<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 20, 1996
REGISTRATION NO. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
FIELDWORKS, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
MINNESOTA 3571 41-1731723
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
FIELDWORKS, INCORPORATED
9961 VALLEY VIEW ROAD
EDEN PRAIRIE, MINNESOTA 55344
(612) 947-0856
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
GARY J. BEEMAN, CHIEF EXECUTIVE OFFICER AND TREASURER
FIELDWORKS, INCORPORATED
9961 VALLEY VIEW ROAD
EDEN PRAIRIE, MINNESOTA 55344
(612) 947-0856
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
KENNETH L. CUTLER, ESQ. TIMOTHY M. HEANEY, ESQ.
R. KIRKLAND COZINE, ESQ. WILLIAM K. SJOSTROM, ESQ.
DORSEY & WHITNEY LLP FREDRIKSON & BYRON, P.A.
220 SOUTH SIXTH STREET 900 SECOND AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55402-1498 MINNEAPOLIS, MINNESOTA 55402
(612) 340-2600 (612) 347-7000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earliest effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH PROPOSED MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE(2) FEE
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<S> <C> <C> <C> <C>
Common Stock, $.001 par 2,012,500 shares $10.00 $20,125,000 $6,099
value.................
</TABLE>
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(1) Including 262,500 shares of Common Stock issuable upon exercise of an
option pursuant to which the Underwriters may purchase shares to cover
over-allotments, if any.
(2) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED DECEMBER 20, 1996
1,750,000 SHARES
[LOGO]
COMMON STOCK
All of the 1,750,000 shares of Common Stock offered hereby are being issued
and sold by FieldWorks, Incorporated ("FieldWorks" or the "Company"). Prior to
this offering, there has been no public market for the Common Stock of the
Company. It is currently estimated that the initial public offering price will
be between $8.00 and $10.00 per share. See "Underwriting" for a discussion of
the factors to be considered in determining the initial public offering price.
The Company has applied for quotation of the Common Stock on the Nasdaq
National Market under the symbol "FWRX."
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" COMMENCING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD
BE CONSIDERED BY PROSPECTIVE PURCHASERS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(/1/) COMPANY(/2/)
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<S> <C> <C> <C>
Per Share.................................. $ $ $
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Total(/3/)................................. $ $ $
</TABLE>
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(1) The Company has agreed to pay the Representative a non-accountable expense
allowance of two percent of the total Price to Public, to sell to the
Representative a four-year warrant to purchase 175,000 shares of Common
Stock at 120% of the Price to Public and to indemnify the Underwriters
against certain liabilities. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $ ,
including printing costs, filing fees, legal and accounting fees and the
two percent non-accountable expense allowance referred to above.
(3) Assumes no exercise of the 30-day option the Company has granted to the
Underwriters to purchase up to 262,500 additional shares of Common Stock
solely to cover over-allotments, if any. If the Underwriters exercise this
option in full, the Price to Public will total $ , the Underwriting
Discount will total $ and the Proceeds to Company will total $ . See
"Underwriting."
--------------------
The shares of Common Stock are offered by the several Underwriters when, as
and if delivered to and accepted by the Underwriters and are subject to various
prior conditions, including their right to reject any order in whole or in
part. It is expected that delivery of the certificates representing such shares
will be made against payment therefor at the offices of R. J. Steichen &
Company on or about , 1997, in Minneapolis, Minnesota.
[R. J. STEICHEN & COMPANY LOGO]
The date of this Prospectus is , 1997
<PAGE>
INSIDE FRONT COVER
[Company "fieldworks, inc." logo.]
FieldWorks, Incorporated designs, manufactures, markets and supports
portable rugged computing platforms and computer system solutions for use in
demanding field environments.
[Photograph of open Company computer.]
Agriculture
Communications
Construction
Engineering
Field Sales
Field Service
Industrial Control
Instrumentation
Logistics
Manufacturing
Telemedicine
Military
Public Safety
Transportation
Utilities
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
FIELDWORKS (TM) and FIELD WORKSTATION (TM) are trademarks of the Company.
This Prospectus also includes trade names, trademarks and registered
trademarks of companies other than the Company.
2
<PAGE>
INSIDE PAGES OF GATEFOLD COVER
Computer Platforms for the field. FieldWorks computer platforms meet four
design criteria that address the needs of field professionals . . .
Rugged
Meet stringent military standards and operate in extreme temperatures,
shock, vibration and moisture.
Expandable
Accomodate current and future needs of users by allowing the integration of
application-specific technology.
Upgradeable
Allow for easy replacement of standard component parts and major subsystems,
including processors, screens, disk drives, memory and keyboards.
Customizable
Adapt to customers' unique needs and specifications.
Rugged field applications
Face it--computers don't just sit on desks any more. Today, many field
professionals take their computers outside the office to service equipment or
implement complex computer systems. Ideally, these professionals would like to
have one tool that addresses all their needs and can withstand outside
environments. Enter FieldWorks platforms--designed to house all tools needed
in ONE rugged package. FieldWorks makes the "toolbox" that accomodates
communications technologies, data acquisition hardware and test
instrumentation for real-time information transfer and efficient problem-
solving. FieldWorks addresses the specialized needs of those professionals who
demand rugged, expandable, upgradeable and customizable computer platforms.
[Photograph of maintenance worker wearing hardhat and using flashlight with
open FieldWorks computing platform.]
Utilities, mining crews, telecommunications test crews and field service
fleets utilize rugged computers as electronic toolboxes to expedite
installation, repair and troubleshooting tasks.
[Photograph of soldier in camaflouge uniform standing in front of muddy tank
with open FieldWorks computing platform.]
Militaries use rugged computers as operations, communications and training
devices.
[Photograph of open FieldWorks computing platform on top of police car hood.]
Rugged computers with special software and hardware help law enforcement
officers collect fingerprints and background information from a centralized
database.
[Two photographs of technicians, one in front of truck cab and one leaning
over interior of a motor, both with open FieldWorks computing platforms.]
Service bay applications in automotive, trucking and heavy equipment
maintenance require rugged computer platforms to provide wireless on-line
links, parts inventories and electronic technical manuals.
<PAGE>
[Photograph of technician examining interior of an aircraft engine with open
FieldWorks computing platform.]
Commercial and business aircraft maintenance groups use rugged computers to
interface with onboard aircraft computers to troubleshoot and diagnose
communication data problems within the aircraft.
[Photograph of technician wearing hardhat and testing outside electricity or
telephone control box with open FieldWorks computing platform.]
Field service engineers and technicians require rugged systems that include
all communications, troubleshooting aids and test equipment in one
lightweight, rugged package.
[Photograph of technician wearing hospital clothing in front of television
monitor and open FieldWorks computing platform.]
Medical and telemedicine applications require high reliability and precision
for applications from instrumentation and monitoring to remote video
conferencing.
<PAGE>
PROSPECTUS SUMMARY
The following summary should be read in conjunction with, and is qualified in
its entirety by, the more detailed information, including "Risk Factors" and
the Consolidated Financial Statements and Notes thereto, appearing elsewhere in
this Prospectus. Unless otherwise indicated, all information in this
Prospectus, including financial information and share and per share data, (i)
assumes no exercise of the Underwriters' over-allotment option and (ii) gives
effect to the automatic conversion of all outstanding Preferred Stock into
Common Stock upon the consummation of this offering. See "Capitalization,"
"Description of Capital Stock" and "Underwriting."
THE COMPANY
FieldWorks, Incorporated ("FieldWorks" or the "Company") designs,
manufactures, markets and supports portable rugged computing platforms and
computer system solutions for use in demanding field environments. In addition
to providing the full range of computer features, performance and functionality
typically found in high-end desktop computers, the Company's portable computing
platforms have been designed to meet rigorous military standards for ruggedness
and to function despite exposure to extreme temperature, mechanical shock,
vibration and moisture. The Company's computing platforms are expandable
through multiple expansion slots to provide a flexible electronic "toolbox"
that can integrate all of a user's application-specific, multi-media and
communications needs into one portable, rugged device. The Company's products
have been designed with a modular system configuration that allows a user to
easily upgrade the central processing unit ("CPU") or any of the other
technological components without purchasing a new computer. Further, the
Company has the ability to customize its computing platforms to meet the unique
needs of its customers.
The worldwide market for portable personal computers is expanding rapidly,
and Frost & Sullivan has predicted that it may reach nearly $80 billion in
annual sales by 2001. Within this market, the market for mobile computing and
field force automation products is predicted to be one of the fastest growing
sectors over the next decade, with annual growth predicted at as much as 35% or
more. According to International Data Corp. ("IDC") estimates, the rugged
portable computer market is currently over $500 million and is expected to grow
by more than 50% over the next three years. Organizations are increasingly
seeking to computerize field personnel, and industries such as
telecommunications, utilities, farming, law enforcement, the military and
transportation have recognized the need for computerization and automation in
the field. However, the effectiveness of these efforts has often been limited
by the nature of the products that have been available. Consumer portable
personal computers frequently become inoperable under field conditions, are
typically available only with a standard set of features that cannot be
expanded or customized to meet the specialized needs of field users, and are
not designed to be upgraded. Similarly, custom-designed portable personal
computers are expensive, generally limited in their applications and often
unable to withstand conditions typically present in the field, while mobile
single-purpose diagnostic and data collection instruments generally have little
independent computing capability.
The Company's products have been designed to accomodate the demands of a wide
variety of users who are looking for mobile computing platforms that are rugged
and expandable, easily upgraded as technology changes and that can be
customized to meet the specialized needs of field force users. The Company
targets those markets that require portable computing platforms that can
perform multiple functions, including diagnostics, data acquisition and
electronic testing and monitoring, and simultaneously provide communications
and computer capability even under adverse conditions in the field. FieldWorks
rugged computing platforms are in use in a variety of market applications,
including: electronic toolboxes for telecommunications test crews to simplify
and expedite installation, repair and troubleshooting tasks; data collection
and transmission for in-flight commercial airplane testing; collection and
analysis of Global Positioning System ("GPS") geographical information and
agricultural data
3
<PAGE>
to aid in the selection of crops, chemicals and farming methods; diagnostic
system analysis and wireless communication for use with trucking fleets; and
video surveillance and monitoring for law enforcement purposes. The Company
believes that its rugged computing technology has enabled its customers to
create new applications that improve the productivity of their field personnel
and believes further that additional markets and customers will develop as more
businesses recognize the benefits of providing field personnel with effective,
sophisticated computing power.
The Company's objective is to be the leading designer, manufacturer and
marketer of rugged computing platforms and computer system solutions. The
Company's strategy is to: (i) penetrate key vertical markets, (ii) expand
strategic OEM relationships, (iii) establish relationships with large-volume,
repeat customers, (iv) develop new products and enhance existing products and
(v) establish product recognition.
The Company shipped its first commercial product, the 7000 Series Field
WORKSTATION rugged laptop computing platform, which is now offered in a range
of models, in June 1994. In June 1996, the Company commercially introduced its
5000 Series FIELD WORKSTATION rugged notebook computing platform to meet the
needs of customers who require a smaller, more lightweight toolbox but do not
require the full expansion capability of the 7000 Series. The Company is
currently developing additional series of computing platforms designed to
address broader customer preferences for products with varying degrees of
expandability, size and price, all of which provide the ruggedness, processing
power and ease of upgrade that characterize the Company's current products.
The Company assembles its products to its customers' specifications as orders
are received, which enables the Company to provide each customer with a
computing platform that satisfies its specific requirements.
The Company was incorporated under the laws of the State of Minnesota in
October 1992. The Company's executive offices are located at 9961 Valley View
Road, Eden Prairie, Minnesota 55344, and its telephone number is (612) 947-
0856.
RISK FACTORS
Prospective purchasers should carefully consider the information set forth
under "Risk Factors" before purchasing any of the shares of Common Stock
offered hereby.
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the
Company..................... 1,750,000 shares
Common Stock to be outstand-
ing after this offering..... 8,047,403 shares(/1/)
Use of Proceeds.............. For repayment of outstanding indebtedness
(including amounts owed to affiliates of the
Company); capital expenditures and leasehold
improvements; expansion of the Company's
domestic and international sales and marketing
efforts; hiring additional engineering staff;
and working capital and other general corporate
purposes, including expansion of the Company's
manufacturing and administrative infrastructure.
Proposed Nasdaq National
Market Symbol............... FWRX
</TABLE>
- -----------------
(1) Based on the number of shares of Common Stock outstanding as of December
20, 1996, adjusted to reflect the automatic conversion of all of the
Company's outstanding Series A Convertible Preferred Stock into 416,667
shares of Common Stock. Excludes (a) 724,500 SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF OUTSTANDING OPTIONS AT A WEIGHTED AVERAGE
EXERCISE PRICE OF $3.19 PER SHARE, (B) 588,078 SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF OUTSTANDING WARRANTS AT A WEIGHTED AVERAGE
EXERCISE PRICE OF $5.28 PER SHARE AND (C) UP TO 138,889 SHARES OF COMMON
STOCK ISSUABLE WITHIN 30 DAYS OF THE EFFECTIVE DATE OF THE REGISTRATION
STATEMENT OF WHICH THIS PROSPECTUS IS A PART UPON CONVERSION (AT A
CONVERSION PRICE EQUAL TO 80% OF AN ASSUMED INITIAL PUBLIC OFFERING PRICE
OF $9.00) OF UP TO $1,000,000 OF THE PRINCIPAL AMOUNT OF CERTAIN
OUTSTANDING PROMISSORY NOTES. SEE "CAPITALIZATION" AND "DESCRIPTION OF
CAPITAL STOCK."
5
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PERIOD
FROM
INCEPTION NINE MONTHS
(OCTOBER 2, YEARS ENDED ENDED
1992) TO DECEMBER 31, SEPTEMBER 30,
DECEMBER 31, ----------------------- ---------------
1992 1993 1994 1995 1995 1996
------------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED
STATEMENTS OF OPERATIONS
DATA:
Net sales................. $ -- $ -- $ 2,742 $8,242 $5,875 $ 9,598
Cost of sales............. -- -- 1,978 4,980 3,414 5,967
----- ------ ------- ------ ------ -------
Gross profit.............. -- -- 764 3,262 2,461 3,631
----- ------ ------- ------ ------ -------
Operating expenses:
Sales and marketing....... -- 36 904 1,523 1,082 2,166
General and
administrative........... -- 160 762 1,169 765 1,473
Research and
development.............. -- 289 765 948 558 1,042
----- ------ ------- ------ ------ -------
Total operating
expenses................ 485 2,431 3,640 2,405 4,681
----- ------ ------- ------ ------ -------
Operating income (loss)...... -- (485) (1,667) (378) 56 (1,050)
Interest expense and
other, net............... -- -- (21) (69) (53) (222)
----- ------ ------- ------ ------ -------
Net income (loss) from
continuing operations.... -- (485) (1,688) (447) 3 (1,272)
Loss from discontinued
operation(/1/)........... -- -- -- (180) (85) (347)
----- ------ ------- ------ ------ -------
Net loss.................. $ -- $ (485) $(1,688) $ (627) $ (82) $(1,619)
===== ====== ======= ====== ====== =======
Pro forma:
Net income (loss) per
common share from
continuing operations.... $ -- $ (.16) $ (.31) $ (.07) $ 0 $ (.20)
Loss per common share
from discontinued
operation................ -- -- -- (.03) (.01) (.05)
----- ------ ------- ------ ------ -------
Net loss per common
share(/2/) .............. $ -- $ (.16) $ (.31) $ (.10) $ (.01) $ (.25)
===== ====== ======= ====== ====== =======
Weighted average common
shares
outstanding(/2/)......... 2,350 3,049 5,486 6,187 6,125 6,493
===== ====== ======= ====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
---------------------------------------
DECEMBER 31, PRO FORMA
1995 ACTUAL PRO FORMA(/3/) AS ADJUSTED(/4/)
------------ ------ -------------- ----------------
<S> <C> <C> <C> <C>
SELECTED CONSOLIDATED
BALANCE SHEET DATA:
Cash..................... $ 113 $ 335 $ 2,991 $ 10,603
Working capital.......... 1,685 2,920 2,995 16,566
Total assets............. 4,559 8,951 11,607 19,219
Long-term debt and
capital lease
obligations, less
current portion......... 62 100 100 100
Total debt............... 1,254 3,459 6,384 109
Accumulated deficit...... (2,805) (4,425) (4,425) (4,816)
Total shareholders'
equity.................. 2,132 3,617 3,692 17,263
</TABLE>
- -----------------
(1) In November 1996, the Company's Board of Directors approved the distribution
of all of the issued and outstanding shares of the common stock of the
Company's wholly-owned subsidiary, Paragon Technology, Inc. ("Paragon"), as
a dividend to shareholders of record of the Company as of November 15, 1996.
Paragon's results of operations for the year ended December 31, 1995 and for
the nine-month periods ended September 30, 1995 and 1996, as well as the
estimated loss from disposition, have been presented as a discontinued
operation in the above Statement of Operations Data. See "Recent Events--
Dividend of Shares of Paragon Technology, Inc."
(2) Computed on the basis described for pro forma net loss per common share in
Note 2 of Notes to Consolidated Financial Statements.
(3) Reflects receipt, in December 1996, of $5,000,000 aggregate principal
amount of bridge loans and the issuance of warrants to purchase an
aggregate of 250,000 shares of Common Stock; does not give effect to the
issuance of up to 138,889 shares of Common Stock issuable upon conversion
of certain principal amounts of such loans.
(4) Adjusted to reflect (a) the sale of 1,750,000 shares of Common Stock
offered hereby at an assumed public offering price of $9.00 per share and
the application of the estimated net proceeds therefrom and (b) the
automatic conversion of all outstanding Preferred Stock into Common Stock
upon the consummation of this offering. See "Use of Proceeds" and
"Capitalization."
6
<PAGE>
RISK FACTORS
An investment in the shares of Common Stock offered hereby is speculative
and involves a high degree of risk. In evaluating an investment in the shares
of Common Stock offered by this Prospectus, prospective investors should
carefully consider the following factors, in addition to the other information
in this Prospectus. The discussion in this Prospectus contains certain
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those discussed herein. Factors
that could cause or contribute to such differences include, but are not
limited to, those discussed in "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and "Business," as
well as those discussed elsewhere in this Prospectus.
UNCERTAINTY OF MARKET ACCEPTANCE
The market for rugged computing platforms is a relatively new, limited
sector of the portable computer market. The Company's success will depend upon
increasing the market acceptance of its two current series of products, which
are both heavier and more expensive than most consumer portable personal
computers. There can be no assurance that the Company's products will gain
widespread acceptance or that the Company will generate sufficient sales to
allow the Company to attain profitable operations. In addition, the failure of
the rugged computing platform market to expand would have a material adverse
effect on the Company's business, financial condition and results of
operations. See "Business--Strategy," and "--Markets and Customers."
COMPETITION
The Company believes that it currently occupies a niche in the portable
computer market with its rugged computing platforms. The Company currently
faces direct competition in this market niche from companies producing
portable computers intended for field use such as Amrel Technology, Inc.,
Badger Computers (a unit of Group Financial Partners, Inc.), Dolch Computer
Systems, Getac Corporation, Husky Computers Inc., Itronix Corporation, Kontron
Elektronik Corporation (a subsidiary of Kontron Elektronik GmbH) and Panasonic
Personal Computer Company. To the extent FieldWorks and its direct competitors
expand and develop this market niche, other manufacturers may turn their
attention to this niche and begin to produce products directly competitive
with those offered by the Company. The Company's computing platforms also face
indirect competition from a variety of different companies and products,
including consumer portable personal computers, customized portable personal
computers and single-purpose diagnostic and data collection instruments.
Both the portable computer industry and the diagnostic and data collection
instrument industry are intensely competitive. Many of the companies that
produce or may produce devices that compete, directly or indirectly, with the
Company's products have substantially greater financial, technological and
marketing resources than the Company. There can be no assurance that the
Company will be able to compete effectively against current or future
competitors, or that such competitors will not succeed in adapting more
rapidly and effectively to changes in technology or in the market or in
developing or marketing products that will be more widely accepted. See
"Business--Competition."
RISK OF TECHNOLOGICAL OBSOLESCENCE
Both the computer industry and the diagnostic and data collection instrument
industry are characterized by rapid technological change, including changes in
customer requirements, frequent new product introductions and enhancements,
and evolving industry standards. The Company's success will depend in part on
its ability to keep pace with technological developments and emerging industry
standards and to respond to customer requirements by enhancing its current
products and developing and introducing new products. Failure to
7
<PAGE>
anticipate or respond rapidly to advances in technology and to adapt the
Company's products appropriately could have a material adverse effect on the
success of the Company's products and thus on the Company's business,
financial condition and results of operations. Technological advances may also
increase the level of competition in the rugged computing platform market. See
"Business--Competition."
RISKS ASSOCIATED WITH MANAGING GROWTH
If the Company is to grow successfully, it must increase its manufacturing
output and capacity significantly. The anticipated growth of the Company's
operations will place significant strain not only on the manufacturing
resources of the Company, but also on the Company's management, sales and
marketing, operating and financial systems and resources. If such growth
occurs, the Company may encounter difficulties, including problems involving
lower than projected production rates, lower quality control and assurance,
decreased product reliability, increased manufacturing costs, difficulties in
maintaining internal accounting controls, malfunctioning of existing and new
equipment, insufficient or untimely component supplies and shortages of
personnel. There can be no assurance that the Company will be able
successfully to plan for or manage increased production and marketing of its
products. The failure to do so could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
anticipates that, at projected sales growth levels, it will be required to
move into expanded production and administrative facilities by mid-1997. While
the Company currently anticipates that it will be able to lease appropriate
expansion space for its manufacturing operations as necessary, there can be no
assurance that such facilities will be available when needed on acceptable
terms, if at all, or that such move can be accomplished without impairing the
Company's operations. See "Recent Events," "Business--Manufacturing," "--
Backlog" and "--Facilities."
RISKS ASSOCIATED WITH DEVELOPING SALES CHANNELS
The Company is engaged in building its sales organization and refining its
sales strategies. Failure to develop this sales organization sufficiently or
to implement appropriate sales strategies in a timely manner could have a
material adverse effect on the Company's business, financial condition and
results of operations.
The Company distributes a substantial portion of its products through
independent sales representatives and distributors. The Company also sells its
products to OEMs, value added resellers ("VARs") and systems integrators. The
success of the Company is dependent in large part upon the performance of
these resellers, many of whom may also carry competitive products, and on its
ability to attract new resellers. The Company operates pursuant to written
agreements, most of which may be terminated by the reseller on 30 days'
written notice with or without cause. The loss of any of the Company's major
resellers or a failure to make acceptable arrangements with resellers in new
markets could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Markets and
Customers" and "--Sales and Marketing."
DEPENDENCE ON THIRD-PARTY MANUFACTURERS
Although the Company performs some mechanical subassembly and all final
assembly of its products, the Company relies on sub-contract manufacturers to
produce a number of subassemblies. Utilization of sub-contract manufacturers
results in dependence on the timely delivery of high quality products from
these manufacturers and may leave the Company with less flexibility and
control over the manufacturing process than if it conducted all of these
operations internally. There can be no assurance that the timely delivery of
quality subassemblies will not be interrupted. Any interruption in the timely
supply of quality subassemblies would have a material adverse effect on the
Company's ability to deliver its products until acceptable arrangements could
be made with a qualified alternative subassembly manufacturer. There can be no
assurance that the Company would be able to reach an
8
<PAGE>
arrangement with such a manufacturer at acceptable prices and adequate quality
levels on a timely basis. If the Company were unable to do so, such an
interruption would have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Manufacturing."
DEPENDENCE ON AVAILABILITY OF COMPONENTS
The Company's rugged computing platforms employ a number of components not
generally used in off the shelf personal computers, such as special hard disk
drives, CD-ROM drives, floppy disk drives, displays and power supplies. There
can be no assurance that such components will continue to be produced.
Further, a number of components contained in the Company's products are single
sourced. While the Company believes that there are other companies that could
provide these components, changing suppliers can create uncertainty and be
costly and time-consuming. In the event that the Company could not obtain
adequate or timely quantities of necessary components from its current
suppliers, there can be no assurance that the Company would be able to
identify or access alternative sources of such components within a reasonable
period of time, on acceptable terms, or at all. Some of the Company's current
vendors use tools that have been designed for and are the property of the
Company; if the Company were required to change suppliers for these
components, it would need either to move the necessary tools or to obtain new
tools, either of which could entail significant cost and delay. Moreover, the
Company's buying power may be limited by its small size, and the Company may
receive less favorable allocations and other terms such as price, timing or
other factors than larger companies buying from the same suppliers. The
unavailability of adequate quantities, the inability to develop alternative
sources, a reduction or interruption in supply or a significant increase in
the price of components could have a material adverse effect on the Company's
ability to manufacture and market its products. See "Business--Manufacturing."
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company's operating results may vary significantly from quarter to
quarter due to such factors as changes in customer buying patterns, the timing
of the announcement and introduction of new products by the Company or its
competitors, the tactics of the Company's competitors, technological
developments affecting the rugged computing platform market, and the overall
strength of the economy. The Company has experienced some seasonality in
orders for its products, with relatively fewer orders received in the first
quarter of the year, a decline in European orders in the summer, and a rise in
orders in the last quarter. In addition, the Company has experienced long
sales cycles in connection with sales to many of its customers, especially
those that are government agencies or large corporations, and also believes
that such customers may place orders that are disproportionate in size
compared to the Company's other orders. All of these factors, along with the
uncertainties associated with the introduction of any new product or product
enhancement, in gauging ultimate customer demand, and in predicting general
trends in the market for the Company's products, may limit management's
ability to plan for production and to forecast quarterly results of operations
accurately. The Company's operating results for any particular quarter are not
necessarily indicative of results that the Company may achieve for any
subsequent quarter or full fiscal year. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
DEPENDENCE ON INTELLECTUAL PROPERTY
The Company's success will depend in part on its ability to protect its
proprietary rights and to operate without infringing on the proprietary rights
of third parties. As of the date of this Prospectus, no patents have been
issued to the Company. The Company has filed two U.S. patent applications
covering various aspects of its 7000 Series FIELD WORKSTATION laptop computing
platforms and its 5000 Series FIELD WORKSTATION notebook computing platforms
and the technology incorporated in such platforms, and the Company may apply
for additional patents in the future. There can be no assurance that any of
the Company's current or future
9
<PAGE>
patent applications will result in issued patents, that the scope of the
claims in any patents issued to the Company will prevent competitors from
introducing competitive products or that any patents issued to the Company
would be enforceable if challenged. In addition, even if patents for which the
Company has applied or applies in the future are ultimately issued, other
parties may hold or receive patents that contain claims covering other
technology included in the Company's current or future products that could
hinder or prevent the sale of the Company's products or require the Company to
obtain licenses to such technology, which might not be available on acceptable
terms or at all.
In addition to patents, the Company intends to rely upon unpatented trade
secrets and know-how and on the expertise of its employees. Although the
Company believes that it has in the past taken, and intends in the future to
take, appropriate steps to protect its unpatented proprietary rights,
including requiring that its employees and third parties granted access to the
Company's proprietary technology enter into confidentiality agreements with
the Company, there can be no assurance that these measures will be sufficient
to protect the Company's rights against third parties. Likewise, there can be
no assurance that others will not independently develop or otherwise acquire
unpatented technologies or products similar or superior to those of the
Company.
The Company claims trademark rights in four marks used in connection with
its products in the United States and filed for registration of such
trademarks in June 1996. The U.S. Patent and Trademark Office (the "PTO") has
not determined the registrability of the trademarks. United States trademark
rights are acquired by use rather than by registration, and there can be no
assurance that others do not have conflicting or superior rights to the
Company's trademarks. The Company is aware that there are third parties that
have claimed or may claim superior rights, in certain territories in the
United States, to the use of certain of the marks in which the Company claims
rights; there can thus be no assurance that no third party will contest the
Company's right to use or register its trademarks. In addition, the PTO can
deny registration to trademarks that it determines are "merely descriptive" or
"generic." There can thus be no assurance that any of the trademarks covered
by the Company's applications for registration will be found registrable, that
registrations will issue, or that the Company can support the cost of defense
of its trademarks.
The Company licenses from third parties certain software that it includes in
its products. If any such licenses were terminated, the Company could be
required to license similar software from other third parties; there can be no
assurance that the Company could do so in a timely fashion, on acceptable
terms, or at all.
The high technology area frequently features disputes over intellectual
property. The Company may in the future be required to defend its intellectual
property rights against infringement, duplication, discovery and
misappropriation by third parties or to defend itself against third-party
claims of infringement. Likewise, disputes may arise in the future with
respect to ownership of technology developed by employees who were previously
employed by other companies. Any such litigation or disputes could result in
substantial costs to, and a diversion of effort by, the Company. An adverse
determination could subject the Company to significant liabilities to third
parties, require the Company to seek licenses from or pay royalties to third
parties or require the Company to develop appropriate alternative technology.
There can be no assurance that any such licenses would be available on
acceptable terms or at all, or that the Company could develop alternate
technology at an acceptable price or at all. Any of these events could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Intellectual Property."
NEED TO ATTRACT AND RETAIN KEY PERSONNEL
The success of the Company is dependent on its ability to attract and retain
personnel needed for its business. The Company's personnel needs include
highly trained personnel for such areas as management, sales and engineering,
including Gary J. Beeman and Robert C. Szymborski, the Company's co-founders
and currently the President and Chief Executive
10
<PAGE>
Officer, and Executive Vice President and Chief Technical Officer,
respectively, of the Company. Qualified individuals in such areas are in high
demand and are often subject to competing employment opportunities. In
addition, as the Company increases its production and sales levels, it will
need to attract and retain additional qualified skilled and unskilled workers
for its manufacturing and related operations. In recent years there has been
great demand for qualified skilled and unskilled employees in the Minneapolis
area, where the Company's manufacturing operations are located. There can be
no assurance that the Company will be successful in attracting and retaining
the personnel needed for its business. Any failure to do so would adversely
affect the Company's business, financial condition and results of operations.
See "Business--Employees."
RISKS ASSOCIATED WITH INTERNATIONAL SALES
In the nine months ended September 30, 1996, international sales of the
Company's products represented approximately 23% of the Company's net sales.
International sales are subject to inherent risks, including longer payment
cycles, greater difficulty or delay in accounts receivable collection, U.S.
and foreign import and export restrictions and tariffs, the burdens of
complying with a variety of foreign laws, potentially adverse tax
consequences, potentially inadequate protection of intellectual property
rights, restrictions on repatriation of earnings, and exposure to increased
political and economic instability. In addition, the Company's net receipts
from international sales are typically lower than net receipts from domestic
sales as the result of the Company bearing some of the cost of foreign import
tariffs and the time required to collect foreign sales receivables is
generally longer than that required for domestic receivables. The loss of a
key foreign distributor or the inability to maintain a foreign distribution
network could have an adverse effect on the Company's business, financial
condition and results of operations.
All of the Company's export sales are currently denominated in United States
dollars. An increase in the value of the United States dollar relative to
foreign currencies could make the Company's products more expensive and,
therefore, potentially less competitive in foreign markets. In the future, if
the Company's export sales were to be denominated in local currencies, foreign
currency translations may contribute to significant fluctuations in the
Company's financial condition and results of operations. If for any reason
currency exchange or price controls or other restrictions on foreign
currencies were imposed, the Company's business, financial condition and
results of operations could be materially adversely affected. See "Business--
Markets and Customers" and "--Sales and Marketing."
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company anticipates that the net proceeds of this offering, together
with cash on hand, interest expected to be earned thereon and anticipated cash
from operations will be sufficient to finance the Company's operations at
least through 1997, although there can be no assurance that additional capital
will not be required sooner. In order to meet its needs beyond such time, the
Company may be required to raise additional capital. There can be no assurance
that sufficient capital will be available if and when required on terms
acceptable to the Company, if at all. Any additional equity financings may be
dilutive to purchasers in this offering, and any debt financing may involve
restrictive covenants. Failure to secure additional financing if and when
needed could adversely affect the Company and its operations, including
requiring the Company to delay, scale back, or eliminate market expansion
activities and research and development on existing or new products, or
forcing the Company to cease operations entirely. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
NO PRIOR PUBLIC MARKET FOR COMMON STOCK; DETERMINATION OF OFFERING PRICE
Prior to this offering there has been no public market for the Common Stock.
Consequently, the initial public offering price of the Common Stock has been
determined by
11
<PAGE>
negotiations between the Company and the Underwriter and may bear no relation
to the market prices for the shares that will prevail in the public market
following this offering. The Common Stock has been approved for quotation on
The Nasdaq National Market; there can, however, be no assurance that an active
trading market in the Common Stock will develop or be sustained upon
completion of this offering or that the market price of the Common Stock will
not decline below the initial public offering price. For factors considered in
determining the initial public offering price, see "Underwriting."
POSSIBLE STOCK PRICE VOLATILITY
The trading prices of the Common Stock could be subject to wide fluctuations
in response to a variety of events or factors, many of which are beyond the
Company's control. These could include, without limitation (i) quarterly
variations in the Company's operating results, (ii) the liquidity of the
market for the Common Stock, (iii) announcements of business developments by
the Company or its competitors, (iv) developments or disputes concerning
proprietary rights, (v) technological innovations or newly introduced
products, and (vi) general conditions in the computer industry and the
economy. Moreover, the stock markets recently have experienced extreme price
and volume fluctuations, which have particularly affected the market prices of
many high technology companies and which have often been unrelated to the
operating performance of such companies.
CONTROL BY PRINCIPAL SHAREHOLDERS; ANTI-TAKEOVER PROVISIONS
Upon completion of this offering, the Company's directors and executive
officers and persons or entities affiliated with them will beneficially own in
the aggregate approximately 41% of the Company's outstanding Common Stock
(assuming the exercise of certain shares subject to outstanding options and
warrants). If these shareholders vote together as a group, they will be able
to substantially influence the business and affairs of the Company, including
the election of individuals to the Company's Board of Directors (the "Board of
Directors"), and to otherwise affect the outcome of certain actions that
require shareholder approval, including the adoption of amendments to the
Company's articles of incorporation and certain mergers, sales of assets and
other business acquisitions or dispositions. See "Principal Shareholders."
Upon completion of this offering, the Company will be authorized to issue
five million shares of undesignated preferred stock, $.001 par value, which
may be issued by the Board of Directors on such terms, and with such rights,
preferences and designations, as the Board of Directors may determine, without
further shareholder action. The rights of the holders of the Common Stock will
be subject to, and may be adversely affected by, the rights of any holders of
any preferred stock so issued. In addition, the Company is subject to certain
provisions of the Minnesota Business Corporation Act that limit the voting
rights of shares acquired in certain acquisitions and restrict certain
business combinations. Exercise of voting control by principal shareholders,
the existence or issuance of "blank check" preferred stock and the effect of
other anti-takeover provisions in the Company's charter documents or Minnesota
law, individually or in the aggregate, may render more difficult or discourage
any attempt to obtain control of the Company by means of a tender offer,
merger, proxy contest or otherwise, which could deprive the Company's
shareholders of opportunities to sell their shares of Common Stock at prices
higher than prevailing market prices. See "Description of Capital Stock--
Preferred Stock" and "--Provisions of the Company's Articles and Bylaws and
the Minnesota Business Corporation Act."
POSSIBLE ADVERSE MARKET EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE;
REGISTRATION RIGHTS
Sales of significant amounts of Common Stock in the public market or the
perception that such sales will occur could adversely affect the market price
of the Common Stock or the future ability of the Company to raise capital
through an offering of its equity securities. Upon completion of this
offering, the Company will have outstanding 8,047,403 shares of Common
12
<PAGE>
Stock (or 8,309,903 shares if the Underwriter's over-allotment option is
exercised in full). Of those shares, 1,750,000 shares (or 2,012,500 shares if
the Underwriter's over-allotment option is exercised in full) will be eligible
for immediate sale in the public market without restriction unless they are
held by "affiliates" of the Company within the meaning of Rule 144 of the
Securities Act of 1933, as amended (the "Securities Act"). The remaining
6,297,403 shares of Common Stock will be "restricted securities," as that term
is defined in Rule 144 under the Securities Act, and may be sold in the public
market only if registered or if they qualify for an exemption from
registration under Rule 144, Rule 144(k), Rule 701 or otherwise. The
Representative has requested, and the Company has agreed, to solicit all
shareholders to agree that they will not sell, directly or indirectly, any
Common Stock without the prior consent of the Representative for a period of
180 days from the date of this Prospectus. Of the shares not subject to this
agreement, (i) approximately shares will be eligible for immediate sale
without restriction pursuant to Rule 144(k) on the effective date of this
offering, (ii) approximately shares will be eligible for sale, subject to
compliance with the volume limitations and other restrictions of Rule 144, 90
days after the effective date of this offering, and (iii) approximately
shares will become eligible for sale under Rule 144 after the expiration of
the two-year holding periods from the dates of acquisition, which end between
and . Beginning on the 181st day after the date of this Prospectus,
when the agreements not to sell shares expire, (iv) approximately 2,519,000 of
the shares may become eligible for sale without restriction pursuant to Rule
144(k), (v) approximately 2,982,637 of the shares (including approximately
2,140,902 shares owned by affiliates of the Company) will become eligible for
sale, subject to compliance with the volume limitations and other restrictions
of Rule 144, and (vi) approximately 795,766 shares will become eligible for
sale under Rule 144 after the expiration of the two-year holding periods from
the dates of acquisition, which end between September 11, 1997 and July 15,
1998. In addition, certain shareholders and holders of warrants, options and
convertible promissory notes, who in the aggregate beneficially own 1,143,634
shares of Common Stock, have the right, subject to certain conditions, to
include their shares in future registration statements relating to the
Company's securities and to cause the Company to register for public sale
certain Common Stock owned by them. See "Shares Eligible for Future Sale" and
"Underwriting."
IMMEDIATE AND SUBSTANTIAL DILUTION
Purchasers of the Common Stock offered hereby will experience immediate and
substantial dilution in net tangible book value per share of $6.85 (assuming
an initial public offering price of $9.00 per share). Investors may also
experience additional dilution as a result of the exercise of outstanding
stock options and warrants. See "Dilution."
NO DIVIDENDS
The Company has never paid or declared a cash dividend on its capital stock
and does not anticipate doing so for the foreseeable future. See "Dividend
Policy."
13
<PAGE>
USE OF PROCEEDS
The net cash proceeds to the Company from the sale of the Common Stock
offered hereby are estimated to be approximately $13,962,500 ($16,112,375 if
the Underwriter's over-allotment option is exercised in full), after deducting
the underwriting discount and estimated expenses of this offering, and
assuming an initial public offering price of $9.00 per share. The Company
intends to apply such net proceeds substantially as follows:
<TABLE>
<S> <C>
Repayment of convertible bridge notes.......................... $ 5,104,000
Expansion of domestic and international sales and marketing ef-
forts......................................................... 2,200,000
Repayment of bridge notes...................................... 1,420,000
Capital expenditures........................................... 1,000,000
Addition of engineering staff.................................. 500,000
Working capital and general corporate purposes................. 3,738,500
-----------
Total.......................................................... $13,962,500
===========
</TABLE>
REPAYMENT OF CONVERTIBLE BRIDGE NOTES. Approximately $5,104,000 of the net
proceeds will be used to pay principal and accrued interest on the Company's
subordinated promissory notes issued in December 1996, assuming none of such
notes are converted into Common Stock. If some or all of such notes are
converted, the net proceeds that would have been used to repay such notes will
be used for general working capital purposes. The outstanding principal and
accrued interest on such notes will be due and payable within 30 days after
the date of this Prospectus and bear interest at the rate of 10% per annum. Up
to 20% of the principal amount of such notes is convertible for a period of 30
days after the date of this Prospectus, at the option of the holder thereof,
into the Company's Common Stock at a conversion price of 80% of the Price to
Public in this offering. The proceeds from such notes were used to pay off
approximately $2,030,000 outstanding under bank lines of credit that were
personally guaranteed by a director of the Company, and for general working
capital purposes. See "Description of Capital Stock--Bridge Loans."
EXPANSION OF DOMESTIC AND INTERNATIONAL SALES AND MARKETING EFFORTS.
Approximately $2,200,000 of the net proceeds will be used to hire additional
sales and marketing personnel, including district sales managers for strategic
U.S. locations; sales engineers; vertical marketing specialists; and product
management personnel. In addition, the Company anticipates that increased
sales volume will lead to an increase in sales commissions and incentive
compensation.
REPAYMENT OF BRIDGE NOTES. The Company entered into a series of transactions
from July through September 1996 resulting in unsecured loans of which
approximately $1,420,000 in principal and accrued interest is currently
outstanding. Of this amount, approximately $1,314,000 of principal and accrued
interest is due to affiliates of the Company. These loans bear interest at
rates from 10% to 12% per annum. The proceeds from the short-term loans were
used for general working capital purposes. See "Certain Transactions" and
"Description of Capital Stock--Bridge Loans."
CAPITAL EXPENDITURES. The Company intends to spend approximately $1,000,000
in 1997 on capital expenditures, including the procurement of injection
molding tools for the production of the 5000 Series chassis and for leasehold
improvements to the expanded facilities that the Company anticipates requiring
in mid-1997.
WORKING CAPITAL AND GENERAL CORPORATE PURPOSES. The remainder of the net
proceeds, approximately $3,738,500 will be allocated to working capital and
will be used for purposes including the addition of manufacturing and
administrative infrastructure to support expansion.
In addition, the Company may also use a portion of the net proceeds to
acquire businesses, products or technologies that management believes may
complement the Company's operations, although the Company currently has no
agreements or understandings regarding any such acquisition and is not
involved in any negotiations with respect to any such transactions.
14
<PAGE>
The amounts given above are estimates, and the amount and timing of actual
expenditures will depend on numerous factors, including competition,
manufacturing activities and the level of market acceptance of the Company's
products.
Pending the use of the net proceeds of this offering, the Company will
invest the funds in short-term, interest-bearing, investment grade securities.
The Company believes that the proceeds of this offering, together with cash
on hand, interest expected to be earned thereon, and anticipated revenues will
be sufficient to fund its operations at least through 1997. In order to meet
its needs beyond such time, the Company may be required to raise additional
capital. There an be no assurance that sufficient capital will be available if
and when required on terms acceptable to the Company, if at all. See "Risk
Factors--Future Capital Needs; Uncertainty of Additional Funding."
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its capital
stock. The Company currently intends to retain all of its earnings, if any, to
finance the development and continued expansion of its business, and does not
intend to pay dividends in the foreseeable future. The payment of dividends,
if any, in the future will be at the discretion of the Board of Directors and
will depend on the Company's earnings, financial condition, capital
requirements, and other relevant factors.
In November 1996, the Company's Board of Directors approved the distribution
of all of the issued and outstanding shares of the capital stock of a wholly-
owned subsidiary as a dividend to shareholders of record as of November 15,
1996. See "Recent Events--Dividend of Shares of Paragon Technology, Inc."
14--1
<PAGE>
CAPITALIZATION
The following table sets forth (i) the capitalization of the Company as of
September 30, 1996, (ii) the pro forma capitalization of the Company, giving
effect to the December 1996, receipt of bridge financing in the amount of
$5,000,000, and (iii) such pro forma capitalization as adjusted to give effect
to the issuance and sale by the Company of the 1,750,000 shares of Common
Stock offered hereby at an assumed initial public offering price of $9.00 per
share and the application of the estimated net proceeds therefrom and the
automatic conversion of all outstanding Preferred Stock into Common Stock upon
the consummation of this offering. This table should be read in conjunction
with, and is qualified in its entirety by, the more detailed information,
including "Risk Factors" and the Consolidated Financial Statements and Notes
thereto, appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt(/1/)............................ $ 3,387 $ 5,968 $ 9
======= ======= =======
Long-term debt and capital lease obligations,
less current portion........................... $ 100 $ 100 $ 100
------- ------- -------
Shareholders' equity:
Series A Convertible Preferred Stock, $.001
par value, 300,000 shares authorized actual
and pro forma, no shares authorized pro forma
as adjusted; 300,000 shares issued and out-
standing actual and pro forma, no shares is-
sued and outstanding pro forma as adjusted... -- -- --
Undesignated Preferred Stock, $.001 par value,
no shares authorized actual and pro forma,
5,000,000 authorized pro forma as adjusted;
no shares outstanding actual, pro forma or
pro forma as adjusted........................ -- -- --
Common Stock, $.001 par value, 14,700,000
shares authorized actual and pro forma,
20,000,000 shares authorized pro forma as
adjusted; 5,880,736 shares issued and
outstanding actual and pro forma; 8,047,403
shares issued and outstanding pro forma as
adjusted(/2/)................................ 6 6 8
Common stock warrants......................... 157 232 232
Additional paid-in capital.................... 7,879 7,879 21,839
Accumulated deficit........................... (4,425) (4,425) (4,816)
------- ------- -------
Total shareholders' equity.................. 3,617 3,692 17,263
------- ------- -------
Total capitalization...................... $ 3,717 $ 3,792 $17,363
======= ======= =======
</TABLE>
- -----------------
(1) Includes $28,000 relating to discontinued operation.
(2) Excludes (a) 724,500 shares of Common Stock issuable upon exercise of
outstanding options at a weighted average exercise price of $3.19 per
share, (b) 588,078 shares of Common Stock issuable upon exercise of
outstanding warrants at a weighted average exercise price of $5.28 per
share and (c) up to 138,889 shares of Common Stock issuable within 30 days
of the effective date of the registration statement of which this
Prospectus is a part upon conversion (at a conversion price equal to 80%
of an assumed initial public offering price of $9.00) of up to $1,000,000
of the principal amount of certain outstanding Promissory Notes. See
"Description of Capital Stock."
15
<PAGE>
DILUTION
Pro forma net tangible book value per share represents total assets, less
total liabilities, divided by the number of shares outstanding as of September
30, 1996 (adjusted to reflect the conversion of the Preferred Stock into
Common Stock upon the consummation of this offering). The Company's pro forma
net tangible book value as of September 30, 1996, was approximately
$3,692,000, or approximately $0.59 per share. Without taking into account any
changes in such net tangible book value per share after September 30, 1996,
other than to give effect to the sale of the shares of Common Stock offered
hereby at an assumed initial public offering price of $9.00 per share and the
receipt of the net proceeds of such sale, the pro forma net tangible book
value per share as of September 30, 1996, would have been approximately
$17,263,000, or approximately $2.15 per share. This represents an immediate
increase in net tangible book value per share of $1.56 to existing
shareholders and an immediate dilution of $6.85 per share to new investors.
The following table sets forth this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................... $9.00
Pro forma net tangible book value per share as of September 30,
1996............................................................ $0.59
Increase per share attributable to new investors................. 1.56
-----
Pro forma net tangible book value per share after this offering.... 2.15
-----
Dilution per share to new investors................................ $6.85
=====
</TABLE>
The following table sets forth, on a pro forma basis as of September 30,
1996, the differences between existing shareholders and new investors with
respect to the total number of shares of Common Stock and Preferred Stock (all
of which Preferred Stock will be converted into Common Stock upon the
consummation of this offering) purchased from the Company, the total
consideration paid and the average price per share paid (assuming the sale of
1,750,000 shares of Common Stock at an initial public offering price of $9.00
share and before deducting underwriting discounts and commissions and
estimated offering expenses):
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------- ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders....... 6,297,403 78.3% $ 7,884,772 33.4% $1.25
New investors............... 1,750,000 21.7 15,750,000 66.6 9.00
--------- ----- ----------- -----
Total..................... 8,047,403 100.0% $23,634,772 100.0%
</TABLE>
The above calculations do not give effect to the possible issuance of (i)
724,500 shares of Common Stock issuable upon exercise of options outstanding
(as of December 20, 1996) at a weighted average exercise price of $3.19 per
share, (ii) 588,078 shares of Common Stock issuable upon exercise of warrants
outstanding (as of December 20, 1996) at a weighted average exercise price of
$5.28 per share and (iii) up to 138,889 shares of Common Stock issuable within
30 days of the effective date of the registration statement of which this
Prospectus is a part upon conversion (at a conversion price equal to 80% of an
assumed initial public offering price of $9.00) of up to $1,000,000 of the
principal amount of certain outstanding Promissory Notes. To the extent that
these options, warrants and conversion rights become exercisable and are
exercised or to the extent additional options or warrants are granted or
exercised, there will be further dilution to new investors. See "Description
of Capital Stock."
16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following selected consolidated financial data of the Company are
qualified by reference to and should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and
the Consolidated Financial Statements and Notes thereto included elsewhere
herein. The statements of operations data as of and for the period from
inception (October 2, 1992) to December 31, 1992, and as of and for the years
ended December 31, 1993, 1994, and 1995, are derived from, and are qualified
by reference to, the audited consolidated financial statements included
elsewhere in this Prospectus and should be read in conjunction with those
consolidated financial statements and notes thereto. The selected consolidated
financial data as of September 30, 1996, and for the nine months ended
September 30, 1995, and 1996, have been derived from unaudited consolidated
financial statements of the Company which, in the opinion of management,
include all adjustments, consisting of normal recurring adjustments, necessary
for a fair presentation of the financial information set forth therein. The
results for the nine months ended September 30, 1996, are not necessarily
indicative of the results to be expected for the entire year.
<TABLE>
<CAPTION>
PERIOD FROM NINE
INCEPTION MONTHS ENDED
(OCTOBER 2, 1992) YEARS ENDED DECEMBER 31, SEPTEMBER 30,
TO DECEMBER 31, --------------------------- ----------------
1992 1993 1994 1995 1995 1996
----------------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED
STATEMENT OF OPERATIONS
DATA:
Net sales............... $ -- $ -- $ 2,742 $ 8,242 $ 5,875 $ 9,598
Cost of sales .......... -- -- 1,978 4,980 3,414 5,967
------ ------- -------- -------- ------- -------
Gross profit........... -- -- 764 3,262 2,461 3,631
Operating expenses:
Sales and marketing.... -- 36 904 1,523 1,082 2,166
General and administra-
tive.................. -- 160 762 1,169 765 1,473
Research and develop-
ment.................. -- 289 765 948 558 1,042
------ ------- -------- -------- ------- -------
Total operating ex-
penses................ -- 485 2,431 3,640 2,405 4,681
------ ------- -------- -------- ------- -------
Operating income
(loss)................. (485) (1,667) (378) 56 (1,050)
Interest expense and
other, net............. -- -- (21) (69) (53) (222)
------ ------- -------- -------- ------- -------
Net income (loss) from
continuing operations.. -- (485) (1,688) (447) 3 (1,272)
Loss from discontinued
operation(/1/)......... -- -- -- (180) (85) (347)
------ ------- -------- -------- ------- -------
Net loss................ $ -- $ (485) $ (1,688) $ (627) $ (82) $(1,619)
====== ======= ======== ======== ======= =======
Pro forma:
Net income (loss) per
common share from con-
tinuing operations.... $ -- $ (.16) $ (.31) $ (.07) $ 0 $ (.20)
Loss per common share
from discontinued
operation............. -- -- -- (.03) (.01) (.05)
------ ------- -------- -------- ------- -------
Net loss per common
share(/1/)............ $ -- $ (.16) $ (.31) $ (.10) $ (.01) $ (.25)
====== ======= ======== ======== ======= =======
Weighted average common
shares
outstanding(/2/)....... 2,350 3,049 5,486 6,187 6,125 6,493
====== ======= ======== ======== ======= =======
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, 1996
----------------------------- ------------------------------------
PRO PRO FORMA
1992 1993 1994 1995 ACTUAL FORMA(/3/) AS ADJUSTED(/4/)
---- ------ ------- ------- ------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED
BALANCE SHEET DATA:
Cash.................... $ -- $1,230 $ 126 $ 113 $ 335 $ 2,991 $10,603
Working capital......... -- 1,845 1,317 1,685 2,920 2,995 16,566
Total assets............ 2 2,008 3,603 4,559 8,951 11,607 19,219
Long-term debt and
capital lease
obligations, less
current portion........ -- -- 11 62 100 100 100
Total debt.............. -- -- 809 1,254 3,459 6,384 109
Accumulated deficit..... -- (485) (2,173) (2,805) (4,425) (4,425) (4,816)
Total shareholders' eq-
uity................... 2 1,919 1,636 2,132 3,617 3,692 17,263
</TABLE>
- -----------------
(1) In November 1996, the Company's Board of Directors approved the
distribution of all of the issued and outstanding shares of the common
stock of the Company's wholly-owned subsidiary, Paragon Technology, Inc.
("Paragon"), as a dividend to shareholders of record of the Company as of
November 15, 1996. Paragon's results of operations for the year ended
December 31, 1995 and for the nine-month periods ended September 30, 1995
and 1996, as well as the estimated loss from disposition, have been
presented as a discontinued operation in the above Statement of Operations
Data. See "Recent Events--Dividend of Shares of Paragon Technology, Inc."
(2) Computed on the basis described for pro forma net loss per common share in
Note 2 of Notes to Consolidated Financial Statements.
(3) Reflects receipt, in December 1996, of $5,000,000 aggregate principal
amount of bridge loans and the issuance of warrants to purchase an
aggregate of 250,000 shares of Common Stock; does not give effect to the
issuance of up to 138,889 shares of Common Stock issuable upon conversion
of certain principal amounts of such loans.
(4) Adjusted to reflect (a) the sale of 1,750,000 shares of Common Stock
offered hereby at an assumed public offering price of $9.00 per share and
the application of the estimated net proceeds therefrom and (b) the
automatic conversion of all outstanding Preferred Stock into Common Stock
upon the consummation of this offering. See "Use of Proceeds" and
"Capitalization."
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Consolidated
Financial Statements and Notes thereto included elsewhere in this Prospectus.
This Prospectus contains, in addition to historical information, forward-
looking statements that involve risks and uncertainties. The Company's actual
results could differ materially from the results discussed in the forward-
looking statements. Factors that could cause or contribute to such differences
include those discussed below, as well as those discussed elsewhere in this
Prospectus. See "Risk Factors."
GENERAL
FieldWorks was incorporated in 1992 to provide rugged computing platforms
and computer system solutions for use by field personnel. From its inception
through June 1994, the Company's activities consisted primarily of developing
its products and building its infrastructure. The Company shipped its first
commercial product, the 7000 Series FIELD WORKSTATION rugged laptop computing
platforms, in June 1994, and the 5000 Series FIELD WORKSTATION rugged notebook
computing platforms in June 1996.
The Company recognizes revenue upon shipment of product. Although the
Company's revenues have increased in each of the last seven quarters, the
Company has incurred net losses in six of the seven quarters and had an
accumulated deficit of $4.4 million as of September 30, 1996. The Company's
limited operating history makes the prediction of future operating results
difficult. Accordingly, although the Company has experienced revenue growth,
such growth should not be considered indicative of future revenue growth, if
any, or of future operating results. See "Risk Factors--Limited Operating
History; History of Operating Losses; Uncertainty of Future Profitability" and
"--Fluctuations in Quarterly Operating Results."
RESULTS OF OPERATIONS
The following table sets forth certain financial data expressed as a
percentage of net sales for the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
---------------- ----------------
1994 1995 1995 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales............................... 100% 100% 100% 100%
Cost of sales........................... 72 60 58 62
------ ------ ------ ------
Gross profit.......................... 28 40 42 38
Operating expenses:
Sales and marketing................... 33 18 18 23
General and administrative............ 28 14 13 15
Research and development.............. 28 12 10 11
------ ------ ------ ------
Total operating expenses............ 89 44 41 49
Operating income (loss)................. (61) (4) 1 (11)
Interest expense and other, net......... (1) (1) (1) (2)
------ ------ ------ ------
Net loss from continuing operations..... (62) (5) 0 (13)
Loss from discontinued operation........ -- (3) (1) (4)
------ ------ ------ ------
Net loss................................ (62)% (8)% (1)% (17)%
====== ====== ====== ======
</TABLE>
19
<PAGE>
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Net Sales. The Company's net sales increased 63% from $5.9 million in the
nine months ended September 30, 1995 to $9.6 million for the nine months ended
September 30, 1996. The increase in net sales was due primarily to an increase
in the number of units sold and also to an increase in the average selling
prices of the 7000 Series driven by the levels of optional features included
in units sold, such as Pentium chips, RAM memory and CD-ROM drive upgrades,
enhanced wet and cold weather packages, and electromagnetic emission control
packages, as well as peripheral equipment purchases such as batteries and
carrying cases. International sales decreased from 38% of net sales in the
nine months ended September 30, 1995, to 23% of net sales in the nine months
ended September 30, 1996, as a result of the Company's focus on building its
domestic sales force and testing to demonstrate continued compliance with new
European EMI standards following certain changes to the 7000 Series.
Gross Profit. Gross profit increased 48% from $2.5 million in the nine
months ended September 30, 1995, to $3.6 million in the nine months ended
September 30, 1996. As a percentage of net sales, gross profits decreased from
42% in the first nine months of 1995, to 38% in the first nine months of 1996.
This decrease in gross profit as a percentage of net sales was the result of
reduced efficiencies related to bringing the 5000 Series into full production
and of increased sales of the lower-margin 5000 Series.
Sales and Marketing. Sales and marketing expenses consist primarily of
salaries, bonuses and commissions, promotions and advertising and travel.
Sales and marketing expenses increased from $1.1 million or 18% of net sales
for the nine months ended September 30, 1995, to $2.2 million or 23% of net
sales for the same period in 1996, primarily due to increased advertising,
staffing and promotion expenses, all of which were intended to build general
product recognition and to introduce the 5000 Series. The Company expects that
its sales and marketing expenses will continue to increase as it seeks to
expand its sales channels.
General and Administrative. General and administrative expenses consist
primarily of salaries, professional services, facilities, incentive
compensation and bad debt costs. General and administrative expenses increased
from $0.8 million or 13% of net sales for the nine months ended September 30,
1995, to $1.5 million or 15% of net sales for the same period in 1996, due
primarily to increased staffing, legal fees and facilities expenses. The
Company expects to continue to increase its general and administrative
expenses in the foreseeable future as it adds general and administrative
infrastructure.
Research and Development. Research and development expenses consist
primarily of salary and materials costs incurred in the development and
testing of new products and customized platforms. Research and development
costs are expensed as incurred. Research and development expenses increased
from $0.6 million or 10% of net sales for the nine months ended September 30,
1995, to $1.0 million or 11% of sales for the same period in 1996. The
increase in research and development expenses was primarily due to significant
investment in the 5000 Series and also to continued development of the 7000
Series. The Company expects research and development expenses to increase for
the foreseeable future.
Interest Expense and Other, Net. Interest expense increased from
approximately $52,000 for the nine months ended September 30, 1995 to $223,000
for the same period in 1996, primarily due to higher levels of indebtedness,
both under the Company's bank line of credit and in the form of loans
primarily from affiliated parties, that were required to fund working capital
requirements. See "--Liquidity and Capital Resources."
COMPARISON OF YEARS ENDED DECEMBER 31, 1993, 1994, AND 1995
Net Sales. Net sales increased 201% from $2.7 million in 1994, the Company's
first year of commercial sales, to $8.2 million in 1995. This increase was due
primarily to an increase in
20
<PAGE>
the number of units sold partially offset by a 6% decrease in the average
selling prices for the 7000 Series. Sales to the Company's international
distributors accounted for 39% and 35% of net sales for 1994 and 1995,
respectively.
Gross Profit. Gross profit increased 327% from $0.8 million in 1994 to $3.3
million in 1995. As a percentage of net sales, gross profit increased from 28%
in 1994 to 40% in 1995. This increase in gross profit was the result of
improved economies of scale realized from increases in production volume and
also of enhanced manufacturing and procurement efficiencies.
Sales and Marketing. There were no significant marketing and selling
expenses in 1993. Sales and marketing expenses increased from $0.9 million or
33% of net sales for 1994 to $1.5 million or 18% of net sales for 1995,
primarily as the result of increased expenditures in advertising, promotion
and staffing. Sales and marketing expenses as a percentage of sales decreased
due to increased market acceptance of the Company's products.
General and Administrative. General and administrative expenses increased
from $0.2 million in 1993 (on no net sales) to $0.8 million or 28% of net
sales in 1994 and to $1.2 million or 14% of net sales in 1995. The increases
from 1993 to 1994 were the result of administrative staffing increases,
facility growth and infrastructure development. Increases in 1995 resulted
from a move to a new facility, the addition of staff and an increase in
professional service expenses.
Research and Development. Research and development expenses increased from
$0.3 million in 1993 (on no net sales) to $0.8 million or 28% of net sales in
1994 and to $0.9 million or 12% of net sales in 1995. These increases were the
result of the Company's efforts to build and support its engineering
infrastructure related to development of the 7000 Series. In addition, the
Company's research and development costs increased in the second half of 1995
as the result of efforts related to the development of the 5000 Series.
Interest Expense and Other, Net. Interest expense increased from $21,000 in
1994 to $69,000 for 1995, primarily due to increased line of credit borrowings
to fund additional working capital requirements. The Company had no borrowings
outstanding in 1993.
QUARTERLY RESULTS OF OPERATIONS
The following table sets forth certain unaudited financial data for each of
the seven consecutive quarters ended September 30, 1996. This data has been
derived from unaudited consolidated financial statements that, in the opinion
of management, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of such information. Such
statement of operations data should be read in conjunction with the Company's
audited Consolidated Financial Statements and Notes thereto.
The Company's operating results may vary significantly from quarter to
quarter due to a wide range of factors, such as changes in customer buying
patterns, the timing of the announcement and introduction of new products by
the Company or its competitors, the tactics of the Company's competitors,
technological developments affecting the rugged computing platform market, and
the overall strength of the economy. As a result, the Company's operating
results for any particular quarter are not necessarily indicative of results
that the Company may achieve for any subsequent quarter or full fiscal year.
See "Risk Factors--Fluctuations in Quarterly Operating Results."
21
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 YEAR ENDING DECEMBER 31, 1996
---------------------------------- ---------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
------- ------- ------- ------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $1,784 $1,853 $2,238 $2,367 $ 2,830 $ 3,066 $ 3,702
Cost of sales........... 1,048 1,100 1,266 1,566 1,735 1,840 2,392
------ ------ ------ ------ --------- --------- ---------
Gross profit............ 736 753 972 801 1,095 1,226 1,310
Operating expenses:
Sales and marketing.... 368 353 380 422 591 775 800
General and
administrative........ 240 262 300 367 465 507 501
Research and
development........... 142 147 213 446 430 320 292
------ ------ ------ ------ --------- --------- ---------
Total operating
expenses.............. 750 762 893 1,235 1,486 1,602 1,593
------ ------ ------ ------ --------- --------- ---------
Operating income
(loss)................. (14) (9) 79 (434) (391) (376) (283)
Interest expense and
other, net............. (19) (17) (17) (16) (64) (54) (104)
------ ------ ------ ------ --------- --------- ---------
Net income (loss) from
continuing operations.. (33) (26) 62 (450) (455) (430) (387)
Income (loss) from
discontinued
operation.............. (2) 7 (90) (95) (70) (137) (140)
------ ------ ------ ------ --------- --------- ---------
Net loss................ $ (35) $ (19) $ (28) $ (545) $ (525) $ (567) $ (527)
====== ====== ====== ====== ========= ========= =========
</TABLE>
The following table sets forth certain unaudited financial data for each of
the seven consecutive quarters ended September 30, 1996, expressed as a
percentage of the Company's net sales for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 YEAR ENDING DECEMBER 31, 1996
------------------------------- -------------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
------- ------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... 100 % 100 % 100 % 100 % 100 % 100 % 100 %
Cost of sales........... 59 59 57 66 61 60 65
--- --- --- --- --------- --------- ---------
Gross profit............ 41 41 43 34 39 40 35
Operating expenses:
Sales and marketing.... 21 19 17 18 21 25 22
General and
administrative........ 13 14 13 15 16 17 13
Research and develop-
ment.................. 8 8 9 19 16 10 8
--- --- --- --- --------- --------- ---------
Total operating
expenses.............. 42 41 39 52 53 52 43
--- --- --- --- --------- --------- ---------
Operating income
(loss)................. (1) -- 4 (18) (14) (12) (8)
Interest expense and
other, net............. (1) (1) (1) (1) (2) (2) (2)
--- --- --- --- --------- --------- ---------
Net income (loss) from
continuing operations.. (2) (1) 3 (19) (16) (14) (10)
Loss from discontinued
operation ............. -- -- (4) (4) (3) (4) (4)
--- --- --- --- --------- --------- ---------
Net loss................ (2)% (1)% (1)% (23)% (19)% (18)% (14)%
=== === === === ========= ========= =========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has principally financed its operations and
capital expenditures through the private sale of equity securities, generating
net proceeds of $7.9 million as of September 30, 1996; through bank lines of
credit, of which $2.0 million was outstanding as of such date; and September
30, 1996 outstanding loans of $1.4 million, of which $1.3 million were with
affiliated parties.
As of September 30, 1996 the Company had cash of $0.3 million.
22
<PAGE>
On December 18 and 19, 1996, the Company issued an aggregate of $5,000,000
original principal amount of subordinated promissory notes. These notes,
together with interest thereon, are due on June 30, 1997; provided, that the
Company may extend their final maturity to December 31, 1997, by written
notice delivered to holders at any time before June 30, 1997; provided,
further, that these notes shall be payable in full within thirty (30) days
after the effective date of the registration statement of which this
Prospectus forms a part. The Company used approximately $2,030,000 of the
funds borrowed to repay amounts outstanding under bank lines of credit (as to
one of which the Company was in default of certain financial covenants as of
September 30, 1996). The Company will utilize the remaining amounts to fund
its operations until the completion of this offering.
Cash used for operating activities totalled $0.4 million in 1993, $2.9
million in 1994, $1.7 million in 1995, and $4.7 million in the nine months
ended September 30, 1996. The Company purchased property and equipment of $0.1
million in 1993, $0.3 million in 1994, $0.2 million in 1995, and $0.4 million
in the first nine months of 1996.
The Company believes that the proceeds of this offering, together with cash
on hand, interest expected to be earned thereon, and anticipated revenues will
be sufficient to fund its operations at least through 1997. In order to meet
its needs beyond such time, the Company may be required to raise additional
capital. There can be no assurance that sufficient capital will be available
if and when required on terms acceptable to the Company, if at all. See "Risk
Factors--Future Capital Needs; Uncertainty of Additional Funding."
23
<PAGE>
RECENT EVENTS
During the first half of 1996, the Company began shipping demonstration
units of its 5000 Series FIELD WORKSTATION for customer test trials.
Complexities in engineering development delayed the shift from production of
demonstration units to commercial production of the 5000 Series beyond the
time that the Company had initially anticipated. The Company began shipping
commercial production units of the 5000 Series in June 1996, and has increased
the number of units shipped in each month since then. However, strong early
customer response caused a significant increase in total order bookings in the
third quarter of 1996, as shown in the following table:
<TABLE>
<CAPTION>
ORDER BOOKINGS
1996 FISCAL QUARTER
--------------------
FIRST SECOND THIRD
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
7000 Series.......................................... $2,651 $2,909 $3,621
5000 Series.......................................... 161 435 2,214
------ ------ ------
Total................................................ $2,812 $3,344 $5,835
</TABLE>
In light of the time necessary to introduce full-scale commercial production
of the 5000 Series, this large volume of orders contributed to a September 30,
1996, backlog of approximately $2.8 million (of which approximately $0.7
million represented orders deliverable in 1997). See "Business--Backlog." The
Company expects to be able to fill approximately $1.8 million of this backlog
before the end of 1996 and believes that custom orders requiring a longer
fulfillment time will represent the bulk of the September 30, 1996, backlog
orders not filled by the end of 1996. Further, the Company currently
anticipates that by the end of the first quarter of 1997 it will have filled
all current backlog orders and will have reduced its average fulfillment time
to its goal of four weeks. There can, however, be no assurance that the
Company will be able to do so; for factors that might prevent this, see "Risk
Factors--Risks Associated with Managing Growth."
The delay in the commercial introduction of the 5000 Series, together with
expenses incurred by the Company in connection with building its corporate
infrastructure to support the anticipated volume of sales of the 5000 Series,
has adversely affected the Company's profits in the second half of 1996.
DIVIDEND OF SHARES OF PARAGON TECHNOLOGY, INC.
In August 1995 the Company acquired a wholly-owned subsidiary, Paragon
Technology, Inc. ("Paragon"), which designs and sells high performance
graphics subsystems for the commercial and OEM markets, including MPEG-II
video compression decoding solutions, image manipulation software and digital
video disk ("DVD") technology. The Company incorporates certain of Paragon's
technology in its computing platforms. Paragon also licenses its products to
large personal computer manufacturers, which include the Paragon products in
commercially available personal computers. In November 1996, the Company's
Board of Directors approved the distribution of all of the issued and
outstanding shares of Paragon's capital stock as a dividend to shareholders of
record of the Company as of November 15, 1996. The Company anticipates that
the distribution of this dividend will be completed before December 31, 1996.
Until December 31, 1996, the Company will provide working capital for Paragon;
from November 15, 1996, until such date, the Company estimates that such
working capital contributions may aggregate between $50,000 and $100,000.
Following completion of the dividend: (i) two of the Company's directors and
officers, Gary Beeman and Robert Szymborski, will serve as directors of
Paragon, (ii) Mr. Beeman will serve as Paragon's Chairman of the Board and
(iii) the Company and Paragon intend to enter into strategic relationships in
the areas of product development and marketing. Since the record date for the
dividend was November 15, 1996, purchasers of shares of Common Stock in this
offering will not be entitled to receive any Paragon stock, nor to receive any
other property in lieu of such dividend.
24
<PAGE>
BUSINESS
THE COMPANY
FieldWorks designs, manufactures, markets and supports portable rugged
computing platforms and computer system solutions for use in demanding field
environments. In addition to providing the full range of computer features,
performance and functionality typically found in high-end desktop computers,
the Company's portable computing platforms have been designed to meet rigorous
military standards for ruggedness and to function despite exposure to extreme
temperature, mechanical shock, vibration and moisture. The Company's computing
platforms are expandable through multiple expansion slots to provide a
flexible electronic "toolbox" that can integrate all of a user's application-
specific, multi-media and communications needs into one portable, rugged
device. The Company's products have been designed with a modular system
configuration that allows a user to easily upgrade the central processing unit
("CPU") processor or any of the other technological components without
purchasing a new computer. Further, the Company has the ability to customize
its computing platforms to meet the unique needs of its customers.
The Company targets those markets that require portable computing platforms
that can perform multiple functions, including diagnostics, data acquisition
and electronic testing and monitoring, and simultaneously provide
communications and computer capability even under adverse conditions in the
field. FieldWorks rugged computing platforms are in use in a variety of market
applications, including: electronic toolboxes for telecommunications test
crews to simplify and expedite installation, repair and troubleshooting tasks;
data collection and transmission for in-flight commercial airplane testing;
collection and analysis of Global Positioning System ("GPS") geographical
information and agricultural data to aid in the selection of crops, chemicals
and farming methods; diagnostic system analysis and wireless communication for
use with trucking fleets; and video surveillance and monitoring for law
enforcement purposes. The Company believes that its rugged computing
technology has enabled its customers to create new applications that improve
the productivity of their field personnel and believes further that additional
markets and customers will develop as more businesses recognize the benefits
of providing field personnel with effective, sophisticated computing power.
The Company markets its products worldwide through a direct sales force,
independent sales representatives and distributors, OEMs, VARs and systems
integrators. The Company's ten top customers during the twenty-one months
ended September 30, 1996 were The Freightliner Corporation ("Freightliner"),
Liberty Technologies, Inc. ("Liberty"), Texas Instruments Incorporated ("Texas
Instruments"), Keithley Metrabyte, a division of Keithley Instruments Inc.,
Dateppli Inc. (for sale to Ford Motor Company), Strategic Solutions, Inc., JoR
A.B. (for sale to L.M. Ericsson A.B., Sweden), International Atomic Energy
Agency, AT&T Corporation and Pacific Avionics, Inc. In July 1996, one of the
Company's customers, Network General, entered into an agreement with the
Company pursuant to which Network General made a $3 million equity investment
in the Company.
FIELD COMPUTING MARKET
Due to rapid technological advances over the past several years,
organizations have become increasingly dependent on mobile computing and
communications devices, such as portable computers, pagers and cellular
telephones, to enhance workforce productivity. Highlighting this trend is the
growth in the market for consumer portable computers, which Frost & Sullivan
has predicted may reach annual worldwide sales of nearly $80 billion by 2001.
Although this demand has to date been largely attributable to offices and
office staff, organizations are increasingly seeking to computerize field
personnel, in particular those who (i) have direct contact with customers,
(ii) install, diagnose and maintain company or customer equipment, or (iii)
collect the critical information that allows the business to better meet the
needs of its customers. Such computerization can provide sophisticated field
diagnostic and analytic capabilities, enhance field access to data and on-line
information, eliminate paperwork
25
<PAGE>
and improve electronic dispatching and communication. As a result, the market
for mobile computing and field force automation products is predicted to be
one of the fastest growing sectors of the computer industry through 1999, with
annual growth predicted at as much as 35% or more. According to International
Data Corp. ("IDC") estimates, the rugged portable computer market is currently
over $500 million and is expected to grow by more than 50% over the next three
years.
Industries such as telecommunications, utilities, farming, law enforcement,
the military and transportation have recognized the need for computerization
and automation in the field. However, the effectiveness of field force
computerization and automation efforts has often been limited by the nature of
the products that have been available. Computers are now being used in the
field to perform a wide range of tasks, but both off the shelf, consumer
portable computers and custom-designed portable computers generally have
significant shortcomings that limit their use by field personnel. In part as a
result of these limitations, some companies still prefer to employ only
single-purpose diagnostic and data collection machines in the field, foregoing
the benefits of full computerization.
Consumer portable personal computers that are designed for office or home
use frequently become inoperable under the harsher conditions present in the
field. The chart below illustrates the durability problems encountered when
attempting to use a consumer personal computer in the field.
[This graph shows the percentage of buyers reporting types of damage for the
following events:
Accidental drops/pavement:
Damage has happened: approximately 62%
Damage rendered computer inoperable: approximately 52%
Food/liquid spills:
Damage has happened: approximately 45%
Damage rendered computer inoperable: approximately 23%
Dirt/other contamination:
Damage has happened: approximately 43%
Damage rendered computer inoperable: approximately 9%
User negligence:
Damage has happened: approximately 42%
Damage rendered computer inoperable: approximately 23%
Objects dropped on unit:
Damage has happened: approximately 32%
Damage rendered computer inoperable: approximately 14%]
(1) Based on a random survey of 589 InfoWorld subscribers
involved in purchasing portable personal computers. Damage
as reported is not representative of damage per single
computer or over any particular time period, and should
not be deemed to represent the likelihood that any
particular computer will be damaged over any particular
time period.
Frost & Sullivan has reported that in one survey it conducted, respondents
reported that between 20% and 25% of all notebook computers used were sent in
for repairs each year, with average "down time" of five and one-half days per
computer. The frequent repair necessary for typical consumer portable
computers that are used in the field results not only in the cost of repair
itself, but also in the lost productivity and associated expense caused by
repair down time.
In addition, consumer portable personal computers are typically available
only with a standard set of features that cannot be expanded or customized to
meet the unique requirements of field personnel. For example, field
technicians require diagnostic and data collection capabilities in addition to
typical office environment computer functionality. Thus, standard portable
personal computers' lack of expandability limits their usefulness as complete
electronic toolboxes for field personnel.
Further, consumer portable personal computers generally are not designed to
be upgraded. Rapidly changing technology results in frequent changes in the
availability of portable personal computers as models change. Large
organizations can discover that their attempts to deploy effective and
consistent field force computerization over a period of time are impaired when
they are unable to continue to purchase the same models of portable personal
computers or when the computers become outmoded.
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<PAGE>
The alternatives to off the shelf, fragile, non-expandable, portable
personal computers have been either custom-designed personal computers or
mobile single-purpose diagnostic and data collection instruments. While
custom-designed portable personal computers can be configured to serve
specific field uses, they are expensive, generally limited in their
applications and often unable to withstand conditions typically present in the
field. Mobile single-purpose diagnostic and data collection instruments are
designed to withstand field conditions, but generally have little independent
computing capability. Data analysis and manipulation, therefore, must be
performed later on a separate, non-portable computer.
THE FIELDWORKS SOLUTION
The Company has focused on delivering products that address the varied and
specialized requirements of field force personnel. The Company's products
feature four critical design characteristics that it believes purchasers of
field computing platforms require.
Rugged. The Company's computing platforms have been designed to meet
stringent military standards of ruggedness, and to function despite extreme
temperatures, mechanical shock while operating up to 100 Gs (100 times the
force of gravity), vibration and moisture. The Company achieves this by using,
among other things: (i) high-strength cast magnesium chassis, (ii) special
shock absorbers for internal components, (iii) durable gold-plated
interconnect systems and (iv) rubber sealing.
Expandable. The Company has focused on providing computing platforms that
are expandable to accommodate both current and future needs of the field force
user. The Company's computing platforms allow for the integration of
application-specific equipment, including auxiliary test, measurement and
diagnostic subsystems and multi-media and communications modules. These
expansion capabilities also allow the Company's computing platforms to adapt
to the evolving requirements of the user, whose needs can change as additional
technology is developed in the future.
Upgradeable. The pace of change in technology such as processors, memory and
display methods can rapidly render non-upgradeable computers obsolete. Unlike
typical consumer portable computers, the Company's computing platforms are
designed to be easily upgraded using standard component parts. The modularity
of the Company's computing platforms allows for easy replacement of all major
subsystems, including processors, screens, disk drives, memory and keyboards,
thereby extending useful life and reducing the overall cost of ownership.
Customizable. Many of the Company's customers have unique needs that require
some degree of customization, from the incorporation of unique functions to
the design and production of special purpose machines. The modular design of
the Company's computing platforms allows the Company to readily adapt its
machines to a customer's specifications. Customization has ranged from fairly
simple mechanical adaptations to sophisticated electrical and mechanical
modifications. Examples of customized features have included: (i) designing
modifications to reduce electro-magnetic emissions, (ii) including
particularly delicate magneto-optical disk drives and (iii) incorporating
specialized high performance graphic subsystems to allow full-motion video
applications.
STRATEGY
The Company's objective is to be the leading designer, manufacturer and
marketer of rugged computing platforms and computer system solutions. The
Company's strategy consists of the following key components:
Penetrate Key Vertical Markets. The Company is seeking to penetrate key
vertical markets including military/government, utilities, transportation,
aviation, telecommunications and law enforcement. The Company intends to
employ a variety of approaches in these various markets, including building
strategic OEM relationships and focusing on relationships with
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<PAGE>
large volume repeat customers, depending on the characteristic purchasing
patterns of each vertical market. Where appropriate, the Company develops
specialized product features and functions to address the special needs of
a particular vertical markets.
Expand Strategic OEM Relationships. Certain of the Company's key vertical
markets are characterized by dominant third party OEMs. In those markets,
the Company sells its computing platforms to be bundled into computer
system solutions that the OEMs then sell to end users. Examples of existing
relationships include an OEM relationship with Texas Instruments, which
provides surveillance systems for military and law enforcement uses through
its Phototelesis division; an exclusive OEM supply relationship with
Liberty, the major producer of testing systems for the nuclear power
industry; and an OEM relationship with Network General, a major producer of
telecommunications testing systems.
Establish Relationships with Large-Volume, Repeat Customers. The Company
intends to focus the efforts of its direct sales force and sales channel
partners on meeting the ongoing needs of large-volume purchasers. The
Company believes that its products are particularly attractive to such
customers given the Company's ability to customize its computing platforms
for specialized needs and the ease with which the Company's computing
platforms can be upgraded and standardized throughout an organization. The
Company believes that its ability to accommodate developing technologies
addresses the concerns many large organizations have regarding the impact
of technological obsolescence in the context of large computer equipment
investments.
Develop New Products and Enhance Existing Products. During the past four
years the Company has made a substantial investment in developing its
current computing platform technologies, which it believes have provided it
with significant expertise with regard to rugged computing platforms. The
Company intends to leverage this expertise to develop new products and
enhance existing products. The Company is currently developing additional
series of computing platforms designed to address broader customer
preferences for products with varying degrees of expandability, size and
price, all of which provide users with the ruggedness, processing power and
ease of upgrade that characterize the Company's current products. The
Company is also constantly working to add new features and functions to its
existing products.
Establish Product Recognition. The Company's goal is to establish the
Company's products as the standard for quality portable rugged computing
platforms. The Company's approach in this respect was to begin by
establishing the Company's products and their reputation for quality with
those customers who demand the greatest number of features. Accordingly,
the Company initially entered the rugged computing platform market with the
7000 Series FIELD WORKSTATION rugged laptop computing platform. The Company
intends to continue to build its reputation in the high-end portion of the
market while also utilizing its product recognition to penetrate portions
of the market where customers have different preferences for expandability,
size and price.
CURRENT PRODUCTS
The Company introduced its first commercial product, the 7000 Series FIELD
WORKSTATION rugged laptop computing platform, in June 1994. The 7000 Series,
available in a range of models, offers significant expansion capacity and is
targeted at the high end of the rugged field computing platform market. In
June 1996, the Company commercially introduced its 5000 Series FIELD
WORKSTATION rugged notebook computing platform, which is also offered in a
range of models. This Series is designed to meet the needs of those customers
with uses that require a smaller, more lightweight toolbox but do not require
the same degree of expandability.
The Company's 7000 Series and 5000 Series share many significant design and
performance characteristics. In particular, both series satisfy military
standards for battlefield equipment with respect to shock (up to 100Gs while
operating) and vibration. Both series share a modular design that allows for
ease of upgrading. Both series can be configured with a variety
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<PAGE>
of screens, memory capacities up to 128 Megabytes and disk drives up to 2.1
Gigabytes and are available with x486 or Pentium processors, as well as
various networking and communications options. All of the Company's computing
platforms are compatible with DOS, Windows, Unix, OS/2 and other operating
systems and come with a sealed keyboard and a FIELD MOUSEPAD pointing device
that can also serve as a signature and drawing pad.
7000 Series Field WorkStation Rugged Laptop Computing Platform. The
structure of the 7000 Series FIELD WORKSTATION laptop computing platform is
based on a high-strength cast magnesium alloy external housing. Internal
components that are sensitive to shock and vibration are contained within this
housing and isolated with special tuned shock absorbing polymers, while a
shock absorbing bushing system suspends all drives and the CPU. The 7000
Series incorporates the Company's backplane/card cage design, which provides
up to six ISA/PCI expansion card slots within the housing. These slots permit
the integration of instrumentation, data acquisition and communications
capabilities in the computing platform. Also contained within the housing are
PCMCIA expansion capability, integrated AC/DC power, battery capability,
desktop ISA/PCI slots, optional integrated CD-ROM, optional dual removable
hard drive system and optional Motion Picture Experts Group ("MPEG-II") video
compression decoding boards. The units in the 7000 Series weigh approximately
14 1/2 pounds.
5000 Series Field WorkStation Rugged Notebook Computing Platform. The
structure of the 5000 Series FIELD WORKSTATION rugged notebook computing
platform is based on an internal frame cast from a high-strength magnesium
alloy, and is encased in a specially-developed urethane coating. The skeleton
and coating protect internal sub-systems from shock and vibration. In
addition, some of the internal subsystems are suspended by a shock absorbent
bushing system. Virtually all of the electronics of the 5000 Series are
contained in a "technology module" that has been designed for easy removal,
making it possible for customers to service the units themselves and
simplifying upgrades. In addition to two optional ISA or PCI expansion slots,
all computing platforms in the 5000 Series have four universal bays in two
sizes. The two larger bays can house batteries, CD-ROM drives, an internal AC
adapter, hard drives or floppy drives. The two smaller bays can house
removable drives and/or PCMCIA slots. 5000 Series units weigh approximately 10
1/2 pounds.
The Company does not currently maintain an inventory of assembled computer
platforms; instead, it assembles its products to its customers' specifications
as orders are received. This enables the Company to provide each customer with
a computing platform that satisfies the customer's specific requirements.
The Company's 7000 Series FIELD WORKSTATION computing platforms have current
base list prices to end users of approximately $6,000 with standard features.
The Company's 5000 Series FIELD WORKSTATION computing platforms have base list
prices to end users of approximately $5,000 with standard features.
MARKETS AND CUSTOMERS
The markets for the Company's products consist of those businesses and other
entities that are seeking effective mobile computing platforms for field
personnel and functions. Users of the Company's field computing platforms and
their demands vary widely, and include: (i) the military, which needs mobile
units capable of withstanding battlefield conditions, (ii) utilities and
telecommunications test crews, which require electronic toolboxes that can
perform data acquisition, diagnostic, communications and analysis tasks to
expedite installation, repair and troubleshooting, and (iii) field sales
personnel, who need multi-media capabilities in a mobile unit that also
provides networking capabilities. Customers have found a wide variety of
specific uses for the Company's rugged computing platforms in the field, such
as the following examples drawn from some of the Company's target market
segments.
Law Enforcement. A federal law enforcement agency is conducting surveillance
and monitoring using a reconnaissance device that includes a FieldWorks
computing platform. This
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<PAGE>
device was employed at the 1996 Summer Olympic Games in Atlanta to capture
digital images and to communicate sensitive information to major intelligence
agencies around the world. Among other functions, the FieldWorks computing
platform provided the expandability necessary to house and control the
device's encryption, digital image capture and satellite communications
subsystems and functions.
Aviation. The Company's computing platform is used for in-flight commercial
airplane testing, where it is connected to the plane's data logging computer
to collect information that is then transmitted to engineers for analysis.
Since the computing platform must operate in areas of the plane that are
sensitive to electro-magnetic interference ("EMI"), the Company's engineers
customized the FieldWorks computing platform to develop an EMI-certified
portable computing platform.
Agriculture. A software developer has integrated the Company's computing
platform into an on-board "precision farming" system that utilizes GPS
technology to collect and analyze geographic information, fertilizer levels,
plant population, yield and other variables present on a specific farm. These
data can then be used to select the most appropriate crops, chemicals and
farming methods. Detachable mounts allow the computing platform to be moved
from one farm vehicle to another or to the home office.
Telecommunications. Test crews use the Company's computing platforms as
electronic toolboxes to simplify and expedite installation, repair and
troubleshooting tasks, such as network testing. The expandability of the
Company's computing platforms allow for the integration of the diagnostic
instrumentation necessary for these tasks.
Transportation. The Company's computing platforms are used in a portable
technical information and diagnostic system for use with fleets of trucks.
Maintenance personnel use the FieldWorks computing platforms incorporated in
this system not only to collect information from each vehicle's electronic
control and data logging units but also to view or graph the information and
to perform on the spot diagnostic routines that utilize the information.
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<PAGE>
The chart below lists some of the vertical markets that the Company has
targeted, along with the names of the largest FieldWorks customers in those
vertical markets:
<TABLE>
<CAPTION>
VERTICAL MARKET SIGNIFICANT CLIENTS
- --------------- -------------------
<S> <C>
Military/Government SAIC
California Microwave, Inc.
Lockheed Sanders, Inc.
Rockwell International
Utilities The Columbia Gas System, Inc.
International Atomic Energy Agency
Union Electric
Transportation Freightliner Corporation
Caterpillar
Detroit Diesel
Aviation Pacific Avionics
United Air Lines, Inc.
The Boeing Company
Bell Helicopter
Automotive Dateppli Inc. (for sale to Ford Motor Company)
Mercedes Benz
Chrysler Corporation
Law Enforcement Harris
New York Police Department
Telecommunications AT&T Corporation
Network General Corporation
Motorola, Inc.
JoR A.B. (for sale to L.M. Ericsson A.B., Sweden)
Instrumentation Liberty Technologies, Inc.
Gould Electronics Inc.
Minnesota Mining & Manufacturing Company (3M)
Honeywell Inc.
Imaging Texas Instruments Corporation
The Walt Disney Company
Eastman Kodak Company
Northrop Grumman Corp.
</TABLE>
In the first nine months of 1996, sales to two customers, Freightliner and
Texas Instruments, each accounted for more than 5% of net sales. During the
same period, sales to international customers represented approximately 23% of
net sales. During 1995, sales to Freightliner accounted for more than 5% of
net sales. During the same period, sales to international customers
represented approximately 35% of net sales. The Company does not believe that
it is dependent upon sales to any single customer given the Company's history
of a relatively large number of different customers and wide variations in the
size and timing of orders from both new and repeat customers.
The Company believes that additional markets and customers will continue to
develop as more businesses recognize the benefits of providing field personnel
with effective, sophisticated computing power.
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<PAGE>
The market for portable rugged computing platforms is in the early stages of
its development. There can be no assurance that a substantial market will
develop for the Company's products within the timeframe it anticipates or at
all. See "Risk Factors--Uncertainty of Market Acceptance."
SALES AND MARKETING
The Company markets its products worldwide through a direct sales force,
independent sales representatives and distributors, OEMs, VARs and systems
integrators. The Company's sales and marketing efforts are based on the
recognition that each of the Company's target vertical markets purchase from
different channels.
The Company's direct sales force focuses its efforts on building and
maintaining relationships with large-volume, repeat purchasers of the
Company's computing platforms and with entities that the Company considers to
be dominant manufacturers or sales channel entities within their vertical
markets. The Company also utilizes a network of approximately 19 independent
sales representatives for domestic sales. Other segments of the market are
addressed by sales to VARs and systems integrators that typically sell systems
that have been configured for specific end-user applications through the
addition of hardware, software or service. For international sales, the
Company maintains a network of approximately 38 international distributors,
which are managed by the Company's director for international sales. To date,
the Company's international sales have been principally in Europe, the Far
East and Australia, with recent sales in South America and Africa.
As of December 1, 1996, the Company employed 21 people in sales and
marketing. The direct sales effort is managed by a Vice President of Sales,
five regional sales managers within the United States, one director for
federal government sales and one director for international sales. Six of the
employees are engaged principally in marketing efforts and the remaining
persons are engaged primarily in sales. The Company conducts its sales
activities from its headquarters in Minnesota as well as sales offices in
Virginia, New Jersey and Alabama.
The Company advertises its products both in industry-specific trade
publications in the Company's target markets, such as Aviation Week and
Maintenance Technology, and in general interest computer magazines, such as PC
Week and BYTE. In addition, the Company participates in industry trade shows
in the Company's target markets and in computer industry trade shows. For
example, the Company participates in the UTC (Utilities Trade Conference) and
the AFCEA, a government and military trade show, in addition to the COMDEX
fall and spring shows. The Company has also employed direct mail campaigns
aimed at potential customers in its target markets.
BACKLOG
The Company's order backlog at September 30, 1996, was approximately
$2,797,000, of which approximately $730,000 represented orders deliverable in
1997 under committed future release dates, compared to approximately $233,000
at September 30, 1995. The Company's sales are made through purchase orders.
Orders are generally shippable within the upcoming quarter unless noted as a
committed future release date order. The Company's goal is to deliver orders
within four weeks of receipt; however, the factors discussed above under
"Recent Events" contributed during the third quarter of 1996 to the creation
of a backlog of orders that currently exceeds the Company's ability to fulfill
orders within such time period. The Company expects to be able to fill
approximately $1.8 million of this backlog before the end of 1996 and believes
that custom orders requiring a longer fulfillment time will represent the bulk
of the September 30, 1996, backlog orders not filled by the end of 1996.
Further, the Company currently anticipates that by the end of the first
quarter of 1997 it will have filled all current backlog orders and will have
reduced its average fulfillment time to its goal of four weeks.
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<PAGE>
RESEARCH AND DEVELOPMENT
As of December 1, 1996, 16 of the Company's 87 employees were engaged in
research and development and engineering. The Company designs many of the
aspects and components of its computing platforms, including lay-out, housings
and circuit boards, rather than incorporating other manufacturers' products.
The Company believes that its past efforts in this area have provided it with
significant technological advantages with regard to rugged computing
platforms, and the Company intends to continue to focus research and
development efforts on improving its core technologies. In addition, the
Company is beginning research and development efforts that are focused on
developing additional series of products that will address broader customer
preferences by providing toolboxes with a greater range of expandability, size
and price, all of which will provide the ruggedness, processing power and ease
of upgrade that characterize the Company's current products. Finally, the
Company's research and development efforts also involve developing customized
solutions for its customers who have unique, specialized requirements. The
Company has developed a number of customized solutions for customers in the
transportation, government and military, entertainment, field service and
engineering markets, and expects to continue to do so in appropriate cases.
The Company spent approximately $0.3 million (on no net sales), $0.8 million
(representing 28% of net sales) and $0.9 million (representing 12% of net
sales) on research and development in the years ended December 31, 1993, 1994,
and 1995, respectively, and $1.0 million (representing 11% of net sales) in
the nine months ended September 30, 1996.
INTELLECTUAL PROPERTY
In April 1996 the Company filed a provisional patent application related to
certain aspects of the design of its 5000 Series FIELD WORKSTATION notebook
computing platforms, including the technology module and features that enhance
its upgradeability and ruggedness. In July 1996, the Company filed a patent
application relating to the backplane design employed in its 7000 Series FIELD
WORKSTATION laptop computing platforms.
The Company claims trademark rights in the following marks used in
connection with its products: FIELDWORKS, FIELDWORKS with design, FIELD
MOUSEPAD, FIELD WORKSTATION, and TECHNOLOGY MODULE. In June 1996 the Company
filed applications in the U.S. Patent and Trademark Office to register
FIELDWORKS with design, FIELD MOUSEPAD, FIELD WORKSTATION, and TECHNOLOGY
MODULE. Trademark applications are not normally examined for at least six
months from the date of filing, and the registrability of these trademarks has
not yet been determined. The Company is aware that there are third parties
that have claimed and may claim superior rights, in certain territories in the
United States, to the use of certain of the marks in which the Company claims
rights. See "Risk Factors--Dependence on Intellectual Property."
The Company places copyright notices on all software that it develops for
inclusion in its products.
In order to protect its trade secrets and other proprietary information, the
Company requires that all vendors and those customers that request
customization work execute non-disclosure agreements with respect to
confidentiality and ownership of the Company's proprietary information and of
any related innovations. The Company also requires all new employees to enter
into agreements covering confidentiality, non-disclosure, assignment of
inventions and non-solicitation of employees.
The Company licenses the source code for Basic Input/Output System ("BIOS")
software that is included in the Company's products from two companies, Award
Software, Inc. and Phoenix Technologies, Ltd. The licenses are covered by
license agreements that, among other things, provide for the payment of
royalties by the Company and grant the Company the right to modify the
software as necessary. In addition, the Company purchases video controller
chips for inclusion in its products from Cirrus Logic, Incorporated and also
licenses the software
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<PAGE>
associated with these chips. The Company believes that the terms of these
licenses are standard for the industry.
There can be no assurance that the measures the Company takes with respect
to intellectual property will be sufficient to protect its intellectual
property or that such intellectual property will provide the Company with any
competitive advantage. See "Risk Factors--Dependence on Intellectual
Property."
SERVICE AND SUPPORT
The Company maintains a service and support program for the benefit of its
customers. The Company's staff is available to monitor order status, to
provide simple troubleshooting and to answer technical questions and questions
on post-installation issues and other product information. The Company
provides a one-year warranty program under which the Company agrees to
diagnose, repair and test any product, and the Company's goal is to return the
product to the customer within 48 hours. In addition to the standard warranty,
the Company also offers limited warranty programs for extended periods. The
Company provides product training, either at the Company's in-house training
facility or at the customer's site, including in some cases customized
programs. The Company also provides customers with updates on additions to the
Company's product line and on new options, accessories and software, and
performs upgrades for its customers. In the past, the most common upgrades
have been processors and display technology.
COMPETITION
The Company believes that it currently occupies a niche in the market with
its rugged computing platforms. The Company currently faces direct competition
in this market niche from companies producing portable computers intended for
field use such as Amrel Technology, Inc., Badger Computers (a unit of Group
Financial Partners, Inc.), Dolch Computer Systems, Getac Corporation, Husky
Computers Inc., Itronix Corporation, Kontron Elektronik Corporation (a
subsidiary of Kontron Elektronik GmbH) and Panasonic Personal Computer
Company. To the extent the Company and its direct competitors expand and
develop this market niche, other manufacturers may turn their attention to
this niche and begin to produce products directly competitive with those
offered by the Company. The Company's computing platforms also face indirect
competition from a variety of different companies and products, including
consumer portable personal computers, customized portable personal computers
and single-purpose diagnostic and data collection instruments.
Both the computer industry and the diagnostic and data collection instrument
industry are intensely competitive. Many of the companies that produce or may
produce devices that compete, directly or indirectly, with the Company's
products have substantially greater financial, technological and marketing
resources than the Company. There can be no assurance that the Company will be
able to compete effectively against current or future competitors, or that
such competitors will not succeed in adapting more rapidly and effectively to
changes in technology or in the market or in developing or marketing products
that will be more widely accepted.
Both the computer industry and the diagnostic and data collection instrument
industry are characterized by rapid technological change, changes in customer
requirements, frequent new product introductions and enhancements, and
evolving industry standards. The Company's success will depend in part on its
ability to keep pace with technological developments and emerging industry
standards and to respond to customer requirements by enhancing its current
products and introducing new products. Failure to anticipate or respond
rapidly to advances in technology and to adapt the Company's products
appropriately could have a material adverse effect on the success of the
Company's products and thus on the Company's business, financial condition and
results of operations. Technological advances may also increase the level of
competition in the rugged computing platform market.
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<PAGE>
The Company's products compete with other rugged computer products primarily
on the basis of product reliability, functional expandability and system
design, which facilitates upgradeability and customization. See "Risk
Factors--Competition" and "--Risk of Technological Obsolescence."
MANUFACTURING
The Company's manufacturing process consists primarily of the mechanical
subassembly, final assembly and testing of components and subassemblies
acquired from third party suppliers and subcontractors. These functions, along
with the final packaging of its products, are performed at the Company's
production facilities in Eden Prairie, Minnesota. The Company generally
assembles products upon receiving customer orders, and operates with little
finished goods inventory. The Company's goal is to fill customer orders within
four weeks; recently, however, the Company has experienced some backlog build-
up. See "Recent Events" and "--Backlog."
The Company works with a number of subcontractors to assemble mechanical
components, to manufacture printed circuit boards, and to produce certain
components, all to the Company's design specifications. A number of these
components are made using tools that have been designed for, and belong to,
the Company, but that are located on the manufacturer's premises. The Company
has relationships with subcontractors who provide subassemblies on a turn-key
basis. The Company also purchases components directly from one or more third
party suppliers before forwarding them to subcontractors for assembly. In
general, the Company believes that these services are available from a number
of different companies.
The Company employs extensive quality control systems and has a quality
assurance department that consists of seven full-time employees. The Company
received ISO 9001 quality assurance certification of its facilities in March
1996.
The Company currently has a limited manufacturing capability, and has, to
date, had no experience with high volume production runs of its products.
There can be no assurance that the Company will successfully develop this
manufacturing capability. See "Risk Factors--Risks Associated with Managing
Growth." Further, the Company's products employ a number of advanced high
technology components and there can be no assurance that these components will
continue to be available on acceptable terms or at all. See "Risk Factors--
Dependence on Availability of Components."
EMPLOYEES
As of December 1, 1996, the Company employed 87 full-time employees, of whom
33 were engaged primarily in manufacturing, 21 were engaged primarily in sales
and marketing, 16 were engaged primarily in engineering and research and
development, 13 were engaged primarily in administration and four were engaged
primarily in customer service. The Company also employs part-time or temporary
employees, mostly in manufacturing. None of the Company's employees are
represented by any labor union or other collective bargaining unit. The
Company believes that its relations with its employees are good.
The Company maintains $1 million key man life insurance policies on the
lives of each of Gary J. Beeman, the Company's President and Chief Executive
Officer, and Robert C. Szymborski, the Company's Executive Vice President and
Chief Technical Officer, with the proceeds payable to the Company.
FACILITIES
The Company currently leases an approximately 24,000 square foot facility in
Eden Prairie, Minnesota. This space houses the Company's headquarters and
manufacturing operations. This lease term expires in June 1999. The Company
believes that its existing facilities are
35
<PAGE>
adequate to meet its requirements only through early to mid-1997 and currently
anticipates that it will begin searching for additional expansion space in
late 1996. The Company believes that suitable expansion space is available in
the proximity of its existing facilities. There can, however, be no assurance
that suitable facilities will be available when needed on acceptable terms, if
at all, or that the Company can relocate its manufacturing and other
operations without significant disruption. See "Risk Factors--Risks Associated
with Managing Growth."
The Company also leases approximately 2,700 square feet in Springfield,
Virginia. The office of the Company's director of federal business, a repair
center, training center and demonstration center are located at the
Springfield facility. This lease term expires in June 2000.
LEGAL PROCEEDINGS
On June 25, 1996, a shareholder of the Company commenced an action in
Minnesota state district court against the Company and certain directors of
the Company. The essence of the shareholder's allegations was that the Company
issued shares of Common Stock without the authorization of all shareholders in
violation of certain agreements and that certain of the Company's directors
treated the plaintiff unfairly. On October 8, 1996, the district court judge
granted the Company's motion for summary judgment dismissing the lawsuit, and
on October 29, 1996, judgment was entered in favor of the Company. The
shareholder has not filed an appeal, but has 90 days from October 29, 1996, to
do so.
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MANAGEMENT
Directors and Executive Officers
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- ------------------------------------------------
<S> <C> <C>
Gary J. Beeman.......... 43 President, Chief Executive Officer, Treasurer
and Chairman of the Board of Directors
Robert C. Szymborski.... 48 Executive Vice President, Chief Technical
Officer, Secretary and Director
G. Paige Hiatt.......... 47 Vice President of Sales
Steven A. Manske ....... 41 Vice President of Finance
George E.
Kline(/1/)(/2/)........ 61 Director
David C. Malm-
berg(/1/)(/2/)......... 53 Director
</TABLE>
- -----------------
(1) Member of the Audit Committee of the Board of Directors.
(2) Member of the Compensation Committee of the Board of Directors.
Gary J. Beeman was a co-founder of the Company and has served as its
President, Chief Executive Officer, Treasurer and a member of the Board of
Directors of the Company since the Company's inception in October 1992. Mr.
Beeman was also a co-founder of Network Communications Corporation ("NCC"), a
Minneapolis-based designer and manufacturer of portable LAN/WAN data
communications diagnostic instrumentation, and served as Vice President of
Marketing and director of NCC from 1983 to 1991. Prior to that, Mr. Beeman
served as a marketing manager for ADC Telecommunications, Inc. ("ADC") and as
a program manager for Texas Instruments Corporation.
Robert C. Szymborski was a co-founder of the Company and has served as
Executive Vice President, Chief Technical Officer and Secretary and a member
of the Board of Directors since the Company's inception in October 1992. Mr.
Szymborski was also a co-founder of NCC and served as its Vice President of
Engineering from 1983 to 1992. Prior to that, Mr. Szymborski served as
Director of Engineering for ADC.
G. Paige Hiatt has served as the Company's Vice President of Sales since
July 1996. From 1994 to July 1996, Mr. Hiatt was a self-employed
manufacturer's representative who represented the Company in the San Francisco
area. From 1992 to 1993 he served as Vice President Sales for The Vantive
Corporation, a developer of client-server based customer response software.
From 1982 to 1992, Mr. Hiatt held various positions, including Director
Western Region and Vice President European Systems Sales, with Grid Systems
Corporation, a manufacturer of high performance portable computer systems.
Steven A. Manske has served as Vice President of Finance of the Company
since July 1995. Prior to his employment with the Company, Mr. Manske was
employed by Jostens, Inc., a provider of recognition and affiliation products,
from 1986, most recently as a division controller. Mr. Manske has also served
as a management consultant for Pragmatek Consulting Group.
George E. Kline has served as a member of the Board of Directors since
February 1994. He has been president of Venture Management, a financial
consulting services corporation, since 1966. Mr. Kline has also served as the
General Partner of Brightstone Capital, Ltd., a venture fund, since 1985 and
has been a private investor and financial consultant for over five years. He
is also a member of the boards of directors of Applied Biometrics, Inc., Pet
Food Warehouse, Inc., Health Fitness Physical Therapy, Inc., Rimage
Corporation and CyberOptics Corporation.
David C. Malmberg has served as a director of the Company since October
1996. Since 1994, Mr. Malmberg has been the president of David C. Malmberg,
Inc., a management consulting and private investment management firm. From
1972 to 1994 he served in various
37
<PAGE>
positions, including Vice Chairman, President and Chief Operating Officer, at
National Computer Systems Inc., a provider of information systems and services
to the education, commercial and financial markets. Mr. Malmberg is the
Chairman of the Board of National City Bank in Minneapolis and serves on the
boards of directors of National City Bancorporation, Three Five Systems, Inc.
and PPT/Vision, Inc.
Each member of the Board of Directors holds office until the regular meeting
of shareholders next held after such director's election and until such
director's successor shall have been elected and shall qualify or until the
earlier death, resignation, removal, or disqualification of such director.
The Company's executive officers are elected or appointed by resolution
approved by the affirmative vote of a majority of the members of the Board of
Directors, and serve until their successors are elected or appointed. Any
officer may be removed from his or her office by the board of directors at any
time, with or without cause.
DIRECTORS' COMPENSATION
The Company at present does not pay any directors' fees. The Company may
reimburse its outside directors for expenses actually incurred in attending
meetings of the Board of Directors. In the past, non-employee directors have
each automatically been granted non-qualified options to purchase shares of
Common Stock under a plan adopted in February 1994: 25,000 shares at the time
of election to the Board of Directors, and 10,000 shares at each re-election.
All such options have an exercise price equal to the fair market value of a
share of Common Stock on the day of grant, vest immediately and expire five
years after the date of grant.
In December 1996, the Board of Directors approved the FieldWorks,
Incorporated 1996 Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"), which will be submitted for the approval of the shareholders of the
Company in January 1997. See "--Stock Plans."
COMMITTEES
The Board of Directors has established a Compensation Committee and an Audit
Committee. The Compensation Committee makes recommendations concerning
executive salaries and incentive compensation for employees of the Company,
subject to ratification by the full Board of Directors, and administers the
Company's 1994 Long-Term Incentive and Stock Option Plan (the "1994 Stock
Option Plan").
The Audit Committee reviews the results and scope of the audit and other
services provided by the Company's independent public accountants, as well as
the Company's accounting principles and its system of internal controls, and
reports the results of its review to the full Board of Directors and to
management.
LIMITATION OF LIABILITY; INDEMNIFICATION
Both the Company's Amended and Restated Articles of Incorporation, as
currently in effect, and its Second Amended and Restated Articles of
Incorporation, which will be effective upon the closing of this offering,
provide that, to the fullest extent permitted by Minnesota law, a director
shall not be liable to the Company or its shareholders for monetary damages
for breach of fiduciary duty as a director.
Both the Company's Amended and Restated Bylaws, as currently in effect, and
its Second Amended and Restated Bylaws, which will be effective upon the
closing of this offering, limit the liability of directors in their capacity
as directors to the full extent permitted by Minnesota law. As permitted by
Minnesota law, a director shall not be liable to the Company or its
shareholders for monetary damages for breach of fiduciary duty as a director,
except (i) for any
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<PAGE>
breach of the director's duty of loyalty to the Company or its shareholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for dividends, stock
repurchases and other distributions made in violation of Minnesota law or for
violations of the Minnesota securities laws, (iv) for any transaction from
which the director derived an improper personal benefit or (v) for any act or
omission occurring prior to the effective date of the provision in the
Company's Amended and Restated Bylaws limiting such liability. These
provisions do not affect the availability of equitable remedies, such as an
action to enjoin or rescind a transaction involving a breach of fiduciary
duty, although, as a practical matter, equitable relief may not be available.
The above provisions also do not limit liability of the directors for
violations of, or relieve them from the necessity of complying with, the
federal securities law.
EXECUTIVE COMPENSATION
Summary Compensation. The following table sets forth the cash and noncash
compensation for 1995 and 1994 awarded to or earned by the Chief Executive
Officer and all executive officers of the Company whose salary and bonus
earned in 1995 exceeded $100,000 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER COMPENSATION(1)
--------------------------- ---- -------- ------ ------ ---------------
<S> <C> <C> <C> <C> <C>
Gary J. Beeman ................. 1995 $131,846 $1,732 $5,400(2) $185
President, Chief Executive
Officer, Treasurer and Chairman
of the Board 1994 120,000 -- -- 185
Robert C. Szymborski ........... 1995 131,846 1,732 5,400(2) 185
Executive Vice President, Chief
Technical Officer, Secretary
and Director 1994 120,000 -- -- 185
</TABLE>
- -----------------
(1) Represents premiums paid by the Company on life insurance policies for the
benefit of the Named Executive Officers.
(2) Represents payment of auto allowance.
For 1996, each of Mr. Beeman and Mr. Szymborski will receive a base salary
of $140,000, a bonus of $17,500 and a car allowance of $5,400.
Option Grants and Values. Prior to April 1996 neither Named Executive
Officer had been granted any options. In April 1996 each of the named
Executive Officers was granted an incentive stock option under the 1994 Stock
Option Plan covering 50,000 shares of Common Stock, at the exercise price of
$5.00 per share, with all the shares vesting immediately and having a five
year term.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. George E. Kline has served as a member of the Compensation Committee of
the Board of Directors since the establishment of the Compensation Committee
in February 1995. Mr. David C. Malmberg has served as a member of the
Compensation Committee of the Board of Directors since October 1996.
In December 1993, Venture Management, Inc., Profit Sharing Plan (of which
Mr. Kline is the sole trustee) purchased 1,500 shares of Common Stock for
$1,500.
Mr. Kline personally guarateed the $500,000 bank line of credit that the
Company secured in July 1994 and amended in April 1995 to provide borrowing
capacity of up to $800,000. As consideration for Mr. Kline's guaranty, the
Company granted to Mr. Kline a warrant to purchase
39
<PAGE>
100,000 shares of Common Stock at an exercise price of $1.00 per share. Mr.
Kline exercised this warrant in December 1995. In December 1995, the line of
credit was replaced by a revolving line of credit agreement, with a borrowing
capacity of $1,500,000. This line of credit is also personally guaranteed by
Mr. Kline; in consideration of the guarantee, the Company issued a three-year
warrant to Mr. Kline to purchase 40,000 shares of the Company's common stock
at $5.00 per share. (In March 1996, the term of the December 1995 line of
credit was extended through April 1997 and the borrowing capacity was
increased to $2,000,000; the additional $500,000 was guaranteed by a non-
affiliate shareholder of the Company who received a three-year warrant to
purchase 25,000 shares of the Company's common stock at $5.00 per share.)
On May 30, 1996, Mr. Kline exercised a non-incentive stock option to
purchase 25,000 shares of the Company's common stock, which option had been
granted in March 1994, at an exercise price of $1.00 per share. Such shares
were issued in the name of Venture Management, Inc., a company of which Mr.
Kline is president. On June 21, 1996, Mr. Kline exercised a non-incentive
stock option to purchase 10,000 shares of the Company's common stock, which
option had been granted in August 1995, at an exercise price of $3.00 per
share.
Mr. Kline is also a member of a limited liability company that is the
general partner of certain venture capital limited partnerships (such limited
liability company and limited partnerships, collectively, the "Brightstone
Entities," as more fully described in Note 7 to the table under "Principal
Shareholders"). As such, Mr. Kline may be deemed to share voting and
investment of power for the shares held by the Brightstone Entities; Mr.
Kline, however, disclaims beneficial ownership of all such shares except to
the extent of his proportionate pecuniary interest in the Brightstone
Entities. Mr. Kline also disclaims beneficial ownership of certain shares of
the Company's common stock owned of record by his wife. See "Principal
Shareholders" and "Certain Transactions."
STOCK PLANS
1994 Stock Option Plan. The Board of Directors adopted the 1994 Stock Option
Plan on March 23, 1994, and the shareholders approved it on June 16, 1994.
Pursuant to the 1994 Stock Option Plan, executive officers, other employees
and consultants of the Company may receive options to purchase Common Stock.
The 1994 Stock Option Plan provides for the grant both of incentive stock
options intended to qualify for preferential tax treatment under Section 422
of the Internal Revenue Code of 1986, as amended, and nonqualified stock
options that do not qualify for such treatment. The exercise price of
incentive stock options must equal or exceed the fair market value of the
Common Stock at the time of grant. The 1994 Stock Option Plan also provides
for grants of stock appreciation rights, restricted stock awards and
performance awards and allows for the grant of restoration options.
The Compensation Committee administers the 1994 Stock Option Plan and
approves awards thereunder. A total of 720,000 shares of Common Stock was
initially reserved for issuance under the 1994 Stock Option Plan. In May 1996,
the 1994 Stock Option Plan was amended to increase the number of shares of
Common Stock available for issuance to 1,100,000. In December 1996, the Board
of Directors amended the 1994 Stock Option Plan to increase the number of
shares of Common Stock available for issuance to 1,500,000, subject to
shareholder approval at a meeting to be held in January 1997. Incentive stock
options may only be granted under the Stock Option Plan to any full or part-
time employee of the Company (including officers and directors who are also
employees) and of its present and future subsidiary corporations. Full or
part-time employees, directors who are not employees, and consultants and
independent contractors to the Company or its subsidiaries or affiliates are
eligible to receive options which do not qualify as incentive stock options,
as well as other awards. In determining the persons to whom options and awards
shall be granted and the number of shares subject to each, the Board of
Directors may take into account the nature of services rendered by the
respective employees or consultants, their present and potential contributions
to the success of the Company, and such other factors as the Board of
Directors in its discretion shall deem relevant.
40
<PAGE>
The Board of Directors may amend or discontinue the 1994 Stock Option Plan
at any time, but may not make any revisions or amendments to the 1994 Stock
Option Plan without shareholder approval that increase the number of shares
subject to the 1994 Stock Option Plan, decrease the minimum exercise price,
extend the maximum exercise term, or modify the eligibility requirements. The
Board of Directors may not alter or impair any award granted under the 1994
Stock Option Plan without the consent of the holder of the award. The 1994
Stock Option Plan will expire March 23, 2004.
Pursuant to the terms of the 1994 Stock Option Plan, appropriate adjustments
to the 1994 Stock Option Plan and outstanding options will be made in the
event of changes in the Common Stock through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, or other change
in corporate structure.
Directors' Plans. On February 1, 1994, the Board of Directors adopted a
stock option plan for non-employee directors that provided for the automatic
grant of a non-qualified option covering 25,000 shares of Common Stock to each
non-employee director at the time of his or her initial election to the Board
of Directors, and an automatic grant of a non-qualified stock option to
purchase 10,000 shares of Common Stock each time such director was re-elected
for a subsequent term. All such options, which were granted outside of the
1994 Stock Option Plan, have an exercise price equal to the fair market value
of the Common Stock on the date of grant, became fully vested and exercisable
on the date of grant and had terms of 10 years from the date of grant.
In December 1996, the Board of Directors approved the FieldWorks,
Incorporated 1996 Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"), which will be submitted for the approval of the shareholders of the
Company in January 1997. Under the Directors' Plan, each non-employee director
will automatically receive non-qualified options to purchase shares of Common
Stock as follows: 25,000 shares (each an "Initial Grant") at the time of
election to the Board of Directors, and 10,000 shares (each an "Annual Grant")
at each re-election. All such options will have an exercise price equal to the
fair market value of a share of Common Stock on the day of grant and will
expire ten years after the date of grant. Initial Grants will vest one third
on the date of grant and one third on each of the first and second
anniversaries, and Annual Grants will vest six months from the date of grant.
Savings Plan. The Company's savings plan (the "401(k) Plan") was adopted by
the Company effective January 1996.
41
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of December 15, 1996 (after giving effect to
the automatic conversion of all shares of Preferred Stock into Common Stock
upon the consummation of this offering) and as adjusted to reflect the sale by
the Company of the 1,750,000 shares of Common Stock offered hereby by: (i)
each person who is known by the Company to own beneficially more than 5% of
the Common Stock, (ii) each of the Company's directors, (iii) each of the
Named Executive Officers, and (iv) all directors and executive officers of the
Company as a group:
<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING
NUMBER OF SHARES OWNED
SHARES ---------------------------
BENEFICIALLY BEFORE AFTER
NAME OWNED(/1/) OFFERING(/1/) OFFERING(/1/)
---- ------------ ------------- -------------
<S> <C> <C> <C>
Robert C. Szymborski(/2/)......... 832,916 13.1% 10.3%
Gary J. Beeman(/3/)............... 768,152 12.1 9.5
George E. Kline(/4/).............. 251,500 4.0 3.1
David C. Malmberg(/5/)............ 28,900 * *
Brightstone Entities(/6/)......... 743,334 11.6 9.1
Network General Corporation(/7/).. 450,000 7.1 5.6
All executive officers and direc-
tors as a group (6 per-
sons)(/8/)....................... 1,945,118 29.8 23.5
</TABLE>
- -----------------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and generally includes voting power
and/or investment power with respect to securities. Shares of Common Stock
subject to options or warrants currently exercisable or exercisable within
60 days of December 20, 1996, are deemed outstanding for computing the
percentage of the person holding such options or warrants but are not
deemed outstanding for computing the percentage of any other person. This
table does not reflect any shares of Common Stock that these existing
shareholders may acquire in this offering. Except as indicated by
footnote, the Company believes that the persons named in this table, based
on information provided by such persons, have sole voting and investment
power with respect to the shares of Common Stock indicated.
(2) Includes 50,000 shares of Common Stock issuable pursuant to currently
exercisable options. Mr. Szymborski's address is 9961 Valley View Road,
Eden Prairie, Minnesota 55344.
(3) Includes 50,000 shares of Common Stock issuable pursuant to currently
exercisable options. Mr. Beeman's address is 9961 Valley View Road, Eden
Prairie, Minnesota 55344.
(4) Includes 41,500 shares of Common Stock held of record by Venture
Management, Inc., Profit Sharing Plan, of which Mr. Kline is the sole
trustee; 50,000 shares of Common Stock issuable pursuant to currently
exercisable options and warrants; and 60,000 shares of Common Stock held
of record by Mr. Kline's wife, of which Mr. Kline disclaims beneficial
ownership. Excludes an aggregate of 743,334 shares owned of record by, or
issuable upon exercise of outstanding warrants to, the Brightstone
Entities. The Brightstone Entities are a series of limited partnerships
and one entity, a limited liability company, which is the general partner
of each of the limited partnerships. Mr. Kline is a member of the limited
liability company, and as such may be deemed to share voting and
investment of power for the shares held by the Brightstone Entities,
however, Mr. Kline disclaims beneficial ownership of all such shares
except to the extent of his proportionate pecuniary interest in the
Brightstone Entities. See Note 7.
(5) Includes 25,000 shares of Common Stock issuable pursuant to currently
exercisable options.
(6) Includes 200,000 shares of Common Stock held of record by Brightstone IV
Partners ("Brightstone IV"); 200,000 shares of Common Stock held of record
by Brightstone Fund V Partnership ("Brightstone V"); 100,000 shares of
Common Stock held of record by Brightstone Fund VI L.P. ("Brightstone
VI"); 83,334 shares of Common Stock held of record by Brightside Fund
Limited Partnership ("Brightside"); 50,000 shares of Common Stock held of
record by Brightstone Fund VII L.P. ("Brightstone VII"); 30,000 shares of
Common Stock issuable upon the exercise of warrants issued to Brightstone
Capital Ltd., LLC ("Brightstone Capital"); 20,000 shares of Common Stock
issuable upon the exercise of warrants issued to Brightstone Fund VII;
20,000 shares of Common Stock issuable upon the exercise of warrants
issued to Brightbridge Fund I L.P. ("Brightbridge," and, together with
Brighstone IV, Brightstone V, Brightstone VI, Brightstone VII,
Brightbridge and Brightstone Capital, the "Brightstone Entities"); 15,000
shares of Common Stock issuable upon the exercise of warrants issued to
Brightstone IV; 15,000 shares of Common Stock issuable upon exercise of
42
<PAGE>
warrants issued to Brightstone V; and 10,000 shares of Common Stock issuable
upon the exercise of warrants issued to Brightstone VI. Brightstone IV,
Brightstone V, Brightstone VI, Brightstone VII, Brightside and Brightbridge
are all limited partnerships of which Brightstone Capital is the general
partner; Brightstone Capital is a limited liability company of which Mr.
Kline is a member. The address of the Brightstone Entities is 7200 Metro
Boulevard, Edina, Minnesota 55439.
(7) Includes 33,333 shares of Common Stock issuable upon exercise of warrants.
The address of Network General Corporation is 4200 Bohannon Drive, Menlo
Park, California 94025.
(8) Includes 23,650 shares of Common Stock issuable pursuant to currently
exercisable options in addition to those shares of Common Stock reflected
in notes 2 through 6.
CERTAIN TRANSACTIONS
For certain information regarding George Kline, a director of the Company,
see "Management--Compensation Committee Interlocks and Insider Participation."
On September 13, 1994, Brightstone IV and Brightstone V, partnerships of
which George Kline, a director of the Company, is a general partner, loaned
the Company an aggregate of $300,000 (the "1994 Loans"). The 1994 Loans bore
interest at an annual rate of 10% and were due on February 28, 1995. In
connection with the 1994 Loans, the Company issued warrants to purchase an
aggregate of 30,000 shares of Common Stock at a price of $3.00 per share to
Brightstone IV and Brightstone V. In March 1995, the Company repaid $200,000
original principal amount of the 1994 Loans, together with $13,750 interest.
In June 1995, the Company repaid the remaining $100,000 original principal
amount of the 1994 Loans, together with $2,500 interest.
In May and June 1996, Brightstone VI and Brightstone VII loaned the Company
an aggregate of $1,540,000 (the "June Loans"). The June Loans bore interest at
an annual rate of 10% and were due on August 2, 1996. In connection with the
June Loans, the Company issued to Brightstone Capital warrants (the "June
Warrants") to purchase 15,000 shares of Common Stock at a price of $10.00 per
share.
On July 15, 1996, Brightbridge loaned the Company $500,000. This loan, which
is represented by a promissory note (the "July Note"), bears interest at 10%
per year and was initially due on December 31, 1996; provided, that the July
Note would become payable in full within thirty (30) days after the effective
date of any registration statement relating to an initial public offering of
the Company's equity securities. In connection with this loan, the Company
issued to Brightbridge warrants (the "July Warrants") to purchase a number of
shares determined in accordance with a formula contained in the July Warrants
at an exercise price equal to 80% of the price to public of shares of the
Company's common stock in the Company's first registration statement to be
declared effective.
On July 29, 1996 the Company sold 300,000 shares of Series A Convertible
Preferred Stock to Network General Corporation for $10.00 per share and in
connection therewith issued warrants to purchase 24,000 shares of Common Stock
at $10.00 per share. The number of shares to be issued upon conversion, the
number of shares subject to the warrants and the exercise price of the
warrants are all subject to adjustment in the event that the Price to Public
in this Offering is less than $12.50 per share. In that event, the conversion
price will be reduced to a price equal to 80% of the Price to Public and the
warrant exercise price and the number of warrant shares will be similarly
adjusted.
As of August 2, 1996, the Company and Brightbridge amended the July Note to
subordinate it to certain bank indebtedness of the Company and to extend its
due date from December 31, 1996, to May 1, 1997.
On August 2, 1996, the Company repaid all principal amounts outstanding on
the June Loans, together with an aggregate of $27,168 in interest.
43
<PAGE>
In September 1996, Brightstone VI and Brightstone VII loaned the Company an
aggregate of $750,000. These loans, which are represented by Promissory Notes
(the "September Notes"), bear interest at 12% per year and were initially due
on the date 180 days from the date of each such loan; provided, that the
September Notes would become payable in full within thirty (30) days after the
effective date of any registration statement relating to an initial public
offering of the Company's equity securities. In connection with the September
Notes, the Company issued to Brightstone VI, Brightstone VII and Brightstone
Capital warrants (the "September Warrants") to purchase a number of shares
determined in accordance with a formula contained in the September Warrants,
which formula (other than the formula in the warrants issued to Brightstone
Capital) depended on whether the September Notes were repaid before or after
the date 90 days after the date of each such note, at an exercise price equal
to 80% of the price per share received by the Company in its next sale of
equity securities with gross proceeds of $2.5 million or more.
As of October 15, 1996, the Company agreed with Brightstone Capital,
Brightstone VI, Brightstone VII and Brightbridge to amend the June Warrant,
the July Warrants, the September Notes and the September Warrants. Pursuant to
these amendments, the final due date of each of such Notes was extended to May
1, 1997; provided, that all such Notes are payable in full within 30 days
after the effective date of any registration statement relating to an initial
public offering of the Company's equity securities; the exercise price under
each of such Warrants was amended to $5.00 per share; and the September
Warrants were amended to provide that they are exercisable for an aggregate of
45,000 shares of Common Stock. As a result of the exercise price amendment,
the July Warrants are currently exercisable for 20,000 shares of Common Stock.
44
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Upon completion of this offering, the Company will be authorized to issue 20
million shares of Common Stock, $.001 par value, and five million shares of
undesignated preferred stock, $.001 par value. As of December 20, 1996
(assuming the automatic conversion of the Preferred Stock into Common Stock),
there were 6,297,403 shares of Common Stock outstanding, which were held of
record by 210 shareholders, and no shares of undesignated preferred stock
outstanding.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders. There is no
cumulative voting for the election of directors, and the holders of more than
50% of the outstanding Common Stock can elect all directors. Subject to
preferences that may be applicable to any outstanding preferred stock, holders
of Common Stock are entitled to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally available therefor and
in liquidation proceedings. Holders of Common Stock have no preemptive or
subscription rights and there are no redemption rights with respect to such
shares. The outstanding shares of Common Stock are, and the shares of Common
Stock offered hereby will be, fully paid and nonassessable.
PREFERRED STOCK
The Second Amended and Restated Articles of Incorporation of the Company to
be in effect upon the closing of this offering authorize the Company's Board
of Directors, without further shareholder action, to issue preferred stock in
one or more series and to fix the voting rights, liquidation preferences,
dividend rights, repurchase rights, conversion rights, redemption rights,
terms, including sinking fund provisions, and certain other rights and
preferences, of any such preferred stock.
WARRANTS AND OPTIONS
As of December 20, 1996, the Company had outstanding warrants to purchase a
total of 578,795 shares of Common Stock at a weighted average exercise price
of $5.37 per share. Such warrants are all currently exercisable and expire on
dates ranging from December 20, 1998 to July 31, 2001. All outstanding warrant
agreements provide for antidilution adjustments in the event of certain
mergers, consolidations, reorganizations, recapitalizations, stock dividends,
stock splits, or other changes in the corporate structure of the Company.
As of December 20, 1996, the Company had outstanding options to purchase a
total of 724,500 shares of Common Stock under the 1994 Stock Option Plan at a
weighted average exercise price of $3.19 per share.
REGISTRATION RIGHTS
Following the completion of this offering, (i) the holders of 304,745 of the
warrants described above will be entitled to certain incidental or "piggyback"
rights to include the shares issued or issuable upon exercise of such warrants
in certain registration statements filed by the Company, (ii) the holder or
holders of the 416,667 shares of Common Stock issued upon the automatic
conversion of the Preferred Stock and the holder or holders of 33,333 of the
warrants described above shall be entitled, if the Company qualifies for the
use of Form S-3 and subject to certain other limitations, to require the
Company to file registration statements on such Form covering the sale of such
shares and (iii) the holders of up to 138,889 shares of Common Stock issued or
issuable upon conversion of certain of the principal amounts of certain
outstanding bridge loans and of 250,000 shares of Common Stock issued or
issuable upon exercise of the warrants described above shall have certain
incidental or "piggyback" rights to include the shares issued or issuable upon
exercise of such warrants in certain registration statements filed by the
Company and shall also have the right, more than one year after the completion
of this offering and on a one-time basis only, to require the Company to file
a registration statement on Form S-3 and keep it effective for a period of 9
months.
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<PAGE>
BRIDGE LOANS
The Company has outstanding an aggregate of $1,350,000 in loans which the
Company received between May and September 1996 (the "September Loans"). All
original principal amount of the September Loans, together with interest
thereon, is due on May 1, 1997; provided, that the September Loans shall be
payable in full within thirty (30) days after the effective date of the
registration statement of which this Prospectus forms a part.
The Company has outstanding an aggregate of $5,000,000 in bridge loans which
the Company received in December 1996 (the "December Loans"). All original
principal amount of the December Loans, together with interest thereon, is due
on June 30, 1997; provided, that the Company may extend the final maturity of
the December Loans to December 31, 1997, by written notice delivered to
holders at any time before June 30, 1997; provided, further, that the December
Loans shall be payable in full within thirty (30) days after the effective
date of the registration statement of which this Prospectus forms a part.
During the thirty (30) days after the effective date of the registration
statement of which this Prospectus forms a part, up to 20% of the original
principal amount of each of the December Loans is convertible into shares of
Common Stock at the option of the holder at a conversion price equal to 80% of
the Price to Public in this offering.
PROVISIONS OF THE COMPANY'S ARTICLES AND BYLAWS AND THE MINNESOTA BUSINESS
CORPORATION ACT
The existence of authorized but unissued preferred stock, described above,
and certain provisions of the Company's Second Amended and Restated Articles
of Incorporation and Second Amended and Restated Bylaws (both of which will be
effective upon the closing of this offering) and of Minnesota law, described
below, could have an anti-takeover effect. These provisions are intended to
provide management flexibility, to enhance the likelihood of continuity and
stability in the composition of the Board of Directors and in the policies
formulated by the Board of Directors and to discourage an unsolicited takeover
of the Company if the Board of Directors determines that such a takeover is
not in the best interests of the Company and its shareholders. However, these
provisions could have the effect of discouraging certain attempts to acquire
the Company's which could deprive the Company's shareholders of opportunities
to sell their shares of Common Stock at prices higher than prevailing market
prices.
Section 302A.671 of the Minnesota Business Corporation Act (the "MBCA")
applies, with certain exceptions, to any acquisition of voting stock of the
Company (from a person other than the Company, and other than in connection
with certain mergers and exchanges to which the Company is a party) resulting
in the beneficial ownership of 20% or more of the voting stock then
outstanding. Section 302A.671 requires approval of any such acquisitions by a
majority vote of the shareholders of the Company prior to its consummation. In
general, shares acquired in the absence of such approval are denied voting
rights and are redeemable at their then fair market value by the Company
within 30 days after the acquiring person has failed to give a timely
information statement to the Company or the date the shareholders voted not to
grant voting rights to the acquiring person's shares.
Section 302A.673 of the MBCA generally prohibits any business combination by
the Company, or any subsidiary of the Company, with any shareholder which
purchases 10% or more of the Company's voting shares (an "interested
shareholder") within four years following such interested shareholder's share
acquisition date, unless the business combination or the acquisition of shares
is approved by the affirmative vote of a majority of a committee of all of the
disinterested members of the Board of Directors, before the interested
shareholder's share acquisition date.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar with respect to the Common Stock will be
Norwest Bank Minnesota, N.A.
46
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has not been any public market for Common
Stock of the Company. Future sales of substantial amounts of Common Stock in
the public market could adversely affect the prevailing market price and
impair the Company's ability to raise additional funds.
Upon completion of this offering, the Company will have outstanding
8,047,403 shares of Common Stock (or 8,309,903 shares if the Underwriters'
over-allotment option is exercised in full). Of those shares, 1,750,000 shares
(or 2,012,500 shares, if the Underwriters' over-allotment option is exercised
in full) will be freely tradeable without restriction or further registration
under the Securities Act, unless held by "affiliates" of the Company, as that
term is defined in Rule 144 under the Securities Act (whose sales would be
subject to certain volume limitations and other restrictions described below).
The remaining 6,297,403 shares of Common Stock will be "restricted
securities," as that term is defined in Rule 144 under the Securities Act, and
may be sold in the public market only if registered or if they qualify for an
exemption from registration under Rule 144, Rule 144(k), Rule 701 or
otherwise. The Representative has requested, and the Company has agreed, to
solicit all shareholders to agree that they will not sell, directly or
indirectly, any Common Stock without the prior consent of the Representative
for a period of days from the date of this Prospectus. Of the shares not
subject to this agreement, (i) approximately shares will be eligible for
immediate sale without restriction pursuant to Rule 144(k) on the effective
date of this offering, (ii) approximately shares will be eligible for
sale, subject to compliance with the volume limitations and other restrictions
of Rule 144, 90 days after the effective date of this offering, and (iii)
approximately shares will become eligible for sale under Rule 144 after
the expiration of the two-year holding periods from the dates of acquisition,
which end between and . Beginning on the 181st day after the date of this
Prospectus, when the agreements not to sell shares expire, (iv) approximately
2,519,000 of the shares may become eligible for sale without restriction
pursuant to Rule 144(k), (v) approximately 2,982,637 of the shares (including
approximately 2,190,902 shares owned by affiliates of the Company) will become
eligible for sale, subject to compliance with the volume limitations and other
restrictions of Rule 144, and (vi) approximately 795,766 shares will become
eligible for sale under Rule 144 after the expiration of the two-year holding
periods from the dates of acquisition, which end between September 11, 1997
and July 15, 1998.
In general, under Rule 144, as currently in effect, if at least two years
have elapsed from the date that shares of Common Stock were acquired from the
Company or an affiliate of the Company, then the holder is entitled to sell in
"brokers' transactions" or to market makers, within any three-month period
commencing 90 days after the date of this Prospectus, a number of shares that
does not exceed the greater of (i) one percent of the then outstanding shares
of Common Stock (80,474 shares immediately after this offering) or (ii)
generally, the average weekly trading volume in the Common Stock during the
four calendar weeks preceding the filing of a Form 144 with respect to such
sale, subject to certain other limitations and restrictions. In addition, a
person who is not deemed to have been an affiliate of the Company at any time
during the three months preceding a sale, and who has beneficially owned the
shares proposed to be sold for at least three years, would be entitled to sell
such shares under Rule 144(k) without regard to the requirements described
above.
Any employee, officer or director of or consultant to the Company who
purchased his or her shares pursuant to a written compensatory plan or
contract is entitled to rely on the resale provisions of Rule 701, which
permits non-affiliates to sell their Rule 701 share without complying with the
public information, holding period, volume limitation or notice provisions of
Rule 144 and which permits Affiliates to sell their Rule 701 shares without
complying with the Rule 144 holding period restrictions, in each case
commencing 90 days after the date of this Prospectus. The Company has issued
644,500 shares under plans or contracts that satisfy the requirements of Rule
701.
47
<PAGE>
The Company intends to file registration statements on Form S-8 under the
Securities Act to register the sale of the 1,500,000 and 300,000 shares
reserved for issuance under, respectively, the 1994 Stock Option Plan and the
Directors' Plan. The filing of such registration statements will permit the
resale of such shares by non-affiliates in the public market without
restriction under the Securities Act. Such registration statements are
expected to be filed soon after the date of this Prospectus and will
automatically become effective upon filing. "See "Management--Stock Option
Plans" and "Description of Capital Stock--Warrants and Options."
In addition, after this offering, the holders of approximately 546,223
shares of Common Stock (including the maximum of 138,889 shares of Common
Stock issuable upon conversion of $5,000,000 of the principal amount of
certain loans) and warrants to purchase approximately 338,078 shares of Common
Stock (together, the "Registrable Securities") will be entitled to certain
rights to cause the Company to register the sale of such shares under the
Securities Act. After this offering, if the Company proposes to register any
of its securities under the Securities Act for its own account, holders of
Registrable Securities are entitled to notice of such registration and are
entitled to include Registrable Securities therein, provided, among other
conditions, that the underwriters of any such offering have the right to limit
the number of shares included in such registration. The holders of certain of
the Registrable Securities may require the Company to prepare and file one or
more registration statements on Form S-3 at its expense, and the Company is
required to use its best efforts to effect such registration, subject to
certain conditions and limitations. Registration of such shares would result
in such shares becoming freely tradeable without restriction under the
Securities Act (except for shares purchased by affiliates of the Company)
immediately upon the effectiveness of such registration.
The Company can make no prediction as to the effect, if any, that sales of
shares of Common Stock or the availability of Common Stock for sale will have
on the market price prevailing from time to time. Nevertheless, sales of
substantial amounts of the Common Stock in the public markets or the
perception that such sales will occur could adversely affect the market price
or the future ability to raise capital through an offering of its equity
securities. See "Risk Factors--Shares Eligible for Future Sale; Registration
Rights."
48
<PAGE>
UNDERWRITING
The Underwriters below, for whom R. J. Steichen & Company is acting as
representative (the "Representative"), have severally agreed, subject to the
terms and conditions contained in the Underwriting Agreement, to purchase from
the Company, the number of shares of Common Stock set forth opposite their
names below.
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
R. J. Steichen & Company ...............................
---------
Total................................................... 1,750,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other considerations. The nature of obligations is such
that they are committed to purchase and pay for all of the above shares of
Common Stock if any are purchased.
The Underwriters, through the Representative, have advised the Company that
they propose to offer the Common Stock initially at the Price to Public set
forth on the cover page of this Prospectus; that the Underwriters may allow to
selected dealers a concession of $ per share; and that such dealers may
reallow a concession of $ per share to certain other dealers. After the
public offering, the offering price and other selling terms may be changed by
the Underwriters. Application has been made for the Common Stock to be
included for quotation on the Nasdaq National Market. The Representative has
advised the Company that it does not intend to confirm sales to any account
over which it exercises discretionary authority.
The Company has granted to the Underwriters a 30-day over-allotment option
to purchase up to an aggregate of 262,500 additional shares of Common Stock,
exercisable at the Price to Public less the underwriting discount. If the
Underwriters exercise such over-allotment option, then each of the
Underwriters will have a firm commitment, subject to certain conditions, to
purchase approximately the same percentage thereof as the number of shares of
Common Stock to be purchased by it as shown in the above table, bears to the
1,750,000 shares of Common Stock offered hereby. The Underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
the shares of Common Stock offered hereby. In addition, the Company has agreed
to pay the Representative at the closing of this offering a non-accountable
expense allowance of 2% of the aggregate public offering price (including the
aggregate public offering price of any over-allotment shares) to cover
expenses incurred by the Underwriters in connection with this offering,
reduced by amounts advanced by the Company, which totaled $10,000 on the date
of this Prospectus.
In connection with this offering, the Company has agreed to issue and sell
to the Representative, for nominal consideration, warrants to purchase a
number of shares of Common Stock equal to 10% of the shares of Common Stock
sold in this offering, exclusive of any shares of Common Stock sold pursuant
to the Underwriters' over-allotment option (the "Representative's Warrants").
The Representative's Warrants will be initially exercisable at a price per
share equal to 120% of the Price to Public, commencing one year from the date
of this Prospectus, and will continue to be exercisable for a period of four
years after such date. The Representative's Warrants are restricted from sale,
transfer, assignment or hypothecation for a period of 12 months from the
effective date of this offering, except to officers, partners or successors of
the Representative. The exercise price of the Representative's Warrants and
the
49
<PAGE>
number of shares of Common Stock issuable upon exercise thereof are subject to
adjustment under certain circumstances. The Representative's Warrants grant to
the holder or holders thereof certain rights regarding the registration of the
Common Stock issuable upon exercise of the Representative's Warrants.
At the request of the Representative, the Company solicited all of its
shareholders to agree that they will not publicly sell or dispose of any
shares of Common Stock for a period of 180 days after the date on which the
Registration Statement is declared effective by the Commission, without the
prior written consent of the Representative. Shareholders who beneficially own
shares of Common Stock after the offering have agreed to such restrictions.
See "Shares Eligible for Future Sale."
The Company has agreed to indemnify the Underwriters against certain
liabilities, losses and expenses, including liabilities under the Securities
Act, or to contribute to payments the Underwriters may be required to make in
respect thereof.
Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price has been determined
through negotiations between the Company and the Representative. Among the
factors considered in determining the initial public offering price were
prevailing market and economic conditions, estimates of the business potential
and prospects of the Company, the present state of the Company's business
operations, an assessment of the Company's management and the consideration of
the above factors in relation to the market valuation of companies in related
businesses. See "Risk Factors--No Prior Market for Common Stock; Determination
of Offering Price."
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Dorsey & Whitney LLP, Minneapolis, Minnesota. Certain
legal matters in connection with this offering will be passed upon for the
Underwriters by Fredrikson & Byron, P.A. Members of Dorsey & Whitney LLP
beneficially own 90,589 shares of Common Stock.
EXPERTS
The financial statements of the Company as of December 31, 1994 and 1995 and
for the three years in the period ended December 31, 1995, included in this
Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
50
<PAGE>
ADDITIONAL INFORMATION
A Registration Statement on Form S-1, including amendments thereto, relating
to the Common Stock offered hereby has been filed with the Commission. This
Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement and the exhibits and schedules
thereto. In particular, statements contained in this Prospectus as to the
contents of any contract or any other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract
or documents filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. A copy of the
Registration Statement, including exhibits and schedules thereto, may be
inspected by anyone without charge at the public reference facilities
maintained by the Commission in Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission: 13th
Floor, Seven World Trade Center, New York, New York, and Northwest Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of all or any part of such material may be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549,
upon payment of certain fees prescribed by the Commission. In addition, the
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission. The Web site's address is
http://www.sec.gov.
The Company intends to furnish its shareholders with annual reports
containing financial statements audited by its independent public accountants
and quarterly reports containing unaudited financial information for the first
three quarters of each fiscal year.
51
<PAGE>
FIELDWORKS, INCORPORATED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Public Accountants................................... F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995 and
September 30, 1996 (actual and pro forma, unaudited)...................... F-3
Consolidated Statements of Operations for the years ended December 31,
1993, 1994 and 1995, and for the nine months ended September 30, 1995 and
1996
(unaudited)............................................................... F-4
Consolidated Statements of Shareholders' Equity for the years ended Decem-
ber 31, 1993, 1994 and 1995, and for the nine months ended September 30,
1996
(unaudited)............................................................... F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1993,
1994 and 1995, and for the nine months ended September 30, 1995 and 1996
(unaudited)............................................................... F-6
Notes to Consolidated Financial Statements................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To FieldWorks, Incorporated:
We have audited the accompanying consolidated balance sheets of FieldWorks,
Incorporated (a Minnesota corporation) and Subsidiaries as of December 31,
1994 and 1995, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of FieldWorks, Incorporated
and Subsidiaries as of December 31, 1994 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1995 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
February 9, 1996
(except with respect
to the distribution discussed
in Note 1, as to which
the date is November 11, 1996)
F-2
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31 SEPTEMBER 30, 1996
---------------------- ------------------------
PRO FORMA
1994 1995 ACTUAL (NOTE 5)
---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash................... $ 125,883 $ 112,602 $ 334,648 $ 334,648
Accounts receivable,
net of allowance for
doubtful accounts of
$27,800, $110,600 and
$150,500.............. 727,421 1,887,928 2,968,539 2,968,539
Inventories............ 1,734,132 1,821,301 4,355,616 4,355,616
Notes receivable from
sale of common stock
(Notes 5 and 6)....... 633,102 100,000 -- --
Prepaid expenses and
other................. 52,573 90,106 338,009 338,009
Net assets of discon-
tinued operation
(Note 1).............. -- 38,251 156,343 156,343
---------- ---------- ---------- ----------
Total current as-
sets................ 3,273,111 4,050,188 8,153,155 8,153,155
---------- ---------- ---------- ----------
PROPERTY AND EQUIPMENT:
Computers and equip-
ment.................. 380,679 604,474 960,381 960,381
Furniture and fix-
tures................. 4,484 82,120 112,627 112,627
Leasehold improve-
ments................. 10,606 51,150 54,218 54,218
Accumulated deprecia-
tion.................. (87,167) (251,655) (454,000) (454,000)
---------- ---------- ---------- ----------
Property and equip-
ment, net........... 308,602 486,089 673,226 673,226
DEPOSITS AND OTHER AS-
SETS, net.............. 20,926 22,952 124,165 124,165
---------- ---------- ---------- ----------
$3,602,639 $4,559,229 $8,950,546 $8,950,546
========== ========== ========== ==========
LIABILITIES AND SHARE-
HOLDERS' EQUITY
CURRENT LIABILITIES:
Lines of credit........ $ 490,000 $1,160,000 $2,000,000 $2,000,000
Notes payable to re-
lated parties (Note
4).................... 300,000 -- 1,350,000 1,350,000
Accounts payable....... 984,882 899,927 1,417,445 1,417,445
Accrued compensation
and benefits.......... 81,697 143,025 166,551 166,551
Accrued warranty and
other................. 91,195 130,003 290,421 290,421
Current maturities of
capitalized lease
obligations........... 8,776 32,244 9,065 9,065
---------- ---------- ---------- ----------
Total current liabil-
ities............... 1,956,550 2,365,199 5,233,482 5,233,482
CAPITALIZED LEASE OBLI-
GATIONS, less current
maturities............. 10,587 61,886 99,877 99,877
---------- ---------- ---------- ----------
Total liabilities.... 1,967,137 2,427,085 5,333,359 5,333,359
---------- ---------- ---------- ----------
COMMITMENTS AND CONTIN-
GENCIES (Notes 8 and
10)
SHAREHOLDERS' EQUITY:
Series A convertible
preferred stock, $.001
par value, 300,000
shares authorized,
issued and outstanding
at September 30,
1996.................. -- -- 300 --
Common stock, $.001 par
value, 15,000,000,
15,000,000 and
14,700,000 shares
authorized; 5,329,100,
5,840,068 and
5,880,736 issued and
outstanding (6,297,403
pro forma at September
30, 1996)............. 5,329 5,840 5,881 6,297
Common stock warrants.. 81,435 115,185 156,985 156,985
Additional paid-in cap-
ital.................. 3,721,471 4,816,262 7,878,591 7,878,475
---------- ---------- ---------- ----------
Accumulated deficit.... (2,172,733) (2,805,143) (4,424,570) (4,424,570)
---------- ---------- ---------- ----------
Total shareholders'
equity.............. 1,635,502 2,132,144 3,617,187 3,617,187
---------- ---------- ---------- ----------
$3,602,639 $4,559,229 $8,950,546 $8,950,546
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE YEARS ENDED DECEMBER 31 ENDED SEPTEMBER 30
---------------------------------- ------------------------
1993 1994 1995 1995 1996
--------- ----------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES............... $ -- $ 2,741,914 $8,241,791 $5,874,592 $ 9,597,772
COST OF SALES........... -- 1,978,157 4,979,504 3,413,837 5,966,978
--------- ----------- ---------- ---------- -----------
Gross profit......... -- 763,757 3,262,287 2,460,755 3,630,794
--------- ----------- ---------- ---------- -----------
OPERATING EXPENSES:
Sales and marketing... 35,689 904,129 1,523,648 1,081,975 2,166,291
General and
administrative....... 159,937 761,455 1,168,626 765,568 1,472,428
Research and
development.......... 289,340 765,081 948,406 557,557 1,041,846
--------- ----------- ---------- ---------- -----------
Total operating
expenses............ 484,966 2,430,665 3,640,680 2,405,100 4,680,565
--------- ----------- ---------- ---------- -----------
Operating income
(loss).............. (484,966) (1,666,908) (378,393) 55,655 (1,049,771)
INTEREST EXPENSE AND
OTHER, net............. 451 (21,310) (68,678) (52,263) (222,767)
--------- ----------- ---------- ---------- -----------
NET INCOME (LOSS) FROM
CONTINUING OPERATIONS.. (484,515) (1,688,218) (447,071) 3,392 (1,272,538)
LOSS FROM DISCONTINUED
OPERATION (NOTE 1)..... -- -- (179,848) (85,167) (346,889)
--------- ----------- ---------- ---------- -----------
NET LOSS................ $(484,515) $(1,688,218) $ (626,919) $ (81,775) $(1,619,427)
========= =========== ========== ========== ===========
PRO FORMA (NOTE 2)
(UNAUDITED):
Net income (loss) per
common share from
continuing
operations........... $ (.16) $ (.31) $ (.07) $ -- $ (.20)
Loss per common share
from discontinued
operation............ -- -- (.03) (.01) (.05)
--------- ----------- ---------- ---------- -----------
Net loss per common
share................ $ (.16) $ (.31) $ (.10) $ (.01) $ (.25)
========= =========== ========== ========== ===========
Weighted average com-
mon shares outstand-
ing.................. 3,049,095 5,486,214 6,187,487 6,125,159 6,493,431
========= =========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-4
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
SERIES A
CONVERTIBLE
PREFERRED STOCK COMMON STOCK COMMON ADDITIONAL TOTAL
----------------- ---------------- STOCK PAID-IN ACCUMULATED SHAREHOLDERS'
SHARES AMOUNT SHARES AMOUNT WARRANTS CAPITAL DEFICIT EQUITY
--------- ------- --------- ------ -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31,
1992................... -- $ -- 2,350,000 $2,350 $ -- $ -- $ -- $ 2,350
Issuance of common
stock, net of
offering costs of
$99,150.............. -- -- 2,500,000 2,500 -- 2,398,350 -- 2,400,850
Net loss.............. -- -- -- -- -- -- (484,515) (484,515)
--------- ------ --------- ------ -------- ---------- ----------- ----------
BALANCE, December 31,
1993................... -- -- 4,850,000 4,850 -- 2,398,350 (484,515) 1,918,685
Issuance of common
stock, net of
offering costs of
$113,700............. -- -- 479,100 479 -- 1,323,121 -- 1,323,600
Issuance of common
stock warrants....... -- -- -- -- 81,435 -- -- 81,435
Net loss.............. -- -- -- -- -- -- (1,688,218) (1,688,218)
--------- ------ --------- ------ -------- ---------- ----------- ----------
BALANCE, December 31,
1994................... -- -- 5,329,100 5,329 81,435 3,721,471 (2,172,733) 1,635,502
Issuance of common
stock, net of
offering costs of
$111,750............. -- -- 354,334 355 -- 950,895 -- 951,250
Exercise of stock
options.............. -- -- 31,334 31 -- 31,971 -- 32,002
Issuance of common
stock warrants....... -- -- -- -- 33,750 -- -- 33,750
Exercise of warrants.. -- -- 100,000 100 -- 99,900 -- 100,000
Merger with Paragon
(Note 1)............. -- -- 25,300 25 -- 12,025 (5,491) 6,559
Net loss.............. -- -- -- -- -- -- (626,919) (626,919)
--------- ------ --------- ------ -------- ---------- ----------- ----------
BALANCE, December 31,
1995................... -- -- 5,840,068 5,840 115,185 4,816,262 (2,805,143) 2,132,144
Issuance of preferred
stock (unaudited).... 300,000 300 -- -- -- 2,999,700 -- 3,000,000
Exercise of stock
options (unaudited).. -- -- 40,668 41 -- 62,629 -- 62,670
Issuance of common
stock warrants
(unaudited).......... -- -- -- -- 41,800 -- -- 41,800
Net loss (unaudited).. -- -- -- -- -- -- (1,619,427) (1,619,427)
--------- ------ --------- ------ -------- ---------- ----------- ----------
BALANCE, September 30,
1996 (unaudited)....... 300,000 $ 300 5,880,736 $5,881 $156,985 $7,878,591 $(4,424,570) $3,617,187
========= ====== ========= ====== ======== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
FOR THE YEARS ENDED DECEMBER 31 SEPTEMBER 30
----------------------------------- ----------------------------
1993 1994 1995 1995 1996
---------- ----------- ---------- ------------ -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss............... $ (484,515) $(1,688,218) $ (626,919) $ (81,775) $ (1,619,427)
Adjustments to reconcile
net loss to net cash
used for operating
activities-
Depreciation and
amortization.......... 2,164 88,488 183,336 121,724 222,895
Warrant expense........ 22,782 58,653 -- -- 19,376
Change in operating
items:
Accounts receivable.. -- (727,421) (1,174,941) (1,047,390) (1,061,075)
Inventories.......... (20,173) (1,713,959) (121,476) (14,920) (2,661,145)
Prepaid expenses and
other............... (26,944) (49,302) (12,039) (58,150) (331,673)
Accounts payable..... 33,750 951,132 (44,320) (22,277) 503,987
Accrued expenses..... 32,975 139,917 83,302 73,410 190,040
---------- ----------- ---------- ------------ -------------
Net cash used for
operating
activities.......... (439,961) (2,940,710) (1,713,057) (1,029,378) (4,737,022)
---------- ----------- ---------- ------------ -------------
INVESTING ACTIVITIES:
Purchase of property
and equipment......... (64,281) (303,226) (251,409) (82,868) (359,310)
---------- ----------- ---------- ------------ -------------
FINANCING ACTIVITIES:
Proceeds from issuance
of common stock....... 1,734,500 1,356,848 1,616,354 1,616,354 162,670
Proceeds from issuance
of preferred stock.... -- -- -- -- 3,000,000
Borrowings on line of
credit, net........... -- 490,000 670,000 70,000 840,000
Proceeds from notes
payable to related
parties............... -- 300,000 10,341 10,341 2,890,000
Payment of notes
payable to related
parties............... -- -- (300,000) (300,000) (1,550,341)
Payment of capitalized
lease obligations..... -- (7,287) (17,670) (13,005) (39,872)
---------- ----------- ---------- ------------ -------------
Net cash provided by
financing
activities.......... 1,734,500 2,139,561 1,979,025 1,383,690 5,302,457
---------- ----------- ---------- ------------ -------------
INCREASE (DECREASE) IN
CASH.................... 1,230,258 (1,104,375) 14,559 271,444 206,125
CASH, beginning of
period.................. -- 1,230,258 125,883 125,883 140,442
---------- ----------- ---------- ------------ -------------
CASH, end of period...... $1,230,258 $ 125,883 $ 140,442 $ 397,327 $ 346,567
========== =========== ========== ============ =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
1. NATURE OF BUSINESS:
Operating Activities
FieldWorks, Incorporated (FieldWorks or the Company), a Minnesota
corporation, was organized on October 2, 1992, and was in the development
stage until significant revenue-generating activities commenced in 1994.
FieldWorks is engaged in the design, development and marketing of portable
field-based computer workstations, and has integrated certain field
instrumentation platforms with state-of-the-art computer technology to produce
a new class of portable instrumentation equipment capable of simultaneously
supporting many types of diagnostic communication and computing capabilities
required by the field service, medical and engineering professions. FieldWorks
markets its products worldwide through a direct sales force, independent sales
representatives and distributors, original equipment manufacturers, value
added resellers and system integrators.
The Company's future operations are dependent upon the attainment of certain
objectives, including the continued successful development, marketing and sale
of its products, and the continued design and implementation of new
technology. After products have been successfully introduced into a market,
additional time may be necessary before continuing profitability is achieved.
During this time, the Company may require additional financing which may not
be available at favorable terms and conditions.
Merger With Paragon Technology, Incorporated and Subsequent Distribution
In August 1995, FieldWorks completed a merger agreement with Paragon
Technology, Incorporated (Paragon), a Pennsylvania company engaged in software
research and development. The merger was effected through a share-for-share
exchange of 25,300 shares of FieldWorks' common stock for all of the
outstanding shares of Paragon common stock. The merger was accounted for as a
pooling of interests and, accordingly, the accompanying consolidated financial
statements reflect the combined activities of FieldWorks and Paragon
(collectively, the Company) for the entire 1995 fiscal year. Amounts in the
1993 and 1994 financial statements have not been restated to reflect Paragon
amounts, as the effects are not material to the Company's results of
operations or financial position.
On November 11, 1996, the Company's board of directors approved the
distribution of all of the issued and outstanding common stock of Paragon, as
a dividend to Company shareholders of record as of November 15, 1996. The
distribution is being effected in order to take advantage of anticipated
capital-raising and product development opportunities on a separate-company
basis. The Company expects that the distribution will take place before
December 31, 1996.
Paragon's results of operations for the year ended December 31, 1995 and for
the nine-month periods ended September 30, 1995 and 1996, as well as the
estimated loss on disposition of Paragon have been presented as a discontinued
operation in the accompanying statements of operations. Revenues applicable to
Paragon were approximately $274,000, $208,000 and $156,000 for the year ended
December 31, 1995 and the nine-month periods ended September 30, 1995 and
1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements of the Company include the accounts of
the Company and its wholly owned subsidiaries. All intercompany accounts and
transactions have been eliminated in consolidation.
F-7
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
Interim Financial Statements
The consolidated balance sheet as of September 30, 1996 and the related
consolidated statements of operations and cash flows for the nine-month
periods ended September 30, 1995 and 1996, and the consolidated statement of
shareholders' equity for the nine-month period ended September 30, 1996 are
unaudited. However, in the opinion of management, these interim financial
statements include all adjustments (consisting of only normal recurring
adjustments) which are necessary for the fair presentation of the results for
the interim periods presented. The results of operations for the unaudited
nine-month period ended September 30, 1996 are not necessarily indicative of
the results which may be expected of the entire 1996 fiscal year.
Pro Forma Net Loss Per Common Share
Unaudited pro forma net loss per common share was computed by dividing net
loss by the weighted average number of shares of common stock outstanding
during each period, including the effect of the conversion of preferred stock
to common stock (see Note 5). The impact of common stock equivalents has been
excluded from the computation of weighted average common shares outstanding,
except as follows, as the effect would be antidilutive. Pursuant to Securities
and Exchange Commission rules, stock options and warrants granted within one
year of the date of the contemplated initial public offering have been
included in the calculation of common stock equivalents, using the treasury
stock method, as if they were outstanding for all periods presented.
Cash
Cash consists of amounts held in the Company's checking accounts. Its
carrying value approximates fair value due to the short maturity of the
instruments.
Inventories
Inventories are stated at the lower of cost or market value, as determined
by the first-in, first-out cost method, and consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------- SEPTEMBER 30,
1994 1995 1996
---------- ---------- -------------
<S> <C> <C> <C>
Raw materials............................... $1,525,340 $1,450,074 $3,266,264
Work in process............................. 75,791 188,963 719,243
Finished goods.............................. 133,001 182,264 370,109
---------- ---------- ----------
Total..................................... $1,734,132 $1,821,301 $4,355,616
========== ========== ==========
</TABLE>
Property and Equipment
Property and equipment are recorded at cost. Repair and maintenance costs
which do not significantly extend the lives of the respective assets are
charged to expense as incurred. Depreciation is computed using the straight-
line method over the related assets' useful lives, ranging from three to five
years.
Warranties
The Company provides a one-year warranty from the date of sale. Estimated
warranty costs are accrued in the same period in which the related revenue is
recognized, based on anticipated parts and labor costs utilizing historical
experience. Ultimate results may differ from such estimates.
F-8
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
Revenue Recognition
The Company recognizes product revenue, net of estimated returns, at the
time the products are shipped. Revenue for services performed is recognized as
earned.
Export Sales and Significant Customers
Export sales were approximately $1,070,000 and $2,859,000 for the years
ended December 31, 1994 and 1995. For the year ended December 31, 1994, sales
to one customer represented 14% of net sales. For the year ended December 31,
1995, there were no customers representing over 10% of net sales.
Research and Development Costs
Research and development costs are charged to expense as incurred.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities as of the date of the
financial statements. Estimates also affect the reported amounts of revenues
and expenses during the periods presented. Ultimate results could differ from
those estimates.
Recently Issued Accounting Standards
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," establishes standards for the recognition and measurement of impairment
of long-lived assets and certain identifiable intangibles. The adoption of
this pronouncement in fiscal 1996 did not have a material impact on the
Company's results of operations or financial position.
SFAS No. 123, "Accounting for Stock-Based Compensation," encourages, but
does not require, a fair value based method of accounting for employee stock
options or similar equity instruments. It also allows an entity to elect to
continue to measure compensation cost under Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB No. 25), but
requires pro forma disclosures of net income (loss) and net income (loss) per
share as if the fair value based method of accounting had been applied. The
Company has elected to continue to measure compensation cost under APB No. 25
and comply with the pro forma disclosure requirements of SFAS No. 123.
3. INCOME TAXES:
The Company accounts for income taxes under the liability method, which
requires recognition of deferred income tax assets and liabilities for the
expected future income tax consequences under enacted tax laws of temporary
differences between the financial reporting and tax bases of assets and
liabilities.
F-9
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
A reconciliation of the Company's statutory tax rate to the effective rate
for the years ended December 31 is as follows:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate..................................... 34% 34% 34%
State taxes, net of federal tax benefit.................... 6 6 6
Valuation allowance........................................ (40) (40) (40)
--- --- ---
--% --% --%
=== === ===
</TABLE>
As of December 31, 1995, the Company had approximately $2,200,000 of net
operating loss carryforwards for federal income tax purposes that are
available to offset future taxable income through the year 2010. Additional
tax losses of approximately $1,000,000 were generated for the nine months
ended September 30, 1996. Certain restrictions caused by the change in
ownership resulting from sales of stock will limit annual utilization of the
net operating loss carryforwards.
The components of the Company's deferred tax asset for the years ended
December 31 are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- -----------
<S> <C> <C> <C>
Net operating loss carryforwards.......... $ 176,000 $ 789,000 $ 877,000
Deductible differences.................... -- 47,000 260,000
Valuation allowance....................... (176,000) (836,000) (1,137,000)
--------- --------- -----------
$ -- $ -- $ --
========= ========= ===========
</TABLE>
4. LINES OF CREDIT AND NOTES PAYABLE:
Lines of Credit
In July 1994, the Company entered into a $500,000 line-of-credit agreement
with a bank, which was amended in April 1995 to provide increased borrowing
capacity of up to $800,000.
In December 1995, this line of credit matured and was replaced by a new
revolving line-of- credit agreement (the New Line), with borrowing capacity of
$1,500,000, limited to a borrowing base, as defined in the agreement.
Availability as of December 31, 1995 was $340,000. This credit facility bears
interest at prime plus 1.5%, payable monthly, and is collateralized by
substantially all assets of the Company. Additionally, the New Line is
personally guaranteed by a shareholder of the Company.
In March 1996, the New Line was extended through April 1997 and its
borrowing limit increased to $2,000,000. The incremental borrowing capacity of
$500,000 was personally guaranteed by a shareholder of the Company.
The following information relates to the Company's lines of credit for the
periods ended December 31:
<TABLE>
<CAPTION>
1994 1995
-------- ----------
<S> <C> <C>
Amount outstanding at end of period....................... $490,000 $1,160,000
Maximum amount outstanding during the period.............. 490,000 1,160,000
Average borrowings during the period...................... 221,000 586,000
Weighted average interest rate during the period.......... 10.17% 11.16%
Interest rate at end of period............................ 10.75% 10.00%
</TABLE>
F-10
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
The Company's existing line-of-credit agreements contain certain covenants
which, among other matters, require the Company to maintain minimum levels of
tangible net worth and certain other financial ratios. The covenants also
limit additional indebtedness, capital expenditures and payment of dividends.
The Company was in compliance with all debt covenants as of December 31, 1995.
In December 1996, the Company repaid all amounts owed under its lines of
credit, with proceeds received from the bridge financing discussed in Note 10.
Notes Payable
At December 31, 1994, the Company had two 10%, $150,000 unsecured notes
payable to related parties. These notes were repaid in March and June 1995.
In May through September 1996, the Company entered into certain short-term
(bridge) financing agreements with related and other parties, for a total of
$2,890,000. These borrowings are due the earlier of 30 days following the
consummation of an initial public offering of common stock or May 1, 1997,
bear interest at rates ranging from 10% to 12%, and are unsecured. At
September 30, 1996, outstanding borrowings under these agreements were
$1,350,000.
5. SHAREHOLDERS' EQUITY:
The Company was originally capitalized by the founders who contributed
personal property and computer equipment in exchange for 2,350,000 shares of
$.001 par value common stock.
In December 1993, the Company completed a private placement of 2,500,000
shares of common stock at $1 per share, receiving $1,833,650 in proceeds prior
to December 31, 1993. The remaining proceeds of $666,350 were received through
March 20, 1994 and are reflected as notes receivable from sale of common stock
in the accompanying 1994 consolidated financial statements.
In December 1994, the Company completed a private placement (1994 Placement)
of 479,100 shares of common stock at $3 per share, receiving proceeds of
$804,198 prior to December 31, 1994. The remaining proceeds of $633,102 were
received through February 23, 1995 and are reflected as notes receivable from
sale of common stock in the accompanying 1994 financial statements. In 1995,
the Company extended the 1994 Placement to allow for issuance of an additional
354,334 shares of common stock at $3 per share.
In July 1996, the Company sold 300,000 shares of Series A, $.001 par value
preferred stock (Preferred Stock) at $10 per share. The Preferred Stock
contains a liquidation preference of $10 per share and is redeemable at the
option of the holder for $10 per share, exercisable beginning in the year
2001. The Preferred Stock is convertible at the option of the holder on a
share-for-share basis into common stock. Conversion to shares of common stock
is automatic upon the consummation of an initial public offering. The
accompanying consolidated balance sheets reflect actual shareholders' equity
at September 30, 1996 and pro forma to reflect the conversion of all preferred
shares to common stock.
The holder of the preferred stock was also granted warrants to purchase
24,000 shares of the Company's common stock at an exercise price of $10 per
share. The warrants are exercisable through July 2001.
F-11
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
6. WARRANTS:
In December 1993, the Company entered into an agreement with the owner of
its leased office space, offering the lessor the opportunity to earn warrants
to purchase up to 115,000 shares of the Company's common stock at an exercise
price of $1 per share, the estimated cash rent value, expiring in February
1999. The economic value of these warrants was allocated over the term of the
lease. In August 1994, the lease was terminated, and rights to unearned
warrants as of the lease termination date were forfeited.
Warrants for the purchase of 100,000 and 40,000 shares at exercise prices of
$1 and $5 per share were issued to a shareholder in 1994 and 1995,
respectively, in connection with personal guarantees of the Company's line-of-
credit agreements (see Note 4). In December 1995, the 1994 $1 per share
warrants were exercised for the purchase of 100,000 shares. As the proceeds
from this stock exercise were received in January 1996, this amount has been
classified as notes receivable from sale of common stock in the accompanying
1995 consolidated balance sheet.
In January 1995, five-year warrants for the purchase of 44,400 shares at an
exercise price of $3.35 per share were granted to an accredited investor in
connection with the 1994 Placement (see Note 5).
In May 1995, the Company issued warrants for a total of 30,000 shares to two
shareholders. The warrants are exercisable at $3 per share any time on or
prior to May 10, 2000 and were granted in connection with loans made to the
Company in 1994.
In March 1996, three-year warrants for the purchase of 25,000 shares at an
exercise price of $5 per share were granted to a shareholder in exchange for a
personal guarantee of the Company's amended line-of-credit agreement (see Note
4).
In June through September 1996, the Company granted warrants for the
purchase of 84,000 shares of common stock in connection with the bridge
financing agreements discussed in Note 4. These warrants are exercisable at $5
per share, at any time subsequent to the consummation of an initial public
offering, expiring at dates ranging from June through September 1999.
7. STOCK OPTION AND 401(K) PLANS:
Stock Option Plan
In June 1994, the Company adopted a long-term incentive and stock option
plan (the Plan) for employees, directors and consultants of the Company. Under
the Plan, options are granted at an exercise price equal to the fair market
value of the common stock, as determined by the Company's board of directors,
at the date of grant. Incentive stock options are granted to employees, and
vest over varying periods not to exceed three years. The Plan also provides
for nonqualified options to be granted to directors and consultants, including
automatic grants of 25,000 stock options to each nonemployee director of the
Company on the date that each director is elected and an automatic grant of
10,000 stock options upon reelection. The nonemployee director options are
fully vested and exercisable at the date of grant.
F-12
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
Shares subject to option are summarized as follows:
<TABLE>
<CAPTION>
NON- OPTION
INCENTIVE QUALIFIED EXERCISE
STOCK STOCK PRICE PER
OPTIONS OPTIONS SHARE
--------- --------- ---------
<S> <C> <C> <C>
Balance, December 31, 1993..................... -- -- --
Options granted.............................. 257,000 80,000 $1-$3
------- ------- -----
Balance, December 31, 1994..................... 257,000 80,000 1-3
Options granted.............................. 123,000 20,000 3
Options canceled............................. (5,666) -- 1-3
Options exercised............................ (31,334) -- 1-3
------- ------- -----
Balance, December 31, 1995..................... 343,000 100,000 1-3
Options granted.............................. 245,500 32,500 5
Options canceled............................. (2,332) -- 3-5
Options exercised............................ (5,668) (35,000) 1-5
------- ------- -----
Balance, September 30, 1996.................... 580,500 97,500 $1-$5
======= ======= =====
Options exercisable at:
December 31, 1994............................ 119,000 80,000 $1-$3
======= ======= =====
December 31, 1995............................ 194,000 100,000 $1-$3
======= ======= =====
September 30, 1996........................... 444,499 97,500 $1-$5
======= ======= =====
</TABLE>
As of December 31, 1995, the Plan authorized the issuance of up to 720,000
shares of common stock for such options. In May 1996, the Company increased
the number of shares authorized for grant under the Plan to 1,100,000. In
December 1996, the Board of Directors amended the Plan to increase the number
of shares of Common Stock available for issuance to 1,500,000, subject to
shareholder approval at a meeting to be held in January 1997. At December 31,
1995 and September 30, 1996, 245,666 and 349,998 shares were available for
future grants.
In December 1996, the Company's board of directors approved the Non-Employee
Directors' Stock Option Plan (the Directors' Plan), which will be submitted
for shareholder approval in January 1997. Under the Directors' Plan, each
nonemployee director will receive 25,000 nonqualified options upon election
and 10,000 options at each reelection date.
401(k) Profit-Sharing Plan
Effective January 1, 1996, the Company adopted a 401(k) profit-sharing plan
(the 401(k) Plan) covering substantially all full-time employees. Eligible
employees may elect to defer up to 15% of their eligible compensation. The
Company may make discretionary matching contributions of up to 6% of each plan
participant's eligible compensation. Through September 30, 1996, the Company
had not made any matching contributions to the 401(k) Plan.
8. COMMITMENTS AND CONTINGENCIES:
Leases
The Company leases its headquarters office facilities under an operating
lease which expires June 30, 1999. The Company also leases equipment under
capital leases which expire at various dates through November 2000. Leased
property and equipment under capital leases at December 31, 1995 totaled
$118,150.
F-13
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
The following is a schedule of future minimum lease payments as of December
31, 1995:
<TABLE>
<CAPTION>
CAPITAL LEASES OPERATING LEASES
-------------- ----------------
<S> <C> <C>
1996....................................... $ 43,836 $89,775
1997....................................... 34,332 68,400
1998....................................... 23,919 68,400
1999....................................... 9,300 34,200
2000....................................... 7,750
--------
Total minimum capital lease payments....... 119,137
Less--
Amount representing interest............. (25,007)
Current maturities....................... (32,244)
--------
Noncurrent portion of minimum capital lease
payments.................................. $ 61,886
========
</TABLE>
Legal Proceedings
The Company is involved in legal actions in the ordinary course of its
business. Although the outcome of any such legal actions cannot be predicted,
management believes that there is no pending legal proceeding against or
involving the Company for which the outcome is likely to have a material
adverse effect upon the Company's financial position, results of operations or
cash flows.
9. SUPPLEMENTAL CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE YEARS ENDED DECEMBER 31 ENDED SEPTEMBER 30
-------------------------------- --------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Supplemental cash flow
disclosure:
Cash paid for inter-
est................... $ -- $ 19,822 $ 86,292 $ 68,877 $ 202,411
========== ========== ========== ========= ==========
Noncash investing and
financing activities:
Notes receivable from
sale of common stock.. $ 666,350 $ 633,102 $ 100,000 $ -- $ --
========== ========== ========== ========= ==========
Property and equipment
acquired under capital
leases................ $ -- $ 26,650 $ 99,409 $ 41,500 $ 64,807
========== ========== ========== ========= ==========
Issuance of warrants... $ -- $ 81,435 $ 33,750 $ -- $ 41,800
========== ========== ========== ========= ==========
Net assets acquired in
Paragon merger (Note
1).................... $ -- $ -- $ 6,559 $ 6,559 $ --
========== ========== ========== ========= ==========
</TABLE>
10. BRIDGE FINANCING AND PROPOSED INITIAL PUBLIC OFFERING:
During December 1996, the Company raised approximately $4,684,000 through a
private debt offering, after payment of $316,000 in related underwriting
discounts and offering costs. Such bridge notes bear interest at 10% and
mature at the earlier of June 30, 1997, which date may be extended to December
31, 1997 at the option of the Company, or thirty days following the effective
date of a registration statement filed in connection with an initial public
offering (IPO). In connection with this private debt offering, 250,000 five-
year warrants to purchase shares of the Company's common stock were issued at
an exercise price equal to 80% of the IPO price, or $6.40 in the event the IPO
does not occur prior to June 30, 1998.
F-14
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
In November 1996, the Company signed a letter of intent to obtain financing
through an IPO of approximately 1,750,000 shares of common stock in early
1997. The proceeds of the offering will be used to repay the bridge financing
arrangements, to fund capital expenditures and for working capital purposes.
In connection with the offering, the underwriter will receive a warrant to
purchase 175,000 shares of common stock at 120% of the IPO price. Upon
completion of the IPO, the Company will be authorized to issue 20 million
shares of Common Stock, $.001 par value, and five million shares of
undesignated preferred stock, $.001 par value.
Supplementary net loss per common share, giving effect to the assumed
retirement of debt with proceeds from the IPO and elimination of related
interest expense, was $.09 and $.20 for the year ended December 31, 1995 and
the nine months ended September 30, 1996.
F-15
<PAGE>
INSIDE BACK COVER
[Company's "fieldworks, inc." logo]
FieldWorks, Incorporated designs, manufactures, markets and supports
portable rugged computing platforms and computer system solutions for use in
demanding field environments.
7000 Series FIELD WORKSTATION(TM)
[Photographs of the 7000 Series FIELD WORKSTATION its chassis and its
contents.]
5000 Series FIELD WORKSTATION(TM)
[Photographs of the 5000 Series FIELD WORKSTATION and parts.]
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY SECURI-
TIES OTHER THAN THE SHARES OF COMMON STOCK TO WHICH IT RELATES OR AN OFFER TO
SELL, OR A SOLICITATION OF ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER
OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT INFORMA-
TION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 7
Use of Proceeds.......................................................... 14
Dividend Policy.......................................................... 14
Capitalization........................................................... 15
Dilution................................................................. 16
Selected Consolidated Financial Data..................................... 17
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 19
Recent Events............................................................ 24
Business................................................................. 25
Management............................................................... 37
Principal Shareholders................................................... 42
Certain Transactions..................................................... 43
Description of Capital Stock............................................. 45
Shares Eligible for Future Sale.......................................... 47
Underwriting............................................................. 49
Legal Matters............................................................ 50
Experts.................................................................. 50
Additional Information................................................... 51
Index to Consolidated Financial Statements............................... F-1
</TABLE>
-----------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EF-
FECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT PAR-
TICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS
IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACT-
ING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1,750,000 SHARES
[LOGO]
COMMON STOCK
-----------------
PROSPECTUS
-----------------
[LOGO]
, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following fees and expenses (which do not include underwriting
commissions and discounts) will be paid by the Company in connection with the
issuance and distribution of the securities registered hereby. All such
expenses, except for the SEC, NASD and Nasdaq fees, are estimated.
<TABLE>
<S> <C>
SEC registration fee.................................................. $ 6,099
NASD filing fee....................................................... 2,515
Nasdaq Stock Market listing fee....................................... 37,700
Legal fees and expenses............................................... 120,000
Accounting fees and expenses.......................................... 133,000
Blue Sky fees and expenses............................................ 15,000
Transfer Agent's and Registrar's fees................................. 5,000
Printing and engraving expenses....................................... 45,000
Miscellaneous......................................................... 5,686
--------
Total............................................................... $370,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 302A.521 of the Minnesota Statutes provides that a corporation shall
indemnify any person made or threatened to be made a party to a proceeding by
reason of the former or present official capacity of such person against
judgments, penalties, fines (including, without limitation, excise taxes
assessed against such person with respect to any employee benefit plan),
settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by such person in connection with the proceeding, if,
with respect to the acts or omissions of such person complained of in the
proceeding, such person (1) has not been indemnified therefor by another
organization or employee benefit plan for the same judgments, penalties or
fines; (2) acted in good faith; (3) received no improper personal benefit and
Section 302A.255 (with respect to director conflicts of interest), if
applicable, has been satisfied; (4) in the case of a criminal proceeding, had
no reasonable cause to believe the conduct was unlawful; and (5) in the case
of acts or omissions in such person's official capacity for the corporation,
reasonably believed that the conduct was in the best interests of the
corporation, or in the case of acts or omissions in such person's official
capacity for other affiliated organizations, reasonably believed that the
conduct was not opposed to the best interests of the corporation. Section
302A.521 also requires payment by a corporation, upon written request, of
reasonable expenses in advance of final disposition of the proceeding in
certain instances. A decision as to required indemnification is made by a
disinterested majority of the Board of Directors present at a meeting at which
a disinterested quorum is present, or by a designated committee of the Board,
by special legal counsel, by the shareholders or by a court.
Provisions regarding indemnification of officers and directors of the
Company to the extent permitted by Section 302A.521 are contained in the
Company's Second Amended and Restated Bylaws as they will be in effect upon
closing of this offering (Exhibit 3.4 hereto, which is incorporated herein by
reference).
Under Section of the Underwriting Agreement (Exhibit 1.1 hereto, which is
incorporated herein by reference), the Underwriter has agreed to indemnify,
under certain conditions, the Company, its directors, certain of its officers
and persons who control the Company within the meaning of the Securities Act
of 1933, as amended, against certain liabilities.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The information set forth below does not give effect to the automatic
conversion of all shares of Preferred Stock into shares of Common Stock upon
the consummation of this offering. Since July 1, 1993, the Company has issued
and sold the following securities that were not registered under the
Securities Act of 1933, as amended (the "Securities Act"):
Between November 1993 and March 1994, the Company sold 2,500,000 shares of
Common Stock at $1.00 per share to 98 accredited investors.
In February 1994, the Company issued a warrant to purchase 115,000 shares of
Common Stock at an exercise price of $1.00 per share in connection with an
agreement with the owner of the Company's leased office space. 33,655 of these
warrants were forfeited on August 1, 1994, in connection with the termination
of such lease.
On July 7, 1994, the Company issued a warrant to purchase 100,000 shares of
Common Stock at a price of $1.00 per share to a director of the Company in
connection with such director's personal guarantee of the Company's line of
credit with Bank Windsor. The warrant was exercised December 31, 1995.
From December 1994 to March 1995 the Company issued 479,100 shares of Common
Stock at $3.00 per share to 42 accredited investors.
On January 7, 1995, the Company issued a warrant to purchase 44,400 shares
of Common Stock at a price of $3.35 per share to an accredited investor, which
warrant was issued in connection with a private placement.
On January 26, 1995, the Company issued 12,000 shares of Common Stock to an
employee at a price of $1.00 per share upon exercise of an incentive stock
option.
On March 29, 1995, the Company issued 5,000 shares of Common Stock to an
employee at a price of $1.00 per share upon exercise of an incentive stock
option.
On April 7, 1995, the Company issued 1,500 shares of Common Stock to an
employee at a price of $1.00 per share upon exercise of an incentive stock
option.
On April 21, 1995 , the Company issued 5,000 shares of Common Stock to an
employee at a price of $1.00 per share upon exercise of an incentive stock
option.
On April 25, 1995, the Company issued 1,500 shares of Common Stock to an
employee at a price of $1.00 per share upon exercise of an incentive stock
option.
On May 5, 1995, the Company issued 5,000 shares of Common Stock to an
employee at a price of $1.00 per share upon exercise of an incentive stock
option.
On May 10, 1995, the Company issued warrants to purchase an aggregate of
30,000 shares of Common Stock at a price of $3.00 per share to two existing
shareholders in connection with a loan to the Company.
Between May and July 1995, the Company issued 354,334 shares of Common Stock
at $3.00 per share to 29 accredited investors.
On August 22, 1995, the Company issued 1,000 shares of Common Stock to an
employee at a price of $1.00 per share upon exercise of an incentive stock
option.
II-2
<PAGE>
On August 22, 1995, the Company issued 334 shares of Common Stock to an
employee at a price of $3.00 per share upon exercise of an incentive stock
option.
On December 20, 1995, the Company issued a warrant to purchase 40,000 shares
of Common Stock at a price of $5.00 per share to a director of the Company in
connection with such director's personal guarantee of the Company's line of
credit.
On January 19, 1996, the Company issued 5,000 shares of Common Stock to an
employee at an exercise price of $1.00 per share upon exercise of an incentive
stock option.
On February 19, 1996, the Company issued 333 shares of Common Stock to an
employee at a price of $3.00 per share upon exercise of an incentive stock
option.
On March 8, 1996, the Company issued a warrant to purchase 25,000 shares of
Common Stock at a price per share of $5.00 to an existing shareholder in
connection with such shareholder's personal guarantee of the Company's
$500,000 increase in its line of credit with Norwest Bank Minnesota, National
Association.
On May 30, 1996, the Company issued 25,000 shares of Common Stock to an
affiliate of a director of the Company at a price of $1.00 per share upon the
exercise of a non-incentive stock option granted to such director.
In May and June 1996, the Company issued promissory notes in the aggregate
principal amount of $1,540,000 to two accredited investors, both of which are
affiliates of a director of the Company, together with warrants to purchase
15,000 shares of Common Stock at a price of $10.00 per share, which warrants
were issued to an accredited investor that is an affiliate of such accredited
investors. In October 1996, in connection with the extension of the due dates
of certain related promissory note, such warrants were amended to provide for
a $5.00 per share exercise price.
On June 21, 1996, the Company issued 10,000 shares of Common Stock to a
director of the Company at an exercise price of $1.00 per share upon the
exercise of a non-incentive stock option.
On July 15, 1996, the Company issued 334 shares of Common Stock to an
employee at an exercise price of $5.00 per share upon the exercise of an
incentive stock option.
On July 15, 1996, the Company issued promissory notes in the aggregate
principal amount of $600,000 to two accredited investors, one of which is an
affiliate of a director of the Company, together with warrants to purchase a
number of shares determined in accordance with a formula contained in the
warrant agreement at an exercise price equal to 80% of the price to public of
shares of the Company's common stock in the Company's first registration
statement to be declared effective. In October 1996, in connection with an
extension of the due date of such promissory notes the Company amended the
exercise price of such warrants to $5.00 per share, which amendment resulted
in such warrants becoming exercisable for an aggregate of 24,000 shares of
Common Stock.
On July 29, 1996, the Company sold 300,000 shares of Series A Convertible
Preferred Stock to an accredited investor for $10.00 per share. The Company
also issued warrants to purchase an aggregate of 24,000 shares of Common Stock
at $10.00 per share in connection with the Preferred Stock.
In September 1996, the Company issued promissory notes in the aggregate
principal amount of $750,000 to two accredited investors, both of which are
affiliates of a director of the
II-3
<PAGE>
Company, together with warrants to purchase a number of shares of Common Stock
to be determined in accordance with a formula contained therein at an exercise
price equal to 80% of the price per share received by the Company in its next
sale of equity securities with gross proceeds of $2.5 million or more. In
October 1996, in connection with an extension of the due date of such
promissory notes, the Company amended such warrants to provide that they would
be exercisable for an aggregate of 45,000 shares at an exercise price of $5.00
per share.
In December 1996, the Company issued promissory notes in the aggregate
principal amount of $5,000,000 to 103 accredited investors, together with
warrants to purchase an aggregate of 250,000 shares of Common Stock. The
promissory notes are convertible into Common Stock as to up to 20% of their
original principal amount. The conversion price for the promissory notes and
the exercise price for the warrants will be 80% of the price per share of
Common Stock in the Company's initial public offering.
The shares of Common Stock sold to employees upon the exercise of stock
options were issued pursuant to Rule 701 under the Securities Act. The other
sales of securities listed above have been made by the Company in reliance on
Section 4(2) of the Securities Act and Rule 506 thereunder.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
*1.1 Underwriting Agreement
3.1 Amended and Restated Articles of Incorporation of the Company
*3.2 Second Amended and Restated Articles of Incorporation of the Company
(to be effective upon closing of this offering)
3.3 Amended and Restated Bylaws of the Company
*3.4 Second Amended and Restated Bylaws of the Company (to be effective
upon closing of this offering)
*4.1 Form of Certificate for Common Stock
*5.1 Opinion of Dorsey & Whitney LLP
10.1 Form of Warrant to purchase Shares of Common Stock, including
registration rights provisions
*10.2 Form of Promissory Note (May and June 1996)
10.3 Warrant, dated as of June 19, 1996, between the Company and
Brightstone Capital, Ltd.
10.4 Form of Bridge Loan Agreement (July 1996)
10.5 Form of Promissory Note (July 1996)
10.6 Form of Warrant (July 1996)
10.7 Purchase Agreement for Series A Convertible Preferred Stock, dated as
of July 29, 1996, by and between the Company and Network General
Corporation, including registration rights provisions
10.8 Warrant, dated as of July 29, 1996, issued to Network General
Corporation
10.9 Amendment to Bridge Loan Agreement and Promissory Note, dated as of
August 2, 1996, between the Company and Brightbridge Fund I L.P.
10.10 Form of Bridge Loan Agreement (September 1996)
10.11 Form of Promissory Note (September 1996)
10.12 Form of Warrant (September 1996)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
10.13 Amendment to Warrant, dated as of October 15, 1996, between the Company
and Brightstone Capital, Ltd.
10.14 Agreement to Extend Promissory Note and Amendment to Warrant, dated as
of October 15, 1996, between the Company and Stephen L. Becher
10.15 Agreement to Extend Promissory Notes and Amendment to Warrants, dated
as of October 15, 1996, between the Company and Brightstone Fund VI,
Brightstone Fund VII and Brightstone Capital, Ltd.
10.16 Amendment to Warrant, dated as of October 15, 1996, between the Company
and Brightbridge Fund I L.P.
10.17 Form of Bridge Loan Agreement including registration rights provisions
(December 1996)
10.18 Form of Subordinated Promissory Note (December 1996)
10.19 Form of Warrant (December 1996)
10.20 Office/Warehouse Lease, dated May 10, 1994, by and between The
Northwestern Mutual Life Insurance Company and the Company
10.21 Amendment to Lease, dated as of May 22, 1996, between the Company and
The Northwestern Mutual Life Insurance Company
10.22 Lease Agreement, dated April 7, 1995, by and between Ronald C. Devine
and the Company
10.23 Lease, dated November 1, 1995, by and between CSW Associates and the
Company
10.24 1994 Long-Term Incentive and Stock Option Plan, including forms of
option agreements
*10.25 Directors' Stock Option Plan, including form of option agreement
10.26 Form of Mutual Confidentiality Agreement for use with third parties
10.27 Form of Employee Disclosure and Assignment Agreement
10.28 Form of OEM Agreement
10.29 Form of Sales Representative Agreement
10.30 Form of System Integrator Agreement
10.31 Form of Extended Limited Warranty Agreement
11.1 Statement Re: Computation of Income (Loss) Per Common Share
21.1 Subsidiaries of the Company
23.1 Consent of Arthur Andersen LLP
*23.2 Consent of Dorsey & Whitney LLP (included in Exhibit 5.1)
24.1 Powers of Attorney (included on signature page)
27.1 Financial Data Schedule
</TABLE>
- -----------------
* To be filed by amendment.
(b) Financial Statement Schedules
II-5
<PAGE>
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that, in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
The undersigned registrant further undertakes that:
(1) It will provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt delivery to
each purchaser.
(2) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(3) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and this offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-1 TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF EDEN
PRAIRIE, STATE OF MINNESOTA, ON DECEMBER 19, 1996.
FIELDWORKS, INCORPORATED
By: /s/ Gary J. Beeman
----------------------------------
GARY J. BEEMAN PRESIDENT AND
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Gary J. Beeman and Steven A. Manske, or either
of them (with full power to act alone), as his or her true and lawful
attorneys-in-fact and agents, with full powers of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any additional Registration Statement pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, and any or all
amendments (including post-effective amendments) to this Registration Statement
(or Registration Statements, if an additional Registration Statement is filed
pursuant to Rule 462(b)), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as
he or she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement on Form S-1 has been signed by the following persons in the
capacities indicated on December 19, 1996.
SIGNATURE TITLE
--------- -----
/s/ Gary J. Beeman President, Chief Executive Officer
- ------------------------------------ and Director (Principal Executive
GARY J. BEEMAN Officer)
/s/ Steven A. Manske Vice President Finance (Principal
- ------------------------------------ Financial and Accounting Officer)
STEVEN A. MANSKE
Director
- ------------------------------------
GEORGE E. KLINE
/s/ David C. Malmberg Director
- ------------------------------------
DAVID C. MALMBERG
/s/ Robert C. Szymborski Director
- ------------------------------------
ROBERT C. SZYMBORSKI
II-7
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
*1.1 Underwriting Agreement
3.1 Amended and Restated Articles of Incorporation of the Company
*3.2 Second Amended and Restated Articles of Incorporation of the Company
(to be effective upon closing of this offering)
3.3 Amended and Restated Bylaws of the Company
*3.4 Second Amended and Restated Bylaws of the Company (to be effective
upon closing of this offering)
*4.1 Form of Certificate for Common Stock
*5.1 Opinion of Dorsey & Whitney LLP
10.1 Form of Warrant to purchase Shares of Common Stock, including
registration rights provisions
*10.2 Form of Promissory Note (May and June 1996)
10.3 Warrant, dated as of June 19, 1996, between the Company and
Brightstone Capital, Ltd.
10.4 Form of Bridge Loan Agreement (July 1996)
10.5 Form of Promissory Note (July 1996)
10.6 Form of Warrant (July 1996)
10.7 Purchase Agreement for Series A Convertible Preferred Stock, dated as
of July 29, 1996, by and between the Company and Network General
Corporation, including registration rights provisions
10.8 Warrant, dated as of July 29, 1996, issued to Network General
Corporation
10.9 Amendment to Bridge Loan Agreement and Promissory Note, dated as of
August 2, 1996, between the Company and Brightbridge Fund I L.P.
10.10 Form of Bridge Loan Agreement (September 1996)
10.11 Form of Promissory Note (September 1996)
10.12 Form of Warrant (September 1996)
10.13 Amendment to Warrant, dated as of October 15, 1996, between the Company
and Brightstone Capital, Ltd.
10.14 Agreement to Extend Promissory Note and Amendment to Warrant, dated as
of October 15, 1996, between the Company and Stephen L. Becher
10.15 Agreement to Extend Promissory Notes and Amendment to Warrants, dated
as of October 15, 1996, between the Company and Brightstone Fund VI,
Brightstone Fund VII and Brightstone Capital, Ltd.
10.16 Amendment to Warrant, dated as of October 15, 1996, between the Company
and Brightbridge Fund I L.P.
10.17 Form of Bridge Loan Agreement including registration rights provisions
(December 1996)
10.18 Form of Subordinated Promissory Note (December 1996)
10.19 Form of Warrant (December 1996)
10.20 Office/Warehouse Lease, dated May 10, 1994, by and between The
Northwestern Mutual Life Insurance Company and the Company
10.21 Amendment to Lease, dated as of May 22, 1996, between the Company and
The Northwestern Mutual Life Insurance Company
10.22 Lease Agreement, dated April 7, 1995, by and between Ronald C. Devine
and the Company
10.23 Lease, dated November 1, 1995, by and between CSW Associates and the
Company
10.24 1994 Long-Term Incentive and Stock Option Plan, including forms of
option agreements
*10.25 Directors' Stock Option Plan, including form of option agreement
10.26 Form of Mutual Confidentiality Agreement for use with third parties
10.27 Form of Employee Disclosure and Assignment Agreement
10.28 Form of OEM Agreement
10.29 Form of Sales Representative Agreement
10.30 Form of System Integrator Agreement
10.31 Form of Extended Limited Warranty Agreement
11.1 Statement Re: Computation of Income (Loss) Per Common Share
21.1 Subsidiaries of the Company
23.1 Consent of Arthur Andersen LLP
*23.2 Consent of Dorsey & Whitney LLP (included in Exhibit 5.1)
24.1 Powers of Attorney (included on signature page)
27.1 Financial Data Schedule
</TABLE>
- -----------------
* To be filed by amendment.
<PAGE>
Exhibit 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
FIELDWORKS, INCORPORATED
ARTICLE 1. NAME
The name of the corporation is "FieldWorks, Incorporated."
ARTICLE 2. REGISTERED OFFICE
The address of the registered office of the corporation is 7600 Golden
Triangle Drive, Eden Prairie, Minnesota 55344.
ARTICLE 3. AUTHORIZED SHARES
The aggregate number of authorized shares of the corporation is 15,000,000
shares, $.01 par value, and which shall be divisible into classes and series,
have the designation, voting rights, and other rights and preferences, and be
subject to the restrictions, that the board of directors may from time to time
establish, fix, and determine, consistent with these articles of incorporation
Unless otherwise designated by the board of directors, all issued shares shall
deemed common shares with equal rights and preferences.
ARTICLE 4. NO CUMULATIVE VOTING
There shall be no cumulative voting by the shareholders of the corporation.
ARTICLE 5. NO PREEMPTIVE RIGHTS
The shareholders of the corporation shall not have any preemptive rights to
subscribe for or acquire securities or rights to purchase securities of any
class, kind, or series of the corporation.
ARTICLE 6. NO ISSUANCE OF SHARES
The shareholders of the corporation shall not have any rights to issue
shares or rights to acquire shares of the corporation.
ARTICLE 7. WRITTEN ACTION BY DIRECTORS
An action required or permitted to be taken at a meeting of the board of
directors of the corporation may be taken by a written action signed, or
counterparts of a written action signed in the aggregate, by all of the
directors unless the action need not be approved by the shareholders of the
corporation, in which
<PAGE>
case the action may be taken by a written action signed, or counterparts of a
written action signed in the aggregate, by the number of directors that would be
required to take the same action at a meeting of the board of directors of the
corporation at which all of the directors were present.
ARTICLE 8. DIRECTOR LIABILITY
To the fullest extent permitted by the Minnesota Business Corporation Act
as the same exists or may hereafter be amended, a director of this corporation
shall not be liable to this corporation or its shareholders for monetary damages
for breach of fiduciary duty as a director.
<PAGE>
ARTICLES OF CORRECTION
OF
FIELDWORKS, INCORPORATED
In order to correct the Amended and Restated Articles of incorporation as
filed with the Minnesota Secretary of State on August 27, 1993, in accordance
with the provisions set forth in Minnesota Statute Section 5.16, the undersigned
hereby makes the following statements
1. The name of the person who filed the instrument is Gary J. Beeman.
2. The instrument to be corrected is the Amended and Restated Articles of
Incorporation of Fieldworks, Incorporated filed with the Minnesota Secretary of
State on August 27,1993.
3. The error to be corrected is the stated par value of the corporation's
common stock.
4. The following portions of the Amended and Restated Articles of
Incorporation are hereby set forth in their entirety as follows:.
"ARTICLE 3. AUTHORIZED SHARES
------------------------------
The aggregate number o(Pounds) authorized shares of the corporation is
15,000,000 shares, $.001 par value, and which shall be divisible into classes
and series, have the designation, voting rights, and other rights and
preferences, and be subject to the restrictions, that the board of directors may
from time to time establish, fix, and determine, consistent with the articles of
incorporation. Unless otherwise designated by the board of directors, all issued
shares shall be deemed common shares with equal rights and preferences."
Dated: March 25, 1994
(s) Gary J. Beeman
----------------------------------------
Gary J. Beeman, President,
Fieldworks, Incorporated
<PAGE>
STATE OF MINNESOTA
SECRETARY OF STATE
NOTICE OF CHANGE OF REGISTERED OFFICE
REGISTERED AGENT
Please read the instructions on the back before completing this form.
1. Corporate Name:
fieldworks, Inc.
2. Registered Office Address (No. & Street): List a complete street address or
rural route and rural route box number. A POST OFFICE BOX IS NOT ACCEPTABLE.
9961 Valley View Road Eden Prairie MN 55344
3. Registered .Agent (Registered agents are required for foreign corporations
but optional for MINNESOTA corporations):
---------
If you do not wish to designate an agent, you must list "NONE" in this box. DO
NOT USE THE CORPORATE NAME.
In compliance with Minnesota Statutes, Section 302A.123, 303.10, 308A.025, 317A.
123 or 322B.135 I certify that the above listed company has resolved to change
the company's registered office and/or agent as listed above.
I certify that I am authorized to execute this certificate and I further certify
that I understand that by signing this certificate I am subject to the penalties
of perjury as set forth in Minnesota Statutes Section 609.48 as if I had signed
this certificate under oath.
Signature of Authorized Persons
Name and Telephone Number of a Contact Person: RoseMary Luebke 612/947-0856
Filing Fee: Minnesota Corporations, Cooperatives and
Limited Liability Companies: $35.00
Non-Minnesota Corporations: $50.00
Make checks payable to Secretary of State
Return to: Minnesota Secretary of State
180 State Office Building
100 Constitution Avenue
St. Paul, MN 55155-1299
(612)296-2803
STATE OF MINNESOTA
DEPARTMENT OF STATE
DEC 29 1994
071239
<PAGE>
EXHIBIT 3.3
BYLAWS
OF
FIELDWORKS, INCORPORATED
ARTICLE I.
OFFICES, CORPORATE SEAL
Section 1.01. Registered Office. The registered office of the corporation
-----------------
in Minnesota shall be that set forth in the articles of incorporation or in the
most recent amendment of the articles of incorporation or resolution of the
directors filed with the secretary of state of Minnesota changing the registered
office.
Section 1.02. Other Offices. The corporation may have such other offices,
---------------
within or without the state of Minnesota, as the directors shall, from time to
time, determine.
Section 1.03. Corporate Seal. The corporation shall have no seal.
----------------
ARTICLE II.
MEETINGS OF SHAREHOLDERS
Section 2.01. Place and Time of Meetings. Except as provided otherwise by
----------------------------
the Minnesota Business Corporation Act, meetings of the shareholders may be held
at any place, within or without the state of Minnesota, as may from time to time
be designated by the directors and, in the absence of such designation, shall be
held at the registered office of the corporation in the state of Minnesota. The
directors shall designate the time of day for each meeting and, in the absence
of such designation, every meeting of shareholders shall be held at ten o'clock
a.m.
Section 2.02. Regular Meetings.
-----------------
(a) A regular meeting of the shareholders shall be held on such date as the
board of directors shall by resolution establish.
(b) At a regular meeting the shareholders, voting as provided in the
articles of incorporation and these bylaws, shall designate the number of
directors to constitute the board of directors (subject to the authority of the
board of directors thereafter to increase or decrease the number of directors as
permitted by law), shall elect qualified successors for directors who serve for
an indefinite term or whose terms have expired or are due to expire within six
months after the date of the meeting and shall transact such other business as
may properly come before them.
<PAGE>
-1-
Section 2.03. Special Meetings. Special meetings of the shareholders may be
------------------
held at any time and for any purpose and may be called by the chief executive
officer, the chief financial officer, two or more directors or by a shareholder
or shareholders holding 10% or more of the voting power of all shares entitled
to vote, except that a special meeting for the purpose of considering any action
to directly or indirectly facilitate or affect a business combination, including
any action to change or otherwise affect the composition of the board of
directors for that purpose, must be called by 25% or more of the voting power of
all shares entitled to vote. A shareholder or shareholders holding the requisite
percentage of the voting power of all shares entitled to vote may demand a
special meeting of the shareholders by written notice of demand given to the
chief executive officer or chief financial officer of the corporation and
containing the purposes of the meeting. Within 30 days after receipt of demand
by one of those officers, the board of directors shall cause a special meeting
of shareholders to be called and held on notice no later than 90 days after
receipt of the demand, at the expense of the corporation. Special meetings shall
be held on the date and at the time and place fixed by the chief executive
officer or the board of directors, except that a special meeting called by or at
demand of a shareholder or shareholders shall be held in the county where the
principal executive office is located. The business transacted at a special
meeting shall be limited to the purposes as stated in the notice of the meeting.
Section 2.04. Quorum. Adjourned Meetings. The holders of a majority of the
--------------------------
shares entitled to vote shall constitute a quorum for the transaction of
business at any regular or special meeting. In case a quorum shall not be
present at a meeting, the meeting may be adjourned from time to time without
notice other than announcement at the time of adjournment of the date, time and
place of the adjourned meeting. If a quorum is present, a meeting may be
adjourned from time to time without notice other than announcement at the time
of adjournment of the date, time and place of the adjourned meeting. At
adjourned meetings at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally noticed. If a
quorum is present when a meeting is convened, the shareholders present may
continue to transact business until adjournment notwithstanding the withdrawal
of enough shareholders originally present to leave less than a quorum.
Section 2.05. Voting. At each meeting of the shareholders every shareholder
------
having the right to vote shall be entitled to vote either in person or by proxy.
Each shareholder, unless the articles of incorporation or statutes provide
otherwise, shall have one vote for each share having voting power registered in
such shareholder's name on the books of the corporation. Jointly owned shares
may be voted by any joint owner unless the corporation receives written notice
from any one of them denying the authority of that person to vote those shares.
Upon the demand of any shareholder, the vote upon any question before the
meeting shall be by ballot. All questions shall be decided by a majority vote of
the number of shares entitled to vote and represented at the meeting at the time
of the vote except if otherwise required by statute, the articles of
incorporation, or these bylaws.
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<PAGE>
Section 2.06. Record Date. The board of directors may fix a date, not
-------------
exceeding 60 days preceding the date of any meeting of shareholders, as a record
date for the determination of the shareholders entitled to notice of, and to
vote at, such meeting, notwithstanding any transfer of shares on the books of
the corporation after any record date so fixed. If the board of directors fails
to fix a record date for determination of the shareholders entitled to notice
of, and to vote at, any meeting of shareholders, the record date shall be the
20th day preceding the date of such meeting.
Section 2.07. Notice of Meetings. There shall be mailed to each
shareholder, shown by the books of the corporation to be a holder of record of
voting shares, at his address as shown by the books of the corporation, a notice
setting out the time and place of each regular meeting and each special meeting,
except (unless otherwise provided in section 2.04 hereof) where the meeting is
an adjourned meeting and the date, time and place of the meeting were announced
at the time of adjournment, which notice shall be mailed at least five days
prior thereto (unless otherwise provided in section 2.04 hereof); except that
notice of a meeting at which a plan of merger or exchange is to be considered
shall be mailed to all shareholders of record, whether entitled to vote or not,
at least fourteen days prior thereto. Every notice of any special meeting called
pursuant to section 2.03 hereof shall state the purpose or purposes for which
the meeting has been called, and the business transacted at all special meetings
shall be confined to the purposes stated in the notice. The written notice of
any meeting at which a plan of merger or exchange is to be considered shall so
state such as a purpose of the meeting. A copy or short description of the plan
of merger or exchange shall be included in or enclosed with such notice.
Section 2.08. Waiver of Notice. Notice of any regular or special meeting
------------------
may be waived by any shareholder either before, at or after such meeting orally
or in writing signed by such shareholder or a representative entitled to vote
the shares of such shareholder. A shareholder, by his attendance at any meeting
of shareholders, shall be deemed to have waived notice of such meeting, except
where the shareholder objects at the beginning of the meeting to the transaction
of business because the meeting is not lawfully called or convened, or objects
before a vote on an item of business because the item may not lawfully be
considered at that meeting and does not participate in the consideration of the
item at that meeting.
Section 2.09. Written Action. Any action which might be taken at a meeting
--------------
of the shareholders may be taken without a meeting if done in writing and signed
by all of the shareholders entitled to vote on that action.
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<PAGE>
ARTICLE III.
DIRECTORS
Section 3.01. General Powers. The business and affairs of the corporation
----------------
shall be managed by or under the authority of the board of directors, except as
otherwise permitted by statute.
Section 3.02. Number Qualification and Term of Office. Until the
---------------------------------------
organizational meeting of the board of directors, the number of directors shall
be the number named in the articles of incorporation. Thereafter, the number of
directors shall be increased or decreased from time to time by resolution of the
board of directors or the shareholders. Directors need not be shareholders. Each
of the directors shall hold office until the regular meeting of shareholders
next held after such director's election and until such director's successor
shall have been elected and shall qualify, or until the earlier death,
resignation, removal, or disqualification of such director.
Section 3.03. Board Meetings. Meetings of the board of directors may be
--------------
held from time to time at such time and place within or without the state of
Minnesota as may be designated in the notice of such meeting.
Section 3.04. Calling Meetings Notice. Meetings of the board of directors
-----------------------
may be called by the chairman of the board by giving at least twenty-four hours'
notice, or by any other director by giving at least five days' notice, of the
date, time and place thereof to each director by mail, telephone, telegram or in
person. If the day or date, time and place of a meeting of the board of
directors has been announced at a previous meeting of the board, no notice is
required. Notice of an adjourned meeting of the board of directors need not be
given other than by announcement at the meeting at which adjournment is taken.
Section 3.05. Waiver of Notice. Notice of any meeting of the board of
----------------
directors may be waived by any director either before, at, or after such meeting
orally or in a writing signed by such director. A director, by his attendance at
any meeting of the board of directors, shall be deemed to have waived notice of
such meeting, except where the director objects at the beginning of the meeting
to the transaction of business because the meeting is not lawfully called or
convened and does not participate thereafter in the meeting.
Section 3.06. Quorum. A majority of the directors holding office
--------
immediately prior to a meeting of the board of directors shall constitute a
quorum for the transaction of business at such meeting.
Section 3.07. Absent Directors. A director may give advance written
------------------
consent or opposition to a proposal to be acted on at a meeting of the board of
directors. If such director is not present at the meeting, consent or opposition
to a proposal does not constitute presence for purposes of determining the
existence of quorum, but consent or opposition shall be counted as a vote in
favor of or against the proposal and shall be entered in the minutes or other
record of
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<PAGE>
action at the meeting, if the proposal acted on at the meeting is substantially
the same or has substantially the same effect as the proposal to which the
director has consented or objected.
Section 3.08. Conference Communications. Any or all directors may
---------------------------
participate in any meeting of the board of directors, or of any duly constituted
committee thereof, by any means of communication through which the directors may
simultaneously hear each other during such meeting. For the purposes of
establishing a quorum and taking any action at the meeting, such directors
participating pursuant to this section 3.08 shall be deemed present in person at
the meeting; and the place of the meeting shall be the place of origination of
the conference telephone conversation or other comparable communication
technique.
Section 3.09. Vacancies: Newly Created Directorships. Vacancies on the
--------------------------------------
board of directors of this corporation occurring by reason of death,
resignation, removal or disqualification shall be filled for the unexpired term
by a majority of the remaining directors of the board although less than a
quorum; newly created directorships resulting from an increase in the authorized
number of directors by action of the board of directors as permitted by section
3.02 may be filled by a majority vote of the directors serving at the time of
such increase; and each director elected pursuant to this section 3.09 shall be
a director until such director's successor is elected by the shareholders at
their next regular or special meeting.
Section 3.10. Removal. Any or all of the directors may be removed from
---------
office at any time, with or without cause, by the affirmative vote of the
shareholders holding a majority of the shares entitled to vote at an election of
directors except, as otherwise provided by the Minnesota Business Corporation
Act, section 302A.223, as amended, when the shareholders have the right to
cumulate their votes. A director named by the board of directors to fill a
vacancy may be removed from office at any time, with or without cause, by the
affirmative vote of the remaining directors if the shareholders have not elected
directors in the interim between the time of the appointment to fill such
vacancy and the time of the removal. In the event that the entire board or any
one or more directors be so removed, new directors may be elected at the same
meeting.
Section 3.11. Committees. A resolution approved by the affirmative vote of
----------
a majority of the board of directors may establish committees having the
authority of the board in the management of the business of the corporation to
the extent provided in the resolution. A committee shall consist of one or more
persons, who need not be directors, appointed by affirmative vote of a majority
of the directors present. Committees are subject to the direction and control
of, and vacancies in the membership thereof shall be filled by, the board of
directors.
A majority of the members of the committee present at a meeting is a
quorum for the transaction of business, unless a larger or smaller proportion or
number is provided in a resolution approved by the affirmative vote of a
majority of the directors present.
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<PAGE>
Section 3.12. Written Action. Any action which might be taken at a meeting
--------------
of the board of directors, or any duly constituted committee thereof, may be
taken without a meeting if done in writing and signed by all of the directors or
committee members, unless the articles provide otherwise and the action need not
be approved by the shareholders.
Section 3.13. Compensation. Directors who are not salaried officers of
--------------
this corporation shall receive such fixed sum per meeting attended or such fixed
annual sum as shall be determined, from time to time, by resolution of the board
of directors. The board of directors may, by resolution, provide that all
directors shall receive their expenses, if any, of attendance at meetings of the
board of directors or any committee thereof. Nothing herein contained shall be
construed to preclude any director from serving this corporation in any other
capacity and receiving proper compensation therefor.
ARTICLE IV.
OFFICERS
Section 4.01. Number. The officers of the corporation shall consist of a
--------
chairman of the board (if one is elected by the board), the president, one or
more vice presidents (if desired by the board), a treasurer, a secretary (if one
is elected by the board) and such other officers and agents as may' from time to
time, be elected by the board of directors. Any number of offices may be held by
the same person.
Section 4.02. Election. Term of Office and Qualifications. The board
---------------------------------------------
of directors shall elect or appoint, by resolution approved by the affirmative
vote of a majority of the directors present, from within or without their
number, the president, treasurer and such other officers as may be deemed
advisable, each of whom shall have the powers, rights, duties, responsibilities,
and terms in office provided for in these bylaws or a resolution of the board of
directors not inconsistent therewith. The president and all other officers who
may be directors shall continue to hold office until the election and
qualification of their successors, notwithstanding an earlier termination of
their directorship.
Section 4.03. Removal and Vacancies. Any officer may be removed from his
---------------------
office by the board of directors at any time, with or without cause. Such
removal, however, shall be without prejudice to the contract rights of the
person so removed. If there be a vacancy in an office of the corporation by
reason of death, resignation or otherwise, such vacancy shall be filled for the
unexplored term by the board of directors.
Section 4.04. Chairman of the Board. The chairman of the board, if one
---------------------
is elected, shall preside at all meetings of the shareholders and directors and
shall have such other duties as may be prescribed, from time to time, by the
board of directors.
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<PAGE>
Section 4.05. President. The president shall be the chief executive officer
---------
and shall have general active management of the business of the corporation. In
the absence of the chairman of the board, he shall preside at all meetings of
the shareholders and directors. He shall see that all orders and resolutions of
the board of directors are carried into effect. He shall execute and deliver, in
the name of the corporation, any deeds, mortgages, bonds, contracts or other
instruments pertaining to the business of the corporation unless the authority
to execute and deliver is required by law to be exercised by another person or
is expressly delegated by the articles or bylaws or by the board of directors to
some other officer or agent of the corporation. He shall maintain records of
and, whenever necessary, certify all proceedings of the board of directors and
the shareholders, and in general, shall perform all duties usually incident to
the office of the president. He shall have such other duties as may, from time
to time, be prescribed by the board of directors.
Section 4.06. Vice President. Each vice president, if one or more is
--------------
elected, shall have such powers and shall perform such duties as prescribed by
the board of directors or by the president. In the event of the absence or
disability of the president, the vice president(s) shall succeed to his power
and duties in the order designated by the board of directors.
Section 4.07. Secretary. The secretary, if one is elected, shall be
-----------
secretary of and shall attend all meetings of the shareholders and board of
directors and shall record all proceedings of such meetings in the minute book
of the corporation. He shall give proper notice of meetings of shareholders and
directors. He shall perform such other duties as may, from time to time, be
prescribed by the board of directors or by the president.
Section 4.08. Treasurer. The treasurer shall be the chief financial
-----------
officer and shall keep accurate financial records for the corporation. He shall
deposit all moneys, drafts and checks in the name of, and to the credit of, the
corporation in such banks and depositories as the board of directors shall, from
time to time, designate. He shall have power to endorse, for deposit, all notes,
checks and drafts received by the corporation. He shall disburse the funds of
the corporation, as ordered by the board of directors, making proper vouchers
therefor. He shall render to the president and the directors, whenever
requested, an account of all his transactions as treasurer and of the financial
condition of the corporation, and shall perform such other duties as may, from
time to time, be prescribed by the board of directors or by the president.
Section 4.09. Compensation. The officers of the corporation shall receive
--------------
such compensation for their services as may be determined, from time to time, by
resolution of the board of directors.
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<PAGE>
ARTICLE V.
SHARES AND THEIR TRANSFER
Section 5.01. Certificates for Shares. All shares of the corporation
-----------------------
shall be certificated shares. Every owner of shares of the corporation shall be
entitled to a certificate, to be in such form as shall be prescribed by the
board of directors, certifying the number of shares of the corporation owned by
such shareholder. The certificates for such shares shall be numbered in the
order in which they shall be issued and shall be signed, in the name of the
corporation, by the president and by the secretary or an assistant secretary or
by such officers as the board of directors may designate. If the certificate is
signed by a transfer agent or registrar, such signatures of the corporate
officers may be by facsimile if authorized by the board of directors. Every
certificate surrendered to the corporation for exchange or transfer shall be
cancelled, and no new certificate or certificates shall be issued in exchange
for any existing certificate until such existing certificate shall have been so
cancelled, except in cases provided for in section 5.04.
Section 5.02. Issuance of Shares. The board of directors is authorized
--------------------
to cause to be issued shares of the corporation up to the full amount authorized
by the articles of incorporation in such amounts as may be determined by the
board of directors and as may be permitted by law. Shares may be issued for any
consideration, including, without limitation, in consideration of cash or other
property, tangible or intangible, received or to be received by the corporation
under a written agreement, of services rendered or to be rendered to the
corporation under a written agreement, or of an amount transferred from surplus
to stated capital upon a share dividend. At the time of approval of the issuance
of shares, the board of directors shall state, by resolution, its determination
of the fair value to the corporation in monetary terms of any consideration
other than cash for which shares are to be issued.
Section 5.03. Transfer of Shares. Transfer of shares on the books of
--------------------
the corporation may be authorized only by the shareholder named in the
certificate, or the shareholder's legal representative, or the shareholder's
duly authorized attorney-in-fact, and upon surrender of the certificate or the
certificates for such shares. The corporation may treat as the absolute owner of
shares of the corporation, the person or persons in whose name shares are
registered on the books of the corporation.
Section 5.04. Loss of Certificates. Except as otherwise provided by the
--------------------
Minnesota Business Corporation Act, section 302A.419, any shareholder claiming a
certificate for shares to be lost, stolen, or destroyed shall make an affidavit
of that fact in such form as the board of directors shall require and shall, if
the board of directors so requires, give the corporation a bond of indemnity in
form, in an amount, and with one or more sureties satisfactory to the board of
directors, to indemnify the corporation against any claim which may be made
against it on account of the reissue of such certificate, whereupon a new
certificate may be issued in the same tenor and for the same number of shares as
the one alleged to have been lost, stolen or destroyed.
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<PAGE>
ARTICLE VI.
DISTRIBUTIONS, RECORD DATE
Section 6.01. Distributions. Subject to the provisions of the articles
---------------
of incorporation, of these bylaws, and of law, the board of directors may
authorize and cause the corporation to make distributions whenever, and in such
amounts or forms as, in its opinion, are deemed advisable.
Section 6.02. Record Date. Subject to any provisions of the articles of
-----------
incorporation, the board of directors may fix a date not exceeding 120 days
preceding the date fixed for the payment of any distribution as the record date
for the determination of the shareholders entitled to receive payment of the
distribution and, in such case, only shareholders of record on the date so fixed
shall be entitled to receive payment of such distribution notwithstanding any
transfer of shares on the books of the corporation after the record date.
ARTICLE VII.
BOOKS AND RECORDS, FISCAL YEAR
Section 7.01. Share Register. The board of directors of the corporation
----------------
shall cause to be kept at its principal executive office, or at another place or
places within the United States determined by the board:
(1) a share register not more than one year old, containing the names and
addresses of the shareholders and the number and classes of shares held by each
shareholder; and
(2) a record of the dates on which certificates or transaction statements
representing shares were issued.
Section 7.02. Other Books and Records. The board of directors shall
-------------------------
cause to be kept at its principal executive office, or, if its principal
executive office is not in Minnesota, shall make available at its Minnesota
registered office within ten days after receipt by an officer of the corporation
of a written demand for them made by a shareholder or other person authorized by
the Minnesota Business Corporation Act, section 302A.461, originals or copies
of:
(1) records of all proceedings of shareholders for the last three years;
(2) records of all proceedings of the board for the last three years;
(3) its articles and all amendments currently in effect;
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<PAGE>
(4) its bylaws and all amendments currently in effect;
(5) financial statements required by the Minnesota Business Corporation
Act, section 302A.463 and the financial statements for the most recent interim
period prepared in the course of the operation of the corporation for
distribution to the shareholders or to a governmental agency as a matter of
public record;
(6) reports made to shareholders generally within the last three years;
(7) a statement of the names and usual business addresses of its
directors and principal officers; and
(8) any shareholder voting or control agreements of which the
corporation is aware.
Section 7.03. Fiscal Year. The fiscal year of the corporation shall be
-------------
determined by the board of directors.
ARTICLE VIII.
LOANS, GUARANTEES, SURETYSHIP
Section 8.01. The corporation may lend money to, guarantee an
obligation of, become a surety for, or otherwise financially assist a person if
the transaction, or a class of transactions to which the transaction belongs, is
approved by the affirmative vote of a majority of the directors present, and:
(1) is in the usual and regular course of business of the corporation;
(2) is with, or for the benefit of, a related corporation, an organization
in which the corporation has a financial interest, an organization
with which the corporation has a business relationship, or an
organization to which the corporation has the power to make donations;
(3) is with, or for the benefit of, an officer or other employee of the
corporation or a subsidiary, including an officer or employee who is a
director of the corporation or a subsidiary, and may reasonably be
expected, in the judgment of the board, to benefit the corporation; or
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<PAGE>
(4) has been approved by (a) the holders of two-thirds of the voting power
of the shares entitled to vote which are owned by persons other than
the interested person or persons, or (b) the unanimous affirmative
vote of the holders of all outstanding shares whether or not entitled
to vote.
Such loan, guarantee, surety contract or other financial assistance may be with
or without interest, and may be unsecured, or may be secured in the manner as a
majority of the directors present approve, including, without limitation, a
pledge of or other security interest in shares of the corporation. Nothing in
this section shall be deemed to deny, limit or restrict the powers of guaranty,
surety or warranty of the corporation at common law or under a statute of the
state of Minnesota.
ARTICLE IX.
INDEMNIFICATION OF CERTAIN PERSONS
Section 9.01. The corporation shall indemnify all officers and
directors of the corporation, for such expenses and liabilities, in such manner,
under such circumstances and to such extent as permitted by section 302A.521 of
the Minnesota Business Corporation Act, as now enacted or hereafter amended. The
Board of Directors may authorize the purchase and maintenance of insurance
and/or the execution of individual agreements for the purpose of such
indemnification, and the corporation shall advance all reasonable costs and
expenses (including attorneys' fees) incurred in defending any action, suit or
proceeding to all persons entitled to indemnification under this section 9.01,
all in the manner, under the circumstances and to the extent permitted by
section 302A.521 of the Minnesota Business Corporation Act, as now enacted or
hereafter amended. Unless otherwise approved by the Board of Directors, the
corporation shall not indemnify any employee of the corporation who is not
otherwise entitled to indemnification pursuant to this section 9.01.
ARTICLE X.
AMENDMENTS
Section 10.01. These bylaws may be amended or altered by a vote of the
majority of the whole board of directors at any meeting. Such authority of the
board of directors is subject to the power of the shareholders, exercisable in
the
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<PAGE>
manner provided in the Minnesota Business Corporation Act, section 302A.181,
subd. 3, to adopt, amend' repeal bylaws adopted, amended, or repealed by the
board of directors. After the adoption of the initial bylaws, the board of
directors shall not make or alter any bylaws fixing a quorum for meetings of
shareholders, prescribing procedures for removing directors or filling vacancies
in the board of directors, or fixing the number of directors or their
classifications, qualifications, or terms of office, except that the board of
directors may adopt or amend any bylaw to increase their number.
ARTICLE XI
SECURITIES OF OTHER CORPORATIONS
Section 11.01. Voting Securities Held by the Corporation. Unless
-------------------------------------------
otherwise ordered by the board of directors, the president shall have full power
and authority on behalf of the corporation (a) to attend any meeting of security
holders of other corporations in which the corporation may hold securities and
to vote such securities on behalf of this corporation; (b) to execute any proxy
for such meeting on behalf of the corporation; or (c) to execute a written
action in lieu of a meeting of such other corporation on behalf of this
corporation. At such meeting, the president shall possess and may exercise any
and all rights and powers incident to the ownership of such securities that the
corporation possesses. The board of directors may, from time to time, grant such
power and authority to one or more other persons and may remove such power and
authority from the president or any other person or persons.
Section 11.02. Purchase and Sale of Securities. Unless otherwise ordered
---------------------------------
by the board of directors, the president shall have full power and authority on
behalf of the corporation to purchase, sell, transfer or encumber any and all
securities of any other corporation owned by the corporation, and may execute
and deliver such documents as may be necessary to effectuate such purchase,
sale, transfer or encumbrance. The board of directors may, from time to time,
confer like powers upon any other person or persons.
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<PAGE>
EXHIBIT 10.1
WARRANT
FOR
SHARES OF COMMON STOCK
OF
FIELDWORKS, INC.
For value received, _____________, an individual resident of the State
of _________, or his successors or assigns ("Investor"), is entitled to
subscribe for and purchase from Fieldworks, Inc., a Minnesota corporation (the
"Company"), up to ____________________ (______) fully paid and nonassessable
shares of the Company's common stock, or such greater of lesser number of such
shares as may be determined by application of the anti-dilution provisions of
this warrant, at the price of ____________ ($_____) per share, subject to
adjustments as noted below (the warrant exercise price").
This warrant may be exercised by Investor at any time or from time to
time on or prior to ________, 19xx.
This warrant is subject to the following provisions, terms and
conditions:
1. (a) The rights represented by this warrant may be exercised by
the holder hereof, in whole or in part, by written notice of exercise delivered
to the Company at least twenty (20) days prior to the intended date of exercise
and by the surrender of this warrant (properly endorsed if required) at the
principal office of the Company and upon payment to it by cash, certified check
or bank draft of the purchase price for such shares. the shares so purchased
shall be deemed to be issued as of the close of business on the date on which
this warrant has been exercised by payment to the Company of the warrant
exercise price. Certificates for the shares of stock so purchased, bearing the
restrictive legend set forth at the end of this warrant, shall be delivered to
the holder within fifteen (15) days after the rights represented by this warrant
shall have been so exercised, and, unless this warrant has expired, a new
warrant representing the number of shares, if any, with respect to which this
warrant has not been exercised shall also be delivered to the holder hereof
within such time. No fractional shares shall be issued upon the exercise of this
warrant.
(b) In lieu of payment, the rights represented by this warrant
may also be exercised by a written notice of exercise specifying that the
Investor wishes to convert all of this warrant (the "Conversion Right") into
that number of shares of the Company's common stock as follows: the number of
shares of the Company's common stock equal to the quotient obtained by dividing
(x) the value of the shares subject to the warrant (determined by subtracting
the aggregate warrant exercise price in effect immediately prior to the exercise
of the Conversion Right from the aggregate fair market value of the shares of
common stock issuable upon exercise of this warrant immediately
<PAGE>
prior to the exercise of the Conversion Right) by (y) the fair market value of
one share of Company common stock immediately prior to the exercise of the
Conversion Right. For purposes of this section 1(b), the fair market value of
a share of Company common stock as of a particular date (the "Determination
Date") shall mean:
(i) If the Company's common stock is traded on an exchange
or is quoted on the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") National Market System, then the
closing or last sale price, respectively, reported for the business
day immediately preceding the Determination Date.
(ii) If the Company's common stock is not traded on an
exchange or on the NASDAQ National Market System but is quoted on
NASDAQ, then the mean of the closing bid and asked prices reported for
the business day immediately preceding the Determination Date.
(iii) If the Company's common stock is not publicly traded,
then as determined in good faith by the Company's Board of Directors
upon a review of relevant factors.
2. The Company covenants and agrees that all shares that may be
issued upon the exercise of the rights represented by this warrant shall upon
issuance, be duly authorized and issued, fully paid and nonassessable shares.
The Company further covenants and agrees that during the period within which the
rights represented by this warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this warrant, a sufficient
number of shares of its common stock to provide for the exercise of the rights
represented by this warrant.
3. The warrant exercise price shall be subject to adjustment form
time to time as hereinafter provided in this section 3.
(a) If the Company at any time divides the outstanding shares of
its common stock into a greater number of shares (whether pursuant to a stock
split, stock dividend or otherwise), and conversely, if the outstanding shares
of its common stock are combined into a smaller number of shares, the warrant
exercise price in effect immediately prior to such division or combination shall
be proportionately adjusted to reflect the reduction or increase in the value of
each such common share.
(b) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in
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<PAGE>
such a way that holders of the Company's common stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for such
common shares, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, the holder of this warrant shall have the right
to purchase and receive upon the basis and upon the terms and conditions
specified in this warrant and in lieu of the shares of the common stock of the
Company immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby, such shares of stock, other securities or assets
as would have been issued or delivered to the holder of this warrant if it had
exercised this warrant and had received such shares of common stock prior to
such reorganization, reclassification, consolidation, merger or sale. The
company shall not effect any such consolidation, merger or sale, unless prior to
the consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed to the registered
holder of this warrant at the last address of such holder appearing on the books
of the Company, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase.
(c) Upon each adjustment of the warrant exercise price, the
holder of this warrant shall thereafter be entitled to purchase, at the warrant
exercise price resulting from such adjustment, the number of shares obtained by
multiplying the warrant exercise price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately prior
to such adjustment and dividing the product thereof by the warrant exercise
price resulting from such adjustment.
(d) Upon any adjustment of the warrant exercise price, the
Company shall give written notice thereof, by first class mail, postage prepaid,
addressed to the registered holder of this warrant at the address of such holder
as shown on the books of the Company, which notice shall state the warrant
exercise price resulting from such adjustment and the increase or decrease, if
any, in the number of shares purchasable at such price upon the exercise of this
warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
4. This warrant shall not entitle the holder hereof to any
voting rights or other rights as a shareholder of the Company.
5. The holder of this warrant, by acceptance hereof, agrees to
give written notice to the Company before transferring this warrant or
transferring any shares of the Company's common stock issuable or issued upon
the exercise of this warrant of the holder's intention to do so, describing
briefly the manner of any proposed transfer of this warrant or such holder's
intention as to the shares of common stock issuable upon the exercise hereof or
the intended disposition to be made of shares of common stock upon such
exercise. Promptly upon receiving such written notice, the Company shall present
-3-
<PAGE>
copies thereof to counsel for the Company. If, in the opinion of such counsel,
the proposed transfer of this warrant or disposition of shares may be effected
without registration or qualification (under any federal or state law) of this
warrant or the shares of common stock issuable or issued upon the exercise
hereof, the Company, as promptly as practicable, shall notify such holder of
such opinion, whereupon such holder shall be entitled to transfer this warrant,
or to exercise this warrant in accordance with its terms and dispose of the
shares received upon such exercise or to dispose of shares of common stock
received upon the previous exercise of this warrant, all in accordance with the
terms of the notice delivered by such holder to the Company, provided that an
appropriate legend in substantially the form set forth at the end of this
warrant respecting the foregoing restrictions on transfer and disposition may be
endorsed on this warrant or the certificates for such shares.
6. Subject to the provisions of section 5, this warrant and all
rights hereunder are transferable, in whole or in part, at the principal office
of the Company by the holder hereof in person or by duly authorized attorney,
upon surrender of this warrant properly endorsed to any person or entity who
represents in writing that he/it is acquiring the warrant for investment and
without any view to the sale or other distribution thereof. Each holder of this
warrant, by taking or holding the same, consents and agrees that the bearer of
this warrant, when endorsed, may be treated by the Company and all other persons
dealing with this warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented by this warrant, or to
the transfer hereof on the books of the Company, any notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat
the registered owner hereof as the owner for all purposes.
7. Neither this warrant nor any term hereof may be changed,
waived, discharged or terminated orally but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
8. The Company further grants to Investor the registration
rights, as provided in Exhibit A, with respect to the common stock purchased
pursuant to the exercise of the rights contained herein.
IN WITNESS WHEREOF, the Company has caused this warrant to be signed and
delivered by a duly authorized officer as of the ____ of _______, 19xx..
FIELDWORKS, INC.
By ______________________________
Gary J. Beeman, President
-4-
<PAGE>
RESTRICTION ON TRANSFER
The security evidenced hereby has not been registered under the
Securities Act of 1933 or any state securities laws and may not be sold,
transferred assigned, offered, pledged or otherwise distributed for value unless
there is an effective registration statement under such act or laws covering
such security or the Company receives an opinion of counsel for the holder of
this security (concurred in by counsel for the Company) stating that such sale,
transfer, assignment, pledge or distribution is exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933 and all
applicable state securities laws.
-5-
<PAGE>
FORM OF SUBSCRIPTION
--------------------
(To be executed only upon exercise (or conversion) of warrant)
The undersigned registered holder of the within warrant hereby
irrevocably elects to exercise the purchase right represented by such warrant
for, and purchases thereunder, _______ shares of the Common Stock of FieldWorks,
Inc. receivable upon such exercise and herewith makes payment of $_______
therefor in cash or by check or elects to exercise the Conversion Right provided
for in such warrant with respect to _______ shares of the Common Stock subject
thereto. The undersigned further requests that the certificates for such shares
be issued in the name of and delivered to __________________, whose address is
______________________________________.
Dated:
___________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
this warrant)
____________________________________
(Street Address)
____________________________________
(City) (State) (Zip Code)
-6-
<PAGE>
FORM OF ASSIGNMENT
------------------
(To be executed only upon transfer of warrant)
For value received, the undersigned registered holder of the within
warrant hereby sells, assigns and transfers unto _____________________________,
whose address is ________________________________________, the right represented
by such warrant to purchase _______ shares of the Common Stock of FieldWorks,
Inc. to which such warrant relates, and appoints ____________________ Attorney
to make such transfer on the books of _______________ maintained for such
purpose, with full power of substitution in the premises.
Dated: ______________________
__________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
this warrant)
__________________________________________
(Street Address)
__________________________________________
(City) (State) (Zip Code)
Signed in the presence of:
_______________________________
-7-
<PAGE>
EXHIBIT A
REGISTRATION RIGHTS PROVISIONS
1. Registration of Stock.
---------------------
1.1 Definitions.
------------
"Commission" shall mean the Securities and Exchange Commission or any
----------
other federal agency at the time administering the Securities Act.
"Company" shall mean FieldWorks, Inc., a Minnesota corporation.
-------
"Common Shares" shall mean the shares of Common Stock authorized by
-------------
the Company's Restated Articles of Incorporation and any additional shares of
Common Stock which may be authorized in the future by the Company, and any stock
into which such Common Shares may hereafter be changed.
"Registrable Securities" shall mean (i) the Common Stock issued upon
----------------------
conversion of the Warrant, issued to _______________, dated __________, 19xx,
and (ii) any additional securities issued with respect to the above described
securities upon any stock split, stock dividend, recapitalization or similar
event, provided, however, that none of the above described securities shall be
treated as Registrable Securities if (a) they have been sold to or through a
broker or dealer or underwriter in a public distribution or a public securities
transaction, or (b) they have been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale amended.
"Securities Act" shall mean the Securities Act of 1933, as
--------------
amended.
1.2 Piggyback Registration. Each time the Company shall determine to
-----------------------
proceed with the actual preparation and filing of a registration statement under
the Securities Act in connection with the proposed offer and sale for money of
any of its securities by it or any of its security holders (other than a
registration statement on Form S-8 or other limited purpose form), the Company
will give written notice of its determination to all record holders of
Registrable Securities. Upon the written request of a record holder of any
shares of Registrable Securities given within 30 days after receipt of any such
notice from the Company, the Company will, except as herein provided, cause all
Common Shares of the Registrable Securities, the record holders of which have so
requested
A-1
<PAGE>
registration thereof, to be included in such registration statement, all to the
extent requisite to permit the sale or other disposition by the prospective
seller or sellers of the Common Shares to be so registered; provided, however,
that nothing herein shall prevent the Company from, at any time, abandoning or
delaying any registration; provided further, however, that if the Company
determines not to proceed with a registration after the registration statement
has been filed with the Commission and the Company's decision not to proceed is
primarily based upon the anticipated public offering price of the securities to
be sold by the Company, the Company shall promptly complete the registration for
the benefit of those selling security holders who wish to proceed with a public
offering of their Common Shares of the Registrable Securities and who bear all
expenses in excess of $25,000 incurred by the Company as the result of such
registration after the Company has decided not to proceed. If any registration
pursuant to this Section shall be underwritten in whole or in part, the Company
may require that the Common Shares requested for inclusion pursuant to this
Section be included in the underwriting on the same terms and conditions as the
securities otherwise being sold through the underwriters. If in the good faith
judgment of the managing underwriter of such public offering the inclusion of
all of the Common Shares originally covered by requests for registration would
reduce the number of shares to be offered by the Company or interfere with the
successful marketing of the shares of stock offered by the Company, the number
of Common Shares to be included in the underwritten public offering may be
reduced in the following manner: the Common Shares held by directly by officers
and directors of the Company (other than Registrable Securities) shall be
excluded from such underwritten public offering to the extent required by the
managing underwriter, and if a further reduction in the number of shares is
required, such shares shall be selected pro rata among the holders thereof
requesting inclusion in such registration. Those Common Shares which are thus
excluded from the underwritten public offering shall be withheld from the market
by the holders thereof for a period, not to exceed 90 days, which the managing
underwriter reasonably determines is necessary in order to effect the
underwritten public offering.
1.3 Registration Procedures. If and whenever the Company required by the
-----------------------
provisions of Section 1.2 to effect the registration of shares of Registrable
Securities under the Securities Act, the Company will:
(a) prepare and file with the Commission a registration statement
with respect to such securities, and use its best efforts to cause such
registration statement to become and remain effective for such period as may be
reasonably necessary to effect the sale of such securities, not to exceed nine
months;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein
A-2
<PAGE>
as may be necessary to keep such registration statement effective for such
period as may be reasonably necessary to effect the sale of such securities, not
to exceed nine months;
(c) furnish to the security holders participating in such
registration and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as such participating holders may reasonably request
within 20 days following the original filing of such registration statement,
except that the Company shall not for any purpose be required to execute a
general consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(e) notify the security holders participating in such registration,
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed;
(f) notify such holders promptly of any request by the Commission for
the amending or supplementing of such registration statement or prospectus or
for additional information;
(g) prepare and file with the Commission, promptly upon the request
of any such holders, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such holders (and
concurred in by counsel for the Company), is required under the Securities Act
or the rules and regulations thereunder in connection with the distribution of
the Conversion Shares by such holder;
(h) prepare and promptly file with the Commission and promptly notify
such holders of the filing of such amendment or supplement to such registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event shall have occurred
as the result of which any such prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading;
A-3
<PAGE>
(i) advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;
(j) not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of such holders shall
have reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities Act
or the rules and regulations thereunder, after having been furnished with a copy
thereof at least five business days prior to the filing thereof, unless in the
opinion of counsel for the Company the filing of such amendment or supplement is
reasonably necessary to protect the Company from any liabilities under any
applicable federal or state law and such filing will not violate applicable law;
and
(k) at the request of any such holder, furnish on the effective date
of the registration statement and, if such registration includes an underwritten
public offering, at the closing provided for in the underwriting agreement: (i)
opinions, dated such respective dates, of the counsel representing the Company
for the purposes of such registration, addressed to the underwriters, if any,
and to the holder or holders making such request, covering such matters as such
underwriters and holder or holders may reasonably request, and (ii) letters,
dated such respective dates, from the independent certified public accountants
of the Company, addressed to the underwriters, if any, and to the holder or
holders making such request, covering such matters as such underwriters and
holder or holders may reasonably request, in which letters such accountants
shall state (without limiting the generality of the foregoing) that they are
independent certified public accountants within the meaning of the Securities
Act and that in the opinion of such accountants the financial statements and
other financial data of the Company included in the registration statement or
any amendment or supplement thereto comply in all material respects with the
applicable accounting requirements of the Securities Act.
1.4 Expenses. With respect to each inclusion of Registrable Securities in
--------
a registration statement pursuant to section 1.2, the Company shall bear the
following fees, costs and expenses: all registration, filing and NASD fees,
printing expenses, fees and disbursements of counsel and accountants for the
Company and all legal fees and disbursements and other expenses of complying
with state securities or blue sky laws of any jurisdictions in which the
securities to be offered are to be registered or qualified. Fees and
disbursements of counsel and accountants for the selling security holders in
excess of $15,000, underwriting discounts and commissions and transfer taxes for
selling security holders and any other expenses incurred by the selling security
holders not expressly included above shall be borne by the selling security
holders.
A-4
<PAGE>
1.5 Indemnification.
---------------
(a) The Company will indemnify and hold harmless each holder of shares
of Registrable Securities that are included in a registration statement pursuant
to the provisions of this Agreement and any underwriter (as defined in the
Securities Act) for such holder and each person, if any, who controls such
holder or such underwriter within the meaning of the Securities Act, from and
against any and all loss, damage, liability, cost and expense to which such
holder or any such underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, damages, liabilities,
costs or expenses are caused by any untrue statement or alleged untrue statement
of any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, damage, liability, cost or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with written information furnished by such holder, such
underwriter or such controlling person specifically for use in the preparation
thereof.
(b) Each holder of shares of Registrable Securities which are included
in a registration pursuant to the provisions of this Section 1 will indemnify
and hold harmless the Company, any controlling person and any underwriter from
and against any and all loss, damage, liability, cost or expense to which the
Company or any controlling person and/or any underwriter may become subject
under the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged untrue
statement of any material fact contained in such registration statement, any
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was so made in
reliance upon and in strict conformity with written information furnished by
such holder specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this section of notice of the commencement
A-5
<PAGE>
of any action involving the subject matter of the foregoing indemnity
provisions, such indemnified party will, if a claim thereof is to be made
against the indemnifying party pursuant to the provisions of said paragraph (a)
or (b), promptly notify the indemnifying party of the commencement thereof; but
the omission to so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than hereunder.
In case such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
if the defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interest which would prevent
counsel for the indemnifying party from also representing the indemnified party,
the indemnified party or parties shall have the right to select separate counsel
to participate in the defense of such action on behalf of such indemnified party
or parties. After notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party pursuant to the provisions of said
paragraph (a) or (b) for any legal or other expense subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless (i) the indemnified party shall have
employed counsel in accordance with the proviso of the preceding sentence, (ii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action, or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
1.6 Stand-Off Agreement. Each holder of Registrable Securities
-------------------
agrees, so long as such holder holds at least 1% of the Company's outstanding
voting equity securities, in connection with the Company's initial public
offering of the Company's Common Shares that, upon request of the Company or the
underwriters managing the underwritten offering of the Company's securities, not
to sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Common Shares of the Company other than those included
in the registration without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not exceeding 120
days) from the effective date of such registration as may be requested by the
underwriters; provided, that all other holders of at least 1% of the Company's
outstanding voting equity securities and all of the officers and directors of
the Company who own stock of the Company also agree to such restrictions.
A-6
<PAGE>
EXHIBIT 10.3
WARRANT
FOR
SHARES OF COMMON STOCK
OF
FIELDWORKS, INCORPORATED
FOR VALUE RECEIVED, Brightstone Capital, Ltd. or its successors or
assigns ("Holder"), is hereby entitled to subscribe for and purchase from
Fieldworks, Incorporated, a Minnesota corporation (the "Company"), Fifteen
Thousand (15,000) fully paid and nonassessable shares of the Company's Common
Stock (the "Warrant Shares") at the exercise price of Ten Dollars ($10.00) per
share (the "Warrant Exercise Price"), subject to adjustment as provided in
Section 3 of this warrant.
This warrant may be exercised by Investor at any time after the
initial public offering of the Company's Common Stock is effective until a date
on or prior to three years from the date hereof.
This warrant is subject to the following provisions, terms and
conditions:
1. (a) The rights represented by this warrant may be exercised by
the holder hereof, in whole or in part, by written notice of exercise delivered
to the Company at least twenty (20) days prior to the intended date of exercise
and by the surrender of this warrant (properly endorsed if required) at the
principal office of the Company and upon payment to it by cash, certified check
or bank draft of the purchase price for such shares or by exercise of the
Conversion Right as provided in (b) below. The shares so purchased shall be
deemed to be issued as of the close of business on the date on which this
warrant has been exercised by payment to the Company of the Warrant Exercise
Price unless the Conversion Right has been exercised. Certificates for the
shares of stock so purchased, bearing the restrictive legend set forth at the
end of this warrant, shall be delivered to the holder within fifteen (15) days
after the rights represented by this warrant shall have been so exercised, and,
unless this warrant has expired, a new warrant representing the number of
shares, if any, with respect to which this warrant has not been exercised shall
also be delivered to the holder hereof within such time. No fractional shares
shall be issued upon the exercise of this warrant.
(b) In lieu of payment, the rights represented by this warrant
may also be exercised by a written notice of exercise specifying that the
Investor wishes to convert all of this warrant (the "Conversion Right") into
that number of shares of Common Stock as follows: the number of shares of Common
Stock equal to the quotient obtained by dividing (x) the value of the shares
subject to the warrant (determined by subtracting the aggregate warrant exercise
price in effect immediately prior to the exercise of the Conversion Right from
the aggregate fair market value of
<PAGE>
the shares of Common Stock issuable upon exercise of this warrant immediately
prior to the exercise of the Conversion Right) by (y) the fair market value of
one share of Common Stock immediately prior to the exercise of the Conversion
Right. For purposes of this section 1(b), the fair market value of a share of
Common Stock as of a particular date (the "Determination Date") shall mean:
(i) If the Company's Common Stock is traded on an exchange or
is quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") National Market System, then the closing or last sale
price, respectively, reported for the business day immediately preceding
the Determination Date.
(ii) If the Company's Common Stock is not traded on an exchange
or on the NASDAQ National Market System but is quoted on NASDAQ, then the
mean of the closing bid and asked prices reported for the business day
immediately preceding the Determination Date.
2. The Company covenants and agrees that all shares that may be
issued upon the exercise of the rights represented by this warrant shall, upon
issuance, be duly authorized and issued, fully paid and nonassessable shares.
The Company further covenants and agrees that during the period within which the
rights represented by this warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this warrant, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this warrant.
3. This warrant shall be exercisable for the number of Warrant
Shares and at the Warrant Exercise Price first given above, subject to
adjustment from time to time as provided below:
(a) If the Company at any time divides the outstanding shares of
its Common Stock into a greater number of shares (whether pursuant to a
stock split, stock dividend or otherwise), and conversely, if the
outstanding shares of its Common Stock are combined into a smaller number
of shares, the Warrant Exercise Price in effect immediately prior to such
division or combination shall be proportionately adjusted to reflect the
reduction or increase in the value of each such share.
(b) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of its
assets to another corporation shall be effected in such a way that holders
of the Company's Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for such shares, then,
as a condition of
-2-
<PAGE>
such reorganization, reclassification, consolidation, merger or sale, the
holder of this warrant shall have the right to purchase and receive upon
the basis and upon the terms and conditions specified in this warrant and
in lieu of the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, such shares of stock, other securities or assets as
would have been issued or delivered to the holder of this warrant if it had
exercised this warrant and had received such shares of Common Stock prior
to such reorganization, reclassification, consolidation, merger or sale.
The Company shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof the successor corporation (if other than
the Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument executed and
mailed to the registered holder of this warrant at the last address of such
holder appearing on the books of the Company, the obligation to deliver to
such holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to purchase.
(c) If the Company takes any other action, or if any other event
occurs, which does not come within the scope of the provisions of Section
3(a) or (b), but which should result in an adjustment in the Warrant
Exercise Price and/or the number of shares subject to this warrant in order
to fairly protect the purchase rights of the holder of this warrant, an
appropriate adjustment in such purchase rights shall be made by the
Company.
(d) Upon each adjustment of the Warrant Exercise Price, the
holder of this warrant shall thereafter be entitled to purchase, at the
Warrant Exercise Price resulting from such adjustment, the number of shares
obtained by multiplying the Warrant Exercise Price in effect immediately
prior to such adjustment by the number of shares purchasable pursuant
hereto immediately prior to such adjustment and dividing the product
thereof by the Warrant Exercise Price resulting from such adjustment.
(e) Upon any adjustment of the Warrant Exercise Price, the
Company shall give written notice thereof, by first class mail, postage
prepaid, addressed to the registered holder of this warrant at the address
of such holder as shown on the books of the Company, which notice shall
state the Warrant Exercise Price resulting from such adjustment and the
increase or decrease, if any, in the number of shares purchasable at such
price upon the exercise of this warrant, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is
based.
4. This warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Company.
-3-
<PAGE>
5. The holder of this warrant, by acceptance hereof, agrees to give
written notice to the Company before transferring this warrant or transferring
any shares of the Company's Common Stock issuable or issued upon the exercise of
this warrant of the holder's intention to do so, describing briefly the manner
of any proposed transfer of this warrant or such holder's intention as to the
shares of Common Stock issuable upon the exercise hereof or the intended
disposition to be made of shares of Common Stock upon such exercise. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company. If, in the opinion of such counsel, the proposed
transfer of this warrant or disposition of shares may be effected without
registration or qualification (under any federal or state law) of this warrant
or the shares of Common Stock issuable or issued upon the exercise hereof, the
Company, as promptly as practicable, shall notify such holder of such opinion,
whereupon such holder shall be entitled to transfer this warrant, or to exercise
this warrant in accordance with its terms and dispose of the shares received
upon such exercise or to dispose of shares of Common Stock received upon the
previous exercise of this warrant, all in accordance with the terms of the
notice delivered by such holder to the Company, provided that an appropriate
legend in substantially the form set forth at the end of this warrant respecting
the foregoing restrictions on transfer and disposition may be endorsed on this
warrant or the certificates for such shares.
6. Subject to the provisions of Section 5, this warrant and all
rights hereunder are transferable, in whole or in part, at the principal office
of the Company by the holder hereof in person or by duly authorized attorney,
upon surrender of this warrant properly endorsed to any person or entity who
represents in writing that he/it is acquiring the warrant for investment and
without any view to the sale or other distribution thereof. Each holder of this
warrant, by taking or holding the same, consents and agrees that the bearer of
this warrant, when endorsed, may be treated by the Company and all other persons
dealing with this warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented by this warrant, or to
the transfer hereof on the books of the Company, any notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat
the registered owner hereof as the owner for all purposes.
7. Neither this warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
8. The Company agrees that each time it shall determine to proceed
with the preparation and filing of a registration statement under the Securities
Act it will use all reasonable efforts to allow the inclusion of the Warrant
Shares in such registration statement; provided, however, that the inclusion of
the Warrant Shares
-4-
<PAGE>
in such registration statement shall be subject to the approval of the managing
underwriter and subject to the good faith determination of the managing
underwriter that the inclusion of such Warrant Shares would not reduce the
number of shares to be offered by the Company nor interfere with the successful
marketing of such shares by the Company.
IN WITNESS WHEREOF, the Company has caused this warrant to be signed
and delivered by a duly authorized officer as of the 19th day of June, 1996.
FIELDWORKS, INCORPORATED
By______________________________________
Its___________________________________
-5-
<PAGE>
RESTRICTION ON TRANSFER
The security evidenced hereby has not been registered under the
Securities Act of 1933 or any state securities laws and may not be sold,
transferred, assigned, offered, pledged or otherwise distributed for value
unless there is an effective registration statement under such act or laws
covering such security or the Company receives an opinion of counsel for the
holder of this security (concurred to by counsel for the Company) stating that
such sale, transfer, assignment, pledge or distribution is exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933
and all applicable state securities laws.
<PAGE>
WARRANT EXERCISE
(To be signed only upon exercise of warrant)
The undersigned, the holder of the foregoing warrant, hereby
irrevocably elects to exercise the purchase right represented by such warrant
for, and to purchase thereunder, ______________________ of the shares of Common
Stock of Fieldworks, Incorporated, to which such warrant relates and herewith
makes payment of $_________________________ therefor in cash or by check or
elects to exercise the Conversion Right as provided in the warrant and requests
that the certificates for such shares be issued in the name of, and be delivered
to ___________________ whose address is set forth below the signature of the
undersigned.
Dated:
[Signature]
[Address]
<PAGE>
WARRANT ASSIGNMENT
(To be signed only upon transfer of warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto __________________________________________________ the purchase
right represented by the foregoing warrant to purchase the shares of Common
Stock of Fieldworks, Incorporated, to which such warrant relates and appoints
attorney to transfer such purchase right on the books of
_______________________________________ with full power of substitution in the
premises.
Dated:
[Signature]
[Name and Address of Transferee]
<PAGE>
EXHIBIT 10.4
BRIDGE LOAN AGREEMENT
NO. ____
THIS BRIDGE LOAN AGREEMENT (this "Agreement") is dated as of July 15, 1996,
by and between Fieldworks, Incorporated, a Minnesota corporation (the
"Company"), and _____________________ (the "Investor").
RECITALS:
(a) Whereas, the Company needs cash to fund its operations until such
time as it can complete a debt or equity financing; and
(b) Whereas, the Investor desires to lend funds to the Company on the
terms and conditions set forth in this Agreement; and
(c) Whereas, other investors ("Other Investors") may lend funds to
the Company on terms and conditions equivalent to those set forth in this
Agreement.
Accordingly, in consideration of the foregoing, the mutual promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Loan/Promissory Note. The Investor agrees to lend to the Company
--------------------
$__________ and the Company agrees to deliver to the Investor a promissory note,
in the form attached hereto as Exhibit A (the "Note"), in a like amount. The
---------
delivery of the Note shall be made concurrently with delivery of funds to the
Company in the amount set forth above.
2. Warrants. In consideration of the loan, the Company shall issue to
--------
the Investor, concurrently with delivery of the Note, a warrant, in the form
attached hereto as Exhibit B (the "Warrant"), to purchase that number of shares
---------
of Common Stock of the Company as provided in the Warrant. The shares of Common
Stock issuable upon exercise of the Warrants are referred to hereinafter as the
"Warrant Stock."
3. Repayment. All outstanding principal and accrued interest on the Note
---------
shall be due and payable on December 31, 1996, provided, however, that
-----------------
notwithstanding the foregoing, the Note shall be payable in full within thirty
(30) days after the effective date (the "Effective Date") of any Registration
Statement. Except in the event a Registration Statement is filed and declared
effective, the Note may not be prepaid.
<PAGE>
4. Restrictions on Transfer. The Note, Warrant and Warrant Stock shall
------------------------
be subject to certain restrictions on transfer identified in the Note and
Warrant.
5. Representations and Warranties of the Company. The Company represents
---------------------------------------------
and warrants to the Investor that this Agreement has been duly authorized by all
necessary corporate action on behalf of the Company, has been duly executed and
delivered by an authorized officer of the Company, and is a valid and binding
agreement on the part of the Company. All corporate action necessary to the
authorization, issuance, and delivery of the Note, the Warrant, and the Warrant
Stock (collectively, a "Unit") has been taken on or prior to the date hereof.
6. Representations and Warranties of the Investor. The Investor
----------------------------------------------
represents and warrants to the Company as follows:
(a) That the Investor is in a financial position to hold the Units
for an indefinite period of time and is able to bear the economic risk and
withstand a complete loss of the Investor's investment in the Units;
(b) That the Investor believes the Investor, either alone or with the
assistance of the Investor's own professional advisor, has such knowledge
and experience in financial and business matters that the Investor is
capable of reading and interpreting financial statements and evaluating the
merits and risks of the prospective investment in the Units and has the net
worth to undertake such risks;
(c) That the Investor has obtained, to the extent the Investor deems
necessary, the Investor's own personal professional advice with respect to
the risks inherent in the investment in the Units and the suitability of an
investment in the Units in light of the Investor's financial condition and
investment needs;
(d) That the Investor believes that the investment in the Units is
suitable for the Investor based upon the Investor's investment objectives
and financial needs, and the Investor has adequate means for providing for
the Investor's current financial needs and personal contingencies and has
no need for liquidity of investment with respect to the Units;
(e) That the Investor has been given access to full and complete
information regarding the Company and has utilized such access to the
Investor's satisfaction for the purpose of obtaining information and,
particularly, the Investor has either attended or been given reasonable
opportunity to attend a meeting with representatives of the Company for the
purpose of asking questions of, and receiving answers from, such
representatives concerning the Company and to obtain any additional
-2-
<PAGE>
information, to the extent reasonably available, necessary to verify the
accuracy of information provided to the Investor;
(f) That the Investor recognizes that an investment in the Units
involves a high degree of risk, including, but not limited to, the risk of
economic losses from operations of the Company;
(g) That the Investor recognizes that in addition to the proceeds
from the sale of Units, the Company will require additional financing to
fund current and proposed operations, and there can be no assurances that
additional financing can be obtained;
(h) That the Investor realizes that (i) the purchase of the Units is
a long-term investment; (ii) the purchaser of the Units must bear the
economic risk of investment for an indefinite period of time because the
Notes, Warrants and Warrant Stock have not been registered under the
Securities Act or under the securities laws of any state and, therefore,
none of such securities can be sold unless they are subsequently registered
under said laws or exemptions from such registrations are available; (iii)
the Investor may not be able to liquidate the Investor's investment in the
event of an emergency or pledge any of such securities as collateral for
loans; and (iv) the transferability of such securities is restricted and
(A) requires the written consent of the Company, and (B) legends will be
placed on the Notes and Warrants referring to the applicable restrictions
on transferability.
(i) That the Investor certifies, under penalties of perjury, that the
Investor is NOT subject to the backup withholding provisions of Section
3406(a)(i)(C) of the Internal Revenue Code of 1986, as amended (Note: You
are subject to backup withholding if (i) you fail to furnish your Social
Security number or taxpayer identification number herein; (ii) the Internal
Revenue Service notifies the Company that you furnished an incorrect Social
Security number or taxpayer identification number; (iii) you are notified
that you are subject to backup withholding; or (iv) you fail to certify
that you are not subject to backup withholding or you fail to certify your
Social Security number or taxpayer identification number);
(j) That the Investor is a bona fide resident of, is domiciled in,
and received the offer and made the decision to invest in the Units in, the
state set forth on the signature page below under "Addresses" and that the
Units are being purchased by the Investor in the Investor's name solely for
the Investor's own beneficial interest and not as nominee for, or on behalf
of, or for the beneficial interest of, or with the intention to transfer
to, any other person, trust or organization.
-3-
<PAGE>
7. Accredited Investor. The Investor represents and warrants that the
-------------------
Investor is an "accredited investor" as defined in Rule 501(a) of Regulation D
of the Securities Act, because the Investor meets at least one of the following
criteria (please check one or more, as applicable):
[_] (a) The Investor is a natural person whose individual net worth, or joint
net worth with his or her spouse, exceeds $1,000,000 at the time of
the Investor's purchase; or
[_] (b) The Investor is a natural person who had an individual income in
excess of $200,000 in each of the two most recent years (1994 and
1995) or joint income with the Investor's spouse in excess of $300,000
in each of those years and who reasonably expects to reach the same
income level in the current year (1996); or
[_] (c) The Investor is a corporation, Massachusetts or similar business
trust, partnership or an organization described in Section 501(c)(3)
of the Internal Revenue Code, not formed for the specified purpose of
acquiring the Units, with total assets in excess of $5,000,000; or
[_] (d) The Investor is (i) a bank as defined in Section 3(a)(2) of the
Securities Act, or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act
whether acting in its individual or fiduciary capacity, (ii) a broker
or dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934, (iii) an insurance company as defined in Section 2(13) of
the Securities Act, (iv) an investment company registered under the
Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of such Act, (v) a Small Business
Investment Company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of
1958, (vi) a plan established or maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan
has total assets in excess of $5,000,000, or (vii) an employee benefit
plan within the meaning of the Employee Retirement Income Security Act
of 1974, if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which plan fiduciary is either a
bank, savings and loan association, insurance company or registered
investment advisor, or if the employee benefit plan has total assets
in excess of $5,000,000 or, if a self directed plan, with investment
decisions made solely by persons who are accredited investors; or
-4-
<PAGE>
[_] (e) The Investor is a private business development company as defined in
Section 202(a)(22) of the Investment Advisors Act of 1940; or
[_] (f) The Investor is a director, executive officer or general partner of
the Company, or a director, executive officer or general partner of a
general partner of the Company; or
[_] (g) The Investor is a trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Units, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii) of Regulation D of the Securities Act (IF ONLY THIS
RESPONSE IS CHECKED, please contact the Company to receive and
complete an information statement before this subscription can be
considered by the Company); or
[_] (h) The Investor is any entity in which all of the equity owners are
accredited investors. (NOTE: Not available with respect to an
irrevocable trust.)
If this purchase is made on behalf of any entity other than a natural person,
Investor certifies that (i) the entity was not formed for the purpose of making
this investment, (ii) the undersigned is empowered and duly authorized by the
entity to execute and carry out the terms of this Agreement and to purchase and
hold the Units, and (iii) this Agreement has been duly and validly executed on
behalf of the entity and constitutes a legal and binding obligation of the
entity.
8. Other.
-----
(a) This Agreement and the rights and obligations of the parties
hereunder shall not be assignable, in whole or in part, by any party
without the prior written consent of the other party, and neither this
Agreement nor any provision hereof may be amended, modified, waived or
discharged without the written consent of the party against whom
enforcement of such amendment, modification, waiver, or discharge is
sought.
(b) This Agreement, including the exhibits attached hereto,
constitutes the entire agreement of the parties relative to the subject
matter hereof and supersedes any and all other agreements and
understandings, whether written or oral, relative to the matters discussed
herein.
(c) This Agreement shall be construed and enforced in accordance with
the laws of the State of Minnesota, except for its rules relating to
conflicts of law.
-5-
<PAGE>
(d) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(e) This Agreement shall be binding on the Company, and the Company
shall be deemed to have accepted the subscription for the Units hereunder,
only upon execution of this Agreement by the Company.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date set forth above.
INVESTOR: FIELDWORKS, INCORPORATED
___________________________________ By______________________________________
Its__________________________________________________________________________
___________________________________
(If more than one Investor)
-6-
<PAGE>
- --------------------------------------------------------------------------------
INVESTOR INFORMATION
- --------------------------------------------------------------------------------
Name (Typed or Printed)
_____________________________________________________________________
__________________________________________________________________________
(If more than one Investor) (Please indicate JTWROS or TIC)
- --------------------------------------------------------------------------------
Addresses
(i) Address of Investor's Domicile and Bona Fide Residence:
_____________________________________________________________________
Street
_____________________________________________________________________
City, State and Zip Code
(ii) Address to Which Correspondence Should be Directed (if different
from above):
_____________________________________________________________________
Street
_____________________________________________________________________
City, State and Zip Code
- --------------------------------------------------------------------------------
Social Security or Tax ID Number (Both if grantor trust or partnership):________
___________________________________________________________________________
- --------------------------------------------------------------------------------
Telephone Number: ____________________
- --------------------------------------------------------------------------------
-7-
<PAGE>
EXHIBIT 10.5
PROMISSORY NOTE
---------------
THIS NOTE IS SUBJECT TO THE RESTRICTIONS ON TRANSFER
SET FORTH AT THE BOTTOM OF THE LAST PAGE HEREOF
$_____________ Minneapolis, Minnesota
July 15, 1996
FOR VALUE RECEIVED, the undersigned, Fieldworks, Incorporated (the
"Company"), promises to pay to the order of ______________, or its permitted
successors and assigns (the "Holder"), at Holder's address set forth in the
Bridge Agreement (as defined below), or such other place as Holder may designate
in writing from time to time, the principal sum of _______________________
($________), in lawful money of the United States, together with simple interest
from the date hereof on the unpaid principal balance outstanding from time to
time at the rate of ten percent (10%) per year (calculated on the basis of the
actual number of days elapsed and a 360-day year). All outstanding principal
and accrued interest on this Note shall be due and payable on December 31, 1996,
provided, however, that notwithstanding the foregoing, this Note shall be
- -------- -------
payable in full within thirty (30) days after the effective date (the "Effective
Date") of any registration statement (a "Registration Statement") relating to an
initial public offering of the Company's equity securities registered under the
Securities Act of 1933, as amended (the "Securities Act").
1. Bridge Loan Agreement. This Note has been issued pursuant to and is
---------------------
subject to the terms and provisions of the Bridge Loan Agreement (the "Bridge
Agreement"), dated as of July 15, 1996, between the Company and Holder, and this
Note and Holder are entitled to all the benefits provided for in the Bridge
Agreement. The provisions of the Bridge Agreement are incorporated herein by
reference with the same force and effect as if fully set forth herein.
2. Prepayment. This Note may not be prepaid except in the event a
----------
Registration Statement is filed and declared effective, as provided above.
3. Notification of Public Offering. The Company shall notify Holder of
-------------------------------
the effectiveness of any Registration Statement within five (5) days after the
Effective Date of such Registration Statement. Such notice shall be accompanied
by notification that this Note will be paid in full within thirty (30) days
after the Effective Date.
4. Investment Intent. Other than pursuant to registration under federal
-----------------
and any applicable state securities laws or an exemption from such registration,
this Note may not be sold, pledged, assigned or otherwise disposed of (whether
voluntarily or involuntarily) by Holder unless the Company receives from the
transferee such representations and agreements as the Company may determine in
its sole discretion to be necessary and appropriate to permit such transfer to
be made
<PAGE>
pursuant to exemptions from registration under federal and applicable state
securities laws. Each certificate representing this Note shall bear appropriate
legends setting forth these restrictions on transfer. Holder, by acceptance
hereof, agrees to give written notice to the Company at least thirty-five (35)
days before any proposed transfer of this Note describing briefly the manner of
any proposed transfer. Within thirty (30) days after receiving such written
notice, the Company shall notify Holder as to whether such transfer may be
effected and of the conditions to any such transfer, and Holder shall abide by
such instructions and conditions as to which Holder was notified by the Company.
5. Notices. All demands and notices to be given hereunder shall be
-------
delivered or sent by certified mail, return receipt requested; in the case of
the Company, addressed to its corporate headquarters, 9961 Valley View Road,
Eden Prairie, Minnesota 55344, and in the case of Holder, addressed to the
address written above, in either case, until a new address shall have been
substituted by like notice.
IN WITNESS WHEREOF, the Company has caused this Note to be executed on its
behalf by its duly authorized officer on the day and year first above written.
FIELDWORKS, INCORPORATED
By ______________________________
Its ______________________
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS. THIS NOTE HAS BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE LAWS OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE LAWS, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
CORPORATION WHOSE AUTHORIZED OFFICER HAS SIGNED THIS NOTE ABOVE.
-2-
<PAGE>
EXHIBIT 10.6
WARRANT
FOR
SHARES OF COMMON STOCK
OF
FIELDWORKS, INCORPORATED
FOR VALUE RECEIVED, ____________ or its successors or assigns
("Holder"), is hereby entitled to subscribe for and purchase from Fieldworks,
Incorporated, a Minnesota corporation (the "Company"), up to the total number of
Warrant Shares (as calculated pursuant to Section 3(A)) of fully paid and
nonassessable shares of the Company's Common Stock, or such greater or lesser
number of such shares as may be determined by application of the anti-dilution
provisions of this warrant, at the exercise price of Ten Dollars ($10.00) per
share (the "Warrant Exercise Price").
This warrant may be exercised by Investor at any time after the
initial public offering of the Company's Common Stock is effective until a date
on or prior to three years from the date hereof.
This warrant is subject to the following provisions, terms and
conditions:
1. (a) The rights represented by this warrant may be exercised by
the holder hereof, in whole or in part, by written notice of exercise delivered
to the Company at least twenty (20) days prior to the intended date of exercise
and by the surrender of this warrant (properly endorsed if required) at the
principal office of the Company and upon payment to it by cash, certified check
or bank draft of the purchase price for such shares or by exercise of the
Conversion Right as provided in (b) below. The shares so purchased shall be
deemed to be issued as of the close of business on the date on which this
warrant has been exercised by payment to the Company of the Warrant Exercise
Price unless the Conversion Right has been exercised. Certificates for the
shares of stock so purchased, bearing the restrictive legend set forth at the
end of this warrant, shall be delivered to the holder within fifteen (15) days
after the rights represented by this warrant shall have been so exercised, and,
unless this warrant has expired, a new warrant representing the number of
shares, if any, with respect to which this warrant has not been exercised shall
also be delivered to the holder hereof within such time. No fractional shares
shall be issued upon the exercise of this warrant.
(b) In lieu of payment, the rights represented by this warrant
may also be exercised by a written notice of exercise specifying that the
Investor wishes to convert all of this warrant (the "Conversion Right") into
that number of shares of Common Stock as follows: the number of shares of Common
Stock equal to the quotient obtained by dividing (x) the value of the shares
subject to the warrant
<PAGE>
(determined by subtracting the aggregate warrant exercise
price in effect immediately prior to the exercise of the Conversion Right from
the aggregate fair market value of the shares of Common Stock issuable upon
exercise of this warrant immediately prior to the exercise of the Conversion
Right) by (y) the fair market value of one share of Common Stock immediately
prior to the exercise of the Conversion Right. For purposes of this section
1(b), the fair market value of a share of Common Stock as of a particular date
(the "Determination Date") shall mean:
(i) If the Company's Common Stock is traded on an exchange or
is quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") National Market System, then the closing or last sale
price, respectively, reported for the business day immediately preceding
the Determination Date.
(ii) If the Company's Common Stock is not traded on an exchange
or on the NASDAQ National Market System but is quoted on NASDAQ, then the
mean of the closing bid and asked prices reported for the business day
immediately preceding the Determination Date.
2. The Company covenants and agrees that all shares that may be
issued upon the exercise of the rights represented by this warrant shall, upon
issuance, be duly authorized and issued, fully paid and nonassessable shares.
The Company further covenants and agrees that during the period within which the
rights represented by this warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this warrant, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this warrant.
3. This warrant shall be exercisable for the number of Warrant
Shares, as adjusted, as provided for in this Section 3(A), and subject to
adjustment from time to time as provided in this Section 3(B).
(A) Warrant Shares: The number of shares which may be purchased by the
---------------
holder of this warrant, subject to adjustment under this Section 3(C), shall be
calculated as follows:
20% x [Principal Amount of Promissory Note] = Warrant Shares
---------------------------------------------------
Warrant Exercise Price per share
(B) Anti-dilution:
--------------
(i) If the Company at any time divides the outstanding shares
of its Common Stock into a greater number of shares (whether pursuant to a
stock split, stock dividend or otherwise), and conversely, if the
outstanding
-2-
<PAGE>
shares of its Common Stock are combined into a smaller number of shares,
the Warrant Exercise Price in effect immediately prior to such division or
combination shall be proportionately adjusted to reflect the reduction or
increase in the value of each such share.
(ii) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of its
assets to another corporation shall be effected in such a way that holders
of the Company's Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for such shares, then,
as a condition of such reorganization, reclassification, consolidation,
merger or sale, the holder of this warrant shall have the right to purchase
and receive upon the basis and upon the terms and conditions specified in
this warrant and in lieu of the shares of the Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such shares of stock, other securities or assets
as would have been issued or delivered to the holder of this warrant if it
had exercised this warrant and had received such shares of Common Stock
prior to such reorganization, reclassification, consolidation, merger or
sale. The Company shall not effect any such consolidation, merger or sale,
unless prior to the consummation thereof the successor corporation (if
other than the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument
executed and mailed to the registered holder of this warrant at the last
address of such holder appearing on the books of the Company, the
obligation to deliver to such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to purchase.
(iii) If the Company takes any other action, or if any other
event occurs, which does not come within the scope of the provisions of
Section 3(B)(i) or (ii), but which should result in an adjustment in the
Warrant Exercise Price and/or the number of shares subject to this warrant
in order to fairly protect the purchase rights of the holder of this
warrant, an appropriate adjustment in such purchase rights shall be made by
the Company.
(iv) Upon each adjustment of the Warrant Exercise Price, the
holder of this warrant shall thereafter be entitled to purchase, at the
Warrant Exercise Price resulting from such adjustment, the number of shares
obtained by multiplying the Warrant Exercise Price in effect immediately
prior to such adjustment by the number of shares purchasable pursuant
hereto immediately prior to such adjustment and dividing the product
thereof by the Warrant Exercise Price resulting from such adjustment.
-3-
<PAGE>
(v) Upon any adjustment of the Warrant Exercise Price, the
Company shall give written notice thereof, by first class mail, postage
prepaid, addressed to the registered holder of this warrant at the address
of such holder as shown on the books of the Company, which notice shall
state the Warrant Exercise Price resulting from such adjustment and the
increase or decrease, if any, in the number of shares purchasable at such
price upon the exercise of this warrant, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is
based.
4. This warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Company.
5. The holder of this warrant, by acceptance hereof, agrees to give
written notice to the Company before transferring this warrant or transferring
any shares of the Company's Common Stock issuable or issued upon the exercise of
this warrant of the holder's intention to do so, describing briefly the manner
of any proposed transfer of this warrant or such holder's intention as to the
shares of Common Stock issuable upon the exercise hereof or the intended
disposition to be made of shares of Common Stock upon such exercise. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company. If, in the opinion of such counsel, the proposed
transfer of this warrant or disposition of shares may be effected without
registration or qualification (under any federal or state law) of this warrant
or the shares of Common Stock issuable or issued upon the exercise hereof, the
Company, as promptly as practicable, shall notify such holder of such opinion,
whereupon such holder shall be entitled to transfer this warrant, or to exercise
this warrant in accordance with its terms and dispose of the shares received
upon such exercise or to dispose of shares of Common Stock received upon the
previous exercise of this warrant, all in accordance with the terms of the
notice delivered by such holder to the Company, provided that an appropriate
legend in substantially the form set forth at the end of this warrant respecting
the foregoing restrictions on transfer and disposition may be endorsed on this
warrant or the certificates for such shares.
6. Subject to the provisions of Section 5, this warrant and all
rights hereunder are transferable, in whole or in part, at the principal office
of the Company by the holder hereof in person or by duly authorized attorney,
upon surrender of this warrant properly endorsed to any person or entity who
represents in writing that he/it is acquiring the warrant for investment and
without any view to the sale or other distribution thereof. Each holder of this
warrant, by taking or holding the same, consents and agrees that the bearer of
this warrant, when endorsed, may be treated by the Company and all other persons
dealing with this warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented by this warrant, or to
the transfer hereof on the books of the Company, any notice to the contrary
notwithstanding; but until such transfer
-4-
<PAGE>
on such books, the Company may treat the registered owner hereof as the owner
for all purposes.
7. Neither this warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
8. The Company agrees that each time it shall determine to proceed
with the preparation and filing of a registration statement under the Securities
Act it will use all reasonable efforts to allow the inclusion of the Warrant
Shares in such registration statement; provided, however, that the inclusion of
the Warrant Shares in such registration statement shall be subject to the
approval of the managing underwriter and subject to the good faith determination
of the managing underwriter that the inclusion of such Warrant Shares would not
reduce the number of shares to be offered by the Company nor interfere with the
successful marketing of such shares by the Company.
IN WITNESS WHEREOF, the Company has caused this warrant to be signed
and delivered by a duly authorized officer as of the ____ day of _______, 1996.
FIELDWORKS, INCORPORATED
By__________________________________________
Its______________________________________
-5-
<PAGE>
RESTRICTION ON TRANSFER
The security evidenced hereby has not been registered under the
Securities Act of 1933 or any state securities laws and may not be sold,
transferred, assigned, offered, pledged or otherwise distributed for value
unless there is an effective registration statement under such act or laws
covering such security or the Company receives an opinion of counsel for the
holder of this security (concurred to by counsel for the Company) stating that
such sale, transfer, assignment, pledge or distribution is exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933
and all applicable state securities laws.
<PAGE>
WARRANT EXERCISE
(To be signed only upon exercise of warrant)
The undersigned, the holder of the foregoing warrant, hereby
irrevocably elects to exercise the purchase right represented by such warrant
for, and to purchase thereunder, ______________________ of the shares of Common
Stock of Fieldworks, Incorporated, to which such warrant relates and herewith
makes payment of $_________________________ therefor in cash or by check or
elects to exercise the Conversion Right as provided in the warrant and requests
that the certificates for such shares be issued in the name of, and be delivered
to ___________________ whose address is set forth below the signature of the
undersigned.
Dated:
[Signature]
[Address]
<PAGE>
WARRANT ASSIGNMENT
(To be signed only upon transfer of warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto __________________________________________________ the purchase
right represented by the foregoing warrant to purchase the shares of Common
Stock of Fieldworks, Incorporated, to which such warrant relates and appoints
attorney to transfer such purchase right on the books of
_______________________________________ with full power of substitution in the
premises.
Dated:
[Signature]
[Name and Address of Transferee]
<PAGE>
EXHIBIT 10.7
AGREEMENT made as of _______, 1996, between Fieldworks, Incorporated,
a Minnesota corporation (the "Company"), and Network General Corporation, a
Delaware corporation (the "Purchaser").
WHEREAS, the Company wishes to sell and the Purchaser desires to
purchase the Company's Series A Convertible Preferred Stock, par value $.001 per
share;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Authorization of the Shares. The Company has authorized, or before
---------------------------
the "Closing" (as hereinafter defined) will have authorized, the issuance and
sale of up to 300,000 shares of its Series A Convertible Preferred Stock, par
value $.001 per share (the "Series A Shares"), for an aggregate purchase price
of $3,000,000 (the "Purchase Price"). The Series A Shares have, or before the
Closing will have, the rights and preferences set forth in Exhibit A.
2. Sale of Shares. Subject to the terms and conditions of this
--------------
Agreement, the Company agrees to sell to the Purchaser, and the Purchaser agrees
to purchase from the Company, 300,000 shares of Series A Shares at a purchase
price equal to $10.00 per Series A Share. The Series A Shares to be sold to the
Purchaser pursuant to this Agreement are hereinafter referred to as the
"Shares." At the Closing, the Company shall also issue to Purchaser a warrant
in the form attached hereto as Exhibit D (the "Warrant").
3. Closing Date; Delivery.
----------------------
3.1 Closing Date. The closing (the "Closing") of the purchase and
------------
sale of the Shares hereunder will be held at the offices of Dorsey & Whitney
LLP, 220 South Sixth Street, Minneapolis, Minnesota 55402, at 10:00 a.m., on
July 29, 1996, or at such other time and place as the Company and the Purchaser
may agree (the "Closing Date").
3.2 Delivery. At the Closing, the Company will deliver to the
--------
Purchaser a certificate dated the Closing Date registered in the Purchaser's
name representing the Shares purchased by the Purchaser, together with the
Warrant. At the Closing, the Purchaser will pay to the Company the Purchase
Price by wire transfer or other manner of immediately available funds.
4. Definitions. Unless the context otherwise requires, the terms defined
-----------
in this Section 4 shall have the meanings herein specified for all purposes of
this Agreement. Certain other capitalized terms used herein are defined
elsewhere in this Agreement.
<PAGE>
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934, as amended.
"Agreement" means this Agreement.
"Articles" means the Company's Restated Articles of Incorporation
together with the Resolution Establishing the Rights and Preferences of the
Series A Convertible Preferred Stock of the Company to be filed with the
Minnesota Secretary of State prior to the Closing.
"Closing" is defined in Section 3.1.
"Closing Date" is defined in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations thereunder.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the shares of Common Stock, $.001 par value,
authorized by the Articles, any additional shares of Common Stock which may be
authorized in the future by the Company and any stock into which such Common
Stock may hereafter be changed. "Common Stock" shall also include capital stock
of any other class of the Company that is not preferred as to dividends or
assets over any other class of stock of the Company or subject to redemption.
"Conversion Stock" shall mean the shares of Common Stock issuable upon
the conversion of outstanding Preferred Shares.
"Convertible Securities" shall mean options, warrants or similar
rights and indebtedness, shares of stock or other securities that are at any
time directly or indirectly convertible into or exercisable or exchangeable for
shares of the capital stock of the Company.
"Disclosure Schedule" is defined in Section 5.
"Lien" means any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever and any assignment, deposit arrangement or lease intended as, or
having the effect of, security for any outstanding Indebtedness.
"Material Adverse Effect" shall mean a material adverse effect upon
the business, operations or condition (financial or otherwise) of the Company
and any Subsidiaries, taken as a whole.
-2-
<PAGE>
"MBCA" means Chapter 302A of the Minnesota Business Corporation Act,
as the same may be amended from time to time.
"Person" means any natural person, corporation, limited liability
company, association, partnership (general or limited), joint venture,
proprietorship, governmental agency, trust, estate, association, custodian,
nominee or any other individual or entity, whether acting in an individual,
fiduciary, representative or other capacity.
"Permitted Stock Issuances" means (i) sales or issuances of shares of
capital stock of a Subsidiary to the Company or another Subsidiary, (ii)
issuances of shares of capital stock upon the conversion of the Preferred
Shares, (iii) sales of shares of Common Stock to the public pursuant to a
registration statement filed under the Securities Act, (iv) the issuance of any
shares of Common Stock or any Convertible Securities, and the exercise or
vesting thereof, under the Stock Option Plan, as the same now exists or may
hereafter be amended in accordance with the terms of this Agreement, (v)
issuances of shares of capital stock of the Company pursuant to any Convertible
Securities outstanding on the Closing Date or thereafter issued in compliance
with or as contemplated by the terms of this Agreement, (vi) the issuance of
warrants to purchase shares of capital stock, and the issuance of such shares of
capital stock upon the exercise thereof, to Persons leasing equipment or
financing or guaranteeing equipment leases by the Company or (vii) the sale of
Shares at the Closing contemplated by this Agreement.
"Preferred Shares" means the Series A Shares.
"Warrant Stock" means the Common Stock issuable upon exercise of the
Warrant.
"Warrant" is defined in Section 2.
"Resolution means the Resolution Establishing the Rights and
Preferences of the Series A Convertible Preferred Stock of the Company to be
filed with the Minnesota Secretary of State prior to the Closing. The
Resolution shall be substantially in the form attached hereto as Exhibit A.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Series A Shares" is defined in Section 1.
"Shares" is defined in Section 2.
-3-
<PAGE>
"Shareholders" means the holders from time to time of the Company's
outstanding Preferred Shares.
"Stock Option Plan" means the Company's 1994 Long-Term Incentive and
Stock Option Plan.
"Subsidiary" means any corporation, association or other business
entity more than a majority (by number of votes) of the voting stock of which is
owned or controlled, directly or indirectly, by the Company or one or more of
its Subsidiaries or both.
5. Representations and Warranties by the Company. Except as disclosed in
---------------------------------------------
the Disclosure Schedule attached hereto as Exhibit B (the "Disclosure
Schedule"), the Company represents and warrants to the Purchaser that:
5.1 Organization and Standing. The Company is a corporation duly
-------------------------
organized, validly existing and in good standing under the laws of the State of
Minnesota and has the requisite corporate power and authority to own its
properties and to carry on its business as now being conducted and presently
proposed to be conducted. Other than as listed on the Disclosure Schedule, the
Company has no Subsidiaries or direct or indirect equity interest in any other
Person. The Company is duly qualified to do business as a foreign corporation
in all jurisdictions in which the failure to do so could reasonably be expected
to result in a Material Adverse Effect.
5.2 Articles. On the Closing Date, the Articles of Incorporation of
--------
the Company shall be substantially in the form of Exhibit A attached hereto.
5.3 Financial Statements. The Company's financial statements are
--------------------
based upon the information contained in the books and records of the Company and
fairly present the financial condition of the Company as of the dates thereof
and results of operations for the periods referred to therein. The unaudited
financial statements have been prepared in accordance with generally accepted
accounting principles and reflect all adjustments necessary to a fair statement
of the results for the interim period presented. Except as set forth in the
financial statements, the Company has no material debts or liabilities,
absolute, accrued, contingent or otherwise, other than (i) liabilities incurred
in the ordinary course of business since the last balance sheet date, and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in the financial statements, which, in the case of both (i) and (ii),
individually or in the aggregate, are not material to the financial condition or
business of the Company.
-4-
<PAGE>
5.4 Tax Returns. The Company is not delinquent in the payment of any
-----------
material federal, state or local tax or in the payment of any assessment or
governmental charge. The Company does not have any tax deficiency proposed or
assessed against it and has not executed any waiver of any statute of
limitations on the assessment or collection of any tax. To the Company's
knowledge, the Company has not incurred any material tax or worker's
compensation liabilities from its inception through the date hereof, except
those incurred in the ordinary course of business. The Company has filed all
required state and federal tax returns on a timely basis.
5.5 Compliance With Other Instruments. To the knowledge of the
---------------------------------
Company, the business and operations of the Company have been and are being
conducted in material compliance with all applicable laws, rules and regulations
of all governmental authorities. Neither the execution or delivery of, the
performance or compliance with, this Agreement nor the consummation of the
transactions contemplated hereby will, with or without the giving of notice or
passage of time, (i) result in any breach of, or constitute a default under, or
result in the imposition of any Lien upon any asset or property of the Company
pursuant to, any agreement or other instrument to which the Company is a party
or by which it or any of its properties is bound or affected or (ii) violate its
Articles of Incorporation or its by-laws. The Company is not in violation of its
existing Articles of Incorporation, Bylaws or any lease, agreement, instrument,
commitment or arrangement to which it is a party or by which it or its
properties or assets may be bound, except for such violations as have not
resulted or could not reasonably be expected to result in a Material Adverse
Effect.
5.6 Shares, Conversion Stock and Warrant Stock. The Shares, when
------------------------------------------
issued and paid for pursuant to the terms of this Agreement, will be duly and
validly authorized, issued and outstanding, fully paid, nonassessable and free
and clear of all pledges, liens, encumbrances and restrictions, except as set
forth in Section 6.2 hereof. The shares of Conversion Stock issuable upon
conversion of the Shares and shares of Warrant Stock issuable upon exercise of
the Warrant have been or will be reserved for issuance and, when issued upon
such conversion or exercise, will be duly and validly authorized, issued and
outstanding, fully paid, nonassessable and free and clear of all Liens and
restrictions, except as set forth in Section 6.2 hereof.
5.7 Securities Laws. Based upon the representations and warranties
---------------
of the Purchaser contained in Section 6.1 of this Agreement, no consent,
authorization, approval, permit or order of or filing with any governmental or
regulatory authority is required under current laws and regulations in
connection with the execution and delivery of this Agreement or the offer,
issuance, sale or delivery of the Shares, the Conversion Stock or the Warrant
Stock, other than filings pursuant to Regulation D promulgated under the
Securities Act and
-5-
<PAGE>
qualifications and filings under certain applicable state securities laws, which
qualifications and filings have been or will be effected as a condition of such
sales or conversions. The Company has not, directly or through an agent, offered
the Shares or any similar securities for sale to, or solicited any offers to
acquire such securities from, Persons other than the Purchaser. Under the
circumstances contemplated hereby, the offer, issuance, sale and delivery of the
Shares will not under current laws and regulations require compliance with the
prospectus delivery or registration requirements of the Securities Act.
5.8 Capital Stock. Immediately prior to the Closing, the authorized
-------------
capital stock of the Company will consist of 15,000,000 shares, 5,880,736 of
which will be designated as Common Stock, and 8,819,264 of which will be
undesignated. Immediately prior to the Closing, 5,880,736 shares of Common Stock
will be outstanding, 220,745 shares of Common Stock will be reserved for
issuance upon the exercise of outstanding warrants and 1,100,000 shares of
Common Stock will be reserved for issuance pursuant to the Stock Option Plan.
No holder of any security of the Company is entitled to any preemptive or
similar rights to purchase any securities of the Company.
5.9 Corporate Acts and Proceedings. The execution and delivery of
------------------------------
this Agreement has been duly authorized by all requisite corporate action on
behalf of the Company and this Agreement has been duly executed and delivered by
an authorized officer of the Company. This Agreement is a valid and binding
obligation of the Company enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and as to limitations on the enforcement of the remedy of
specific performance and other equitable remedies. The requisite corporate
action necessary to the authorization, creation, issuance and delivery of the
Shares, the Conversion Stock, the Warrant and the Warrant Stock has been or will
be taken by the Company prior to the Closing.
5.10 No Brokers or Finders. No Person has or will have, as a result
---------------------
of any act of or omission of the Company, any right, interest or valid claim
against the Company or the Purchaser for any commission, fee or other
compensation as a finder or broker in connection with the transactions
contemplated by this Agreement. The Company will pay, and will indemnify and
hold the Purchaser harmless against any and all liability with respect to any
such commission, fee or other compensation which may be payable or determined to
be payable in connection with the transactions contemplated by this Agreement by
reason of any acts or omissions of the Company.
5.11 Intellectual Property. To the knowledge of the Company, the
---------------------
Company owns, or is licensed to use, rights to all patents, trade names, service
-6-
<PAGE>
marks, trademarks, mask works, trade secrets and copyrights ("Intellectual
Property") used to carry on or necessary to carry on its business as currently
conducted or proposed to be conducted. To the knowledge of the Company, the
Company is not infringing upon or otherwise acting adversely to any known right
or claimed right of any person under or with respect to any patents, patent
rights, trademarks, service marks, copyrights, trade names, trade secrets or any
other third party rights. The Company had not received any notice that it is
infringing upon any claimed right of any person under or with respect to any
patents, trademarks, service marks, trade names, copyrights, licenses or other
similar rights with respect to the foregoing.
6. Representations and Warranties of the Purchaser; Restrictions on
----------------------------------------------------------------
Transfer.
- --------
6.1 Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
represents and warrants to the Company that:
(a) The Shares, the Warrant, the Conversion Stock and the Warrant
Stock being acquired by the Purchaser hereunder are being purchased for the
Purchaser's own account and not with the view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the
Securities Act. The Purchaser understands that such securities 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
the Company and others upon this exemption from such registration is predicated
in part upon the representations and warranties of the Purchaser contained
herein. The Purchaser further understands that an exemption from the
registration requirements of the Securities Act with respect to resale of the
securities is not presently available pursuant to Rule 144 promulgated under the
Securities Act by the Commission and that, in any event, the Purchaser may not
sell any Shares pursuant to Rule 144 prior to the expiration of a two-year
period after the Purchaser has acquired the Shares.
(b) The principal office of the Purchaser is located at the address
set forth in Section 10.2. The Purchaser is an "accredited investor" as that
term is defined in Regulation D promulgated under the Securities Act and has
such knowledge and experience in financial and business matters that the
Purchaser is capable of evaluating the merits and risks of the investment to be
made hereunder by the Purchaser. The Company has made available to the
Purchaser at a reasonable time prior to execution of this Agreement the
opportunity to ask questions and receive answers concerning the terms and
conditions of the sale of the securities contemplated by this Agreement and to
obtain any additional information regarding the Company desired by the
Purchaser. The Purchaser has utilized such access and opportunity to the extent
believed by the Purchaser to be necessary.
-7-
<PAGE>
(c) The Purchaser is able to bear the full economic risk of an
investment in the securities. Despite its high risk and lack of liquidity, an
investment in the securities is suitable for the Purchaser based on the
Purchaser's investment objectives and financial needs and the fact that the
Purchaser has adequate means to provide for the Purchaser's current financial
needs and contingencies and has no need for liquidity of investment with respect
to the Shares.
(d) The execution and delivery of this Agreement by the Purchaser has
been duly authorized by all requisite corporate action of the Purchaser and this
Agreement has been duly executed and delivered by the Purchaser. This Agreement
is a valid and binding obligation of the Purchaser enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and as to limitations on the
enforcement of the remedy of specific performance and other equitable remedies.
(e) No Person has or will have, as a result of any act of or omission
by the Purchaser, any right, interest or claim against the Company for any
commission, fee or other compensation as a finder or broker, or in any similar
capacity, in connection with the transactions contemplated by this Agreement.
The Purchaser will indemnify and hold the Company harmless against any and all
liability to any Person with respect to any such commission, fee or other
compensation which may be payable or determined to be payable in connection with
the transactions between the Purchaser and the Company contemplated by this
Agreement by reason of any acts or omissions of the Purchaser.
6.2 Restrictions on Transfer.
------------------------
(a) In addition to any legends required under applicable state
securities laws, each certificate representing the Shares shall be endorsed with
the following legend:
"The securities represented by this certificate may not be
transferred without (i) the opinion of counsel satisfactory to
the issuer thereof that such transfer may lawfully be made
without registration or qualification under the federal
Securities Act of 1933, as amended, and applicable state
securities laws or (ii) such registration or qualification."
Upon the conversion of any of the Shares into Conversion Stock, or the exercise
of the Warrant into Warrant Stock unless the Company receives an opinion of
counsel satisfactory to the Company to the effect that a transfer of the
Conversion
-8-
<PAGE>
Stock or the Warrant Stock may thereafter be made without registration, or
unless such Conversion Stock or the Warrant Stock is being disposed of pursuant
to a registration statement filed under the Securities Act, the same legend
shall be endorsed on the certificate evidencing such Conversion Stock or Warrant
Stock.
(b) Any legend endorsed on a certificate pursuant to Section 6.2(a)
hereof shall be removed, and the Company shall issue a certificate without such
legend to the holder of the securities, if the securities are being disposed of
pursuant to a registration statement filed under the Securities Act or if such
holder provides the Company with an opinion of counsel satisfactory to the
Company to the effect that a transfer of the securities represented by such
certificate may thereafter be made without registration.
7. Closing Conditions.
------------------
7.1 Conditions to Purchaser's Obligation. The Purchaser's
------------------------------------
obligation to purchase and pay for the Shares that the Purchaser has agreed to
purchase on the Closing Date is subject to the fulfillment prior to or on the
Closing Date of the following conditions, any of which may be waived in whole or
in part by the Purchaser:
(a) The representations and warranties of the Company made in Section
5 of this Agreement shall be true in all material respects as of such Closing
Date with the same effect as though made on and as of such Closing Date.
(b) The Resolution in the form attached hereto as Exhibit A shall
have been filed with the Minnesota Secretary of State.
(c) There shall not be threatened, instituted or pending any action
or proceeding before any court or governmental body, challenging or seeking to
invalidate, make illegal, or to delay or otherwise directly or indirectly
restrain or prohibit, the consummation of the transactions contemplated by the
Agreement or seeking to obtain material damages in connection with such
transactions.
7.2 Conditions to Company's Obligation. The obligation of the
----------------------------------
Company to issue and sell the Shares to the Purchaser is subject to the
fulfillment prior to or on the Closing Date of the following conditions, any of
which may be waived in whole or in part by the Company:
(a) All registrations, qualifications, permits and approvals required
under applicable state and federal securities laws for the lawful execution and
delivery of the Agreement and the offer, sale, issuance and delivery of the
Shares shall have been obtained, except for the notices required or permitted to
be filed after the Closing Date with certain federal and state securities
commissions.
-9-
<PAGE>
(b) The Purchaser at the Closing shall have tendered to the Company
the Purchase Price for the Shares to be purchased by it.
8. Registration of Stock. The Company hereby grants to the holder of the
---------------------
Shares the registration rights described in Exhibit C. The holder of the Shares
agrees to be subject to all of the provisions set forth in Exhibit C.
9. Covenants of the Company. The Company covenants and agrees with the
------------------------
Purchaser that:
9.1 Corporate Existence. Except as otherwise determined by the Board
-------------------
of Directors, the Company will maintain its corporate existence in good
standing.
9.2 Books of Account and Reserves. The Company will keep, and will
-----------------------------
cause any Subsidiary to keep, books of record and account in which full, true
and correct entries are made of all of its and their respective dealings,
business and affairs, in accordance with generally accepted accounting
principles. The Company will have annual audits made by such independent public
accountants in the course of which such accountants shall make such
examinations, in accordance with generally accepted auditing standards, as will
enable them to give such reports or opinions with respect to the financial
statements of the Company and its Subsidiaries as will satisfy the requirements
of the Commission in effect at such time with respect to reports or opinions of
accountants. Management will request such independent public accountants to
issue to the Company a management letter of recommendations in connection with
each annual audit of the financial statements of the Company.
9.3 Inspection and Attendance. Subject to the execution of a
-------------------------
reasonable confidentiality agreement, the Company will permit the Purchaser and
any of its officers or employees, to attend meetings of the Company's Board of
Directors as an observer and to visit and inspect at the expense of such
Purchaser, except for any expenses required to be borne by the Company under
Section 302A.461, subd. 5 of the MBCA, any of the properties of the Company or
any Subsidiaries, including their books and records (and, subject to the last
sentence of this Section 9.3, to make photocopies thereof or extracts
therefrom), and to discuss their affairs, finances and accounts with their
officers, except with respect to trade secrets and similar confidential
information, all to such reasonable extent and at such reasonable times and
intervals as Purchaser may reasonably request without disruption of the
Company's operations.
Purchaser agrees that any information delivered to or received by
Purchaser pursuant to this Section 9.3 shall be used by Purchaser solely to
evaluate the Company's financial condition and prospects and that Purchaser
shall maintain
-10-
<PAGE>
the confidential nature of such information and shall not disclose the same to
any Person, except as may be required by law.
9.4 Replacement of Stock Certificates. Upon receipt of evidence
---------------------------------
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any certificate representing any Preferred Shares or Conversion
Stock, and, in the case of any such loss, theft or destruction, upon delivery of
a bond of indemnity satisfactory to the Company, or, in the case of any such
mutilation, upon surrender and cancellation of the certificate representing the
Preferred Shares or Conversion Stock, as the case may be, the Company will issue
a new certificate representing the Preferred Shares or Conversion Stock, as the
case may be, of like tenor, in lieu of such lost, stolen, destroyed or mutilated
certificate.
10. Miscellaneous.
-------------
10.1 Waivers and Amendments. With the written consent of the record
----------------------
holders of more than 50% of Preferred Shares, the obligations of the Company
under this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), and with the same consent the
Company may enter into a supplementary agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of any supplemental agreement hereto, or modifying in any
manner the rights and obligations created hereunder or thereunder; provided,
--------
however, that no such waiver or supplemental agreement shall (a) amend the terms
- -------
of the Preferred Shares as set forth in the Articles (any such amendment to the
terms of the Preferred Shares shall require the vote of the holders of the
Preferred Shares required by law or called for by the Articles) or (b) reduce
the aforesaid proportion of the Preferred Shares that is required to consent to
any waiver or supplemental agreement, without the consent of the record holders
of all of the then outstanding Preferred Shares.
10.2 Notices. All notices, requests, consents and other
-------
communications required hereunder shall be in writing and shall be personally
delivered, sent by overnight delivery service, telecopy or mailed, if to the
holders of the Preferred Shares at the addresses shown on the books and records
of the Company, or at such other address as may specify by written notice to the
Company, or, if to the Purchaser at 4200 Bohannon Drive, Menlo Park, CA 94025,
fax: (415) 327-2369, attention: Jill Fishbein, General Counsel, or at such
other address as the Purchaser may specify by written notice to the Company, or,
if to the Company at 9961 Valley View Road, Eden Prairie, MN 55344, fax (612)
947-0859, attention: Chief Executive Officer, with a copy to Kenneth L. Cutler,
Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota 55402, fax:
(612) 340-8738, or at such other address as the Company may specify by written
notice to the Purchasers, and such notices and other communications shall for
all purposes of the
-11-
<PAGE>
Agreement be treated as being effective or having been given when delivered, or,
if sent by mail or delivery service, three days after mailing, whichever is
earlier.
10.3 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties contained herein shall survive until the earlier of (i) for a
period of one year after the Closing Date and (ii) the conversion of all of the
outstanding Preferred Shares into shares of Conversion Stock.
10.4 Parties in Interest. All the terms and provisions of this
-------------------
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto but shall inure
to the benefit of and be enforceable by the holder or holders from time to time
of any of Preferred Shares only to the extent herein specifically provided.
10.5 Headings. The headings of the sections of this Agreement have
--------
been inserted for convenience of reference only and do not constitute a part of
this Agreement.
10.6 Choice of Law. It is the intention of the parties that the
-------------
internal laws of the State of Minnesota, without regard to its body of law
controlling conflicts of law, shall govern the validity of this Agreement, the
construction of its terms and the interpretation of the rights and duties of the
parties.
10.7 Counterparts. This Agreement may be executed concurrently in two
------------
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.8 Termination. Article 9 of this Agreement shall terminate in its
-----------
entirety:
(a) upon the merger of the Company with or into, or its consolidation
with, another Person if, immediately after such merger or consolidation, the
Persons who were Shareholders immediately prior thereto own, in the aggregate,
capital stock of the surviving or resulting corporation representing less than a
majority of the total voting power of such corporation; and
(b) upon the conversion of all of the outstanding Preferred Shares
into shares of Conversion Stock.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized representatives as of
the day and year first above written.
NETWORK GENERAL CORPORATION
By______________________________________
Its___________________________________
FIELDWORKS, INCORPORATED
By______________________________________
Its___________________________________
-13-
<PAGE>
================================================================================
FIELDWORKS, INCORPORATED
___________________
PURCHASE AGREEMENT
FOR
SERIES A CONVERTIBLE PREFERRED STOCK
___________________
DATED AS OF
JULY 29, 1996
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TABLE OF CONTENTS
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1. Authorization of the Shares......................................... 1
2. Sale of Shares...................................................... 1
3. Closing Date; Delivery.............................................. 1
3.1 Closing Date................................................... 1
3.2 Delivery....................................................... 1
4. Definitions......................................................... 1
5. Representations and Warranties by the Company....................... 4
5.1 Organization and Standing...................................... 4
5.2 Articles....................................................... 4
5.3 Financial Statements........................................... 4
5.4 Tax Returns.................................................... 5
5.5 Compliance With Other Instruments.............................. 5
5.6 Shares, Conversion Stock and Warrant Stock..................... 5
5.7 Securities Laws................................................ 5
5.8 Capital Stock.................................................. 6
5.9 Corporate Acts and Proceedings................................. 6
5.10 No Brokers or Finders.......................................... 6
5.11 Intellectual Property.......................................... 6
6. Representations and Warranties of the Purchaser; Restrictions on
Transfer............................................................ 7
6.1 Representations and Warranties of the Purchaser................ 7
6.2 Restrictions on Transfer....................................... 8
7. Closing Conditions.................................................. 9
7.1 Conditions to Purchaser's Obligation........................... 9
7.2 Conditions to Company's Obligation............................. 9
8. Registration of Stock............................................... 9
9. Covenants of the Company............................................ 9
9.1 Corporate Existence............................................ 10
9.2 Books of Account and Reserves.................................. 10
9.3 Inspection and Attendance...................................... 10
9.4 Replacement of Stock Certificates.............................. 10
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10. Miscellaneous................................................. 11
10.1 Waivers and Amendments.................................. 11
10.2 Notices................................................. 11
10.3 Survival of Representations and Warranties.............. 11
10.4 Parties in Interest..................................... 12
10.5 Headings................................................ 12
10.6 Choice of Law........................................... 12
10.7 Counterparts............................................ 12
10.8 Termination............................................. 12
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Exhibit A - Resolution Establishing the Series A Convertible Preferred Stock
Exhibit B - Disclosure Schedule
Exhibit C - Registration Rights Provisions
Exhibit D - Warrant
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Exhibit C
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REGISTRATION RIGHTS PROVISIONS
1. Registration of Stock.
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1.1 Definitions.
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"Commission" shall mean the Securities and Exchange Commission or
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any other federal agency at the time administering the Securities Act.
"Company" shall mean Fieldworks, Incorporated, a Minnesota
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corporation.
"Common Shares" shall mean the shares of common stock, par value
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$.001 per share, authorized by the Company's Articles of Incorporation and any
additional shares of Common Stock which may be authorized in the future by the
Company, and any stock into which such Common Shares may hereafter be changed,
and shall also include capital stock of any other class of the Company which is
not preferred as to dividends or assets over any other class of stock of the
Company and which is not subject to redemption.
"Preferred Stock" shall mean the outstanding shares of Series A
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Convertible Preferred Stock, par value $.001 per share, of the Company, and any
securities (other than Common Shares) into which such shares may hereafter be
changed).
"Public Offering" shall mean any offering of Common Shares to the
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public, either on behalf of the Company or any of its security holders, pursuant
to an effective registration statement under the Securities Act.
"Purchasers" shall mean the holders from time to time of the
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Preferred Stock.
"Registrable Securities" shall mean (i) the Common Shares at any
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time issued or subject to issuance upon the conversion of the Preferred Stock
and exercise of the Warrant and (ii) any additional securities issued with
respect to the above described securities upon any stock split, stock dividend,
recapitalization, or similar event. Registrable Securities shall cease to be
Registrable Securities when (x) a registration statement with respect to the
sale of such Securities shall have become effective under the Securities Act and
such Securities shall have been disposed of in accordance with such registration
statement, (y) they shall be eligible to be distributed pursuant to Rule 144
promulgated under the Securities Act in a
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single three-month period by the holder thereof or (w) they shall have ceased to
be outstanding.
"Registration Expenses" shall mean the expenses described in
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Section 1.6.
"Securities Act" shall mean the Securities Act of 1933, as
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amended.
"Warrant" shall mean the warrant issued to Network General
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Corporation, pursuant to that certain Stock Purchase Agreement with the Company,
dated _____________________________________ , 1996 (the "Stock Purchase
Agreement") to purchase shares of the Company's Common Stock.
1.2 Demand Registration. (a) Subject to Section 1.2(d) and Section
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1.2(e), if twelve months have elapsed from the date of the Stock Purchase
Agreement and the Company has yet to consummate a Public Offering on Form S-1 or
Form SB-2, and if the Company shall have received a written request therefor
from the record holder or holders of an aggregate of at least 51% of the
Registrable Securities issued or issuable to the holders of Preferred Stock, the
Company shall prepare and file a registration statement under the Securities Act
covering such number of Registrable Securities as are the subject of such
request and shall use its best efforts to cause such registration statement to
become effective; provided, however, that the registration requested pursuant to
this Section 1.2 can only be requested if the Company has not consummated a
Public Offering prior to the requested registration. Upon the receipt of a
registration request meeting the requirements of this Section 1.2, the Company
shall promptly give written notice to all other record holders of Registrable
Securities that such registration is to be effected. The Company shall include
in such registration statement such additional Registrable Securities as such
other record holders request within thirty (30) days after the date of the
Company's written notice to them. If (i) the holders of a majority of the
Registrable Securities for which registration has been requested pursuant to
this Section 1.2 determine for any reason not to proceed with the registration
at any time before the related registration statement has been declared
effective by the Commission, (ii) such registration statement, if theretofore
filed with the Commission, is withdrawn and (iii) the holders of the Registrable
Securities subject to such registration statement agree to bear their own
Registration Expenses incurred in connection therewith and to reimburse the
Company for the Registration Expenses incurred by it in such connection or if
such registration statement, if theretofore filed with the Commission, is
withdrawn at the initiative of the Company, then the holders of the Registrable
Securities shall not be deemed to have exercised their demand registration right
pursuant to this Section 1.2.
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(b) The method of disposition of all Registrable Securities included
in such registration shall be an underwritten offering. The managing
underwriter of any such offering shall be selected by the Company. If in the
good faith judgment of the managing underwriter of the Public Offering, the
inclusion of all of the Registrable Securities the registration of which has
been requested would interfere with their successful marketing, the number of
Registrable Securities to be included in the offering shall be reduced, pro
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rata, among the requesting holders thereof in proportion to the number of
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Registrable Securities included in their respective requests for registration.
Registrable Securities that are so excluded from the underwritten Public
Offering shall be withheld by the holders thereof for such period, not exceeding
one hundred and twenty (120) days, that the managing underwriter reasonably
determines is necessary to effect the Offering. The Company shall have the right
to include any securities in a registration statement to be filed as part of a
demand registration pursuant to this Section 1.2.
(c) The Company shall be obligated to prepare, file and cause to be
effective only one (1) registration statement pursuant to this Section 1.2.
(d) Notwithstanding the foregoing, the Company may delay initiating
the preparation and filing of any registration statement requested pursuant to
this Section 1.2 for a period not to exceed one hundred eighty (180) days if in
the good faith judgment of the Company's Board of Directors effecting the
registration would adversely affect a proposed Public Offering by the Company or
would require the premature disclosure of any financing, acquisition,
disposition of assets or stock, merger or other comparable transaction or would
require the Company to make public disclosure of information the public
disclosure of which would have material adverse effect on the Company.
(e) Notwithstanding anything to the contrary contained herein, and
without limitation as to the rights of the Company to include in a demand
registration securities for sale for its own account as provided in Section
1.2(a), at any time within thirty (30) days after receiving a demand for
registration, the Company may elect to effect an underwritten primary
registration in lieu of the requested registration. If the Company so elects,
the Company shall give prompt written notice to all holders of Registrable
Securities of its intention to effect such a registration and shall afford such
holders the rights contained in Section 1.3 with respect to "piggyback"
registrations. In such event, the demand for registration shall be deemed to
have been withdrawn.
1.3 (a) Piggyback Registration. If twelve months have elapsed from the
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date of the Stock Purchase Agreement and the Company has yet to consummate a
Public Offering, then each time the Company shall determine to proceed with the
actual preparation and filing of a registration statement under the Securities
Act in connection with the proposed offer and sale for money of any of its
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securities by it or any of its security holders (other than a registration
statement on Form S-8, Form S-4 or other limited purpose form), the Company will
give written notice of its determination to all record holders of Registrable
Securities. Upon the written request of a record holder of any shares of
Registrable Securities given within 30 days after the date of any such notice
from the Company, the Company will, except as herein provided, cause all the
Registrable Securities the registration of which is requested to be included in
such registration statement, all to the extent requisite to permit the sale or
other disposition by the prospective seller or sellers of the Registrable
Securities to be so registered; provided, however, that nothing herein shall
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prevent the Company from, at any time, abandoning or delaying any registration;
and provided, further, that if the Company determines not to proceed with a
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registration after the registration statement has been filed with the Commission
and the Company's decision not to proceed is primarily based upon the
anticipated public offering price of the securities to be sold by the Company,
the Company shall promptly complete the registration for the benefit of those
selling security holders who wish to proceed with a Public Offering of their
Registrable Securities and who bear all of the Registration Expenses in excess
of $25,000 incurred by the Company as the result of such registration after the
Company has decided not to proceed. In the discretion of the holders of the
Registrable Securities to be included in the registration (provided that
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such holders are the record holders of at least 51% of the Registrable
Securities), such registration may count as a demand registration under Section
1.2 (if it otherwise meets the requirements of Section 1.2(a)) for which the
Company will pay the Registration Expenses.
(b) If any registration pursuant to this Section 1.3 is underwritten
in whole or in part, the Company may require that the Registrable Securities
included in the registration be included in the underwriting on the same terms
and conditions as the securities otherwise being sold through the underwriters.
If, in the good faith judgment of the managing underwriter of the Public
Offering, the inclusion of all of the Registrable Securities originally covered
by requests for registration would reduce the number of shares to be offered by
the Company or interfere with the successful marketing of the shares offered by
the Company, the number of Registrable Securities to be included in the Offering
may be reduced in the following manner: first, securities held by officers and
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directors of the Company (other than Registrable Securities) shall be excluded
from such underwritten public offering to the extent required by the managing
underwriter, second, any securities, other than Registrable Securities, proposed
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to be sold in the Offering by persons other than the Company shall be excluded
and third, if a further reduction in the Offering is required, the Registrable
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Securities requested to be included in the Offering shall be reduced, pro rata,
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among the requesting holders thereof in proportion to the number of Registrable
Securities included in their respective requests for registration. The
Registrable Securities which are thus excluded from the underwritten Public
Offering shall be withheld from the market
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by the holders thereof for a period which the managing underwriter reasonably
determines is necessary in order to effect the Public Offering.
1.4 Short Form Registration. In addition to the registration rights
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provided in Sections 1.2 and 1.3, if the Company qualifies for the use of Form
S-3 (or any similar registration form), the Company shall at the request of
holders of Registrable Securities from time to time register Registrable
Securities on behalf of such holder or holders on such form; provided, however,
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that the Company shall not be required to accommodate any request to register
less than 100,000 Registrable Securities nor to accommodate more than two of
such registrations in any calendar year. The Company shall give notice of any
proposed Form S-3 registration to the record holders of Registrable Securities
who did not join in the request therefor and afford them a reasonable
opportunity to do so.
1.5 Registration Procedures. If and whenever the Company is required
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by the provisions of Sections 1.2 and 1.3 or 1.4 to effect the registration of
shares of Registrable Securities under the Securities Act, the Company will use
its best efforts to effect the registration and sale of such Registrable
Securities in accordance with the intended methods of disposition specified by
the holders participating therein. Without limiting the foregoing, the Company
in each such case will, as expeditiously as possible,:
(a) prepare and file with the Commission (in the case of a demand
registration pursuant to Section 1.2 or Section 1.4) the requisite
registration statement to effect such registration (including such audited
financial statements as may be required by the Securities Act or the rules
and regulations promulgated thereunder) and use its best efforts to cause
such registration statement to become effective; provided, however, that as
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far in advance as practical before filing such registration statement or
any amendment thereto, the Company will furnish to counsel for the
requesting holders copies of reasonably complete drafts of all such
documents proposed to be filed (including exhibits), and any such holder
shall have the opportunity to object to any information pertaining solely
to such holder that is contained therein and the Company will make the
corrections reasonably requested by such holder with respect to such
information prior to filing any such registration statement or amendment;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and any prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration statement and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities included in such registration statement, in accordance with the
intended methods of disposition thereof, until the earlier of (i) such time
as all of such
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securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth
in such registration statement and (ii) one hundred eighty (180) days after
such registration statement becomes effective;
(c) promptly notify each requesting holder and the underwriter or
underwriters, if any:
(i) when such registration statement or any prospectus used in
connection therewith, or any amendment or supplement thereto, has been
filed and, with respect to such registration statement or any post-
effective amendment thereto, when the same has become effective;
(ii) of any written request by the Commission for amendments or
supplements to such registration statement or prospectus;
(iii) of the notification to the Company by the Commission of its
initiation of any proceeding with respect to the issuance by the
Commission of, or of the issuance by the Commission of, any stop order
suspending the effectiveness of such registration statement; and
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the applicable securities or blue sky laws
of any jurisdiction;
(d) furnish to each seller of Registrable Securities included in such
registration statement such number of conformed copies of such registration
statement and of each amendment and supplement thereto such number of
copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 promulgated under the Securities Act
relating to such seller's Registrable Securities, and such other documents,
as such seller may reasonably request to facilitate the disposition of its
Registrable Securities;
(e) use its best efforts to register or qualify all Registrable
Securities included in such registration statement under such other
securities or blue sky laws of such jurisdictions as each holder of
Registrable Securities thereof shall reasonably request within twenty (20)
days following the original filing of such registration statement and to
keep such registration or qualification in effect for so long as such
registration statement remains in effect, and take any
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other action which may be reasonably necessary or advisable to enable such
holder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such holder, except that the Company shall
not for any such purpose be required (i) to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this paragraph (e) be obligated to be so
qualified, (ii) to consent to general service of process in any such
jurisdiction or (iii) to subject itself to taxation in any such
jurisdiction by reason of such registration or qualification;
(f) use its best efforts to cause all Registrable Securities included
in such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
each holder thereof to consummate the disposition of such Registrable
Securities;
(g) If and to the extent any of the following are obtained by or
furnished to the Company or the underwriters, furnish to any holder who so
requests a signed counterpart, addressed to such holder (and the
underwriters, if any), of
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement (or, if such registration includes
an underwritten Public Offering, dated the date of any closing under
the underwriting agreement), and
(ii) a "cold comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten Public Offering, dated the date of any closing under the
underwriting agreement), signed by the independent public accountants
who have certified the Company's financial statements included in such
registration statement;
provided, however, that the obligation to furnish a "cold comfort" letter
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shall only be imposed to the extent permitted under any then-prevailing
rules of accounting procedure;
(h) notify each holder whose Registrable Securities are included in
such registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the happening of
any event as a result of which any prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and at the request of any such
holder promptly prepare and furnish to such holder a reasonable number of
copies
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of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(i) otherwise use its best efforts to comply with applicable rules
and regulations of the Commission;
(j) provide a transfer agent and registrar for all Registrable
Securities included in such registration statement not later than the
effective date of such registration statement; and
(k) use its best efforts to cause all Registrable Securities included
in such registration statement to be listed, upon official notice of
issuance, on any securities exchange or quotation system on which any of
the securities of the same class as the Registrable Securities are then
listed.
(l) The Company may require each holder whose Registrable securities
are being registered to, and each such holder, as a condition to including
Registrable Securities in such registration, shall, furnish the Company and
the underwriters with such information and affidavits regarding such holder
and the distribution of such securities as the Company and the underwriters
may from time to time reasonably request in writing in connection with such
registration. At any time during the effectiveness of any registration
statement covering Registrable Securities offered by a holder, if such
holder becomes aware of any change materially affecting the accuracy of the
information contained in such registration statement or the prospectus (as
then amended or supplemented) relating to such holder, it will immediately
notify the Company of such change.
(m) Upon receipt of any notice from the Company of the happening of
any event of the kind described in paragraph (h) of this Section 1.5, each
holder will forthwith discontinue such holder's disposition of Registrable
Securities pursuant to the registration statement relating to such
Registrable Securities until such holder receives the copies of the
supplemented or amended prospectus contemplated by paragraph (h) of this
Section 1.5 and, if so directed by the Company, shall deliver to the
Company all copies, other than permanent file copies, then in such holder's
possession of the prospectus relating to such Registrable Securities
current at the time of receipt of such notice.
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1.6 Expenses. With respect to any registration requested pursuant to
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Section 1.2 (except as otherwise provided in such Section with respect to a
registration voluntarily terminated at the request of the requesting holders of
Registrable Securities), Section 1.3 (except as otherwise provided in such
Section with respect to a registration continued by selling security holders who
wish to proceed with a Public Offering that is withdrawn by the Company) or
Section 1.4, the Company shall bear all of the expenses ("Registration
Expenses") incident to the Company's performance of or compliance with its
obligations under this Agreement in connection with such registration including,
without limitation, all registration, filing, securities exchange listing and
NASD fees, all registration, filing, qualification and other fees and expenses
or complying with securities or blue sky laws, all word processing, duplicating
and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, premiums and
other costs of any policies of insurance against liabilities arising out of the
Public Offering of the Registrable Securities being registered obtained by the
Company (it being understood that the Company shall have no obligation to obtain
such insurance) and any fees and disbursements of underwriters customarily paid
by issuers or sellers of securities, but excluding underwriting discounts and
commissions and transfer taxes, if any, in respect of Registrable Securities,
which discounts, commissions and taxes in respect of Registrable Securities, and
excluding any fees and disbursements of counsel and accountants to the holders
of the Registrable Securities, which shall in any registration be payable by the
holders of the Registrable Securities being registered, pro rata in proportion
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to the number of Registrable Securities being sold by them.
1.7 Indemnification.
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(a) The Company will, to the full extent permitted by law,
indemnify and hold harmless each holder of Registrable Securities which are
included in a registration statement pursuant to the provisions of this
Section 1 and its directors, officers and partners and each other person,
if any, who controls such holder within the meaning of the Securities Act
from and against any and all losses, claims, damages, expenses or
liabilities, joint or several (collectively, "Losses") to which such holder
or any such director, officer, partner or controlling person may become
subject under the Securities Act or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in a registration statement
prepared and filed hereunder, any preliminary, final or summary prospectus
contained therein or any amendment or supplement thereto or any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make
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the statements therein (in the case of a prospectus, in light of the
circumstances in which they were made) not misleading and the Company will
reimburse the holder and each such director, officer, partner and
controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending against any such Losses
(or action or proceeding in respect thereof); provided, however, that the
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Company will not be liable in any such case to the extent that any such
Losses arise out of or are based upon (i) an untrue statement or alleged
untrue statement or omission or alleged omission made in conformity with
written information furnished by such holder specifically for use in the
preparation of the registration statement or (ii) such holder's failure to
send or give a copy of the final prospectus to the persons asserting an
untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of Registrable
Securities to such person if such statement or omission was corrected in
such final prospectus. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such holder or any
such director, officer, partner or controlling person of such holder and
shall survive the transfer of such securities by such holder. The Company
shall also indemnify each other person who participates (including as an
underwriter) in the offering or sale of Registrable Securities, their
officers and directors, and partners, and each other person, if any, who
controls any such participating person within the meaning of the Securities
Act to the same extent as provided above with respect to holders of
Registrable Securities.
(b) Each holder of shares of Registrable Securities which are
included in a registration pursuant to the provisions of this Section 1
will, to the full extent permitted by law, indemnify and hold harmless the
Company, its officers, directors and each other person, if any, who
controls the Company within the meaning of the Securities Act from and
against any and all Losses to which the Company or any such officer,
director or controlling person may become subject under the Securities Act
or otherwise, insofar as such Losses (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained in a
registration statement prepared and filed hereunder, any preliminary, final
or summary prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in
the light of the circumstances under which they were made) not misleading,
in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was
so made in reliance upon and in strict conformity with written information
furnished by such holder specifically for use in the preparation
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of such registration statement. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person of the Company.
The holder of Registrable Securities included in a registration statement
shall also indemnify each other person who participates (including as an
underwriter) in the offering or sale of Registrable Securities, their
officers and directors, and partners, and each other person, if any, who
controls any such participating person within the meaning of the Securities
Act to the same extent as provided above with respect to the Company. In no
event shall the liability of any holder under this Section 1.7(b) exceed
the net proceeds received by such holder from the sale of their Registrable
Securities.
(c) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) or (b) of this Section 1.7 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to
be made against the indemnifying party pursuant to the provisions of
paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party
will not relieve the indemnifying party from any liability which it may
have to any indemnified party except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case any
such action is brought against any indemnified party, the indemnifying
party shall have the right to participate in, and, to the extent that it
may wish, jointly with any other indemnifying party, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any action include both the
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indemnified party and the indemnifying party and the indemnified party
reasonably concludes that there is a conflict of interest that would
prevent counsel for the indemnifying party from also representing the
indemnified party, the indemnified party shall have the right to select
separate counsel to participate in the defense of such action on behalf of
the indemnified party or parties. After notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party
pursuant to the provisions of said paragraph (a) or (b) for any legal or
other expense subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have
employed counsel in accordance with the proviso of the preceding sentence,
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after the notice of the commencement of the action
or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party. If the
indemnifying party is not entitled to, or elects not to, assume the defense
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of a claim, it will not be obligated to pay the fees and expenses of more
than one counsel for the indemnified parties with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other indemnified
parties with respect to such claim, in which event the indemnifying party
shall be obligated to pay the fees and expenses of additional counsel or
counsels for the indemnified parties. No indemnifying party shall consent
to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation without the consent of the indemnified
party. No indemnifying party shall be subject to any liability for any
settlement made without its consent. An indemnified party may at any time
elect to participate in the defense of any claim or proceeding at its own
expense.
1.8 Covenants Relating to Rule 144. If at any time the Company is
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required to filed reports in compliance with either Section 13 or Section 15(d)
of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") the
Company will (a) file reports in compliance with the Exchange Act and (b) comply
with all rules and regulations of the Commission applicable to the use of Rule
144.
1.9 Underwritten Offerings. If a distribution of Registrable
----------------------
Securities pursuant to a registration statement is to be underwritten, the
holders whose Registrable Securities are to be distributed by such underwriters
shall be parties to such underwriting agreement. No requesting holder may
participate in such underwritten offering unless such holder agrees to sell its
Registrable Securities on the basis provided in such underwriting agreement and
completes and executes all questionnaires, powers of attorney, indemnities and
other documents reasonably required under the terms of such underwriting
agreement. If any requesting holder disapproves of the terms of an
underwriting, such holder may elect to withdraw therefrom and from such
registration by notice to the Company and the managing underwriter, and each of
the remaining requesting holders shall be entitled to increase the number of
Registrable Securities being registered to the extent of the Registrable
Securities so withdrawn in the proportion which the number of Registrable
Securities being registered by such remaining requesting holder bears to the
total number of Registrable Securities being registered by all such remaining
requesting holders.
1.10 Stand-Off Agreement. Each holder of Registrable Securities
-------------------
agrees, so long as such holder holds at least 1% of the Company's outstanding
voting equity securities, in connection with the Company's initial Public
Offering, upon request of the Company or the underwriters managing such
Offering, not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any Common Shares of the Company other than
those included in the
12
<PAGE>
registration without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not exceeding 180
days) from the effective date of such registration as may be requested by the
underwriters; provided, however, that all other holders of at least 1% of the
-------- -------
Company's outstanding voting equity securities and all of the officers and
directors of the Company who own stock of the Company must also agree to not
less onerous restrictions.
1.11 Amendment of Registration Rights. Without the written consent
--------------------------------
of the holders of more than 50% of the then outstanding Registrable Securities,
the Company shall not amend this Exhibit C, or enter into any agreement with any
holder or prospective holder of any securities of the Company which would allow
such holder or prospective holder to include such securities as Registrable
Securities under this Exhibit C. Any amendment to this Section 1 pertaining
only to rights of a particular series of the Company's outstanding Preferred
Stock and affecting such rights adversely and in a manner materially different
from its effect on the rights of the other outstanding series of the Preferred
Stock must be approved by the holders of more than 50% of the outstanding shares
of such series of Preferred Stock.
1.12 Termination. This Exhibit C, and all of the Company's
-----------
obligations (other than its obligations pursuant to Section 1.7, which Section
shall survive such termination) hereunder, shall terminate upon the earlier to
occur of (i) the date there are no Registrable Securities outstanding and (ii)
the fifth anniversary of the effective date of the registration statement filed
with respect to the Company's initial Public Offering.
13
<PAGE>
EXHIBIT 10.8
------------
WARRANT
FOR
SHARES OF COMMON STOCK
OF
FIELDWORKS, INC.
For value received, Network General Corporation, a Delaware
corporation or its successors or assigns ("Investor"), is entitled to subscribe
for and purchase from Fieldworks, Incorporated, a Minnesota corporation (the
"Company"), up to Twenty-Four Thousand (24,000) fully paid and nonassessable
shares of the Company's common stock, or such greater or lesser number of such
shares as may be determined by application of the anti-dilution provisions of
this warrant, at the price of Ten Dollars ($10.00) per share, subject to
adjustments as noted below (the "warrant exercise price").
This warrant may be exercised by Investor at any time or from time to
time on or prior to _________________, 2001.
This warrant is subject to the following provisions, terms and
conditions:
1. The rights represented by this warrant may be exercised by the
holder hereof, in whole or in part, by written notice of exercise delivered to
the Company at least twenty (20) days prior to the intended date of exercise and
by the surrender of this warrant (properly endorsed if required) at the
principal office of the Company and upon payment to it by cash, certified check
or bank draft of the purchase price for such shares. The shares so purchased
shall be deemed to be issued as of the close of business on the date on which
this warrant has been exercised by payment to the Company of the warrant
exercise price. Certificates for the shares of stock so purchased, bearing the
restrictive legend set forth at the end of this warrant, shall be delivered to
the holder within fifteen (15) days after the rights represented by this warrant
shall have been so exercised, and, unless this warrant has expired, a new
warrant representing the number of shares, if any, with respect to which this
warrant has not been exercised shall also be delivered to the holder hereof
within such time. No fractional shares shall be issued upon the exercise of
this warrant.
2. The Company covenants and agrees that all shares that may be
issued upon the exercise of the rights represented by this warrant shall, upon
issuance, be duly authorized and issued, fully paid and nonassessable shares.
The Company further covenants and agrees that during the period within which the
rights represented by this warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this warrant, a sufficient
number of shares of its common stock to provide for the exercise of the rights
represented by this warrant.
<PAGE>
3. The warrant exercise price shall be subject to adjustment from
time to time as hereinafter provided in this section 3.
(a) If the Company at any time following the conversion of the series
of Preferred Stock (the "Preferred Stock") purchased by Investor from the
Company pursuant to that certain Stock Purchase Agreement, dated
----------------
, 1996 (the "Stock Purchase Agreement") into shares of Common Stock divides the
outstanding shares of its common stock into a greater number of shares (whether
pursuant to a stock split, stock dividend or otherwise), and conversely, if the
outstanding shares of its common stock are combined into a smaller number of
shares, the warrant exercise price in effect immediately prior to such division
or combination shall be proportionately adjusted to reflect the reduction or
increase in the value of each such common share.
(b) If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of the Company's common
stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for such common shares, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, the holder of
this warrant shall have the right to purchase and receive upon the basis and
upon the terms and conditions specified in this warrant and in lieu of the
shares of the common stock of the Company immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby, such shares
of stock, other securities or assets as would have been issued or delivered to
the holder of this warrant if it had exercised this warrant and had received
such shares of common stock prior to such reorganization, reclassification,
consolidation, merger or sale. The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument executed and mailed to the registered holder of this
warrant at the last address of such holder appearing on the books of the
Company, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase.
(c) If when the Preferred Stock is converted into Common Stock and
such conversion results in conversion into a greater number of shares of Common
Stock than 300,000 shares, pursuant to the application of the anti-dilution
provisions granted to Investor pursuant to the Stock Purchase Agreement and any
exhibits thereof, then the warrant exercise price and number of shares subject
to the warrant shall be appropriately adjusted such that the number of shares
subject to
-2-
<PAGE>
this warrant shall be equal to eight percent (8%) of the shares of Common Stock
issued or issuable upon such conversion.
(d) Upon each adjustment of the warrant exercise price, the holder of
this warrant shall thereafter be entitled to purchase, at the warrant exercise
price resulting from such adjustment, the number of shares obtained by
multiplying the warrant exercise price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately prior
to such adjustment and dividing the product thereof by the warrant exercise
price resulting from such adjustment.
(e) Upon any adjustment of the warrant exercise price, the Company
shall give written notice thereof, by first class mail, postage prepaid,
addressed to the registered holder of this warrant at the address of such holder
as shown on the books of the Company, which notice shall state the warrant
exercise price resulting from such adjustment and the increase or decrease, if
any, in the number of shares purchasable at such price upon the exercise of this
warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
4. This warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Company.
5. The holder of this warrant, by acceptance hereof, agrees to give
written notice to the Company before transferring this warrant or transferring
any shares of the Company's common stock issuable or issued upon the exercise of
this warrant of the holder's intention to do so, describing briefly the manner
of any proposed transfer of this warrant or such holder's intention as to the
shares of common stock issuable upon the exercise hereof or the intended
disposition to be made of shares of common stock upon such exercise. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company. If, in the opinion of such counsel, the proposed
transfer of this warrant or disposition of shares may be effected without
registration or qualification (under any federal or state law) of this warrant
or the shares of common stock issuable or issued upon the exercise hereof, the
Company, as promptly as practicable, shall notify such holder of such opinion,
whereupon such holder shall be entitled to transfer this warrant, or to exercise
this warrant in accordance with its terms and dispose of the shares received
upon such exercise or to dispose of shares of common stock received upon the
previous exercise of this warrant, all in accordance with the terms of the
notice delivered by such holder to the Company, provided that an appropriate
legend in substantially the form set forth at the end of this warrant respecting
the foregoing restrictions on transfer and disposition may be endorsed on this
warrant or the certificates for such shares.
-3-
<PAGE>
6. Subject to the provisions of section 5, this warrant and all
rights hereunder are transferable, in whole or in part, at the principal office
of the Company by the holder hereof in person or by duly authorized attorney,
upon surrender of this warrant properly endorsed to any person or entity who
represents in writing that he/it is acquiring the warrant for investment and
without any view to the sale or other distribution thereof. Each holder of this
warrant, by taking or holding the same, consents and agrees that the bearer of
this warrant, when endorsed, may be treated by the Company and all other persons
dealing with this warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented by this warrant, or to
the transfer hereof on the books of the Company, any notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat
the registered owner hereof as the owner for all purposes.
7. Neither this warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
IN WITNESS WHEREOF, the Company has caused this warrant to be signed
and delivered by a duly authorized officer as of the _________ day of
----------
,1996.
FIELDWORKS, INCORPORATED
By _____________________________
Gary J. Beeman, President
RESTRICTION ON TRANSFER
The security evidenced hereby has not been registered under the
Securities Act of 1933 or any state securities laws and may not be sold,
transferred, assigned, offered, pledged or otherwise distributed for value
unless there is an effective registration statement under such act or laws
covering such security or the Company receives an opinion of counsel for the
holder of this security (concurred in by counsel for the Company) stating that
such sale, transfer, assignment, pledge or distribution is exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933
and all applicable state securities laws.
-4-
<PAGE>
WARRANT EXERCISE
----------------
(To be signed only upon exercise of warrant)
The undersigned, the holder of the foregoing warrant, hereby
irrevocably elects to exercise the purchase right represented by such warrant
for, and to purchase thereunder, _____________ of the shares of common stock of
________________________________, to which such warrant relates and herewith
makes payment of $___________ therefor in cash or by check and requests that the
certificates for such shares be issued in the name of, and be delivered to
__________________, whose address is set forth below the signature of the
undersigned.
Dated: _____________________
_________________________________
_________________________________
_________________________________
(Name and Address of Transferee)
-5-
<PAGE>
WARRANT ASSIGNMENT
------------------
(To be signed only upon transfer of warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto __________________ the purchase right represented by the
foregoing warrant to purchase the shares of common stock of
_____________________________ , to which such warrant relates and appoints
_____________________________ attorney to transfer such purchase right on the
books of ________________________ , with full power of substitution in the
premises.
Dated: _____________________
__________________________________
__________________________________
__________________________________
(Name and Address of Transferee)
-6-
<PAGE>
EXHIBIT 10.9
AMENDMENT
TO
BRIDGE LOAN AGREEMENT
AND
PROMISSORY NOTE
THIS AMENDMENT, dated as of August 2, 1996 (the "Amendment"), is made by
and between FieldWorks, Incorporated, a Minnesota corporation (the "Company"),
and Brightbridge Fund I L.P. (the "Investor").
WHEREAS, pursuant to the terms of a Bridge Loan Agreement dated as of July
15, 1996 (the "Agreement"), Investor lent the Company $500,000, in return for
which the Company delivered to Investor a Promissory Note dated July 15, 1996,
in the amount of $500,000 (the "Note").
WHEREAS, the Agreement and the Note provide that all outstanding principal
and accrued interest on the Note shall be due and payable on December 31, 1996,
if not prepaid prior to such date in accordance with the terms of the Agreement
and the Note.
WHEREAS, the Company desires to extend the date on which all outstanding
principal and accrued interest on the Note shall be due and payable.
WHEREAS, Investor agrees to extend the date on which all outstanding
principal and accrued interest on the Note shall be due and payable.
WHEREAS, in connection with certain negotiations between the Company and
its bank, Norwest Bank National Association (the "Bank"), regarding the
extension and amendment of the Company's current line of credit, the Bank has
requested that the Agreement and the Note be amended to clarify that the
indebtedness represented thereby is subordinated to any amounts that may be due
and payable from the Company to the Bank from time to time under the Company's
line of credit.
WHEREAS, Investor has agreed to such clarification.
NOW, THEREFORE, in accordance with Section 8(a) of the Agreement and in
consideration of the foregoing, the mutual promises set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
<PAGE>
1. Section 3 of the Agreement is hereby amended in its entirety to read
as follows:
"Repayment. All outstanding principal and accrued interest on the
---------
Note shall be due and payable on May 1, 1997, provided, however, that
-------- -------
notwithstanding the foregoing, the Note shall be payable in full within
thirty (30) days after the effective date (the "Effective Date") of any
Registration Statement. Except in the event a Registration Statement is
filed and declared effective, the Note may not be prepaid."
2. The date in the introductory paragraph of the Note is hereby amended
from December 31, 1996, to May 1, 1997.
3. The parties hereto agree that the indebtedness evidenced by the
Agreement and the Note, and the payment of the principal thereof and interest
thereon, shall be subordinate and subject in right of payment to the payment in
full of all amounts then due and payable under a line of credit of up to $3.5
million provided to the Company by Norwest Bank National Association.
4. Except as expressly amended hereby, the Agreement and the Note are in
all respects ratified and confirmed and all the terms, conditions and provisions
thereof shall remain in full force and effect.
5. This Amendment may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
FIELDWORKS, INCORPORATED
By:_______________________________________
Gary Beeman, Chief Executive Officer
BRIGHTBRIDGE FUND I L.P.
By:________________________________________
Name: __________________________________
Title:__________________________________
<PAGE>
EXHIBIT 10.10
BRIDGE LOAN AGREEMENT
NO. __
THIS BRIDGE LOAN AGREEMENT (this "Agreement") is dated as of September __,
1996, by and between Fieldworks, Incorporated, a Minnesota corporation (the
"Company"), and ________ (the "Investor").
RECITALS:
(a) Whereas, the Company needs cash to fund its operations until such
time as it can complete a debt or equity financing; and
(b) Whereas, the Investor desires to lend funds to the Company on the
terms and conditions set forth in this Agreement; and
(c) Whereas, other investors ("Other Investors") may lend funds to
the Company on terms and conditions equivalent to those set forth in this
Agreement.
Accordingly, in consideration of the foregoing, the mutual promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Loan/Promissory Note. The Investor agrees to lend to the Company
--------------------
$_____ and the Company agrees to deliver to the Investor a promissory note, in
the form attached hereto as Exhibit A (the "Note"), in a like amount. The
---------
delivery of the Note shall be made concurrently with delivery of funds to the
Company in the amount set forth above.
2. Warrants. In consideration of the loan, the Company shall issue to
--------
the Investor, concurrently with delivery of the Note, a warrant, in the form
attached hereto as Exhibit B (the "Warrant"), to purchase that number of shares
---------
of Common Stock of the Company as provided in the Warrant. The shares of Common
Stock issuable upon exercise of the Warrants are referred to hereinafter as the
"Warrant Stock."
3. Repayment. All outstanding principal and accrued interest on the Note
---------
shall be due and payable on the date 180 days from the date hereof, provided,
---------
however, that notwithstanding the foregoing, the Note shall be payable in full
- -------
within thirty (30) days after the effective date (the "Effective Date") of any
Registration Statement. Except in the event a Registration Statement is filed
and declared effective, the Note may not be prepaid.
<PAGE>
4. Restrictions on Transfer. The Note, Warrant and Warrant Stock shall
------------------------
be subject to certain restrictions on transfer identified in the Note and
Warrant.
5. Representations and Warranties of the Company. The Company represents
---------------------------------------------
and warrants to the Investor that this Agreement has been duly authorized by all
necessary corporate action on behalf of the Company, has been duly executed and
delivered by an authorized officer of the Company, and is a valid and binding
agreement on the part of the Company. All corporate action necessary to the
authorization, issuance, and delivery of the Note, the Warrant, and the Warrant
Stock (collectively, a "Unit") has been taken on or prior to the date hereof.
6. Representations and Warranties of the Investor. The Investor
----------------------------------------------
represents and warrants to the Company as follows:
(a) That the Investor is in a financial position to hold the Units
for an indefinite period of time and is able to bear the economic risk and
withstand a complete loss of the Investor's investment in the Units;
(b) That the Investor believes the Investor, either alone or with the
assistance of the Investor's own professional advisor, has such knowledge
and experience in financial and business matters that the Investor is
capable of reading and interpreting financial statements and evaluating the
merits and risks of the prospective investment in the Units and has the net
worth to undertake such risks;
(c) That the Investor has obtained, to the extent the Investor deems
necessary, the Investor's own personal professional advice with respect to
the risks inherent in the investment in the Units and the suitability of an
investment in the Units in light of the Investor's financial condition and
investment needs;
(d) That the Investor believes that the investment in the Units is
suitable for the Investor based upon the Investor's investment objectives
and financial needs, and the Investor has adequate means for providing for
the Investor's current financial needs and personal contingencies and has
no need for liquidity of investment with respect to the Units;
(e) That the Investor has been given access to full and complete
information regarding the Company and has utilized such access to the
Investor's satisfaction for the purpose of obtaining information and,
particularly, the Investor has either attended or been given reasonable
opportunity to attend a meeting with representatives of the Company for the
purpose of asking questions of, and receiving answers from, such
representatives concerning the Company and to obtain any additional
information, to the extent reasonably available, necessary to verify the
accuracy of information provided to the Investor;
<PAGE>
(f) That the Investor recognizes that an investment in the Units
involves a high degree of risk, including, but not limited to, the risk of
economic losses from operations of the Company;
(g) That the Investor recognizes that in addition to the proceeds
from the sale of Units, the Company will require additional financing to
fund current and proposed operations, and there can be no assurances that
additional financing can be obtained;
(h) That the Investor realizes that (i) the purchase of the Units is
a long-term investment; (ii) the purchaser of the Units must bear the
economic risk of investment for an indefinite period of time because the
Notes, Warrants and Warrant Stock have not been registered under the
Securities Act or under the securities laws of any state and, therefore,
none of such securities can be sold unless they are subsequently registered
under said laws or exemptions from such registrations are available; (iii)
the Investor may not be able to liquidate the Investor's investment in the
event of an emergency or pledge any of such securities as collateral for
loans; and (iv) the transferability of such securities is restricted and
(A) requires the written consent of the Company, and (B) legends will be
placed on the Notes and Warrants referring to the applicable restrictions
on transferability.
(i) That the Investor certifies, under penalties of perjury, that the
Investor is NOT subject to the backup withholding provisions of Section
3406(a)(i)(C) of the Internal Revenue Code of 1986, as amended (Note: You
are subject to backup withholding if (i) you fail to furnish your Social
Security number or taxpayer identification number herein; (ii) the Internal
Revenue Service notifies the Company that you furnished an incorrect Social
Security number or taxpayer identification number; (iii) you are notified
that you are subject to backup withholding; or (iv) you fail to certify
that you are not subject to backup withholding or you fail to certify your
Social Security number or taxpayer identification number);
(j) That the Investor is a bona fide resident of, is domiciled in,
and received the offer and made the decision to invest in the Units in, the
state set forth on the signature page below under "Addresses" and that the
Units are being purchased by the Investor in the Investor's name solely for
the Investor's own beneficial interest and not as nominee for, or on behalf
of, or for the beneficial interest of, or with the intention to transfer
to, any other person, trust or organization.
7. Accredited Investor. The Investor represents and warrants that the
-------------------
Investor is an "accredited investor" as defined in Rule 501(a) of Regulation D
of the Securities Act, because the Investor meets at least one of the following
criteria (please check one or more, as applicable):
<PAGE>
[_] (a) The Investor is a natural person whose individual net worth, or joint
net worth with his or her spouse, exceeds $1,000,000 at the time of
the Investor's purchase; or
[_] (b) The Investor is a natural person who had an individual income in
excess of $200,000 in each of the two most recent years (1994 and
1995) or joint income with the Investor's spouse in excess of $300,000
in each of those years and who reasonably expects to reach the same
income level in the current year (1996); or
[_] (c) The Investor is a corporation, Massachusetts or similar business
trust, partnership or an organization described in Section 501(c)(3)
of the Internal Revenue Code, not formed for the specified purpose of
acquiring the Units, with total assets in excess of $5,000,000; or
[_] (d) The Investor is (i) a bank as defined in its political subdivisions,
or any agency or Section 3(a)(2) of the Securities Act, or any
instrumentality of a state or its political savings and loan
association or other subdivisions, for the benefit of its employees,
institution as defined in Section 3(a)(5)(A) of if such plan has total
assets in excess of the Securities Act whether acting in its
$5,000,000, or (vii) an employee benefit plan individual or fiduciary
capacity, (ii) a broker within the meaning of the Employee Retirement
or dealer registered pursuant to Section 15 of Income Security Act of
1974, if the investment the Securities Exchange Act of 1934, (iii) an
decision is made by a plan fiduciary, as insurance company as defined
in Section 2(13) defined in Section 3(21) of such Act, which of the
Securities Act, (iv) an investment plan fiduciary is either a bank,
savings and company registered under the Investment Company loan
association, insurance company or Act of 1940 or a business
development company registered investment advisor, or if the as
defined in Section 2(a)(48) of such Act, (v) employee benefit plan has
total assets in a Small Business Investment Company licensed by excess
of $5,000,000 or, if a self directed the U.S. Small Business
Administration under plan, with investment decisions made solely by
Section 301(c) or (d) of the Small Business persons who are accredited
investors; or Investment Act of 1958, (vi) a plan established or
maintained by a state,
[_] (e) The Investor is a private business development company as defined in
Section 202(a)(22) of the Investment Advisors Act of 1940; or
[_] (f) The Investor is a director, executive officer or general partner of
the Company, or a director, executive officer or general partner of a
general partner of the Company; or
<PAGE>
[_] (g) The Investor is a trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Units, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii) of Regulation D of the Securities Act (IF ONLY THIS
RESPONSE IS CHECKED, please contact the Company to receive and
complete an information statement before this subscription can be
considered by the Company); or
[_] (h) The Investor is any entity in which all of the equity owners are
accredited investors. (NOTE: Not available with respect to an
irrevocable trust.)
If this purchase is made on behalf of any entity other than a natural person,
Investor certifies that (i) the entity was not formed for the purpose of making
this investment, (ii) the undersigned is empowered and duly authorized by the
entity to execute and carry out the terms of this Agreement and to purchase and
hold the Units, and (iii) this Agreement has been duly and validly executed on
behalf of the entity and constitutes a legal and binding obligation of the
entity.
8. Other.
-----
(a) This Agreement and the rights and obligations of the parties
hereunder shall not be assignable, in whole or in part, by any party
without the prior written consent of the other party, and neither this
Agreement nor any provision hereof may be amended, modified, waived or
discharged without the written consent of the party against whom
enforcement of such amendment, modification, waiver, or discharge is
sought.
(b) This Agreement, including the exhibits attached hereto,
constitutes the entire agreement of the parties relative to the subject
matter hereof and supersedes any and all other agreements and
understandings, whether written or oral, relative to the matters discussed
herein.
(c) This Agreement shall be construed and enforced in accordance with
the laws of the State of Minnesota, except for its rules relating to
conflicts of law.
(d) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(e) This Agreement shall be binding on the Company, and the Company
shall be deemed to have accepted the subscription for the Units hereunder,
only upon execution of this Agreement by the Company.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date set forth above.
INVESTOR: FIELDWORKS, INCORPORATED
____________________________ By_______________________________
Its ______________________________________________________________________
____________________________
(If more than one Investor)
<PAGE>
- --------------------------------------------------------------------------------
INVESTOR INFORMATION
________________________________________________________________________________
Name (Typed or Printed)
___________________________________________________________________
________________________________________________________________________
(If more than one Investor) (Please indicate JTWROS or TIC)
________________________________________________________________________________
Addresses
(i) Address of Investor's Domicile and Bona Fide Residence:
___________________________________________________________________
Street
___________________________________________________________________
City, State and Zip Code
(ii) Address to Which Correspondence Should be Directed (if different
from above):
____________________________________________________________________
Street
____________________________________________________________________
City, State and Zip Code
________________________________________________________________________________
Social Security or Tax ID Number (Both if grantor trust or partnership):________
________________________________________________________________________________
________________________________________________________________________________
Telephone Number: ____________________
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 10.11
PROMISSORY NOTE
---------------
THIS NOTE IS SUBJECT TO THE RESTRICTIONS ON TRANSFER
SET FORTH AT THE BOTTOM OF THE LAST PAGE HEREOF
______ $Minneapolis, Minnesota
September __, 1996
FOR VALUE RECEIVED, the undersigned, Fieldworks, Incorporated (the
"Company"), promises to pay to the order of ________, or its permitted
successors and assigns (the "Holder"), at Holder's address set forth in the
Bridge Agreement (as defined below), or such other place as Holder may designate
in writing from time to time, the principal sum of _________ Dollars ($_____),
in lawful money of the United States, together with simple interest from the
date hereof on the unpaid principal balance outstanding from time to time at the
rate of twelve percent (12%) per year (calculated on the basis of the actual
number of days elapsed and a 360-day year). All outstanding principal and
accrued interest on this Note shall be due and payable on the date 180 days from
the date of this Note, provided, however, that notwithstanding the foregoing,
-------- -------
this Note shall be payable in full within thirty (30) days after the effective
date (the "Effective Date") of any registration statement (a "Registration
Statement") relating to an initial public offering of the Company's equity
securities registered under the Securities Act of 1933, as amended (the
"Securities Act").
1. Bridge Loan Agreement. This Note has been issued pursuant to and is
---------------------
subject to the terms and provisions of the Bridge Loan Agreement (the "Bridge
Agreement"), dated as of September __, 1996, between the Company and Holder, and
this Note and Holder are entitled to all the benefits provided for in the Bridge
Agreement. The provisions of the Bridge Agreement are incorporated herein by
reference with the same force and effect as if fully set forth herein.
2. Prepayment. This Note may not be prepaid except in the event a
----------
Registration Statement is filed and declared effective, as provided above.
3. Notification of Public Offering. The Company shall notify Holder of
-------------------------------
the effectiveness of any Registration Statement within five (5) days after the
Effective Date of such Registration Statement. Such notice shall be accompanied
by notification that this Note will be paid in full within thirty (30) days
after the Effective Date.
4. Investment Intent. Other than pursuant to registration under federal
-----------------
and any applicable state securities laws or an exemption from such registration,
this Note may not be sold, pledged, assigned or otherwise disposed of (whether
voluntarily or involuntarily) by Holder unless the Company receives from the
transferee such representations and agreements as the Company may determine in
its sole discretion to be necessary and appropriate to permit such transfer to
be made
<PAGE>
pursuant to exemptions from registration under federal and applicable state
securities laws. Each certificate representing this Note shall bear appropriate
legends setting forth these restrictions on transfer. Holder, by acceptance
hereof, agrees to give written notice to the Company at least thirty-five (35)
days before any proposed transfer of this Note describing briefly the manner of
any proposed transfer. Within thirty (30) days after receiving such written
notice, the Company shall notify Holder as to whether such transfer may be
effected and of the conditions to any such transfer, and Holder shall abide by
such instructions and conditions as to which Holder was notified by the Company.
5. Notices. All demands and notices to be given hereunder shall be
-------
delivered or sent by certified mail, return receipt requested; in the case of
the Company, addressed to its corporate headquarters, 9961 Valley View Road,
Eden Prairie, Minnesota 55344, and in the case of Holder, addressed to the
address written above, in either case, until a new address shall have been
substituted by like notice.
IN WITNESS WHEREOF, the Company has caused this Note to be executed on its
behalf by its duly authorized officer as of the day and year first above
written.
FIELDWORKS, INCORPORATED
By _____________________________
Its ___________________________
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS. THIS NOTE HAS BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE LAWS OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE LAWS, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
CORPORATION WHOSE AUTHORIZED OFFICER HAS SIGNED THIS NOTE ABOVE.
-2-
<PAGE>
EXHIBIT 10.12
WARRANT
FOR
SHARES OF COMMON STOCK
OF
FIELDWORKS, INCORPORATED
FOR VALUE RECEIVED, ________________ or its successors or assigns
("Holder"), is hereby entitled to subscribe for and purchase from Fieldworks,
Incorporated, a Minnesota corporation (the "Company"), up to the total number of
Warrant Shares (as calculated pursuant to Section 3(A)) of fully paid and
nonassessable shares of the Company's Common Stock, or such greater or lesser
number of such shares as may be determined by application of the anti-dilution
provisions of this warrant, at an exercise price per share equal to 80% of the
price per share received by the Company in its next sale of equity securities
with gross proceeds of $2.5 million or more (the "Warrant Exercise Price").
This warrant may be exercised by Investor at any time after the
initial public offering of the Company's Common Stock is effective until a date
on or prior to three years from the date hereof.
This warrant is subject to the following provisions, terms and
conditions:
1. (a) The rights represented by this warrant may be exercised by
the holder hereof, in whole or in part, by written notice of exercise delivered
to the Company at least twenty (20) days prior to the intended date of exercise
and by the surrender of this warrant (properly endorsed if required) at the
principal office of the Company and upon payment to it by cash, certified check
or bank draft of the purchase price for such shares or by exercise of the
Conversion Right as provided in (b) below. The shares so purchased shall be
deemed to be issued as of the close of business on the date on which this
warrant has been exercised by payment to the Company of the Warrant Exercise
Price unless the Conversion Right has been exercised. Certificates for the
shares of stock so purchased, bearing the restrictive legend set forth at the
end of this warrant, shall be delivered to the holder within fifteen (15) days
after the rights represented by this warrant shall have been so exercised, and,
unless this warrant has expired, a new warrant representing the number of
shares, if any, with respect to which this warrant has not been exercised shall
also be delivered to the holder hereof within such time. No fractional shares
shall be issued upon the exercise of this warrant.
(b) In lieu of payment, the rights represented by this warrant
may also be exercised by a written notice of exercise specifying that the
Investor wishes to convert all of this warrant (the "Conversion Right") into
that number of shares of Common Stock as follows: the number of shares of Common
Stock equal to the quotient obtained by dividing (x) the value of the shares
subject to the warrant
<PAGE>
(determined by subtracting the aggregate warrant exercise price in effect
immediately prior to the exercise of the Conversion Right from the aggregate
fair market value of the shares of Common Stock issuable upon exercise of this
warrant immediately prior to the exercise of the Conversion Right) by (y) the
fair market value of one share of Common Stock immediately prior to the exercise
of the Conversion Right. For purposes of this section 1(b), the fair market
value of a share of Common Stock as of a particular date (the "Determination
Date") shall mean:
(i) If the Company's Common Stock is traded on an exchange or is
quoted on the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") National Market System, then the
closing or last sale price, respectively, reported for the business
day immediately preceding the Determination Date.
(ii) If the Company's Common Stock is not traded on an exchange
or on the NASDAQ National Market System but is quoted on NASDAQ, then
the mean of the closing bid and asked prices reported for the business
day immediately preceding the Determination Date.
2. The Company covenants and agrees that all shares that may be
issued upon the exercise of the rights represented by this warrant shall, upon
issuance, be duly authorized and issued, fully paid and nonassessable shares.
The Company further covenants and agrees that during the period within which the
rights represented by this warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this warrant, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this warrant.
3. This warrant shall be exercisable for the number of Warrant
Shares, as adjusted, as provided for in this Section 3(A), and subject to
adjustment from time to time as provided in this Section 3(B).
(A) Warrant Shares: Subject to adjustment under this Section 3, the number
--------------
of Warrant Shares which may be purchased by the holder of this warrant shall be
equal to:
10% x $ = Warrant Shares
-----------------------------------------
Warrant Exercise Price per share
(B) Anti-dilution:
--------------
(i) If the Company at any time divides the outstanding shares of
its Common Stock into a greater number of shares (whether pursuant to
a stock split, stock dividend or otherwise), and conversely, if the
outstanding shares of its Common Stock are combined into a smaller
number of shares, the Warrant Exercise Price in effect immediately
prior to such division or
<PAGE>
combination shall be proportionately adjusted to reflect the reduction
or increase in the value of each such share.
(ii) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the
Company with another corporation, or the sale of all or substantially
all of its assets to another corporation shall be effected in such a
way that holders of the Company's Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for
such shares, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, the holder of this
warrant shall have the right to purchase and receive upon the basis
and upon the terms and conditions specified in this warrant and in
lieu of the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, such shares of stock, other securities or assets
as would have been issued or delivered to the holder of this warrant
if it had exercised this warrant and had received such shares of
Common Stock prior to such reorganization, reclassification,
consolidation, merger or sale. The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation
thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument executed and
mailed to the registered holder of this warrant at the last address of
such holder appearing on the books of the Company, the obligation to
deliver to such holder such shares of stock, securities or assets as,
in accordance with the foregoing provisions, such holder may be
entitled to purchase.
(iii) If the Company takes any other action, or if any other
event occurs, which does not come within the scope of the provisions
of Section 3(B)(i) or (ii), but which should result in an adjustment
in the Warrant Exercise Price and/or the number of shares subject to
this warrant in order to fairly protect the purchase rights of the
holder of this warrant, an appropriate adjustment in such purchase
rights shall be made by the Company.
(iv) Upon each adjustment of the Warrant Exercise Price, the
holder of this warrant shall thereafter be entitled to purchase, at
the Warrant Exercise Price resulting from such adjustment, the number
of shares obtained by multiplying the Warrant Exercise Price in effect
immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Warrant Exercise Price resulting
from such adjustment.
(v) Upon any adjustment of the Warrant Exercise Price, the
Company shall give written notice thereof, by first class mail,
postage prepaid, addressed to the registered holder of this warrant at
the address of such holder
<PAGE>
as shown on the books of the Company, which notice shall state the
Warrant Exercise Price resulting from such adjustment and the increase
or decrease, if any, in the number of shares purchasable at such price
upon the exercise of this warrant, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is
based.
4. This warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Company.
5. The holder of this warrant, by acceptance hereof, agrees to give
written notice to the Company before transferring this warrant or transferring
any shares of the Company's Common Stock issuable or issued upon the exercise of
this warrant of the holder's intention to do so, describing briefly the manner
of any proposed transfer of this warrant or such holder's intention as to the
shares of Common Stock issuable upon the exercise hereof or the intended
disposition to be made of shares of Common Stock upon such exercise. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company. If, in the opinion of such counsel, the proposed
transfer of this warrant or disposition of shares may be effected without
registration or qualification (under any federal or state law) of this warrant
or the shares of Common Stock issuable or issued upon the exercise hereof, the
Company, as promptly as practicable, shall notify such holder of such opinion,
whereupon such holder shall be entitled to transfer this warrant, or to exercise
this warrant in accordance with its terms and dispose of the shares received
upon such exercise or to dispose of shares of Common Stock received upon the
previous exercise of this warrant, all in accordance with the terms of the
notice delivered by such holder to the Company, provided that an appropriate
legend in substantially the form set forth at the end of this warrant respecting
the foregoing restrictions on transfer and disposition may be endorsed on this
warrant or the certificates for such shares.
6. Subject to the provisions of Section 5, this warrant and all
rights hereunder are transferable, in whole or in part, at the principal office
of the Company by the holder hereof in person or by duly authorized attorney,
upon surrender of this warrant properly endorsed to any person or entity who
represents in writing that he/it is acquiring the warrant for investment and
without any view to the sale or other distribution thereof. Each holder of this
warrant, by taking or holding the same, consents and agrees that the bearer of
this warrant, when endorsed, may be treated by the Company and all other persons
dealing with this warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented by this warrant, or to
the transfer hereof on the books of the Company, any notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat
the registered owner hereof as the owner for all purposes.
7. Neither this warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed
<PAGE>
by the party against which enforcement of the change, waiver, discharge or
termination is sought.
8. The Company agrees that each time it shall determine to proceed
with the preparation and filing of a registration statement under the Securities
Act it will use all reasonable efforts to allow the inclusion of the Warrant
Shares in such registration statement; provided, however, that the inclusion of
the Warrant Shares in such registration statement shall be subject to the
approval of the managing underwriter and subject to the good faith determination
of the managing underwriter that the inclusion of such Warrant Shares would not
reduce the number of shares to be offered by the Company nor interfere with the
successful marketing of such shares by the Company.
IN WITNESS WHEREOF, the Company has caused this warrant to be signed
and delivered by a duly authorized officer as of the _____ day of September,
1996.
FIELDWORKS, INCORPORATED
By________________________________
Its____________________________
<PAGE>
RESTRICTION ON TRANSFER
The security evidenced hereby has not been registered under the
Securities Act of 1933 or any state securities laws and may not be sold,
transferred, assigned, offered, pledged or otherwise distributed for value
unless there is an effective registration statement under such act or laws
covering such security or the Company receives an opinion of counsel for the
holder of this security (concurred to by counsel for the Company) stating that
such sale, transfer, assignment, pledge or distribution is exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933
and all applicable state securities laws.
<PAGE>
WARRANT EXERCISE
(To be signed only upon exercise of warrant)
The undersigned, the holder of the foregoing warrant, hereby
irrevocably elects to exercise the purchase right represented by such warrant
for, and to purchase thereunder, ______________________ of the shares of Common
Stock of Fieldworks, Incorporated, to which such warrant relates and herewith
makes payment of $_________________________ therefor in cash or by check or
elects to exercise the Conversion Right as provided in the warrant and requests
that the certificates for such shares be issued in the name of, and be delivered
to ___________________ whose address is set forth below the signature of the
undersigned.
Dated:
[Signature]
[Address]
<PAGE>
WARRANT ASSIGNMENT
(To be signed only upon transfer of warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto __________________________________________________ the purchase
right represented by the foregoing warrant to purchase the shares of Common
Stock of Fieldworks, Incorporated, to which such warrant relates and appoints
attorney to transfer such purchase right on the books of
_______________________________________ with full power of substitution in the
premises.
Dated:
[Signature]
[Name and Address of Transferee]
<PAGE>
EXHIBIT 10.13
FIELDWORKS, INCORPORATED
AMENDMENT
TO
WARRANT
This Amendment to Warrant, dated as of October 15, 1996 (the "Amendment"),
is made by and between FieldWorks, Incorporated, a Minnesota corporation (the
"Company"), and Brightstone Capital, Ltd. ("Brightstone Capital").
WHEREAS, in May and June 1996 Brightstone Fund VI lent the Company an
aggregate of $600,000 (the "Brightstone VI Bridge Loans") and Brightstone Fund
VII lent the Company an aggregate of $940,000 (the "Brightstone VII Bridge
Loans" and, together with the Brightstone VI Bridge Loans, the "Bridge Loans").
WHEREAS, on August 2, 1996, the Company repaid the Bridge Loans in full,
together with all accrued interest thereon.
WHEREAS, in connection with the Bridge Loans, the Company issued to
Brightstone Capital a Warrant, dated as of June 19, 1996, to purchase 15,000
shares of the Company's Common Stock, par value $.001 per share (the "Warrant").
WHEREAS, at the time of the Bridge Loans, the Company was engaged in
preparing for an initial public offering of its Common Stock.
WHEREAS, in August 1996, such public offering was postponed indefinitely,
and the Company has since determined that such public offering is unlikely to be
accomplished during the course of the second half of 1996.
WHEREAS, in light of the postponement of the proposed public offering, the
Company has requested, and Brightstone Capital and certain of its affiliates
have agreed, to extend the due date of other loans made to the Company from May
through September 1996.
WHEREAS, in connection with such postponement, Brightstone Capital and
certain of its affiliates have requested, and the Company has agreed, to adjust
the exercise price under certain warrants issued in connection with such loans,
including the Warrant.
WHEREAS, Section 7 of the Warrant provides that the Warrant and the terms
thereof may be changed only by an instrument in writing.
<PAGE>
NOW, THEREFORE, in consideration of the foregoing, the mutual promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Warrant Exercise Price. The Warrant is hereby amended to
-----------------------------------
provide that the "Warrant Exercise Price," as defined in the Warrant, shall be
Five Dollars ($5.00) per share.
2. Miscellaneous.
-------------
(a) Except as expressly amended hereby, the Warrant are in all
respects ratified and confirmed and all the terms, conditions and
provisions thereof shall remain in full force and effect.
(b) This Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
FIELDWORKS, INCORPORATED
By: ___________________________________________
Gary Beeman, Chief Executive Officer
BRIGHTSTONE CAPITAL, LTD.
By:____________________________________________
Name: ______________________________________
Title: _____________________________________
-2-
<PAGE>
EXHIBIT 10.14
FIELDWORKS, INCORPORATED
AGREEMENT TO EXTEND PROMISSORY NOTES
AND
AMENDMENT TO WARRANTS
This Agreement to Extend Promissory Notes and Amendment to Warrants, dated
as of October 15, 1996 (the "Amendment"), is made by and among FieldWorks,
Incorporated, a Minnesota corporation (the "Company"), Brightstone Fund VI
("Brightstone VI"), Brightstone Fund VII ("Brightstone VII") and Brightstone
Capital, Ltd. ("Brightstone Capital").
WHEREAS, pursuant to the terms of a Bridge Loan Agreement dated as of
September 13, 1996 (the "Brightstone VI Agreement"), Brightstone VI lent the
Company $250,000, in return for which the Company delivered to Brightstone VI a
Promissory Note dated as of September 13, 1996, in the amount of $250,000 (the
"Brightstone VI Note"), and a Warrant, dated as of September 13, 1996, to
purchase shares of the Company's Common Stock, par value $.001 per share (the
"Brightstone VI Warrant").
WHEREAS, pursuant to the terms of a Bridge Loan Agreement dated as of
September 24, 1996 (the "Brightstone VII Agreement" and, together with the
Brightstone VI Agreement, the "Agreements"), Brightstone VII lent the Company
$500,000, in return for which the Company delivered to Brightstone VII a
Promissory Note dated as of September 24, 1996, in the amount of $500,000 (the
"Brightstone VII Note" and, together with the Brightstone VI Note, the "Notes"),
and a Warrant, dated as of September 24, 1996, to purchase shares of the
Company's Common Stock, par value $.001 per share (the "Brightstone VII
Warrant").
WHEREAS, in connection with the Notes, the Company issued to Brightstone
Capital a Warrant, dated as of September 24, 1996, to purchase shares of the
Company's Common Stock, par value $.001 per share (the "Brightstone Capital
Warrant" and, together with the Brightstone VI Warrant and the Brightstone VII
Warrant, the "Warrants").
WHEREAS, at the date of the Agreements, the Notes and the Warrants the
Company had been involved in discussions regarding timing of a proposed initial
public offering that had been postponed indefinitely in August 1996, and
believed that such public offering might be imminent.
WHEREAS, subsequent to such time, the Company learned that such public
offering was unlikely to be accomplished during the course of the second half of
1996.
<PAGE>
WHEREAS, the Agreements and the Notes provide that all outstanding
principal and accrued interest on the Notes shall be due and payable 180 days
from the respective dates thereof, if not prepaid prior to such date in
accordance with the terms of the Agreements and the Notes.
WHEREAS, in light of such information the Company has requested, and
Brightstone VI and Brightstone VII have agreed, to extend the date on which all
outstanding principal and accrued interest on the Notes shall be due and
payable.
WHEREAS, in light of such information, the agreement to extend the due date
of the Notes and the understanding that the Notes will not be repaid within 90
days of their issuance, Brightstone VI, Brightstone VII and Brightstone Capital
have requested, and the Company has agreed, to adjust the exercise price under
the Warrants and to set the final number of shares subject to the Warrants.
WHEREAS, Section 8(a) of each of the Agreements and Section 7 of each of
the Warrants provide that the terms of such instruments may be changed only by
an instrument in writing.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Agreement to Extend. Brightstone VI and Brightstone VII hereby agree
-------------------
to extend the due dates under the Notes to May 1, 1997. Except as expressly set
forth herein, this extension of the Notes shall not alter, affect, release or
prejudice in any way any of the Company's obligations or any of the rights of
Brightstone VI and Brightstone VII under the Notes. By granting the extension
provided in this Amendment, neither of Brightstone VI nor Brightstone VII shall
be deemed to have established a course of conduct on such entity's part upon
which the Company may rely at any time in the future, and the Company, by the
Company's acceptance of the extension provided herein, expressly waives any
right to assert any claim to such effect at any time.
2. Amendment to Warrant Exercise Price. The Warrants are hereby amended
-----------------------------------
to provide that the "Warrant Exercise Price," as defined in the Warrants, shall
be Five Dollars ($5.00) per share.
3. Number of Warrant Shares. The number of "Warrant Shares," as defined
------------------------
in the Warrants, shall be as follows:
(a) The number of Warrant Shares under the Brightstone VI Warrant
shall be be Ten Thousand (10,000).
-2-
<PAGE>
(b) The number of Warrants Shares under the Brightstone VII Warrant
shall be Twenty Thousand (20,000).
(c) The number of Warrants Shares under the Brightstone Capital
Warrant shall be Fifteen Thousand (15,000).
4. Miscellaneous.
-------------
(a) Except as expressly amended hereby, the Agreements, the Notes and
the Warrants are in all respects ratified and confirmed and all the terms,
conditions and provisions thereof shall remain in full force and effect.
(b) This Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement to Extend Promissory Notes and Amendment to Warrants as of the date
first above written.
FIELDWORKS, INCORPORATED
By:_________________________________________
Gary Beeman, Chief Executive Officer
BRIGHTSTONE FUND VI
By:_________________________________________
Name: ___________________________________
Title: __________________________________
BRIGHTSTONE FUND VII
By:_________________________________________
Name: ___________________________________
Title: __________________________________
BRIGHTSTONE CAPITAL, LTD.
By:_________________________________________
Name: ___________________________________
Title: __________________________________
-3-
<PAGE>
EXHIBIT 10.15
FIELDWORKS, INCORPORATED
AGREEMENT TO EXTEND PROMISSORY NOTE
AND
AMENDMENT TO WARRANT
This Agreement to Extend Promissory Note and Amendment to Warrant, dated as
of October 15, 1996 (the "Amendment"), is made by and between FieldWorks,
Incorporated, a Minnesota corporation (the "Company"), and Stephen L. Becher
(the "Investor").
WHEREAS, pursuant to the terms of a Bridge Loan Agreement dated as of July
15, 1996 (the "Agreement"), Investor lent the Company $100,000, in return for
which the Company delivered to Investor a Promissory Note dated July 15, 1996,
in the amount of $100,000 (the "Note") and a Warrant to purchase shares of the
Common Stock, par value $.001 per share, of the Company, dated as of July 15,
1996 (the "Warrant").
WHEREAS, at the time the parties entered into the Agreement and the related
documents, the Company was engaged in preparing for an initial public offering
of its Common Stock.
WHEREAS, in August 1996, such public offering was postponed indefinitely,
and the Company has since determined that such public offering is unlikely to be
accomplished during the course of the second half of 1996.
WHEREAS, the Agreement and the Note provide that all outstanding principal
and accrued interest on the Note shall be due and payable on December 31, 1996.
WHEREAS, in light of the postponement of the proposed public offering, the
Company has requested, and Investor has agreed, that the due date of the Note be
extended from December 31, 1996, to May 1, 1997.
WHEREAS, in light of the postponement of the proposed public offering
Investor has requested, and the Company has agreed, to adjust the exercise price
under the Warrant.
WHEREAS, Section 7 of the Warrant provides that the Warrant and the terms
thereof may be changed only by an instrument in writing.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
1. Agreement to Extend. Investor hereby agrees to extend the due date
-------------------
under the Note to May 1, 1997. Except as expressly set forth herein, this
extension of the Note shall not alter, affect, release or prejudice in any way
any of the Company's obligations or any of Investor's rights under the Note. By
granting the extension provided in this Amendment, Investor shall not be deemed
to have established a course of conduct on Investor's part upon which the
Company may rely at any time in the future, and the Company, by the Company's
acceptance of the extension provided herein, expressly waives any right to
assert any claim to such effect at any time.
2. Amendment to Warrant Exercise Price. The Warrant is hereby amended to
-----------------------------------
provide that the "Warrant Exercise Price," as defined in the Warrant, shall be
Five Dollars ($5.00) per share.
3. Miscellaneous.
-------------
(a) Except as expressly amended hereby, the Note and the Warrant are
in all respects ratified and confirmed and all the terms, conditions and
provisions thereof shall remain in full force and effect.
(b) This Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement to Extend Promissory Note and Amendment to Warrant as of the date
first above written.
FIELDWORKS, INCORPORATED
By:_______________________________________
Gary Beeman, Chief Executive Officer
STEPHEN L. BECHER
By:________________________________________
Name: __________________________________
Title: _________________________________
<PAGE>
EXHIBIT 10.16
FIELDWORKS, INCORPORATED
AMENDMENT
TO
WARRANT
THIS AMENDMENT, dated as of October 15, 1996 (the "Amendment"), is made by
and between FieldWorks, Incorporated, a Minnesota corporation (the "Company"),
and Brightbridge Fund I L.P. (the "Investor").
WHEREAS, pursuant to the terms of a Bridge Loan Agreement dated as of July
15, 1996 (the "Agreement"), Investor lent the Company $500,000, in return for
which the Company delivered to Investor a Promissory Note dated July 15, 1996,
in the amount of $500,000 (the "Note") and a Warrant to purchase shares of the
Common Stock, par value $.001 per share, of the Company, dated as of July 15,
1996 (the "Warrant").
WHEREAS, at the time the parties entered into the Agreement and the related
documents, the Company was engaged in preparing for an initial public offering
of its Common Stock.
WHEREAS, in August 1996, such public offering was postponed indefinitely.
WHEREAS, in connection with such postponement, the due date of the Note was
extended from December 31, 1996, to May 1, 1997, by an amendment, dated as of
August 2, 1996, to the Agreement and the Note.
WHEREAS, in light of the postponement of the proposed public offering and
the agreement to extend the due date of the Note Investor has requested, and the
Company has agreed, to adjust the exercise price under the Warrant.
WHEREAS, Section 7 of the Warrant provides that the Warrant and the terms
thereof may be changed only by an instrument in writing.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
1. Amendment to Warrant Exercise Price. The Warrant is hereby amended to
-----------------------------------
provide that the "Warrant Exercise Price," as defined in the Warrant, shall be
Five Dollars ($5.00) per share.
2. Miscellaneous.
-------------
(a) Except as expressly amended hereby, the Warrant is in all
respects ratified and confirmed and all the terms, conditions and
provisions thereof shall remain in full force and effect.
(b) This Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
FIELDWORKS, INCORPORATED
By:_______________________________________
Gary Beeman, Chief Executive Officer
BRIGHTBRIDGE FUND I L.P.
By:_______________________________________
Name: _________________________________
Title: ________________________________
<PAGE>
EXHIBIT 10.17
BRIDGE LOAN AGREEMENT
NO. ____
THIS BRIDGE LOAN AGREEMENT (this "Agreement") is dated as of ___________,
1996, by and between Fieldworks, Incorporated, a Minnesota corporation (the
"Company"), and _____________________ (the "Investor").
RECITALS:
(a) Whereas, the Company needs cash to fund its operations until
such time as it can complete a debt or equity financing; and
(b) Whereas, the Investor desires to lend funds to the Company
on the terms and conditions set forth in this Agreement; and
(c) Whereas, other investors ("Other Investors") may lend funds
to the Company on terms and conditions equivalent to those set forth
in this Agreement.
Accordingly, in consideration of the foregoing, the mutual promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Loan/Promissory Note. The Investor agrees to lend to the Company
--------------------
$__________ and the Company agrees to deliver to the Investor a subordinated
promissory note, in the form attached hereto as Exhibit A (the "Note" and,
---------
together with any similar notes issued to Other Investors, the "Notes"), in a
like amount. The delivery of the Note shall be made concurrently with delivery
of funds to the Company in the amount set forth above. Up to 20% of the
original principal amount of the Note shall be convertible into shares of Common
Stock (the "Conversion Shares") at Investor's option, as more fully described in
the Note.
2. Warrants. In consideration of the loan, the Company shall issue
--------
to the Investor, concurrently with delivery of the Note, a warrant, in the form
attached hereto as Exhibit B (the "Warrant" and, together with any similar
---------
warrants issued to Other Investors, the "Warrants"), to purchase 2,500 shares of
Common Stock of the Company for each $50,000 loaned to the Company. For
incremental amounts loaned over $50,000, the Warrant shall cover that number of
shares of Common Stock obtained by multiplying 2,500 by a fraction, the
numerator of which is the incremental amount loaned and the denominator of which
is 50,000. The shares of Common Stock issuable upon exercise of the Warrant are
referred to hereinafter as the "Warrant Shares."
3. Repayment. All outstanding principal and accrued interest on the
---------
Note shall be due and payable on June 30, 1997; provided, however, that the
-------- -------
Company may extend the final maturity of the Note to December 31, 1997, by
written
<PAGE>
notice delivered to the Investor at any time before June 30, 1997; provided,
--------
further, that notwithstanding the foregoing, the Note shall be payable in full
- -------
within thirty (30) days after the effective date (the "Effective Date") of any
registration statement (a "Registration Statement") relating to an initial
public offering of the Company's equity securities registered under the
Securities Act of 1933, as amended (the "Securities Act"). The Note may not be
prepaid except in the event a Registration Statement is filed and declared
effective, as described above.
4. Restrictions on Transfer. The Note, the Warrant, the Warrant Shares
------------------------
and the Conversion Shares shall be subject to certain restrictions on transfer
identified in the Note and the Warrant.
5. Representations and Warranties of the Company. The Company represents
---------------------------------------------
and warrants to the Investor as follows:
(a) That this Agreement has been duly authorized by all necessary
corporate action on behalf of the Company, has been duly executed and
delivered by an authorized officer of the Company, and is a valid and
binding agreement on the part of the Company;
(b) That all corporate action necessary to the authorization,
issuance, and delivery of the Note, the Warrant, the Warrant Shares and the
Conversion Shares (collectively, a "Unit") has been taken on or prior to
the date hereof; and
(c) That, as of the date hereof, this Agreement, the Note, the Warrant
and the Company's Confidential Private Placement Memorandum dated December
4, 1996 (together with all exhibits thereto and documents delivered
therewith, the "Memorandum"), taken as a whole, do not contain an untrue
statement of a material fact or omit to state a material fact required in
light of the circumstances under which such statements were made to be
stated in such documents to make the statements in such documents, taken as
a whole, not misleading.
6. Representations and Warranties of the Investor. The Investor
----------------------------------------------
represents and warrants to the Company as follows:
(a) The Investor has received, carefully reviewed and is familiar
with the Memorandum;
(b) That the Investor is in a financial position to hold the Units
for an indefinite period of time and is able to bear the economic risk and
withstand a complete loss of the Investor's investment in the Units;
-2-
<PAGE>
(c) That the Investor believes the Investor, either alone or
with the assistance of the Investor's own professional advisor, has
such knowledge and experience in financial and business matters that
the Investor is capable of reading and interpreting financial
statements and evaluating the merits and risks of the prospective
investment in the Units and has the net worth to undertake such risks;
(d) That the Investor has obtained, to the extent the Investor
deems necessary, the Investor's own personal professional advice with
respect to the risks inherent in the investment in the Units and the
suitability of an investment in the Units in light of the Investor's
financial condition and investment needs;
(e) That the Investor believes that the investment in the Units
is suitable for the Investor based upon the Investor's investment
objectives and financial needs, and the Investor has adequate means
for providing for the Investor's current financial needs and personal
contingencies and has no need for liquidity of investment with respect
to the Units;
(f) That the Investor has been given access to full and complete
information regarding the Company and has utilized such access to the
Investor's satisfaction for the purpose of obtaining information and,
particularly, the Investor has either attended or been given
reasonable opportunity to attend a meeting with representatives of the
Company for the purpose of asking questions of, and receiving answers
from, such representatives concerning the Company and to obtain any
additional information, to the extent reasonably available, necessary
to verify the accuracy of information provided to the Investor;
(g) That the Investor recognizes that an investment in the Units
involves a high degree of risk, including, but not limited to, the
risk of economic losses from operations of the Company;
(h) That the Investor recognizes that in addition to the proceeds
from the sale of Units, the Company will require additional financing
to fund current and proposed operations, and there can be no
assurances that additional financing can be obtained;
(i) That the Investor realizes that (i) the purchase of the
Units is a long-term investment; (ii) the purchaser of the Units must
bear the economic risk of investment for an indefinite period of time
because the Notes, the Warrant, the Warrant Shares and the Conversion
Shares have not been registered under the Securities Act or under the
securities laws of any state and, therefore, none of such securities
can be sold unless they are
-3-
<PAGE>
subsequently registered under said laws or exemptions from such
registrations are available; (iii) the Investor may not be able to
liquidate the Investor's investment in the event of an emergency or
pledge any of such securities as collateral for loans; and (iv) the
transferability of such securities is restricted and (A) requires the
written consent of the Company, and (B) legends will be placed on the
Notes and the Warrant and on any certificates representing the Warrant
Shares and the Conversion Shares referring to the applicable
restrictions on transferability.
(j) That the Investor certifies, under penalties of perjury,
that the Investor is NOT subject to the backup withholding provisions
of Section 3406(a)(i)(C) of the Internal Revenue Code of 1986, as
amended (Note: You are subject to backup withholding if (i) you fail
to furnish your Social Security number or taxpayer identification
number herein; (ii) the Internal Revenue Service notifies the Company
that you furnished an incorrect Social Security number or taxpayer
identification number; (iii) you are notified that you are subject to
backup withholding; or (iv) you fail to certify that you are not
subject to backup withholding or you fail to certify your Social
Security number or taxpayer identification number); and
(k) That the Investor is a bona fide resident of, is domiciled
in, and received the offer and made the decision to invest in the
Units in, the state set forth on the signature page below under
"Addresses" and that the Units are being purchased by the Investor in
the Investor's name solely for the Investor's own beneficial interest
and not as nominee for, or on behalf of, or for the beneficial
interest of, or with the intention to transfer to, any other person,
trust or organization.
7. Accredited Investor. The Investor represents and warrants that
-------------------
the Investor is an "accredited investor" as defined in Rule 501(a) of Regulation
D of the Securities Act, because the Investor meets at least one of the
following criteria (please check one or more, as applicable):
[_] (a) The Investor is a natural person whose individual net worth, or
joint net worth with his or her spouse, exceeds $1,000,000 at the
time of the Investor's purchase; or
[_] (b) The Investor is a natural person who had an individual income in
excess of $200,000 in each of the two most recent years (1994 and
1995) or joint income with the Investor's spouse in excess of
$300,000 in each of those years and who reasonably expects to
reach the same income level in the current year (1996); or
-4-
<PAGE>
[_] (c) The Investor is a corporation, Massachusetts or similar business
trust, partnership or an organization described in Section
501(c)(3) of the Internal Revenue Code, not formed for the
specified purpose of acquiring the Units, with total assets in
excess of $5,000,000; or
[_] (d) The Investor is (i) a bank as defined in Section 3(a)(2) of the
Securities Act, or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities
Act whether acting in its individual or fiduciary capacity, (ii)
a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended, (iii) an insurance
company as defined in Section 2(13) of the Securities Act, (iv)
an investment company registered under the Investment Company Act
of 1940, as amended, or a business development company as defined
in Section 2(a)(48) of such Act, (v) a Small Business Investment
Company licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of
1958, as amended, (vi) a plan established or maintained by a
state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess
of $5,000,000, or (vii) an employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974,
as amended, if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such Act, which plan
fiduciary is either a bank, savings and loan association,
insurance company or registered investment advisor, or if the
employee benefit plan has total assets in excess of $5,000,000
or, if a self directed plan, with investment decisions made
solely by persons who are accredited investors; or
[_] (e) The Investor is a private business development company as defined
in Section 202(a)(22) of the Investment Advisors Act of 1940, as
amended; or
[_] (f) The Investor is a director, executive officer or general partner
of the Company, or a director, executive officer or general
partner of a general partner of the Company; or
[_] (g) The Investor is a trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
Units, whose purchase is directed by a sophisticated person as
described in Rule 506(b)(2)(ii) of Regulation D of the Securities
Act (IF ONLY THIS RESPONSE IS CHECKED, please contact the Company
to receive and complete an
-5-
<PAGE>
information statement before this subscription can be considered
by the Company); or
[_] (h) The Investor is any entity in which all of the equity owners are
accredited investors. (NOTE: Not available with respect to an
irrevocable trust.)
If this purchase is made on behalf of any entity other than a natural person,
Investor certifies that (i) the entity was not formed for the purpose of making
this investment, (ii) the undersigned is empowered and duly authorized by the
entity to execute and carry out the terms of this Agreement and to purchase and
hold the Units, and (iii) this Agreement has been duly and validly executed on
behalf of the entity and constitutes a legal and binding obligation of the
entity.
8. Relationship to Brokerage Firms. Please answer the following
-------------------------------
questions by checking the appropriate response:
(a) ____ YES ____ NO: Is the Investor a director, officer, partner, branch
manager, registered representative, employee, shareholder of, or similarly
related to or employed by, a brokerage firm? (IF YES, please contact the
Company to provide additional information before your subscription can be
considered.)
(b) ____ YES ____ NO: Is the Investor's spouse, father, mother, father-in-
law, mother-in-law, or any of the Investor's brothers, sisters, brothers-in-law,
sisters-in-law or children, or any relative which the Investor supports, a
director, officer, partner, branch manager, registered representative, employee,
shareholder of, or similarly related to or engaged by, a brokerage firm? (IF
YES, please contact the Company to provide additional information before your
subscription can be considered.)
(c) ____ YES ____ NO: Does the Investor own voting securities of any
brokerage firm? (IF YES, please contact the Company to provide additional
information before your subscription can be considered.)
(d) ____ YES ____ NO: If the Investor is an entity, is any director,
officer, partner or 5% owner of the Investor also a director, officer, partner,
branch manager, registered representative, employee, shareholder of, or
similarly related to or employed by, a brokerage firm? (IF YES, please contact
the Company to provide additional information before your subscription can be
considered.)
9. Registration Rights.
-------------------
(a) Each time the Company shall determine to proceed with the actual
preparation and filing of a registration statement under the Securities
-6-
<PAGE>
Act in connection with the proposed offer and sale for money of any of its
securities by it, the Company will give written notice of its determination
to Investor. Upon the written request of Investor given within 30 days
after the date of mailing of any such notice from the Company, the Company
will, except as herein provided, cause all the Warrant Shares and
Conversion Shares issued and to be issued upon exercise of the Warrants and
conversion of the Notes requested by such holders to be registered, to be
included in such registration statement, all to the extent requisite to
permit the sale or other disposition by Investor of the shares to be so
registered; provided, however, that nothing herein shall prevent the
Company from, at any time, abandoning or delaying any such registration
initiated by it. If any such registration shall be underwritten in whole or
in part, the Company may require that the shares requested for inclusion by
Investor pursuant to this paragraph (a) be included in the underwriting on
the same terms and conditions as the securities otherwise being sold
through the underwriters. If in the good faith judgment of the managing
underwriter of such public offering the inclusion of all of the shares
originally covered by a request for registration made by Investor would
reduce the number of shares to be offered by the Company or interfere with
the successful marketing of the shares of stock offered by the Company, the
number of shares owned by Investor and otherwise to be included in the
underwritten public offering may be reduced; provided, however, that any
such required reduction shall be pro rata among all persons (other than the
Company) who are participating in such offering. Those shares which are
thus excluded from such underwritten public offering shall be withheld from
the market by Investor for a period, not to exceed 90 days, which the
managing underwriter reasonably determines is necessary in order to effect
the underwritten public offering.
(b) Further, on a one-time basis only, after the first anniversary of
the Effective Date, upon request by the holders of a majority in interest
of the Warrants, Warrant Shares and Conversion Shares held by Investor and
the Other Investors, the Company will promptly take all necessary steps to
register or qualify on Form S-3 (or any successor form thereto) under the
Securities Act and the securities laws of such states as the holders may
reasonably request (provided, that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify
to do business as a foreign corporation in any jurisdiction wherein it is
not so qualified), the Warrant Shares and Conversion Shares issued and to
be issued upon exercise of the Warrants and conversion of the Notes
requested by such holders to be registered or qualified in their request to
the Company. The Company shall keep effective and maintain any
registration, qualification, notification or approval specified in this
paragraph (b) for nine months to provide such holders time to dispose
thereof and from time to time shall
-7-
<PAGE>
amend or supplement the prospectus used in connection therewith to the
extent necessary in order to comply with applicable law.
(c) With respect to each inclusion of securities in a registration
statement pursuant to this Section 9, the Company shall bear the following
fees, costs and expenses: all registration, filing and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for the
Company, fees and disbursements of counsel for the underwriter or
underwriters of such securities (if the Company is required to bear such
fees and disbursements), all internal expenses, the premiums and other
costs of policies of insurance against liability arising out of the public
offering, and legal fees and disbursements and other expenses of complying
with state securities laws of any jurisdictions in which the securities to
be offered are to be registered or qualified. Fees and disbursements of
special counsel and accountants for the selling holders, underwriting
discounts and commissions, and transfer taxes for selling holders and any
other expenses relating to the sale of securities by the selling holders
not expressly included above shall be borne by the selling holders.
(d) The Company shall indemnify each Investor, its officers and
directors and each person, if any, who controls such Investor within the
meaning of Section 15 of the Securities Act against all losses, claims,
damages, and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in the registration statement or
prospectus (and as amended or supplemented) relating to such registration,
or caused by any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they are made,
unless such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company expressly
for use therein by such Investor.
(e) The Investor shall indemnify the Company, its officers and
directors and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act against all losses, claims,
damages, and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in the registration statement or
prospectus (and as amended or supplemented) relating to such registration,
or caused by any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they are made,
provided that this paragraph (e) shall apply only to statements or
--------
omissions made in reliance upon and in conformity with information
furnished in writing to the Company expressly for use therein by the
Investor.
-8-
<PAGE>
(f) The Investor hereby represents that, notwithstanding the exercise
of the Warrant or the conversion of the Note by such Investor, the Investor
will not offer for sale, sell, distribute, or otherwise dispose of any
Warrant Shares or Conversion Shares, or any other Common Stock of the
Company held by the Investor, for a period of 180 days after the Effective
Date, except (i) with the consent of the managing underwriter or
underwriters in such initial public offering, (ii) pursuant to a will or
the laws of descent and distribution, or (iii) by gift or liquidation of a
pledge pursuant to which the donee or pledgee agrees in writing to be bound
by the same restriction on transferability.
10. Repayment of Certain Promissory Notes.
-------------------------------------
(a) The Company currently has an aggregate of $1,250,000 of promissory
notes outstanding to various "affiliates" of the Company (the "Affiliate
Notes"), all of which Affiliate Notes are due and payable May 1, 1997. The
Company hereby covenants and agrees that the Company will only repay the
Affiliates Notes using the proceeds of an initial public offering of the
Company's equity securities registered under the Securities Act.
(b) The holders of a majority in interest of the Notes held by
Investor and the Other Investors may modify, amend or waive the Company's
performance of the covenant contained in this Section 10.
11. Other.
-----
(a) This Agreement and the rights and obligations of the parties
hereunder shall not be assignable, in whole or in part, by any party
without the prior written consent of the other party, and neither this
Agreement nor any provision hereof may be amended, modified, waived or
discharged without the written consent of the party against whom
enforcement of such amendment, modification, waiver, or discharge is
sought, except that the covenant contained in Section 10(a) above may be
modified, amended or waived as provided in Section 10(b) above.
(b) This Agreement, including the exhibits attached hereto,
constitutes the entire agreement of the parties relative to the subject
matter hereof and supersedes any and all other agreements and
understandings, whether written or oral, relative to the matters discussed
herein.
(c) This Agreement shall be construed and enforced in accordance with
the laws of the State of Minnesota, except for its rules relating to
conflicts of law.
-9-
<PAGE>
(d) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(e) This Agreement shall be binding on the Company, and the Company
shall be deemed to have accepted the subscription for the Units hereunder,
only upon execution of this Agreement by the Company.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date set forth above.
INVESTOR: FIELDWORKS, INCORPORATED
_______________________________ By ___________________________
Its __________________________________________________________________________
__________________________________
(If more than one Investor)
-10-
<PAGE>
- --------------------------------------------------------------------------------
INVESTOR INFORMATION
- --------------------------------------------------------------------------------
Name (Typed or Printed)
_________________________________________________________________________
_________________________________________________________________________
(If more than one Investor) (Please indicate JTWROS or TIC)
________________________________________________________________________________
Addresses
(i) Address of Investor's Domicile and Bona Fide Residence:
___________________________________________________________________
Street
___________________________________________________________________
City, State and Zip Code
(ii) Address to Which Correspondence Should be Directed (if different
from above):
_________________________________________________
Street
_________________________________________________
City, State and Zip Code
________________________________________________________________________________
Social Security or Tax ID Number (Both if grantor trust or partnership):_____
_____________________________________________________________________________
________________________________________________________________________________
Telephone Number: ____________________
- --------------------------------------------------------------------------------
-11-
<PAGE>
EXHIBIT 10.18
SUBORDINATED PROMISSORY NOTE
----------------------------
THIS NOTE IS SUBJECT TO THE RESTRICTIONS ON TRANSFER
SET FORTH AT THE BOTTOM OF THE LAST PAGE HEREOF
$_____________ Minneapolis, Minnesota
__________, 1996
FOR VALUE RECEIVED, the undersigned, Fieldworks, Incorporated (the
"Company"), promises to pay to the order of ______________, or its permitted
successors and assigns (the "Holder"), at Holder's address set forth in the
Bridge Agreement (as defined below), or such other place as Holder may designate
in writing from time to time, the principal sum of _______________________
($________), in lawful money of the United States, together with simple interest
from the date hereof on the unpaid principal balance outstanding from time to
time at the rate of ten percent (10%) per year (calculated on the basis of the
actual number of days elapsed and a 360-day year). All outstanding principal
and accrued interest on this Note shall be due and payable on June 30, 1997,
unless the Company extends such due date in accordance with Section 3 below;
provided, however, that notwithstanding the foregoing, this Note shall be
- -------- -------
payable in full within thirty (30) days after the effective date (the "Effective
Date") of any registration statement (a "Registration Statement") relating to an
initial public offering of the Company's equity securities registered under the
Securities Act of 1933, as amended (the "Securities Act").
1. Bridge Loan Agreement. This Note has been issued pursuant to and is
---------------------
subject to the terms and provisions of the Bridge Loan Agreement (the "Bridge
Agreement"), dated as of ________, 1996, between the Company and Holder, and
this Note and Holder are entitled to all the benefits provided for in the Bridge
Agreement. The provisions of the Bridge Agreement are incorporated herein by
reference with the same force and effect as if fully set forth herein.
2. Prepayment. This Note may not be prepaid except in the event a
----------
Registration Statement is filed and declared effective, as provided above.
3. Extension. The Company may extend the final maturity of this Note to
---------
December 31, 1997, by written notice delivered to Holder at any time before June
30, 1997.
4. Notification of Public Offering. The Company shall notify Holder of
-------------------------------
the effectiveness of any Registration Statement within five (5) days after the
Effective Date of such Registration Statement. Such notice shall be accompanied
by notification that this Note will be paid in full within thirty (30) days
after the Effective Date.
<PAGE>
5. Conversion of Note. At any time from the Effective Date to the date
------------------
(30) days after the Effective Date, Holder may elect to convert up to twenty
percent (20%) of the principal amount of this Note ($_______) into shares of the
Company's Common Stock, par value $.001 per share. Such conversion right shall
be exercised by providing the Company with a written notice in substantially the
form attached hereto specifying the amount of principal that Holder wishes to
convert into shares of Common Stock. The number of shares of Common Stock
issuable upon such conversion (the "Conversion Shares") shall be determined by
dividing the principal amount to be converted by 80% of the price to public per
share of the Common Stock sold pursuant to the Registration Statement.
6. Subordination. The indebtedness evidenced by this Note is and shall
-------------
remain subordinate in right of payment to all Senior Debt to the extent and in
the manner hereinafter set forth. "Senior Debt" shall mean the principal and
interest on indebtedness of the Company to financial institutions or
institutional lenders for borrowed money (other than the indebtedness evidenced
by this Note and all notes issued to Other Investors (as defined in the Bridge
Agreement)), and for purchase money loans secured by real estate or personal
property used in connection with the business of the Company, whether created,
incurred or assumed before or after the date hereof, except such as by its terms
is expressly not superior in right of payment to this Note, and renewals,
extensions and refundings of any such indebtedness; provided, however, that
-------- -------
"Senior Debt" shall in no event include any indebtedness of the Company to
"affiliates" of the Company, as such term is defined under the Securities Act
and the rules and regulations thereunder. The subordination provisions
contained in this Section 6 are expressly and only for the benefit of third
party senior creditors of the Company and shall in no way limit the rights or
remedies of Holder against the Company, including without limitation the time at
which or the method with which Holder may proceed against the Company for any
default.
No payment of principal or interest on this Note shall be made if the
Company is in default, or such payment would result in a default, with respect
to the payment of moneys on any Senior Debt. For purposes of this paragraph,
default with respect to payment of any Senior Debt shall refer to failure of the
Company to pay in full when due the principal of or interest or premium on any
such Senior Debt, or any portion thereof, according to its terms. Upon any
distribution of assets of the Company, upon dissolution, winding up, liquidation
or reorganization of the Company, whether in bankruptcy, insolvency or
receivership proceedings, or upon an assignment for the benefit of creditors, or
any other marshalling of the assets and liabilities of the Company, or
otherwise, Senior Debt shall first be paid in full, or provision made for such
payment in cash, before any payment is made on account of the principal of and
interest on this Note. In such events, upon payment in full of all Senior Debt,
Holder shall be subrogated ratably to all rights of such Senior Debtors to
receive payments or distributions of the assets of the Company applicable
-2-
<PAGE>
to such Senior Debt until the principal of and interest on this Note shall be
paid in full.
Notwithstanding the foregoing, payment of principal and interest on this
Note shall not be subordinated to the prior payment of such Senior Debt as to
all amounts which actually are paid by the Company under this Note if the
Company is not in default under any or all of said Senior Debt at the time or
times such payment or payments are made.
7. Default. "Default" means any event which is, or after notice or
-------
passage of time, or both, would be, an Event of Default. An "Event of Default"
occurs if:
(a) the Company defaults in the payment of interest on any of the
Notes (as such term in defined in the Bridge Agreement) when the same
becomes due and payable, and such default continues for a period of 30
days;
(b) the Company defaults in the payment of the principal of any of
the Notes when the same becomes due and payable, at maturity or otherwise;
or
(c) the Company defaults in the payment of interest or principal on
any Senior Debt and such Senior Debt shall, as a result thereof, have been
accelerated (or comparable event shall have occurred) so that the same
shall have become due and payable prior to the date on which the same would
otherwise have become due and payable and such acceleration has been in
effect without rescission or annulment for a period of 30 days; provided,
however, that if such default in the payment of interest or principal on
any Senior Debt shall be remedied or cured by the Company or waived by the
holders of such Senior Debt, or if such acceleration shall have been
rescinded or annulled by the holders of such Senior Debt, then, unless this
Note shall have been accelerated as provided in this Note, the Event of
Default hereunder by reason thereof shall be deemed likewise to have been
thereupon remedied, cured or waived without further action upon the part of
the Holder.
If an Event of Default occurs and is continuing, the principal of and
interest on all the Notes shall become and be immediately due and payable
without any declaration or other act on the part of Holder or any of the Other
Investors (as such term is defined in the Bridge Agreement).
Holder may waive an existing Default or Event of Default and its
consequences. When a Default or Event of Default is waived, it is cured and
ceases.
8. Expenses of Enforcement. The Company agrees to reimburse Holder upon
-----------------------
demand for all reasonable out-of-pocket expenses, including reasonable
-3-
<PAGE>
attorneys' fees, in connection with Holder's enforcement of the Company's
obligations hereunder.
9. Investment Intent. Other than pursuant to registration under federal
-----------------
and any applicable state securities laws or an exemption from such registration,
this Note and the Conversion Shares may not be sold, pledged, assigned or
otherwise disposed of (whether voluntarily or involuntarily) by Holder unless
the Company receives from the transferee such representations and agreements as
the Company may determine in its sole discretion to be necessary and appropriate
to permit such transfer to be made pursuant to exemptions from registration
under federal and applicable state securities laws. Each certificate
representing this Note or any Conversion Shares shall bear appropriate legends
setting forth these restrictions on transfer. Holder, by acceptance hereof,
agrees to give written notice to the Company at least thirty-five (35) days
before any proposed transfer of this Note or any Conversion Shares describing
briefly the manner of any proposed transfer. Within thirty (30) days after
receiving such written notice, the Company shall notify Holder as to whether
such transfer may be effected and of the conditions to any such transfer, and
Holder shall abide by such instructions and conditions as to which Holder was
notified by the Company.
10. Conversion Shares.
-----------------
(a) The Company covenants and agrees that all Conversion Shares that
may be issued upon the conversion of amounts of principal pursuant to
Section 5 shall, upon issuance, be duly authorized and issued, fully paid
and nonassessable shares. The Company further covenants and agrees that
during the period within which such conversion right may be exercised, the
Company will at all times have authorized, and reserved for the purpose of
issue or transfer upon exercise of the conversion right, a sufficient
number of shares of its Common Stock to provide for the exercise of the
conversion right.
(b) Section 9 of the Bridge Agreement contains certain registration
rights applicable to the Conversion Shares.
11. No Rights As A Shareholder. The conversion right contained in this
--------------------------
Note shall not entitle Holder to any voting rights or other rights as a
shareholder of the Company.
12. Notices. All demands and notices to be given hereunder shall be
-------
delivered or sent by certified mail, return receipt requested; in the case of
the Company, addressed to its corporate headquarters, 9961 Valley View Road,
Eden Prairie, Minnesota 55344, and in the case of Holder, addressed to the
address written above, in either case, until a new address shall have been
substituted by like notice.
-4-
<PAGE>
13. Amendment. Neither this Note nor any term hereof may be changed,
---------
waived, discharged or terminated orally but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
IN WITNESS WHEREOF, the Company has caused this Note to be executed on its
behalf by its duly authorized officer on the day and year first above written.
FIELDWORKS, INCORPORATED
By ___________________________
Its ________________________
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS. THIS NOTE HAS BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE LAWS OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE LAWS, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
CORPORATION WHOSE AUTHORIZED OFFICER HAS SIGNED THIS NOTE ABOVE.
-5-
<PAGE>
NOTE CONVERSION NOTICE
(To be signed only upon conversion of principal amount)
The undersigned, the holder of the foregoing Note, hereby irrevocably
elects to exercise the conversion right contained in Section 5 of such Note as
to $___________ of the principal amount of such Note (which amount may not
exceed 20% of the original principal of such Note), and requests that the
certificates for the Conversion Shares issuable pursuant to such conversion be
issued in the name of, and be delivered to ___________________ whose address is
set forth below the signature of the undersigned.
Dated:
[Signature]
[Address]
-6-
<PAGE>
EXHIBIT 10.19
WARRANT
FOR
SHARES OF COMMON STOCK
OF
FIELDWORKS, INCORPORATED
FOR VALUE RECEIVED, ____________ or its successors or assigns ("Holder"),
is hereby entitled to subscribe for and purchase from Fieldworks, Incorporated,
a Minnesota corporation (the "Company"), up to _________ fully paid and
nonassessable shares (the "Warrant Shares") of the Company's Common Stock, par
value $.001 per share (the "Common Stock"), or such greater or lesser number of
such shares as may be determined by application of the anti-dilution provisions
of this warrant, at an exercise price per share equal to 80% of the price to
public of a share of Common Stock sold in the initial public offering of the
Common Stock; provided, however, that in the event the Company has not completed
-----------------
an initial public offering prior to December 31, 1997, then the exercise price
shall be $6.40 per share (the "Warrant Exercise Price").
This warrant may be exercised by Investor at any time prior to five years
from the date hereof and after the earlier to occur of (i) the date on which
initial public offering of the Company's Common Stock is declared effective or
(ii) December 31, 1997.
This warrant is subject to the following provisions, terms and conditions:
1. (a) The rights represented by this warrant may be exercised by the
holder hereof, in whole or in part, by written notice of exercise substantially
in the form attached hereto delivered to the Company at least twenty (20) days
prior to the intended date of exercise and by the surrender of this warrant
(properly endorsed if required) at the principal office of the Company and upon
Holder's payment to the Company by cash, certified check or bank draft of the
purchase price for such shares or by exercise of the Conversion Right as
provided in (b) below. The Warrant Shares so purchased shall be deemed to be
issued as of the close of business on the date on which this warrant has been
exercised by payment to the Company of the Warrant Exercise Price, unless the
Conversion Right has been exercised. Certificates for the shares of stock so
purchased, bearing the restrictive legend set forth at the end of this warrant,
shall be delivered to the holder within fifteen (15) days after the rights
represented by this warrant shall have been so exercised, and, unless this
warrant has expired, a new warrant representing the number of Warrant Shares, if
any, with respect to which this warrant has not been exercised shall also be
delivered to the holder hereof within such time. No fractional shares shall be
issued upon the exercise of this warrant.
<PAGE>
(b) In lieu of payment, the rights represented by this warrant may
also be exercised by a written notice of exercise specifying that the Investor
wishes to convert all of this warrant (the "Conversion Right") into that number
of shares of Common Stock as follows: the number of shares of Common Stock equal
to the quotient obtained by dividing (x) the value of the shares subject to the
warrant (determined by subtracting the aggregate warrant exercise price in
effect immediately prior to the exercise of the Conversion Right from the
aggregate fair market value of the shares of Common Stock issuable upon exercise
of this warrant immediately prior to the exercise of the Conversion Right) by
(y) the fair market value of one share of Common Stock immediately prior to the
exercise of the Conversion Right. For purposes of this section 1(b), the fair
market value of a share of Common Stock as of a particular date (the
"Determination Date") shall mean:
(i) If the Company's Common Stock is traded on an exchange or is
quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") National Market System, then the closing or last sale
price, respectively, reported for the business day immediately preceding
the Determination Date.
(ii) If the Company's Common Stock is not traded on an exchange
or on the NASDAQ National Market System but is quoted on NASDAQ, then the
mean of the closing bid and asked prices reported for the business day
immediately preceding the Determination Date.
2. The Company covenants and agrees that all Warrant Shares that may be
issued upon the exercise of the rights represented by this warrant shall, upon
issuance, be duly authorized and issued, fully paid and nonassessable shares.
The Company further covenants and agrees that during the period within which the
rights represented by this warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this warrant, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this warrant.
3. The Warrant Exercise Price and the number of Warrant Shares shall be
subject to adjustment from time to time as provided in this Section 3.
(a) If the Company at any time divides the outstanding shares of its
Common Stock into a greater number of shares (whether pursuant to a stock split,
stock dividend or otherwise), and conversely, if the outstanding shares of its
Common Stock are combined into a smaller number of shares, the Warrant Exercise
Price in effect immediately prior to such division or combination shall be
proportionately adjusted to reflect the reduction or increase in the value of
each such share.
-2-
<PAGE>
(b) If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of the Company's Common
Stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for such shares, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, the holder of this warrant
shall have the right to purchase and receive upon the basis and upon the terms
and conditions specified in this warrant and in lieu of the shares of the Common
Stock of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, such shares of stock, other
securities or assets as would have been issued or delivered to the holder of
this warrant if it had exercised this warrant and had received such shares of
Common Stock prior to such reorganization, reclassification, consolidation,
merger or sale. The Company shall not effect any such consolidation, merger or
sale, unless prior to the consummation thereof the successor corporation (if
other than the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument executed
and mailed to the registered holder of this warrant at the last address of such
holder appearing on the books of the Company, the obligation to deliver to such
holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to purchase.
(c) If the Company takes any other action, or if any other event
occurs, which does not come within the scope of the provisions of Section 3(a)
or (b), but which should result in an adjustment in the Warrant Exercise Price
and/or the number of shares subject to this warrant in order to fairly protect
the purchase rights of the holder of this warrant, an appropriate adjustment in
such purchase rights shall be made by the Company.
(d) Upon each adjustment of the Warrant Exercise Price, Holder shall
thereafter be entitled to purchase, at the Warrant Exercise Price resulting from
such adjustment, the number of shares obtained by multiplying the Warrant
Exercise Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Warrant Exercise Price resulting from such
adjustment.
(e) Upon any adjustment of the Warrant Exercise Price, the Company
shall give written notice thereof, by first class mail, postage prepaid,
addressed to the registered holder of this warrant at the address of such holder
as shown on the books of the Company, which notice shall state the Warrant
Exercise Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares purchasable at such price upon the exercise of this
warrant, setting
-3-
<PAGE>
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based.
4. This warrant shall not entitle the holder hereof to any voting rights
or other rights as a shareholder of the Company.
5. The holder of this warrant, by acceptance hereof, agrees to give
written notice to the Company before transferring this warrant or transferring
any shares of the Company's Common Stock issuable or issued upon the exercise of
this warrant of the holder's intention to do so, describing briefly the manner
of any proposed transfer of this warrant or such holder's intention as to the
shares of Common Stock issuable upon the exercise hereof or the intended
disposition to be made of shares of Common Stock upon such exercise. Promptly
upon receiving such written notice, the Company shall present copies thereof to
counsel for the Company. If, in the opinion of such counsel, the proposed
transfer of this warrant or disposition of shares may be effected without
registration or qualification (under any federal or state law) of this warrant
or the shares of Common Stock issuable or issued upon the exercise hereof, the
Company, as promptly as practicable, shall notify such holder of such opinion,
whereupon such holder shall be entitled to transfer this warrant, or to exercise
this warrant in accordance with its terms and dispose of the shares received
upon such exercise or to dispose of shares of Common Stock received upon the
previous exercise of this warrant, all in accordance with the terms of the
notice delivered by such holder to the Company, provided that an appropriate
legend in substantially the form set forth at the end of this warrant respecting
the foregoing restrictions on transfer and disposition may be endorsed on this
warrant or the certificates for such shares.
6. Subject to the provisions of Section 5, this warrant and all rights
hereunder are transferable, in whole or in part, at the principal office of the
Company by the holder hereof in person or by duly authorized attorney, upon
surrender of this warrant properly endorsed to any person or entity who
represents in writing that he/it is acquiring the warrant for investment and
without any view to the sale or other distribution thereof. Each holder of this
warrant, by taking or holding the same, consents and agrees that the bearer of
this warrant, when endorsed, may be treated by the Company and all other persons
dealing with this warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented by this warrant, or to
the transfer hereof on the books of the Company, any notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat
the registered owner hereof as the owner for all purposes.
7. Neither this warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the
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<PAGE>
party against which enforcement of the change, waiver, discharge or termination
is sought.
8. Section 9 of that Bridge Loan Agreement, dated as of the date hereof,
between the Company and Holder contains certain registration rights applicable
to the Warrant Shares.
IN WITNESS WHEREOF, the Company has caused this warrant to be signed and
delivered by a duly authorized officer as of the ____ day of _______, 1996.
FIELDWORKS, INCORPORATED
By ________________________________
Its ____________________________
-5-
<PAGE>
RESTRICTION ON TRANSFER
The security evidenced hereby has not been registered under the Securities
Act of 1933 or any state securities laws and may not be sold, transferred,
assigned, offered, pledged or otherwise distributed for value unless there is an
effective registration statement under such act or laws covering such security
or the Company receives an opinion of counsel for the holder of this security
(concurred to by counsel for the Company) stating that such sale, transfer,
assignment, pledge or distribution is exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933 and all
applicable state securities laws.
<PAGE>
WARRANT EXERCISE
(To be signed only upon exercise of warrant)
The undersigned, the holder of the foregoing warrant, hereby irrevocably
elects to exercise the purchase right represented by such warrant for, and to
purchase thereunder, ______________________ of the shares of Common Stock of
Fieldworks, Incorporated, to which such warrant relates and herewith makes
payment of $_________________________ therefor in cash or by check or elects to
exercise the Conversion Right as provided in section 1(a) of the warrant and
requests that the certificates for such shares be issued in the name of, and be
delivered to ___________________ whose address is set forth below the signature
of the undersigned.
Dated:
[Signature]
[Address]
<PAGE>
WARRANT ASSIGNMENT
(To be signed only upon transfer of warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _____________________________ the purchase right represented by the
foregoing warrant to purchase the shares of Common Stock of Fieldworks,
Incorporated, to which such warrant relates and appoints attorney to transfer
such purchase right on the books of _______________________________ with full
power of substitution in the premi ses.
Dated:
[Signature]
[Name and Address of Transferee]
<PAGE>
EXHIBIT 10.20
$5.50/ft.
OFFICE/WAREHOUSE LEASE
This Indenture of lease, dated this 10th day of May, 1994 by and between
----- ---------
The Northwestern Mutual Life Insurance Company, hereinafter referred to as
"Landlord," and
FieldWorks, Inc.
----------------
(A Minnesota Corporation),
--------------------------
hereinafter referred to as "Tenant."
DEFINITIONS:
"Building" - That certain office/warehouse building containing
approximately 40,628 square feet of net rentable area located upon the Premises
------
and commonly described as
Oak Park Business Center, 9947-69 Valley View Road,
---------------------------------------------------
Eden Prairie, MN 55344
-----------------------
"Common Areas" - The term "common area" means the entire areas to be used
for the non-exclusive use by Tenant and other tenants in the Building,
including, but not limited to, corridors, lavatories, driveways, truck docks,
parking lots, and landscaped areas. Subject to reasonable rules and regulations
to be promulgated by Landlord, the common areas are hereby made available to
Tenant and its employees, agents, customers, and invitees for reasonable use in
common with other Tenants, their employees, agents, customers, and invitees.
"Demised Premises" - That certain portion of the Building designated as
-- --
Bays -------- through --------, consisting of approximately 12,386 square feet
------
(7,093 57%) square feet of office space and 5,293 square feet of warehouse
- ------------- -----
space), as measured from the outside walls of the Demised Premises to the center
of the partition wall, as shown on the floor plan attached hereto as Exhibit "B"
and made a part hereof. The Demised Premises include a non-exclusive easement
for access to common areas, as hereinafter defined, and all licenses and
easements appurtenant to the Demised Premises.
"Premises" - That certain real property located in the City of Eden
----
Prairie, County of Hennepin and State of Minnesota, and legally described on
- ------- ---------
Exhibit "A" attached hereto and made a part hereof, including all buildings and
site improvements located thereon.
WITNESSETH:
TERM:
1. For and in consideration of the rents, additional rents, terms,
provisions, and covenants herein contained, Landlord hereby lets, leases, and
demises to tenant the Demised Premises for the term of 60 months commencing on
---
the first day of July 1994 (sometimes called "Commencement Date") and expiring
------ ---------
the last day of June, 1999 (sometimes called "Expiration Date"), unless sooner
----- ----------
terminated as hereinafter provided.
BASE RENT:
2. Tenant shall pay Landlord, a total rental of Three Hundred Forty
-------------------
Thousand Six Hundred Twenty and 00/100 Dollars ($340,620.00), payable in
- -------------------------------------- -----------
advance, in equal monthly installments of Five Thousand Six Hundred Seventy-
---------------------------------
Seven Dollars ($5,677.00), commencing on the Commencement Date and continuing on
- ----- ---------
or before the first day of each and every month thereafter for the next
succeeding months during the balance of the term (sometimes called "Base Rent").
In the event the Commencement Date falls on a date other than the first of a
month, the rental for that month shall be prorated and adjusted accordingly and
one full month shall be added to the Term of the Lease for each month of delay.
ADDITIONAL RENT:
3. Tenant shall pay to landlord throughout the term of this Lease the
following:
a. Tenant shall pay a sum equal to thirty & 49/100 percent (30.49%)
--------------- --------
of the Real Estate taxes. The term "Real Estate Taxes" shall mean all real
estate taxes, all assessments, and any taxes in lieu thereof which may be levied
upon or assessed against the premises of which the Demised Premises are a part.
Tenant, in addition to all other payments to Landlord by Tenant required
hereunder shall pay to Landlord, in each year during the term of this Lease and
any extension or renewal thereof, Tenant's proportionate share of such real
estate taxes and assessments paid in the first instance by extension or renewal
thereof. Tenant's proportionate share of such real estate taxes and assessments
paid in the first instance by Landlord.
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<PAGE>
9/92
Any tax year commencing during any lease year shall be deemed to correspond
to such lease year, in the event the taxing authorities include in such real
estate taxes and assessments the value of any machinery, equipment, fixtures,
inventory, or other personal property or assets of Tenant, then Tenant shall pay
all the taxes attributable to such items in addition to its proportionate share
of said aforementioned real estate taxes and assessments. A photostatic copy of
the tax statement submitted by Landlord to Tenant shall be sufficient evidence
of the amount of taxes and assessments assessed or levied against the Premises
of which the Demised Premises are a part.
b. A sum equal to thirty & 49/100% (30.49%) of the annual aggregate
--------------- -----
operating expenses incurred by Landlord in the operation, maintenance, and
repair of the Premises. The term "Operating Expenses" shall include but not be
limited to maintenance, repair, replacement, and care of all common area
lighting, common area plumbing and roofs, parking and landscaped areas, signs,
snow removal, non-structural repair, maintenance of the exterior of the
Building, insurance premiums, management fees, wages, and fringe benefits of
personnel employed for such work, costs of equipment purchased and used for such
purposes, and the cost or portion thereof property allocable to the Premises
(amortized over such reasonable period as Landlord shall determine together with
the interest at the rate of 12% per annum on the unamortized balance) of any
--
capital improvements (including those required to bring the common areas into
compliance with the Americans with Disabilities Act of 1990) made to the
Building by Landlord after the Base Year which result in a reduction of
Operating Expenses or made to the Building by Landlord after the date of this
Lease that are required under any governmental law or regulation that was not
applicable to the Building at the time it was constructed.
The payment of the sums set forth in this Article 3 shall be in addition to
the Base Rent payable pursuant to Article 2 of this Lease. All sums due
hereunder shall be due and payable within thirty (30) days of delivery of
written certification by Landlord setting forth the computation of the amount
due from Tenant. In the event the lease term shall begin or expire at any time
during the calendar year, the Tenant shall be responsible for his pro rata share
of Additional Rent under subdivisions a. and b. during the Lease and/or
occupancy time.
Prior to commencement of this Lease, and prior to the commencement of each
calendar year thereafter commencing during the term of this Lease or any renewal
or extension thereof, Landlord may estimate for each calendar (i) the total
amount of Real Estate Taxes; (ii) the total amount of Operating Expenses; (iii)
Tenant's share of Real Estate Taxes for such calendar year; (iv) Tenant's share
of Operating Expenses for such calendar year; and (v) the computation of the
annual and monthly rental payable during such calendar year as a result of
increases or decreases in Tenant's share of Real Estate Taxes and Operating
Expenses. Said estimates will be in writing and will be delivered or mailed to
Tenant at the Premises.
The amount of Tenant's share of Real Estate Taxes, and Operating Expenses
for each calendar year, so estimated, shall be payable as Additional Rent, in
equal monthly installments, in advance, on the first day of each month during
such calendar year. In the event that such estimate is delivered to Tenant
before the first day of January of such calendar year, said amount, so
estimated, shall be payable as additional rent in equal monthly installments, in
advance, on the first day of each month during such calendar year. In the event
that such estimate is delivered to Tenant after the first day of January of such
calendar year, said amount, so estimated, shall be payable as additional rent in
equal monthly installments, in advance, on the first day of each month over the
balance of such calendar year, with the number of installments being equal to
the number of full calendar months remaining in such calendar year.
Upon completion of each calendar year during the term of this Lease or any
renewal or extension thereof, Landlord shall cause its accountants to determine
the actual amount of the Real Estate Taxes and Operating Expenses payable in
such calendar year and Tenant's share thereof and deliver a written
certification of the amounts thereof to Tenant. If Tenant has underpaid its
share of Real Estate Taxes, or Operating Expenses for such calendar year, Tenant
shall pay the balance of its share of same within ten (10) days after the
receipt of such statement. If Tenant has overpaid its share of Real Estate Taxes
or Operating Expenses for such calendar year, Landlord shall either (i) refund
such excess or (ii) credit such excess against the most current monthly
installment or installments due Landlord for its estimate of Tenant's share of
Real Estate Taxes and Operating Expenses for the next following calendar year. A
prorata adjustment shall be made for a fractional calendar year occurring during
the term of this Lease or any renewal or extension thereof based upon the number
of days of the term of the Lease during said calendar year as compared to three
hundred sixty-five (365) days and all additional sums payable by Tenant or
credits due Tenant as a result of the provisions of this Article 3 shall be
adjusted accordingly. Tenant shall have the right to inspect Landlord's records
at management office during normal business hours with prior notice.
COVENANT TO PAY RENT:
4. The covenants of Tenant to pay the Base Rent and the Additional Rent
are each independent of any other covenant, condition, provision, or agreement
contained in this Lease. All rents are payable to Landlord at
Welsh Companies, Inc.
---------------------
11200 W. 78th Street
--------------------
Eden Prairie, MN 55344
-----------------------
9/92 -2-
<PAGE>
UTILITIES:
5. Landlord shall provide mains and conduits to supply water, gas,
electricity, and sanitary sewage to the Premises. Tenant shall pay, when due,
all charges for sewer usage or rental, garbage disposal, refuse removal, water,
electricity, gas, fuel oil, LP gas, telephone, and/or other utility services or
energy source furnished to the Demised Premises during the term of this Lease,
or any renewal or extension thereof. If Landlord elects to furnish any of the
foregoing utility services or other services furnished or caused to be furnished
to Tenant, then the rate charged by landlord shall not exceed the rate Tenant
would be required to pay to a utility company or service company furnishing any
of the foregoing utilities or services. The charges thereof shall be deemed
additional rent in accordance with Articles 3 and 4.
CARE AND REPAIR OF DEMISED PREMISES:
6. Tenant shall, at all times throughout the term of this Lease, including
renewals and extensions, and at its sole expense, keep and maintain the Demised
Premises in a clean, safe, sanitary , and first class condition and in
compliance with all applicable laws, codes, ordinances, rules, and regulations.
Tenant's obligations hereunder shall include but not be limited to the
maintenance, repair and replacement, if necessary, of heating, air conditioning
fixtures, equipment, and systems, all lighting and plumbing fixtures and
equipment, fixtures, motors and machinery, all interior walls, partitions,
doors and windows, including the regular painting thereof, all exterior
entrances, windows, doors, and docks and the replacement of all broken glass.
When used under this provision, the term "repairs" shall include replacements
and overhauling equipment when necessary, and all such repairs made by the
Tenant shall be equal in quality and class to the original work. The Tenant
shall keep and maintain all portions of the Demised Premises and the sidewalk
and areas adjoining the same in clean and orderly condition, free of
accumulation of dirt, rubbish, snow, and ice.
If Tenant fails, refuses or neglects to maintain or repair the Demised
Premises as required in this Lease after notice has been given Tenant, in
accordance with Article 33 of this Lease, Landlord may make such repairs without
liability to Tenant for any loss or damage that may accrue to Tenant's
merchandise, fixtures, or other property or to its business by reason thereof,
and upon completion thereof, Tenant shall pay to Landlord all costs plus 15%
for overhead incurred by Landlord in making such repairs upon presentation to
the Tenant of bill therefor.
Landlord shall repair, at its expense, the structural portions of the
Building, provided, however, where structural repairs are required to be made by
reason of the acts of Tenant, the costs thereof shall be borne by Tenant and
payable by Tenant to Landlord upon demand.
The Landlord shall be responsible for all outside maintenance of the
Demised Premises, including grounds and parking areas. All such maintenance
which is the responsibility of the Landlord shall be provided as reasonably
necessary to the comfortable use and occupancy of Demised Premises during
business hours, except Saturdays, Sundays, and holidays, upon the condition that
the Landlord shall not be liable for damages for failure to do so due to causes
beyond its reasonable control.
SIGNS:
7. Any sign, lettering, picture, notice, or advertisement installed on or
in any part of the Premises and visible from the exterior of the Building, or
visible from the exterior of the Demised Premises, except for one standard sign
which Landlord shall install and pay for, shall be approved, installed, and
maintained by Landlord, at Tenant's expense. In the event of a violation of the
foregoing by Tenant, Landlord may remove the same without any liability and may
charge the expense incurred by such removal to Tenant.
ALTERATIONS, INSTALLATION, FIXTURES:
8. Except as hereinafter provided, Tenant shall not make any alterations,
additions, or improvements in or to the Demised Premises or add, disturb, or in
any way change any plumbing or wiring therein without the prior written consent
of the Landlord. In the event alterations are required by any governmental
agency by reason of the use and occupancy of the Demised Premises by Tenant.
Tenant shall make such alterations at its own cost and expense after first
obtaining Landlord's approval of plans and specifications and furnishing such
indemnification as Landlord may reasonably require against liens, costs,
damages, and expenses arising out of such alterations. Alterations and additions
by Tenant must be built in compliance with all laws, ordinances, and
governmental relations affecting the Premises and Tenant shall warrant to
Landlord that all such alterations, additions, or improvements shall be in
strict compliance with all relevant laws, ordinances, governmental regulations,
and insurance requirements. Construction of such alterations or additions shall
commence only upon Tenant obtaining and exhibiting to Landlord the requisite
approvals, licenses, permits, and indemnification against liens. All
alterations, installations, physical additions, or improvements to the Demised
Premises made by Tenant shall at once become the property of Landlord and shall
be surrendered to Landlord upon the Termination of this Lease; provided,
however, this clause shall not apply to movable equipment or furniture owned by
Tenant which may be removed by Tenant at the end of the term of this Lease.
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POSSESSION:
9. Except as hereinafter provided, Landlord shall deliver possession of
the Demised Premises to Tenant in the condition required by Exhibit D of this
Lease on or before the Commencement Date, but delivery of possession prior to or
later than such Commencement Date shall not affect the expiration date of this
Lease. The rentals herein reserved shall commence on the date when possession
of the Demised Premises is delivered by landlord to Tenant. Any occupancy by
Tenant prior to the beginning of the term shall in all respects be the same as
that of a Tenant under this Lease. If Demised Premises are not ready for
occupancy by Commencement Date and possession is later than Commencement Date,
rent shall begin on date of possession.
SECURITY AND DAMAGE DEPOSIT:
10. Tenant, contemporaneously with the execution of this Lease, has
deposited with Landlord the sum of Nine Thousand Three Hundred Thirty-One and
------------------------------------------
00/100 Dollars ($9,331.00), receipt of which is acknowledged hereby by Landlord,
- -------------- -----------
when deposit is to be held by Landlord, without liability for interest, as a
security and damage deposit for the faithful performance by Tenant during the
term hereof or any extension hereof. Prior to the time when Tenant shall be
entitled to the return of this security deposit, Landlord may commingle such
deposit with Landlord's own funds and to use such security deposit for such
purpose as Landlord may determine. In the event of the failure of Tenant to
keep and perform any of the terms, covenants, and conditions of this Lease to be
kept and performed by Tenant during the term hereof or any extension hereof,
then Landlord, either with or without terminating this Lease, may (but shall not
be required to ) apply such portion of said deposit as may be necessary to
compensate or repay Landlord for all losses or damages sustained or to be
sustained by Landlord due to such breach on the part of the Tenant, including,
but not limited to overdue and unpaid rent, any other sum payable by Tenant to
landlord pursuant to the provisions of this Lease, damages or deficiencies in
the reletting of Demised Premises, and reasonable attorney's fees incurred by
Landlord. Should the entire deposit or any portion thereof, be appropriated and
applied by Landlord, in accordance with the provisions of this paragraph.
Tenant, upon written demand by landlord, shall remit forthwith to Landlord a
sufficient amount of cash to restore said security deposit to the original sum
deposited, and Tenant's failure to do so within five (5) days after receipt of
such demand shall constitute a breach of this Lease. Said security deposit
shall be returned to Tenant, less any depletion thereof as the result of the
provisions of this paragraph, at the end of the term of this Lease or any
renewal thereof, or upon the earlier termination of this Lease. Tenant shall
have no right to anticipate return of said deposit by withholding any amount
required to be paid pursuant to the provision of this Lease or otherwise.
In the event Landlord shall sell the Premises, or shall otherwise convey or
dispose of its interest in this Lease, Landlord may assign said security deposit
or any balance thereof to Landlord's assignees, whereupon landlord shall be
released from all liability for the return or repayment of such security
deposit and Tenant shall look solely to the said assignees for the return and
repayment of said security deposit. Said security deposit shall not be assigned
or encumbered by Tenant without such consent of Landlord, and any assignment or
encumbrance without such consent shall not bind Landlord. In the event of any
rightful and permitted assignment or this Lease by Tenant, said security deposit
shall be deemed to be held by landlord as a deposit made by the assignee, and
Landlord shall have no further liability with respect to the return of said
security deposit to the Tenant.
USE:
11. The Demised Premises shall be used and occupied by Tenant solely for
the purposes of office, assembly and storage of electronic or related items so
-------------------- ---------------------------------------
long as such use is in compliance with all applicable laws, ordinances, and
governmental regulations affecting the Building and Premises. The Demised
Premises shall not be used in such manner that, in accordance with any
requirement of law or of any public authority, Landlord shall be obliged on
account of the purpose or manner of said use to any requirement of law of any
public authority. Landlord shall be obliged on account of the purpose or manner
of said use to make any addition or alteration to or in the Building. Tenant
shall be responsible for compliance with the Americans with Disabilities Act of
1990 as it applies to the Demised Premises. The Demised Premises shall not be
used in any manner which will increase the rates required to be paid for public
liability or for fire and extended coverage insurance covering the Premises.
Tenant shall occupy the Demised Premises, conduct its business and control its
agents, employees, invitees, and visitors in such a way as is lawful and
reputable and will not permit or create any nuisance, noise, odor, or otherwise
interfere with, annoy, or disturb any other Tenant in the Building in its normal
business operations or Landlord in its management of the Building. Tenant's use
of the Demised Premises shall conform to all the Landlord's rules and
regulations relating to the use of the Premises. Outside storage on the
Premises of any type of equipment, property, or materials owned or used on the
Premises by Tenant or its customers and suppliers shall not be permitted.
ACCESS TO DEMISED PREMISES:
12. The Tenant agrees to permit the Landlord and the authorized
representatives of the Landlord to enter the Demised Premises at all times
during usual business hours for the purpose of inspecting the same and making
any necessary repairs to the Demised Premises and performing any work therein
that may be necessary to comply with any laws, ordinances, rules, regulations,
or requirements of any public authority or of the Board of Fire Underwriters or
any similar body or that the Landlord may deem necessary to prevent waste or
deterioration in connection with the Demised Premises.
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Nothing herein shall imply any duty upon the part of the Landlord to do any such
work which, under any provision of this Lease, the Tenant may be required to
perform and the performance thereof by the Landlord shall not constitute a
waiver of the Tenant's default in failing to perform the same. The Landlord
may, during the progress of any work in the Demised Premises, keep and store
upon the Demised Premises all necessary materials, tools, and equipment. The
Landlord shall not in any event be liable for inconvenience, annoyance,
disturbance, loss of business, or other damage of the Tenant by reason of making
repairs or the performance or any work in the Demised Premises, or on account of
bringing materials, supplies, and equipment into or through the Demised Premises
during the course thereof and the obligations of the Tenant under this Lease
shall not thereby be affected in any manner whatsoever.
Landlord reserves the right to enter upon the Demised Premises at any time in
the event of an emergency and at reasonable hours to exhibit the Demised
Premises to prospective purchasers or others; and to exhibit the Demised
Premises during the last sixty (60) days of the term of this Lease, all without
hindrance or molestation by Tenant.
EMINENT DOMAIN:
13, In the event of any eminent domain or condemnation proceeding or
private sale in lieu thereof in respect to the Premises during the term
thereof, the following provisions shall apply:
a. If the whole of the Premises shall be acquired or condemned
by eminent domain for any public or quasipublic use or purpose, then the term of
this Lease shall cease and terminate as of the date possession shall be taken in
such proceeding and all rentals shall be paid up to that date.
b. If any part constituting less than the whole of the Premises
shall be acquired or condemned as aforesaid, and in the event that such partial
taking or condemnation shall materially affect the Demised Premises so as to
render the Demised Premises unsuitable for the business of the Tenant, in the
reasonable opinion of Landlord, then the term of this Lease shall cease and
terminate as of the date possession shall be taken by the condemning authority
and rent shall be paid to the date of such termination.
In the event of a partial taking or condemnation of the Premises which
shall not materially affect the Demised Premises so as to render the Demised
Premises unsuitable for the business of the Tenant, in the reasonable opinion of
the Landlord, this Lease shall continue in full force and effect but with a
proportionate abatement of the Base Rent and Additional Rent based on the
portion, if any, of the Demised Premises taken. Landlord reserves the right, at
its option, to restore the Building and the Demised Premises to substantially
the same condition as they were prior to such condemnation. In such event,
Landlord shall give written notice to Tenant, within thirty (30) days following
the date possession shall be taken by the condemning authority, of Landlord's
intention to restore. Upon Landlord's notice of election to restore, Landlord
shall commence restoration and shall restore the Building and the Demised
Premises with reasonable promptness, subject to delays beyond the Landlord's
control and delays in the making of condemnation or sale proceeds adjustments by
landlord; and Tenant shall have no right to terminate this Lease except as
herein provided. Upon completion of such restoration, the rent shall be
adjusted based upon the portion, if any, of the Demised Premises restored.
c. In the event of any condemnation or taking as aforesaid,
whether whole or partial, the Tenant shall not be entitled to any part of the
award paid for such condemnation and Landlord is to receive the full amount of
such award, the Tenant hereby expressly waiving any right to claim to any part
thereof.
d. Although all damages in the event of any condemnation shall
belong to the Landlord whether such damages are awarded as compensation for
diminution in value of the leasehold or to the fee of the Demised Premises,
Tenant shall have the right to claim and recover from the condemning authority,
but not from Landlord, such compensation as may be separately awarded or
recoverable by Tenant in Tenant's own right on account of any and all damage to
Tenant's business by reason of the condemnation and for or on account of any
cost or loss to which Tenant might be put in removing Tenant's merchandise,
furniture, fixtures, leasehold improvements, and equipment. However, Tenant
shall have no claim against Landlord or make any claim with the condemning
authority for the loss of its leasehold estate, any unexpired term or loss of
any possible renewal or extension of said Lease or loss of any possible value of
said Lease, any unexpired term, renewal, or extension of said Lease.
DAMAGE OR DESTRUCTION:
14. In the event of any damage or destruction to the Premises by fire of
other cause during the term hereof, the following provisions shall apply:
9/92 -5-
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a. If the Building is damaged by fire or any other cause to
such extent that the cost of restoration, as reasonably estimated by Landlord,
will equal or exceed thirty percent (30%) of the replacement value of the
Building (exclusive of foundations) just prior to the occurrence of the damage,
then Landlord may, no later than the sixtieth (60th) day following the damage,
give Tenant written notice of Landlord's election to terminate this Lease.
b. If the cost of restoration as estimated by Landlord will
equal or exceed fifty percent (50%) of said replacement value of the Building
and if the Demised Premises are not suitable as a result of said damage for the
purposes for which they are demised hereunder, in the reasonable opinion of
Tenant, then Tenant may, no later than the sixtieth (60th) day following the
damage, give Landlord a written notice of election to terminate this Lease.
c. If the cost of restoration as estimated by Landlord shall
amount to less than thirty percent (30%) of said replacement value of the
Building, or if, despite the cost, Landlord does not elect to terminate this
Lease, Landlord shall restore the Building and the Demised Premises with
reasonable promptness, subject to delays beyond the Landlord's control and
delays in the making of insurance adjustments by Landlord; and Tenant shall have
no right to terminate this Lease except as herein provided. Landlord shall not
be responsible for restoring or repairing leasehold improvements of the Tenant.
d. In the event of either of the elections to terminate, this
Lease shall be deemed to terminate as of the date of destruction and all rentals
shall be paid up to that date. Tenant shall have no claim against Landlord for
the value of any unexpired term of this Lease.
e. In any case where damage to the Building shall materially
affect the Demised Premises so as to render them unsuitable in whole or in part
for the purposes for which they are demised hereunder, then, unless such
destruction was wholly or partially caused by the negligence or breach of the
terms of this Lease by Tenant, its employees, contractors or licensees, a
portion of the rent based upon the amount of the extent to which the Demised
Premises are rendered unsuitable shall be abated until repaired or restored. If
the destruction or damage was wholly or partially caused by negligence or breach
of the terms of this lease by Tenant as aforesaid and if Landlord shall elect to
rebuild, the rent shall not abate and the Tenant shall remain liable for the
same.
CASUALTY INSURANCE:
15. a. Landlord shall at all times during the term of this Lease,
at its expense, maintain a policy or policies of insurance with premiums paid in
advance issued by an insurance company licensed to do business in the State of
Minnesota insuring the Building against loss or damage by fire, explosion, or
other insurable hazards and contingencies for the full replacement value,
provided that Landlord shall not be obligated to insure any furniture,
equipment, machinery, goods, or supplies not covered by this Lease which Tenant
may bring upon the Demised Premises or any additional improvements which Tenant
may construct or install on the Demised Premises.
b. Tenant shall not carry any stock of goods or do anything in
or about the Demised Premises which will in any way impair or invalidate the
obligation of the insurer under any policy of insurance required by this Lease.
c. Landlord hereby waives and releases all claims, liabilities,
and causes of action against Tenant and its agents, servants, and employees for
loss or damage to, or destruction of, any of the improvements, fixtures,
equipment, supplies, merchandise, and other property, whether that of Tenant or
of others in, upon, or about the Premises resulting from fire, explosion, or the
other perils included in standard extended coverage insurance, whether caused by
the negligence of any of said persons or otherwise. The waiver shall remain in
force whether or not the Tenant's insurer shall consent thereto.
d. In the event that the use of the Demised Premises by Tenant
increases the premium rate for insurance carried by landlord on the improvements
of which the Demised Premises are a part, Tenant shall pay Landlord, upon
demand, the amount of such premium increase. If Tenant installs any electrical
equipment that overloads the power lines to the building or its wiring, Tenant
shall, at its own expense, make whatever changes are necessary to comply with
the requirements of the insurance underwriter, insurance rating bureau, and
governmental authorities having jurisdiction.
PUBLIC LIABILITY INSURANCE:
16. Tenant shall during the term hereof keep in full force and effect at
its expense a policy or policies of public liability insurance with respect to
the Demises Premises and the business of Tenant, on terms and companies approved
in writing by Landlord, in which both Tenant and Landlord shall be covered by
being named as insured parties under reasonable limits of liability not less
than: $1,000,000 combined single limit. Such policy or policies shall provide
that thirty (30) days written notice must be given to the Landlord prior to
cancellation thereof. Tenant shall furnish evidence satisfactory to landlord at
the time this Lease is executed that such coverage is in full force and effect.
9/92 -6-
<PAGE>
DEFAULT:
17. a. In the event of any failure of Tenant to pay any rental due
hereunder within five (5) days after written notice, or any failure to perform
any other of the terms, conditions, or covenants of this Lease to be observed or
performed by Tenant for more than 30 days (or as long as is reasonably necessary
if Tenant is pursuing a cure in good faith) after written notice of such failure
shall have been given to Tenant, or if Tenant or an agent of Tenant shall
falsify any report required to be furnished to Landlord pursuant to the terms of
this Lease, or if Tenant or any guarantor of this Lease shall become bankrupt or
involvement, or file any debtor proceedings or any person shall take or have
against Tenant or any guarantor of this Lease in any court pursuant to any
statute either of the United States or of any state a petition in bankruptcy or
insolvency or for reorganization or for the appointment of a receiver or trustee
of all or a portion of Tenant's or any such guarantor's property, or if Tenant
or any such guarantor makes an assignment for the benefit of creditors, or
petitions for or enters into an argument, or if Tenant shall abandon the Demised
Premises or suffer this Lease to be taken under any writ of execution, then in
any such event Tenant shall be in default hereunder, and Landlord, in addition
to other rights or remedies it may have, shall have the immediate right of re-
entry and may remove all persons and property from the Demised Premises and such
property may be removed and stored in a public warehouse or elsewhere at the
cost of, and for the account of Tenant, all without service of notice or resort
to legal process and without being guilty of trespass, or becoming liable for
any loss or damage which may be occasioned thereby.
b. Should Landlord elect to re-enter the Demised Premises, as herein
provided, or should it take possession of the Demised Premises pursuant to legal
proceedings or pursuant to any notice provided for by law, it may either
terminate this Lease or it may from time to time, without terminating this
Lease, make such alterations and repairs as may be necessary in order to relet
the Demised Premises, and relet the Demised Premises or any part thereof under
such term or terms (which may be for a term extending beyond the term of this
Lease) and at such rental or rentals and upon such other terms and conditions as
Landlord in its sole discretion may deem advisable. Upon each such subletting
all rentals received by the Landlord from such reletting shall be applied first
to the payment of any indebtedness other than rent due hereunder from Tenant to
landlord; second, to the payment of any costs and expenses of such reletting,
including brokerage fees and attorney's fees and costs of such alterations and
repairs; third, to the payment of the rent due and upon payment of future rent
as the same may become due and payable hereunder. If such rentals received from
such reletting during any month are less than that to be paid during that month
by Tenant hereunder, Tenant, upon demand, shall pay any such deficiency to
landlord. No such re-entry or taking possession of the Demised Premises by
Landlord shall be construed as an election on its part to terminate this Lease
unless a written notice of such intention be given to Tenant or unless the
termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any such reletting without termination. Landlord may at any
time after such re-entry and reletting elect to terminate this Lease for any
such breach. In addition to any other remedies it may have, it may recover from
Tenant all damages it may incur by reason of such breach, including the cost of
recovering the Demised Premises, reasonable attorney's fees, and including the
worth at the time of such termination of the excess, if any of the amount of
rent and charges equivalent to rent reserved in this Lease for the remainder of
the stated term over the then reasonable rental value of the Demised Premises
for the remainder of the stated term, all of which amounts shall be immediately
due and payable from Tenant to Landlord.
c. Landlord may, at its option, instead of exercising any other
rights or remedies available to it in this Lease or otherwise by law, statute,
or equity, spend such money as is reasonably necessary to cure any default of
Tenant herein and the amount so spent, and costs incurred, including attorney's
fees in curing such default, shall be paid by Tenant, as additional rent, upon
demand.
d. In the event suit shall be brought for recovery of possession of
the Demised Premises, for the recovery of rent or any other amount due under the
provisions of this Lease, or because of the breach of any other covenant herein
contained on the part of Tenant to be kept or performed, and a breach shall be
established, Tenant shall pay to Landlord all expenses incurred therefor,
including a reasonable attorney's fee, together with interest on all such
expenses at the rate of twelve percent (12%) per annum from the date of such
------- -----
breach of the covenants of this Lease.
e. Tenant hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event of Tenant being
evicted or dispossessed for any cause, or in the event of Landlord obtaining
possession of the Demised Premises, by reason of the violation of the Tenant of
any of the covenants or conditions of this Lease, or otherwise. Tenant also
waives any demand for possession of the Demised Premises, and any demand for
payment of rent and any notice of intent to re-enter the Demised Premises, or of
intent to terminate this Lease, other than the notices above provided in this
Article, and waives any and every other notice or demand prescribed by any
applicable statutes or laws.
f. No remedy herein or elsewhere in this Lease or otherwise by law,
statute, or equity, conferred upon or reserved to Landlord or Tenant shall be
exclusive of any other remedy, but shall be cumulative, and may be exercised
from time to time and as often as the occasion may arise.
9/92 -7-
<PAGE>
COVENANTS TO HOLD HARMLESS:
18. Unless the liability for damage or loss is caused by the negligence of
Landlord, its agents, or its employees, Tenant shall hold Landlord harmless from
any liability for damages to any person or property in or upon the Demised
Premises and the Premises, including the person and the property of Tenant and
its employees and all persons in the Building at its or their invitation or
sufferance, and from all damages resulting from Tenant's failure to perform the
covenants of this Lease. All property kept, maintained, or stored on the
Demised Premises shall be so kept, maintained, or stored at the sole risk of
Tenant. Tenant agrees to pay all sums of money in respect of any labor, service,
materials, supplies, or equipment furnished or alleged to have been furnished to
Tenant in or about the premises, and not furnished on order of Landlord, which
may be secured by any mechanics', materialmens', or other lien to be discharged
at the time performance of any obligation secured thereby matures. However,
Tenant may contest such lien, but if such lien is reduced to final judgment and
if such judgment on process thereon is not stayed, or if stayed and said stay
expires, then and in each such event, Tenant shall forthwith pay and discharge
said judgment. Landlord shall have the right to post and maintain on the Demised
Premises, notices of non-responsibility under the laws of the State of
Minnesota.
NON-LIABILITY:
19. Subject to the terms and conditions of Article 14 hereof, Landlord
shall not be liable for damage to any property of Tenant or of others located on
the Premises, nor for the loss of or damage to any property of Tenant or of
others by theft or otherwise, Landlord shall not be liable for any injury or
damage to persons or property resulting from fire, explosion, falling plaster,
steam, gas, electricity, water, rain, snow, or leaks from any part of the
Premises or from the pipes, appliances, or plumbing works or from the roof,
street, or subsurface or from any other place or by dampness or by any other
cause of whatsoever nature.
Landlord shall not be liable for any such damage caused by other Tenants or
persons in the Premises, occupants of adjacent property, of the buildings, or
the public or caused by operations in construction of any private, public, or
quasi-public work. Landlord and Tenant shall not be liable for any latent
defect in the Demised Premises. All property of Tenant kept or stored on the
Demised Premises shall be so kept or stored at the risk of Tenant only and
Tenant shall hold Landlord harmless from any claims arising out of damage to the
same, including subrogation claims by Tenant's insurance carrier.
SUBORDINATION:
20. This Lease shall be subordinated to any mortgages that may now exist
or that may hereafter be placed upon the Demised Premises and to any and all
advances made thereunder, and to the interest upon the indebtedness evidenced by
such mortgages, and to all renewals, replacements, and extensions thereof. In
the event of execution by Landlord after the date of this Lease of any such
mortgage, renewal, replacement, or extension, Tenant agrees to execute a
subordination agreement with the holder thereof which agreement shall provide
that:
a. Such holder shall not disturb the possession and other
rights of Tenant under this Lease so long as Tenant is not in default hereunder;
b. In the event of acquisition of title to the Demised Premises
by such holder, such holder shall accept the Tenant as tenant of the Demised
Premises under the terms and conditions of this Lease and shall perform all the
obligations of Landlord hereunder; and
c. The Tenant shall recognize such holder as Landlord
hereunder.
Tenant shall, upon receipt of a request from Landlord, execute
and deliver to Landlord or to any proposed holder of a mortgage or trust deed or
to any proposed purchaser of the Premises, a certificate in recordable form,
certifying that this Lease is in full force and effect and that there are no
offsets against rent nor defenses to Tenant's performance under this Lease, or
setting forth any such offsets or defenses claimed by Tenant, as the case may
be.
ASSIGNMENT OR SUBLETTING:
21. Tenant agrees to use and occupy the Demised Premises throughout the
entire term hereof for the purpose or purposes herein specified and for no other
purposes, in the manner and to substantially the extent now intended, and not to
transfer or assign this Lease or sublet said Demised Premises, or any part
thereof, whether by voluntary act, operation of law, or otherwise, without
obtaining the prior consent of Landlord in each instance. Tenant shall seek
such consent of Landlord by a written request, setting forth such information as
Landlord may deem necessary. Landlord agrees not to withhold consent
unreasonably. Consent by Landlord to any assignment of this Lease or to any
subletting of the Demised Premises shall not be a waiver of Landlord's rights
under this Article as to any subsequent assignment or subletting.
9/92 -8-
<PAGE>
Landlord's rights to assign this Lease are and shall remain unqualified. No
such assignment or subleasing shall relieve the Tenant from any of Tenant's
obligations in this Lease contained nor shall any assignment or sublease or
other transfer of this Lease be effective unless the assignee, sublessee, or
transferee shall at the time of such assignment, sublease, or transfer, assume
in writing for the benefit of Landlord, its successors, or assigns, all of the
terms, covenants, and conditions of this Lease thereafter to be performed by
Tenant and shall agree in writing to be bound thereby. Should tenant sublease
in accordance with the terms of this Lease, fifty percent (50%) of any increase
in rental received by Tenant over the per square foot rental rate which is being
paid by Tenant shall be forwarded to and retained by Landlord, which increase
shall be in addition to the Base Rent and Additional Rent due Landlord under
this Lease.
ATTORNMENT:
22. In the event of a sale or assignment of Landlord's interest, in the
Premises, or the Building in which the Demised Premises are located, or this
Lease, or if the Premises come into custody of possession of a mortgagee or any
other party whether because of a mortgage foreclosure or otherwise, Tenant shall
attorn to such assignee or other party and recognize such party as Landlord
hereunder; provided, however, Tenant's peaceable possession will not be
disturbed so long as Tenant faithfully performs in obligations under this Lease.
Tenant shall execute, on demand, any attornment agreement required by any such
party to be executed, containing such provisions and such other provisions as
such party may require.
NOVATION IN THE EVENT OF SALE:
23. In the event of the sale of the Demised Premises, Landlord shall be
and hereby is relieved of all of the covenants and obligations created hereby
accruing from and after the date of sale, and such sale shall result
automatically in the purchaser assuming and agreeing to carry out all the
covenants and obligations of Landlord herein. Notwithstanding the foregoing
provisions of this Article, Landlord, in the event of a sale of the Demised
Premises, shall cause to be included in this agreement of sale and purchase a
covenant whereby the purchaser of the Demised Premises assumes and agrees to
carry out all of the covenants and obligations of Landlord herein.
The Tenant agrees at any time and from time to time upon not less than ten
(10) days prior written request by the Landlord to execute, acknowledge, and
deliver to the Landlord an Estoppel Certificate substantially in the form of
Exhibit E.
SUCCESSORS AND ASSIGNS:
24. The terms, covenants, and conditions hereof shall be binding upon and
inure to the benefit of the successors and assigns of the parties hereto.
REMOVAL OF FIXTURES:
25. Notwithstanding anything contained in Article 8, 29, or elsewhere in
this Lease, if Landlord requests, Tenant will promptly remove at the sole cost
and expense of Tenant all fixtures, equipment, and alterations made by Tenant
simultaneously with vacating the Demised Premises and Tenant will promptly
restore said Demised Premises to the condition that existed immediately prior to
said fixtures, equipment, and alterations having been made all at the sole cost
and expense of Tenant. Landlord shall have no responsibility or liability for
loss or damage to fixtures, facilities, or equipment installed or left on the
Demised Premises after tenant has vacated.
QUIET ENJOYMENT:
26. Landlord warrant that it has full right to execute and to perform this
Lease and to grant the estate demised, and that Tenant, upon payment of the
rents and other amounts due and the performance of all the terms, conditions,
covenants, and agreements on Tenant's part to be observed and performed under
this lease, may peaceably and quietly enjoy the Demised Premises for the
business uses permitted hereunder, subject , nevertheless, to the terms and
conditions of this Lease.
RECORDING:
27. Tenant shall not record this Lease without the written consent of
Landlord. However, upon the request of either party hereto, the other party
shall join in the execution of a memorandum lease for the purposes of
recordation. Said memorandum lease shall describe the parties, the Demised
Premises and the term of the Lease and shall incorporate this Lease by
reference.
OVER DUE PAYMENTS:
28. All monies due under this Lease from Tenant to Landlord shall be due
on demand, unless otherwise specified and if not paid when due, shall result in
the imposition of a service charge for such late payment in the amount of twelve
------
percent (12%) per annum of the amount due.
- --------------
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<PAGE>
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SURRENDER:
29. On the Expiration Date or upon the terminations hereof upon a day
other than the Expiration Date, Tenant shall peaceably surrender the Demised
premises broom-clean in good order, condition, and repair, reasonable wear and
tear only excepted. On or before the Expiration Date or upon termination of
this Lease on a day other than the Expiration Date, Tenant shall, at its
expense, remove all trade fixtures, personal property, equipment, and signs from
the Demised Premises and any property not removed shall be deemed to have been
abandoned. Any damage caused in the removal of such items shall be repaired by
Tenant and at its expense. All alterations, additions, improvements, and
fixtures (other than trade fixtures) which shall have been made or installed by
Landlord or Tenant upon the Demised Premises and all floor covering so installed
shall remain upon and be surrendered with the Demised Premises as a part
thereof, without disturbance, molestation, or injury, and without charge, at the
expiration or termination of this Lease. If the Demised Premises are not
surrendered on the Expiration Date or the date of termination, Tenant shall
indemnify Landlord against loss or liability, claims, without limitation, made
by any succeeding Tenant founded on such delay. Tenant shall promptly surrender
all keys for the Demised Premises to Landlord at the place then fixed for
payment of rent and shall inform Landlord of combinations of any locks and safes
on the Demised Premises.
HOLDING OVER:
30. In the event of a holding over by Tenant after expiration or
termination of this Lease without the consent in writing of Landlord, Tenant
shall be deemed a Tenant at sufferance and shall pay rent for such occupancy at
the rate of 150% of the last-current aggregate Base, plus 100% of the Additional
Rent, prorated for the entire holdover period, plus all attorney's fees and
expenses incurred by landlord in enforcing its rights hereunder, plus any other
actual damages occasioned by such holding over. Except as otherwise agreed, any
holding over with the written consent of Landlord shall constitute Tenant a
month-to-month Tenant.
ABANDONMENT:
31. In the event Tenant shall remove its fixtures, equipment, or machinery
or shall vacate the Demised Premises or any part thereof prior to the
Expiration Date of this Lease, or shall discontinue or suspend the operation of
its business conducted on the Demised Premises for a period of more than thirty
(30) consecutive days (except during any time when the Demised Premises may be
rendered untenantable by reason of fire or other casualty), then in such event
Tenant shall be deemed to have abandoned the Demised Premises and Tenant shall
be in default under the terms of this Lease.
CONSENTS BY LANDLORD:
32. Whenever provision is made under this Lease for Tenant securing the
consent or approval by Landlord, such consent or approval shall only be in
writing.
NOTICES:
33. Any notice required or permitted under this Lease shall be deemed
sufficiently given or secured if sent by registered or certified return receipt
mail to Tenant at 9961 Valley View Road, Eden Prairie, MN 55344, and to
----------------------------------------------
Landlord at the address then fixed for the payment of rent as provided in
Article 4 of this Lease, and either party may be like written notice at any time
designate a different address to which notices shall subsequently be sent or
rent to be paid.
RULES AND REGULATIONS:
34. Tenant shall observe and comply with the rules and regulations
hereinafter set forth in "Exhibit C," and with such further reasonable rules and
regulations as Landlord may prescribe, on written notice to Tenant for the
safety, care, and cleanliness of the Building.
INTENT OF PARTIES;
35. Except as otherwise provided herein, the Tenant covenants and agrees
that if it shall any time fail to pay any such cost or expense, or fail to take
out, pay for, maintain, or deliver any of the insurance policies above required,
or fail to make any other payment or perform any other act on its part to be
made or performed as in this Lease provided, then the Landlord may, but shall
not be obligated so to do, and without notice to or demand upon the Tenant and
without waiving or releasing the Tenant from any obligations of the tenant in
this Lease contained, pay any such cost or expense, effect any such insurance
coverage and pay premiums therefor, and may make any other payment or perform
any other act on the part of the tenant to be made and performed as in this
Lease provided, in such manner and to such extent as the Landlord may deem
desirable, and in exercising any such right, to also pay all necessary and
incidental costs and expenses, employ counsel, and incur and pay reasonable
attorneys' fees.
9/92 -10-
<PAGE>
All sums so paid by Landlord and all necessary and incidental costs and expenses
in connection with the performance of any such act by the landlord together with
interest thereon at the rate of twelve percent (12%) per annum from the date of
---------------------
making of such expenditure, by Landlord, shall be deemed additional rent
hereunder, and shall be payable to Landlord on demand. Tenant covenants to pay
any such sum or sums with interest as aforesaid and the landlord shall have the
same rights and remedies in the event of the non-payment thereof by Tenant as in
the case of default by Tenant in the payment of the Base Rent payable under this
Lease.
GENERAL:
36. The Lease does not create the relationship of principal and agent or
of partnership or of joint venture or of any association between Landlord and
Tenant, the sole relationship between the parties hereto being that of landlord
and tenant.
No waiver of any default of Tenant hereunder shall be implied from any
omission by landlord to take any action on account of such default if such
default persists or is repeated, and no express waiver shall affect any default
other than the default specified in the express waiver and that only for the
time and to the extent therein stated. One or more waivers by Landlord shall
not be construed as a waiver of a subsequent breach of the same covenant, term,
or condition. the consent to or approval by Landlord of any act by Tenant
requiring Landlord's consent or approval shall not waive or render unnecessary
Landlord's consent to or approval of any subsequent similar act by Tenant. No
action required or permitted to be taken by or on behalf of Landlord under the
terms or provisions of this Lease shall be deemed to constitute an eviction or
disturbance of Tenant's possession of the Demised Premises. All preliminary
negotiations are merged into and incorporated in this Lease. The laws of the
State of Minnesota shall govern the validity, performance, and enforcement of
this Lease.
a. This Lease and the exhibits, if any, attached hereto and forming
a part hereof, constitute the entire agreement between Landlord and Tenant
affecting the Demised Premises and there are no other agreements, either oral or
written, between them other than are herein set forth. No subsequent alteration,
amendment, change, or addition to this Lease shall be binding upon Landlord or
Tenant unless reduced to writing and executed in the same form and manner in
which this Lease is executed.
b. If any agreement, covenant, or condition of this Lease or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such agreement, covenant, or condition to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby and each agreement, covenant, or condition of his Lease shall be valid
and be enforced to the fullest extent permitted by law.
HAZARDOUS MATERIAL:
37. a. The Demised Premises hereby leased shall be used by and/or at the
sufferance of Tenant only for the purpose set forth in Article 11 above and for
no other purposes. Tenant shall not use or permit the use of the Demised
Premises in any manner that will tend to create waste or a nuisance, or will
tend to unreasonably disturb other tenants in the Building. Tenant, its
employees and all persons visiting or doing business with Tenant in the building
shall be bound by and shall observe the Building Rules and Regulations attached
to this Lease as Exhibit "C," and such further and other reasonable rules and
regulations made hereafter by Landlord relating to the Demised Premises or the
Building of which notice in writing shall be given to the Tenant, and all such
rules and regulations shall be deemed to be incorporated into and for a part of
this Lease.
b. Tenant covenants throughout the Lease Term, at Tenant's sold
cost and expense, promptly to comply with all laws and ordinances and the order,
rules, and regulations and requirements of all federal, state, and municipal
governments and appropriate departments, commissions, boards, and officers
thereof, and the orders, rules, and relations of the Board of Fire Underwriters
where the Demised Premises are situated, or any other body now or hereafter well
as extraordinary, and whether or not the same require structural repairs or
alterations, which may be applicable to the Demised Premises, or the use or
manner of use of the Demised Premises. Tenant will likewise observe and comply
with the requirements of all policies of public liability, fire, and all other
policies of insurance at any time in force with respect to the buildings and
improvements on the Demised Premises and the equipment thereof.
c. In the event any Hazardous Material (hereinafter defined) is
brought or caused to be brought into or onto the Demised Premises or the
Building by Tenant, Tenant shall handle any such material in compliance with all
applicable federal, state, and/or local regulations. For purposes of this
Article, "Hazardous Material" means and includes any hazardous, toxic, or
dangerous waste, substance or material defined as such in (or for purposes of)
the Comprehensive Environmental Response, Compensation, and Liability Act, any
so-called "Superfund" or "Superlien" law, or any federal, state, or local
statute, law, ordinance, code, rule, regulation, order, or decree regulating,
relating to, or imposing liability or standards of conduct concerning any
hazardous, toxic, or dangerous waste, substance or material, as now or at any
time hereafter in effect.
-11-
<PAGE>
9/92
Tenant shall submit to Landlord on an annual basis copies of its approved
hazardous materials communication plan, OSHA monitoring plan, and permits
required by the Resource Recovery and Conservation Act of 1976, if Tenant is
required to prepare, file, or obtain any such plans or permits. Tenant will
indemnify and hold harmless Landlord from any losses, liabilities, damages,
costs, or expenses (including reasonable attorneys' fees) which Landlord may
suffer or incur as a ressult of Tenant's introduction into or onto the Premises
of any Hazardous Material. This Article shall survive the expiration or sooner
termination of this Lease. To the best of the Landlord's knowledge, no
environmental contamination exists in the building as of the date of the lease.
CAPTIONS:
38. The captions are inserted only as a matter of convenience and for
reference, and in no way define, limit, or describe the scope of this Lease nor
the intent or any provision thereof.
EXHIBITS:
39. Reference is made to Exhibits A through E inclusive, which Exhibits
are attached hereto and made a part hereof.
EXHIBIT DESCRIPTION
------- -----------
Exhibit A Legal Description
Exhibit B Demised Premises
Exhibit C Building Rules and Regulations
Exhibit D Sign Criteria
Exhibit E Estoppel Certificate
40. Submission of this instrument to Tenant or proposed Tenant or his
agents or attorneys for examination, review, consideration, or signature does
not constitute or imply an offer to lease, reservation of space, or option to
lease, and this instrument shall have no binding legal effect until execution
hereof by both Landlord and Tenant or its agents.
41. It is agreed and understood that Scott Fredericksen, agent or broker
--------------------
with Welsh Companies, Inc., is representing The Northwestern Mutual Life
---------------------
Insurance Company, Landlord, and Gary Lally, agent or broker with Hoyt
----------- ----
Properties, Inc., is representing FieldWorks, Inc., Tenant.
- ------------------ -----------------
42. also see rider attached hereto and made a part hereof containing
Articlees 43 through Articles 45 inclusive.
-- --
-12-
<PAGE>
9/92
IN WITNESS EHREOF, the Landlord and the Tenant have caused these presents to be
executed in form and manner sufficient to bind them at law, as of the day and
year first above written.
TENANT: LANDLORD:
FieldWorks, Inc. THE NORTHWESTERN MUTUAL LIFE
- -------------------------------------
(A Minnesota Corporation) INSURANCE COMPANY
- -------------------------------------
By: /s/ Gary J. Beeman By: /s/ Joseph E. Fefer
--------------------------------- --------------------------------
Gary J. Beeman Joseph E. Fefer
Its: President and CEO Its: Senior Real Estate Officer
---------------------------------- -------------------------------
STATE OF )
)ss
COUNTY OF )
On this _____ day of ________________, 199__, personally came before me, a
Notary Public within and for said foregoing instrument, and acknowledged that
he executed the same as his free act and deed.
Notary Public ___________________________________
My Commission Expires -__________________________
STATE OF )
)ss
COUNTY OF )
On this _____ day of ________________, 199__, before me appeared
_________________________ and _____________________ , Vice President and
Assistant Secretary, respectively, of The Northwestern Mutual Life Insurance
Company, who are personally to me known and known to me to be such Vice
President and Assistant Secretary and to be the same persons who, as such
officers, executed the foregoing instrument of writing in the name of said
corporation and duly and severally acknowledged the execution thereof as the
free act and deed of said corporation.
Notary Public ___________________________________
My Commission Expires ___________________________
This instrument was prepared for
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
by Steve Martinie, Attorney
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
-13-
<PAGE>
9/92
RIDER TO LEASE
DATED MAY 10, 1994
BY AND BETWEEN
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, LANDLORD
AND
FIELDWORKS, INC.
(A MINNESOTA CORPORATION), TENANT
Article 43 - Early Occupancy:
In the event the Demised Premises becomes available and ready for occupancy
prior to the Commencement Date, Landlord may elect Tenant to take occupancy
of the Demised Premises. Such occupancy by Tenant shall be subject to all
of the terms and conditions hereof, except no Base Rent or Additional Rent
will be charged.
Article 44 - Improvements:
The Landlord will, at no expense to Tenant, recarpet the office area,
repair broken lunchroom cabinets, repaint the office area, revarnish the
existing doors, service and certify the HVAC electrical and plumbing
systems are in proper working condition upon the Lease Commencement Date
and rekey the Demised Premises. Any additional improvements other than
those described above must be approved by the Landlord and completed at the
sole cost of the Tenant.
Article 45 - First Opportunity To Lease Additional Space:
A. Provided Tenant is not in default and has performed all of its
obligations hereunder, Tenant shall have the First Opportunity to
lease such other contiguous spaces in their entirety, or at Landlord's
direction, some portion thereof, as they become available for leasing
during the Lease Term ("First Opportunity") for a term coterminous
with this Lease at the then prevailing market rental rates for
office/warehouse upon the following other terms and conditions:
B. Upon notification in writing by Landlord that such space is available,
Tenant shall have five (5) business days in which to elect in writing
so to lease such space, in which event the lease for same shall
commence not more than thirty (30) days after such space becomes
vacant and shall be coterminous with this Lease.
C. In the event Tenant declines or fails to elect so to lease such space,
then the First Opportunity hereby granted so as to such space shall
automatically terminate and shall thereafter be null and void as to
such space.
D. It is understood that this First Opportunity shall not be construed to
prevent any other tenant in the Building from extending or renewing
its lease.
E. The First Opportunity hereby granted is personal to FieldWorks, Inc.,
is not transferrable; in the event of any assignment of subletting
under this Lease, this First Opportunity shall automatically terminate
and shall thereafter be null and void.
TENANT: LANDLORD:
FIELDWORKS, INC. THE NORTHWESTERN MUTUAL
(A MINNESOTA CORPORATION) LIFE INSURANCE COMPANY
BY: /s/ Gary J. Beeman BY: /s/ Joseph E. Fefer
---------------------------- --------------------------------
Gary J. Beeman Joseph E. Fefer
ITS: President and CEO ITS: Senior Real Estate Office
--------------------------- -------------------------------
DATE: 5/16/94 DATE: 5/16/94
--------------------------- ------------------------------
-14-
<PAGE>
EXHIBIT 'A'
LEGAL DESCRIPTION
Portnoys 2nd Addition, Lot 001, Block 001
<PAGE>
EXHIBIT 'B'
FLOOR PLAN
<PAGE>
EXHIBIT "C"
BUILDING RULES AND REGULATIONS
1. Any sign, lettering, picture, notice or advertisement installed on or in
any part of the Premises and visible from the exterior of the Office/Showroom
Complex, or visible from the exterior of the Premises, shall be installed at
Tenant's sole cost and expense, and in such manner, character and style as
Landlord may approve in writing. In the event of a violation of the foregoing
by Tenant, Landlord may remove the same without any liability and may charge the
expense incurred by such removal to Tenant.
2. No awning or other projection shall be attached to the outside walls of the
Office/Showroom Complex. No curtains, blinds, shades or screens visible from
the exterior of the Premises, shall be attached to or hung in, or used in
connection with any window or door of the Premises without the prior written
consent of Landlord. Such curtains, blinds, shades, screens or other fixtures
must be of a quality, type, design and color, and attached in the manner
approved by Landlord.
3. Tenant, it's servants, employees, customers, invitees and guests shall not
obstruct sidewalks, entrances, passages, corridors, vestibules, halls, or
stairways in and about the Office/Showroom Complex which are used in common with
other tenants and their servants, employees, customers, guests and invitees, and
which are not a part of the Premises of Tenant. Tenant shall not place objects
against glass partitions or doors or windows which would be unsightly from the
Office/Showroom Complex corridors or from the exterior of the Office/Showroom
Complex and will promptly remove any such objects upon notice from Landlord.
4. Tenant shall not make excessive noises, cause disturbances or vibrations or
use or operate any electrical or mechanical devices that emit excessive sound or
other waves or disturbances or create obnoxious odors, any of which may be
offensive to the other tenants and occupants of the Office/Showroom Complex, or
that would interfere with the operation of any device, equipment, radio,
television broadcasting or reception from or within the Office/Showroom Complex
or elsewhere and shall not place or install any projections, antennas, aerials
or similar devices inside or outside of the Premises or on the Office/Showroom
Complex without Landlord's approval.
5. Tenant shall not waste electricity, water or air conditioning and shall
cooperate fully with Landlord to insure the most effective operation of the
Office/Showroom Complex's heating and air conditioning systems and shall refrain
from attempting to adjust any controls other than unlocked room thermostats, if
any, installed for Tenant's use. Tenant shall keep corridor doors closed.
<PAGE>
Exhibit "C"
Building Rules and Regulations
Page Two
6. Tenant assumes full responsibility for protecting its space from theft,
robbery and pilferage, which includes keeping doors locked and other means
of entry to the Premises closed and secured after normal business hours.
7. In no event shall Tenant bring into the Office/Showroom Complex
inflammables, such as gasoline, kerosene, naphtha and benzine, or
explosives or any other article of intrinsically dangerous nature. If, by
reason of the failure of Tenant to comply with the provisions of this
subparagraph, any insurance premium for all or any part of the
Office/Showroom Complex shall at any time be increased. Tenant shall make
immediate payment of the whole of the increased insurance premium, without
waiver of any of Landlord's other rights at law or in equity for Tenant's
breach of this Lease.
8. Tenant shall comply with all applicable federal, state and municipal laws,
ordinances and regulations, and building rules and shall not directly or
indirectly make any use of the Premises which may be prohibited by any of
the foregoing or which may be dangerous to persons or property or may
increase the cost of insurance or require additional insurance coverage.
9. Landlord shall have the right to prohibit any advertising by Tenant which
in Landlord's reasonable opinion tends to impair the reputation of the
Office/Showroom Complex or its desirability as an Office/Showroom Complex
for office use, and upon written notice from landlord, Tenant shall refrain
from or discontinue such advertising.
10. The Premises shall not be used for lodging, sleeping or for any immoral or
illegal purpose.
11. Tenant and Tenant's servants, employees, agents, visitors, and licensees
shall observe faithfully and comply strictly with the foregoing rules and
regulations and such other and further appropriate rules and regulations as
Landlord or Landlord's agent may from time to time adopt. Reasonable notice
of any additional rules and regulations shall be given in such manner as
Landlord may reasonably elect.
12. Unless expressly permitted by the Landlord, no additional locks or similar
devices shall be attached to any door or window and no keys other than
those provided by the Landlord shall be made for any door. If more than two
keys for one lock are desired by the Tenant, the Landlord may provide the
same upon payment by the Tenant. Upon termination of this lease or of the
Tenant's possession, the Tenant shall surrender all keys of the Premises
and shall explain to the Landlord all combination locks on safes, cabinets
and vaults.
<PAGE>
Exhibit "C"
Building Rules and Regulations
Page Three
13. Any carpeting cemented down by Tenant shall be installed with a releasable
adhesive. In the event of a violation of the foregoing by Tenant, Landlord
may charge the expense incurred by such removal to Tenant.
14. The water and wash closets, drinking fountains and other plumbing fixtures
shall not be used for any purpose other than those for which they were
constructed, and no sweepings, rubbish, rags, coffee grounds, or other
substances shall be thrown therein. All damages resulting from any misuse
of the fixtures shall be borne by the Tenant who, or whose servants,
employees, agents visitors or licensees, shall have caused the same. No
person shall waste water by interfering or tampering with the faucets or
otherwise.
15. No electric circuits for any purpose shall be brought into the leased
premises without Landlord's written permission specifying the manner in
which same may be done.
16. No dogs or other animals shall be allowed in office, halls, corridors, or
elsewhere in the building.
17. Tenant shall not throw anything out of the door or windows, or down any
passageways or elevator shafts.
18. All leading, unloading, receiving or delivery of goods, supplies or
disposal of garbage or refuse shall be made only through the entryways and
freight elevators provided for such purposes and indicated by Landlord.
Tenant shall be responsible for any damage to the building or the property
of its employees or to others and injuries sustained by any person
whomsoever resulting from the use of or moving of such articles in or out
of the leased premises, and shall make all repairs and improvements
required by landlord or governmental authorities in connection with the use
or moving of such articles.
19. All safes, equipment or other heavy articles shall be carried in or out of
the Premises only at such time and in such manner as shall be prescribed in
writing by landlord, and Landlord shall in all cases have the right to
specify the proper position of any such safe, equipment or other heavy
article, which shall only be used by Tenant in a manner which will not
interfere with or cause damage to the leased premises or the building in
which they are located, or to the other tenants or occupants of said
building. Tenant shall be responsible for any damage to the building or the
property of its employees or other and injuries sustained by any person
whomsoever resulting from the use or moving of such articles in or out of
the leased premises, and shall make all repairs and improvements required
by landlord or governmental authorities in connection with the use or
moving of such articles.
<PAGE>
Exhibit "C"
Building Rules and Regulations
Page Four
20. Canvassing, soliciting, and peddling in the building is prohibited and
each Tenant shall cooperate to prevent the same.
22. Wherever in these Building Rules and Regulations the word "Tenant" occurs,
it is understood and agreed that it shall mean Tenant's associates, agents,
clerks, servants, and visitors. Wherever the work "Landlord" occurs, it is
understood and agreed it shall mean Landlord's agent, clerks, servants, and
visitors.
23. Landlord shall have the right to enter upon the leased premises at all
reasonable hours for the purpose of inspecting the same.
24. Landlord shall have the right to enter the leased the premises at hours
convenient to Tenant for the purpose of exhibiting the same to prospective
tenants within the sixty (60) day period prior to the expiration of this
Lease, and may place signs advertising the leased premises for rent on the
windows and doors of said Premises at any time within said sixty (60) day
period.
25. Tenant, it's servants, employees, customers invitees and guests shall, when
using the common parking facilities, if any, in and around the building,
observe and obey all signs regarding fire lanes and no parking zones, and
when parking always park between the designated lines. Landlord reserves
the right to tow away, at the expense of the owner, any vehicle which is
improperly parked, or parked in a no parking zone. All vehicles shall be
parked at the sole risk of the owner, and Landlord assumes no
responsibility for any damage to or loss of vehicles. No vehicles shall be
parked over night outside the premises without notice to landlord or its
agents.
26. All entrance doors to the Premises shall be locked when the Premises are
not in use. All corridor doors shall also during times when the air
conditioning equipment in the Office/Showroom Complex is operating so as
not to dissipate the effectiveness of the systems or place an overload
thereon.
27. Landlord reserves the right at any time to rescind, alter or waive, in
whole or in part, any of these Rules and Regulations when it is deemed
necessary, desirable, or proper, in Landlord's judgment, for its best
interest or for the best interest of the tenants of the Office/Showroom
Complex.
<PAGE>
EXHIBIT "D"
SIGN CRITERIA
Oak Park Business Center
9947-9969 Valley View Road
Eden Prairie, MN
A sign criteria has been established for this project, and tenants will be
required to comply with the criteria.
1. Tenant Identification shall be by way of 30" in height x 28" in width
1/4" thick integral plexiglass signs with 1" wide x 4" high gold
colored vinyl letters, Helvetica medium style. The plexiglass will be
mounted by the entry doors including offset mounts from the wall.
2. Rear shipping identification shall be by way of 6" letters, Helvetica
Style, bronze in mounted above the shipping doors. In addition, if
desired, 3" white letters may be used on the rear entry doors.
3. Scaled drawings of the proposed signage must be submitted to the
manager of the property, Welsh Companies, 11200 W. 78th Street, Eden
Prairie, MN 55344 and be approved prior to sign construction.
4. The City manager of Eden Prairie has been instructed not to issue sign
permits for any sign unless accompanies on the necessary application
by a copy of the approved scaled drawing.
5. To assist tenants in complying with the sign criteria, a sign
consultant has been retained for the project. He is Brett Flemmer, 1409 7th
Street South, Hopkins, MN 55343; telephone number --(612) 938-6889.
<PAGE>
EXHIBIT "E"
ESTOPPEL CERTIFICATE
(BY SPACE TENANT)
IRE NO. _____________
Premises: _____________________________________________________________________
Lease dated _______________________________ between The Northwestern Mutual Life
Insurance Company, Landlord and _______________________________________________,
Tenant, commencing _____________________________________________________, 19___.
The undersigned, the Tenant under the above Lease, hereby certifies to ________,
the proposed purchaser (or mortgate) of the above Premises:
1. that said Lease is presently in full force and effect and unmodified
except as indicated at the end of this certificate*;
2. that the undersigned has accepted possession of said Demised Premises
and that any improvements required by the terms of said Lease to be
made by the Landlord have been completed to the satisfaction of the
undersigned;
3. that no rent under said Lease has been paid more than thirty (30) days
in advance of its due date;
4. that the address for notices to be sent to the undersigned is as set
forth in said Lease, or set forth below; and
5. that the undersigned, as of this date, has no charge, lien or claim of
setoff under said Lease or otherwise, against rents or other charges
due or to become due thereunder.
DATED: ________________________________, 19___ ________________________________
Address: _______________________
________________________________
* Lease modifications, if any, to be listed here:
<PAGE>
EXHIBIT 10.21
AMENDMENT NO. 1
TO LEASE DATED MAY 10, 1994, BY AND BETWEEN
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, AS LANDLORD
AND FIELDWORKS, INC. (A MINNESOTA CORPORATION), AS TENANT
THIS AMENDMENT NO. 1, made this 22nd day of May, 1996, by and between The
Northwestern Mutual Life Insurance Company (hereinafter called "Landlord") and
Fieldworks, Inc. (a Minnesota corporation), (hereinafter called "Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into a certain lease agreement, dated
May 10, 1994 (hereinafter called the "Lease"), under which Landlord demised to
Tenant the Demised Premises commonly known as Oak Park Business Center, 9947-
9969 Valley View Road, Eden Prairie, Minnesota; and
WHEREAS, Landlord and Tenant desire to set forth their agreement concerning
certain Agreements to the Lease, including the expansion of the Premises and to
establish the rents payable thereunder during the remaining Lease Term; and
WHEREAS, it is intended by this Agreement to amend said Lease;
NOW THEREFORE, in consideration of the Demised Premises, and of the
covenants and agreements herein undertaken to be kept and performed, it is
agreed as follows:
1. Expansion of Premises: Effective as of November 1, 1996, through and
---------------------
including June 30, 1999, the Premises shall be expanded to incorporate that
certain portion of the building that consists of 12,153 square feet (the
"Expansion Premises") as shown on the attached Exhibit A1, and thereafter the
Premises shall be deemed to contain 24,539 square feet.
2. Base Rent: Effective as of November 1, 1996, Tenant shall pay to
-----------
Landlord on the first day of each month, Base Rent under the following schedule:
<TABLE>
<CAPTION>
Monthly Total Base
Period Base Rent Rent for Period
------ ---------- ---------------
<S> <C> <C>
November 1, 1996, through and
including October 31, 1997 $12,854.00 $154,248.00
November 1, 1997, through and
including October 31, 1998 $13,360.00 $160,320.00
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
November 1, 1998, through and
including June 30, 1999 $13,867.00 $110,936.00
</TABLE>
3. Additional Rent: Effective November 1, 1996, through and including June
---------------
30, 1999, Tenant's percentage defined in Article 3 of the Lease of Real Estate
Taxes and Operating Expenses shall be increased from 30.49% to 60.40%.
Except as herein specifically amended, as other terms, and covenants, and
conditions of the Lease shall remain in full force and effect, and the same are
hereby ratified and confirmed.
TENANT: LANDLORD:
Fieldworks, Inc. The Northwestern Mutual Life Insurance
(A Minnesota Corporation) Company
/s/ Gary J. Beeman /s/ Cynthia White
Its: President and CEO Its: Senior Real Estate Officer
<PAGE>
Exhibit A1
Floor Plan
<PAGE>
EXHIBIT 10.22
LEASE AGREEMENT
---------------
THIS LEASE, made this 7th day of April, 1995, by and between RONALD C.
--- ------------
DEVINE, ("Landlord") and FIELDWORKS, INC., a Minnesota Corporation, ("Tenant").
WITNESSETH:
1. PREMISES
--------
Landlord does hereby rent and lease to the Tenant those certain Premises
consisting of approximately 2653 square feet of space (Floor 14) in the office
building known as The Springfield Tower, situated at Augusta Drive, Springfield,
Virginia 22151 (the "Building"), together with the appurtenant right to use in
common with the Landlord, other tenants, their guests and invitees, the
sidewalks, entries, passages, corridors, stairways, hallways, elevators and
other common areas of the building.
2. TERM
----
The term of this Lease shall commence on July 1, 1995 (the "Lease
Commencement Date") and shall end at midnight on June 30, 2000 (the "Lease
Termination Date"), unless sooner terminated pursuant to the terms hereof (the
"Term").
3. BASE RENT
---------
Tenant hereby covenants and agrees to pay during the term hereof a basic
annual rent for the first year of SIXTEEN THOUSAND TWO HUNDRED AND NO/100
DOLLARS ($16,200.00), without deductions, set off or demand, to be paid in equal
monthly installments as follows: ONE THOUSAND TWO HUNDRED AND 00/100
($1,200.00), promptly and in advance, on the first day of each month for the
first six months of the lease; increasing to ONE THOUSAND FIVE HUNDRED AND
00/100 DOLLARS ($1,500.00) on January, 1996. The basic annual rent shall
increase for the second year of the lease beginning on July 1, 1996 to TWENTY-
FOUR THOUSAND AND 00/100 DOLLARS to be paid in equal monthly installments of TWO
THOUSAND AND 00/100 DOLLARS. On July 1, 1997, the basic annual rent shall
increase to THIRTY THOUSAND AND 00/100 dollars with equal monthly installments
of TWO THOUSAND FIVE HUNDRED AND 00/100 dollars. On July 1, 1998, if Tenant
exercises its option to extend the Term for two additional years without
penalty, the basic annual rent shall increase to THIRTY SIX THOUSAND AND 00/100
DOLLARS to be paid in equal monthly installments of THREE THOUSAND AND 00/100
DOLLARS and shall remain at this rate for the remainder of the initial five year
lease.
In the event Tenant extends the Term for a second five year term, on July
1, 2000, the basic annual rent shall increase to FORTY TWO THOUSAND AND 00/100
DOLLARS to be paid in equal monthly installments of THREE THOUSAND FIVE HUNDRED
AND 00/100
<PAGE>
DOLLARS. On July 1, 2002, the basic annual rent shall increase to FORTY-EIGHT
THOUSAND AND 00/100 DOLLARS to be paid in equal monthly installment of FOUR
THOUSAND AND 00/100 DOLLARS and shall remain at this rate for the remainder of
the second five year lease.
All payments of rent shall be made by check, or by other appropriate forms
of payment reasonably determined by the Landlord, payable to Ronald C. Devine,
-----------------
trading as Property Services, and delivered to 6320 Augusta Drive, Twelfth
- ----------------------------- ---------------------------
Floor, Springfield, Virginia 22150 or to such other person, entity and/or place
- ----------------------------------
as may be designated in writing from Landlord to Tenant from time to time.
4. LATE CHARGES
------------
Payments of rent and any other charges due hereunder not received within
fifteen (15) calendar days of date due shall be subject to a five percent (5%)
late payment charge.
5. SECURITY DEPOSIT
----------------
Contemporaneous with its execution and delivery of this Lease, TENANT shall
deposit with Landlord the sum of ONE THOUSAND TWO HUNDRED AND 00/100 DOLLARS
($1,200.00) as and for a security deposit ("Security Deposit"), which Landlord
will hold as security for TENANT's prompt, full and faithful performance of each
and every of its obligations under the Lease for tenants lease. If an Event of
Default (as said term is defined in and by the Lease) occurs, LANDLORD, in its
sole discretion, may use, apply or retain the whole or any part of the Security
Deposit for the payment of (i) all rents, expenses or other charges due under
the Lease which TENANT has not paid at that time, or which become due and are
not paid after the occurrence of such Event of Default, (ii) any sum expended by
LANDLORD on TENANT's behalf in accordance with the provisions of this Lease
Agreement, or (iii) any sum which LANDLORD may expend or be required to expend
by reason of TENANT's default, including, without limitation, damages or
deficiency in the reletting of the Premises, and reasonable attorney's fees and
expenses and court costs. LANDLORD's election to use, apply or retain all or any
portion of the Security Deposit shall not operate to prevent LANDLORD from
exercising any other right or remedy provided by this Lease Agreement or by law,
and shall not operate as a limitation on any recovery to which LANDLORD may
otherwise be entitled. To the extent LANDLORD does so use, apply or retain all
or any portion of the Security Deposit, TENANT agrees to deposit cash with
-----------------------------------
LANDLORD, within ten (10) days after a written demand is made by LANDLORD, in an
- --------------------------------------------------------------------------------
amount sufficient to restore the Security Deposit to its original amount so that
- --------------------------------------------------------------------------------
LANDLORD shall have the full amount of the Security Deposit on hand at all
- --------------------------------------------------------------------------
times.
- -----
Provided TENANT fully and faithfully complies with all of its duties and
obligations under this Lease Agreement, the Security Deposit, or any remaining
balance thereof, shall be returned to TENANT within thirty (30) days following
the expiration of the Term.
In the event LANDLORD transfers its interest in the Premises, LANDLORD
shall have the right to transfer the Security Deposit to LANDLORD's transferee.
In such event, upon the
2
<PAGE>
delivery by LANDLORD to TENANT of such transferee's written acknowledgment of
its receipt of the Security Deposit (or the remaining balance thereof), TENANT
shall be deemed to have released LANDLORD of and from any further liability or
obligation for the return of all or any part of said Security Deposit, and
LANDLORD's transferee shall be bound by the provisions of this Lease Agreement
pertaining to the Security Deposit.
6. USE OF PREMISES
---------------
(a) The Premises are to be used only for office purposes and any other
incidental use which is legally permitted and is not inconsistent with the
character and type of tenancy found in first-class office buildings in Northern
Virginia.
(b) Tenant shall not suffer nor permit the Premises nor any part thereof
to be used in any manner, nor anything to be done therein, nor suffer or permit
anything to be brought into or kept therein, which would in any way (i) make
void , voidable or unobtainable any fire or liability insurance policy with
respect to the Building; (ii) cause, or, in Landlord's reasonable opinion, be
likely to cause physical damage to the Building or any part thereof; (iii)
constitute a public or private nuisance; (iv) impair, in the reasonable opinion
of Landlord, the appearance, character or reputation of the Building; (v) impair
or interfere with any of the Building services or impair or interfere with or
tend to impair or interfere with the use of any of the other areas of the
Building by, or occasion discomfort to landlord or any of the other tenants or
occupants of the Building, any such impairment or interference to be in the
reasonable judgment of Landlord; (vi) constitute waste; or (vii) make any noise
or set up any vibration which will disturb other tenants, except in the course
of permitted repairs or alterations.
(c) Tenant shall not use the Premises nor permit anything to be done in or
about the Premises which will in any way conflict with any law, statue,
ordinance or governmental rule or regulation now in force or which may hereafter
be enacted or promulgated. Tenant shall give prompt notice to Landlord of any
notice it receives of the violation of any law or requirement of any public
authority with respect to the premises or the use or occupation thereof.
Landlord shall give prompt notice to Tenant of any notice it receives relative
to the violation by Tenant of any law or requirement of any public authority
with respect to the Premises or the use or occupation thereof.
(d) Subject to "punch list" items identified by Tenant in writing to
Landlord within thirty (30) days of Tenant's taking possession and subject to
latent defects, Tenant accepts the Premises in their present condition.
7. TENANT'S CARE OF LEASED PREMISES
--------------------------------
(a) Tenant shall act with care in its use and occupancy of the Premises
and the fixtures therein. Tenant, at Tenant's sole cost and expense, shall make
all repairs and replacements to the Premises, structural or otherwise,
necessitated or caused by the acts, omissions or negligence of Tenant, or any
person claiming through or under Tenant or by the use or occupancy of the
Premises by Tenant or any person. Tenant, at Tenant's sole cost and
3
<PAGE>
expense, shall also make all repairs and replacements, as and when necessary, to
any alterations made by Tenant. In addition to the foregoing, all damage or
injury to the Premises, its fixtures, appurtenances and equipment caused by
Tenant moving property in or out or by installation or removal of furniture,
fixtures, or other property by Tenant shall be repaired, restored or replaced
promptly by Tenant, at its sole cost and expense, to the reasonable satisfaction
of Landlord. All aforesaid repairs, restoration and replacements shall be in
quality and class equal to the original work or installation.
(b) Landlord shall make the following repairs as and when necessary: (i)
structural repairs to the Premises and Building; (ii) repairs required in order
to provide the elevator, plumbing, heating and air conditioning services to be
furnished by Landlord pursuant to this Lease; (iii) repairs to exterior portions
of the Building, including windows, balconies and roof thereof; and (iv) other
repairs to the Building necessary for Tenant's use and enjoyment of the
Premises. Landlord's obligations under the preceding sentence shall not accrue
until after notice by Tenant to Landlord of the nature and necessity for any
specific repair to the extent Tenant has actual or constructive knowledge of the
need for such repairs.
8. INSPECTIONS
-----------
Upon reasonable prior notice to Tenant (except in an emergency) Landlord
may enter the Premises at reasonable hours to exhibit the Premises to
prospective purchasers or tenants; to inspect the Premises to see that Tenant is
complying with all its obligations hereunder; and to make repairs or
replacements required of Landlord under the terms hereof or repairs or
modifications to any adjoining space or any other areas of the Building.
Landlord shall be permitted to take any materials into and upon the Premises
that may be required in connection with such repairs or replacements. Landlord
will exercise its best efforts not to interfere with tenant, however, rent
abatement will be made if Tenant's use is materially interfered with.
9. DEFAULT PROVISIONS
------------------
(a) Each of the following events shall be deemed to be, and is referred to
in this Lease as, an "Event of Default":
(1) A default by Tenant in the due and punctual payment of any Rent
or any other charges due hereunder which continues for more than ten (10) days
after such amounts shall be due and payable; or
(2) The neglect or failure of Tenant to perform or observe any of the
terms, covenants or conditions contained in this Lease on Tenant's part to be
performed or observed (other than those referred to in paragraph (1) above)
which is not remedied by Tenant within 20 days after Landlord shall have given
to Tenant written notice specifying such neglect or failure; or
(3) The assignment, transfer, mortgaging or encumbering of this Lease
or the subletting of the Premises in a manner not permitted by this Lease; or
4
<PAGE>
(4) The taking of this Lease or the Premises, or any part thereof,
upon execution or by other process of law directed against Tenant, or upon or
subject to any attachment at the instance of any creditor of or claimant against
Tenant, which execution or attachment shall not be discharged within 30 days
after the levy thereof; or
(b) Upon the occurrence of an Event of Default, Landlord shall have the
right, at its election, then or at any time thereafter which such Event of
Default shall continue, either:
(1) To give Tenant written notice that this Lease will terminate on a
date to be specified in such notice, which date shall not be less than five days
after such notice, and on the date specified in such notice. Tenant's right to
possession of the Premises shall cease and this Lease shall thereupon be
terminated, but Tenant shall remain liable as provided in Subparagraph (d) of
this section; or
(2) Without demand or notice, to reenter to take possession of the
Premises or any part thereof, and repossess the same and expel Tenant and those
claiming through or under Tenant and remove the effects of both or either
summary proceedings, or by action at law or in equity or otherwise, without
being deemed guilty of any manner of trespass and without prejudice to any
remedies to collect rent due from Tenant.
(c) If Landlord elects to reenter under subparagraph (b) above, Landlord
may terminate this Lease, or, from time to time, without terminating this Lease,
may relet the Premises, or any part thereof, as agent for Tenant for such terms
and at such rentals and upon such other terms and conditions as Landlord may
deem advisable, with the right to make alterations and repairs to the premises.
No such reentry or taking of possession of the Premises by Landlord shall be
construed as an election on Landlord's part to terminate this lease unless a
written notice of such intention is given to Tenant under Subparagraph (b) above
or unless the termination thereof be decreed by a court of competent
jurisdiction.
(d) If Landlord terminates this Lease pursuant to Subparagraph (b) above,
Tenant shall remain liable to the extent legally permissible for (i) the sum of
(A) all Rent or any other charges due hereunder or provided for in this Lease
until the date this Lease would have expired had such termination not occurred,
and (B) any and all reasonable expenses incurred by Landlord in reentering the
Premises, repossessing the same, making good any default of Tenant, painting,
altering or dividing the Premises, combining the same with any adjacent space
for any new tenants, putting the same in proper repair, reletting the same
(including any and all reasonable attorney's fees and disbursements and
reasonable brokerage fees incurred in so doing), and any and all expenses which
Landlord may incur during the occupancy of any new tenant (other than expenses
of a type that are Landlord's responsibility under the terms of this Lease);
less (ii) the net proceeds of any reletting. Tenant agrees to pay to Landlord
the difference between items (i) and (ii) above with respect to each month
during the Term, within five days after the end of such month. Any suit brought
by landlord to enforce collection of such difference for any one month shall not
prejudice Landlord's right to enforce the collection of any difference for any
subsequent month. In addition to the foregoing, Tenant shall pay to the Landlord
reasonable attorney's fees
5
<PAGE>
with respect to any successful lawsuit or action instituted by land lord to
enforce the provisions of this Lease. Landlord shall have the right, at its sole
option, to relet the whole or any part of the Premises for the whole of the
unexpired Term, or longer, or from time to time for shorter periods, for any
rental then obtainable giving such concessions of rent and making such special
repairs, alterations, decorations and paintings for any new tenant as Landlord
in its sole and absolute discretion, may deem advisable. Tenant's liability as
aforesaid shall survive the institution of summary proceedings and the issuance
of any warrant thereunder. Landlord shall be under no obligation to relet the
Premises, but agrees to use its best efforts to do so.
10: BANKRUPTCY TERMINATION PROVISIONS
---------------------------------
This Lease shall automatically terminate and expire, without the
performance of any act or the giving of any notice by landlord, upon the
occurrence of any of the following events: (1) Tenant's admitting in writing its
inability to pay its debts generally as they become due, or (2) the commencement
by Tenant of a voluntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other applicable federal or state
bankruptcy, insolvency or other similar laws, or (3) the entry of a decree or
order for relief by a court having jurisdiction in an involuntary case under the
federal bankruptcy laws, as not constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar law, and the
continuance of any such decree or order unstated and in effect for a period of
30 consecutive days, or (4) Tenant's making an assignment of all or a
substantial part of its property for benefit of its creditors, or (5) Tenant's
seeking or consenting to or acquiescing in the appointment of, or the taking of
possession by, a receiver, trustee or custodian for all or a substantial part of
its property, or (6) the entry of a court order without Tenant's consent, which
order shall not be vacated, set aside or stayed with 30 days from the date of
entry, appointing a receiver, trustee or custodian for all or a substantial part
of its property. The provisions of this section shall be interpreted in a manner
which results in a termination of this Lease in each and every instance, and to
the fullest extent, that such termination is permitted under the federal
bankruptcy laws, it being of prime importance to the Landlord to deal only with
Tenants who have, and continue to have, a strong degree of financial strength
and financial stability.
11. PERSONALTY OF TENANT
--------------------
If the Tenant shall not remove all its furniture, personal property or
other effects (the "Personalty") from the Premises at any termination of this
Lease, Landlord may, at its option, remove all or part of the Personalty in any
manner that Landlord shall choose and store the same without liability to Tenant
for loss thereof. Tenant shall be liable to Landlord for all expenses incurred
in such removal and storage.
12. SERVICES AND UTILITIES
----------------------
(a) Landlord will furnish the following facilities, maintenance and
services without cost to Tenant with first rate materials and in a first rate
manner:
6
<PAGE>
(i) Electricity for lighting and ordinary office machinery;
provided, however, that Landlord shall be under no obligation to provide
electricity for any electronic computers or other data processing equipment or
electricity or gas to operate any air-conditioning equipment necessitated by the
installation of electronic computers or data processing equipment. Tenant shall
however have the right to install electronic computing and data processing
equipment at its expense, and Landlord agrees to make available to Tenant the
electrical energy and air-conditioning service customary to operate such
computing and data processing equipment.
(ii) Sufficient heat, air conditioning and fresh air supply to keep
the Premises comfortable for office use.
(iii) Automatic elevator service.
(iv) Adequate toilet facilities and all necessary toilet supplies,
hot and cold water and sewage.
(v) Janitorial services will be the responsibility of the Landlord.
(b) It is understood and agreed that Landlord shall not be under any
responsibility or liability in any way whatsoever for the quality, quantity,
impairment, interruption, stoppage or other interference with service involving
water, heat, air-conditioning, electric, electric current for light and power,
telephone or any other service arising from any conditions beyond the control of
Landlord. Will use its best efforts to restore such service as quickly as
possible.
(c) Landlord reserves the right to stop the service of heating, air-
conditioning, ventilating, elevator, plumbing, electricity or other mechanical
systems or facilities in the Premises or the Building, if necessary by reason of
accident or emergency, or for repairs, alterations, replacements, additions or
improvements which, in the reasonable judgment of Landlord, are desirable or
necessary, until said repairs or alterations, replacements, additions or
improvements are completed. Landlord shall provide a rent abatement in the event
services are halted for a prolonged period of time.
13. SUBLETTING AND ASSIGNMENT
-------------------------
(a) Tenant shall not mortgage, pledge, encumber, sell or assign this Lease
in whole or in part or sublease or sublet the whole or any part of the Premises,
nor permit the Premises to be used by others without the prior written consent
of Landlord, which consent shall not be unreasonably withheld. Any attempted
transfer, assignment, subletting mortgaging or encumbering of this Lease in
violation of the provisions of this section shall be void and confer no rights
upon any third person. No permitted assignment or subletting shall relieve
Tenant of any of its obligations under this Lease.
(b) If Tenant's interest in this Lease is assigned, whether or not in
violation of this provisions of this section, Landlord may collect rent from the
assignee. If the Premises or any part thereof are sublet to, or occupied by, or
used by, any person other than Tenant, whether or
7
<PAGE>
not in violation of this section, Landlord, after default by Tenant under this
Lease, may collect rent from the subtenant, user or occupant. in either case,
landlord shall apply the amount collected to the rents reserved in this Lease,
but neither any such assignment, subletting, occupancy or use, whether with or
without Landlord's prior consent, nor any such collection or application, shall
be deemed a waiver of any term, covenant or condition of this Lease or the
acceptance by Landlord of such assignee, subtenant, occupant or user as tenant.
The consent by Landlord to any assignment or subletting shall not relieve Tenant
from its obligation to obtain the express prior consent of Landlord to any
further assignment or subletting. Neither an assignment of Tenant's interest in
this Lease nor a subletting occupancy or use of the Premises or any part thereof
by any person other than Tenant, nor the collection of rent by landlord from any
person other than Tenant as provided in this subsection nor the application of
any such rent as provided in this subsection shall, in any circumstances,
relieve Tenant from its obligation fully to observe and perform the terms,
covenants and conditions of this Lease on Tenant's part to be observed and
performed.
14. LIABILITY INSURANCE
-------------------
(a) Tenant, at Tenant's sold cost and expense, shall obtain and maintain
in effect at all times during the Term, a policy of comprehensive general public
liability insurance with broad form property damage endorsement, naming Landlord
and (at Landlord's request) any Mortgagee of the Building and any management
agent as additional named insured(s), protecting Landlord, Tenant and any such
Mortgagee and management agent against any liability for bodily injury, death or
property damage occurring upon, in, or about any part of the Building or the
land on which it is built, the Leased Premises or any appurtenances thereto.
Such policies shall afford protection to the limit of not less than $500,000
with respect to bodily injury of death to any one person, to the limit of not
less than $1,000,000 with respect to bodily injury or death to any number of
persons in any one accident, and to the limit of not less than $100,000 with
respect to damage to the property of any one owner from one occurrence.
(b) Any insurance policies required to be obtained by Tenant under this
section: (i) shall be issued by an insurance company of recognized
responsibility licensed to do business in the jurisdiction in which the Building
is located; (ii) shall be written as primary policy coverage and not
contributing with or in excess of any coverage which Landlord may carry. Neither
the issuance of any insurance policy required under this Lease, nor the minimum
limits specified herein with respect to Tenant's insurance coverage, shall be
deemed to limit or restrict in any way Tenant's liability arising under or out
of this Lease. With respect to any insurance policy required to be obtained by
Tenant under this section, on or before the Lease Commencement Date, and at
least thirty (30) days before the expiration of the expiring policy or
certificate previously furnished, Tenant shall deliver to Landlord a certificate
of insurance therefor, together with evidence of payment of all applicable
premiums. Any insurance policy required to be carried hereunder by or on behalf
of Tenant shall provide (and any certificate evidencing the
8
<PAGE>
existence of each such insurance policy shall certify) that such insurance
policy shall not be canceled unless Landlord shall have received 20 days' prior
notice of cancellation.
(c) Except for the willful or negligent acts or omissions of Landlord or
its agents or employees, Tenant hereby agrees to indemnify and hold harmless
Landlord from and against any and all claims, losses, actions, damages,
liabilities and expenses (including attorney's fees) that (i) arise from or are
in connection with Tenant's possession, use, occupancy, management, repair,
maintenance or control of the Premises, or any portion thereof, or (ii) arise
from or are in connection with any willful or negligent acts or omissions of
Tenant or Tenant's agents, employees, invites or subtenants, or (iii) result
from any default, breach, violations or nonperformance of this lease or any
provision therein by Tenant, or (iv) arise from injury or death to persons or
damage to property sustained on or about the Premises. Tenant shall at its own
cost and expense, defend any and all actions, suits and proceedings which may be
brought against Landlord with respect to the foregoing, or in which Landlord may
be impleaded. Tenant shall pay, satisfy and discharge any and all money
judgments which may be recovered against Landlord in connection with the
foregoing.
15. FIRE INSURANCE
--------------
(a) Landlord shall, through the Term, at its expense, keep the Building
insured against all loss or damage by fire with extended coverage in such amount
as any first Mortgagee of the Building may from time to time require. Tenant
shall, throughout the Term, at its expense, keep Tenant's alterations to the
Premises and Tenant's personal property insured against all loss or damage by
fire with extended coverage in an amount sufficient to prevent Tenant from
becoming a co-insurer.
Tenant's policies of insurance shall contain an appropriate clause or
endorsement under which the insurer agrees that such policy shall not be
cancelled without at least 15 days' notice to Landlord.
(b) Landlord and Tenant will (i) if requested, advise the other as to the
provisions of fire and extended coverage insurance policies obtained pursuant to
this section, and (ii) notify the other promptly of any change in the terms of
any such policy which would affect such provisions.
16. DAMAGE BY FIRE OR OTHER CASUALTY
--------------------------------
In the event of loss of, or damage to, the Premises or the Building by fire
or other casualty, the rights and obligations of the parties hereto shall be as
follows:
(a) If the Premises or any part thereof shall be damaged by fire or other
casualty, Tenant shall give prompt notice thereof to Landlord, and Landlord,
upon receiving such notice, shall proceed promptly and with reasonable
diligence, subject to unavoidable delays and a reasonable time for adjustment of
insurance losses, to repair, or cause to be repaired, such damage in a manner
designed to minimize interference with Tenant's occupancy (but with no
9
<PAGE>
obligation to employ labor at overtime or other premium pay rates). If the
Premises or any part thereof shall be rendered untenantable by reason of such
damage, whether to the Premises or the Building, the Base rent and any
additional charges due hereunder shall proportionately abate for the period from
the date of such damage to the date when such damage has been repaired for the
portion of the Premises rendered untenantable.
(b) If as a result of fire or other casualty more than one-half (1/2) of
the Building is rendered untenantable, Landlord within 60 days from the date of
such fire or casualty may terminate this Lease by notice to Tenant, specifying a
date, not less than 20 nor more than 40 days after the giving of such notice, on
which the Term shall expire as fully and completely as if such date were the
date herein originally fixed for the expiration of the Term. If the Premises are
damaged as a result of fire or other casualty and if the damage to the Premises
is so extensive that such damage cannot be substantially repaired within 180
days from the date of the fire or other casualty, either Landlord or Tenant
within 30 days from the date of such fire or other casualty may terminate this
Lease by notice to the other, specifying a date, not less than 20 nor more than
40 days after the giving of such notice, on which the Term shall expire as fully
and completely as if such date were the date originally fixed for the expiration
of the Term. If either Landlord or Tenant terminates this Lease, the Base Rent
and all other charges due hereunder shall be apportioned as of the date of such
fire or other casualty. If neither Landlord or Tenant so elects to terminate
this Lease, then Landlord shall proceed to repair the damage to the Building and
the damage to the Premises, if any shall have occurred, and the Base Rent and
any other charges due hereunder shall meanwhile be apportioned and abated all as
provided in this subsection (a).
(c) If the Premises shall be rendered untenantable to the extent of eighty
percent (80%) or more by fire or other casualty during the last six months of
the Term, Landlord or Tenant may terminate this Lease upon notice to the other
party given within 90 days after such fire or other casualty specifying a date,
not less than 20 days nor more than 40 days after the giving of such notice, on
which the Term shall expire as fully and completely as if such date were the
date originally fixed for the expiration of the Term. If either Landlord or
Tenant terminates this Lease pursuant to this subsection, the Base Rent and any
additional charges due hereunder shall be apportioned as of the date of such
fire or casualty.
(d) Landlord shall not be required to repair or replace any of Tenant's
alterations or improvements or any other personal property of Tenant and no
damages, compensation or claim shall be payable by Landlord for inconvenience,
loss of business by annoyance arising from any repair or restoration of any
portion of the Premises or of the Building.
(e) Notwithstanding any other provisions of this Lease, Landlord shall not
be liable or responsible for, and Tenant hereby releases Landlord and its
Partners, officers, directors, agents and employees from and any person claiming
by, through or under Tenant, by way of subrogation or otherwise, for any injury,
loss or damage to Tenant's property covered by a valid and collectible fire
insurance policy with extended coverage endorsement. Tenant shall require its
insurer(s) to include in all of Tenant's insurance policies which could give
rise to a right of subrogation against Landlord a clause or endorsement whereby
the insurer(s) shall waive any
10
<PAGE>
rights of subrogation against Landlord, and Tenant shall pay any additional
premium required therefor.
(f) Notwithstanding any other provision of this Lease, Tenant shall not be
liable or responsible for, and Landlord hereby releases Tenant and its partners,
officers, directors, agents and employees from, any and all liability or
responsibility to Landlord or any person claiming by, through or under Landlord,
by way of subrogation or otherwise, for any injury, loss or damage to Landlord's
property covered by a valid and collectible fire insurance policy with extended
coverage endorsement. Landlord shall require its insurer(s) to include in all of
Landlord's insurance policies which could give rise to a right of subrogation
against Tenant a clause or endorsement whereby the insurer(s) shall waive any
rights of subrogation against Tenant, and Landlord shall pay any additional
premium required therefor.
(g) The proceeds payable under all fire and other hazard insurance
policies maintained by Landlord on the building shall belong to and be the
property of the Landlord, and Tenant shall not have any interest in such
proceeds. Tenant agrees to look to its own fire and hazard insurance policies in
the event of damage to Tenant's alterations or its personal property.
17. CONDEMNATION
------------
(a) In the event of a taking under the power of eminent domain or
condemnation ("Taking") of the whole of the Premises, this Lease shall terminate
as of the date of such Taking. If only a part of the Premises shall be so taken
then, except as otherwise provided in this subsection, this Lease shall continue
in force and effect but, from and after the date of the Taking, the Base Rent
and any additional charges due hereunder shall be equitably reduced on the basis
of the portion of the Premises so taken. If a part of the Building shall be
taken, and if (i) the part of the Building so taken contains more than twenty-
five percent (25%) of the Premises immediate to such Taking, or (ii) in
Landlord's reasonable opinion, it shall be impracticable to continue to operate
the Building, then Landlord, may give to Tenant within 50 days after the date
upon which Landlord shall have received notice of the Taking, a 30 day's notice
of termination of this lease. If a 30 days' notice of termination is given by
landlord, this Lease shall terminate upon the expiration of the 30-day period.
If part of the Building, premises or common areas shall be taken and, in
Tenant's reasonable opinion, it shall be impracticable to continue to operate
the Building, then Tenant may give to Landlord within 50 days after the date
upon which Tenant shall have received notice of the Taking, a 30 day'[s notice
of termination of this lease. If a taking occurs which does not result in the
termination of this Lease, Landlord shall repair, alter and restore the
remaining portions of the Premises to their former condition to the extent the
same may be feasible.
(b) Landlord shall have the exclusive right to receive any and all awards
made for damages to the Premises and the building accruing by reason of a Taking
or by reason of anything lawfully done in pursuance of public or other
authority. Tenant hereby releases and assigns to Landlord all of Tenant's rights
to such awards, and covenants to deliver such further assignments and assurances
thereof as Landlord may from time to time request. This provision shall not
prevent Tenant from seeking to recover relocation benefits and such business
damages
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and/or consequential damages as any be allowed by law which do not constitute a
part of the compensation for the Building and do not diminish the amount of the
aware to which landlord would otherwise be entitled.
18. DEMOLITION AND RENOVATION
-------------------------
(a) In the event Landlord decides to take action which will result in the
demolition and/or renovation of the Building in which the Premises are located,
then this Lease shall automatically be terminated as of One Hundred Eighty (180)
days after Landlord gives written notice of its intent to demolish and/or
renovate.
(b) Upon any termination of this Lease under any of the provisions of this
section, the parties shall be released thereby, without further obligation to
the other, from the date possession of the Premises is surrendered to the
Landlord, except for Tenant's obligations which have theretofore accrued and are
then unpaid.
(c) Nothwithstanding any destruction or damage to the Premises or the
Building, including the parking facilities and interior and adjacent landscaped
areas, Tenant shall not be released from any of its obligations under this Lease
except to the extent and upon the conditions expressly stated in this section.
19. ALTERATIONS AND IMPROVEMENTS
----------------------------
(a) Tenant shall make no alterations, additions or improvements
("Alterations") to the Premises without first obtaining the Landlord's written
consent, which consent shall not be unreasonably withheld. All alterations or
other fixtures, whether temporary or permanent in character (except only the
movable office furniture and equipment of the Tenant), made in or upon the
Premises, either by Tenant or Landlord, shall be Landlord's property and shall
remain upon the Premises at the termination of the Term by lapse of time or
otherwise, without compensation to Tenant. At the option of Landlord, all or any
part of such Alterations may be required by Landlord to be removed from the
Premises at the expiration of the Term or other termination of this Lease at
Tenant's expense and, at Tenant's expense, the Premises shall be restored to
their original condition existing prior to the installation of the alterations
by Tenant, ordinary wear and tear excepted.
(b) Tenant shall pay or cause to be paid all costs for work done by Tenant
or caused to be done by Tenant on the Premises of a character which will or may
result in liens on Landlord's interest therein and Tenant will keep the Premises
free and clear of all mechanic's liens and other liens on account of work done
for Tenant or persons claiming under it. Tenant hereby agrees to indemnify,
defend and save Landlord harmless of and from all liability, loss, damage, costs
or expenses, including reasonable attorneys' fees, incurred on account of any
claims of any nature whatsoever for work performed for, or materials or supplies
furnished to Tenant, including lien claims of laborers, materialmen or others.
Should any such liens be filed or recorded against the Premises with respect to
work done or for materials supplied to or on behalf of Tenant or any action
affecting the title thereto be commenced, Tenant shall cause such
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<PAGE>
liens to be removed of record within five (5) days after notice from Landlord.
If Tenant shall be in default in paying any charge for which a mechanic's lien
or suit thereon has been filed and shall not have caused such lien or suit to be
discharged, Landlord may (but without being required to do so) pay such lien or
claim any costs, and the amount so paid, together with reasonable attorneys'
fees incurred in connection therewith, shall be immediately due from Tenant to
Landlord.
20. RULES AND REGULATIONS
---------------------
The rules and regulations attached hereto as Exhibit "A" shall be and are
hereby made a part of this Lease. Tenant, its servants and agents, will perform
and abide by said rules and regulations, and any reasonable and uniform
amendments or additions thereto as may be made from time to time by Landlord.
21. HOLDING OVER
------------
If Tenant remains in possession after expiration of the term hereof, Tenant
shall be deemed to be occupying the Premises as a tenant from month to month.
There shall be no renewal of this Lease by operation of law or otherwise and
Tenant shall be subject to all other terms and conditions hereof.
22 SURRENDER OF PREMISES
---------------------
At the termination of this Lease, Tenant shall remove all of its property
and surrender the Premises and keys thereof to Landlord in the same condition as
at commencement of the Term, normal wear and tear only excepted.
23. PARKING
-------
Tenant shall have, without charge, non-exclusive use of automobile parking
spaces on the on-site parking area of the building. Access and use thereof shall
be as provided in the Rules and Regulations promulgated by landlord. Such
parking spaces shall be available on a first-come, first-served basis, subject,
however, to the rights of any other tenant of the building to park vehicles in
reserved parking spaces as may be provided in such Tenant's lease.
24. SUBORDINATION
-------------
(a) This Lease and Tenant's interest hereunder shall be subordinate to and
subject to the lien of any Mortgage or Deed of Trust ("Mortgage") made by
landlord against the Building. This Lease and Tenant's interest hereunder shall
be subject and subordinate to the lien of such Mortgage and to all renewals,
modifications, replacements, consolidations and extensions thereof and to any
and all advances made thereunder and the interest thereon. Tenant agrees that,
within 10 days after receipt of a written request therefor from Landlord, it
will from time to time execute and deliver any instrument or other document
required by any such Mortgagee to
13
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subordinate this and deliver any instrument or other document required by any
such Mortgagee to subordinate this Lease and its interest in the Premises to the
lien of such Mortgage.
(b) This Lease and Tenant's interest hereunder shall be subject and
subordinate to each and every ground or underlying lease hereafter made of the
Building or the land on which it is constructed, or both, and to all renewals,
modifications, replacements and extensions thereof. Tenant agrees that, within
10 days after the receipt of written request therefor from landlord, it will,
from time to time, execute, acknowledge and deliver any instrument or other
document required by any such lessor to subordinate this Lease and its interest
in the Premises to such ground or underlying lease.
(c) If the Building, or any part thereof, or the land on which the
building is constructed, or Landlord's leasehold estate in the building, is at
any time subject to a first Mortgage, and (i) this Lease is assigned to the
First Mortgagee, and (ii) Tenant is given written notice of such assignment,
including the name and address of the assignee, then, in such event, Tenant
shall not terminate this Lease or make any abatement in the Base Rent payable
hereunder for any default on the part of Landlord without first giving notice,
in the manner provided elsewhere in this Lease for the giving of notices, to
such first Mortgagee, specifying the default and affording a reasonable
opportunity to make performance, at its election for and on behalf of Landlord.
25. ATTORNEY'S FEES
---------------
In the event any sums payable to Landlord hereunder are collected at law or
through any attorney at law, Tenant shall pay, in addition to such sums, twenty
percent (20%) thereof as attorney's fees. Tenant shall pay all reasonable
attorney's fees and expenses Landlord incurs in connection with any litigation
or negotiations which landlord shall, without its fault, become involved through
or on account of this Lease. Except as provided above, in connection with any
dispute or litigation between Landlord and Tenant with respect to this Lease or
the Premises, the prevailing party shall be entitled to reasonable attorneys'
fees and costs from the other.
26. ATTORNMENT AND NON-DISTURBANCE
------------------------------
In the event of (i) a transfer of Landlord's interest in the Premises, (ii)
the termination of any ground or underlying lease of the Building or the land on
which it is constructed or both, or (iii) the purchase of the Building or
Landlord's interest therein in a foreclosure sale or be deed in lieu of
foreclosure under any mortgage or pursuant to a power of sale contained in any
mortgage, then in any such events Tenant shall, upon demand by the owner of the
Building or the land on which it is constructed, or both, attorn to and
recognize the transferee or purchaser of Landlord's interest or the lessor under
the terminated ground or underlying lease, as the case may be , as Landlord
under this Lease for the balance then remaining of the Term, and thereafter this
Lease shall continue as a direct lease between such person, as "Landlord" and
"Tenant", except that such lessor, transferee or purchaser shall not be liable
for any act or omission of Landlord prior to such lease termination or prior to
such person's succession to title, nor be bound by any payment of Base Rent or
additional charges due hereunder prior to such lease termination or prior to
such person's succession to title for more than one month in advance. Tenant
hereby
14
<PAGE>
waives the provisions of any present or future law or regulations which gives or
purports to give Tenant any right to terminate or otherwise adversely affect
this Lease, or the obligations of Tenant hereunder, upon or as a result of the
termination of any ground or underlying lease or the completion of any such
foreclosure and sale.
27. ESTOPPEL CERTIFICATES
---------------------
Tenant agrees from time to time, within 15 days after written request
therefor by Landlord, to execute, acknowledge and deliver to Landlord a
statement in writing certifying to Landlord, any Mortgagee, assignee of a
mortgagee, or any purchaser of the Building or the land on which it is
constructed, or any other person designated by Landlord, as of the date of such
statement, (i) that Tenant is in possession of the Premises; (ii) that this
Lease is unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect as modified and
setting forth such modifications); (iii) whether or not there are then existing
any set-offs or defenses known to Tenant against the enforcement of right or
remedy of Landlord, or any duty or obligation of Tenant, hereunder (and, if so,
specifying the same in detail); (iv) the dates, if any, to which any base Rent
or other charges have been paid in advance; (v) that Tenant has no knowledge of
any such uncured defaults, specifying the same in detail); (vi) that Tenant has
no knowledge of any event having occurred that authorizes the termination of
this Lease by Tenant (if Tenant has such knowledge, specifying the same in
detail); (vii) the amount of any security deposit held by Landlord) and (viii)
any additional facts reasonably requested by any such Mortgagee, assignee of a
Mortgagee or purchaser.
28. LIMITATION ON LANDLORD'S LIABILITY
----------------------------------
(a) Except for damages resulting from the willful or negligent act or
omission of Landlord, its agent and employees, Landlord shall not be liable to
Tenant, and its employees, agents, business invitees, licensees, customers,
guests or trespassers for any damage or loss to the property of Tenant or others
located on the Premises, or in the Building or the land on which it is built, or
for any accident or injury to persons in the Premises of the Building, resulting
from the necessity of repairing any portion of the Building; the use or
operation (by Tenant or any other person or persons whatsoever) of any
elevators, or heating, cooling, electrical or plumbing equipment or apparatus;
the termination of this Lease by reason of the destruction of the Building or
the Premises; any fire, robbery, theft, and/or any other casualty; any leaking
water, wind, rain, or snow that may leak into, or flow from, any part of the
Premises or the Building; any acts or omissions of any occupant of any space
adjacent to or adjoining all or any part of the Premises; any water, gas, steam,
fire, explosion, electricity or falling plaster; the bursting, stoppage or
leakage of any pipes, sewer pipes, drains, conduits, appliances or plumbing
works, or, any other cause whatsoever.
(b) Landlord shall not be required to perform its obligations under this
Lease, nor be liable for loss or damage for failure to do so, nor shall Tenant
be released from any of its obligations under this Lease because of the
Landlord's failure to perform, where such failure arises from or through
unavoidable delays beyond Landlord's control. If Landlord is so delayed or
prevented from performing any of its obligations during the Term, the period of
such delay or
15
<PAGE>
such prevention shall be deemed added to the time herein provided for the
performance of any such obligation.
29. NAME OF BUILDING; TENANT'S SIGNS
--------------------------------
(a) Landlord expressly reserves the right to have the Building designated
by a street number or numbers and to affix to the building, at locations
designated by Landlord, signs indicating any such number or numbers and the name
of the Building as selected from time to time by Landlord.
(b) Landlord has not granted to Tenant any rights in or to the roof or the
outer side of the outside walls or windows of the Building, control of which is
hereby reserved by Landlord. Tenant shall not display or erect any lettering,
signs, advertisements, awnings or other projections on the exterior of the
Premises or in the interior of the Premises if visible from a public way, except
for customary hallway door lettering.
(c) Landlord shall provide a directory tablet in the main lobby of the
Building, at its expense, upon which Landlord will affix Tenant's name. The
size, color and style of such directory and the names affixed thereto shall be
selected by Landlord.
(d) The location, size, color and style of any sign or hallway door
lettering utilized by Tenant shall be subject to Landlord's approval. Any Tenant
sign shall conform to the design criteria which Landlord has established for the
Building.
30. LEASING COMMISSION
------------------
Landlord and Tenant each represent and warrant to the other that neither of
them has employed any broker in carrying on the negotiations relative to this
Lease. Landlord and Tenant shall each indemnify and hold harmless the other from
and against any claim or claims for brokerage or other commission arising from
or out of any breach of the foregoing representation and warranty.
31. PERMITS AND LICENSES
--------------------
Tenant shall have the responsibility of procuring at its sole cost and
expense any necessary permits, licenses or variances required for the conduct of
Tenant's business or for any improvements or renovations to the Premises. Tenant
agrees to hold Landlord harmless from any damages or other losses resulting from
any delay or inability to obtain any required permits, licenses or variances.
32. GENERAL PROVISIONS
------------------
(a) The covenants, conditions, agreements, terms and provisions herein
contained shall be binding upon, and shall inure to the benefit of, the parties
hereto and each of their respective personal representatives, successors and
assigns.
16
<PAGE>
(b) It is the intention of the parties hereto that this Lease shall be
construed and enforced in accordance with the laws of the Commonwealth of
Virginia.
(c) No failure by Landlord to insist upon the strict performance of any
term, covenant, agreement, provision, condition or limitation of this Lease or
to exercise any right or remedy consequent upon a breach thereof, and no
acceptance by the Landlord of full or partial rent during the continuance of any
such breach, shall constitute a waiver of any such breach or of any such term,
covenant, agreement, provision, condition or limitation. No term, covenant,
agreement, provision, condition or limitation of this Lease to be kept, or
performed by Landlord or by Tenant, and no breach thereof, shall be waived,
altered or modified except by a written instrument executed by Landlord or by
Tenant, as the case may be. No waiver of any breach shall affect or alter this
Lease, but each and every term, covenant, agreement, provision, condition and
limitation of this Lease shall continue in full force and effect with respect to
any other then-existing or subsequent breach thereof.
(d) No notice, request, consent, approval, waiver or other communication
which may be or is required or permitted to be given under this Lease shall be
effective unless the same is in writing and is delivered in person or sent by
registered or certified mail, return receipt requested, first-class postage
prepaid as follows:
IF TO LANDLORD:
RONALD C. DEVINE
6320 AUGUSTA DRIVE, SUITE 1200
SPRINGFIELD, VA 22150
IF TO TENANT:
GARY BEEMAN
FIELDWORKS, INC.
9961 VALLEY VIEW ROAD
EDEN PRAIRIE, MN 55344
or any other address that may be given by one party to the other by notice
pursuant to this subsection. Such notices, if sent by registered or certified
mail, shall be deemed to have been given at the time of mailing.
(e) It is understood and agreed by and between the parties hereto that
this Lease contains the final and entire agreement between said parties, and
that they shall not be bound by any terms, statements, conditions or
representations, oral or written, express or implied, not herein contained. It
is understood and agreed, however, that the terms hereof shall be modified, if
so required, for the purpose of complying with or fulfilled the requirements of
any Mortgagee secured by a first Mortgage that may now be or hereafter become a
lien on the Building, provided, however, that such modification shall not be in
substantial derogation or diminution of
17
<PAGE>
any of the rights of the parties hereunder, nor increase any of the obligations
or liabilities of the parties hereunder.
(f) Time is of the essence in the performance of all Tenant's obligations
under this Lease.
(g) Wherever appropriate herein, the singular includes the plural and the
plural includes the singular.
(h) This Lease has been executed in several counterparts, but all
counterparts shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Lease on the day and
year first above written.
LANDLORD:
/s/ Ronald C. Devine
----------------------------------------
RONALD C. DEVINE
TENANT:
/s/ Gary J. Beeman
----------------------------------------
GARY J. BEEMAN
18
<PAGE>
EXHIBIT "A"
-----------
RULES AND REGULATIONS, a part of the within lease
1. The sidewalks, entries, passages, court corridors, stairways and
elevators shall not be obstructed by any of the Tenants, their employees or
agents, or used by them for purposes other than in ingress and egress to and
from their respective suites.
2. All office furniture, safes, or other heavy articles shall be carried
up into the Premises only at such times and in such manner as shall be
prescribed by the Landlord and the Landlord shall in all cases have the right to
specify the proper weight and position of any such safe or other heavy article.
Any damage done to the building by taking in or removing any safe or from
overloading any floor in any way shall be paid by the Tenant. Defacing or
injuring in any way any part of the building by the Tenant, his agents or
employees, shall be paid for by the Tenant.
3. Tenant will refer all contractors, contractors' representatives and
installation technicians rendering any service on or to the Premises for Tenant
to landlord for Landlord's approval and supervision before performance of any
contractual service. This provision shall apply to all work performed in the
building, including installation of telephones, telegraph equipment, electrical
devices and attachments and installations of any nature affecting floors, walls,
woodwork, trim, windows, ceilings, equipment or any other physical portion of
the building.
4. No sign, advertisement or notice shall be inscribed, painted or
affixed on any part of the inside or outside of the said building unless of such
color, size and style and in such place upon or in said building as shall first
be designated by Landlord; there shall be no obligation or duty on Landlord to
allow any sign, advertisement or notice to be inscribed, painted or affixed on
any part of the inside or outside of said building. Signs on doors will be
painted for the Tenant by a sign writer approved by the Landlord, and cost of
the painting to be paid by the Tenant. A directory in a conspicuous place, with
the names of the Tenants, will be provided by landlord; and necessary revisions
in this will be made by landlord within a reasonable time after notice from the
Tenant of the error of change making the revision necessary. Landlord shall have
the right to remove all other signs without notice to Tenant at the expense of
Tenant.
5. Tenant shall have the non-exclusive use in common with the Landlord,
other tenants, their guests and invites, of the automobile parking areas,
driveways and footpaths, subject to reasonable rules and regulations for the use
thereof as prescribed from time to time by Landlord. Landlord shall have the
right to designate parking areas for the use of the building tenants and their
employees, and the tenants and their employees shall not park in parking areas
not so designated. Tenant agrees that upon written notice from Landlord, it will
furnish to Landlord, within five (5) days from receipt of such notice, the state
automobile license numbers assigned to the automobiles of the Tenant and its
employees.
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6. The janitor of the building may at all times keep a pass key. No
additional locks or burglar alarms shall be placed upon any doors without the
written consent of the Landlord, and in any event, copies of any keys or
instructions to burglar alarms necessary for entry shall be immediately provided
to Landlord.
7. No windows or other openings that reflect or admit light into the
corridors or passageways, or to any other place in said building, shall be
covered or obstructed by any of the Tenants.
8. The water closets and other water fixtures shall not be used for any
purpose other than those for which they were constructed, and any damage
resulting to them from misuse, or the defacing, or injury of any party of the
building, shall be borne by the person who shall occasion it.
9. No person shall disturb the occupants of the building by the use of
any musical instruments, loudspeakers, the making of unseemly noises, or any
unreasonable use. No dogs or other animals or pets of any kind will be allowed
in the building.
10. No bicycles or similar vehicles will be allowed in the building.
11. Nothing shall be thrown out of the windows of the building or down the
stairways or other passages.
12. Tenant shall not be permitted to use or to keep in the building any
kerosene, camphene, burning fluid or other illuminating materials.
13. If the Tenant desires telegraphic, telephonic or other electric
connections, Landlord or its agents will direct the electricians as to where and
how the wires may be introduced, and without such direction no boring or cutting
of wires will be permitted.
14. If Tenant desires shades or awnings, they must be of such shape,
color, materials and make as shall be prescribed by landlord and any outside
awning proposed may be prohibited by Landlord.
15. All glass, locks and trimmings in or about the doors and windows and
all electric fixtures belonging to the building shall be kept whole, and
whenever broken by anyone shall be immediately replaced or repaired and put in
order by Tenant under the direction and to the satisfaction of Landlord, and
upon vacation or premises by Tenant, shall be left whole and in good repair.
20
<PAGE>
16. Tenant shall not install or authorize the installation of any vending
machines or food preparation devices without Landlord's written approval.
Approval of a microwave oven is hereby given.
INITIALS:
LANDLORD: /s/ RCD
TENANT: /s/ GJB
21
<PAGE>
ADDENDUM
This Addendum is attached to and made a part of that certain lease between
FIELDWORKS, INC., a Minnesota corporation, as Tenant, and PROPERTY SERVICES,
INC., as Landlord. The purpose of this Addendum is to set forth additional terms
and conditions relating to said Lease.
1. Extension Options.
-----------------
Landlord grants Tenant five successive options to extend the Term for 60
months each, subject to the following conditions:
(a) Tenant gives Landlord at least three months' written notice of
Tenant's election to extend the Term prior to the expiration of the
initial Term or applicable extended Term, as the case may be.
(b) The Base Rent for the first extended Term shall be in accordance with
Paragraph 2 of Section 3 of the Lease and each subsequent extended
Term shall equal the Base Rent for the previous year adjusted by a
percentage equal to the percentage change in the U.S. Department of
Labor Consumer Price Index for all Urban Consumers which covers the
smallest geographical area that includes the Premises and is
maintained consistently throughout such previous rental period (the
"CPI").
2. Space Build Out: Landlord will provide, at no additional cost to
FieldWorks, Inc. a complete office build-out to include new suspended
ceiling, new industrial grade carpet, one reception area, a
copy/coffee/storage/file room/kitchenette, file and supply room and closet,
all electric power wiring and receptacles (per attached drawing), all
existing air-conditioning/heating and thermostats and one-half the cost of
installation of vertical blinds not to exceed $1,000.
3. Furture improvements to the space will be done by East Coast Construction
at Tenant's expense. Tenant will pay only for the actual costs of these
improvements.
4. Phone and computer communication wiring (Category 5 shielded twisted pair
LAN cabling) shall be installed by Tenant.
5. Property taxes will be paid by Property Services. There will be no pass
through of taxes to FieldWorks, Inc.
6. This agreement shall be handled directly by and between FieldWorks, Inc.
and Property Services, Inc. There shall be no brokerage fee.
7. The entire floor will be built out to Tenant's specifications, however
Tenant does not currently have a need for the entire floor. Therefore,
three to four offices may be leased
22
<PAGE>
individually to third-party tenants. Property Services, Inc. will manage
and administer all subletting, billing and collection. reveune for the
subletted space will be divided equally (50/50) between Tenant and Property
Services, Inc. Said monies will be paid to Tenant on a monthly basis.
8. Signs. Tenant may install one illuminated sign on the top of the north
-----
exterior side of the Building. The total surface area of the sign is not to
exceed 64 square feet. Tenant shall be responsible for all costs associated
with the sign, including permitting, installation, maintenance and
electrical installation and service.
9. Exclusive Parking. Tenant shall, without additional charge, be entitled to
-----------------
one exclusive double-wide parking space in the location shown on Exhibit D
---------
hereto. Landlord will clearly mark this space as being reserved for Tenant.
TENANT: FIELDWORKS, INC.
By: /s/ Gary J. Beeman
-------------------------------------
Its CEO
-------------------------------------
LANDLORD: PROPERTY SERVICES, INC.
By: /s/ Ronald C. Devine
-------------------------------------
President
23
<PAGE>
EXHIBIT "D"
EXCLUSIVE PARKING
Lower Parking Area
Augusta Drive
One exclusive FieldWorks parking space on lower parking level (covered)
Requires high overhead clearance for converted van.
24
<PAGE>
EXHIBIT 10.23
L E A S E
-------------
THIS AGREEMENT made and executed this first day of November, 1995 by and between
CSW Associates, hereinafter called the Landlord, and Fieldworks, Inc.,
hereinafter called the Tenant, and witnesseth, that Landlord has agreed to, and
does hereby, let unto Tenant the premises known as 3006 Research Drive, Space
A1, State College, PA for the term of 24 months, commencing the 1 Day of Nov
1995 and ending at midnight on Oct. 31, 1997. The rent shall be set at an
initial rate of $1742 per month for the first year. In subsequent years, the
rent may be adjusted for the prorata share of increases in local, school and
county property taxes, prorated extra costs exceeding $2,000 for snow removal
and increases in the Consumer Price Index with the base year beginning January
1, 1994. In no case shall the portion of the rent increase due to CPI be more
than 5% in any given year. Rent shall be payable in monthly installments by
check to with the first installment payable on the execution of this Agreement
and the remaining installments payable in advance on the first day of each
ensuing month at the office of CSW Associates, 226 Highland Avenue, State
College, PA 16801 and Tenant does hereby covenant and agree as follows:
1. That he will, and does, hereby take and hold said premises as a Tenant
for the term of 24 months.
2. That he will pay said rent, at the time specified, without deduction
or demand.
3. That he will not transfer nor assign this Agreement, nor let nor
sublet the whole or part of said premises the written consent of
Landlord first. Consent will not be unreasonably without withheld.
4. That he will keep said premises in good order and condition, and
surrender same at the expiration of the term herein in the same order
in which they are received, usual wear and tear and damages resulting
from acts not caused by Tenant's negligence excepted.
5. That he will allow Landlord or its agents to have access to said
premises at any time for the purpose of inspection, or in the event of
fire or other property damage, or for the purpose of installing or
removing screens and awnings, or for the purpose of making any repairs
Landlord considers necessary or desirable within a 9 am - 5 pm period
with a one-week notice required, except in any emergency situation, or
to show property to future tenants.
6. That he will give Landlord prompt notice of any defects or breakage in
the structure, equipment or fixtures of said premises.
7. That he will not make any alterations or additions to the structure,
equipment or fixtures of said premises, or do any redecorating or
repainting without the written consent of the Landlord. Consent will
not be unreasonably withheld.
8. The Tenant is responsible for his own electric costs, phone, natural
gas and sewer bills. The Landlord will provide public water, outdoor
lighting, maintenance of exterior of building and snow removal. Tenant
is responsible for Janitorial Services for their space
<PAGE>
and it is understood that Tenant A1 & A2 will share the expense and
responsibility to clean & maintain the entrance hallway outside
suite.
9. That he will conform to the rules and regulations made or hereafter
made by Landlord for the management of the building.
10. That all personal property placed in the leased premises or in any
other portion of said building or place appurtenant thereto, shall be
at the sole risk of the Tenant or the parties owning the same, and the
Landlord shall in no event be liable for the loss, destruction, theft
of or damage to such property.
11. That the Landlord shall not be liable or responsible for any loss,
injury or damage from any cause whatever to the Tenant, any
member of the Tenant's family, any guest or visitor of the Tenant or
to another person or to any property at any time within said rented
suite.
In the event of default after 10 days notice from Landlord to Tenant in the
payment of any installment of rent, the Tenant hereby authorizes and empowers
the Prothonotary or any attorney of any County of Record to appear for and to
confess judgement against Tenant and in favor of Landlord for the entire amount
of the rent reserved herein or for any part thereof then remaining unpaid with
costs of suit, with 15% added for attorney fees and costs.
Landlord and Tenant agree that timely payment of the rental and performance
of all terms and conditions of this Lease Agreement is of the essence of this
Lease Agreement. If the monthly rental shall not have been paid after the 5th of
each month when the rental shall have been due, the Tenant agrees to pay the
late charge of $5.00 per day retroactive to the day when the payment was due to
compensate Landlord for additional administrative costs, expenses and liquidated
damages caused by the late payment. If payment is made to Landlord at the proper
address by first-class mail postage prepaid, then the date of the postmark shall
be the date of payment.
Option to Renew: Tenant may extend the term of the Lease Agreement for two
(2) additional two-year periods by giving notice to Landlord in writing of
Tenant's intention to do so not later than ninety (90) days prior to the
expiration of the current term of this Lease. Tenant's right to so extend the
Lease term shall be subject to the following conditions:
(1) If Tenant is in default at any time during the term of this Lease, any
option to extend the term shall become immediately null and void
without notice to Tenant; and
(2) All the terms, covenants and provisions of this Lease shall apply to
such extended term, with the express exception of rent and prorated
share of increases as written in first paragraph off this Lease
Agreement.
Damage or Destruction: If the leased premises or the building should be
damaged or destroyed during the term of this Lease by fire or other insurable
casualty, Landlord shall, subject to the time that elapses due to adjustment of
fire insurance, repair and/or restore the same to substantially the condition it
was in immediately prior to such damage or destruction, except as otherwise
noted in this Paragraph. Landlord's obligation under this Paragraph shall, in no
event, exceed the scope of the work required to be done by Landlord in the
original construction of the building. Landlord shall not be required to replace
or restore any trade
<PAGE>
fixtures, signs or other installations theretofore installed by Tenant. Rent
payable under this Lease shall be abated proportionately according to the floor
area of the leased premises which is usable by Tenant, there shall be not
abatement of rent. Such abatement shall continue for the period commencing with
such damage or destruction and ending with the completion by Landlord of such
work of repair and/or reconstruction as Landlord is obligated to do. If,
however, the leased premises or the building should be damaged or destroyed by
any cause so that Landlord shall decide to demolish or to completely rebuild the
leased premises or the building, Landlord may, within sixty days after such
damage or destruction, give Tenant written notice of such decisions and
thereupon this Lease shall be deemed to have terminated as of the date of the
damage or destruction and Tenant shall immediately quit and surrender the leased
premises to Landlord. Tenant is to provide adequate insurance to cover tenant
improvements and equipment.
Confession of Judgement in Ejectment: Should the said Tenant break, or
even attempt to break, evade, or attempt to evade, any of the covenants or
conditions of this Lease, or should he make any assignment for the benefit of
creditors, or commit any act of bankruptcy, or become insolvent, than all of the
said Tenant's right, title and interest in the within Lease shall forthwith
cease, end and determine, and the said Landlord shall be entitled to the
immediate possessions of the herein leased premises and the said Landlord may
file an action in ejectment in the Court of Common Pleases of Centre County, PA
for said premises as if a summons had been regularly issued out of said Court at
the suit of the said Landlord against the said Tenant and had been duly served
and so returned by the Sheriff, and upon the filing of a suggestion covenants of
such Lease file therein by said Landlord, or any agent of the said Landlord, the
said Landlord for the premises herein leased and to direct the immediate issuing
of a Write and Habere Facias Possessionem, with the Clause of Fieri Facias for
costs, waiving all irregularities, without notice, and without asking Leave of
Court, and without Stay of Execution, Right of Appeal, and Right to have
Judgement Opened.
And it is further agreed that, upon the breach by the Tenant of any
Agreement of covenant herein, the Landlord may, within 10 days written notice
via certified mail to rectify the situation, re-enter and repossess said
premises and re-rent the same or substitute other tenants therein and exercise
general supervision and control over said premises for the balance of said term,
and that no such re-entry or re-letting or exercise of right or control over
said premises by the Landlord shall be construed as a surrender or acceptance of
a surrender of said premises by the Tenant, but shall be an option granted by
the Landlord and reserved by the Landlord to protect its rights and those of the
Owner of said property; that no such re-entry, substitution of tenants or re-
letting of said premises shall be construed as abatement of the rental,
hereinabove agreed to get paid, or as a waiver of the Tenant's liability
therefore, provided however, that any amount so received from any substituted
Tenant after deducting all proper charges, costs, expenses and damages,
including any property attorney's fees, incurred by the Landlord, shall be
credited to the Tenant who shall in any and all such events remain liable for
the full amount of rental therefore. This Lease shall be interpreted and
construed in accordance with the laws of the State of Pennsylvania.
Tenant is responsible for contents and insuring same.
IT IS FURTHER MUTUALLY UNDERSTOOD AND AGREED AS FOLLOWS:
1. The Landlord shall be under no liability to Tenant due to any
discontinuance of heat, hot water, elevator service, if such service is
furnished or for the discontinuance of any other service caused by
accidents,, breakage or strikes or for any accident or damage caused by the
handling of electric wires or lights, and the Landlord shall not be liable
for loss of or damage to property of Tenant caused by moths,
<PAGE>
termites, or other vermin, or by rain, snow, water or stream that may leak
into or flow from any part of said premise through any defects in the roof
or plumbing, or from any other source.
2. At beginning of the Lease, Tenant shall deposit with Landlord the sum of
$1742 as security for the full and faithful performance by Tenant of all
terms, covenants and conditions of this Lease to be performed by Tenant
against which sum Landlord is authorized to charge any damages occasioned
by Tenant's not fully and faithfully performing any of said terms,
covenants and conditions. At the expiration of the term of this Lease
returned to the Tenant, but only after an inspection of the premises has
been made after vacation thereof by Tenant and before occupancy by another
Tenant.
IN TESTIMONY WHEREOF, the respective parties have hereunto set their hands
and seals the day and year first hereinbefore written.
BY: _____________________________________________
(TENANT) Re/Max Centre Realty Agent for CSW Assoc.
Charlene A. Wallace
I hereby guarantee the faithful
performance of the terms of this
Lease.
BY: ______________________________________________
By /s/ Steve Manske
-----------------
Paragon/FieldWorks, Inc.
By /s/ Gary J. Beeman
------------------
Paragon/FieldWorks, Inc.
<PAGE>
EXHIBIT 10.24
FIELDWORKS, INCORPORATED
1994 LONG-TERM INCENTIVE
AND
STOCK OPTION PLAN
SECTION 1. PURPOSE OF PLAN.
- ----------------------------
This Plan shall be known as the "FIELDWORKS, INCORPORATED 1994 LONG-
TERM INCENTIVE AND STOCK OPTION PLAN" and is hereinafter referred to as the
"Plan". The purpose of the Plan is to aid in maintaining and developing
personnel capable of assuring the future success of Fieldworks, Incorporated, a
Minnesota corporation (the "Company"), to offer such personnel additional
incentives to put forth maximum efforts for the success of the business, and to
afford them an opportunity to acquire a proprietary interest in the Company
through stock options and other long-term incentive awards as provided herein.
Options granted under this Plan may be either incentive stock options
("Incentive Stock Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986 (the "Code"), or options that do not qualify as Incentive
Stock Options. Awards granted under this Plan shall be SARs, restricted stock or
performance awards as hereinafter described.
SECTION 2. STOCK SUBJECT TO PLAN.
- ----------------------------------
Subject to the provisions of Section 16 hereof, the stock to be
subject to options or other awards under the Plan shall be the Company's
authorized common shares, par value $0.01 per share (the "Common Shares"). Such
Common Shares may be either authorized but unissued shares, or issued shares
which have been reacquired by the Company. Subject to adjustment as provided in
Section 16 hereof, the maximum number of shares on which options may be
exercised or other awards issued under this Plan shall be 720,000 shares. If an
option or award under the Plan expires, or for any reason is terminated or
unexercised with respect to any shares, such shares shall again be available for
options or awards thereafter granted during the term of the Plan.
SECTION 3. ADMINISTRATION OF PLAN.
- -----------------------------------
(a) The Plan shall be administered by the Board of Directors of the
Company or a committee thereof. The members of any such committee shall be
appointed by and serve at the pleasure of the Board of Directors. (The group
administering the Plan shall hereinafter be referred to as the "Committee".)
(b) The Committee shall have plenary authority in its discretion, but
subject to the express provisions of the Plan: (i) to determine the purchase
price of the Common Stock covered by each option or award, (ii) to determine the
employees to whom and the time or times at which such options and awards shall
be granted and the number of shares to be subject to each,
1
<PAGE>
(iii) to determine the form of payment to be made upon the exercise of an SAR or
in connection with performance awards, either cash, Common Shares of the Company
or a combination thereof, (iv) to determine the terms of exercise of each option
and award, (v) to accelerate the time at which all or any part of an option or
award may be exercised, (vi) to amend or modify the terms of any option or award
with the consent of the optionee, (vii) to interpret the Plan, (viii) to
prescribe, amend and rescind rules and regulations relating to the Plan, (ix) to
determine the terms and provisions of each option and award agreement under the
Plan (which agreements need not be identical), including the designation of
those options intended to be Incentive Stock Options, and (x) to make all other
determinations necessary or advisable for the administration of the Plan,
subject to the exclusive authority of the Board of Directors under Section 17
herein to amend or terminate the Plan. The Committee's determinations on the
foregoing matters, unless otherwise disapproved by the Board of Directors of the
Company, shall be final and conclusive.
(c) The Committee shall select one of its members as its Chair and
shall hold its meetings at such times and places as it may determine. A majority
of its members shall constitute a quorum. All determinations of the Committee
shall be made by not less than a majority of its members. Any decision or
determination reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a majority vote at
a meeting duly called and held. The grant of an option or award shall be
effective only if a written agreement shall have been duly executed and
delivered by and on behalf of the Company following such grant. The Committee
may appoint a Secretary and may make such rules and regulations for the conduct
of its business as it shall deem advisable.
SECTION 4. ELIGIBILITY AND GRANT.
- ----------------------------------
(a) Eligibility. Incentive Stock Options may only be granted under
-----------
this Plan to any full or part-time employee (which term as used herein includes,
but is not limited to, officers anddirectors who are also employees) of the
Company and of its present and future subsidiary corporations within the meaning
of Section 424(f) of the Code (herein called "subsidiaries"). Full or part-time
employees, directors who are not employees, consultants or independent
contractors to the Company or one of its subsidiaries or affiliates shall be
eligible to receive options which do not qualify as Incentive Stock Options and
awards. In determining the persons to whom options and awards shall be granted
and the number of shares subject to each, the Committee may take into account
the nature of services rendered by the respective employees or consultants,
their present and potential contributions to the success of the Company and such
other factors as the Committee in its discretion shall deem relevant.
(b) Grant of Additional Options. A person who has been granted an
---------------------------
option or award under this Plan may be granted additional options or awards
under the Plan if the Committee shall so determine; provided, however, that to
the extent the aggregate fair market value (determined at the time the Incentive
Stock Option is granted) of the Common Shares with respect to which all
Incentive Stock Options are exercisable for the first time by an employee during
any calendar year (under all plans described in subsection (d) of Section 422 of
the Code of his or her employer corporation and its parent and subsidiary
corporations) exceeds $100,000,
2
<PAGE>
such options shall be treated as options that do not qualify as Incentive Stock
Options. Nothing in the Plan or in any agreement thereunder shall confer on any
employee any right to continue in the employ of the Company or any of its
subsidiaries or affect, in any way, the right of the Company or any of its
subsidiaries to terminate his or her employment at any time.
SECTION 5. PRICE.
- ------------------
The option price for all Incentive Stock Options granted under the
Plan shall be determined by the Committee but shall not be less than 100% of the
fair market value of the Common Shares at the date of grant of such option. The
option price for options granted under the Plan that do not qualify as Incentive
Stock Options and, if applicable, the price for all awards shall also be
determined by the Committee. For purposes of the preceding sentence and for all
other valuation purposes under the Plan, the fair market value of the Common
Shares shall be as reasonably determined by the Committee. If on the date of
grant of any option or award hereunder the Common Shares are not traded on an
established securities market, the Committee shall make a good faith attempt to
satisfy the requirements of this Section 5 and in connection therewith shall
take such action as it deems necessary or advisable.
SECTION 6. TERM.
- -----------------
Each option and award and all rights and obligations thereunder shall
expire on the date determined by the Committee and specified in the option or
award agreement. The Committee shall be under no duty to provide terms of like
duration for options or awards granted under the Plan, but the term of an
Incentive Stock Option may not extend more than ten (10) years from the date of
grant of such option and the term of options granted under the Plan which do not
qualify as Incentive Stock Options may not extend more than fifteen (15) years
from the date of granting of such option.
SECTION 7. EXERCISE OF OPTION OR AWARD.
- ----------------------------------------
(a) Exercisability. The Committee shall have full and complete
--------------
authority to determine whether an option or award will be exercisable in full at
any time or from time to time during the term thereof, or to provide for the
exercise thereof in such installments, upon the occurrence of such events (such
as termination of employment for any r eason) and at such times during the term
of the option as the Committee may determine and specify in the option or award
agreement.
(b) No Violation of State or Federal Laws. The exercise of any
-------------------------------------
option or award granted hereunder shall only be effective at such time that the
sale of Common Shares pursuant to such exercise will not violate any state or
federal securities or other laws.
(c) Method of Exercise. An optionee or grantee electing to exercise
------------------
an option or award shall give written notice to the Company of such election and
of the number of shares subject to such exercise. The full purchase price of
such shares shall be tendered with such notice
3
<PAGE>
of exercise. Payment shall be made to the Company in cash (including bank check,
certified check, personal check, or money order), or, at the discretion of the
Committee and as specified by the Committee, (i) by delivering certificates for
the Company's Common Shares already owned by the optionee or grantee having a
fair market value as of the date of grant equal to the full purchase price of
the shares, or (ii) by delivering the optionee's or grantee's promissory note,
which shall provide for interest at a rate not less than the minimum rate
required to avoid the imputation of income, original issue discount or a below-
market-rate loan pursuant to Sections 483, 1274 or 7872 of the Code or any
successor provisions thereto, or (iii) a combination of cash, the optionee's or
grantee promissory note and such shares. The fair market value of such tendered
shares shall be determined as provided in Section 5 herein. The optionee's or
grantee's promissory note shall be a full recourse liability of the optionee and
may, at the discretion of the Committee, be secured by a pledge of the shares
being purchased. Until such person has been issued the shares subject to such
exercise, he or she shall possess no rights as a shareholder with respect to
such shares.
SECTION 8. RESTORATION OPTIONS.
- --------------------------------
The Committee may grant "restoration" options, separately or together
with another option, pursuant to which, subject to the terms and conditions
established by the Committee and any applicable requirements of Rule 16b-3
promulgated under the Exchange Act or any other applicable law, the optionee
would be granted a new option when the payment of the exercise price of the
option to which such "restoration" option relates is made by the delivery of
shares of the Company's Common Shares owned by the optionee, as described in
this Section 8, which new option would be an option to purchase the number of
shares not exceeding the sum of (a) the number of shares of the Company's Common
Shares tendered as payment upon the exercise of the option to which such
"restoration" option relates and (b) the number of shares of the Company's
Common Shares, if any, tendered as payment of the amount to be withheld under
applicable income tax laws in connection with the exercise of the option to
which such "restoration" option relates, as described in Section 12 hereof.
"Restoration" options may be granted with respect to options previously granted
under this Plan or any prior stock option plan of the Company, and may be
granted in connection with any option granted under this Plan at the time of
such grant. The purchase price of the Common Shares under each such new option,
and the other terms and conditions of such option, shall be determined by the
Committee, consistent with the provisions of the Plan.
SECTION 9. STOCK APPRECIATION RIGHTS.
- --------------------------------------
(a) Grant. At the time of grant of an option or award under the Plan
-----
(or at any other time), the Committee, in its discretion, may grant a Stock
Appreciation Right ("SAR") evidenced by an agreement in such form as the
Committee shall from time to time approve. Any such SAR may be subject to
restrictions on the exercise thereof as may be set forth in the agreement
representing such SAR, which agreement shall comply with and be subject to the
following terms and conditions and any additional terms and conditions
established by the Committee that are consistent with the terms of the Plan.
4
<PAGE>
(b) Exercise. An SAR shall be exercised by the delivery to the
--------
Company of a written notice which shall state that the holder thereof elects to
exercise his or her SAR as to the number of shares specified in the notice and
which shall further state what portion, if any, of the SAR exercise amount
(hereinafter defined) the holder thereof requests is to be paid in cash and what
portion, if any, is to be paid in Common Shares of the Company. The Committee
promptly shall cause to be paid to such holder the SAR exercise amount either in
cash, in Common Shares of the Company, or any combination of cash and shares as
the Committee may determine. Such determination may be either in accordance with
the request made by the holder of the SAR or in the sole and absolute discretion
of the Committee. The SAR exercise amount is the excess of the fair market value
of one share of the Company's Common Shares on the date of exercise over the per
share exercise price in respect of which the SAR was granted, multiplied by the
number of shares as to which the SAR is exercised. For the purposes hereof, the
fair market value of the Company's shares shall be determined as provided in
Section 5 herein.
SECTION 10. RESTRICTED STOCK AWARDS.
- ------------------------------------
Awards of Common Shares subject to forfeiture and transfer
restrictions may be granted by the Committee. Any restricted stock award shall
be evidenced by an agreement in such form as the Committee shall from time to
time approve, which agreement shall comply with and be subject to the following
terms and conditions and any additional terms and conditions established by the
Committee that are consistent with the terms of the Plan:
(a) Grant of Restricted Stock Awards. Each restricted stock award
---------------------------------
made under the Plan shall be for such number of Common Shares as shall be
determined by the Committee and set forth in the agreement containing the terms
of such restricted stock award. Such agreement shall set forth a period of time
during which the grantee must remain in the continuous employment of the Company
in order for the forfeiture and transfer restrictions to lapse. If the Committee
so determines, the restrictions may lapse during such restricted period in
installments with respect to specified portions of the shares covered by the
restricted stock award. The agreement may also, in the discretion of the
Committee, set forth performance or other conditions that will subject the
Common Shares to forfeiture and transfer restrictions. The Committee may, at its
discretion, waive all or any part of the restrictions applicable to any or all
outstanding restricted stock awards.
(b) Delivery of Common Shares and Restrictions. At the time of a
------------------------------------------
restricted stock award, a certificate representing the number of Common shares
awarded thereunder shall be registered in the name of the grantee. Such
certificate shall be held by the Company or any custodian appointed by the
Company for the account of the grantee subject to the terms and conditions of
the Plan, and shall bear such a legend setting forth the restrictions imposed
thereon as the Committee, in its discretion, may determine. The grantee shall
have all rights of a shareholder with respect to the Common Shares, including
the right to receive dividends and the right to vote such shares, subject to the
following restrictions: (i) the grantee shall not be entitled to delivery of the
stock certificate until the expiration of the restricted period and the
fulfillment
5
<PAGE>
of any other restrictive conditions set forth in the restricted stock agreement
with respect to such Common Shares; (ii) none of the Common Shares may be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed
of during such restricted period or until after the fulfillment of any such
other restrictive conditions; and (iii) except as otherwise determined by the
Committee, all of the Common Shares shall be forfeited and all rights of the
grantee to such Common Shares shall terminate, without further obligation on the
part of the Company, unless the grantee remains in the continuous employment of
the Company for the entire restricted period in relation to which such Common
Shares were granted and unless any other restrictive conditions relating to the
restricted stock award are met. Any Common Shares, any other securities of the
Company and any other property (except for cash dividends) distributed with
respect to the Common Shares subject to restricted stock awards shall be subject
to the same restrictions, terms and conditions as such restricted Common Shares.
(c) Termination of Restrictions. At the end of the restricted period
---------------------------
and provided that any other restrictive conditions of the restricted stock award
are met, or at such earlier time as otherwise determined by the Committee, all
restrictions set forth in the agreement relating to the restricted stock award
or in the Plan shall lapse as to the restricted Common Shares subject thereto,
and a stock certificate for the appropriate number of Common Shares, free of the
restrictions and the restricted stock legend, shall be delivered to the grantee
or his or her beneficiary or estate, as the case may be.
SECTION 11. PERFORMANCE AWARDS.
- -------------------------------
The Committee is further authorized to grant performance awards.
Subject to the terms of this Plan and any applicable award agreement, a
performance award granted under the Plan (i) may be denominated or payable in
cash, Common Shares (including, without limitation, restricted stock), other
securities, other awards, or other property and (ii) shall confer on the holder
thereof rights valued as determined by the Committee, in its discretion, and
payable to, or exercisable by, the holder of the Performance awards, in whole or
in part, upon the achievement of such performance goals during such performance
periods as the Committee, in its discretion, shall establish. Subject to the
terms of this Plan and any applicable award agreement, the performance goals to
be achieved during any performance period, the length of any performance period,
the amount of any Performance award granted, and the amount of any payment or
transfer to be made by the grantee and by the Company under any Performance
award shall be determined by the Committee.
SECTION 12. INCOME TAX WITHHOLDING AND TAX BONUSES.
- ---------------------------------------------------
(a) Withholding of Taxes. In order to comply with all applicable
--------------------
federal or state income tax laws or regulations, the Company may take such
action as it deems appropriate to ensure that all applicable federal or state
payroll, withholding, income or other taxes, which are the sole and absolute
responsibility of an optionee or grantee under the Plan, are withheld or
collected from such optionee or grantee. In order to assist an optionee or
grantee in paying all federal and state taxes to be withheld or collected upon
exercise of an option or award which
6
<PAGE>
does not qualify as an Incentive Stock Option hereunder, the Committee, in its
absolute discretion and subject to such additional terms and conditions as it
may adopt, shall permit the optionee or grantee to satisfy such tax obligation
by (i) electing to have the Company withhold a portion of the shares otherwise
to be delivered upon exercise of such option or award with a fair market value,
determined in accordance with Section 5 herein, equal to such taxes or (ii)
delivering to the Company
Common Shares other than the shares issuable upon exercise of such
option or award with a fair market value, determined in accordance with Section
5, equal to such taxes.
(b) Tax Bonus. The Committee shall have the authority, at the time
---------
of grant of an option under the Plan or at any time thereafter, to approve tax
bonuses to designated optionees or grantees to be paid upon their exercise of
options or awards granted hereunder. The amount of any such payments shall be
determined by the Committee. The Committee shall have full authority in its
absolute discretion to determine the amount of any such tax bonus and the terms
and conditions affecting the vesting and payment thereafter.
SECTION 13. ADDITIONAL RESTRICTIONS.
- ------------------------------------
The Committee shall have full and complete authority to determine
whether all or any part of the Common Shares of the Company acquired upon
exercise of any of the options or awards granted under the Plan shall be subject
to restrictions on the transferability thereof or any other restrictions
affecting in any manner the optionee's or grantee's rights with respect thereto,
but any such restriction shall be contained in the agreement relating to such
options or awards.
SECTION 14. TEN PERCENT SHAREHOLDER RULE.
- -----------------------------------------
Notwithstanding any other provision in the Plan, if at the time an
option is otherwise to be granted pursuant to the Plan the optionee owns
directly or indirectly (within the meaning of Section 424(d) of the Code) Common
Shares of the Company possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or its parent or
subsidiary corporations, if any (within the meaning of Section 422(b)(6) of the
Code), then any Incentive Stock Option to be granted to such optionee pursuant
to the Plan shall satisfy the requirements of Section 422(c)(5) of the Code, and
the option price shall be not less than 110% of the fair market value of the
Common Shares of the Company determined as described herein, and such option by
its terms shall not be exercisable after the expiration of five (5) years from
the date such option is granted.
SECTION 15. NON-TRANSFERABILITY.
- --------------------------------
No option or award granted under the Plan shall be transferable by an
optionee or grantee, otherwise than by will or the laws of descent or
distribution. Except as otherwise provided in an option or award agreement,
during the lifetime of an optionee or grantee, the option shall be exercisable
only by such optionee or grantee.
7
<PAGE>
SECTION 16. DILUTION OR OTHER ADJUSTMENTS.
- ------------------------------------------
If there shall be any change in the Common Shares through merger,
consolidation, reorganization, recapitalization, dividend in the form of stock
(of whatever amount), stock split or other change in the corporate structure,
appropriate adjustments in the Plan and outstanding options and awards shall be
made by the Committee. In the event of any such changes, adjustments shall
include, where appropriate, changes in the aggregate number of shares subject to
the Plan, the number of shares and the price per share subject to outstanding
options and awards and the amount payable upon exercise of outstanding awards,
in order to prevent dilution or enlargement of option or award rights.
SECTION 17. AMENDMENT OR DISCONTINUANCE OF PLAN.
- ------------------------------------------------
The Board of Directors may amend or discontinue the Plan at any time.
Subject to the provisions of Section 16 no amendment of the Plan, however, shall
without shareholder approval: (i) increase the maximum number of shares under
the Plan as provided in Section 2 herein, (ii) decrease the minimum price
provided in Section 5 herein, (iii) extend the maximum term under Section 6, or
(iv) modify the eligibility requirements for participation in the Plan. The
Board of Directors shall not alter or impair any option or award theretofore
granted under the Plan without the consent of the holder of the option.
SECTION 18. TIME OF GRANTING.
- -----------------------------
Nothing contained in the Plan or in any resolution adopted or to be
adopted by the Board of Directors or by the shareholders of the Company, and no
action taken by the Committee or the Board of Directors (other than the
execution and delivery of an option or award agreement), shall constitute the
granting of an option or award hereunder.
SECTION 19. EFFECTIVE DATE AND TERMINATION OF PLAN.
- ---------------------------------------------------
(a) The Plan was approved by the Board of Directors on March 23,
1994, and shall be approved by the shareholders of the Company within twelve
(12) months thereof.
(b) Unless the Plan shall have been discontinued as provided in
Section 16 hereof, the Plan shall terminate March 23, 2004. No option or award
may be granted after such termination, but termination of the Plan shall not,
without the consent of the optionee or grantee, alter or impair any rights or
obligations under any option or award theretofore granted.
8
<PAGE>
FIELDWORKS, INCORPORATED
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, made this ___rd day of _________, 19__, by and between
FIELDWORKS, INCORPORATED, a Minnesota corporation and _______________
("Employee").
WITNESSETH, THAT:
WHEREAS, the Company pursuant to it 1994 Long-Term Incentive and Stock Option
Plan wishes to grant this stock option to Employee.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Grant of Option
---------------
The Company hereby grants to Employee, on the date set forth above,
the right and option (hereinafter called "the option") to purchase all or any
part of an aggregate of _______ common shares, par value $0.01 per share (the
"Common Shares"), at the price of $_____ per share on the terms and conditions
set forth herein. This option is not intended to be an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. Duration and Exercisability
---------------------------
(a) This option shall in all events terminate five (5) years after
the date of grant subject to the other terms and conditions set forth herein,
this option may be exercised by Employee in cumulative installments as follows:
Cumulative percentage
On or after each of of shares as to which
the following dates option is exercisable
------------------- ---------------------
xx/xx/xx 34%
xx/xx/xx 33%
xx/xx/xx 33%
(b) During the lifetime of Employee, the option shall be exercisable
only by Employee and shall not be assignable or transferable by Employee, other
than by will or the laws of descent and distribution.
9
<PAGE>
(c) Notwithstanding the installment exercise provision set forth in
paragraph (a) above and subject to the other terms and conditions set forth
herein, this option may be exercised as to 100% of the Common Shares of the
Company for which this option was granted on the date of a "change of control"
as hereinafter defined. A "change of control" shall mean any of the following:
(i) A sale of all or substantially all of the assets of the
Company.
(ii) The acquisition of more than 80% of the Common Shares of
the Company (with all classes or series thereof treated as a single class)
by any person or group of persons, except a Permitted Shareholder as
hereinafter defined, acting in concert. A "Permitted Shareholder" means a
holder, as of the date the Plan was adopted by the Company, of Company
Common Shares.
(iii) A reorganization of the Company wherein the holders of
Common Shares of the Company receive stock in another company, a merger of
the Company with another company wherein there is an 80 % or greater change
in the ownership of the Common Shares of the Company as a result of such
merger, or any other transaction in which the Company (other than as the
parent corporation) is consolidated for federal income tax purposes with
another corporation.
(iv) In the event that the Common Shares of the Company are
traded on an established securities market: a public announcement that any
person has acquired or has the right to acquire beneficial ownership of 51%
or more of the then outstanding Common Shares of the Company and for this
purpose the terms "person" and "beneficial ownership" shall have the
meanings provided in Section 13(d) of the Securities and Exchange Act of
1934 or related rules promulgated by the Securities and Exchange Commission
or: the commencement of or public announcement of an intention to make a
tender offer or exchange offer for 51% or more of the then outstanding
Common Shares of the Company.
(v) The Board of Directors of the Company, in its sole and
absolute discretion, determines that there has been a sufficient change in
the share ownership of the Company to constitute a change of effective
ownership or control of the Company.
Employee understands that to the extent that the aggregate fair market value
(determined at the time the option was granted) of the Common Shares with
respect to which all options, that are incentive stock options within the
meaning of Section 422 of the Code, are exercisable for the first time by
Employee during any calendar year exceed $100,000, in accordance with Section
422(d) of the Code, such options shall be treated as options that do not qualify
as incentive stock options.
10
<PAGE>
3. Effect of Termination of Employment
-----------------------------------
(a) In the event that Employee shall cease to be employed by the
Company or its subsidiaries, if any, for any reason other than Employee's
serious misconduct or Employee's death or disability (as such term is defined in
Section 3(c) hereof), Employee shall have the right to exercise the option at
any time within one (1) month after such termination of employment to the extent
of the full number of shares Employee was entitled to purchase under the option
on the date of termination, subject to the condition that no option shall be
exercisable after the expiration of the term of the option.
(b) In the event that Employee shall cease to be employed by the
Company or its subsidiaries, if any, by reason of Employee's serious misconduct
during the course of employment, including but not limited to wrongful
appropriation of the Company's funds, or in the event that Employee violates the
covenants set forth in Section 5 hereof, the option shall be terminated as of
the date of the misconduct.
(c) If Employee shall die while in the employ of the Company or a
subsidiary, if any, or within one (1) month after termination of employment for
any reason other than serious misconduct or if employment is terminated because
Employee has become disabled (within the meaning of Code Section 22(e)(3)) while
in the employ of the Company or a subsidiary, if any, and Employee shall not
have fully exercised the option, such option may be exercised at any time within
twelve (12) months after Employee's death or date of termination of employment
for disability by Employee, personal representatives or administrators, or
guardians of Employee, as applicable, or by any person or persons to whom the
option is transferred by will or the applicable laws of descent and
distribution, to the extent of the full number of shares Employee was entitled
to purchase under the option on the date of death, termination of employment, if
earlier, or date of termination for such disability and subject to the condition
that no option shall be exercisable after the expiration of the term of the
option.
4. Manner of Exercise
------------------
(a) The option can be exercised only by Employee or other proper
party by delivering within the option period written notice to the Company at
its principal office. The notice shall state the number of shares as to which
the option is being exercised and be accompanied by payment in full of the
option price for all shares designated in the notice.
(b) Employee may pay the option price in cash, by check (bank check,
certified check or personal check), by money order, or with the approval of the
Company (i) by delivering to the Company for cancellation Common Shares of the
Company with a fair market value as of the date of exercise equal to the option
price or the portion thereof being paid by tendering such shares, (ii) by
delivering to the Company the full option price in a combination of cash and
Employee' full recourse liability promissory note
11
<PAGE>
with a principal amount not to exceed eighty percent (80%) of the option price
and a term not to exceed five (5) years, which promissory note shall provide for
interest on the unpaid balance thereof which at all times is not less than the
minimum rate required to avoid the imputation of income, original issue discount
or a below-market rate loan pursuant to Sections 483, 1274 or 7872 of the Code
or any successor provisions thereto or (iii) by delivering to the Company a
combination of cash, Employee's promissory note and Common Shares of the Company
with an aggregate fair market value and a principal amount equal to the option
price. For these purposes, the fair market value of the Company's Common Shares
as of any date shall be as reasonably determined by the Company pursuant to the
Plan.
5. Covenant Not to Compete and Protection of Confidential Information.
-------------------------------------------------------------------
Employee hereby agrees to a covenant not to compete and agreement to
protect certain information pursuant to the terms and conditions hereinafter set
forth. The covenant not to compete shall have a term beginning on the date
hereof and ending on the date that (a) is two (2) years after the date that
Employee has exercised this option or (b) is two (2) years after the date of the
termination of Employee's employment with the Company for any reason whatsoever,
whichever is longer. The covenant not to compete shall apply to the same
geographical area in which Employee worked on behalf of the Company at any time
during the two-year period preceding Employee's termination of employment with
the Company.
Employee further agrees that during the term of said covenant he or
she shall hold in a fiduciary capacity for the benefit of the Company all
confidential information, knowledge and data, including customer lists,
representative lists and the Company's products, processes and programs
(oConfidential Datao), relating in any way to the business of the Company for so
long as such Confidential Data remains confidential and all such Confidential
Data, together with all copies thereof and notes and other references thereto,
shall remain the sole property of the Company.
Employee further agrees that during the term of said covenant he or
she shall not, directly or indirectly, engage in any business activity on his or
her own behalf or a partner, shareholder (except by ownership of less than five
percent (5%) of the outstanding stock of a publicly held corporation), director,
trustee, principal, agent, employee, consultant or otherwise of any person or
entity which is in any respect in competition with or competitive with the
Company to engage in any such activity. Employee also agrees that during the
term of said covenant he or she shall not directly or indirectly solicit, entice
or induce any employee or representative of the Company to engage in any such
activity. Employee also agrees that during the term of said covenant he or she
shall not directly or indirectly solicit, entice or induce (or assist any other
person or entity in soliciting, enticing or inducing) any customer or potential
customer) with whom Employee had contact in the course of his or her employment
with the Company to deal with a competitor of the Company.
12
<PAGE>
If any court of competent jurisdiction shall determine that the
foregoing covenants are invalid in any respect, the parties hereto agree that
any court so holding may limit such covenant either or both in time, in area or
in any other manner which the court determines such that the covenant shall be
enforceable against Employee. Employee acknowledges that the remedy of law for
any breach of the foregoing covenants will be inadequate, and that the Company
shall be entitled, in addition to any remedy of law, to preliminary and
permanent to injunctive relief.
6. Company's Option to Repurchase Common Shares
--------------------------------------------
(a) Upon the occurrence of any one or more of the Option Events, as
hereinafter defined, the Company shall have the irrevocable right and option
(the oCall Optiono) to purchase from Employee or Employee's heirs, successors,
personal representatives or assigns, and Employee on behalf of his or her heirs,
successors, personal representatives or assigns, agrees to sell to the Company
upon the exercise of the Call Option all or any part of the Common Shares
acquired by Employee pursuant to this option. (The Company's Call Option, and
any reference to Common Shares acquired by Employee pursuant to this option,
shall be deemed to include all other shares of any class or series of the
Company's capital stock acquired by Employee on account of or with respect to
Common Shares acquired pursuant to this option, whether the acquisition of such
shares is by stock dividend, stock split, recapitalization or any other similar
means.) The Option Events shall be:
(i) The express desire of Employee to sell, assign, pledge,
transfer, give or otherwise dispose of or encumber any Common Shares
acquired by Employee pursuant to this option to a bona fide third party or
any attempt by Employee to transfer any such Common Shares except in strict
compliance with the terms and conditions of this Agreement.
(ii) The employment by a court of competent jurisdiction or
otherwise of a receiver, trustee or assignee of Employee or Employee's
property.
(iii) The expiration of thirty (30) days immediately following
the date upon which a money judgment entered in a court of record against
Employee becomes final, provided such judgment remains unsatisfied.
(iv) Voluntary application of Employee for relief any act of
Congress or any of the laws of the several states now or hereafter enacted
providing for the relief of debtors.
(v) Institution of a levy, garnishment or attachment involving
such Common Shares, unless released or discharged within a period of thirty
(30) days.
13
<PAGE>
(vi) Employee's termination of employment with the Company,
whether voluntary or involuntary with or without cause, including without
limitation termination as a result of death or disability.
(b) Upon the occurrence of any one or more of the Option Events,
Employee (or a legal representative thereof) shall deliver a written notice
thereof to the Company, which notice shall specify the Option Event, the person
to whom the shares are to be sold, transferred, exchanged or disposed of, if
applicable, the purchase price or other consideration to be received by Employee
for such shares, if any, and the terms upon which such purchase price or other
consideration is to be paid, if applicable. The Company may then exercise its
Call Option with respect to all or any part of such Common Shares by delivering
a written acceptance to Employee (or a legal representative thereof) within
thirty (30) days after receipt of the foregoing written notice from Employee. If
the Company elects not to exercise the Call Option, Employee (or a legal
representative thereof) shall be able to transfer or encumber such shares on the
terms specified in the written notice to the Company, but only if such
transaction is consummated within ninety (90) days after such notice to the
Company.
(c) The purchase price for the Common Shares that are repurchased by
the Company pursuant to the exercise of its Call Option shall be either the
amount to be paid therefor by a bona fide third party purchaser or the fair
market value thereof, whichever is greater. The fair market value of the Common
Shares shall be determined by the Company's Board of Directors; provided,
however, that if upon the occurrence of an Option Event the Company's Common
Shares are then traded on an established securities market, the fair market
thereof shall be determined by reference to such trading price, as determined by
the Company in its sold and absolute discretion.
(d) The Company shall make payment of the purchase price for any
Common Shares reacquired by it pursuant to its exercise of the Call Option by
delivering to Employee or Employee's heirs, successors, assigns or personal
representatives, as the case may be, either (i) the Company's check in the
amount of the purchase price or (ii) the Company's promissory note in the amount
of the purchase price, which promissory note shall provide for a term not to
exceed five (5) years and interest on the unpaid balance thereof at a rate which
is not less than the minimum rate required to avoid the imputation of income,
original issue discount or a below market rate loan pursuant to Sections
483,1274 and 7872 of the Code or any successor provisions thereto, as determined
by the Company, or (iii) a combination of cash and the Company's promissory
note, with the foregoing terms, the total of which is equal to such purchase
price. Upon receipt of such payment from the Company, Employee or his or her
heirs, successors, assigns or personal representatives, as the case may be,
shall deliver to the Company for Cancellation the stock certificate or
certificates evidencing the
14
<PAGE>
Common Shares being repurchased by the Company pursuant to the exercise of
its Call Option, which certificate or certificates shall be duly endorsed for
cancellation by the Company.
(e) Employee shall not voluntarily or involuntarily sell, exchange,
transfer, pledge or otherwise dispose of any of the Common Shares acquired
pursuant to the exercise of this option unless Employee shall first offer to
sell such Common Shares to the Company's Call Option as described above. The
following legend shall be affixed to the certificates evidencing the Common
Shares acquired pursuant to the exercise of this option.
The shares evidence by this certificate are subject to restrictions on
transferability and the repurchase options contained in an Incentive Stock
Option Agreement dated___________, 19__ between ___________ and FieldWorks,
Incorporated, a Minnesota corporation, a copy of which is available for review
at the principal offices of FieldWorks, Incorporated.
7. Miscellaneous
-------------
(a) This option is issued pursuant to the Company's 1994 Long Term
and Incentive Stock Option Plan and is subject to its terms. The terms of the
Plan are available for inspection during business hours at the principal offices
of the Company.
(b) This Agreement shall not confer on Employee any right with
respect to continuance of employment by the Company or any of its subsidiaries,
nor will it interfere in any way with the right of the Company to terminate such
employment at any time. Employee shall have none of the rights of a shareholder
with respect to shares subject to this option until such shares shall have been
issued to Employee upon exercise of this option.
(c) The exercise of all or any parts of this option shall only be
effective at such time that the sale of Common Shares pursuant to such exercise
will not violate any state or federal securities or other laws.
(d) If there shall be any change in the Common Shares of the Company
through merger, consolidation, reorganization, recapitalization, dividend in the
form of stock (of whatever amount), stock split or other change in the
corporate structure of the Company, and all or any portion of the option shall
then be unexercised and not yet expired, then appropriate adjustments in the
outstanding option shall be made by the Company, in order to prevent dilution or
enlargement of option rights. Such adjustments shall include, where appropriate,
changes in the number of shares of Common Shares and the price per share subject
to the outstanding option.
15
<PAGE>
(e) The Company shall at all times during the term of the option
reserve and keep available such number of shares as will be sufficient to
satisfy the requirements of this Agreement.
(f) if Employee shall dispose of any of the Common Shares of the
Company acquired by Employee pursuant to the exercise of the option within two
(2) years from the date this option was granted or within one (1) year after the
transfer of any such shares to Employee upon exercise of this option, then, in
order to provide the Company with the opportunity to claim the benefit of any
income tax deduction which may be available to it under the circumstances,
Employee shall promptly notify the Company of the dates of acquisition and
disposition of such shares, the number of shares so disposed of, and the
consideration, if any, received for such shares. In order to comply with all
applicable federal or state income tax laws or regulations, the Company may
take such action as it deems appropriate to insure (i) notice to the Company of
any disposition of the Common Shares of the Company within the time periods
described above and (ii) that, if necessary, all applicable federal or state
payroll, withholding, income or other taxes are withheld or collected from
Employee.
(g) Employee agrees to disclose neither the contents nor any of the
terms and conditions of this option to any other person, and agrees that such
disclosure may result in both immediate termination of this option without the
right to exercise any part thereof and termination of employment with the
Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day and year first above written.
FIELDWORKS, INCORPORATED
By_______________________
Its_____________________
_________________________
Employee
16
<PAGE>
FIELDWORKS, INCORPORATED
NON-INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, made this ____ day of _______, 19___, by and between FIELDWORKS,
INCORPORATED, a Minnesota corporation and ____________________.
WITNESSETH, THAT:
WHEREAS, the Company pursuant to it 1994 Long-Term Incentive and Stock Option
Plan wishes to grant this stock option to Optionee.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Grant of Option
---------------
The Company hereby grants to Optionee, on the date set forth above,
the right and option (hereinafter called "the option") to purchase all or any
part of an aggregate of _________ common shares, par value $0.01 per share (the
"Common Shares"), at the price of $_____ per share on the terms and conditions
set forth herein. This option is not intended to be an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
17
<PAGE>
2. Duration and Exercisability
---------------------------
(a) This option shall in all events terminate ten (10) years after
the date of grant subject to the other terms and conditions set forth herein,
this option may be exercised by Optionee in full; provided, however, that this
option shall be exercisable by Optionee prior to the Normal Exercise Date in
cumulative installments as follows:
Cumulative percentage
On or after each of of shares as to which
the following dates option is exercisable
------------------- ---------------------
xx/xx/xx 34%
xx/xx/xx 33%
xx/xx/xx 33%
Notwithstanding the foregoing, this option shall be exercisable by Optionee
prior to the Normal Exercise Date in accordance with the foregoing vesting
schedule if and only if, in addition to the other terms and conditions of the
option, Optionee has achieved, in the option of the Company, certain performance
objectives, which objectives shall be established at the outset of each calendar
quarter by the Company and provided in writing to Optionee.
(b) During the lifetime of Optionee, the option shall be exercisable
only by Optionee and shall not be assignable or transferable by Optionee, other
than by will or the laws of descent and distribution.
3. Manner of Exercise
------------------
(a) The option can be exercised only by Optionee or other proper
party by delivering within the option period written notice to the Company at
its principle office. The notice shall state the number of shares as to which
the option is being exercised and be accompanied by payment in full of the
option price for all shares designated in the notice.
18
<PAGE>
(b) Optionee may pay the option price in cash, by check (bank check,
certified check or personal check), by money order, or with the approval of the
Company (i) by delivering to the Company for cancellation Common Shares of the
Company with a fair market value as of the date of exercise equal to the option
price or the portion thereof being paid by tendering such shares, (ii) By
delivering to the Company the full option price in a combination of cash and
Optionee's full recourse liability promissory note with a principal amount not
to exceed eighty percent (80%) of the option price and a term not to exceed five
(5) years, which promissory note will provide for interest on the unpaid balance
thereof which at all times is not less than the minimum rate required to avoid
the imputation of income, original issue discount or a below-market rate loan
pursuant to Sections 483, 1274 or 7872 of the Code or any successor provisions
thereto or (iii) by delivering to the Company a combination of cash, Optionee's
promissory note and Common Shares of the Company with an aggregate fair market
value and a principal amount equal to the option price. For these purposes, the
fair market value of the Company's Common Shares as of any date shall be as
reasonably determined by the Company pursuant to the plan.
5. Miscellaneous
-------------
(a) This option is issued pursuant to the Company's 1994 Long Term
Incentive and Stock Option Plan and is subject to its terms. The terms of the
plan are available for inspection during business hours at the principal offices
of the Company.
(b) The exercise of all or any parts of this option shall only be
effective at such time that the sale of Common Shares pursuant to such exercise
will not violate any state or federal securities or other laws.
19
<PAGE>
(c) If there shall be any change in the Common Shares of the Company
through merger, consolidation, reorganization, recapitalization, dividend in the
form of stock (of whatever amount), stock split or other change in the corporate
structure of the Company, and all or any portion of the option shall then be
unexercised and not yet expired, then appropriate adjustments in the outstanding
option shall be made by the Company, in order to prevent dilution or enlargement
of option rights. Such adjustments shall include, where appropriate, changes in
the number of shares of Common Shares and the price per share subject to the
outstanding option.
(d) The Company shall at all times during the term of the option
reserve and keep available such number of shares as will be sufficient to
satisfy the requirements of this Agreement.
(e) In order to provide the Company with the opportunity to claim the
benefit of any income tax deduction which may be available to it upon the
exercise of the option, and in order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to insure that, if necessary, all applicable federal or state
payroll, withholding, income or other taxes are withheld or collected from
Optionee. Optionee may elect to satisfy his federal and state income tax
withholding obligations upon exercise of this option by (i) having the Company
withhold a portion of the shares of Common Stock otherwise to be delivered upon
exercise of such option having a fair market value equal to the amount of
federal and state income tax required to be withheld upon such exercise, in
accordance with the rules of the Committee, or (ii) delivering to the Company
shares of its Common Stock other than the shares issuable upon exercise of such
option with a fair market value equal to such taxes, in accordance with the
rules of the Committee.
20
<PAGE>
(f) Optionee agrees to disclose neither the contents nor any of the
terms and conditions of this option to any other person, and agrees that such
disclosure may result in immediate termination of this option without the right
to exercise any part thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
FIELDWORKS, INCORPORATED
By____________________________
Its_________________________
______________________________
Optionee
21
<PAGE>
EXHIBIT 10.26
MUTUAL CONFIDENTIALITY AGREEMENT
THIS AGREEMENT, dated and made effective this ____ day of ______________, 19___,
by and between __________________________________________, a ________________
corporation, located at _______________________________________________, and
___________________, located at ____________________________________,
("Vendor").
WHEREAS, __________ and Vendor wish to exchange certain data and other
information of a confidential or proprietary nature, all for the purpose of
exploring potential business relationships, to the parties' mutual benefit, and
WHEREAS, for the purposes herein, either __________ or Vendor, respectively
("Discloser'') may disclose, from time to time, such data and information to
Vendor or __________, respectively ("Disclosee'') on a confidential basis;
NOW, THEREFORE, the parties hereto agree as follows:
1. For purposes of this Agreement, the term "Confidential Information"
shall mean that information of Discloser which is disclosed to Disclosee under
this Agreement, and concerns the subject(s), if any, listed on Attachment A
hereto, which is/are in written, graphic, recorded, photographic, or any machine
readable form (or oral information reduced to writing within 72 hours after
disclosure to Disclosee), and which, in any case, is/are conspicuously marked or
otherwise labeled "Confidential," `'Proprietary," "Sensitive" or in another
manner indicating its confidential and/or proprietary nature or which, in the
ease of oral information, is specifically identified at the time of disclosure
as being confidential, proprietary or sensitive.
2. (a) Disclosee will use such Confidential Information for its own
internal use only and shall use the same degree of care it uses to protect and
safeguard the confidentiality of its own proprietary information to not disclose
such Confidential Information to any person or persons inside Disclosee, except
those persons listed as permitted recipients on Attachment A, and in no event to
---------
persons outside Disclosee. Disclosee covenants that such degree of care is
reasonably designed to protect the confidentiality of proprietary and
confidential information.
(b) Disclosee shall not be liable for disclosure of any such
Confidential Information if the same:
(i) was in the public domain at the time it was disclosed;
(ii) was known to Disclosee prior to the time of disclosure;
(iii) is disclosed with the prior written approval of Discloser;
(iv) is or becomes publicly known through no wrongful act of
Disclosee;
(v) is disclosed after three years from the date of this
Agreement;
<PAGE>
(vi) was or is independently developed by Disclosee without any
direct or indirect use of the Confidential Information;
(vii) becomes known to Disclosee from a source other than
Discloser without breach of this Agreement by Disclosee;
(viii) is furnished by Discloser to others not in a confidential
relationship with Discloser without restrictions similar to those herein on the
right of the receiving party to use or disclosure;
(ix) is received by Disclosee after written notification to, and
receipt of such notification by Discloser that Disclosee will not accept any
further information;
(x) is disclosed pursuant to the order or requirement of a
court, administrative agency, or other governmental body.
(c) In the event of a disclosure under subsection (b)(x) above,
Disclosee shall give Discloser written notice of such order or requirement as
soon as practicable prior to disclosure of the Confidential Information.
3. Discloser understands that Disclosee may currently or in the future be
developing information internally, or receiving information from other parties,
that may be similar to Discloser's information. Accordingly, nothing in this
Agreement shall be constructed as a representation or inference that Disclosee
will not develop or be involved in developing or financing products, services or
systems (collectively, "Systems), for itself or others, that complete with the
Systems contemplated by Discloser's information. Similarly, participation in the
exchange of Confidential Information herein shall not constitute or imply a
commitment by either party to favor or recommend any System of the other party.
4. The provisions of this Agreement shall supersede the provisions of any
legends affixed to any Confidential Information provided by Discloser to
Disclosee.
5. This document contains the entire agreement between the parties as to
the subject matter hereof and supersedes any previous or contemporaneous
understandings, commitments or agreements, oral or written, as to such subject
matter. This Agreement can only be amended by a written document executed by the
parties hereto.
6. This Agreement shall be governed by the laws of the Commonwealth of
Virginia.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above-
written.
"DISCLOSER" COMPANY NAME: "DISCLOSEE" COMPANY NAME:
By:________________________ By:_______________________________
Print Name:_______________________ Print Name:_______________________
Print Title:______________________ Print Title:______________________
<PAGE>
ATTACHMENT A
-----------
"Confidential Information" Subjects:
- ------------------------- ---------
PERMITTED RECIPIENTS OF CONFIDENTIAL INFORMATION:
For Discloser:
For Disclosee:
<PAGE>
EXHIBIT 10.27
EMPLOYEE DISCLOSURE AND ASSIGNMENT AGREEMENT
For valuable consideration, including my employment by fieldworks Incorporated,
(hereinafter "FWI"), FWI and __________________________________ (hereinafter
"EMPLOYEE") agrees as follows:
I. EMPLOYEE will disclose promptly in writing to FWI all inventions,
improvements, discoveries, software, and writing (hereinafter "INVENTIONS")
which are conceived, made, discovered, or written, whether jointly or alone, on
FWI's time or on EMPLOYEE's own time, providing the invention is capable of
being used by FWI in the normal course of business. All such inventions shall
belong solely to FWI.
II. At the request and expense of FWI, EMPLOYEE will sign and execute all
instruments of assignment and other papers to evidence FWI's ownership of
EMPLOYEE'S entire right, title, and interest in such inventions. EMPLOYEE will
also do all acts and sign all instruments of assignment and other papers with
FWI may reasonably request relation to patents, applications for patents,
copyrights, and the enforcement and protection thereof.
Paragraphs I and II do not apply to inventions for which no equipment, supplies,
facility of trade secret information of the employer was used and which was
developed entirely on the employee's own time unless the invention relates
directly to FWI's business or demonstrably anticipated research or development
of results from work performed by the employee for FWI.
III. EMPLOYEE and FWI will initial the subparagraph which applies:
[_] a. EMPLOYEE has NO inventions useful to FWI in the normal course of FWI's
business, which were conceived, made or written prior to EMPLOYEE's
acceptance of a position with FWI.
[_] b. The inventions in EMPLOYEE's possession and useful to FWI in the
normal course of FWI's business, which were conceived, made or written
prior to EMPLOYEE's acceptance of a position with FWI are excluded
from this Agreement, and are listed below in their entirety:
___________________________________________________________________________
___________________________________________________________________________
IV. FWI and EMPLOYEE understand that EMPLOYEE may now be in possession of
proprietary information or other proprietary subject matter of another and that
FWI will not consent of disclosure, receipt or acceptance thereof.
V. FWI has confidential business information and also possesses and has
independently developed and will continue to develop proprietary technical
information and know-how (CONFIDENTIAL INFORMATION) related to its business and
products. In the course of EMPLOYEE's employment,
<PAGE>
EMPLOYEE will have access to the CONFIDENTIAL INFORMATION. In order to protect
the CONFIDENTIAL INFORMATION, FWI and EMPLOYEE agree as follows:
a. EMPLOYEE agrees that s/he will not disclose, to any third party,
either during or after the course of employment relationship, any
CONFIDENTIAL INFORMATION, without first obtaining written consent from
FWI.
b. The confidentiality and non-use obligations under this Article V of
this agreement survive any termination of the employment relationship
between FWI and EMPLOYEE.
c. If EMPLOYEE leaves the employ of FWI, EMPLOYEE will not, without its
prior written consent, retain or take with him/her any drawings,
writing or other record in any form or nature which relates to
CONFIDENTIAL INFORMATION.
VI. During the term of employment, EMPLOYEE shall engage in no activity or
employment which may conflict with the interest of FWI and EMPLOYEE shall comply
with all policies and practices of FWI.
VII. For a period of one year following termination of his/her employment for
any reason, EMPLOYEE agrees that EMPLOYEE will not directly or indirectly, or in
concert with others, encourage or seek to influence any other FWI employees to
quit or leave FWI's employment, or for any supplier, customer, independent
contractor, or company to terminate or alter its relationship with FWI.
VIII. This Agreement may be assigned by FWI and the Agreement is binding of
EMPLOYEE's heirs, executors, administrators and assigns.
IX. The EMPLOYEE understands and agrees that employment is at-will and is for
no definite period of time. This means that either EMPLOYEE or FWI may
terminate the employment relationship at any time for any reason, with or
without notice.
X. This is the entire Agreement between the parties with respect to the
subject matter hereof, and modifications hereof must be in writing and signed by
an authorized representative of the party against whom the modification is
asserted. This Agreement shall be governed by and construed in accordance with
the laws of the State of Minnesota.
_________________________________ ______________________________
Signature of Employee Date
_________________________________
Type or Print Name
Accepted by FWI:
By ______________________________ ______________________________
Title Date
<PAGE>
OEM AGREEMENT
This non-exclusive OEM Agreement is made as of by and between located at
("OEM"), and FIELDWORKS, INCORPORATED, located at 9961 Valley View Rd., Eden
Prairie, MN 55344 ("FieldWorks").
OEM desires to sell certain products manufactured and sold by FieldWorks
and FieldWorks desires to have OEM act as its non-exclusive OEM in the sale of
such products. In consideration of these promises and the covenants contained
in this Agreement, the parties agree as follows.
1. Appointment of OEM
1.1 FieldWorks hereby appoints OEM as a non-exclusive OEM for FieldWorks'
products set forth on Exhibit A (the "Products") as FieldWorks may amend from
time to time upon notice to OEM. OEM shall be entitled to sell the Products
only in the territory and/or markets defined in Exhibit B.
1.2 OEM agrees to use its best efforts to promote, sell, support and
maintain the Products as provided in this Agreement and agrees to abide by all
reasonable rules and regulations FieldWorks establishes for its OEM from time to
time. OEM shall sell the Products only as bundled with additional application
software or system hardware.
2. Ordering, Delivery, Prices and Payments
2.1 OEM shall purchase such number of Products to meet the annual minimum
quota set forth in Exhibit C. The failure to meet such annual minimum quota
shall be a material breach of this Agreement.
2.2 OEM shall purchase the Products on the annual ship schedule set forth
as Exhibit C. Any change to the annual ship schedule shall be subject to the
prior written approval of FieldWorks. OEM shall be entitled to use its standard
form of purchase order for such orders; however, any terms in addition or
contrary to the terms of this Agreement shall not apply. All orders shall be in
minimum lot sizes of five (5) units.
2.3 The prices to be paid by OEM for Products purchased under this
Agreement shall be the prices established by FieldWorks defined in Exhibit D.
The prices are to be determined by the annual minimum quota outlined in Exhibit
C. FieldWorks may increase prices at any time by providing OEM with at least
(30) days prior written notice.
2.4 All deliveries of Products shall be FOB FieldWorks' facilities by a
carrier of FieldWorks' choice, unless otherwise agreed in writing by FieldWorks
and OEM. Title to the Products and risk of loss shall pass to OEM upon delivery
to such carrier. FieldWorks shall not be responsible for any delay in shipping
the Products.
Page 1 of 6
<PAGE>
OEM AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
3. Marketing and Business Obligations
3.1 OEM shall provide all after sales support for its customers for any
Products or repairs that are not covered by FieldWorks' warranty. OEM shall
maintain a sufficient staff trained to support and maintain the Products.
3.2 OEM shall communicate regularly with FieldWorks regarding its sales
and marketing activities relating to the Products, including providing, on a
monthly basis or as requested by FieldWorks, inventory and sales status, and the
name, address, and phone number of all sales to customers along with the
corresponding serial number, model number and date of unit purchase. OEM shall
assist FieldWorks in tracing and locating Products upon request. To facilitate
communications, OEM shall maintain at its facilities an industry-standard
facsimile unit.
3.3 OEM shall perform its obligations under this Agreement in compliance
with all applicable laws. OEM shall not conduct sales or marketing activity
outside the territory/market defined in Exhibit B and nor make any
representation or warranty relating to any Product or to FieldWorks, except as
authorized by FieldWorks. OEM shall not export the Products (or knowingly
permit any third party to do so) outside of the United States without the prior
written consent of FieldWorks.
3.4 Except as permitted in Section 1.2, OEM shall not modify the Products
in any manner and shall maintain Products in its inventory in a clean, safe and
professional condition. OEM shall not reverse engineer, decompile or
disassemble the Products and shall not knowingly allow any other person to do
so.
3.5 OEM agrees to, and hereby does, indemnify FieldWorks, its officers,
directors, employees and agents against and hold each of them harmless from any
and all claims, causes of action, damages, liabilities, costs and expenses
(including attorneys fees) arising from any breach by OEM of any provision of
this Agreement.
3.6 FieldWorks may from time to time review OEM's performance under this
Agreement. Upon request by FieldWorks, OEM shall provide FieldWorks with
relevant records and/or access to OEM's facility (during normal business hours)
to perform such review.
4. Warranty
4.1 FieldWorks warrants the Products to OEM and its customer for a period
of one (1) year from the date of shipment to OEM pursuant to the terms of
FieldWorks' then current standard product warranty. In order for the warranty
to transfer to the customer, OEM must provide to FieldWorks the customer
identification information identified in Section 3.2.
4.2 The warranty set forth in Section 4.1 is intended for the benefit of
OEM and OEM's customers. All claims made hereunder shall be made by OEM or by
OEM's customer through OEM.
Page 2 of 6
<PAGE>
OEM AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
4.3 THE WARRANTY SET FORTH IN SECTION 4.1 AND IN FIELDWORKS' STANDARD
WARRANTY ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE
HEREBY DISCLAIMED AND EXCLUDED BY FIELDWORKS, INCLUDING WITHOUT LIMITATION ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE AND ALL
OBLIGATIONS OR LIABILITIES ON THE PART OF FIELDWORKS FOR DAMAGES ARISING OUT OF
OR IN CONNECTION WITH THE DISTRIBUTION, USE, REPAIR OR PERFORMANCE OF THE
PRODUCTS.
5. Trademarks
5.1 FieldWorks grants to OEM a non-exclusive, nontransferable, royalty-
free license to use FieldWorks' trademarks and trade names solely in connection
with the distribution, promotion, advertising and maintenance of the Products
and in accordance with FieldWorks' standards and instructions. OEM shall not
use any other marks or trade names in connection with the marketing and
distribution of the Products without the prior written consent of FieldWorks.
All use of FieldWorks' trademarks and tradenames shall be subject to FieldWorks'
prior written approval and FieldWorks may, from time to time, inspect and
monitor OEM's use of the FieldWorks trademarks.
5.2 OEM is not granted any right, title or interest in such trademarks
other than the foregoing limited license, and OEM shall not use any FieldWorks
trademarks as part of OEM's corporate or trade name or permit any third party to
do so. OEM shall not register FieldWorks' trademarks or trade names without
FieldWorks' prior written authorization, nor adopt, use or register any words,
phrases or symbols which are identical to or confusingly similar to any of
FieldWorks' trademarks. Upon termination or expiration of this Agreement, OEM
shall cease and desist from use of FieldWorks' trademarks and trade names in any
manner.
5.3 OEM shall not remove or alter any patent numbers, trade names, trade
marks, notices, serial numbers, labels, tags, copyright notices or other
identifying marks, symbols or legends affixed to any Products, documentation,
containers or packages, without the prior written consent of FieldWorks.
5.4 OEM shall promptly notify FieldWorks in writing of any unauthorized
use of FieldWorks' trademarks or similar marks which may constitute an
infringement or passing off of FieldWorks' trademarks and shall cooperate with
FieldWorks in any legal action taken by FieldWorks. FieldWorks reserves the
right in its sole discretion to institute any proceedings against such third
party infringers.
6. Term and Termination
6.1 Unless earlier terminated as provided in this Agreement, this
Agreement shall commence as of the date set forth above and shall terminate one
(1) year thereafter. This agreement may be renewed for additional one (1) year
terms upon written agreement of the parties which agreement must include mutual
agreement as to the annual minimum sales quota and the ship forecast for such
renewal term. If the parties fail to agree in writing upon a renewal of this
Agreement prior to the expiration of this Agreement, this Agreement shall
automatically expire and terminate without further notice to either party.
Page 3 of 6
<PAGE>
OEM AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
6.2 Either party can terminate this Agreement, with or without cause, on a
thirty (30) days' prior written notice to the other party.
6.3 Within thirty (30) days of the termination of this Agreement, OEM
shall provide to FieldWorks:
1 A list of all OEM's customers and the destination of all Products
sold, and
1 Complete information regarding any negotiations ongoing for the
sale of Products, and
1 A list of all OEM's customers whose units are still under warranty.
6.4 Upon termination or expiration of this Agreement, unless FieldWorks
terminates for OEM's material breach, OEM shall have the right to distribute its
then existing inventory of Products during the three (3) month period following
such termination or expiration, and OEM shall thereafter cease selling, leasing
or distributing the Products. If this Agreement is terminated for OEM's
material breach, OEM shall cease selling, leasing or distributing the Products
as of the effective date of such termination. Sections 3.3, 4 and 7 shall
survive any termination or expiration of this Agreement.
7. Confidentiality
7.1 OEM agrees that in the course of business dealings with FieldWorks,
certain valuable, proprietary and confidential information of FieldWorks is
likely to become known to OEM, including, without limitation, such information
as equipment and software design information, documentation, prospect and
customer lists, key employee names, pricing, discount, and commission
structures, production volumes, and similar information (hereinafter
"proprietary information"). OEM agrees that the proprietary information is the
sole and exclusive property of FieldWorks and shall be treated as confidential.
OEM shall not disclose the proprietary information in any manner to any third
party without the prior written approval of FieldWorks and shall take reasonable
measures to prevent any unauthorized disclosure by its employees, agents,
contractors or consultants during the term hereof including appropriate
individual nondisclosure agreements. OEM may use the proprietary information
during the term of this Agreement only as permitted or required for OEM's
performance hereunder.
7.2 The obligations set forth in Section 7.1 shall not apply to any
information which is or becomes known to the general public, or which OEM can
prove by written records was known to OEM at the time of its receipt thereof
from FieldWorks, or which has been rightfully obtained by OEM from a third
party. The provisions of this Section 7, shall survive any termination or
expiration of this Agreement.
8. General
8.1 This Agreement, including the Exhibits hereto which are incorporated
herein by reference, constitute the entire Agreement between the parties and
supersedes all prior and contemporaneous Agreements, understandings, negations
and discussions, whether written or oral.
Page 4 of 6
<PAGE>
OEM AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
8.2 Any dispute between the parties arising out of or in connection with
this Agreement, if not resolved by mutual agreement between the parties, shall
be settled by binding arbitration under the rules of the American Arbitration
Association. In the event of any such dispute or difference, either party may
give to the other party written notice that the matter shall be settled by
arbitration. Such arbitration shall be conducted in Hennepin County, Minnesota,
USA. An award by arbitration may be entered as final judgment in any court
having jurisdiction in the matter or application may be made to such a court for
acceptance of the award and for an order of compliance.
8.3 This Agreement shall be governed by and interpreted under the laws of
the State of Minnesota, USA, excluding its choice of law rules.
8.4 OEM shall pay all expenses incidental to the performance of its duties
hereunder, including payroll taxes, salaries, wages or commissions for
employees, transportation and travel expenses and the expense of maintaining
such office as OEM shall deem desirable.
8.5 All modifications, amendments, and/or waivers to this Agreement, less
exhibits, shall be in writing and signed by both parties. No failure by either
party to take any action or assert any right hereunder shall be deemed to be a
waiver of such right in the event of the continuation or repetition of the
circumstances giving rise to such right.
8.6 In no event shall FieldWorks be liable to OEM, any of OEM's customers
or any other party for loss of profits, indirect, special, consequential or
incidental damages arising out of this Agreement, even if FieldWorks shall have
been advised of the possibility of such potential loss or damage by OEM or OEM's
customers. In no event shall FieldWorks be liable for any damages in excess of
the aggregate amounts actually paid by OEM to FieldWorks under this Agreement.
8.7 OEM may not assign, delegate or transfer any of its rights or
obligations under this Agreement, without the prior written consent of
FieldWorks. Any attempted assignment, delegation or transfer by OEM without
such consent shall be void.
8.8 If any provision of this Agreement is found invalid or unenforceable,
such provision shall be deemed stricken from the Agreement and the remainder of
the Agreement shall continue in full force and effect.
8.9 This Agreement does not make either party the employee, agent or legal
representative of the other for any purpose whatsoever. Neither party is
granted any right or authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
party. Each party is acting as an independent contractor.
8.10 Notices permitted or required to be given hereunder shall be deemed
sufficient if given by (a) registered or certified mail, postage prepaid, return
receipt requested, (b) private courier service, or (c) facsimile addressed to
the respective addresses of the parties as first above written or at such other
addresses as the respective parties may designate by like notice from time to
time. Notices so given shall be effective upon (1) receipt by the party to
which notice is given, or (2) on the fifth (5th) day following mailing,
whichever occurs first.
Page 5 of 6
<PAGE>
OEM AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
8.11 If the performance of this Agreement or any obligation hereunder
(other than the payment of monies due owing hereunder) is prevented, restricted
or interfered with by reason of any event or condition beyond the reasonable
control of such party (including without limitation acts of State or
governmental action, riots, disturbance, war, strikes, lockouts, slowdowns,
prolonged shortage of energy or other supplies, epidemics, fire, flood,
hurricane, typhoon, earthquake, lightning and explosion,), the party so affected
shall be excused from such performance, only for so long as and to the extent
that such a force prevents, restricts or interferes with the party's performance
and provided that the party affected gives notice thereof to the other party and
uses diligent efforts to remedy such event or conditions.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives below.
FIELDWORKS INCORPORATED
____________________________ _________________________________
By By
___________________________ _________________________________
Title Title
___________________________ _________________________________
Date Date
Page 6 of 6
<PAGE>
OEM AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
EXHIBIT A
THE PRODUCTS
The products to be sold by OEM include:
<PAGE>
OEM AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
EXHIBIT B
TERRITORY/MARKET BOUNDARIES
Territory includes all FieldWorks labeled products which are sold and shipped by
OEM to the following geographic territory/and or markets:
Inclusions:
Exclusions:
<PAGE>
OEM AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
EXHIBIT C
ONE YEAR SHIP QUOTA
For the twelve (12) month period beginning and ending , the
total Units bought by OEM from FieldWorks, Inc. is UNITS and assigned as
minimum sales quota for the period.
Ship schedule for the period is as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
Jan Feb Mar April May June July Aug Sept Oct Nov Dec
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------
</TABLE>
Note: OEM can deviate from the above schedule if permitted by FieldWorks.
<PAGE>
OEM AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
EXHIBIT D
PRICE SCHEDULE
Product percentage off list
Maintenance Contracts
<PAGE>
EXHIBIT 10.29
[Logo Fieldworks Inc.]
SALES REPRESENTATIVE AGREEMENT
This non-exclusive Sales Representative Agreement is made as of by and
between located at Phone () , Fax () ("REP"), and FIELDWORKS, INCORPORATED,
located at 9961 Valley View Road, Eden Prairie, MN 55344 ("FieldWorks").
REP desires to promote the sales of certain products manufactured and sold
by FieldWorks and FieldWorks desires to have REP act as its representative in
the sale of such products. In consideration of these promises and the covenants
contained in this Agreement, the parties agree as follows.
1. Appointment of REP
1.1 FieldWorks hereby appoints REP as a non-exclusive sales representative
for FieldWorks' products set forth on Exhibit A (the "Products") as FieldWorks
may amend from time to time upon notice of REP. REP shall be entitled to
promote the sale of the Products only in the territory and/or markets as defined
in Exhibit B.
1.2 REP agrees to use its best efforts to promote the sale of the Products
and agrees to abide by all reasonable rules and regulations FieldWorks
establishes for its sales representatives from time to time. REP agrees that,
during the term of this Agreement, REP will not sell, promote or offer for sale,
products which directly compete with or substitute for the Products.
1.3 REP will solicit and take orders for the Products and transmit the
orders in writing to FieldWorks in the format approved by FieldWorks.
FieldWorks reserves the right to accept, reject, modify or cancel in whole or in
part any or all orders received and/or accepted for the Products, in its sole
discretion. REP's authority under this Agreement is limited to the solicitation
and transmission to FieldWorks of orders, and REP has no right or authority to
make binding quotations, to accept any orders or to enter into any contracts or
agreements whatsoever for or on behalf of FieldWorks. REP is an independent
contractor and not an agent or employee of FieldWorks.
1.4 REP understands that FieldWorks' Products will be marketed to and used
by a wide variety of customers and in various market segments. REP understands
that other sales organizations may be operating in the same territory and/or
markets as REP.
2. Commissions
2.1 For sales made by REP for delivery within REP's territory and/or
market, FieldWorks shall pay REP the commission rate set forth in Exhibit C.
The commission shall become due and payable on the last day of the calendar
month following the month in which FieldWorks received payment in full for the
Product.
Page 1 of 5
<PAGE>
SALES REPRESENTATIVE AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
2.2 REP's commission rate and schedule, set forth in Exhibit C, is based
on the Net Sales Price of the Products sold. As used herein, "Net Sales Price"
shall mean the actual price received by FieldWorks after any adjustments for
credits, returns, pricing adjustments, discounts, allowances, taxes, shipping
charges, non-recurring or other factors which reduce the amount actually
received by FieldWorks. Non-discountable items defined in Exhibit A are also
non-commissionable. Commission will be paid only once on each Product that is
sold.
2.3 In the event of any dispute respecting commissions, commission
splitting, or any other commission issue, final resolution of the matter shall
be determined by FieldWorks' Sales Management. Shares of the full commission
shall be awarded by FieldWorks based on the determination of the Sales
Management, in his/her sole discretion, based upon the sales and support efforts
of the parties involved.
2.4 On sales of any Products, REP's commission is set forth in Exhibit C.
In the case of sales more than fifty (50) FW7000 Series Field WorkStations
("UNITS") or more than $400,000 USD per single Purchase Order, FieldWorks in its
sole discretion is entitled to increase customer discount only in order to get
customer sale. In such cases, agreements on the amount of commission must be
made prior to FieldWorks' acceptance of the applicable order. In the event no
written agreement is reached prior to acceptance of the order, the commission
will be awarded at a minimum rate of 5%.
2.5 Sales to federal government organizations under FieldWorks' GSA
Authorized ADP Schedule Pricelist will be commissioned at a rate defined in
Exhibit C.
2.6 REP acknowledges that FieldWorks may, in its sole discretion, pay
commissions to REP prior to receiving full and final payment from the customer.
REP agrees that, should FieldWorks not receive full payment for related Product
shipped (such as returns or charge backs), FieldWorks shall be entitled to
deduct such commission paid from other commissions to be paid to REP, at
FieldWorks' sole discretion. In the event that there is no commission for
FieldWorks to deduct from, FieldWorks is entitled to seek full reimbursement.
REP agrees to cooperate and work with FieldWorks and the customer to secure the
business and payment.
3. Sales Objective
3.1 REP understands and agrees that the establishment and achievement of a
Sales Quota is the essence of this Agreement, and that failure by REP to satisfy
its obligation under this Section shall constitute a material breach of this
Agreement, entitling FieldWorks to terminate this Agreement. As a result, REP
agrees that it will obtain orders which are accepted by FieldWorks in which the
number of UNITS received by FieldWorks totals at least the number of UNITS or
the corresponding dollar amount specified in Exhibit D, as may be revised by the
parties for renewal terms of this Agreement.
4. Marketing and Business Obligations
4.1 REP agrees (a) to submit quarterly to Field Works a six month rolling
sales forecast by model, (b) to follow up on leads supplied by FieldWorks within
5 days from the receipt thereof, (c) to actively sell and promote FieldWorks
products.
Page 2 of 5
<PAGE>
SALES REPRESENTATIVE AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
4.2 REP agrees to initially purchase or lease one or more model of the
FW7000 Series or FW5000 Series to be used in sales and the promotion of the
Products at the current FieldWorks pricing, as set forth on Exhibit E. REP and
FieldWorks will split 50-50 the costs for the up-keep of the demonstration
equipment which includes cosmetic appearance, factory upgrades and any other
product revisions that may occur during the term of this Agreement.
4.3 REP agrees (d) to employ sufficient appropriately trained personnel at
REP's expense to represent and sell the Product adequately, and (e) to maintain
Products in a clean, safe and professional condition.
4.4 REP agrees to, and hereby does, indemnify FieldWorks, its officers,
directors, employees and agents against and hold each of them harmless from any
and all claims, causes of action, damages, liabilities, costs and expenses
(including attorneys fees) arising from any breach by REP of any provision of
this Agreement.
5. Term and Termination
5.1 Unless earlier terminated as provided in this Agreement, this
Agreement shall commence as of the date set forth above and shall terminate one
(1) year thereafter. This agreement may be renewed for additional one (1 ) year
terms upon written agreement of the parties which agreement must include mutual
agreement as to the Sales Quota applicable to such renewal term. If the parties
fail to agree in writing upon a renewal of this Agreement prior to the
expiration of this Agreement, this Agreement shall automatically expire and
terminate without further notice to either party.
5.2 Either party can terminate this Agreement, with or without cause, on a
thirty (30) days prior written notice to the other party.
5.3 If either party defaults in the performance of any material provision
of this Agreement, then the non-defaulting party may give written notice to the
defaulting party and, if the default is not remedied within thirty (30) days
following receipt of such notice, the Agreement will be terminated (material
breaches of this Agreement shall include, without limitation, failure to meet
the sales quota).
5.4 FieldWorks shall pay REP commission on sales of Products resulting
from orders taken by REP during the 30-day notice period provided for in Section
5.2, provided that FieldWorks has received payment in full for such orders
within three months after the date of termination hereof. Section 6 shall
survive any termination or expiration of this Agreement.
6. Confidentiality
6.1 REP agrees that in the course of business dealings with FieldWorks,
certain valuable, proprietary and confidential information of FieldWorks is
likely to become known to REP, including, without limitation, such information
as equipment and software design information, documentation, prospect and
customer lists, key employee names, pricing, discount, and commission
structures, production volumes, and similar information (hereinafter
"proprietary information"). REP agrees that the proprietary information is the
sole and exclusive property of FieldWorks and shall be treated as confidential.
REP shall not disclose the proprietary information in any manner without the
prior written approval of FieldWorks and
Page 3 of 5
<PAGE>
SALES REPRESENTATIVE AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
shall take reasonable measures to prevent any unauthorized disclosure by its
employees, agents, contractors or consultants during the term hereof including
appropriate individual nondisclosure agreements. REP may use the proprietary
information during the term of this Agreement only as permitted or required for
REP's performance hereunder.
6.2 The obligations set forth in Section 6.1 shall not apply to any
information which is or becomes known to the general public through no fault of
REP, or which REP can prove by written records was known to REP at the time of
its receipt thereof from FieldWorks, or which has been rightfully obtained by
REP from a third party. The provisions of Section 6 shall survive any
termination or expiration of this Agreement.
7. General
7.1 This Agreement, including the Exhibits hereto which are incorporated
herein by reference, constitute the entire Agreement between the parties and
supersedes all prior and contemporaneous Agreements, understandings, negations
and discussions, whether written or oral.
7.2 Any dispute between the parties arising out of or in connection with
this Agreement, if not resolved by mutual agreement between the parties, shall
be settled by binding arbitration under the rules of the Commercial Arbitration
Rules of the American Arbitration Association. In the event of any such dispute
or difference, either party may give to the other party written notice that the
matter shall be settled by arbitration. Such arbitration shall be conducted in
Hennepin County, Minnesota. An award by arbitration may be entered as final
judgment in any court having jurisdiction in the matter or application may be
made to such a court for acceptance of the award and for an order of compliance.
7.3 REP shall pay all expenses incidental to the performance of its duties
hereunder, including payroll taxes, salaries, wages or commissions for
employees, transportation and travel expenses and the expense of maintaining
such office as REP shall deem desirable.
7.4 All modifications, amendments, and/or waivers to this Agreement, less
exhibits, shall be in writing and signed by both parties. No failure by either
party to take any action or assert any right hereunder shall be deemed to be a
waiver of such right in the event of the continuation or repetition of the
circumstances giving rise to such right.
7.5 In no event shall FieldWorks be liable to REP, a customer or any other
party for loss of profits, indirect, special, consequential or incidental
damages arising out of this Agreement even if FieldWorks shall have been advised
of the possibility of such potential loss or damage by REP or REP's customers.
In no event shall FieldWorks be liable for any damages in excess of the
aggregate amounts actually paid by REP to FieldWorks under this Agreement.
7.6 REP may not assign, delegate or transfer any of its rights or
obligations under this Agreement, without the prior written consent of
FieldWorks. Any attempted assignment, delegation or transfer by REP without such
consent shall be void.
7.7 If any provision of this Agreement is declared by a court of competent
jurisdiction to be invalid or unenforceable, such provision shall be deemed
stricken from the Agreement and the remainder of the Agreement shall continue in
full force and effect.
Page 4 of 5
<PAGE>
SALES REPRESENTATIVE AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
7.8 This Agreement does not make either party the employee, agent or legal
representative of the other for any purpose whatsoever. Neither party is
granted any right or authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
party. Each party is acting as an independent contractor.
7.9 Notices permitted or required to be given hereunder shall be deemed
sufficient if given by (a) registered or certified mail, postage prepaid, return
receipt requested, (b) private courier service, or (c) facsimile addressed to
the respective addresses of the parties as first above written or at such other
addresses as the respective parties may designate by like notice from time to
time. Notices so given shall be effective upon (1) receipt by the party to
which notice is given, or (2) on the fifth (5th) day following mailing,
whichever occurs first.
7.10 If the performance of this Agreement or any obligation hereunder
(other than the payment of monies due owing hereunder) is prevented, restricted
or interfered with by reason of any event or condition beyond the reasonable
control of such party (including without limitation acts of State or
governmental action, riots, disturbance, war, strikes, lockouts, slowdowns,
prolonged shortage of energy or other supplies, epidemics, fire, flood,
hurricane, typhoon, earthquake, lightning and explosion), the party so affected
shall be excused from such performance, only for so long as and to the extent
that such a force prevents, restricts or interferes with the party's performance
and provided that the party affected gives notice thereof to the other party and
uses diligent efforts to remedy such event or conditions.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives below.
FIELDWORKS INCORPORATED
________________________________ ________________________________
By By
________________________________ ________________________________
Title Title
________________________________ ________________________________
Date Date
Page 5 of 5
<PAGE>
SALES REPRESENTATIVE AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
EXHIBIT A
THE PRODUCTS
<PAGE>
SALES REPRESENTATIVE AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
EXHIBIT B
TERRITORY/MARKET BOUNDARIES
Territory includes all FieldWorks labeled products which are sold by REP
and shipped by FieldWorks to the following geographic territory and/or specific
market(s):
Inclusions:
The Territory includes:
The Market Segment includes:
Exclusions:
All OEM/Reseller/Private Label sales are excluded under the commission
schedule shown in EXHIBIT C under this contract. All OEM/Reseller/Private Label
sales will be commissioned at a rate to be determined by both FieldWorks, and
REP. Any other applicable market segments found by REP are to be discussed with
FieldWorks as they arise for consideration for representation.
<PAGE>
SALES REPRESENTATIVE AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
EXHIBIT C
COMMISSION/DISCOUNT SCHEDULE *
Quantity is per single Purchase Order ("P.O.").
<TABLE>
<CAPTION>
QUANTITY REP COMMISSION. CUSTOMER DISCOUNT.
UNITS/P.O.
<S> <C> <C>
10-24 13% 7%
25-49 11% 12%
50 99 10% 14%
100-249 9% 16%
250-499 8% 18%
500 999 7% 20%
</TABLE>
* FW7000 Series only - FW5000 Commission Schedule to be determined
GSA Orders 9% Rep Commission
Excluding the following items:
. Integrated Battery Module
. RAM upgrades
. TFT Active Matrix Display
The items indicated as non-discountable in Exhibit A are also non-
commissionable.
<PAGE>
SALES REPRESENTATIVE AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
EXHIBIT D
SALES QUOTA
For the Twelve (12) month period beginning and ending the total
number of UNITS or U.S. Dollar amount sold by REP and assigned as Quota for the
period is UNITS or $
<PAGE>
SALES REPRESENTATIVE AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
EXHIBIT E
DEMO PROGRAM
Welcome! ! !
FieldWorks welcomes your organization into the FieldWorks family. We would
like to show our appreciation by offering a one time signing bonus. Option 1: As
a representative of FieldWorks, you're entitled to purchase up to ten (10) of
the FW7000 Series at 35% off the list price or 25% off the list price of the
FW5000. Option 2: Field Works offers an affordable leasing program which can be
a cost effective alternative for some REP firms.
This signing bonus program is our initial Demo program so we do require you
to purchase at least one (1) UNIT at the 35% off-list price of the FW7000 Series
or 25% of the FW5000 Series or lease one (1) UNIT. We realize that this is a
large amount of money to invest but we feel extremely confident that you will
pay for the cost of the UNIT within the first month of being our REP. We are so
confident, that if you don't sell a UNIT within thirty (30) days after receiving
your UNIT, we will reimburse you 100% guaranteed and terminate the REP Agreement
at that time.
<PAGE>
[FIELDWORKS INC. LOGO]
EXHIBIT 10.30
SYSTEM INTEGRATOR AGREEMENT
This non-exclusive System Integrator Agreement is made as of by and between
located at ("S.I."), and FIELDWORKS, INCORPORATED, located at 9961 Valley View
Rd., Eden Prairie, MN 55344 ("FieldWorks").
S.I. desires to sell to third parties certain products manufactured and
sold by FieldWorks as part of systems with additional software and/or hardware.
FieldWorks desires to have S.I. act as its non-exclusive system integrator in
the sale of such bundled products. In consideration of the covenants contained
in this Agreement, the parties agree as follows:
1. Appointment of S.I.
1.1 FieldWorks hereby appoints S.I. as a non-exclusive system integrator
for the FieldWorks products set forth on Exhibit A (the "Products") as
FieldWorks may amend such exhibit from time to time upon notice to S.I. S.I.
shall sell the Products bundled with application software or system hardware in
such systems as are set forth in Exhibit B, as may be amended from time to time
by mutual written agreement of the parties. S.I. shall be entitled to sell the
bundled Products in the territory and/or markets defined in Exhibit C.
1.2 S.I. hereby certifies that the Products acquired under this Agreement
are to be used as part of systems or products that S.I. manufactures, supplies
or both, for sale, lease or other commercial disposition to third parties in the
regular course of S.I.'s business. Such systems or products shall include the
Products, together with substantial other hardware, software, or both,
manufactured, acquired or developed by S.I. S.I. may not remarket the Products
except as part of such systems or products and only if S.I.'s portion of such
systems or products adds substantial value to the Products.
1.3 S.I. agrees to use its best efforts to promote the sale of the
Products and agrees to abide by all reasonable rules and regulations FieldWorks
establishes for its system integrators from time to time. S.I. agrees that,
during the term of this Agreement, S.I. will not sell, promote or offer for sale
products which compete with the Products.
2. Ordering, Delivery, Prices and Payments
2.1 S.I. shall be entitled to use its standard form of purchase order for
such orders; however, any terms in addition or contrary to the terms of this
Agreement shall not apply. All orders shall be in minimum lot sizes of five (5)
units.
2.2 All orders shall be subject to acceptance by FieldWorks. FieldWorks
shall inform S.I. of acceptance or rejection of each purchase order within
fourteen (14) days of receipt thereof.
2.3 The prices to be paid by S.I. for Products purchased under this
Agreement shall be the prices established by FieldWorks defined in Exhibit A and
incorporating the discount schedule set forth in Exhibit D. FieldWorks may
increase prices of Products for which it has not yet accepted a purchase order
at any time by providing S.I. with at least (30) days prior written notice.
Page 1 of 6
<PAGE>
SYSTEM INTEGRATOR AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
2.4 All deliveries of Products shall be FOB FieldWorks' facilities by a
carrier of FieldWorks' choice, unless otherwise agreed in writing by FieldWorks
and S.I. Title to the Products and risk of loss shall pass to S.I. upon delivery
to such carrier. FieldWorks shall not be responsible for any delay in shipping
the Products.
3. Obligations of S.I.
3.1 S.I. shall provide all after sales support for its customers for
bundled Products or repairs, except for repairs that are covered by FieldWorks'
standard warranty. S.I. shall be the primary contact with its customers.
3.2 Except as permitted in Section 1.2, S.I. shall not modify the Products
in any manner and shall maintain Products in its inventory in a clean, safe and
professional condition. S.I. shall not reverse engineer, decompile or
disassemble the Products and shall not knowingly allow any other person to do
so.
3.3 S.I. agrees to, and hereby does, indemnify FieldWorks, its officers,
directors, employees and agents against and hold each of them harmless from any
and all claims, causes of action, damages, liabilities, costs and expenses
(including attorneys fees) arising from: (i) any breach by S.I. of any provision
of this Agreement; (ii) performance by S.I. of its obligations under this
Agreement; or (iii) use by S.I. or its agents, distributors or customers of the
Products furnished under this Agreement.
3.4 FieldWorks may from time to time review S.I.'s performance under this
Agreement. Upon request by FieldWorks, S.I. shall provide FieldWorks with
relevant records and/or access to S.I.'s facility (during normal business hours)
to perform such review.
3.5 S.I. shall provide FieldWorks with a non-binding rolling six month
forecast of orders, and shall promptly apprise FieldWorks of any anticipated
deviation from such forecast.
3.6 Except as otherwise provided herein, S.I. shall be responsible for
compliance with all laws, regulations requirements established by governmental
authorities within the U.S. and the territory and/or markets defined in Exhibit
C, including but not limited to export laws, customs and registration
requirements but exclusive of technical product standards, which are necessary
or useful for the distribution of the Products.
4. Warranty
4.1 FieldWorks warrants the Products to S.I. and its customer for a period
of one (1) year from the earlier of the date of shipment from S.I. to its
customer or sixty (60) days after shipment of the Product to S.I., pursuant to
the terms of FieldWorks' then current standard product warranty. The warranty
shall be null and void if S.I. or its customer modifies the Product without
written approval of FieldWorks.
4.2 The warranty set forth in Section 4.1 is intended for the benefit of
S.I. and S.I.'s customers. All claims made hereunder shall be made by S.I. or by
S.I.'s customer through S.I.
Page 2
<PAGE>
SYSTEM INTEGRATOR AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
4.3 THE WARRANTY SET FORTH IN SECTION 4.1 AND IN FIELDWORKS' STANDARD
WARRANTY ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE
HEREBY DISCLAIMED AND EXCLUDED BY FIELDWORKS, INCLUDING WITHOUT LIMITATION ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE AND ALL
OBLIGATIONS OR LIABILITIES ON THE PART OF FIELDWORKS FOR DAMAGES ARISING OUT OF
OR IN CONNECTION WITH THE DISTRIBUTION, USE, REPAIR OR PERFORMANCE OF THE
PRODUCTS.
4.4 S.I. represents and warrants to FieldWorks:
a. It is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and has the corporate
power and authority to own its own assets and properties and carry on its
business as now being and heretofore conducted; and
b. The execution, delivery and performance of this Agreement have been
duly authorized, do not violate its certificate of incorporation, by-laws, or
similar governing instruments or applicable law and do not, and with the passage
of time will not, materially conflict with or constitute a breach under any
other agreement, judgment or instrument to which it is a party or by which it is
bound.
5. Trademarks
5.1 FieldWorks grants to S.I. a non-exclusive, nontransferable, royalty-
free license to use FieldWorks' trademarks and trade names solely in connection
with the distribution, promotion and advertising of the Products and in
accordance with FieldWorks' standards and instructions. S.I. shall not use any
other marks or trade names in connection with the marketing and distribution of
the Products, except with prior written permission of FieldWorks. All use of
FieldWorks' trademarks and tradenames shall be subject to FieldWorks' prior
written approval and FieldWorks may, from time to time, inspect and monitor
S.I.'s use of the FieldWorks trademarks.
5.2 S.I. is not granted any right, title or interest in such trademarks
other than the foregoing limited license, and S.I. shall not use any FieldWorks
trademarks as part of S.I.'s corporate or trade name or permit any third party
to do so. S.I. shall not register FieldWorks' trademarks or trade names without
FieldWorks' prior written authorization, nor adopt, use or register any words,
phrases or symbols which are identical to or confusingly similar to any of
FieldWorks' trademarks. Upon termination or expiration of this Agreement, S.I.
shall cease and desist from use of FieldWorks' trademarks and trade names in any
manner.
5.3 S.I. shall not remove or alter any patent numbers, trade names, trade
marks, notices, serial numbers, labels, tags, copyright notices or other
identifying marks, symbols or legends affixed to any Products, documentation,
containers or packages, without the prior written consent of FieldWorks.
Page 3
<PAGE>
SYSTEM INTEGRATOR AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
5.4 S.I. shall promptly notify FieldWorks in writing of any unauthorized
use of FieldWorks' trademarks or similar marks which may constitute an
infringement or passing off of FieldWorks' trademarks and shall cooperate with
FieldWorks in any legal action taken by FieldWorks. FieldWorks reserves the
right in its sole discretion to institute any proceedings against such third
party infringers.
6. Term and Termination
6.1 Unless earlier terminated as provided in this Agreement, this
Agreement shall commence as of the date set forth above and shall terminate one
(1) year thereafter. This agreement may be renewed for additional one (1) year
terms upon written agreement of the parties. If the parties fail to agree in
writing upon a renewal of this Agreement prior to the expiration of this
Agreement, this Agreement shall automatically expire and terminate without
further notice to either party.
6.2 FieldWorks may terminate this Agreement effective immediately upon
notice to S.I. if S.I. resells the Products without adding substantial value as
provided in Section 1.2.
6.3 Either party can terminate this Agreement, with or without cause, on a
thirty (30) days' prior written notice to the other party.
6.4 Within thirty (30) days of the termination of this Agreement, S.I.
shall provide to FieldWorks a list of all S.I.'s customers whose units are still
under warranty.
6.5 Upon termination or expiration of this Agreement, unless FieldWorks
terminates for S.I.'s material breach, including termination pursuant to Section
6.2, S.I. shall have the right to add value to and distribute its then-existing
inventory of Products during the three (3) month period following such
termination or expiration, and S.I. shall thereafter cease selling, leasing or
distributing the Products. If this Agreement is terminated for S.I.'s material
breach, S.I. shall cease selling, leasing or distributing the Products as of the
effective date of such termination. Sections 3.3, 4 and 7 shall survive any
termination or expiration of this Agreement.
7. Confidentiality
7.1 S.I. agrees that in the course of business dealings with FieldWorks,
certain valuable, proprietary and confidential information of FieldWorks is
likely to become known to S.I., including, without limitation, such information
as equipment and software design information, documentation, prospect and
customer lists, key employee names, pricing discount, and commission structures,
production volumes, and similar information (hereinafter "proprietary
information"). S.I. agrees that the proprietary information is the sole and
exclusive property of FieldWorks and shall be treated as confidential. S.I.
shall not disclose the proprietary information in any manner to any third party
without the prior written approval of FieldWorks and shall take reasonable
measures to prevent any unauthorized disclosure by its employees, agents,
contractors or consultants during the term hereof including appropriate
individual nondisclosure agreements. S.I. may use the proprietary information
during the term of this Agreement only as permitted or required for S.I.'s
performance hereunder.
Page 4
<PAGE>
SYSTEM INTEGRATOR AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
7.2 The obligations set forth in Section 7.1 shall not apply to any
information which is or becomes known to the general public, or which S.I. can
prove by written records was known to S.I. at the time of its receipt thereof
from FieldWorks, or which has been rightfully obtained by S.I. from a third
party. The provisions of this Section 7, shall survive any termination or
expiration of this Agreement.
8. General
8.1 This Agreement, including the Exhibits hereto which are incorporated
herein by reference, constitute the entire Agreement between the parties and
supersedes all prior and contemporaneous Agreements, understandings,
negotiations and discussions, whether written or oral.
8.2 Any dispute between the parties arising out of or in connection with
this Agreement, if not resolved by mutual agreement between the parties, shall
be settled by binding arbitration under the rules of the American Arbitration
Association. In the event of any such dispute or difference, either party may
give to the other party written notice that the matter shall be settled by
arbitration. Such arbitration shall be conducted in Hennepin County, Minnesota,
U.S.A. An award by arbitration may be entered as final judgment in any court
having jurisdiction in the matter or application may be made to such a court for
acceptance of the award and for an order of compliance.
8.3 This Agreement shall be governed by and interpreted under the laws of
the State of Minnesota, U.S.A., excluding its choice of law rules and the U.N.
Convention on Contracts for the International Sale of Goods.
8.4 All modifications, amendments, and/or waivers to this Agreement, less
exhibits, shall be in writing and signed by both parties. No failure by either
party to take any action or assert any right hereunder shall be deemed to be a
waiver of such right in the event of the continuation or repetition of the
circumstances giving rise to such right.
8.5 IN NO EVENT SHALL FIELDWORKS BE LIABLE TO S.I., ANY OF S.I.'s
CUSTOMERS OR ANY OTHER PARTY FOR LOSS OF PROFITS, INDIRECT, SPECIAL,
CONSEQUENTIAL OR INCIDENTAL DAMAGES ARISING OUT OF THIS AGREEMENT, EVEN IF
FIELDWORKS SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH POTENTIAL LOSS OR
DAMAGE BY S.I. OR S.I.'s CUSTOMERS. IN NO EVENT SHALL FIELDWORKS BE LIABLE FOR
ANY DAMAGES IN EXCESS OF THE AGGREGATE AMOUNTS ACTUALLY PAID BY S.I. TO
FIELDWORKS UNDER THIS AGREEMENT.
8.6 S.I. may not assign, delegate or transfer any of its rights or
obligations under this Agreement, without the prior written consent of
FieldWorks. Any attempted assignment, delegation or transfer by S.I. without
such consent shall be void.
8.7 If any provision of this Agreement is found invalid or unenforceable,
such provision shall be deemed stricken from the Agreement and the remainder of
the Agreement shall continue in full force and effect.
Page 5
<PAGE>
SYSTEM INTEGRATOR AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
8.8 This Agreement does not make either party the employee, agent or legal
representative of the other for any purpose whatsoever. Neither party is granted
any right or authority to assume or to create any obligation or responsibility,
express or implied, on behalf of or in the name of the other party. Each party
is acting as an independent contractor.
8.9 Notices permitted or required to be given hereunder shall be deemed
sufficient if given by (a) registered or certified mail, postage prepaid, return
receipt requested, (b) private courier service, or (c) facsimile addressed to
the respective addresses of the parties as first above written or at such other
addresses as the respective parties may designate by like notice from time to
time. Notices so given shall be effective upon (1) receipt by the party to which
notice is given, or (2) on the fifth (5th) day following mailing, whichever
occurs first.
8.10 If the performance of this Agreement or any obligation hereunder
(other than the payment of monies due owing hereunder) is prevented, restricted
or interfered with by reason of any event or condition beyond the reasonable
control of such party (including without limitation acts of State or
governmental action, riots, disturbance, war, strikes, lockouts, slowdowns,
prolonged shortage of energy or other supplies, epidemics, fire, flood,
hurricane, typhoon, earthquake, lightning and explosion,), the party so affected
shall be excused from such performance, only for so long as and to the extent
that such a force prevents, restricts or interferes with the party's performance
and provided that the party affected gives notice thereof to the other party and
uses diligent efforts to remedy such event or conditions.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives below.
FIELDWORKS INCORPORATED
___________________________ ______________________________
By By
___________________________ ______________________________
Title Title
___________________________ ______________________________
Date Date
Page 6
<PAGE>
SYSTEM INTEGRATOR AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
EXHIBIT A
THE PRODUCTS
<PAGE>
SYSTEM INTEGRATOR AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
EXHIBIT B
S.I. VALUE ADDED SYSTEMS OR PRODUCTS
<PAGE>
SYSTEM INTEGRATOR AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
EXHIBIT C
TERRITORY/MARKET BOUNDARIES
Territory includes all Products to which value is added in the form of
additional software or system hardware and which are sold and shipped by S.I. to
the following geographic territory/and or markets:
Inclusions:
Exclusions:
<PAGE>
SYSTEM INTEGRATOR AGREEMENT (TYPE CO. NAME, CONTRACT DATE)
EXHIBIT D
DISCOUNT SCHEDULE
General Conditions:
1 Terms: C.O.D. or cashiers check. Net 30 Days with credit approval.
1 System Integrator Agreement must be signed prior to acceptance of P.O.
1 Blanket P.O. with 12 month maximum release schedule required before quantity
discount will be applied.
1 All discounts calculated from prices listed in Exhibit A.
Sale of FieldWorks 5000 Series Products to System Integrator:
1 One time 25% discount on the first order (2 Units maximum).
<TABLE>
<CAPTION>
ANTICIPATED ANNUAL SALES SYSTEM INTEGRATOR
(QUANTITY IN UNITS) DISCOUNT
=============================================
<S> <C>
xx x %
- ---------------------------------------------
</TABLE>
Sale of FieldWorks 7000 Series Products to System Integrator:
1 One time 35% discount on the first order (2 Units maximum).
<TABLE>
<CAPTION>
ANTICIPATED ANNUAL SALES SYSTEM INTEGRATOR
(QUANTITY IN UNITS) DISCOUNT
=============================================
<S> <C>
xx x %
- ---------------------------------------------
</TABLE>
<PAGE>
EXTENDED LIMITED WARRANTY PROGRAM EXHIBIT 10.31
TERMS AND CONDITIONS
INTRODUCTION:
FieldWorks, Inc. cosigns and manufactures portable Field WorkStations for field
professionals who demand six slot expandability in a very rugged package. The
Field WorkStations provide years of uninterrupted performance as long as they
are cared for and maintained within the specifications listed for the product.
All Field WorkStations carry a full one year parts and labor limited warranty.
For those customers who need to have an extended warranty, FieldWorks has made
this plan available.
PLAN DESCRIPTION:
The terms and conditions of this agreement ("the Plan") extend the rights and
privileges of FieldWorks' one-year warranty for a one to two year period
beginning on the start date set forth on the reverse side. The Plan covers the
Field WorkStation product line as well as the options that are sold with the
Field WorkStations.
In the event that any covered Field WorkStation or option does not satisfy the
foregoing warranty at any time during the term of the Plan coverage, repair or
replacement of that instrument or option will be provided by FieldWorks.
The Plan is available for purchase during the original warranty period and
becomes effective at the completion of the initial year's warranty. However, the
cost of the Plan is less when purchased at the time of the Field WorkStation's
purchase.
Products which are out of warranty will need to be recertified by the factory to
determine their acceptability under the program. A recertification fee is
required. If service work is required you will be notified for approval to
proceed (in the form of a purchase order) and the recertified fee will apply
towards the service work required.
WHAT IT DOES NOT COVER:
THE PLAN DOES NOT COVER ANY COSTS YOU INCUR IN RETURNING THE PRODUCTS TO
FIELDWORKS' MINNESOTA REPAIR FACILITY INCLUDING, BUT NOT LIMITED TO, THE COSTS
OF PACKAGING, INSURANCE AND TRANSPORTATION. IT DOES NOT INCLUDE THE COST OF
INSTRUMENT HARDWARE CHANGES WHICH MAY 8E NEEDED TO TAKE ADVANTAGE OF FEATURES
PROVIDED IN NEW RELEASES OF THE BIOS OR SYSTEM M SOFTWARE, INSTRUMENTATION, OR
OPTIONS.
LIMITED WARRANTY
THE EXTENDED WARRANTIES PROVIDED HEREUNDER AS DESCRIBED ABOVE ARE IN LIEU OF AU
OTHER WARRANTIES, EXPRESSED OR IMPLIED, WHICH ARE HEREBY DISCLAIMED AND EXCLUDED
BY FIELDWORKS, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE, AND ALL OBLIGATIONS OR WARRANTIES OF
FIELDWORKS UNDER THE ORIGINAL WARRANTY FOR HARDWARE, SOFTWARE OR OPTIONS THAT
ARE NOT EXPRESSLY EXTENDED UNDER THESE TERMS AND CONDITIONS AS DESCRIBED ABOVE.
LIMITATION OF REMEDIES:
THE SOLE EXCLUSIVE REMEDIES FOR BREACH OF ANY AND ALL WARRANTIES AND THE SOLE
REMEDIES FOR FlELDWORKS' LIABILITY OF ANY (lNCLUDING LIABILITY FOR NEGLIGENCE),
OTHER THAN LIABILITY FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, WITH RESPECT TO
THE PRODUCTS AND SERVICES COVERED BY THIS AGREEMENT AND ALL OTHER PERFORMANCE BY
FIELDWORKS UNDER OR PURSUANT TO THIS AGREEMENT SHALL BE LIMITED TO THE
MAINTENANCE SERVICE SPECIFICALLY DESCRIBED ABOVE.
PRICES AND PAYMENT:
Prices are exclusive of all federal, state, municipal or other political
subdivision, excise, sales, use, property, occupational, or like taxes now In
force or enacted in the future and are therefore subject to an increase equal to
any such taxes FieldWorks may require to collect or pay upon the sale of
Services purchased hereunder.
TO ORDER THE EXTENDED WARRANTY PROGRAM AGREEMENT:
FieldWorks Extended Warranty Program can be ordered through your Sales
Representative or through the Sales Department at FieldWorks. The Following
information will be needed:
1. The Field WorkStation's Model Number and Serial Number.
2. The options as to be included in the warranty.
3. The BIOS Release Date (available on power up screen)
4. A purchase order for the service request.
Two copies of the completed agreement will be mailed to you for your signature.
Please keep one copy and return the other copy in the postage paid envelope
provided. This will ensure prompt registration. The Agreement goes into effect
when payment is received and/or on the specified start date, whichever is later.
MISCELLANEOUS:
This agreement is not assignable by Customer without the prior written consent
of FieldWorks. Any such attempt of assignment shall be void.
The Customer acknowledges that he/she has read this agreement and understands
and agrees to be bound by its terms, conditions and prices. Customer further
agrees that this Agreement, when combined with FieldWork's standard one-year
limited warranty is the complete and exclusive statement of the mutual
understanding of the parties and that this Agreement supersedes and cancels all
previous written and oral agreements and communications relating to the subject
matter of this agreement.
FieldWorks shall not be obligated to perform any maintenance services under the
Plan if any amount due from Customer is outstanding or overdue.
These forms and conditions constitute the entire agreement of the parties with
respect to the subject matter hereof, and supersede all previous agreements by
and between FieldWorks and customer related to the products or services provided
hereunder, as well as all proposals, oral, or written, and all negotiations,
conversations or discussions heretofore between the parties related thereto.
Customer acknowledges that it has not been induced to enter into this agreement
by any representations or statements, oral, or written, not expressly contained
herein.
TO RETURN PRODUCTS FOR MAINTENANCE:
FieldWorks provides ongoing technical support for customers who need assistance.
If a problem arises with the product, assistance may be requested by calling
technical support 1612) 947~856. Simply explain the problem to the support
representative. Many problems can be solved over the phone. If the support
representative sees the need for the product to be repaired at the Minnesota
facility then he/she will give the Customer a RMA# which should be plainly
displayed on the outside of the box prior to shipping to FieldWorks.
FieldWorks will ship the unit within 48 hours of receiving the unit.
<PAGE>
FIELDWORKS, INC.
EXTENDED LIMITED WARRANTY AGREEMENT
(Please Print or Type)
Coverage under This Program Includes:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Model Serial Number of
Number Number Bios Version Years Start Date End Date Price
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
TOTAL:
</TABLE>
Bill To: Contact:
____________________________________ _____________________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
Agreed: Agreed:
____________________________________ FieldWorks, Incorporated
Company Name 9961 Valley View Road
____________________________________ Eden Prairie, MN 55344
Street Address
____________________________________ Phone: (612) 947-0856
City/State/Zip FAX: (612) 947-0859
____________________________________
Telephone This program is subject to the
____________________________________ terms and conditions described on
FAX Number the reverse side. Please read
carefully before signing. This
agreement becomes valid upon
acceptance by FieldWorks, Inc.
Accepted By:
X___________________________________ X___________________________________
Signature & Title Signature & Title
Contract Agent
____________________________________ ____________________________________
Date Date
................................................................................
CUSTOMER AGENTS AUTHORIZED TO SIGN
UNDER AGREEMENT:
____________________________________ ____________________________________
Name & Title Name & Title
____________________________________ ____________________________________
Name & Title Name & Title
<PAGE>
Exhibit 11.1
FIELDWORKS, INC. AND SUBSIDIARIES
Computation of Pro Forma Net Loss Per Common Share
<TABLE>
<CAPTION>
For the Nine Months Ended
For the Years Ended December 31 September 30
---------------------------------------------- ---------------------------------
1993 1994 1995 1995 1996
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
PRIMARY AND FULLY DILUTED:
Net Loss $ (484,515) $ (1,688,218) $ (626,919) $ (81,775) $ (1,619,427)
============== ============== ============== ============== ==============
Weighted average common shares
outstanding 2,415,779 4,852,898 5,554,171 5,491,843 5,860,115
Effect of conversion of preferred
shares/(1)/ 416,667 416,667 416,667 416,667 416,667
Effect of cheap shares issued/(2)/ 216,649 216,649 216,649 216,649 216,649
-------------- -------------- -------------- -------------- --------------
3,049,095 5,486,214 6,187,487 6,125,159 6,493,431
============== ============== ============== ============== ==============
PRO FORMA NET LOSS PER
COMMON SHARE $ (.16) $ (.31) $ (.10) $ (.01) $ (.25)
============== ============== ============== ============== ==============
</TABLE>
/(1)/ Gives effect to preferred shares which convert to common shares concurrent
with this offering.
/(2)/ Warrants issued and options granted from March 1, 1996 to February 28,
1997 are included in the calculation for all periods presented, using the
treasury stock method, in accordance with Staff Accounting Bulletin Topic
4(D).
<PAGE>
Exhibit 21.1
Subsidiaries of the Company
---------------------------
Paragon Technology, Inc., a Pennsylvania corporation (in November 1996, the
Company's Board of Directors approved the distribution of all of the issued and
outstanding shares of Paragon's capital stock as a dividend to shareholders of
record of the Company as of November 15, 1996. The Company anticipates that the
distribution of this dividend will be completed before December 31, 1996.)
Fieldworks International, Incorporated, a Barbados corporation
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
December 20, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 SEP-30-1996
<CASH> 112,602 334,648
<SECURITIES> 0 0
<RECEIVABLES> 1,887,928 2,968,539
<ALLOWANCES> 110,600 150,500
<INVENTORY> 1,821,301 4,355,616
<CURRENT-ASSETS> 4,050,188 8,153,155
<PP&E> 486,089 673,226
<DEPRECIATION> 251,655 454,000
<TOTAL-ASSETS> 4,559,229 8,950,546
<CURRENT-LIABILITIES> 2,365,199 5,233,482
<BONDS> 0 0
0 0
0 300
<COMMON> 5,840 5,881
<OTHER-SE> 4,931,447 8,035,576
<TOTAL-LIABILITY-AND-EQUITY> 4,559,229 8,950,546
<SALES> 8,241,791 9,597,772
<TOTAL-REVENUES> 8,241,791 9,597,772
<CGS> 4,979,504 5,966,978
<TOTAL-COSTS> 3,640,680 4,680,565
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 68,678 222,767
<INCOME-PRETAX> (447,071) (1,272,538)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (447,071) (1,272,538)
<DISCONTINUED> (179,848) (346,889)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (626,919) (1,619,427)
<EPS-PRIMARY> (.10) (.25)
<EPS-DILUTED> (.10) (.25)
</TABLE>
