Exhibit 2(e)
COMMERCIAL ALLIANCE AGREEMENT
This Agreement, dated October 14, 1998 is between A.S.V., Inc., a
Minnesota corporation with a principal place of business at 840 Lily Lane, Grand
Rapids, Minnesota 55744 ("ASV") and Caterpillar Inc., a Delaware corporation
with a principal place of business at 100 Northeast Adams, Peoria, Illinois
61629 ("Caterpillar").
WHEREAS, ASV is engaged in the design, manufacture and sale of
all-terrain rubber tracked vehicles;
WHEREAS, Caterpillar is a manufacturer of earthmoving and construction
equipment, which it distributes through its worldwide network of independent
dealers;
WHEREAS, pursuant to that certain Securities Purchase Agreement of even
date herewith ("SPA") between the parties, Caterpillar has agreed to purchase an
equity interest in ASV and ASV has granted Caterpillar a warrant to purchase a
controlling interest in ASV;
WHEREAS, ASV and Caterpillar also wish to form a commercial alliance
that will, among other things, enhance sales of ASV's products by Caterpillar
granting ASV access to Caterpillar's distribution system and to Caterpillar's
components for incororation in ASV's products, ASV granting Caterpillar access
to ASV's technology and components for incorporation in Caterpillar's products
and establishing a framework for joint development of new agricultural equipment
products;
NOW, THEREFORE, the parties agree as follows:
PART I
SPA AND MARKETING AGREEMENT
1. This Agreement shall enter into effect conditioned upon and at the
time of the closing of the SPA (as defined therein) (the "Closing"), except for
Sections 11 through and including 23, which shall be effective as of the date
hereof.
2. At the Closing, ASV and Caterpillar shall enter into a Marketing
Agreement in the form attached hereto as EXHIBIT A.
PART II
OTHER AGREEMENTS
3. As soon as practicable after the Closing, Caterpillar and ASV shall
negotiate in good faith to reach and execute Service Agreements as follows:
3.1. Caterpillar will offer to ASV financial services, via
Caterpillar's wholly-owned finance subsidiary, Caterpillar Financial
Services Corporation. "Financial
services" shall include, without limitation, customer financing and
dealer rental fleet financing.
3.2 Caterpillar will offer to ASV logistics services, via
Caterpillar's wholly-owned logistics subsidiary, Caterpillar Logistics
Services, Inc. "Logistics services" shall include parts warehousing,
inventory management and distribution services to support ASV's
products on a worldwide basis.
3.3 Caterpillar's defense and federal products group will offer
its services in promoting sales of ASV's products to governmental
bodies worldwide.
3.4 If the services offered by Caterpillar are competitive, from
a total-value point of view, with similar services offered by other
service providers, ASV will utilize such services, working directly
with the relevant Caterpillar subsidiary or division.
4. As soon as practicable after the Closing, Caterpillar and ASV shall
negotiate in good faith to reach and execute a Supply Agreement (Caterpillar to
ASV) as follows:
4.1 Caterpillar will offer to supply Caterpillar components to
ASV for incorporation in ASV's products, including without limitation,
diesel engines.
4.2 Caterpillar will use its best reasonable efforts to ensure
that the terms of Caterpillar's offers are competitive, from a
total-value point of view, with the terms offered by other
manufacturers of similar quality components.
4.3 If the terms of Caterpillar's offer to supply are
competitive, from a total-value point of view, with the terms offered
by other component suppliers and the relevant Caterpillar components
may be installed on ASV's products without undue expense, ASV will
contract with Caterpillar to purchase its requirements for such
components from Caterpillar.
4.4 The term of the Supply Agreement shall be the shorter of (i)
ten years from the Closing or (ii) the final expiration of the Warrant
as defined in the SPA.
5. As soon as practicable after the Closing, Caterpillar and ASV shall
negotiate in good faith to reach and execute a Supply Agreement (ASV to
Caterpillar) as follows:
5.1 ASV will offer to supply ASV components, including without
limitation, suspension systems, to Caterpillar for incorporation in
Caterpillar's products that do not compete directly with ASV products.
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5.2 If Caterpillar decides in its sole discretion to purchase ASV
components, Caterpillar will contract with ASV to purchase some or all
of its requirements for such components from ASV.
5.3 The term of the Supply Agreement shall be the shorter of (i)
ten years from the Closing of the SPA or (ii) the final expiration of
the Warrant as defined in the SPA.
5.4 To the extent it is or becomes economically impractical for
ASV to supply such components, ASV will offer to license its related
intellectual property rights (including patents and know-how) to
Caterpillar to make, or have made, those components in accordance with
the license agreement described in Section 6.
6. As soon as practicable after the Closing, Caterpillar and ASV shall
negotiate in good faith to reach and execute a Technology License Agreement (ASV
to Caterpillar) as follows:
6.1 Subject to ASV's right to supply components as described in
Section 5, ASV will offer to license Caterpillar, on an exclusive
(except as to ASV) and royalty bearing basis, to use ASV's proprietary
patents and know-how relating to all-terrain rubber track vehicles in
the design, manufacture, use and sale of Caterpillar's products that
do not compete directly with ASV's products.
6.2 The term of the Technology License Agreement shall be the
shorter of (i) ten years from the Closing or (ii) the final expiration
of the Warrant as defined in the SPA.
7. As soon as practicable after the Closing, Caterpillar and ASV shall
negotiate in good faith to reach and execute a Joint Venture Agreement on the
following basic terms:
7.1 ASV and Caterpillar shall establish a 50-50 joint venture
company ("Newco") as a Delaware Limited Liability Company.
7.2 The site of Newco operations shall be Grand Rapids,
Minnesota.
7.3 The purpose of Newco shall be to design and develop a line of
agricultural tractors in the 30-125 hp range utilizing key aspects of
the parties' respective technology and know-how.
7.4 Both ASV and Caterpillar shall provide Newco with a
technological base by licensing or assigning mutually agreed aspects
of their respective proprietary information and know-how.
7.5 Both ASV and Caterpillar shall second mutually agreed
personnel to Newco.
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7.6 Both ASV and Caterpillar shall sell parts and components to
Newco at market-based prices.
7.7 Products designed and developed by Newco shall be marketed
and supported exclusively under the Caterpillar name through
Caterpillar dealers.
8. At the Closing, Caterpillar and ASV shall execute a Management
Services Agreement in the form attached hereto as Exhibit B.
9. All agreements referred to above in Part II shall be hereinafter
referred to as "Other Agreements".
PART III
TERM AND TERMINATION
10. Unless earlier terminated by mutual agreement of the parties or
pursuant to sub-sections 10.1 and 10.2 below, this Agreement shall remain in
effect until the last of the Other Agreements has been executed.
10.1 If either party fails to perform this Agreement in any
material respect (and does not remedy such failure to the complete
satisfaction of the non-defaulting party, within sixty (60) days after
written notice thereof has been sent to the other party) or becomes
insolvent, bankrupt or consents to the appointment of a trustee or
receiver, or if any trustee or receiver is appointed for the greater
part of either party's properties without the consent of that party and
such trustee or receiver is not discharged within sixty (60) days, or
if any bankruptcy, reorganization, arrangement or liquidation
proceedings are instituted by either party or if instituted against
either party are consented to by it or permitted to remain undismissed
for sixty (60) days, or if either party's shares, management, ownership
or substantially all of either party's property is confiscated,
nationalized, expropriated or otherwise taken by any government action,
then, in such event, the other party may terminate this Agreement
immediately upon written notice.
10.2 In the event of any Change in Control of ASV (as defined
below), Caterpillar shall have the right to terminate this Agreement
effective immediately.
For purposes of this Section 10.2, "Change in Control" shall mean,
except pursuant to the terms of the SPA and the Warrant or with the
prior written consent of Caterpillar:
(a) The acquisition by any third party or group of
parties acting in concert of at least thirty percent (30%) of
the outstanding shares of common stock of ASV; or
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(b) A change of the majority of the directors of ASV
occurring in a period of less than one year, excluding, to the
extent no solicitation in opposition has theretofore been
announced or commenced, changes in directors resulting from
the election of directors at the next regularly scheduled
annual meeting of ASV's shareholders; or
(c) The sale, exchange, transfer or other disposition
to a third party of all or substantially all of the assets of
ASV.
PART IV
DEFINITIONS
11. In this Agreement, the following terms shall be defined as follows:
11.1 "Affiliate" means any person (individual, corporation,
partnership, limited liability company or other entity) that directly
or indirectly controls, is under common control of or is controlled by
either party to this Agreement. "Control" means the ownership, direct
or indirect, of fifty percent (50%) or more of the voting shares or
capital of such person.
11.2 "Confidential Information" means all trade secrets,
confidential knowledge, and proprietary data of any kind or nature
whatsoever relating to this Agreement, or the businesses of either
party and its Affiliates. Confidential Information also shall include
any information prepared or developed by a party in connection with
this Agreement, which reflects, interprets, evaluates, includes or is
derived from the Confidential Information of another party.
Confidential Information shall include, but not be limited to,
technical specifications, diagrams, discoveries, economic models, pro
forma and other financial information, designs, business opportunities,
cost and pricing data, records, customer lists, and engineering,
manufacturing, and marketing know-how. Confidential Information does
not include information which (i) was generally known or available to
the public at the time of its disclosure hereunder, or which after such
disclosure became generally known or available to the public, provided
that such disclosure was made or occurred through no fault of the
Receiving Party (defined below) or its Affiliates, or its or their
officers, directors, or employees; (ii) was in the possession of the
Receiving Party prior to its disclosure hereunder; (iii) was known by
the Receiving Party at the time of its disclosure hereunder or was
independently developed at any time by the Receiving Party without
reference to the Disclosing Party's (defined below) Confidential
Information; (iv) is required to be furnished pursuant to law or legal
process; or (v) is rightfully obtained, subsequent to its disclosure
hereunder, by the Receiving Party or its Affiliates from a third party
who is lawfully in possession of such information and who is not under
an obligation of confidentiality to the Disclosing Party.
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11.3 The party that discloses Confidential Information shall
be referred to as the "Disclosing Party".
11.4 The party that receives Confidential Information shall be
referred to as the "Receiving Party".
PART V
MISCELLANEOUS
12. The parties shall maintain the secrecy of Confidential Information
as follows:
12.1 In connection with performance of this Agreement, the
parties may disclose to one another certain Confidential Information.
12.2 The Receiving Party shall hold the Disclosing Party's
Confidential Information in strictest confidence and trust and shall
use the Confidential Information only in connection with the purposes
of this Agreement. The Receiving Party shall not disclose Confidential
Information provided by the Disclosing Party and/or its Affiliates, or
the fact that it has been made available to the Receiving Party, except
that the Receiving Party may disclose Confidential Information and the
fact that it has been provided to those employees, officers, directors,
agents, consultants and representatives of the Receiving Party and its
Affiliates who have a reasonable need to know such information in
connection with the purposes of this Agreement. The Receiving Party
shall be liable for any breach of the confidentiality obligation
hereunder by any of its Affiliates, or by any of the respective
employees, officers, directors, agents, consultants and contractors of
the Receiving Party and/or its Affiliates.
12.3 If the Receiving Party is required by law or legal
process to disclose any of the Confidential Information of the
Disclosing Party, the Receiving Party shall promptly notify the
Disclosing Party in writing so that the Disclosing Party may seek an
appropriate protective order or other remedy at the sole cost of the
Disclosing Party. If no such protective order or other remedy is
obtained, the Receiving Party shall furnish only that portion of such
Confidential Information that is legally required and will exercise its
reasonable efforts to obtain reliable assurances from all parties
receiving the designated portions of such Confidential Information that
confidential treatment will be accorded to such Confidential
Information. Notwithstanding any such disclosure, any such Confidential
Information so disclosed shall, for all other purposes, continue to be
treated as Confidential Information under this Agreement.
12.4 Nothing contained herein shall be construed to obligate
either party to disclose to the other any Confidential Information. The
disclosure of Confidential Information pursuant to this Agreement, and
any prior or future discussions, evaluations or other communications
between the parties, shall not confer any right nor impose or
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create any obligation on the parties other than those expressly agreed
to in this Agreement.
12.5 All reports, notes, data, memoranda, records, or other
tangible expressions of Confidential Information of the other party,
including any electronically stored data, will be returned to the
Disclosing Party promptly upon request of such Disclosing Party.
12.6 The confidentiality obligation shall survive expiration
or termination of this Agreement for any reason for a period of five
(5) years.
13. It is understood and agreed by the parties that each may be
irreparably injured by a breach of Sections 2, 8, 11 or 12 of this Agreement and
that monetary damages may not be a sufficient remedy for any actual or
threatened breach thereof. In addition to any remedies available at law, the
non-breaching party may also be entitled to equitable relief, including
injunction and specific performance.
14. No failure or omission by either party in the performance of any of
its obligations under this Agreement shall be deemed a breach of this Agreement,
nor create any liability or give rise to any right to terminate this Agreement,
if the same shall arise from or as a consequence of a fire, flood, severe
weather or other act of God, war, insurrection, civil disturbance, or any other
cause beyond the reasonable control of such party, whether similar to or
different from the causes above enumerated, and any such cause shall absolve the
affected party from responsibility for such failure to perform said obligation.
15. Neither party shall make any announcement concerning the nature and
details of this Agreement or any of the Other Agreements referred to herein
without the express written consent of the other party.
16. This Agreement may not be assigned by either party without the
prior written consent of the other party, except that Caterpillar may assign
this Agreement to a wholly-owned subsidiary with the consent of ASV, which
consent shall not be unreasonably withheld.
17. The parties agree that this Agreement shall be construed,
interpreted, and applied in accordance with the laws of the State of Illinois,
without reference to its conflict of laws provisions.
18. This Agreement, including the Exhibits attached hereto or referred
to herein, constitutes the entire agreement between the parties and there are no
prior understandings, agreements, representations or warranties between the
parties relating hereto. No modification or amendment to this Agreement or any
of its provisions shall be binding unless contained in a writing signed by both
parties.
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19. When written notice is required by this Agreement, it shall be sent
by registered mail, by courier or by such other method as will permit the sender
to verify delivery, to the addresses set forth below:
For Caterpillar: Caterpillar Inc.
Attn: Richard A. Benson, Vice President
100 Northeast Adams Street
Peoria, Illinois 61629-2495
Telephone: (309) 675-1000
Facsimile: (309) 675-4777
For ASV: A.S.V., Inc.
Attn: Mr. Gary D. Lemke
840 Lily Lane
Grand Rapids, Minnesota 55744
Telephone: (218) 327-3434
Facsimile: (218) 326-5579
Written notice may also be sent by facsimile to the numbers listed above, but
such notice shall not be effective unless the sender receives a return facsimile
acknowledging receipt of the notice. Notice shall be deemed received when
actually delivered to the recipient as demonstrated by postal records. Facsimile
notice shall be deemed received upon receipt by the sender of an acknowledgement
as described above. The addresses and transmittal numbers set forth above can be
changed only by written notice, which complies with the requirements of this
Section 19.
20. The relationship between Caterpillar and ASV shall be that of
independent contractors, and nothing in this Agreement shall be construed to
establish a fiduciary, partnership, agency, or joint venture relationship
between the parties, or constitute Caterpillar, its agents and employees as the
agents or employees of ASV or to grant them any power or authority to act for,
bind or otherwise create or assume any obligation on behalf of ASV for any
purpose whatsoever.
21. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the remainder
hereof.
22. 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.
23. The headings to the sections of this Agreement are solely for
convenience of reference, and they shall not govern, limit or aid in the
interpretation of any terms or provisions of this Agreement.
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IN WITNESS WHEREOF, the authorized representative of each party has
duly executed this Agreement as of the date and year set forth above.
Caterpillar Inc.: A.S.V., Inc.:
By: /s/ Richard A. Benson By: /s/ Gary D. Lemke
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Richard A. Benson, Vice President Gary D. Lemke, President
Exhibit A - Marketing Agreement
Exhibit B - Management Services Agreement
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