EXHIBIT 2.1
SECURITIES EXCHANGE AGREEMENT
This SECURITIES EXCHANGE AGREEMENT is made this 12th day of February 2003, by
and among WENTWORTH III, INC., a Delaware corporation having its principal place
of business at 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000
("Wentworth"), WHITCO COMPANY, L.L.P., a Texas limited liability partnership
having its principal place of business at 0000 Xxxx Xxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxx Xxxxx, Xxxxx 00000 ("Whitco") and the partners of Whitco listed on Annex A
hereto (the "Whitco Partners").
WHEREAS, Whitco has issued and outstanding an aggregate of 892.82 limited
liability partnership units ("LLP Units") and 241.3485 options to purchase
limited liability partnership units, which such options are granted but
unexercised, to certain of its officers and employees ("Option Units") (the LLP
Units and Option Units are referred to collectively herein as the "Units"); and
WHEREAS, Wentworth is authorized to issue 40,000,000 shares of common
stock, par value $.01 per share (the "Wentworth Common Stock") of which 200,000
shares (the "Issued Wentworth Shares") are issued and outstanding and 10,000,000
shares of preferred stock, par value $.01 share (the "Wentworth Preferred
Stock"), of which no shares are issued or outstanding. The Wentworth Common
Stock and the Wentworth Preferred Stock are referred to collectively herein as
the "Wentworth Shares"; and
WHEREAS, Wentworth, Whitco and the Whitco Partners desire to effect the
exchange of all of the Units for shares of authorized, but unissued Wentworth
Common Stock (the "Wentworth Exchange Shares"), upon the terms and subject to
the conditions set forth in this Agreement (the "Security Exchange"); and
WHEREAS, upon the issuance thereof, the Wentworth Exchange Shares will
constitute not less than 80% of the issued and outstanding capital stock of
Wentworth; and
WHEREAS, it is contemplated that Whitco will become a subsidiary of
Wentworth; and
WHEREAS, the parties to this Agreement intend and desire that the Security
Exchange shall constitute a tax-free reorganization within the meaning of
Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, none of the parties to this Agreement has either requested or
obtained, nor will they request, a private letter ruling from the Internal
Revenue Service or any opinion of counsel to the effect that the Security
Exchange will constitute a tax-free reorganization within the meaning of Section
351 of the Code; and
WHEREAS, the Whitco Partners recognize and acknowledge that, in light of
the foregoing, there can be no assurance from Wentworth or Whitco, nor is any
assurance intended, that the Security Exchange will constitute a tax-free
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reorganization under Section 351 of the Code and that they must consult with and
rely upon their own advisors for advice regarding the tax consequences of the
Security Exchange; and
WHEREAS, the Board of Directors of Wentworth and the partners of Whitco
(together with Wentworth, the "Companies") deem it advisable and generally to
the advantage and welfare of each of the respective Companies, and their
respective shareholders and partners, that the Security Exchange be effected
under the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, covenants and conditions
hereof, the parties hereto do mutually agree as follows:
1. Votes on Security Exchange and Related Matters. Whitco shall, as soon as
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practicable but prior to Closing (as defined below) (i) cause a special
meeting of its partners to be called to consider and vote upon the Security
Exchange on the terms and conditions hereinafter set forth, or (ii) obtain
written consent of such partners as is necessary to approve the Security
Exchange. If the Security Exchange is approved in accordance with applicable
law, subject to the further conditions and provisions of this Agreement, a
closing of this Agreement shall be held (the "Closing") and all documents or
instruments deemed necessary or appropriate by the parties hereto to effect the
Security Exchange, shall be executed as promptly as possible thereafter. The
time when the Security Exchange becomes effective is referred to herein as the
"Effective Time."
2. Representations, Warranties and Covenants of Whitco. Whitco represents,
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warrants and covenants as follows, except to the extent set forth on the
schedule of exceptions in the form of Schedule A annexed hereto and made a part
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hereof, with such exceptions to apply solely to the representation as to which
they are scheduled, except to the extent otherwise specifically
cross-referenced:
2.1 Organization; Capitalization. Whitco is, and on the effective date
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of the Security Exchange (the "Effective Date") will be, a duly organized and a
validly existing limited partnership in good standing under the laws of its
state of formation, and has all requisite corporate power and authority to own
its properties and operate its business as presently conducted. There are
issued and outstanding, and on the Effective Date there will be issued and
outstanding, only the Units, all of which are, and on the Effective Date will
be, duly authorized and validly issued. Other than the Option Units, there are,
and on the Effective Date there will be, no outstanding rights, options or
warrants to purchase any equity interest in Whitco, including but not limited to
any partnership units of Whitco, and there will be no other or any other issued
or outstanding securities of any nature convertible into or exercisable or
exchangeable for partnership units of Whitco. The LLP Units have been issued
pursuant to an appropriate exemption from the registration requirements of the
Securities Act and from any applicable registration requirements of the various
states. In the event any of the Option Units are exercised prior to the
Effective Date, such units shall be issued pursuant to an appropriate exemption
from the registration requirements of the Securities Act and from any applicable
registration requirements of the various states.
2.2 Authority. Whitco and the Whitco Partners each has, and on the
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Effective Date will have, full power and authority to enter into this Agreement
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and, subject to any required partner or other third party approval in accordance
with the laws of the State of Texas or such other state as to which Whitco
may be subject as a result of any agreement pursuant to which third party
approval is required, to consummate the transactions contemplated hereby. This
Agreement and the transactions contemplated hereby have been duly approved by
all requisite corporate action on the part of Whitco and, prior to the Closing,
by the other Whitco Partners whose consent is required under applicable law and
the Amendment and Restatement of Partnership Agreement of Whitco, dated as of
the Effective Date (the "Partnership Agreement").
2.3 Binding Agreement. This Agreement has been duly executed and
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delivered by Whitco and constitutes the legal, valid and binding obligation of
Whitco and the Whitco Partners, enforceable against them in accordance with the
terms hereof, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application relating to or
affecting the enforcement of rights hereunder or general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
2.4 No Conflicts. The execution and delivery by Whitco and the Whitco
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Partners of this Agreement, the consummation and performance of the transactions
herein contemplated, and compliance with the terms of this Agreement by Whitco
and the Whitco Partners will not conflict with, result in a breach of or
constitute or give rise to a default under (i) any indenture, mortgage, deed of
trust or other agreement, instrument or contract to which Whitco or any Whitco
Partner is now a party or by which it or any of its assets or properties are
bound; (ii) Whitco's Certificate of Limited Partnership or Partnership
Agreement; or (iii) any law, order, rule, regulation, writ, injunction, judgment
or decree of any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over Whitco, any of the Whitco Partners or any of
Whitco's business or properties wherein such breach could have a material
adverse effect on Whitco or any of its business or properties.
2.5 Subsidiaries. Whitco does not have, and on the Effective Date will
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not have, any subsidiaries, nor does it own any direct or indirect interest in
any other business entity.
2.6 Foreign Qualifications. Whitco is, and on the Effective Date will
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be, qualified or licensed as a foreign limited partnership in all jurisdictions
where its business or ownership of assets so requires, except where the failure
to be qualified or licensed would not be reasonably expected to have a material
adverse effect on the business of Whitco. The business of Whitco does not
require it to be registered as an investment company or investment adviser, as
such terms are defined under the Investment Company Act of 1940 and the
Investment Advisers Act of 1940, each as amended.
2.7 Financial Statements. All financial statement of Whitco previously
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delivered to Wentworth (the "Financial Statements") fairly present in all
material respects the financial position, results of operations and other
information purported to be shown therein of Whitco, at the dates and for the
respective periods to which they apply. All such Financial Statements have been
prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, and have been adjusted for
all normal and recurring accruals and are incorporated herein by reference.
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2.8 Material Adverse Change. There has not been, and on the Effective
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Date there will not have been in the aggregate, any material adverse change in
the condition, financial or otherwise, of Whitco from that set forth in the
Financial Statements.
2.9 Ordinary Course of Business. Except for transactions occurring in
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the ordinary course of business, there has not been, and on the Effective Date
there will not have been, any single transaction involving Whitco since
September 30, 2002 in an amount in excess of $100,000.
2.10 Liabilities; Claims. There are, and on the Effective Date will
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be, no liabilities (including, but not limited to, tax liabilities) or claims
against Whitco (whether such liabilities or claims are contingent or absolute,
direct or indirect, matured or unmatured) not appearing on the Financial
Statements, other than (i) liabilities incurred in the ordinary course of
business since September 30, 2002, (ii) taxes accrued on earnings since
September 30, 2002 which are not yet due or payable, or (iii) liabilities which
in the aggregate do not exceed $50,000.
2.11 Tax Returns. All federal, state, county and local income, excise,
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property and other tax returns required to be filed by Whitco have been filed,
and all required taxes, fees or assessments have been paid or an adequate
reserve therefor has been established in the Financial Statements. The federal
income tax returns and state and foreign income tax returns of Whitco have not
been audited by the Internal Revenue Service ("IRS") or any other taxing
authority within the past five (5) years. Neither the IRS nor any state, local
or other taxing authority has proposed any additional taxes, interest or
penalties with respect to Whitco or any of its operations or businesses. There
are no pending, or to the knowledge of Whitco, threatened, tax claims or
assessments, and there are no pending, or to the knowledge of Whitco,
threatened, tax examinations by any taxing authorities. Whitco has not given
any waivers of rights (which are currently in effect) under applicable statutes
of limitations with respect to the federal income tax returns of Whitco for any
year.
2.12 Title to Assets. Except as provided for in the Financial
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Statements, Whitco, has, and on the Effective Date will have, good and
marketable title to all of its furniture, fixtures, equipment and other assets
owned by Whitco, and such assets are owned free and clear of all security
interests, pledges, liens, restrictions and encumbrances of every kind and
nature. Whitco is the owner of its inventory as set forth in the Financial
Statements and has good and marketable title thereto.
2.13 Accounts Receivable. The accounts receivable as set forth in the
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Financial Statements represent amounts due for goods sold or services rendered
by Whitco in the ordinary course of business and, except as reserved for in the
Financial Statements, Whitco believes are collectable in the ordinary course of
business.
2.14 Material Contracts. A copy (or summary if oral) of all
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agreements, contracts, arrangements, understandings and commitments, whether
written or oral, to which Whitco is or on the Effective Date will be, a party,
or from which Whitco will receive substantial benefits and which are material to
Whitco (collectively, "Whitco Contracts"), have been or will be delivered to
Wentworth or its counsel. Any Whitco Contracts entered into between the date
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hereof and the Effective Date will be delivered to Wentworth or its counsel
prior to Closing. Whitco is not now, nor will it be on the Effective Date, in
material default under any Whitco Contract and to the knowledge of Whitco no
other party to any Whitco Contract is in material default thereunder. Each
Whitco Contract is a legal, valid and binding obligation of Whitco, enforceable
against it in accordance with their respective terms. The validity and
enforceability of, and rights of Whitco contained in, each such Whitco Contract
shall not be adversely effected by the Security Exchange or the transactions
contemplated hereby or any actions taken in furtherance hereof.
2.15 Legal Proceedings. There are, and on the Effective Date there will be,
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no legal, administrative, arbitral or other proceedings, claims, actions or
governmental investigations of any nature pending, or to Whitco's knowledge,
threatened, involving Whitco, individually or in the aggregate, in which an
unfavorable determination could result in suspension or termination of Whitco's
business or authority to conduct such business in any jurisdiction or could
result in the payment by Whitco of more than $100,000, or challenging the
validity or propriety of the transactions contemplated by this Agreement. Whitco
is not a party to any order, judgment or decree which will, or might reasonably
be expected to, materially adversely affect the business, operations,
properties, assets or financial condition of Whitco.
2.16 Certain Transactions. Since September 30, 2002 there have been, and
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through the Effective Date there will be: (i) no bonuses or extraordinary
compensation paid to any of the officers or partners of Whitco, (ii) no loans
made to or any other transactions with any of the officers or partners of Whitco
or their families and (iii) no dividends or other distributions declared or paid
by Whitco, except those distributions made to partners for federal income tax
purposes.
2.17 Insurance. Whitco has, and on the Effective Date will have, maintained
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casualty and liability policies and other insurance policies with respect to its
business which are appropriate and customary for businesses similar in size,
industry and risk profile. Copies of all of the policies of insurance and bonds
presently in force with respect to Whitco, including without limitation those
covering properties, buildings, machinery, equipment, worker's compensation,
officers and directors and public liability, have been made available to
Wentworth. All such insurance is outstanding and in full force and effect, with
all premiums thereon duly paid, and Whitco has not received any notice of
cancellation of any such policies.
2.18 Intellectual Property. Whitco has, and on the Effective Date will
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have, no patents, patent applications, trademarks, trademark registrations or
applications, trade names, copyrights, copyright registrations or applications,
or other intellectual property. Whitco does not have knowledge of any
infringements by it of any third party's intellectual property.
2.19 Compliance with Laws. Since its acquisition in June, 2000, Whitco has,
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and on the Effective Date will have, in all material respects operated its
business and conducted its affairs in compliance with all applicable laws, rules
and regulations, except where the failure to so comply did not have and would
not be expected to have a material adverse effect on its business or property.
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2.20 Related Party Contracts. There are, and on the Effective Date there
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will be, no loans, leases or other Whitco Contracts outstanding between Whitco
and any of its officers, partners, any holders of more than five percent (5%) or
more of the Units or any person related to or affiliated with any such officers
or directors or holders of more than five percent (5%) or more of the Units.
2.21 Officer and Director Information. Since its acquisition in June, 2000,
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neither Whitco nor any of its officers or partners, nor any person intended upon
consummation of the Security Exchange to be nominated by Whitco to become an
officer or director of Wentworth or any successor entity or subsidiary, has been
the subject of:
(a) a petition under the Federal bankruptcy laws or any other
insolvency or moratorium law or has a receiver, fiscal agent or similar
officer been appointed by a court for the business or property of Whitco or
such person, or any partnership in which Whitco or any such person was a
general partner at or within two years before the time of such filing, or
any corporation or business association of which Whitco or any such person
was an executive officer at or within two years before the time of such
filing;
(b) a conviction in a criminal proceeding or a named subject of a
pending criminal proceeding (excluding traffic violations which do not
relate to driving while intoxicated or driving under the influence);
(c) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining Whitco or any such person from, or otherwise
limiting, the following activities:
(i) Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
United States Commodity Futures Trading Commission or an associated
person of any of the foregoing, or as an investment adviser,
underwriter, broker or dealer in securities, or as an affiliated
person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or
continuing any conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or
sale of any security or commodity or in connection with any violation
of Federal, state or other securities laws or commodities laws;
(d) any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any Federal, state or local authority barring,
suspending or otherwise limiting for more than 60 days the right of Whitco
or any such person to engage in any activity described in the preceding
sub-paragraph, or to be associated with persons engaged in any such
activity;
(e) a finding by a court of competent jurisdiction in a civil action
or by the Securities and Exchange Commission (the "Commission") to have
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violated any securities law, regulation or decree and the judgment in such
civil action or finding by the Commission has not been subsequently
reversed, suspended or vacated; or
(f) a finding by a court of competent jurisdiction in a civil action
or by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding has not
been subsequently reversed, suspended or vacated. All items described in
clauses (a) through (f) above are collectively referred to herein as "Bad
Events."
2.22 Benefit Plans. Whitco does not have any pension plan, profit sharing
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or similar employee benefit plan other than its 401(k) plan, which is managed by
its employee leasing company.
2.23 Consents and Approvals. Except for the consent and approval of the
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partners of Whitco, no consents or approvals of, or filings or registrations
with, any third party or any public body or authority are necessary in
connection with (i) the execution and delivery by Whitco of this Agreement and
(ii) the consummation by Whitco of the Security Exchange and of all other
transactions contemplated hereby.
2.24 Finder's Fees. Whitco knows of no person who rendered any service in
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connection with the introduction of the Companies to any of the other Companies,
for a "finder's fee" or similar type of fee in connection with the Security
Exchange and the other transactions contemplated hereby, except for Xxxxxxx
Investments, LLC which will receive 200,000 shares of Wentworth Common Stock as
a fee in connection with the Security Exchange.
2.25 Employee Matters. No employees of Whitco are on strike or to the best
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of Whitco's knowledge threatening any strike or work stoppage. Whitco does not
have any obligations under any collective bargaining or labor union agreements,
nor is Whitco involved in any material controversy with any of its employees or
any organization representing any of its employees. Whitco believes its
relationships with its employees are good.
2.26 Disclosure. None of the information supplied or to be supplied by or
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about Whitco herein or for inclusion or incorporation by reference in any
information to be supplied to holders of Wentworth Common Stock concerning the
Security Exchange contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
2.27 Actions Prior to Closing. From the date hereof through the Closing,
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Whitco shall not, other than in the ordinary course of business, consistent with
past practice, without due consent of Wentworth:
(a) sell, lease, assign, transfer or otherwise dispose of any material
assets, including cash;
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(b) incur or agree to assume or assume, guarantee, endorse or
otherwise in any way be or become responsible or liable for, directly or
indirectly, any material contingent obligation;
(c) make any material capital expenditure;
(d) participate or engage in any discussions or negotiations with any
person regarding, or enter into any transaction concerning, a merger, stock
exchange or consolidation, other than with the other parties hereto, or
liquidate or dissolve itself (or suffer any liquidation or dissolution) or
convey, sell, lease, transfer or otherwise dispose of, in one transaction
or a series of related transactions, all or a substantial part of its
property, business, assets or units, or other securities convertible into
equity, or make any material change in the present method of conducting
business;
(e) declare or pay any dividends or make any other distribution
(whether in cash or property) on any of its partnership units (except that
Whitco shall be entitled to make distributions to its partners sufficient
to allow them to pay income taxes on Whitco's taxable income passed through
to them, consistent with past practices), or purchase, redeem, retire or
otherwise acquire for value any partnership units or warrants or options,
whether now or hereafter outstanding;
(f) make or suffer to exist any advances or loans to, or investments
in any person, firm, corporation or other business entity not a party to
this letter of intent;
(g) make any amendment to its Application for Registered Limited
Liability Partnership;
(h) enter into or amend any employment agreements or increase the
salary or bonus of any existing employee;
(i) enter into any new material agreement or be or become liable under
any new material agreement for the lease, hire or use of any real or
personal property;
(j) create, incur, assume or suffer to exist, any mortgage, pledge,
lien, charge, security interest or encumbrance of any kind upon any of its
property, assets, income or profits, whether now owned or hereafter
acquired; or
(k) enter into any commitment with respect to any of the foregoing.
3. Representations, Warranties and Covenants of Wentworth. Wentworth
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represents, warrants and covenants as follows, except to the extent set forth in
the Schedule of Exceptions in the form of Schedule B annexed hereto and
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made part hereof ("Wentworth Schedule of Exceptions"):
3.1 Organization; Capitalization. Wentworth is a duly organized and validly
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existing corporation in good standing under the laws of the State of
Delaware, authorized to issue an aggregate of 40,000,000 shares of Wentworth
Common Stock and 10,000,000 shares of Wentworth Preferred Stock. On the
Effective Date, there will be issued and outstanding no more than 200,000 shares
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of Wentworth Common Stock, all of which such issued and outstanding shares will
be validly issued, fully paid and nonassessable. On the Effective Date, there
will be issued and outstanding no shares of Wentworth Preferred Stock. Except
as contemplated by this Agreement, on the Effective Date there will be no issued
or outstanding securities and no issued or outstanding options, warrants or
other rights, or commitments or agreements of any kind, contingent or otherwise,
to purchase or otherwise acquire Wentworth Shares or any issued or outstanding
securities of any nature convertible into Wentworth Shares other than the
200,000 shares of Wentworth Common Stock which are currently outstanding. There
is no proxy or any other agreement, arrangement or understanding of any kind
authorized, effective or outstanding which restricts, limits or otherwise
affects the right to vote any Wentworth Shares.
3.2 Binding Agreement. This Agreement and the transactions contemplated
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hereby have been duly approved by the Board of Directors of Wentworth. This
Agreement has been duly executed and delivered by Wentworth and constitutes the
legal, valid and binding obligation of Wentworth enforceable against it in
accordance with the terms hereof, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of rights hereunder or general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
3.3 Recent Business Operations. The business of Wentworth and the Wentworth
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Subsidiaries (as hereinafter defined), since their respective incorporation, has
been limited to the search for an acquisition or merger partner and certain
transactions described in its filings with the Commission (the "SEC Filings"),
and except for transactions described in the SEC Filings, Wentworth and the
Wentworth Subsidiaries have not engaged in any other business since their
respective incorporation.
3.4 Foreign Qualifications. Wentworth is, and on the Effective Date will
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be, duly authorized, qualified and licensed under any and all applicable laws,
regulations, ordinances or orders of public authorities to carry on its business
in the places and in the manner as presently conducted. The business of
Wentworth does not require it to be registered as an investment company or
investment advisor, as such terms are defined under the Investment Company Act
and the Investment Advisors Act of 1940.
3.5 Subsidiaries. Wentworth has, and on the Effective Date will have, no
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subsidiaries.
3.6 Financial Statements. The financial statements of Wentworth, consisting
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of its Balance Sheets, Statement of Operations, Statement of Stockholders'
Equity and Statement of Cash Flows, all as at or for periods ending September
30, 2002, and all together with accompanying notes, if any, are complete and
correct in all material respects, present fairly the financial position of
Wentworth, the results of operations and changes in financial position for the
period covered thereby, and were prepared in accordance with generally accepted
accounting principles consistently applied, and have been adjusted for all
normal and recurring accruals. All the financial statements referenced herein
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regarding Wentworth are collectively referred to as the "Wentworth Financial
Statements", all of which have been delivered to Whitco and are true, correct
and complete in all material respects.
3.7 No Adverse Changes. There has not been, and on the Effective Date there
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will not have been, any material change in the financial condition of Wentworth
and the Wentworth Subsidiaries from that set forth in the Wentworth Financial
Statements except for (i) transactions in the ordinary course of business, (ii)
transactions relating to this Agreement, and (iii) the incurring of expenses and
liabilities relating to this Agreement.
3.8 Liabilities. There are, and on the Effective Date will be, no
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liabilities (including, but not limited to, tax liabilities) of, or claims
against, Wentworth (whether such liabilities or claims are contingent or
absolute, direct or indirect, accrued or unaccrued and matured or unmatured) not
appearing on the Wentworth Financial Statements, except for (i) liabilities for
expenses incurred relating to this Agreement and the consummation of the
transactions contemplated hereby and (ii) liabilities and commitments incurred
or made in the ordinary course of Wentworth's business or taxes incurred on
earnings since September 30, 2002.
3.9 Tax Returns. All Federal, state, county and local income, excise,
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property or other tax returns required to be filed by Wentworth have been timely
filed and all required taxes, fees and assessments have been paid or an adequate
reserve therefore has been provided for in the Wentworth Financial Statements.
3.10 Assets. Wentworth have, and on the Effective Date will have, no
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fixtures, furniture, equipment, inventory, accounts receivable or other assets.
3.11 Material Contracts. Wentworth each have, and on the Effective Date
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will have, no material contracts to which it is, or on the Effective Date will
be, a party, except as described in the Wentworth Financial Statements.
3.12 No Conflicts. The execution and delivery by Wentworth of this
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Agreement, the consummation and performance of the transactions herein
contemplated and compliance with the terms of this Agreement by Wentworth will
not conflict with, result in a breach of or constitute a default under (i) any
indenture, mortgage, deed of trust or other agreement, instrument or contract to
which Wentworth is now a party or by which it or any of its assets or properties
is bound; (ii) the Certificate of Incorporation or the bylaws of Wentworth, in
each case as amended; or (iii) any law, order, rule, regulation, writ,
injunction, judgment or decree of any government, governmental instrumentality
or court, domestic or foreign, having jurisdiction over Wentworth or any of its
business or properties.
3.13 Legal Proceedings. There are, and on the Effective Date there will be,
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no legal, administrative, arbitral or other proceedings, claims, actions or
governmental investigations of any nature pending or to Wentworth's knowledge
threatened, against Wentworth, including, but not limited to any shareholder
claims or derivative actions, or challenging the validity or propriety of the
transactions contemplated by this Agreement, and, to Wentworth's best knowledge,
there is no reasonable basis for any proceeding, claim, action or governmental
investigation against Wentworth. Wentworth is not a party to any order, judgment
or decree which will, or might reasonably be expected to, materially adversely
affect the business, operations, properties, assets or financial condition of
Wentworth.
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3.14 Certain Transactions. Other than as disclosed in the SEC Filings,
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there have been, and to the Effective Date there will be (i) no salaried or
otherwise compensated employees and no bonuses paid to any officer or director
of Wentworth; (ii) no loans made to or transactions with any officer or director
of Wentworth; (iii) no dividends or other distributions declared or paid by
Wentworth; and (iv) no purchase by Wentworth or any third party of any of the
Wentworth Shares.
3.15 Issuances of Securities. Wentworth has not, except for the Issued
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Wentworth Shares, issued or committed itself to issue, and to the Effective Date
will not issue or commit itself to issue, any Wentworth Shares or any
options, rights, warrants, or other securities convertible into Wentworth
Shares, except as contemplated by this Agreement.
3.16 Intellectual Property. Wentworth has no patents, patent applications,
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trademarks, trademark registrations, trade names, copyrights, copyright
registrations or applications therefor. Wentworth has no knowledge of any
infringements by Wentworth of any third party's intellectual property.
3.17 Compliance with Laws. Wentworth has, and on the Effective Date will
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have, in all material respects operated its business and conducted its affairs
in compliance with all applicable laws, rules and regulations, except where the
failure to so comply did not have and would not be expected to have a material
adverse effect on its business or property. To the best of its knowledge,
Wentworth is not in violation of any Federal, state or local environmental law
or regulation.
3.18 Related Party Transactions. On the Effective Date there will be no
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loans, leases, commitments, arrangements or other contracts of any kind or
nature outstanding between (i) Wentworth or (ii) any officer or director of
Wentworth or any person related to or affiliated with any officer or director of
Wentworth.
3.19 Officers and Directors. During the past five year period, no current
----------------------
officer or director of Wentworth has been the subject of any Bad Event.
3.20 Employee Benefit Plans. Wentworth has no pension plan, profit sharing
----------------------
or similar employee benefit plan.
3.21 Consents. Except for the consent and approval of the Board of
--------
Directors of Wentworth, the effectiveness of a post-effective amendment to
Wentworth's registration statement on Form SB-2, registration number 333-75044
(the "Registration Statement"), delivery of an amended prospectus to all
Wentworth shareholders and the waiver by all of Wentworth's shareholders of any
rights to rescind their share purchases pursuant to Rule 419 promulgated under
the Securities Act of 1933, as amended ("Rule 419") and the filing of Commission
Form 8-K, no consents or approvals of, or filings or registrations with, any
third party or any public body or authority are necessary in connection with (i)
11
the execution and delivery by Wentworth of this Agreement or (ii) the
consummation by Wentworth of the Security Exchange and the other transactions
contemplated hereby. Wentworth has, and on the Effective Date will have, full
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
3.22 Finder's Fees. Wentworth knows of no person who rendered any service
-------------
in connection with the introduction of the Companies to any of the other
Companies, for a "finder's fee" or similar type of fee in connection with the
Security Exchange and the other transactions contemplated hereby except for
Xxxxxxx Investments, LLC which will receive 200,000 shares of Wentworth Common
Stock as a fee in connection with the Security Exchange.
3.23 Employees. Wentworth has no employees.
---------
3.24 Rule 419. Wentworth's initial public offering of securities was
---------
conducted in full compliance with all applicable securities laws and
regulations, including without limitation, all the requirements of Rule 419.
3.25 Disclosure. None of the information supplied or to be supplied by
----------
or about Wentworth to Whitco concerning the Security Exchange contains any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
3.26 Registration. The Wentworth Common Stock is, and at the
------------
Effective Date will be, validly registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended.
4. Representations to Survive Closing. All of the representations,
-------------------------------------
covenants and warranties contained in this Agreement (including all statements
contained in any certificate or other instrument delivered by or on behalf of
Wentworth or Whitco pursuant hereto or in connection with the transactions
contemplated hereby) shall survive the Closing for a period of one (1) year from
the Effective Date.
5. Exchange of Securities.
-------------------------
5.1 Whitco Partners' Exchange of Units.
--------------------------------------
Upon the terms and subject to the conditions contained herein, and in reliance
upon the representations, warranties, covenants and indemnifications contained
herein, the Whitco Partners hereby agree to convey, transfer, assign and deliver
to Wentworth, and Wentworth hereby agrees to acquire from the Whitco Partners,
on the Closing Date, all of the rights, title and interest of the Whitco
Partners in and to the Units. The number of Units to be delivered by each
Whitco Partner is set forth opposite such Whitco Partner's name on Annex A
-------
hereto.
5.2 Wentworth Exchange of Shares.
-------------------------------
Upon the terms and subject to the conditions contained herein, and in reliance
upon the representations, warranties, covenants and indemnifications contained
herein, Wentworth hereby agrees to issue the Wentworth Exchange Shares to the
12
Whitco Partners on the Closing Date and the Whitco Partners hereby agree to so
acquire the Wentworth Exchange Shares from Wentworth. The Wentworth Exchange
Shares shall be delivered to the Whitco Partners on a pro rata basis as set
forth on Annex A, in accordance with the formula set forth below in Section 6.
-------
6. Treatment of Securities of in the Security Exchange. The terms and
---------------------------------------------------------
conditions of the Security Exchange, the mode of carrying the same into effect,
and the manner and basis of exchanging the securities of each of Whitco and
Wentworth are as follows:
6.1 Treatment of Units. The Units shall be converted by virtue of the
--------------------
Security Exchange, and at the Effective Date, into an aggregate of 3,800,000
shares of Wentworth Common Stock ("Whitco Shares"), on the basis of 3,350.47217
shares of Wentworth Common Stock for each Unit, without any action on the part
of the holders thereof. After the Effective Date, each holder of Units prior to
the Security Exchange shall be entitled, upon surrender, to receive from
Wentworth a certificate representing the number of shares of Wentworth Common
Stock to which such holder shall be entitled, which certificate shall contain
any appropriate restrictive legend concerning the resale of such Wentworth
Common Stock. Until so surrendered, any outstanding certificates or other
documentation which, prior to the Effective Date, represented Units, shall be
deemed for all corporate purposes to evidence ownership of Wentworth Common
Stock into which such Units shall have been exchanged. Upon exchange, any
fractional Wentworth Common Stock resulting from exchange shall be rounded up to
the next highest whole number.
6.2 Treatment of Option Units. The Option Units shall be replaced at
----------------------------
closing by options to purchase Wentworth Common Stock on the same basis of
conversion as set forth in Section 6.1 above.
6.3 Treatment of Whitco Convertible Debentures. In the event any
----------------------------------------------
convertible debentures of Whitco are still outstanding on the Effective Date,
such convertible debentures shall be converted into Wentworth Common Stock on
the same basis of conversion as set forth in Section 6.1 above.
7. Conditions of Obligations of Wentworth. The obligation of Wentworth to
----------------------------------------
consummate the Security Exchange is subject to the following conditions prior to
the Effective Date:
7.1 Compliance with Representations and Warranties. Whitco shall be in
--------------------------------------------------
compliance with its representations, warranties and covenants contained herein
in all material respects, and Wentworth shall receive from Whitco certificates
to such effect from the President of Whitco as of the Effective Date.
7.2 Losses. Whitco shall not have suffered a loss on account of fire,
------
flood, accident or other calamity of such a character as to interfere materially
with the continuous operation of its business or materially affect
adversely its condition, financial or otherwise, regardless of whether or not
such loss shall have been insured.
13
7.3 No Material Transactions. No material transaction shall have been
------------------------
entered into by Whitco other than transactions in the ordinary course of
business between December 31, 2002 and the Effective Date, other than as
referred to in this Agreement or in Schedule A annexed hereto, except with the
prior written consent of Wentworth.
7.4 No Material Adverse Change; Due Diligence. Except as disclosed in this
-----------------------------------------
Agreement or in the schedules annexed hereto, no material adverse change in the
aggregate shall have occurred in the financial condition, business, properties,
assets, liabilities, results of operations or prospects of Whitco since
September 30, 2002. Additionally, Wentworth shall be satisfied in all material
respects with the results of its due diligence investigation of Whitco.
7.5 Disposition of Assets. None of the properties or assets of Whitco shall
---------------------
have been sold or otherwise disposed of other than in the ordinary course of
business in accordance with past practice during such period, except with the
prior written consent of Wentworth.
7.6 Conditions. Whitco shall have performed and complied with the
----------
provisions and conditions of this Agreement on its part to be performed and
complied with.
7.7 Filings and Approvals. All applicable filings and regulatory approvals
---------------------
required to be made or obtained by Whitco have been made or obtained.
7.8 Partner Approvals. This Agreement and the transactions contemplated
-----------------
hereby shall have been approved by appropriate action of the general partner and
the other Partners, as required, of Whitco and resolutions to that effect in
form and substance reasonably satisfactory to Wentworth and its counsel, shall
have been delivered to Wentworth.
7.9 Compliance with Securities Laws. There shall have been full compliance
-------------------------------
with the applicable securities or "blue sky" laws and regulations of any state
or other governmental body having jurisdiction over the Security Exchange.
7.10 Opinions of Counsel. Wentworth shall have received an opinion from
-------------------
counsel to Whitco in form and substance reasonably satisfactory to Wentworth's
counsel.
7.11 Investment Representation. Whitco shall have obtained an instrument,
-------------------------
in the form annexed hereto as Exhibit A, from the Whitco Partners, including a
---------
representation that the shares of Wentworth Common Stock being acquired as a
result of the transactions contemplated by this Agreement are being acquired for
investment purposes only and not with a view to, or sale in connection with, any
distribution within the meaning of the Securities Act of 1933, as amended.
Compliance with the provisions of this Section 7 shall be evidenced by the
certificate of the President and Secretary of Whitco.
8. Conditions of Obligations of Whitco and the Whitco Partners. The
-------------------------------------------------------------------
obligations of Whitco and the Whitco Partners to consummate the Security
Exchange are subject to the following conditions prior to the Effective Date:
14
8.1 Compliance with Representations and Warranties. Wentworth shall be in
------------------------------------------------
compliance with its representations, warranties and covenants contained herein,
and Whitco shall have received from Wentworth a certificate to such effect from
its President as of the Effective Date.
8.2 Losses. Wentworth shall not have suffered any loss on account of fire,
------
flood, accident or other calamity of such a character as to interfere materially
with the continuous operation of its business or materially adversely
affect its condition, financial or otherwise, regardless of whether or not such
loss shall have been insured.
8.3 No Material Transactions. No material transactions shall have been
------------------------
entered into by Wentworth, other than transactions in the ordinary course of
business, since September 30, 2002, other than as referred to in this Agreement
or in connection herewith, except with the prior written consent of Whitco.
8.4 No Material Adverse Change; Due Diligence. No material adverse change
-----------------------------------------
shall have occurred in the financial condition, business, properties, assets,
liabilities, results of operations or prospects of Wentworth since September 30,
2002, other than as referred to in this Agreement. Additionally, Whitco shall
be satisfied in all material respects with the results of its due diligence
investigation of Wentworth.
8.5 Disposal of Assets. None of the properties or assets of Wentworth shall
------------------
have been sold or otherwise disposed of, other than in the ordinary course of
business since September 30, 2002, except with the written consent of Whitco.
8.6 Compliance with Conditions. Wentworth shall have performed and complied
--------------------------
with the provisions and conditions of this Agreement on its part to be performed
and complied with.
8.7 Filings and Approvals. All applicable filings required to be made
---------------------
and regulatory approvals, as well as any other third party approvals, obtained
by Wentworth have been made or obtained. In particular, but not by way of
limitation, Wentworth shall have caused to become effective the Registration
Statement pursuant to Rule 419, offering each shareholder of Wentworth an
opportunity to rescind their share purchases, and no such shareholder shall have
so rescinded by the end of the time period required by Rule 419.
8.8 Board Resignations. Wentworth shall have held a meeting of its
-------------------
Board of Directors at which meeting all of its directors except one (to be
chosen by Wentworth) shall have resigned seriatim and the persons designated by
Whitco shall have been elected as directors of Wentworth, all subject to the
consummation of the Security Exchange.
8.9 Opinions. Whitco shall have received opinions from counsel to
--------
Wentworth in form and substance reasonably satisfactory to Whitco's counsel.
Compliance with the provisions of this Section 8 shall be evidenced by the
certificates of the respective Presidents and Secretaries of Wentworth to be
delivered at Closing.
15
9. Post Closing Covenants.
------------------------
9.1 Amendment of Wentworth Certificate of Incorporation. Promptly following
---------------------------------------------------
the Closing, Wentworth shall prepare and file preliminary proxy materials
to be sent to the shareholders of Wentworth and call a special meeting of the
shareholders of Wentworth (the "Special Meeting") to be held as soon as
practicable after the Closing, for the purpose of amending Wentworth's
Certificate of Incorporation to change its corporate name to Catalyst Lighting
Group, Inc. and such other matters as Wentworth shall deem appropriate.
Wentworth shall use its best efforts to promptly and substantively respond to
any Commission comments to such preliminary proxy materials and to file with the
Commission and mail to Wentworth shareholders definitive proxy materials as soon
as practicable thereafter.
10. Covenants of Principal Shareholders of Wentworth.
-----------------------------------------------------
10.1 Amendment of Wentworth Certificate of Incorporation. Xxxxx X. Xxxxxxx
----------------------------------------------------
("Xxxxxxx") and Xxxxxxx X. Xxxxxx ("Xxxxxx") each agrees that he will vote all
shares of Wentworth capital stock beneficially owned or controlled by him at the
Special Meeting in favor of the amendment of Wentworth's Certificate of
Incorporation to change its corporate name to Catalyst Lighting Group, Inc.
10.2 Election of Directors. Xxxxxxx and Xxxxxx each agrees that, for a
-----------------------
period of twelve months following the Closing, he will vote all shares of
Wentworth capital stock beneficially owned or controlled by him in favor of the
election of four persons chosen by Xxxxxx X. Xxxxxxxxxx, and reasonably
acceptable to the Wentworth Board of Directors, as members of the Board of
Directors of Wentworth. The persons initially chosen by Xxxxxx X. Xxxxxxxxxx to
be elected as a member of the Board of Directors of Wentworth, and who are
acceptable to the Wentworth Board of Directors, are Xxxx Xxxxx, Xxxxx Xxxxxx,
Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxxxxx.
11. Abandonment. This Agreement and the Security Exchange may be abandoned
-----------
(a) by any of the Companies, acting by its Board of Directors or general
partner, as applicable, by written notice to the other parties hereto, at any
time in the event of the failure of any condition in favor of such entity as to
which the consummation of the Security Exchange is subject, or (b) by the
consent of all the Companies, acting each by its Board of Directors or general
partner, as applicable, at any time prior to the Effective Date. In the event
of abandonment of this Agreement, the same shall become wholly void and of no
effect, and there shall be no further liability or obligation hereunder on the
part of any of the Companies, their respective Boards of Directors or managing
partner or any other party to this Agreement.
12. Closing or Termination. In the event the Closing of this Agreement
------------------------
shall not take place due to failure of any condition of Closing required herein,
then any party shall have the right to terminate this Agreement, in which
event no party shall have any further right or obligation as against any other.
If Whitco shall fail to close for any reason other than failure of any condition
of Closing required herein to be performed on the part of Wentworth, Whitco
shall pay to Wentworth a break-up fee of $25,000 in cash. If Wentworth shall
16
fail to close for any reason other than failure of any condition of Closing
required herein to be performed on the part of Whitco, Wentworth shall pay to
Whitco a break-up fee of $25,000 in cash.
13. Delivery of Corporate Proceedings of Wentworth. At the Closing,
-----------------------------------------------
Wentworth shall deliver to counsel for Whitco the originals of all of the
corporate proceedings of Wentworth, duly certified by its Secretary, relating to
this Agreement.
14. Delivery of Partnership Proceedings of Whitco. At the Closing, Whitco
----------------------------------------------
shall deliver to counsel for Wentworth the originals of all of the partnership
proceedings of Whitco, duly certified by its Secretary, relating to this
Agreement.
15. Limitation of Liability. The representations and warranties made by any
-----------------------
party to this Agreement are intended to be relied upon only by the other parties
to this Agreement and by no other person. Nothing contained in this Agreement
shall be deemed to confer upon any person not a party to this Agreement any
third party beneficiary rights or any other rights of any nature whatsoever.
16. Further Instruments and Actions. Each party shall deliver such further
-------------------------------
instruments and take such further action as may be reasonably requested by any
other in order to carry out the intent and purposes of this Agreement.
17. Governing Law. This Agreement is being delivered and is intended to be
-------------
performed in the State of Texas, and shall be construed and enforced in
accordance with the laws of such state, without regard to conflicts of laws
thereof.
18. Notices. All notices or other communications to be sent by any party to
-------
this Agreement to any other party to this Agreement shall be sent by certified
mail, personal delivery or nationwide overnight courier to the addresses
hereinbefore designated, or such other addresses as may hereafter be designated
in writing by a party. Notice shall be deemed given and received on the date of
actual delivery to the address specified thereon.
19. Binding Agreement. This Agreement represents the entire agreement among
-----------------
the parties hereto with respect to the matters described herein and is binding
upon and shall inure to the benefit of the parties hereto and their legal
representatives, successors and permitted assigns. This Agreement may not be
assigned and, except as stated herein, may not be altered or amended except in
writing executed by the party to be charged.
20. Counterparts. This Agreement may be executed in counterparts, all of
------------
which, when taken together, shall constitute the entire Agreement.
21. Severability. The provisions of this Agreement shall be severable, so
------------
that the unenforceability, validity or legality of any one provision shall not
affect the enforceability, validity or legality of the remaining provisions
hereof.
22. Joint Drafting. This Agreement shall be deemed to have been drafted
--------------
jointly by the parties hereto, and no inference or interpretation against any
party shall be made solely by virtue of such party allegedly having been the
draftsperson of this Agreement.
17
23. Reliance on Certificates. In rendering any opinion referred to herein,
------------------------
counsel for the parties hereto may rely, as to any factual matters involved in
their respective opinions, on certificates of public officials and of corporate
and company officers, and on such other evidence as such counsel may reasonably
deem appropriate and, as to the matters governed by the laws of jurisdictions
other than the United States or the States of Delaware and Texas, an opinion of
local counsel in such other jurisdiction(s), which counsel shall be satisfactory
to the other parties in the exercise of their reasonable discretion.
24. Public Announcements. All parties hereto agree that any public
--------------------
announcement, press release or other public disclosure of the signing of this
Agreement shall be made jointly and only after all parties hereto have reviewed
and approved the language and timing of such disclosure, except as such
disclosure may be required pursuant to any legal obligation or order of any
court having proper jurisdiction over any of the parties hereto.
25. Consent. Whenever consent is required to be given by any of the
-------
Companies to
any of the other Companies hereunder in connection with any matter contemplated
hereby, such consent shall not be unreasonably withheld, delayed or conditioned.
26. Assignment. Neither this Agreement nor any right or obligation
----------
hereunder is assignable in whole or in part, whether by operation of law or
otherwise, by any party without the express written consent of the other party
hereto and any such attempted assignment shall be void and unenforceable;
provided, however, that, notwithstanding the foregoing, Whitco may, at any time
-------- -------
prior to or after the Closing, transfer or assign this Agreement or any right or
obligation hereunder to a limited partnership (the "LP") wherein all of the
Whitco Partners and option holders of Whitco are partners and option holders of
the LP, owning and having the right to own substantially the same proportion of
partnership units in the LP as they currently own in Whitco. In conjunction
with such assignment to an LP, any Whitco Partner may assign all or any portion
of any LLP Units owned by such Whitco Partner to a limited liability company
serving as the general partner of the LP.
18
IN WITNESS WHEREOF, the parties hereto have made and executed this
Agreement as of the day and year first above written.
WENTWORTH III, INC.,
a Delaware corporation
By:
_______________________________________
Xxxxx X. Xxxxxxx, President
WHITCO COMPANY, L.L.P., a Texas limited liability
partnership
By:
_________________________________________
Xxxxxx X. Xxxxxxxxxx, Managing Member
THE WHITCO PARTNERS:
_________________________________________
Xxxxxxxxx X. Xxxxxxxxxx
JUNE X. XXXXXXX REVOCABLE TRUST
By: __________________________________
Name:
Title:
XXXXX X. XXXXXXXX LIVING TRUST
By: _________________________________
Name:
Title:
00
XXXX X. XXX XXXXXXXXXX X.
XXXXXXXXXX, XXXXXX
By: _________________________________
Name:
Title:
XXXXXX X. XXXXXXXXXX REVOCABLE
TRUST
By: _________________________________
Name:
Title:
As to the provisions of Section 10 of the Securities
Exchange Agreement:
_______________________________
XXXXX X. XXXXXXX
_______________________________
XXXXXXX X. XXXXXX
20
Schedule A Whitco Schedule of Exceptions
Schedule B Wentworth Schedule of Exceptions
Annex A Whitco Partners
Exhibit A Investment Representation
21
SCHEDULE A
Section 2.4- 1. Approval of A.M. Xxxxx XX, Xxxxxxxxxx Xxxxxxxxxx and Xxx
Xxxxxxxxx required to convert to limited partnership.
2. Approval from PNC Bank is required.
Section 2.9- We have spent in the aggregate more than $100,000
for the development of our sport lighting fixture division.
All such expenditures appear on the Financial Statements.
Section 2.14- We are in default as to covenants of the loan agreement with
PNC Bank relating to tangible net worth, debt ratio and cash
flow coverage.
Section 2.18- We are in the process of trademarking both the Catalyst
Lighting Group and its logo and Whitco. No final approval
has been granted by the PTO.
Section 2.23- Approval from PNC Bank is required
Section 2.27- As previously disclosed to Wentworth, we have had
conversations with Qualite Sports Lighting regarding their
potential acquisition by Whitco.
22
SCHEDULE B
None.
23
ANNEX A
Number of Shares
of Wentworth Common Stock
Partner Partnership Units to be received at closing
-------- ------------------- -------------------------
Xxxxxx X. Xxxxxxxxxx 1 3,350
June X. Xxxxxxx Revocable Trust 33.33 111,671
Xxxxx X. Xxxxxxxx Living Trust 204.45 685,004
Xxxxxxxxx X. Xxxxxxxxxx 140.89 472,048
Xxxx X. and Xxxxxxxxxx X.
Xxxxxxxxxx, JTWROS 33.33 111,671
Xxxxxx X. Xxxxxxxxxx
Revocable Trust 479.82 1,607,624
24
EXHIBIT A
[to come]
25
