EXHIBIT 2(a)
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is entered into
as of October 14, 1998 between CATERPILLAR INC., a Delaware corporation
(together with its successors and permitted assigns, "Investor"), and A.S.V.,
INC., a Minnesota corporation (together with its successors and permitted
assigns, "Issuer"). Capitalized terms used but not otherwise defined herein
shall have the meanings set forth in Section 6.1.
RECITALS
Subject to the terms and conditions of this Agreement, Investor desires
to purchase, and Issuer desires to issue and sell to Investor, 1,000,000 shares
of Issuer's common stock, par value $0.01 per share (the "Common Stock"), and a
warrant to purchase an additional 10,267,127 shares of Common Stock.
Concurrently herewith, Issuer is issuing to Investor an option to purchase
1,579,000 shares of Common Stock and Issuer and Investor are entering into a
Commercial Alliance Agreement of even date herewith (the "Commercial Alliance
Agreement"). Prior to the execution of this Agreement, Investor and certain
Shareholders of Issuer entered into a Voting Agreement dated as of October 13,
1998.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
ISSUANCE AND PURCHASE OF COMMON STOCK, WARRANT, AND OPTION
1.1 Issuance and Purchase of Common Stock, Warrant, and Option. Subject
to the terms and conditions of this Agreement, Issuer will issue and sell to
Investor and Investor will purchase from Issuer for an aggregate purchase price
of $18,000,000 (the "Purchase Price") (i) 1,000,000 shares of Common Stock (the
"Shares") and (ii) a warrant (the "Warrant") to purchase an additional
10,267,127 shares of Common Stock at an exercise price of $21.00 per share,
exercisable in whole or in part at any time and from time to time from the date
of Closing until the tenth anniversary of the date of the Closing (subject to
certain rights of the Company to accelerate such date), pursuant to the terms of
the warrant certificate in the form attached hereto as Exhibit A (the "Warrant
Certificate"). Concurrently with the execution hereof, Issuer is issuing to
Investor an option (the "Option") to purchase 1,579,000 shares of Common Stock
at an exercise price of $18.00 per share, exercisable in whole or in part at any
time and from time to time from the date hereof until the termination date set
forth therein, pursuant to the terms of the option certificate in the form
attached hereto as Exhibit B (the "Option Certificate").
1.2 Legend. Any certificate or certificates representing the Shares,
the Warrant, the Option, any Common Stock issued upon exercise of the Warrant
(the "Warrant Shares"), and any Common Stock issued upon exercise of the Option
(the "Option Shares") shall bear the following legend:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR UNDER ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT
OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER OR UNDER
APPLICABLE STATE SECURITIES LAWS.
ARTICLE II
CLOSING
2.1 Closing. The closing of the transactions contemplated herein (the
"Closing") shall take place as promptly as practicable (and in any event within
two (2) business days) after satisfaction or waiver of the conditions set forth
in Article VIII at the offices of McDermott, Will & Emery, 227 West Monroe
Street, Chicago, Illinois 60606. At the Closing, (i) Investor shall pay to
Issuer, by wire transfer of immediately available funds to an account designated
in writing by Issuer, the Purchase Price; (ii) Issuer shall issue to Investor
the Shares, and deliver to Investor certificates for the Shares duly registered
in the name of Investor; (iii) Issuer shall issue to Investor the Warrant and
deliver the Warrant Certificate to Investor; (iv) pursuant to the terms of the
Option, Investor shall deliver to Issuer the Option and Issuer shall cancel the
Option; and (v) all other agreements and other documents referred to in this
Agreement shall be executed and delivered (if not done prior to the Closing).
2.2 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of Issuer and Investor;
(b) by Investor, but only if Investor is not in material
breach of this Agreement, upon a material breach of any representation,
warranty, covenant or agreement on the part of Issuer set forth in this
Agreement, or if any material representation or warranty of Issuer
shall have become untrue, in either case such that the conditions in
Section 8.2 would be incapable of being satisfied by March 31, 1999 (or
as such date is otherwise extended pursuant to Section 2.2(e) below);
(c) by Issuer, but only if Issuer is not in material breach of
this Agreement, upon a material breach of any representation, warranty,
covenant or agreement on the part of Investor set forth in this
Agreement, or if any material representation or warranty of Investor
shall have become untrue, in either case such that the conditions in
Section 8.3 would be incapable of being satisfied by March 31, 1999 (or
as such date is otherwise extended pursuant to Section 2.2(e) below);
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(d) by either Investor or Issuer, but only if the terminating
party is not in material breach of this Agreement at that time, if the
conditions in Section 8.1 would be incapable of being satisfied by
March 31, 1999; by Investor, but only if Investor is not in material
breach of this Agreement at that time, if the conditions in Section 8.2
would be incapable of being satisfied by March 31, 1999; or by Issuer,
but only if Issuer is not in material breach of this Agreement at that
time, if the conditions in Section 8.3 would be incapable of being
satisfied by March 31, 1999 (or, in each case, as such date is
otherwise extended pursuant to Section 2.2(e) below);
(e) by either Investor or Issuer, but only if the terminating
party is not in material breach of this Agreement at that time, if the
Closing shall not have been consummated before March 31, 1999;
provided, however, that this Agreement may be extended by written
notice of either Investor or Issuer to a date not later than June 30,
1999; or
(f) by Issuer if (1) any Person or group ("Group"), as defined
in the Exchange Act shall have commenced (as such term is used in Rule
14d-2(b) under the Exchange Act) an unsolicited bona fide tender offer
for all outstanding shares of Common Stock or any person or Group shall
have made an unsolicited bona fide written offer proposing a merger or
consolidation of Issuer or the acquisition of all or substantially all
of its assets, and (2) Issuer's Board of Directors shall determine,
based on advice of Issuer's financial advisors, that such offer is a
Superior Proposal (as herein defined), and (3) Issuer's Board of
Directors determines upon the advice of its legal counsel that if they
failed to recommend such offer or accept such proposal then such
failure would be reasonably likely to result in a breach of the
directors' fiduciary duties; provided however that Issuer may not
terminate this Agreement pursuant to this Section 2.2(f) until the
expiration of five business days after written notice of any such
Superior Proposal has been delivered to Investor, together with a
summary of the terms of any such offer or proposal.
2.3 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 2.2, this Agreement shall forthwith become void,
there shall be no liability on the part of Issuer or Investor to each other and
all rights and obligations of any party hereto shall cease; provided, however,
that nothing herein shall relieve any party from liability for the breach of any
of its representations, warranties, covenants or agreements set forth in this
Agreement; further provided, however, nothing herein shall affect the terms and
conditions of the Option contained in the Option Certificate; further, provided,
however, that the terms of Section 9.5 of this Agreement shall continue to be in
full force and effect following such termination.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ISSUER
As a material inducement to Investor entering into this Agreement and
the Option Certificate and purchasing the Shares and the Warrant, Issuer
represents and warrants to Investor as follows:
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3.1 Corporate Status. Issuer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Minnesota.
Issuer has all requisite corporate power and authority to own or lease, as the
case may be, its properties and to carry on its business as now conducted.
Issuer and its Subsidiaries are qualified or licensed to conduct business in all
jurisdictions where its or their ownership or lease of property and the conduct
of its or their business requires such qualification or licensing, except to the
extent that failure to so qualify or be licensed would not have a Material
Adverse Effect on Issuer. There is no pending or threatened proceeding for the
dissolution, liquidation, or insolvency of Issuer or any of its Subsidiaries.
3.2 Corporate Power and Authority. Issuer has the corporate power and
authority to execute and deliver this Agreement, the Warrant Certificate, and
the Option Certificate and to perform its obligations hereunder and thereunder
and, subject, in the case of the Agreement and the Warrant Certificate but not
in the case of the Option Certificate, to the applicable approval of Issuer's
shareholders, to consummate the transactions contemplated hereby and thereby.
Issuer has taken all necessary corporate action to authorize the execution,
delivery and performance of the Option Certificate. Other than obtaining its
shareholders' applicable approval, Issuer has taken all necessary corporate
action to authorize the execution, delivery and performance of this Agreement
and the Warrant Certificate and the transactions contemplated hereby and
thereby.
3.3 Execution, Delivery and Enforceability. Each of this Agreement and
the Option Certificate has been duly executed and delivered by Issuer and
constitutes a legal, valid and binding obligation of Issuer, enforceable against
Issuer in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
3.4 No Violation. Except as set forth on Schedule 3.4 hereto, the
execution and delivery by Issuer of this Agreement, the Warrant Certificate, the
Option Certificate, the consummation of the transactions contemplated hereby and
thereby, and the compliance by Issuer with the terms and provisions hereof and
thereof (including, without limitation, the issuance to Investor of the Shares,
the Warrant Certificate and the Option Certificate, the issuance of the Warrant
Shares as contemplated by and in accordance with the Warrant Certificate and the
issuance of the Option Shares as contemplated by and in accordance with the
Option Certificate), will not result in a default under (or give any other party
the right, with the giving of notice or the passage of time (or both), to
declare a default or accelerate any obligation under) or violate the Articles of
Incorporation or Bylaws or any Contract to which Issuer or any of its
Subsidiaries is a party or by which Issuer or its properties or assets are bound
(except to the extent such a default would not, in the case of a Contract, have
a Material Adverse Effect on Issuer), or any Requirement of Law applicable to
Issuer or any of its Subsidiaries, or result in the creation or imposition of
any Lien upon any of the capital stock, properties or assets of Issuer or any of
its Subsidiaries (except where such Lien would not have a Material Adverse
Effect on Issuer).
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3.5 Consents/Approvals. Except as set forth on Schedule 3.5 hereto and
except for filing and approval under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
("HSR Act"), and the applicable approval of this Agreement and the transactions
contemplated hereby (other than the Option Certificate) by the shareholders of
Issuer, (a) no consents, filings, authorizations or other actions of any
Governmental Authority are required for Issuer's execution, delivery and
performance of this Agreement, the Warrant Certificate, or the Option
Certificate and (b) no consent, approval, waiver or other action by any Person
under any Contract to which Issuer or any of its Subsidiaries is a party or by
which Issuer or any of its properties or assets are bound is required or
necessary for the execution, delivery or performance by Issuer of this
Agreement, the Warrant Certificate, or the Option Certificate and the
consummation of the transactions contemplated hereby and thereby, except where
the failure to obtain such consents would not have a Material Adverse Effect on
Issuer.
3.6 Capitalization. The authorized capital stock of Issuer consists of
45,000,000 shares, of which 33,750,000 are shares of Common Stock and 11,250,000
are shares of preferred stock, par value $0.01 per share. As of the date hereof,
7,895,988 shares of Common Stock are validly issued and outstanding, fully paid,
and non-assessable, and no shares of preferred stock are issued or outstanding.
Except with respect to the Shares, the Warrant Shares, and the Option Shares,
and except for options for 407,598 shares of Common Stock issued and 948,723
shares of Common Stock reserved for issuance pursuant to the A.S.V., INC. 1994
Long-Term Incentive and Stock Option Plan, as amended (the "1994 Plan"), options
for 1,002,375 shares of Common Stock issued and 2,250,000 shares of Common Stock
reserved for issuance pursuant to the A.S.V., INC. 1996 Incentive and Stock
Option Plan, as amended (the "1996 Plan"), 450,000 shares of Common Stock
reserved for issuance pursuant to the A.S.V., INC. 1998 Non-Employee Director
Stock Option Plan, as amended (the "1998 Plan"), none of which have been issued,
681,812 shares of Common Stock issuable pursuant those certain senior
convertible debentures issued October 1996 (the "Debentures"), and 337,500
shares of Common Stock issuable pursuant to that certain Warrant issued to Leo
Partners, Inc. on December 1, 1996 (the "Leo Partners Warrant", together with
the 1994 Plan, the 1996 Plan, the 1998 Plan, and the Debentures, being the
"Derivative Equity Documents"), no other shares of Common Stock and no shares of
preferred stock, or any rights, options, warrants, convertible securities,
subscription rights or other agreements or commitments of any kind obligating
Issuer to issue or sell any other shares of Common Stock or preferred stock, are
outstanding or have been authorized, except that the number of shares issuable
pursuant to the 1994 Plan (and therefore the number of shares reserved for
issuance) automatically increases on an annual basis, subject to an overall
limitation on the number of shares which may be issued pursuant to incentive
stock options of 1,125,000 shares. Upon delivery to Investor of the certificates
for the Shares, the Warrant Certificate, and the Option Certificate and payment
of the Purchase Price, Investor will acquire good, valid and marketable title to
and record ownership of the Shares, the Warrant, and the Option, respectively,
and such Shares will be validly issued, fully paid and non-assessable.
3.7 SEC Reports and Nasdaq Compliance. Issuer has made all filings (the
"SEC Reports") required to be made by it under the Securities Act, the Exchange
Act and the securities
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laws of any state, and any rules and regulations promulgated thereunder and
pursuant to any Requirements of Law. The SEC Reports, when filed, complied in
all material respects with all applicable requirements of the Securities Act,
the Exchange Act and other Requirements of Law. None of the SEC Reports, at the
time of filing, 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 not misleading in light of the circumstances in
which they were made. Issuer has taken all necessary actions to ensure its
continued inclusion in, and the continued eligibility of the Common Stock for
trading on the Nasdaq National Market under all currently effective and
currently proposed inclusion requirements.
3.8 Governing Documents. Issuer has delivered or made available to
Investor true, accurate and complete copies of its Articles of Incorporation and
Bylaws in effect as of the date hereof.
3.9 Subsidiaries. Except as set forth on Exhibit 22 to Issuer's Form
10-K for the fiscal year ended December 31, 1997, Issuer does not own, directly
or indirectly, any outstanding voting securities of or other interests in, and
does not control, any corporation, partnership, limited liability company, joint
venture or other business entity.
3.10 Financial Statements. Each of the balance sheets included in the
SEC Reports (including any related notes and schedules) fairly presents in all
material respects the consolidated financial position of Issuer and its
Subsidiaries as of its date, and each of the other financial statements included
in the SEC Reports (including any related notes and schedules) fairly presents
in all material respects the consolidated financial condition, results of
operations, cash flows, or other information therein of Issuer and its
Subsidiaries for the periods or as of the dates therein set forth in accordance
with GAAP consistently applied during the periods involved (except that the
interim reports are subject to normal recurring adjustments which might be
required as a result of year end audit and except as otherwise stated therein).
3.11 Changes Since December 31, 1997. Except as set forth in the SEC
Reports, since December 31, 1997, there has been no Material Adverse Change in
Issuer. Except as set forth in the SEC Reports or on Schedule 3.11 hereto, (a)
since December 31, 1997, there has not been (i) any direct or indirect
redemption, purchase or other acquisition by Issuer of any shares of Issuer's
capital stock or (ii) declaration, setting aside or payment of any dividend or
other distribution by Issuer in respect of its capital stock, or (iii) issuance
of any shares of capital stock of Issuer or any granting to any person of any
option to purchase or other right to acquire shares of capital stock of Issuer
other than pursuant to the Derivative Equity Documents, and (b) none of the
officers or directors of Issuer (or any of their spouses or children) has (i)
any direct or indirect investment or equity interest in, or power to control the
business affairs of, any manufacturer, supplier, lender or provider of services
or goods to Issuer, except for their interest in Issuer, (ii) any material
contractual relationship with Issuer, and (iii) has any direct or indirect
interest in any material right, property or asset which is owned or used by
Issuer in the conduct of its business.
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3.12 Environmental Matters. Except as set forth in the SEC Reports
or on Schedule 3.12 hereto:
(a) Issuer is and has at all times been in compliance with all
Environmental Laws (as defined below) governing its business,
operations, properties and assets, including, without limitation,
Environmental Laws with respect to discharges into the ground water,
surface water and soil, emissions into the ambient air, and generation,
accumulation, storage, treatment, transportation, labeling or disposal
of solid and hazardous waste materials and substances or process
by-products, in each case, for which failure to comply could have a
Material Adverse Effect on Issuer. Issuer is not currently liable for
any penalties, fines or forfeitures for failure to comply with any of
the foregoing, which penalty, fine or forfeiture could have a Material
Adverse Effect on Issuer. Issuer is in compliance with all notice,
record keeping and reporting requirements of all Environmental Laws,
and has complied with all informational requests or demands arising
under the Environmental Laws, where failure to comply could have a
Material Adverse Effect on Issuer.
(b) As used in this Agreement, "Environmental Laws" means all
federal, state or local laws, rules, regulations, orders or ordinances
or judicial or administrative interpretations thereof, any of which
govern (or purport to govern) or relate to air emissions, water
discharges, hazardous or toxic substances, solid or hazardous waste and
occupational health and safety, as any of these terms are or may be
defined in such laws, rules, regulations, orders, or ordinances, or
judicial or administrative interpretations thereof, including, without
limitation, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act,
as amended, by the Superfund Amendments and Reauthorization Act, the
Hazardous Materials Transportation Act, the Toxic Substances Control
Act, the Clean Air Act, the Clean Water Act and the Occupational Safety
and Health Act.
3.13 No Commissions. Issuer has not incurred any obligation for any
finder, broker or agent's fees or commissions in connection with the
transactions contemplated hereby or by the Option Certificate.
3.14 Voting Agreement. James H. Dahl, Gary D. Lemke, JoAnn Lemke,
Philip C. Smaby, Jerome T. Miner, Edgar E. Hetteen, Hannah Hetteen, Thomas R.
Karges, Leland T. Lynch, Karlin S. Symons, and R.E. "Teddy" Turner, IV have
entered into a voting agreement pursuant to which they have agreed to vote the
shares of Common Stock benefically owned by them, which aggregate 2,061,352
shares, in favor of approving this Agreement and the transactions contemplated
hereunder, a copy of which Voting Agreement is attached hereto as Exhibit C (the
"Voting Agreement").
3.15 Inapplicability of Section 302A.673 of Minnesota Business
Corporation Act. The Board of Directors of Issuer, together with a separate
committee of disinterested Directors of
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Issuer, have each approved the execution and delivery by Issuer of this
Agreement, the Warrant Certificate, and the Option Certificate, and the
consummation of the transactions contemplated by this Agreement, the Warrant
Certificate, and the Option Certificate, and the other transactions contemplated
hereby and thereby, and each such approval is sufficient to render inapplicable
to Investor and/or any affiliates or associates (as defined in Section 302A.673
of the Minnesota Business Corporation Act ("MBCA")) of Investor and/or all or
any combination of such persons the provisions of Section 302A.673 of MBCA that
restrict business combinations (as defined in Section 302A.673 of MBCA) between
an interested shareholder and Issuer.
3.16 Fairness Opinion. Issuer has received an opinion from Piper
Jaffray Inc. acceptable to its Board of Directors to the effect that the
transactions set forth in this Agreement, the Warrant Certificate and the Option
Certificate are fair from a financial point of view to the shareholders of
Issuer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INVESTOR
As a material inducement to Issuer entering into this Agreement and the
Option Certificate and issuing the Shares, the Warrant, and the Option, Investor
represents and warrants to Issuer as follows:
4.1 Corporate Status; Power and Authority. Investor is a corporation
duly organized, validly existing, and in good standing under the laws of
Delaware. Investor has the corporate power and authority to execute and deliver
and to perform its obligations under this Agreement and consummate the
transactions contemplated hereby. Investor has taken all necessary corporate
action to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby.
4.2 No Violation. The execution and delivery by Investor of this
Agreement, the consummation of the transactions contemplated hereby, and the
compliance by Investor with the terms and provisions hereof, will not result in
a default under (or give any other party the right, with the giving of notice or
the passage of time (or both), to declare a default or accelerate any obligation
under) or violate the Certificate of Incorporation or Bylaws of Investor or any
Contract to which Investor is a party or by which it or its properties or assets
are bound, or violate any Requirement of Law applicable to Investor, other than
such violations, conflicts, defaults or breaches which, individually and in the
aggregate, do not and will not have a Material Adverse Effect on Investor.
4.3 Consents/Approvals. Except for filing and approval under the HSR
Act, (a) no consents, filings, authorizations or actions of any Governmental
Authority are required for Investor's execution, delivery and performance of
this Agreement, and (b) no consent, approval, waiver or other actions by any
Person under any Contract to which Investor is a party or by which Investor or
any of his properties or assets are bound is required or necessary for the
execution,
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delivery and performance by Investor of this Agreement and the consummation of
the transactions contemplated hereby.
4.4 Enforceability. This Agreement has been duly executed and delivered
by Investor and constitutes a legal, valid and binding obligation of Investor,
enforceable against Investor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally and general equitable principles regardless of
whether enforceability is considered in a proceeding at law or in equity.
4.5 Investment Intent. Investor is acquiring the Shares, the Warrant,
and the Option for its own account and with no present intention of distributing
or selling such Shares, any interest in the Warrant or Warrant Shares acquired
upon exercise thereof, or any interest in the Option or Option Shares acquired
upon exercise thereof in violation of the Securities Act or any applicable state
securities law. Investor agrees that it will not sell or otherwise dispose of
any of the Shares, any interest in the Warrant or Warrant Shares acquired upon
exercise thereof, or any interest in the Option or Option Shares acquired upon
exercise thereof unless such sale or other disposition has been registered under
the Securities Act or, in the opinion of counsel to Investor satisfactory to
Issuer, is exempt from registration under the Securities Act and has been
registered or qualified or, in the opinion of such counsel, is exempt from
registration or qualification under applicable state securities laws. Investor
understands that the sale of the Shares, the Warrant, the Option, the Warrant
Shares, and the Option Shares, have not been registered under the Securities Act
by reason of their contemplated issuance in transactions exempt from the
registration and prospectus delivery requirements of the Securities Act pursuant
to Section 4(2) thereof, and that the reliance of Issuer on such exemption from
registration is predicated in part on the representations and warranties of
Investor. Investor acknowledges that pursuant to Section 1.2 a restrictive
legend consistent with the foregoing has been or will be placed on the
certificates for the Shares, on the Warrant Certificate, on the Option
Certificate, and on certificates for any Warrant Shares or Option Shares issued
upon exercise thereof.
4.6 No Commissions. Investor has not incurred any obligation for any
finder, broker, or agent's fees or commissions in connection with the
transactions contemplated hereby or by the Warrant Certificate or the Option
Certificate.
ARTICLE V
COVENANTS
5.1 Filings. Each of Investor and Issuer shall make on a prompt and
timely basis all governmental or regulatory notifications and filings required
to be made by it for the consummation of the transactions contemplated hereby.
5.2 Public Announcements. Except as required by law or the policies
or rules of any stock exchange (or the Nasdaq National Market) on which Issuer's
securities are listed or quoted
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as of the date hereof, the form and content of all press releases or other
public communications of any sort relating to the subject matter of this
Agreement, and the method of their release or publication thereof, shall be
subject to the prior approval of the parties hereto, which approval shall not be
unreasonably withheld or delayed.
5.3 Further Assurances. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
5.4 Cooperation. Issuer and Investor each agree to cooperate with the
other in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
Requirement of Law or the rules of any exchange on which the Common Stock is
traded or the Nasdaq National Market in connection with the transactions
contemplated by this Agreement and to use their respective reasonable best
efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions. Except as may be specifically
required hereunder, neither of the parties hereto or their respective Affiliates
shall be required to agree to take any action that in the reasonable opinion of
such party would result in or produce a Material Adverse Effect on such party.
5.5 Board of Directors. Issuer and Investor agree that concurrently
with the Closing, a meeting of the Board of Directors of Issuer shall be held,
and at that meeting, (a) the number of directors constituting such Board shall
be increased to ten (10), and (b) two (2) persons designated by Investor shall
be added to such Board. Issuer and Investor further agree that at any time
Investor's percentage interest in the outstanding Common Stock increases
(whether by exercise of all or a portion of the Option or the Warrant or other
purchase of Common Stock or by reduction in the number of outstanding shares of
Common Stock), at the next meeting of the Board of Directors, (x) one or more
existing Directors (other than the Directors designated by Investor), as
selected by a plurality of the Directors of Issuer, or if no such plurality
exists, then as selected by the Directors of Issuer designated by Investor,
shall resign as a Director of Issuer effective at such time, and (y) one or more
persons designated by Investor shall replace such resigning Director or
Directors on such Board, so that the ratio of Directors designated by Investor
to the total number of Directors on the Board shall be substantially equal to
the ratio of the number of shares of Common Stock owned by Investor to the total
number of issued and outstanding shares of Common Stock, provided that until
Investor owns a majority of the outstanding Common Stock, at no time shall
Investor have the right to increase the number of directors designated by
Investor to a number such that the ratio of that number to the total number of
directors is greater than Investor's percentage ownership of the outstanding
Common Stock of Issuer and provided further that the Directors designated by
Investor shall constitute a majority of the Board at such time as the Investor
owns a majority of outstanding shares of Common Stock.
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5.6 Access to Information. From the date hereof until the Closing,
Issuer shall (and shall cause its Subsidiaries and its and their directors,
officers, employees, auditors, counsel and agents to) afford Investor and its
employees, counsel and agents reasonable access at all reasonable times to
Issuer's properties, offices, and other facilities, to its officers and
employees and to all books and records, and shall furnish Investor with all
financial, operating and other data and information as may be reasonably
requested. No information provided to or obtained by Investor shall affect any
representation or warranty in this Agreement although Investor agrees to give
notice to Issuer of any such information which would constitute a breach of
Issuer's representations and warranties hereunder. Investor agrees to maintain
the confidentiality of all such information which is confidential and not to
disclose such information to any person other than its representatives and
advisors who need to know such information in connection with the transactions
and relationships contemplated hereby and by the Commercial Alliance Agreement;
provided, however, such restriction shall not apply to any information which is
(a) in the public domain prior to the time of disclosure, (b) obtained by
Investor from a third party that has independently obtained such information, or
(c) disclosed by or on behalf of Investor in connection with any action as
required by a court of competent jurisdiction or Governmental Authority.
5.7 Notification of Certain Matters. Each party hereto shall give
prompt notice to the other party hereto of the occurrence, or non-occurrence, of
any event which would be likely to cause any representation or warranty herein
to be untrue or inaccurate, or any covenant, condition or agreement herein not
to be complied with or satisfied.
5.8 Proxy Statement. As promptly as practicable after the execution of
this Agreement, Issuer shall prepare and file with the SEC, in compliance with
applicable law and regulations, a proxy statement relating to the meeting of
Issuer's shareholders to be held in connection with approving the transaction
contemplated hereby (the "Proxy Statement"), and shall use its best efforts to
have the Proxy Statement and/or any amendment or supplement thereto cleared by
the SEC. Investor shall furnish all information concerning itself to Issuer as
Issuer may reasonably request in connection with such actions and the
preparation of the Proxy Statement. As promptly as practicable after clearance
by the SEC, Issuer shall mail the Proxy Statement to its shareholders. Unless
there is a Superior Proposal (as defined herein) outstanding and the Issuer's
Board of Directors determines, in good faith and after consulting with its
outside legal counsel that doing so would be reasonably likely to constitute a
breach of its fiduciary duty to the Issuer's shareholders, the Proxy Statement
shall include the recommendation of the Board of Directors of Issuer to the
shareholders of Issuer in favor of approving this Agreement and the transactions
contemplated hereby.
5.9 Shareholders' Meeting; Voting Agreement. Issuer shall call and hold
a special meeting of its shareholders as promptly as practicable for the purpose
of voting upon the approval of this Agreement and the transactions contemplated
hereby. Issuer shall comply with all Requirements of Law applicable to such
meeting. Issuer shall use its best efforts to solicit from its shareholders
proxies in favor of approval of this Agreement and the transactions
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contemplated hereby, and shall take all other action necessary or advisable to
obtain the vote of its shareholders required by the requirements of the National
Association of Securities, Inc. to obtain such approvals, unless there is a
Superior Proposal (as defined herein) outstanding. In connection with the
foregoing, Issuer shall cooperate and consult with Investor. Issuer will not
take a position before any court or other tribunal, or otherwise, that the
voting rights of the Shares, the Warrant Shares, or the Option Shares or the
shares subject to the Voting Agreement are in any way limited, reduced or
eliminated pursuant to the provisions of Section 302A.671 of the MBCA.
5.10 No Solicitation; Competing Offers. Neither Issuer nor any of its
Subsidiaries, nor any of their respective officers, directors, employees,
representatives, agents or Affiliates, shall, directly or indirectly, encourage,
solicit, initiate, or participate in any way in any discussion or negotiations
with, or provide any information to, or afford any access to the properties,
offices, and other facilities, to the officers and employees, or to the books
and records, of Issuer or any of its Subsidiaries, or otherwise assist,
facilitate or encourage, any Person concerning any Competing Transaction.
Notwithstanding the provisions of the prior sentence, the Issuer may, in
response to an unsolicited offer with respect to a Competing Transaction which
the Issuer's Board of Directors determines, in good faith and after consultation
with its independent financial advisor, would result (if consummated pursuant to
its terms) in a Competing Transaction more favorable to the Issuer's
shareholders than the transactions contemplated hereby (any such offer or
proposal being referred to as a "Superior Proposal") furnish (subject to the
execution of a confidentiality agreement substantially similar to the
confidentiality provisions applicable between Issuer and Investor), confidential
or non-public information to a financially capable corporation, partnership,
person or other entity or group (a "Potential Acquirer") and negotiate with such
Potential Acquirer if the Board of Directors of the Issuer, after consulting
with its outside legal counsel, determines in good faith that the failure to
provide such confidential or non-public information to or negotiate with such
Potential Acquirer would be reasonably likely to constitute a breach of its
fiduciary duty to the Issuer's shareholders. Issuer shall immediately
communicate to Investor the terms of any proposal, offer, discussion,
negotiation or inquiry relating to a Competing Transaction and the identity of
the party making such proposal, offer or inquiry which Issuer may receive in
respect of any such Competing Transaction (which shall mean that any such
communication shall be delivered no less promptly than by telephone within 24
hours of Issuer's receipt of any such proposal, offer or inquiry, followed by
written notice by facsimile and overnight delivery), or Issuer's receipt of any
request for information from the SEC or any other Governmental Authority with
respect to any Competing Transaction. Unless there is a Superior Proposal
outstanding and the Issuer's Board of Directors determines, in good faith and
after consulting with its outside legal counsel that failure to do so would be
reasonably likely to constitute a breach of its fiduciary duty to the Issuer's
shareholders, (i) the Board of Directors of Issuer shall not modify or withdraw
its approval or recommendation of this Agreement, (ii) shall refrain from
recommending approval of or otherwise taking a position with respect to a
Competing Transaction and, (iii) Issuer shall refrain from presenting an offer
for a Competing Transaction to Issuer's shareholders.
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5.11 HSR Act and Other Actions. Each of the parties hereto shall (i)
make promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act, with respect to the transactions contemplated
hereby, and (ii) use its reasonable best efforts to take, or cause to be taken,
all appropriate actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated herein, including, without limitation,
using its reasonable best efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Authorities
and parties to contracts with Issuer and its Subsidiaries as are necessary for
the consummation of the transactions contemplated hereby. Investor shall make
payment of the applicable HSR Act filing fee. The parties also agree to use
their reasonable best efforts to defend all lawsuits or other legal proceedings
challenging this Agreement, the Warrant Certificate, or the Option Certificate
or the consummation of the transactions contemplated hereby or thereby and to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions
contemplated.
5.12 Conduct of Issuer's Business Pending the Closing. Issuer covenants
and agrees that, between the date of this Agreement and the Closing, unless
Investor shall have consented in writing (such consent not to be unreasonably
withheld), the businesses of each of Issuer and its Subsidiaries shall in all
material respects be conducted only in, and each of Issuer and its Subsidiaries
shall not take any material action except in, the ordinary course of business,
consistent with past practice; and each of Issuer and its Subsidiaries shall use
its best efforts to preserve intact is business organization, to keep available
the services of its and its Subsidiaries' current officers, employees and
consultants and to preserve its and its Subsidiaries' present relationships with
customers, suppliers and other persons with which it or any of its Subsidiaries
has significant business relations. By way of amplification and not limitation,
except as contemplated by this Agreement, neither Issuer nor any of its
Subsidiaries shall, between the date of this Agreement and the Closing, directly
or indirectly do or propose or agree to do any of the following without the
prior written consent of Investor, which consent shall not unreasonably be
withheld:
(a) amend or otherwise change the Articles of Incorporation
or Bylaws or equivalent organizational documents;
(b) except pursuant to Issuer's Option plans, issue, sell,
pledge, dispose of, encumber, or, authorize the issuance, sale, pledge,
disposition, grant or encumbrance of: (i) any shares of capital stock
of any class of it or its Subsidiaries, or any options, warrants,
convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest, of it or
any of its Subsidiaries, or (ii) any assets, tangible or intangible, of
Issuer or any of its Subsidiaries, except for the grant of options
pursuant to Issuer's stock option plans or the exercise or conversion
of options, warrants or other similar rights issued pursuant to or
contained in the Derivative Equity Documents in effect on the date of
this Agreement;
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(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, for cash or
shares of stock, by merger, consolidation, or acquisition of stock or
assets) any interest in any corporation, partnership, limited liability
company, or other business organization or division thereof or any
assets, or make any investment (other than in the ordinary course of
business) either by purchase of stock or securities, contributions of
capital (other than to wholly owned Subsidiaries) or property transfer,
or, except in the ordinary course of business, purchase any property or
assets of any other Person, (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations
of any person, or make any loans or advances, except in the ordinary
course of business and consistent with past practice, or (iii) enter
into any contract or agreement other than in the ordinary course of
business;
(f) increase the compensation payable or to become payable to
its officers or employees, except for increases in the ordinary course
of business consistent with past practices, or, except as presently
bound to do, grant any severance or termination pay to, or enter into
any employment or severance agreement with, any director, officer or
other employee of it or any of its Subsidiaries, or establish, adopt,
enter into or amend in any material respect or take any action to
accelerate any rights or benefits under any collective bargaining,
bonus, profit sharing, trust, compensation, stock option, restricted
stock, pension retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
(g) take any action other than in the ordinary course of
business and in a manner consistent with past practice with respect to
accounting policies or procedures;
(h) pay, discharge or satisfy any existing material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with
past practice or liabilities reflected or reserved against in the
consolidated financial statements of Issuer and its Subsidiaries or
incurred after the date hereof in the ordinary course of business; or
(i) agree, in writing or otherwise, to take any of the
foregoing actions or any action which would make any representation or
warranty in Article III untrue or incorrect in any material respect.
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Notwithstanding the foregoing, Investor acknowledges that Issuer may
seek to induce the holders of the Debentures to convert such Debentures and
agrees that such action will not violate any of the representations, warranties
or covenants contained herein, provided that no more than 641,812 shares are
issued upon conversion.
5.13 Conduct of Issuer's Business Following the Closing. Issuer
covenants and agrees that, between the date of the Closing and the termination
of the Warrant, unless such action shall be approved by at least one-half of the
Directors of Issuer designated by Investor, Issuer shall not directly or
indirectly do or propose or agree to do any of the actions specified in clauses
(a), (b), (c), (d) or (e) of Section 5.12 above other than in the ordinary
course of business; provided, however, Issuer shall be entitled to and shall, to
the extent reasonable, use the net proceeds received upon exercise of all or any
portion of the Warrant to repurchases of shares of its Common Stock.
5.14 First Offer Rights and Additional Warrants.
(a) Except for the issuance of (i) Common Stock pursuant to the
exercise or conversion of currently outstanding options, warrants or other
similar rights issued pursuant to or contained in the Derivative Equity
Documents as of the date of this Agreement, (ii) Common Stock upon any partial
or full exercise of the Warrant or the Option, (iii) options to acquire up to an
additional 500,000 shares of Common Stock which may be granted to employees,
directors or consultants of the Issuer and (iv) Common Stock upon exercise of
the options referred to in clause (iii) of this sentence ("Permitted
Issuances"), if Issuer authorizes the issuance or sale of any shares of Common
Stock or other voting securities, or any securities convertible into or
containing options or rights to acquire any shares of Common Stock or other
voting securities, Issuer shall first offer to sell to Investor all of such
stock or securities. Investor shall be entitled to purchase such stock or
securities at the most favorable price and on the most favorable terms as such
stock or securities are to be offered to any other Persons.
(b) In order to exercise its purchase rights hereunder, Investor must
within 30 days after receipt of written notice from Issuer describing in
reasonable detail the stock or securities being offered, the purchase price
thereof, and the payment terms thereof deliver a written notice to Issuer
describing its election hereunder.
(c) Upon the expiration of the 30-day offering period described above,
Issuer shall be entitled to sell any such stock or securities which Investor has
not elected to purchase during the 90 days following such expiration on terms
and conditions no more favorable to the purchasers thereof than those offered to
Investor.
(d) Upon a sale, grant or issuance of such stock, options or other
securities to a purchaser or optionee other than Investor, and other than
Permitted Issuances, Issuer shall, concurrent with the consummation of such
sale, grant or issuance, issue to Investor a stock purchase warrant on
substantially the same terms as the Warrant (other than the provisions of
Article V thereof,
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provided that such warrant shall expire upon final expiration of the Warrant) at
an exercise price per share equal to the exercise or purchase price applicable
to the stock, options or other securities sold, granted or issued to such other
purchaser or optionee. Such stock purchase warrant to Investor shall be
exercisable for the number of shares of Common Stock sold, granted or issued to
such other purchaser and/or the maximum number of shares of Common Stock into
which such stock, options or other securities sold or granted to such purchaser
or optionee are exercisable or convertible. Such stock purchase warrant shall be
issued immediately upon issuance of the stock, options or other securities to
the other purchaser or optionee except in the case of employee, director or
consultant options and other than Permitted Issuances, in which case the stock
purchase warrant shall be issued in January on a weighted average price basis
with respect to all options granted in the preceding calendar year.
(e) Any stock, options or securities offered or sold by Issuer after
such 90-day period must be reoffered to Investor pursuant to the terms of this
Section 5.14.
(f) Notwithstanding the provisions of paragraph (a) hereof, nothing
contained herein shall require Issuer to offer to sell shares of Common Stock to
Investor in connection with (i) increases in the number of shares of Common
Stock available for issuance under the 1994, 1996 or 1998 Plans, (ii) Issuer
adopting additional compensatory option plans covering employees, directors or
consultants of Issuer, (iii) Issuer issuing such increased number of options,
awards or other grants or additional options to employees or directors of
Issuer, or (iv) Issuer issuing shares of Common Stock upon exercise of such
options, awards or other grants; provided however, that in connection with any
such grant of options or issuance of Common Stock, the Issuer shall issue to
Investor a stock purchase warrant pursuant to clause (d) of this Section 5.14.
ARTICLE VI
DEFINITIONS
6.1 Defined Terms. As used herein the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
hereof.
"Articles of Incorporation" means Issuer's Second Restated Articles of
Incorporation, as the same may be or have been supplemented, amended or restated
from time to time.
"Bylaws" means Issuer's Restated Bylaws, as the same may be or have
been supplemented, amended or restated from time to time.
"Closing" has the meaning specified in Section 2.1 of this Agreement.
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"Commercial Agreements" has the meaning specified in Section 8.2(c)
of this Agreement.
"Commercial Alliance Agreement" has the meaning specified in the
Recitals to this Agreement.
"Common Stock" has the meaning specified in the Recitals to this
Agreement.
"Competing Transaction" means a proposed merger, consolidation, share
exchange, business combination, recapitalization, liquidation, or similar
transaction involving Issuer or its shareholders, as applicable, a direct or
indirect sale of all or any significant portion of the assets or business of
Issuer or any of its Subsidiaries or a direct or indirect sale or issuance of
any material portion of the capital stock of Issuer.
"Contract" means any indenture, lease, sublease, loan agreement,
mortgage, note, restriction, commitment, obligation or other contract, agreement
or instrument.
"Debentures" has the meaning specified in Section 3.6 of this
Agreement.
"Derivative Equity Documents" has the meaning specified in Section 3.6
of this Agreement.
"Environmental Laws" has the meaning specified in Section 3.12(b) of
this Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any entity or official exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"HSR Act" has the meaning specified in Section 3.5 of this Agreement.
"Indemnified Party" has the meaning specified in Section 7.2 of this
Agreement.
"Indemnifying Party" has the meaning specified in Section 7.1 of this
Agreement.
"Issuer" means A.S.V., Inc., a Minnesota corporation.
"Investor" means Caterpillar Inc., a Delaware corporation.
"Leo Partners Warrant" has the meaning specified in Section 3.6 of this
Agreement.
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"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give a financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction in connection with such mortgage, pledge, security interest,
encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a change (or effect), in
the condition (financial or otherwise), properties, assets, liabilities, rights,
obligations, operations, business or prospects which change (or effect)
individually or in the aggregate with other such changes (or effects) is
materially adverse to such condition, properties, assets, liabilities, rights,
obligations, operations, business or prospects.
"MBCA" has the meaning specified in Section 3.15 of this Agreement.
"1994 Plan" has the meaning specified in Section 3.6 of this Agreement.
"1996 Plan" has the meaning specified in Section 3.6 of this Agreement.
"1998 Plan" has the meaning specified in Section 3.6 of this Agreement.
"Option" has the meaning specified in Section 1.1 of this Agreement.
"Option Certificate" has the meaning specified in Section 1.1 of this
Agreement.
"Option Shares" has the meaning specified in Section 1.2 of this
Agreement.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, estate, trust,
unincorporated association, joint venture, Governmental Authority or other
entity, of whatever nature.
"Proxy Statement" has the meaning specified in Section 5.8 of this
Agreement.
"Purchase Price" has the meaning specified in Section 1.1 of this
Agreement.
"Requirement of Law" means as to any Person, the articles of
incorporation, by-laws or other organizational or governing documents of such
person, and any domestic or foreign and federal, state or local law, rule,
regulation, statute or ordinance or determination of any arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its properties or to which such Person or any of its property
is subject.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" has the meaning specified in Section 3.7 of this
Agreement.
18
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning specified in Section 1.1 of this Agreement.
"Subsidiary" means as to any Person, a corporation of which more than
50% of the outstanding capital stock having full voting power is at the time
directly or indirectly owned or controlled by such Person.
"Superior Proposal" has the meaning specified in Section 5.10 of this
Agreement.
"Voting Agreement" has the meaning specified in Section 3.14 of this
Agreement.
"Warrant" has the meaning specified in Section 1.1 of this Agreement.
"Warrant Certificate" has the meaning specified in Section 1.1 of this
Agreement.
"Warrant Shares" has the meaning specified in Section 1.2 of this
Agreement.
6.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined meanings
when used in any certificates, reports or other documents made or delivered
pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with this
Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable.
(d) As used herein, the neuter gender shall also denote the masculine
and feminine, and the masculine gender shall also denote the neuter and
feminine, where the context so permits.
6.3 The words "hereof", "herein" and "hereunder", and words of similar
import, when used in this Agreement shall refer to this Agreement as a whole
(including any Exhibits or Schedules hereto) and not to any particular provision
of this Agreement.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification Generally. Issuer, on the one hand, and Investor,
on the other hand (each an "Indemnifying Party"), shall indemnify the other from
and against any and all losses,
19
damages, liabilities, claims, charges, actions, proceedings, demands, judgments,
settlement costs and expenses of any nature whatsoever (including, without
limitation, attorneys' fees and expenses) or deficiencies resulting from any
breach of a representation, warranty or covenant by the Indemnifying Party and
all claims, charges, actions or proceedings incident to or arising out of the
foregoing.
7.2 Indemnification Procedures. Each person entitled to indemnification
under this Section (an "Indemnified Party") shall give notice as promptly as
reasonably practicable to each Indemnifying Party required to provide
indemnification under this Article VII of any action commenced against or by it
in respect of which indemnity may be sought hereunder, but failure to so notify
an Indemnifying Party shall not relieve such Indemnifying Party from any
liability that it may have otherwise than on account of this indemnity agreement
so long as such failure shall not have materially prejudiced the position of the
Indemnifying Party. Upon such notification, the Indemnifying Party shall assume
the defense of such action if it is a claim brought by a third party. If and
after such assumption the Indemnified Party shall not be entitled to
reimbursement of any expenses incurred by it in connection with such action
except as described below. In any such action, any Indemnified Party shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the contrary or
(ii) the named parties in any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing or conflicting interests between them. The Indemnifying
Party shall not be liable for any settlement of any proceeding effected without
its written consent (which shall not be unreasonably withheld or delayed by such
Indemnifying party), but if settled with such consent or if there be final
judgment for the plaintiff, the Indemnifying Party shall indemnify the
Indemnified Party from and against any loss, damage or liability by reason of
such settlement or judgment.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to Obligation of Each Party to Effect the Closing. The
respective obligations of each party to effect the Closing shall be subject to
the fulfillment of the following conditions any and all of which may be waived,
in whole or in part, to the extent permitted by applicable law:
(a) Shareholder Approval. This Agreement and the transactions
contemplated hereunder shall have been approved and adopted by the vote
of the holders of a majority of the shares of Common Stock voting on
such matters in accordance with the Articles of Incorporation, Bylaws
and the MBCA;
(b) No Order. No governmental authority or other agency or
commission or federal or state court of competent jurisdiction shall
have enacted, issued, promulgated,
20
enforced or entered any statute, rule, regulation, executive order,
decree, injunction, or other order (whether temporary, preliminary or
permanent) which is in effect and which materially restricts, prevents
or prohibits consummation of the Closing or any transaction
contemplated by this Agreement; provided, however, that the parties
shall use their reasonable best efforts to cause any such decree,
judgment, injunction or other order to be vacated or lifted; and
(c) Hart-Scott-Rodino Act. Any waiting period (and any
extension thereof) applicable to the consummation of the Closing under
the HSR Act shall have expired or been terminated.
8.2 Additional Conditions to the Obligations of Investor. The
obligation of Investor to proceed with the Closing is also subject to the
following conditions any and all of which may be waived, in whole or in part, to
the extent permitted by applicable law:
(a) Representations and Warranties. Each of the
representations and warranties of Issuer contained in this Agreement
shall be true and correct as of the Closing as though made on and as of
the Closing, except (i) for changes specifically permitted by this
Agreement, and (ii) that those representations and warranties which
address matters only as of a particular date shall remain true and
correct as of such date, except in any case for such failures to be
true and correct which would not, individually or in the aggregate,
have a Material Adverse Effect on Issuer. Investor shall have received
a certificate of the chief executive officer and chief financial
officer of Issuer to such effect;
(b) Agreement and Covenants. Issuer shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Closing. Investor shall have received a certificate of the
chief executive officer and chief financial officer of Issuer to such
effect; and
(c) Commercial Agreements. Issuer shall have executed the
Marketing Agreement and Management Services Agreement contemplated by
the Commercial Alliance Agreement and the Exhibits thereto
(collectively, the "Commercial Agreements") each between Issuer and
Investor substantially in the forms attached to the Commercial Alliance
Agreement and the Marketing Agreement.
8.3 Additional Conditions to the Obligations of Issuer. The obligation
of Issuer to proceed with the Closing is also subject to the following
conditions any and all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) Representations and Warranties. Each of the
representations and warranties of Investor contained in this Agreement
shall be true and correct as of the Closing as though made on and as of
the Closing, except (i) for changes specifically permitted by
21
this Agreement, and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true
and correct as of such date, except in any case for such failures to be
true and correct which would not, individually or in the aggregate,
have a Material Adverse Effect on Investor. Issuer shall have received
a certificate of an authorized officer of Investor to such effect;
(b) Agreement and Covenants. Investor shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Closing. Issuer shall have received a certificate of an
authorized officer of Investor to such effect;
(c) Commercial Agreements. Investor shall have executed
each of the Commercial Agreements; and
(d) Fairness Opinion Bring Down. Issuer shall have received
the updated fairness opinion of Piper Jaffray, Inc., dated the date of
the Proxy Statement, to the effect set forth in Section 3.16.
ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission (provided sender receives a return facsimile
acknowledging receipt of the notice), to the following addresses and facsimile
numbers (or to such other addresses or facsimile numbers which such party shall
designate in writing to the other party):
(a) if to Issuer to: A.S.V., Inc.
840 Lily Lane
Grand Rapids, Minnesota 55744
Attention: Mr. Gary D. Lemke
Fax: (218) 326-5579
Telephone:(218) 327-3434
with a copy to: Dorsey & Whitney, LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, Minnesota 55402-1498
Attention: Amy E. Ayotte
Fax: (612) 340-8738
Email:
Telephone:(612) 340-6323
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(b) if to Investor to: Caterpillar Inc.
100 Northeast Adams Street
Peoria, Illinois 61629-2495
Attention: Richard A. Benson, Vice
President, Diversified Products Division
Fax: (309) 675-4777
Email: Benson_Richard_A@cat.com
Telephone:(309) 675-1000
with a copy to: Caterpillar Inc.
100 Northeast Adams Street
Peoria, Illinois 61629-2495
Attention: Henry T. Ames, Assistant
General Counsel
Telephone: (309) 675-1000
Email: Ames_Hank_T@cat.com
Facsimile: (309) 675-6620
with a copy to: McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Attention: Thomas J. Murphy
Fax: (312) 984-3669
Email:Telephone: (312) 372-2000
9.2 Survival. Notwithstanding any knowledge of facts determined or
determinable by Investor or Issuer by investigation, Investor and Issuer shall
have the right to fully rely on the representations, warranties, covenants and
agreements of Issuer contained in this Agreement or in any other documents or
papers delivered in connection herewith. Each representation, warranty, covenant
and agreement of the parties set forth in this Agreement is independent of each
other representation, warranty, covenant and agreement. Each representation and
warranty made by any party in this Agreement shall survive the Closing for a
period of two years.
9.3 Remedies.
(a) Each of Investor and Issuer acknowledge that the other party would
not have an adequate remedy at law for money damages in the event that any of
the covenants or agreements of such party in this Agreement was not performed in
accordance with its terms, and it is therefore agreed that each of Investor and
Issuer in addition to and without limiting any other remedy or right such party
may have, shall have the right to an injunction or other equitable relief in any
court of competent jurisdiction, enjoining any such breach and enforcing
specifically the terms and provisions hereof, and each of Investor and Issuer
hereby waive any and all defenses
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such party may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief.
(b) All rights, powers and remedies under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and not
alternative, and the exercise or beginning of the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
9.4 Entire Agreement. This Agreement and the Commercial Alliance
Agreement (including the Exhibits and Schedules attached hereto and thereto),
the Option Certificate, and the documents to be delivered at the Closing
pursuant hereto, contain the entire understanding of the parties in respect of
its subject matter and supersede all prior agreements and understandings between
or among the parties with respect to such subject matter. The Exhibits and
Schedules hereto constitute a part hereof as though set forth in full above.
9.5 Expenses; Taxes. Except as otherwise provided in this Agreement,
the parties shall pay their own fees and expenses, including their own counsel
fees, incurred in connection with this Agreement or any transaction contemplated
hereby. Any sales tax, stamp, duty, deed transfer or other tax (except taxes
based on the income of Investor) arising out of the sale of the Shares, the
Warrant, or the Option by Issuer to Investor, the issuance of Warrant Shares
upon exercise of the Warrant, the issuance of Option Shares upon exercise of the
Option, and the consummation of the transactions contemplated by this Agreement,
the Warrant Certificate and the Option Certificate shall be paid by Issuer.
9.6 Amendment; Waiver. Each of this Agreement, the Warrant Certificate
and the Option Certificate may not be modified, amended, supplemented, canceled
or discharged, except by written instrument executed by both parties. No failure
to exercise, and no delay in exercising, any right, power or privilege under
each of this Agreement, the Warrant Certificate and the Option Certificate shall
operate as a waiver, nor shall any single or partial exercise of any right,
power or privilege hereunder or thereunder preclude the exercise of any other
right, power or privilege. No waiver of any breach of any provision hereunder or
thereunder shall be deemed to be a waiver of any preceding or succeeding breach
of the same or any other provision, nor shall any waiver be implied from any
course of dealing between the parties. No extension of time for performance of
any obligations or other acts hereunder, thereunder, or under any other
agreement shall be deemed to be an extension of the time for performance of any
other obligations or any other acts.
9.7 Binding Effect; Assignment. The rights and obligations of this
Agreement, the Warrant Certificate and the Option Certificate shall bind and
inure to the benefit of the parties and their respective successors and legal
assigns. The rights and obligations of this Agreement may not be assigned by any
party without the prior written consent of the other party.
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9.8 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 and the same instrument.
9.9 Headings. The headings contained in this Agreement are for
convenience of reference only and are not to be given any legal effect and shall
not affect the meaning or interpretation of this Agreement.
9.10 Governing Law; Interpretation. This Agreement shall be construed
in accordance with and governed for all purposes by the laws of the State of
Minnesota applicable to contracts executed and to be wholly performed within
such State.
9.11 Severability. The parties stipulate that the terms and provisions
of this Agreement, the Warrant Certificate and the Option Certificate are fair
and reasonable as of the date hereof. However, if any provision of this
Agreement, the Warrant Certificate or the Option Certificate shall be determined
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement, the Warrant Certificate or the Option Certificate, as applicable,
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated. If, moreover, any of those provisions shall for any reason be
determined by a court of competent jurisdiction to be unenforceable because
excessively broad or vague as to duration, geographical scope, activity or
subject, it shall be construed by limiting, reducing or defining it, so as to be
enforceable.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed and delivered as of the day and year
first above written.
A.S.V., INC.
By: /s/ Gary D. Lemke
--------------------------------
Name: Gary D. Lemke
Title: President
CATERPILLAR INC.
By: /s/ Richard A. Benson
--------------------------------
Name: Richard A. Benson
Title: Vice President
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