.10 are all (i)
patents, applications for patents, registrations of trademarks and applications
therefor, and registrations of copyrights and applications therefor that are
owned by the Company, and (ii) unexpired licenses relating to the Company IP
Rights that have been granted to the Company and that are material to the
conduct of the Company's business as presently conducted or as proposed to be
conducted, but excluding end-user licenses granted to
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COMMON STOCK PURCHASE AGREEMENT
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the Company relating to standard "off the shelf" software that is generally
available on commercially reasonable terms.
(b) Neither the execution, delivery and performance
of this Agreement or the other Related Documents nor the consummation of the
transactions contemplated hereby or thereby will (i) constitute a breach of any
instrument or agreement governing any Company IP Rights, (ii) cause the
forfeiture or termination or give rise to a right of forfeiture or termination
of any Company IP Rights or (iii) impair the right of the Company to use, sell
or license any Company IP Rights or portion thereof, except for any such breach,
forfeiture, termination, right of forfeiture or termination or impairment that
would not, individually or in the aggregate, have a material adverse effect on
the Condition of the Company.
(c) The manufacture, marketing, license, sale or
intended use of any product currently licensed or sold by the Company is not in
breach of any material license or agreement between the Company and any third
party or, to the best of the Company's knowledge, has not infringed and is not
infringing on any intellectual property right of any other party. To the best of
the Company's knowledge, there is no claim or litigation, pending or threatened,
which contests the validity, ownership or right to use, sell, license or dispose
of any Company IP Rights.
(d) Except as set forth on Schedule 2.10(d), the
Company owns the Company IP Rights free and clear of all liens or other
encumbrances. The Company has not received any communications alleging that the
Company has violated or, by conducting its business presently conducted or as
proposed to be conducted, violates or will violate any intellectual property
rights of any other person or entity. The Company is not aware that any of its
employees 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 interfere with
their duties to the Company or that would conflict with the Company's business
as presently conducted or as proposed to be conducted. Neither the execution nor
delivery of this Agreement or the other Related Documents, nor the carrying on
of the Company's business by the employees of the Company, nor the conduct of
the Company's business as presently conducted or as proposed to be conducted,
will conflict with or result in a breach of the terms, conditions or provisions
of, or constitute a default under, any contract, covenant or instrument under
which any employee is now bound. The Company does not believe it is or will be
necessary to utilize any inventions, trade secrets or proprietary information of
any of its employees (or people the Company currently intends to hire) made
prior to their employment by the Company, except for Company IP Rights that have
been assigned to the Company.
(e) The Company has taken reasonable security
measures to maintain the confidentiality of and to protect the Company IP
Rights. Each employee, consultant and officer of the Company has executed a
Company IP Rights and inventions agreement to protect the rights of the Company
to all Company IP Rights in substantially the form provided to the Investors.
2.11 Title to Property and Assets. The Company does not own
any real property. The Company has good and marketable title to or, in the case
of leases and licenses,
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has valid and subsisting leasehold interests or licenses in, all of its
properties and assets of whatever kind (whether real or personal, tangible or
intangible) free and clear of any liens or other encumbrances, except for liens
or other encumbrances that are not, individually or in the aggregate, material
to the Condition of the Company. No person other than the Company owns any
equipment or other tangible assets or property situated on the premises of the
Company that is necessary to the operation of the business of the Company as
conducted or as proposed to be conducted, except for leased items that are
leased. With respect to property leased by the Company, the Company has a valid
leasehold interest in such property pursuant to leases which are in full force
and effect, and the Company is in compliance in all material respects with the
material provisions of such leases. All facilities, equipment and other material
items of tangible property and assets of the Company are in good operating
condition and repair, subject to normal wear and maintenance, and conform to all
applicable Laws relating to their construction, use and operation.
2.12 Compliance with Laws. The Company is and has been in
compliance in all material respects with all Laws that are applicable to the
Company, the conduct of its business as presently conducted and as proposed to
be conducted, and the ownership of its property and assets (including, without
limitation, all occupational safety, health, wage and hour, employment
discrimination and environmental laws), and the Company, to its knowledge, is
not aware of any state of facts, events, conditions or occurrences which may now
or hereafter constitute or result in a violation of any of such Laws or which
may give rise to the assertion of any such violation, the effect of which could
have a material adverse effect on the Condition of the Company. All required
reports and filings with Authorities have been properly made as and when
required, except where the failure to report or file would not, individually or
in the aggregate, have a material adverse effect on the Condition of the
Company.
2.13 Licenses and Permits. The Company has obtained and
maintains all federal, state and local licenses, permits, consents, approvals,
registrations, memberships, authorizations and qualifications required to be
maintained in connection with and material to the operations of the Company as
presently conducted and as proposed to be conducted, and all such licenses,
permits, consents, approvals, registrations, memberships, authorizations and
qualifications obtained are valid and in full force and effect.
2.14 Related Entities. Except as set forth on Schedule 2.14,
the Company does not presently own or control, directly or indirectly, any
interest in any other subsidiary, corporation, association or other business
entity. The Company is not a party to any joint venture.
2.15 Related Party Transactions and Agreements.
(a) Except as disclosed in the SEC Reports or on
Schedule 2.15, there are no agreements, understandings or proposed transactions
(other than employer/employee relationships) between the Company, on the one
hand, and any of its respective officers, directors, shareholders (who hold one
percent or more of the Company's Common Stock (on a fully-diluted basis)) or any
affiliate thereof, on the other hand.
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(b) Except as disclosed on Schedule 2.15, no
employee, officer or director of the Company or shareholder who holds one
percent or more of the Company's Common Stock (on a fully-diluted basis) or
member of the immediate family of any of the foregoing (i) owns, directly or
indirectly, any interest in (except for less than 1% stock holdings for
investment purposes in securities of publicly traded companies), or is an
officer, director, employee or consultant of, any company which is or was
engaged in business as, a competitor, lessor, lessee, supplier or customer of
the Company; (ii) owns, directly or indirectly, as a whole or in part, any
tangible or intangible property that the Company uses or contemplates using in
the conduct of its business as presently conducted or as proposed to be
conducted; or (iii) has any cause of action or other claim whatsoever against,
or is owed any amount from, the Company, except as disclosed in the SEC Reports
and except for immaterial claims in the ordinary course of business, such as
accrued vacation pay, accrued benefits under employee benefit plans and medical,
dental and other similar health benefit plans existing on the date hereof.
2.16 Marketing Rights. The Company has not granted rights to
develop, license, market, distribute or sell its products or use any of its
Proprietary Information to any other person or entity and is not bound by any
agreement that affects the exclusive right of the Company to develop, license,
market, distribute or sell its products or any other products that utilize the
Proprietary Information.
2.17 Changes. Since the date of the most recent SEC Report,
the Company has operated its respective business diligently and in the ordinary
course of business and there has not been, or the Company has not caused,
permitted or suffered to exist:
(a) any material adverse change in the Condition of
the Company;
(b) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the Condition of the
Company;
(c) any waiver or compromise by the Company of a
valuable right or of a material debt owed it;
(d) sold, encumbered, assigned or transferred any
assets or properties of the Company, other than in the ordinary course of
business;
(e) incurred any liability other than in the ordinary
course of business;
(f) created, incurred, assumed or guaranteed any
indebtedness or subjected any of its assets to any lien or encumbrance, except
for indebtedness, liens or encumbrances that are not, individually or in the
aggregate, material to the Condition of the Company;
(g) declared, set aside or paid any dividends or made
any other distributions in cash or property on the Company's capital stock;
(h) directly or indirectly redeemed, purchased or
otherwise acquired any shares of capital stock of the Company;
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COMMON STOCK PURCHASE AGREEMENT
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(i) suffered any resignation or termination of
employment of any key officers or employees;
(j) except in the ordinary course of business of the
Company, increased the compensation payable or to become payable by the Company
to any of its officers, employees or directors or increased any bonus,
insurance, pension or other employee benefit plan, payment or arrangement made
by the Company for or with any such officers, employees or directors;
(k) made any direct or indirect loan to any
shareholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business;
(l) changed any agreement to which the Company is a
party which materially and adversely affects the Condition of the Company; or
(m) entered into any agreement or commitment to do
any of the things described in this Section 2.17.
2.18 Employee Benefit Plans. Set forth in the SEC Reports or
on Schedule 2.18 are all "employee benefit plans," as such term is defined in
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), to
which the Company has any liability or obligation, contingent or otherwise. All
such employee benefit plans comply and have been maintained and administered in
compliance with ERISA, the Code (as defined in Section 2.19) and all other
statutes, orders and governmental rules and regulations applicable to such
employee benefit plans. The Company does not maintain or contribute to, and has
not maintained or contributed to, any "multiemployer plan," as such term is
defined in ERISA.
2.19 Taxes. The Company has timely filed all tax returns and
reports (federal, state and local) as required by Law and these returns and
reports are true and correct in all material respects. The Company has paid all
taxes and other assessments shown to be due on such returns or reports. Neither
the Internal Revenue Service nor any state or local taxing authority has, during
the past three years, examined or informed the Company it is in the process of
examining, any such tax returns and reports. The provision for taxes of the
Company, as shown on the most recent Financial Statements, is adequate for taxes
due or accrued as of the date thereof. The Company has not elected, pursuant to
the Internal Revenue Code of 1986, as amended (the "Code"), to be treated as a
collapsible corporation pursuant to Section 341(f) of the Code, nor has it made
any other elections pursuant to the Code (other than elections that relate
solely to methods of accounting, depreciation or amortization) that would have a
material effect on the Condition of the Company.
2.20 Insurance. The Company has in full force and effect fire,
casualty and liability insurance policies, with extended coverage, sufficient in
amount (subject to reasonable deductibles) to allow the Company to replace any
of its properties that might be damaged or destroyed to the extent and in the
manner customary for companies in similar business similarly situated.
2.21 Employees. The Company does not have any collective
bargaining agreements with any of its employees. There is no labor union
organizing activity pending or, to
10
COMMON STOCK PURCHASE AGREEMENT
12
the Company's knowledge, threatened with respect to the Company. Except as set
forth on Schedule 2.21, no employee has any agreement or contract, written or
verbal, regarding his employment contracts. Except as set forth in the SEC
Reports or on Schedule 2.21, the Company is not a party to or bound by any
deferred compensation arrangement, bonus plan, incentive plan, profit sharing
plan, retirement agreement or other employee compensation plan or agreement. The
Company is not aware that any officer or key employee, or that any group of key
employees, intends to terminate their employment with the Company, nor does the
Company have a present intention to terminate the employment of any of the
foregoing. Except as set forth on Schedule 2.21, the employment of each officer
and employee of the Company is terminable at the will of the Company. The
Company is and has been in compliance with all applicable Laws regulating
employment and employment practices or prescribing terms and conditions of
employment, wages and hours and the provisions of all Laws applicable to any
employee benefit, stock option or other similar plan maintained or contributed
to by the Company for the benefit of its employees, and there are no claims
(other than routine claims for benefits and claims in connection with
terminations of employment) pending or threatened with respect to any of such
plans or arrangements.
2.22 Material Contracts. Set forth in the SEC Reports and on
Schedule 2.22, are all material contracts, agreements, commitments and
arrangements that require capital expenditures or payments in excess of $25,000
or that are otherwise material, necessary or otherwise desirable to conduct the
Company's business as presently conducted or as proposed to be conducted
("Material Contracts"). The Material Contracts are valid and in full force and
effect as to the Company, and, to the best of the Company's knowledge, to the
other parties thereto. Except as otherwise disclosed herein, the Company is not
in violation of, or default under (and there does not exist any event or
condition which, after notice or lapse of time or both, would constitute such a
default under), the Material Contracts, except to the extent that such
violations or defaults, individually or in the aggregate, could not reasonably
be expected to (a) affect the validity of this Agreement or the other Related
Documents, (b) have a material adverse effect on the Condition of the Company,
or (c) impair the ability of the Company to perform fully on a timely basis any
material obligation which the Company has or will have under this Agreement or
the other Related Documents. To the Company's knowledge, none of the other
parties to any Material Contract are in violation of or default under any
Material Contract in any respect that would result in a material adverse effect
on the Condition of the Company. The Company has not received any notice of
cancellation or any written communication threatening cancellation of any
Material Contract by any other party thereto. The Company is not a party to and
is not bound by any contract, agreement or instrument, or subject to any
restriction under its articles of incorporation, as amended, bylaws or other
governing documents that materially adversely affects (i) it business as
presently conducted or as proposed to be conducted or (ii) the Condition of the
Company.
2.23 Real Property Holding Company. The Company is not a real
property holding company within the meaning of Section 897 of the Code.
2.24 Significant Customers and Suppliers. No customer or
supplier that was significant to the Company during the period covered by the
Financial Statements or that has been significant to the Company thereafter, has
terminated, materially reduced or threatened to
11
COMMON STOCK PURCHASE AGREEMENT
13
terminate or material reduce its purchases from or provision of products or
services to the Company.
2.25 Brokers and Finders. Except as set forth on Schedule
2.25, the Company has not employed any broker, finder, consultant or
intermediary in connection with the transactions contemplated by this Agreement
that would be entitled to a broker's, finder's or similar fee or commission in
connection herewith and therewith.
2.26 Registration Rights. Except as provided by the Investors'
Rights Agreement and on Schedule 2.26, the Company is not under any obligation
to register any presently outstanding securities, or any securities which may
hereafter be issued, under the Securities Act of 1933, as amended.
2.27 Foreign Corrupt Practices. Neither the Company nor any
director, officer, employee, agent or other person acting on behalf of the
Company has, in the course of that person's actions for, or on behalf of, the
Company, (a) used any corporate assets for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity, (b)
made any direct or indirect unlawful payment to any foreign or domestic
governmental official or employee, (c) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, or (d) made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic governmental official or employee.
2.28 Form SB-2 Eligibility. The Company is currently eligible
to register the resale of its Common Stock on a registration statement on Form
SB-2 under the Securities Act.
2.29 Disclosure. This Agreement, Schedules and Exhibits
hereto, the other Related Documents, and all other documents delivered to the
Investors in connection herewith or therewith at the Closing, do not contain any
untrue statement of a material fact, or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. There are no facts that, individually or in the
aggregate, materially adversely affect the Condition of the Company that has not
been disclosed to the Investors in this Agreement (including the Schedules and
Exhibits hereto), the other Related Documents and all other documents delivered
to the Investors in connection herewith or therewith at the Closing.
3. Representations and Warranties of each Investor. Each Investor,
severally but not jointly, represents and warrants that:
3.1 Investment Intent. The Investor is acquiring the Common
Stock and the Warrants (collectively, the "Securities") pursuant to this
Agreement with his, her or its own funds for his, her or its own account and not
as a nominee or agent for the account of any other person. No other person has
any interest, beneficial or otherwise, in any of the Securities to be purchased
by the Investor. Except as provided herein, the Investor is not obligated to
transfer any Securities to any other person, nor does the Investor have any
agreement or understanding with any other person to do so. The Investor is
purchasing the Securities for investment purposes and not with a view to the
sale or distribution of any Securities, by public or private sale or other
disposition, and the Investor has no intention of selling, granting any
participation
12
COMMON STOCK PURCHASE AGREEMENT
14
in or otherwise distributing or disposing of any of the Securities. Except as
provided in Section 6 hereof, the Investor does not intend to subdivide or
transfer to any other person the Securities acquired by the Investor herewith.
Notwithstanding the foregoing, the disposition of the Investor's property shall
be at all times within the Investor's own control, and the Investor's right to
sell or otherwise dispose of all or any part of the Securities purchased by it
pursuant to an effective registration statement under the Securities Act or
under an exemption under the Securities Act shall not be prejudiced; provided,
that the Investor complies with Section 6 herein. Nothing herein shall prevent
the distribution of any Securities to any member, partner or stockholder, former
member, partner or stockholder of the Investor in compliance with the Securities
Act and applicable state "blue sky" laws.
3.2 No Public Offering. The Investor is able to bear the
economic risk of his, her or its investment in the Securities. The Investor is
aware that it must be prepared to hold the Securities for an indefinite period
and that the Securities have not been, and when issued will not be, registered
under the Securities Act or registered or qualified under any state securities
law, on the ground that the Securities are being issued by the Company without
any public offering within the meaning of Section 4(2) of the Securities Act.
The Investor has had an opportunity to discuss the Company's business,
management and financial affairs with the Company's management. The Investor is
not subscribing for the Securities as a result of or subsequent to any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
any solicitation of a subscription by any person not previously known to the
Investor in connection with investments in securities generally.
3.3 Certificates to be Legended. The Investor understands that
each stock certificate representing Securities acquired hereunder will bear a
legend on the face thereof (or on the reverse thereof with a reference to such
legend on the face thereof) required by the SEC or a state securities
commission.
3.4 Securities Will be "Restricted Securities". The Investor
understands that the Securities will be "restricted securities" as that term is
defined in Rule 144 promulgated under the Securities Act and, accordingly, that
the Securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
The Investor understands and agrees that, except as provided herein and in the
Investors' Rights Agreement, the Company is not under any obligation to register
the Securities under the Securities Act or to comply with Regulation A or any
other exemption.
3.5 Accredited Investor. The Investor has been advised or is
aware of the provisions of Regulation D under the Securities Act relating to the
accreditation of investors, and the Investor is an "accredited investor" as
defined in Rule 501 of Regulation D promulgated under the Securities Act.
3.6 Sophistication of the Investor. The Investor has such
knowledge and experience in financial and business matters that the Investor is
capable of evaluating the merits and risks of the investment contemplated by
this Agreement and has the capacity to protect his, her or its own interests.
The Investor acknowledges that investment in the Securities is highly
speculative and involves a substantial and high degree of risk of loss of the
Investor's entire
13
COMMON STOCK PURCHASE AGREEMENT
15
investment. The Investor has adequate means of providing for current and
anticipated financial needs and contingencies, is able to bear the economic risk
of the investment for an indefinite period of time and has no need for liquidity
of the investment in the Securities and could afford complete loss of such
investment.
3.7 Brokers' Fees. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of the Investor.
3.8 Organization. Unless the Investor is an individual, the
Investor is a corporation, limited liability company or limited partnership, as
the case may be, duly organized, validly existing and in good standing in the
jurisdiction of its formation. The Investor has all requisite power and
authority to execute, deliver and carry out the terms of this Agreement and the
Investors' Rights Agreement.
3.9 Execution and Binding Effect. The execution and delivery
of this Agreement and the Investors' Rights Agreement and the consummation of
the transactions contemplated hereby or thereby have been duly authorized by all
necessary action on the part of the Investor. Upon the execution and delivery by
the Investor, this Agreement and the Investors' Rights Agreement shall
constitute the legal, valid and binding obligations of the Investor enforceable
against the Investor in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, liquidation,
reorganization, moratorium or other laws relating to or limited creditors'
rights generally or by equitable principles relating to enforceability.
4. The Investor's Conditions to each Closing. Each Investor's
obligation to purchase and pay for the shares of Common Stock to be sold to such
Investor at the applicable Closing and the issuance of the Warrants is subject
to the fulfillment to such Investor's satisfaction, prior to or at the such
Closing, of the following conditions:
4.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true and correct when
made and as of the applicable Closing with the same effect as though such
representations and warranties had been made on and as of the date of such
Closing, except to the extent of changes caused by transactions expressly
contemplated herein.
4.2 Performance. The Company shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed by it or with which it is required to have complied
on or before the applicable Closing.
4.3 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the applicable
Closing and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Investor, and the Investor shall have received all
such counterpart original and certified or other copies of such documents as
they may reasonably request.
14
COMMON STOCK PURCHASE AGREEMENT
16
4.4 Securities Compliance. Upon the filing of its Form D in
the appropriate jurisdictions, the Company shall have taken all action necessary
to comply with any federal or state securities laws applicable to the
transactions contemplated hereunder.
4.5 Consents, Permits, and Waivers. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement and the
Investors' Rights Agreement (except for such as may be properly obtained
subsequent to the applicable Closing).
4.6 Compliance Certificate. The Company shall deliver to each
Investor at the applicable Closing, relating to such Investor's purchase of
shares of Common Stock and the issuance of the Warrants, a certificate signed by
the President of the Company stating that the Company has complied with or
satisfied each of the conditions to the Investor's obligation to consummate the
applicable Closing set forth in Sections 4.1 through 4.5, unless waived in
writing by the Investor.
4.7 Investors' Rights Agreement. The Investors' Rights
Agreement, in the form attached hereto as Exhibit B, shall have been executed by
all the parties thereto on or prior to the applicable Closing.
4.8 Stock Certificate. The Company shall deliver to each
Investor at the applicable Closing a duly executed stock certificate evidencing
the shares of Common Stock purchased by such Investor at such Closing.
4.9 Warrants. The Company shall deliver to each Investor at
the applicable Closing a duly executed Warrant.
4.10 Opinion of Counsel. The Company shall deliver to each
Investor at the applicable Closing an opinion of counsel for the Company, dated
as of such Closing, in the form attached hereto as Exhibit C.
4.11 Expenses. The Company shall pay (i) the legal fees and
expenses of Shartsis, Friese & Ginsburg LLP (legal counsel only for ICM Asset
Management, Inc.), in an amount not to exceed $15,000, incurred in connection
with the First Closing under this Agreement, the Other Related Documents and the
transactions contemplated hereby and thereby and (ii) the legal fees and
expenses of Shartsis, Friese & Ginsburg LLP, in an amount not to exceed $3,000
with respect to each subsequent Closing, incurred in connection with each
subsequent Closing contemplated by this Agreement. The Company shall pay the
reasonable fees and out of pocket expenses of Raven Ventures, LLC, in an amount
not to exceed $5,000, incurred in connection with the transactions contemplated
by this Agreement, the Other Related Documents and the transactions contemplated
hereby and thereby.
4.12 Due Diligence. The Investors shall have completed due
diligence to their satisfaction.
4.13 Legal Matters. All matters of a legal nature which
pertain to this Agreement and the transactions contemplated hereby shall have
been approved by counsel to the Investors.
15
COMMON STOCK PURCHASE AGREEMENT
17
5. The Company's Conditions to each Closing. The Company's obligation
to deliver the shares of Common Stock and issuance of the Warrants at the
applicable Closing is subject to the fulfillment to the Company's satisfaction,
prior to or at such Closing, of the following conditions:
5.1 Representations and Warranties. The representations and
warranties of each Investor participating in the applicable Closing contained in
Section 3 hereof shall be true and correct on and as of such Closing.
5.2 Performance. Each Investor participating in the applicable
Closing shall have performed and complied with all agreements, obligations, and
conditions contained in the Agreement that are required to be performed by it or
them or with which it or they are required to have complied on or before such
Closing.
5.3 Payment. Each Investor participating in the applicable
Closing shall have delivered the consideration specified in Section 1 for each
share of Common Stock purchased by the Investor at such Closing.
5.4 Legal Matters. All matters of a legal nature which pertain
to this Agreement and the transactions contemplated hereby shall have been
approved by counsel to the Company.
6. Transfer of Securities.
6.1 Restrictions on Transfer. The Securities are not
transferable except upon the conditions specified in the Investors' Rights
Agreement and applicable federal and state securities laws.
6.2 Restrictive Legends. The Warrants and the stock
certificates representing the shares of Common Stock shall be stamped or
otherwise imprinted with legends in substantially the following forms:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND THUS MAY NOT BE TRANSFERRED UNLESS REGISTERED OR
QUALIFIED UNDER THAT ACT OR SUCH LAWS OR UNLESS, IN THE OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER, AN EXEMPTION FROM
REGISTRATION OR QUALIFICATION IS AVAILABLE.
7. Miscellaneous.
7.1 Survival of Warranties. The warranties, representations
and covenants of the Company and each Investor contained in or made pursuant to
this Agreement shall survive the execution and delivery of this Agreement and
the Closings.
16
COMMON STOCK PURCHASE AGREEMENT
18
7.2 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Investors
holding more than 50% of the outstanding shares of Common Stock acquired
hereunder. Any amendment or waiver effective in accordance with this Section 7.2
shall be binding upon each Investor, his, her or its heirs, representatives or
permitted assigns, and the Company and its heirs, representatives and permitted
assigns.
7.3 Notices. Any notice, consent, authorization or other
communication to be given hereunder shall be in writing and shall be deemed duly
given and received when delivered personally or transmitted by facsimile
transmission with receipt acknowledged by the addressee or three days after
being mailed by first class mail, or the next business day after being deposited
for next-day delivery with a nationally recognized overnight delivery service,
charges and postage prepaid, properly addressed to the party to receive such
notice at the address(es) specified on the signature page of this Agreement for
the Company and each Investor (or at such other address as shall be specified by
like notice).
7.4 Entire Agreement. This Agreement (including the Schedules
and Exhibits, and the Warrants and the Investors' Rights Agreement) contains the
entire agreement of the parties and supersede all prior negotiations,
correspondence, term sheets, agreements and understandings, written and oral,
between or among the parties regarding the subject matter hereof.
7.5 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the respective heirs, representatives, successors
and permitted assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective heirs, representatives, successors and permitted assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
7.6 Severability. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid or unenforceable, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those to which it is held
to be invalid or unenforceable, shall not be affected thereby.
7.7 Governing Law. This Agreement shall be governed by and
construed and interpreted in accordance with the law of the State of Washington,
without regard to that state's conflict of laws principles. All disputes between
the parties hereto, whether sounding in contract, tort, equity or otherwise,
shall be resolved only by state and federal courts located in Spokane,
Washington, and the courts to which an appeal therefrom may be taken. All
parties hereto waive any objections to the location of the above referenced
courts, including but not limited to any objection based on lack of
jurisdiction, improper venue or forum non-conveniens. Notwithstanding the
foregoing, any party obtaining any order or judgment in any of the above
referenced courts may bring an action in a court in another jurisdiction in
order to enforce such order or judgment.
17
COMMON STOCK PURCHASE AGREEMENT
19
7.8 Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement or the other
Related Documents, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
7.9 Interpretation. This Agreement shall be construed
according to its fair language. The rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement.
7.10 Further Assurances. Each party shall execute such other
and further certificates, instruments and other documents as may be reasonably
necessary and proper to implement, complete and perfect the transactions
contemplated by this Agreement.
7.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall constitute an original, and all of
which together shall be considered one and the same agreement.
7.12 Assignment. Each Investor may assign or transfer all or
any part of the Securities acquired hereunder provided that the conditions
specified in Section 6 are satisfied, which conditions are, among other things,
intended to insure compliance with the provisions of the Securities Act and
state securities laws in respect of the transfer of any of the Securities
acquired hereunder. The Company shall not assign this Agreement or any rights
hereunder or delegate any duties hereunder. Any attempted or purported
assignment or delegation in violation of the preceding sentence shall be void.
7.13 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.14 Exculpation Among Investors. Each Investor acknowledges
that it is not relying upon any person, firm or corporation, other than the
Company and its officers and directors, in making its investment or decision to
invest in the Company. Each Investor agrees that no Investor nor the respective
controlling person, officers, directors, partners, agents or employees of any
Investor shall be liable to any other Investor for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
purchase of the Common Stock or the execution of or performance under any of
this Agreement or the Other Related Documents.
7.15 Representation. Each party hereto acknowledges that (a)
ICM Asset Management, Inc. retained SF&G to represent ICM Asset Management, Inc.
and its affiliates (collectively, "ICM") in connection with this Agreement, the
other Related Documents and the transaction related hereto and thereto, (b) the
interests of ICM may not necessarily coincide with the interests of other
Investors, (c) SF&G does not represent any Investor other than ICM, and (d) each
Investor has consulted with, or has had an opportunity to consult with, its own
legal counsel and has not relied on SF&G for legal counsel in connection with
this Agreement, the other Related Documents and the transactions related hereto
and thereto.
18
COMMON STOCK PURCHASE AGREEMENT
20
8. Glossary. For purposes of this Agreement, the following terms shall
have the meanings set forth below, which shall be equally applicable to both the
singular and plural forms of any of such terms:
"Authority" shall mean any government or political subdivision, or any
agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury, arbitrator or
mediator, in each case whether federal, state, local or foreign.
"Law" shall mean any judgment, decree, order, statute, law, ordinance,
rule or regulation of any Authority (including common law), constitution,
statute, treaty, regulation, rule, ordinance, judgment, order, foreign
injunction, writ, decree or award of any Authority.
"Proprietary Information" shall mean all trade secrets, technical
knowledge and experience, confidential information and other proprietary
knowledge, whether or not patentable, possessed by, accumulated or owned by the
Company concerning the design, formulation, manufacturing, quality control,
testing, storage, development, improvement, installation and operation of the
products and services of the Company, including, without limitation, the Company
IP Rights, technical, engineering and operating data relating to the products,
designs, schematics, plans, operating principles, formulas, computer software
programs, electronically recordable data or concepts, marketing data,
inventions, improvements, research and development records and reports,
experimental and engineering reports, product specifications, drawings,
photographs, models, compilations of information, records, books and papers,
quality control reports and specifications, and any other information possessed
by the Company, relating to its products or services.
"Related Documents" shall mean this Agreement, the Investors' Rights
Agreement (including the exhibits attached thereto) and the Warrants.
[Signatures appear on following page.]
19
COMMON STOCK PURCHASE AGREEMENT
21
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first set forth above.
"COMPANY"
ELITE LOGISTICS, INC.
By:
---------------------------------------
Name: Joseph D. Smith:
President/CEO
1201 N Ave. H
Freeport, TX 77541
(979) 230-0222
(979) 230-0122 Fax
with a copy to:
Adrienne Randle Bond, Esq.
Bond & Taylor LLP
1021 Main St., Suite 1940
Houston, TX 77002
(713) 759-9970
(713) 759-1980 Fax
"INVESTOR"
KOYAH LEVERAGE PARTNERS, L.P.
By: Koyah Ventures LLC, its general partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
c/o ICM Asset Management, Inc.
601 West Main Avenue, Suite 600
Spokane, WA 99201
Attn: Robert Law, Esq.
Tel: (509) 455-3588
Fax: (509) 444-4500
S-1
COMMON STOCK PURCHASE AGREEMENT
22
with copies to:
Shartsis, Friese & Ginsburg LLP
One Maritime Plaza, 18th Floor
San Francisco, CA 94111
Attn: John F. Milani, Esq.
Tel: (415) 421-6500
Fax: (415) 421-2922
"INVESTOR"
KOYAH PARTNERS, L.P.
By: Koyah Ventures LLC, its general partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
c/o ICM Asset Management, Inc.
601 West Main Avenue, Suite 600
Spokane, WA 99201
Attn: Robert Law, Esq.
Tel: (509) 455-3588
Fax: (509) 444-4500
with copies to:
Shartsis, Friese & Ginsburg LLP
One Maritime Plaza, 18th Floor
San Francisco, CA 94111
Attn: John F. Milani, Esq.
Tel: (415) 421-6500
Fax: (415) 421-2922
"INVESTOR"
-------------------------------------------
Scott Atkison
Address:
----------------------------------
----------------------------------
----------------------------------
Tel:
----------------------------------
Fax:
----------------------------------
S-2
COMMON STOCK PURCHASE AGREEMENT
23
"INVESTOR"
-------------------------------------------
Nigel Davey
Address:
----------------------------------
----------------------------------
----------------------------------
Tel:
----------------------------------
Fax:
----------------------------------
S-3
COMMON STOCK PURCHASE AGREEMENT
24
EXHIBIT A
FORM OF WARRANT
COMMON STOCK PURCHASE AGREEMENT
25
EXHIBIT B
INVESTORS' RIGHTS AGREEMENT
COMMON STOCK PURCHASE AGREEMENT
26
SCHEDULE OF INVESTORS
INVESTOR SHARES INVESTMENT AMOUNT
- -------- ------- -----------------
Koyah Leverage Partners, L.P. 444,445 $600,000.75
Koyah Partners, L.P. 111,111 $149,999.85
Scott Atkison 7,407 $ 9,999.45
Nigel Davey 7,407 $ 9,999.45
------- -----------
TOTAL 570,370 $769,999.50
COMMON STOCK PURCHASE AGREEMENT
27
ELITE LOGISTICS, INC.
FIRST AMENDMENT TO
COMMON STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO COMMON STOCK PURCHASE AGREEMENT (this
"Amendment") is entered into as of October 20, 2000, by and among Elite
Logistics, Inc., an Idaho corporation (the "Company"), and the parties listed on
the Schedule of Investors attached hereto (each, an "Investor"), with reference
to the following facts:
WHEREAS, the Company and the Investors desire to amended that certain
Common Stock Purchase Agreement (the "Stock Purchase Agreement"), dated as of
October 13, 2000, by and among the Company and the Investors.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions set forth in this Amendment, the parties agree
as follows:
1. Amendment to Section 1.4(c) of the Stock Purchase Agreement. Section
1.4(c) of the Stock Purchase Agreement is hereby amended by adding the following
sentence at the end of that Section.
"Anything herein to the contrary notwithstanding, no
individual Approved Investor shall have a right to acquire
those shares of Common Stock under this Section 1.4(c), which,
when added with all other shares of equity securities
(including, without limitation, all issued and outstanding
options and warrants on an as-converted basis) then held by
such Approved Investor, result in such Approved Investor
holding ten percent (10%) or more of the Company's issued and
outstanding equity securities (including, without limitation,
all issued and outstanding options and warrants on an
as-converted basis)."
2. Miscellaneous.
2.1 Governing Law. This Amendment shall be governed by and
construed and interpreted in accordance with the law of the State of Washington,
without regard to that state's conflict of laws principles.
2.2 Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall constitute an original, and all of which
together shall be considered one and the same agreement.
2.3 Reference to Stock Purchase Agreement. On and after the
date hereof, each reference in the Stock Purchase Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import referring to the Stock
Purchase Agreement, and each reference in the other Related Documents to the
Stock Purchase Agreement, shall mean and be a reference to the Stock Purchase
Agreement as amended by this Amendment
[Signatures appear on following page.]
FIRST AMENDMENT TO
COMMON STOCK PURCHASE AGREEMENT
28
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and delivered as of the date first set forth above.
"COMPANY"
ELITE LOGISTICS, INC.
By:
---------------------------------------
Name: Joseph D. Smith:
President/CEO
"INVESTORS"
KOYAH LEVERAGE PARTNERS, L.P.
By: Koyah Ventures LLC, its general partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
KOYAH PARTNERS, L.P.
By: Koyah Ventures LLC, its general partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-------------------------------------------
Scott Atkison
-------------------------------------------
Nigel Davey
S-1
FIRST AMENDMENT TO
COMMON STOCK PURCHASE AGREEMENT
29
SCHEDULE OF INVESTORS
Koyah Leverage Partners, L.P.
Koyah Partners, L.P.
Scott Atkison
Nigel Davey
FIRST AMENDMENT TO
COMMON STOCK PURCHASE AGREEMENT