EXHIBIT 2.1
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ASSET AND BUSINESS PURCHASE AGREEMENT
AGREEMENT, dated January 29, 2003, between XXXxxx.xxx, Inc. ("Buyer's
Parent"), GCS Western Power & Equipment Corp., a Delaware corporation ("Buyer"),
Western Power & Equipment Corp, a Delaware corporation ("Seller's Parent") and
Western Power & Equipment Corp., an Oregon corporation ("Seller").
WHEREAS, Buyer is a wholly owned subsidiary of Buyer's Parent;
WHEREAS, Seller is a wholly owned subsidiary of Seller's Parent;
WHEREAS, Seller conducts certain business operations involving the sale,
rental and servicing of construction, and industrial equipment and parts;
WHEREAS, Buyer desires to purchase from Seller substantially all of the
assets and operations of Seller conducted at showrooms, warehouses and offices
in California and Nevada (the "Business") and is willing to assume certain
liabilities and obligations in respect thereof which are specifically identified
in this Agreement; and
WHEREAS, Seller wishes to sell substantially all of the assets and the
operations of the Business to Buyer, and transfer certain liabilities and
obligations of Seller as specifically identified herein, all upon the terms and
subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
representations, warranties and agreements contained herein, the parties hereby
agree as follows:
1. PURCHASE AND SALE.
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1.1 Purchase and Sale of the Business Assets.
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On the terms and subject to the conditions herein set forth, at the
Closing (as defined in Section 2.3 hereof), Seller agrees to sell, transfer,
convey, assign and deliver to Buyer, and Buyer agrees to purchase from Seller
and accept delivery of, all of Seller's right, title and interest in and to the
assets of the Business set forth on Schedule 1.1, which is attached hereto and
made a part of this Agreement, and the following tangible, intangible, real,
personal and mixed assets, properties and rights of every kind and description,
wherever located, which constitute or are used by Seller in connection with the
Business, other than the Excluded Assets (as defined in Section 1.2 hereof), all
as the same shall exist on the Closing Date (collectively the "Assets"):
(a) all security deposits, prepaid items, unbilled costs and fees in
connection with the Business, of a type that was or should have
been included in a balance sheet if it had been audited, and
works in process other than those, if any, specifically
identified as an Excluded Asset herein;
(b) all merchandise, materials, whole goods, finished goods,
component materials now owned or hereafter acquired and held for
sale or lease or which contribute to finished products,
stationery, purchase orders and other forms, labels, catalogs,
brochures, art work, photographs and advertising material,
wherever located, which are used or held for use or sale by the
Business (collectively, "Inventory") except as expressly
disclosed in Section 3.10 of the Disclosure Schedule as being
owned by a third party;
(c) all furniture, fixtures, leasehold improvements (except to the
extent such leasehold improvements are, pursuant to the terms of
the relevant Lease (as defined in Section 3.11 or 3.14 below) the
property of the lessor thereunder), machinery, equipment,
computer hardware and software and office equipment owned or
leased by Seller located at or provided to the Business, or
otherwise identified in the disclosure schedule attached hereto
and made a part hereof (the "Disclosure Schedule") (the
"Equipment");
(d) Seller's interest in and to all telephone, telecopier, electronic
mail (but only to the extent such address is independent of
addresses associated with Seller's Parent, defined below),
internet address (but only to the extent such address is
independent of addresses associated with Seller's Parent, defined
below) and telex (if any) numbers and telephone and other
directory listings utilized in connection with the Business to
the extent assignable;
(e) except as set forth on Schedule 1.2(m), any and all formulae,
trade secrets, patents, trademarks, trade names, inventions,
computer software, technology, proprietary know-how, art work,
designs, processes and other intellectual property now used by
Seller in connection with the Business, (collectively,
"Intellectual Property");
(f) except as set forth on Schedule 1.2(n), to the extent assignable,
all franchises, permits and licenses, registration, certificate
of occupancy, contracts, agreements and commitments, customer
lists, restrictive covenants, confidentiality obligations and
similar obligations of present and former shareholders, officers
and employees of Seller, and any of their predecessors;
(g) all rights or choses in action arising out of occurrences before
or after the Closing, including without limitation all rights
under express or implied warranties relating to the Assets;
(h) all assets and properties reflected on the Closing Balance Sheet
as defined in Section 2.5; and
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(i) all books, files, papers, engineering, sales, marketing and other
studies, data and plans, records and other data of Seller,
including but not limited to all personnel files, computer
software and customer and supplier lists and other data bases, if
any, relating to the foregoing;
it being the parties' intention that (x) all tangible, intangible, real,
personal and mixed property, assets and rights considered by Seller to
constitute part of the Business as an ongoing business, wherever located, except
as expressly set forth in Sections 1.2 below, are to be conveyed to Buyer as
part of the Assets, and (y) the Assets comprise all the business, properties,
assets (however, employees, to the extent they could be considered assets, are
not included as assets in this Section) and goodwill employed by the Seller and
its affiliates in connection with the Business other than the Excluded Assets
(as defined below).
1.2 Excluded Assets.
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Notwithstanding the forgoing, it is agreed by the parties hereto that
Seller is not selling, and Buyer is not purchasing, any of the following:
(a) Seller's business operations outside of California and Nevada;
(b) Seller's franchise as a corporation and any prepaid taxes or
expenses or deferred charges in connection therewith and tax
refund claims for the periods prior to Closing;
(c) Seller's name
(d) Seller's minute books, corporate seals and stock books;
(e) the consideration to be paid by Buyer to Seller and rights of
Seller pursuant to this Agreement;
(f) all cash and cash equivalents on hand and in bank accounts on and
prior to the Closing Date;
(g) all intercompany accounts between Seller and any of its
Affiliates (as such term is defined herein), including, without
limitation, Seller's Parent;
(h) the software used by Seller with respect to its financial
information, except Buyer will be, to the extent possible and
subject to the implementation of appropriate security measures,
given a license to use such software for up to 180 days, at no
cost to the Buyer;
(i) all insurance policies maintained by Seller in respect of the
Business;
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(j) all assets of Seller located in California or Nevada and not used
as part of the Business (all of which assets are set forth on
Schedule 1.2(h) hereof);
(k) all accounts, notes and other receivables, and unbilled fees for
services rendered by Seller prior to and on the Closing Date;
(l) all payments in connection with the Business which are in
transit, including but not limited to cash and cash equivalents;
(m) the Intellectual Property set forth on Schedule 1.2(m); and
(n) the franchises, licenses and contract rights set forth on
Schedule 1.2(n).
1.3 Method of Conveyance.
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(a) The sale, transfer, conveyance, assignment and delivery by Seller
of the Assets to Buyer in accordance with Section 1.1 hereof
shall be effected on the Closing Date by Seller's execution and
delivery of one or more bills of sale and other instruments of
conveyance and transfer, substantially in the forms attached
hereto as Exhibit A (the "Xxxx of Sale").
(b) At the Closing Seller shall transfer, convey, assign and deliver
to Buyer all of the Assets pursuant to this Agreement and the
Xxxx of Sale free and clear of any and all liens, encumbrances,
claims, rights of Seller or any third party rights of redemption
equities, and other restrictions of any kind or nature whatsoever
(collectively, "Liens"), except for liens for current taxes not
yet due and except as set forth in Section 3.10(c) of the
Disclosure Schedule, and subject only to those liabilities or
obligations of Seller in respect of the Business to be
specifically assumed by Buyer pursuant to Section 1.4 and Section
2.4 hereof.
(c) Seller and Buyer will equally share all of the costs payable by
reason of the purchase and sale of the Assets hereunder or
Buyer's assumption of the Assumed Obligations and the Assumed
Liabilities hereunder.
(d) Seller covenants and agrees that in the event that either (i) any
of the Assets cannot be transferred or assigned by it without the
consent of or notice to a third party and in respect of which any
necessary consent or notice has not as of the Closing Date been
given or obtained, or (ii) any Assets are non-assignable in their
nature, Seller will use its reasonable best efforts to cause the
beneficial interest in and to the same to in any event pass to
the Buyer; and Seller covenants and agrees, on and after the
Closing Date, (x) to use its reasonable best efforts to hold such
Assets in trust for, and for the benefit of, the Buyer; (y) to
continue, to use its reasonable best efforts, on and after the
Closing Date, to obtain and to secure such consent and give such
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notice as may be required to effect a valid transfer or transfers
of such Assets to the extent such consent reasonably can be
obtained; provided, however, that, in the case of Leases to be
transferred as part of the Assets, Seller shall continue, if such
consent will not be obtained and/or until any such consent is
received, as a party to each such Lease for the benefit of the
Buyer, and Buyer shall perform Seller's post-Closing obligations
under such Leases as specifically set forth in subleases between
Seller and Buyer and hold Seller and its affiliates harmless with
respect to such performance by Buyer and with respect to any
post-Closing liability Seller or any of its affiliates may incur
in connection with any such Lease subsequent to the Closing; and
(z) to make or complete such transfer or transfers as soon as
possible. Buyer and Buyer's Parent will execute such documents
and take such actions, including the guaranty by Buyer's Parent
of Buyer's obligations to landlords with respect to any real
property leases.
1.4 Assumed Obligations.
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(a) At the Closing, Buyer shall assume and shall, subject to all
rights, against third parties, of offset, defenses, causes of
action, counterclaims and claims of any nature that may be
available to Buyer in respect of the Assumed Obligations, agree
to satisfy and discharge, as the same shall become due, all of
the liabilities and obligations of Seller (the "Assumed
Obligations") under:
(i) the contracts, agreements and commitments of Seller which
are specifically identified in Sections 3.11, 3.14 and
3.16(a), (b), (c) or (p) of the Disclosure Schedule and
obligations to deliver inventory, lease equipment and
perform repair services in the ordinary course of business
(the "Assumed Contracts") but only to the extent any such
liabilities and obligations arise after the Closing and then
only in respect of events and time periods occurring after
the Closing, provided, however, Buyer shall not assume or
agree to pay, discharge or perform:
(A) any liabilities or obligations arising exclusively in
respect of a breach of the non-assignment provision of
any Assumed Contract by virtue of the assignment of
such contract to Buyer hereunder, (but Buyer shall
allow Seller to take all such steps as may be necessary
to remedy any such breach);
(B) liabilities or obligations of the aforesaid character
existing as of the Closing Date, and which under
generally accepted accounting principles should have
been accrued or reserved for on a balance sheet or the
notes thereto as a liability or obligation, if and to
the extent that the same were not accrued or reserved
for on the Closing Balance Sheet;
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(C) liabilities or obligations arising out of any breach by
Seller of any provision of any agreement, contract,
commitment or lease referred to in this Section
1.4(a)(i), including but not limited to liabilities or
obligations arising out of Seller's failure to perform
any agreement, contract, commitment or lease in
accordance with its terms prior to the Closing; or
(D) any liability of Seller to Seller's Parent or any of
its affiliates.
(ii) all permits, registrations, and licenses which are being
transferred to Buyer on the Closing Date, if and to the
extent transferable, but only to the extent any such
liabilities and obligations arise after the Closing and then
only in respect of events and time periods occurring after
the Closing; and
(iii)all of Seller's obligations under purchase orders or
agreements entered into until the Closing to acquire goods
and services solely in connection with the operation of the
Business in the ordinary course and which are in existence
as of the Closing (subject to the limit on capital
expenditures set forth in Section 3.10(j), below).
(b) Buyer agrees to execute and deliver to Seller: (i) the Assignment
and Assumption Agreement (the "Assignment and Assumption
Agreement"), substantially in the form of Exhibit B1 hereto, to
evidence Buyer's assumption of the Assumed Obligations and the
Assumed Liabilities (as such term is defined in Section 2.4
below); and (ii) Assignment and Assumption Agreements
substantially in the form annexed hereto as Exhibit B2, related
to the Leased Properties in Sacramento, CA, Stockton, CA,
Redding, CA, Sparks, NV, Hayward, CA, Xxxxx Xxxx, XX xxx Xxxxx
Xxxx, XX, defined in Section 3.12 (c), below.
1.5 Excluded Obligations.
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Buyer shall not assume or be responsible for any liability,
obligation, debt or commitment of Seller, other than the Assumed Obligations and
the Assumed Liabilities, which liabilities, obligations, debts and commitments
not so assumed (the "Excluded Obligations") shall include and not be limited to
liabilities, obligations, debts or commitments, absolute or contingent, whenever
the same may arise:
(a) as set forth in Section 2.4(u) through (z) below;
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(b) which arise or are asserted by operation of any law, including
but not limited to any liability (other than an Assumed
Obligation or Assumed Liability) which may be sought to be
imposed on Buyer as successor to any part of Seller's Business,
or otherwise, by reason of any event (including but not limited
to the provision of services by Seller prior to the Closing), act
or omission, injury or transaction which shall have occurred or
failed to have occurred, whether by reason of the operation of
the Business or otherwise, prior to the Closing;
(c) to issue or purchase or make any payment in respect of any shares
of capital stock or any other security of Seller or any of its
affiliates;
(d) except as otherwise expressly provided herein, including, without
limitation in Section 2.4 hereof, which arises prior to Closing
or is otherwise incurred in respect of any event which occurs
prior to the Closing, whether under any of Seller's contracts
which are assumed by Buyer or otherwise;
(e) relating in any way to any of Seller's affiliates;
(f) which did not arise in the Business;
(g) except as provided in Section 2.4(b) and subject to Section
7.11(c) in respect of any of Seller's employee policies (whether
set forth in any of Seller's employee handbooks, policies or
otherwise) and benefit plans (including but not limited to the
Employee Benefit Plans (as that term is defined in Section 3.24
of this Agreement);
(h) for any deficit in Seller's unemployment compensation obligations
in respect of Seller's employees prior to the Closing;
(i) to any of Seller's employees in respect of any matter prior to
Closing, whether self-insured by Seller or otherwise, and
including but not limited to worker's compensation and medical
claims;
(j) to any of Seller's retired employees;
(k) for any liability in respect of Seller's operations outside of
California and Nevada;
(l) in respect of any express or implied representation, warranty or
guarantee made in connection with any of Seller's services or
operations (except as provided in Section 7.15 below), or which
are or may be imposed by operation of law in respect of any
operations prior to the Closing; and
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(m) any liability, whenever the same may arise, in respect of any
pricing, profit limitation or other regulation applicable to
government contracts, if any, of Seller for all periods prior to
Closing.
Without limiting the generality of the foregoing, Buyer shall,
notwithstanding Seller's disclosure of any matter in this Agreement, or Seller's
failure to disclose any matter in this Agreement whether or not Seller shall
have been required to make any such disclosure, under no circumstances be deemed
to have assumed any debt, liability or obligation of Seller not expressly
assumed in Section 1.4 above or in Section 2.4 below.
2. PURCHASE PRICE AND CLOSING.
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2.1 Purchase Price.
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The purchase price (the "Purchase Price") for the Assets to be sold,
transferred, conveyed, assigned and delivered by Seller to Buyer pursuant to
this Agreement shall be $1,000,000, plus the face amount of all accounts
receivable of Seller transferred to Buyer at Closing.
2.2 Payment of Purchase Price.
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On the Closing Date, the Buyer shall pay to Seller on account of the
purchase price:
(a) the amount of $500,000 plus the amount equal to the funds
available to Buyer, as of the Closing Date, under the credit
facility described in Section 6.1(c), in respect of accounts
receivable of Seller arising from the Business and transferred to
Buyer at Closing (the "Purchased Receivables"), payable by wire
transfer of immediately payable funds to such account as Seller
shall designate (the "Closing Cash Payment");
(b) the Buyer will issue to Seller a subordinated note in the form
annexed hereto as Exhibit C (the "Note") in the principal amount
of $500,000; and
(c) the Buyer will assume the liabilities described as being assumed
by Buyer in Section 2.4, below.
2.3 Closing.
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The closing of the transactions provided for in this Agreement (the
"Closing") shall take place at the offices of Xxxxxxx, Savage, Kaplowitz, Wolf &
Marcus, LLP on March 20, 2003, but no later than 10:00 a.m., New York time on
March 27, 2003 to be effective as of March 31, 2003. The date on which the
Closing is to be effective is herein referred to as the "Closing Date." The
Closing shall be deemed to have occurred at 11:59 P.M. on the Closing Date.
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2.4 Assumption of Liabilities.
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At the Closing hereunder and except as otherwise specifically provided
in this Section 2.4, Buyer shall assume and agree to pay, discharge or perform,
as appropriate, the following liabilities and obligations of Seller (the
"Assumed Liabilities").
(a) all liabilities and obligations of Seller arising in the regular
and ordinary course of the Business from purchase orders for
equipment, parts, supplies purchased by Buyer or in transit to
Buyer to the extent that the same remain unpaid and undischarged
on the Closing Date and are accrued or reserved for on the
Closing Balance Sheet.
(b) all liabilities for accrued sick and vacation pay for all
employees of the Business as of the Closing Date to the extent
such liabilities are accrued or reserved for on the Closing
Balance Sheet.
Except as set forth in Section 3.9 of the Disclosure Schedule, in no
event shall Buyer assume or incur any liability or obligation under this Section
2.4 or otherwise in respect of any of the following:
(u) any undisclosed liability;
(v) except as otherwise expressly provided in Section 1.4 herein, any
product liability or claim for injury to person or property,
regardless of when made or asserted, which arises out of or is
based upon any express or implied representation, warranty,
agreement or guarantee made by Seller, or alleged to have been
made by Seller, or which is imposed or asserted to be imposed by
operation of law, in connection with any service performed or
product sold or leased by or on behalf of Seller on or prior to
the Closing, including without limitation any claim relating to
any product delivered in connection with the performance of such
service and any claim seeking recovery for consequential damage,
lost revenue or income;
(w) any federal, state, local or foreign taxes, including, but not
limited to income, franchise, sales and use taxes, and penalties
and interest as a result of Seller to qualify or become
authorized to do business as a foreign corporation in any
jurisdiction (i) payable with respect to the business, assets,
properties or operations of Seller or any member of any
affiliated group of which it is a member for any period prior to
the Closing Date, or (ii) incident to or arising as a consequence
of the negotiation or consummation by Seller or any member of any
affiliated group of which it is a member of this Agreement and
the transactions contemplated hereby;
(x) any liability or obligation under or in connection with Excluded
Assets under Section 1.2;
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(y) except as otherwise expressly provided in this Agreement, any
liability or obligation arising prior to or as a result of the
Closing to any employees, agents or independent contractors of
Seller, whether or not employed by Buyer after the Closing, or
under any compensation or benefit arrangement with respect
thereto; or
(z) except as otherwise expressly provided in this Agreement, any
liability or obligation of Seller arising or incurred in
connection with, or incident to, the negotiation, preparation and
execution of this Agreement and the transactions contemplated
hereby and fees and expenses of counsel, accountants and other
experts.
2.5 Closing Financial Statements.
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Not later than 30 days after the Closing Date, Seller shall prepare a
balance sheet of the Business at the Closing Date ("Closing Balance Sheet") in
accordance with generally accepted accounting principles. Such balance sheet
shall specifically identify all assets reflected thereon which are not included
in the Assets and all liabilities reflected thereon which are not assumed by
Buyer hereunder.
Seller shall cause Xxxxxx & Co., CPA's, P.C., its independent
accountants ("Seller's Auditors"), to issue, as soon as practicable but in any
event not later than 45 days after the Closing Date, its report to Seller and
Buyer to the effect that such balance sheet presents fairly the financial
position of the Business as of the Closing Date, in conformity with generally
accepted accounting principles.
References in this Agreement to the Closing Balance Sheet shall mean
the balance sheet of the Business at the Closing Date, prepared and reported
upon as described in this Section 2.5.
2.6 Allocation of Purchase Price.
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The consideration for the Assets will be allocated consistent with the
allocation set forth on Schedule 2.6 hereto. It is agreed that such an
allocation is fair to both parties and that it will be used as the basis for
reporting this transaction for all tax purposes. Each party hereto agrees to
prepare its federal and state income tax returns for all current and future tax
reporting periods and file Form 8594 (and corresponding state forms) with
respect to the transfer of the Assets to Buyer in a manner consistent with such
allocation. The allocation of the Purchase Price shall in no event limit the
liability of Seller to Buyer with respect to damages, liabilities or expenses
incurred by Buyer with respect to any breach of Seller's representations,
warranties, covenants or agreements set forth herein.
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2.7 Adjustment of Closing Price.
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(a) Not later than 175 days after the Closing Date, the Buyer will
provide Seller with a detailed statement setting forth collections of Purchased
Receivables, certified as correct by the Buyer's chief financial officer (the
"Collection Report").
(b) Five days after the delivery of the Collection Report to Seller,
Seller will purchase by wire transfer to an account designated by Buyer, all
uncollected Purchased Receivables from Seller for an amount equal to the amount
credited to Seller for the uncollected Purchased Receivables, less the amount by
which collections on Purchased Receivables exceeds the amount credited to Seller
for such collected Purchased Receivables at Closing ("Excess Collection").
(c) In the event the Excess Collection amount exceeds the amount due
to Buyer for the uncollected Purchased Receivables, Buyer will pay by wire
transfer to an account designated by Seller, the amount by which the Excess
Collection amount exceeds the amount due to Buyer on account of uncollected
Purchased Receivables.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
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Seller hereby represents and warrants to Buyer as follows:
3.1 Corporate Organization.
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(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Oregon. Seller has
all requisite corporate power and authority to carry on the
Business as the same is now being conducted and to own, lease and
operate it's properties and assets in the places where such
business is now conducted and where such properties and assets
are now owned, leased or operated.
(b) Seller is duly qualified or licensed to do business as a foreign
corporation in good standing only in the jurisdictions set forth
in Section 3.1(b) of the Disclosure Schedule. There are no
jurisdictions where Seller is not qualified to do business where
the failure to so qualify would have a material adverse effect on
the Business.
(c) Except as set forth in Section 3.1(c) of the Disclosure Schedule,
Seller neither owns nor leases any property, and does not employ
any person or maintain any agent, with respect to the Business,
outside of the jurisdictions set forth in Section 3.1(b) of the
Disclosure Schedule.
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3.2 Authorization.
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(a) Seller has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to carry
out the transactions contemplated hereby; (b) Seller has taken all necessary
corporate action required by law or otherwise to be taken by Seller to authorize
Seller's execution and delivery of this Agreement and the consummation by Seller
of the transactions contemplated hereby; and (c) this Agreement has been duly
and validly executed and delivered by Seller and constitutes a valid and binding
agreement of and upon Seller enforceable against Seller in accordance with its
terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity.
3.3 No Violation.
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Except for the required consents of third parties identified in
Sections 3.11 and 3.14 of the Disclosure Schedule, and except as set forth in
Section 3.3 of the Disclosure Schedule, neither the execution and delivery of
this Agreement by Seller nor the consummation by Seller of the transactions
contemplated hereby will violate any provision of the Certificate of
Incorporation or the by-laws of Seller, or be in conflict with, or constitute a
material default (or an event which, with or without notice, lapse of time or
both, would constitute a material default) under, or result in the termination
or invalidity of, or accelerate the performance required by, or cause the
acceleration of the maturity of any of the Assumed Obligations, or result in the
creation or imposition of any security interest, lien or other encumbrance upon
any of the Assets under any agreement or commitment to be assumed by Buyer
pursuant to this Agreement to which Seller is a party or by which Seller is
bound or to which any of the Assets is subject, or violate any statute or law or
any judgment, decree, order, regulation or rule of any domestic or (to the
knowledge of Seller) foreign court or domestic or (to the knowledge of Seller)
foreign government authority applicable to Seller, or any of the Assets. For
purposes of this Agreement, "to Seller's knowledge," "to the best of Seller's
knowledge, " or any similar formulation thereof shall mean to the actual
knowledge of any of the current: (i) quality assurance and/or quality control
directors of Seller, (ii) hazardous material directors of Seller, or (iii)
officers and directors of Seller or Seller's Parent.
3.4 Brokers and Finders.
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No person has been authorized by Seller, or by anyone acting on behalf
of Seller or any of its officers, directors, employees or trustees, to act as a
broker, finder or in any other similar capacity in connection with the
transactions contemplated by this Agreement in such manner as to give rise to
any valid claim against Buyer or Seller for any broker's or finder's fee or
commission or similar type of compensation.
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3.5 Financial Statements.
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(a) Section 3.5(a) of the Disclosure Schedule sets forth the
following unaudited financial information (the "Financial
Information"):
(i) Internal, unaudited balance sheet of Seller as of July 31,
2002 and internal unaudited statements of operations and
cash flows of Seller for each of the two years ended July
31, 2002 on a historical basis with respect to the
operations of Seller at its facilities in Sacramento, CA,
Stockton, CA, Redding, CA, Sparks, NV, Hayward, CA, Xxxxx
Xxxx, XX xxx Xxxxx Xxxx, XX, excluding all overhead
allocations from the Seller's Parent and excluding the
assets described in Section 1.2(j) and (k) above.
(ii) internal, unaudited balance sheets of Seller as of October
31, 2002, adjusted to reflect the assets and liabilities of
the Business and after giving effect to the disposition or
exclusion, as appropriate, of the Excluded Assets (the
"October Balance Sheet");
(iii)internal, unaudited statements of operations and cash flows
(prepared in a format previously agreed to by the parties
hereto), of Seller for the fiscal quarters ended October 31,
2002 and 2001 on a historical basis giving effect solely to
the operations of Seller at its facilities in Sacramento,
CA, Stockton, CA, Redding, CA, Sparks, NV, Hayward, CA,
Xxxxx Xxxx, XX xxx Xxxxx Xxxx, XX, excluding all overhead
allocations from the Seller's Parent.
(b) The Financial Information was compiled from Seller's internal
management reports in the ordinary course of Seller's business,
which is not consistent in all circumstances with generally
accepted accounting principles. The amounts with respect to
property, plant and equipment of the Business set forth in the
Financial Information, fairly present, in all material respects,
such information as of the dates referred to therein, and the
revenues and gross margins excluding overhead allocation of the
Business set forth in the Financial Information fairly present,
in all material respects, such information for the periods
referred to therein.
(c) Since July 31, 2002, Seller has kept its financial records in a
manner consistent with its practices at the time and during the
periods reflected in clauses (ii) and (iii) of paragraph (a)
above without change, in any material respect, of policy or
procedure, as to nature of item, amount or otherwise.
(d) The aggregate dollar amount of the net property, plant and
equipment included in the Financial Information does not exceed
the cost of such property, plant and equipment to Seller, less
any previous write-downs and less depreciation, and the value
thereof has not been written up.
13
3.6 Records and Books of Account; Accounting Practices.
---------------------------------------------------
The records and books of account of Seller have been regularly kept
and maintained in reasonable detail and accurately and fairly reflect the
transactions and asset dispositions of the Seller. The Seller also maintains an
adequate system of internal controls.
3.7 No Undisclosed Liabilities.
---------------------------
(a) As of October 31, 2002, except as set forth in Section 3.7 of the
Disclosure Schedule, Seller did not have any material liabilities
or obligations of any nature (absolute, accrued, contingent or
otherwise) which were not fully disclosed or reserved against in
the October Balance Sheet, and the reserves reflected in the
October Balance Sheet were adequate, appropriate, and reasonable
as to both nature of items and amounts.
(b) Except as set forth in Section 3.7 of the Disclosure Schedule,
since October 31, 2002, Seller has not incurred any material
liabilities (contingent or otherwise) except in the ordinary and
usual course of business and consistent with past practices.
3.8 Inventory.
----------
Except as set forth in Section 3.8 of the Disclosure Schedule, (a) all
material items of the Inventory have been acquired in the ordinary and usual
course of business; (b) all material items of the Inventory are of a quality and
quantity usable in the ordinary and usual course of business; and (c) the
quantities of each type of Inventory are not materially excessive, but are
reasonable, adequate and appropriate.
3.9 Interim Operations.
-------------------
Except as set forth in Section 3.9 of the Disclosure Schedule, since
July 31, 2002 Seller has conducted the Business only in the ordinary and usual
course consistent with past practices. Without limiting the generality of the
foregoing, except as set forth in Section 3.9 of the Disclosure Schedule, Seller
has not with respect to the Business, since July 31, 2002:
(a) suffered any material adverse change in the Assets, or suffered
any material damage, destruction or loss, whether or not covered
by insurance, in either case materially affecting the business,
assets or properties of the Seller;
(b) agreed to, or incurred, assumed or become subject to, any
liabilities or obligations for returns or allowances, other than
in the ordinary and usual course of business and materially
consistent in nature of item and amount with past practice, or
increased, or experienced any change in any assumption
14
underlying, or methods of calculating, any bad debt, contingency
or other reserve (except for any such reserve expressly set forth
in the October Balance Sheet);
(c) paid, discharged or satisfied any material claim, liability or
obligation (absolute, accrued, contingent or otherwise), other
than the payment, discharge or satisfaction of liabilities and
obligations reflected or reserved against in the October Balance
Sheet, or incurred in the ordinary and usual course of business
consistent with past practices;
(d) prepaid any obligation having a fixed maturity of more than 90
(ninety) days from the date such obligation was issued or
incurred, or not paid, within 60 days of when due, any account
payable, or sought the extension of the payment date of any
material account payable, other than any account payable which
was (until paid) or is being contested in good faith;
(e) subjected any of the Assets, or, to the best of Seller's
knowledge, permitted or allowed any of the Assets to be
subjected, to any mortgage, pledge, lien, security interest,
encumbrance, restriction or charge of any kind, except for liens
for current taxes not yet due;
(f) waived any claims or rights of substantial value under any of the
Assumed Contracts or otherwise in connection with any of the
Assets;
(g) sold, transferred, licensed or otherwise disposed of any of its
material properties or assets (real, personal or mixed, tangible
or intangible) that, but for such sale, transfer or other
disposition, would have been included in the Assets, except in a
bona fide transaction to an unaffiliated third party for fair
value and in the ordinary and usual course of business and
consistent with past practice (the exceptions hereto listed in
Section 3.9 of the Disclosure Schedule show date of disposition,
identity of transferee, amount received and book value);
(h) disposed of, licensed or permitted to lapse any rights to the use
of any patent, trademark, trade name or copyright used in the
conduct of the Business, or, to Seller's knowledge, disposed of
or disclosed, or permitted to be disclosed (except as necessary
in the conduct of its business), to any person other than
representatives or agents of Buyer, any trade secret, formula,
process, know-how or similar information not theretofore a matter
of public knowledge;
(i) granted or committed to make any material increase in any
compensation, bonus, pension, profit-sharing or other benefit
plan or commitment of any employee of Seller;
(j) since October 31, 2002, made any capital expenditures or binding
commitments to be assumed by Buyer or to which any of the Assets
may be or become subject, in excess of $5,000 in any one case or
$50,000 in the aggregate, for repairs or additions to property,
plant, equipment or tangible assets;
15
(k) paid, loaned or advanced any amount to, or sold, transferred or
leased property or asset (real, personal, mixed, tangible or
intangible) to, or entered into any agreement or arrangement
with, any of Seller's, or Seller's Parents, officers, employees,
directors, stockholders or any "affiliate" or "associate" (as
such terms are defined in Rule 405 under the Securities Act of
1933, as amended) or any immediate or extended family member (up
to and including first cousins) of any of such persons
(collectively, the "Significant Persons" and, individually, a
("Significant Person"), except for compensation to such persons
expressly disclosed in Section 3.27 of the Disclosure Schedule,
except for purchase orders and working capital advances from
Seller's Parent;
(l) made any change in any method of accounting;
(m) changed any of the banking or safe deposit arrangements
comprising part of the Assets;
(n) failed to maintain the books, accounts and records of the Seller
in the usual, regular and ordinary manner; or
(o) agreed, whether in writing or otherwise, to take any action
described in this Section 3.9.
3.10 Title to Assets; Encumbrances.
------------------------------
(a) Section 3.10(a) of the Disclosure Schedule contains an accurate
and complete list (the "Equipment List") of all of the Equipment
and interests therein owned by Seller on the date hereof and such
list includes all of the Equipment owned by Seller reflected in
the October Balance Sheet or acquired after October 31, 2002
(except to the extent disposed of to an unaffiliated third party
in a bona fide transaction, for fair value, in the ordinary and
usual course of business and consistent with past practice)
having an original cost in excess of $500.00. All of such
properties are and will be included in the Assets. Section
3.10(a) of the Disclosure Schedule also contains a list of all
property in the possession of Seller on the date hereof which is
owned by any government agency or other third party.
(b) Except as set forth in Section 3.10(b) of the Disclosure
Schedule, Seller has good and valid title to all of the Assets.
The Assets comprise all of the business, properties, assets
(however, employees, to the extent that they could be considered
assets, are not included as assets in this Section) and goodwill
employed by Seller and its affiliates in connection with the
Business except the Excluded Assets.
16
(c) Except as set forth in Section 3.10(c) of the Disclosure
Schedule, all Assets (excluding Assets that are described in
Section 3.11(b) or Section 3.10(a) of the Disclosure Schedule as
leased Assets or Assets owned by third parties) are owned by
Seller free and clear of all title defects or objections, liens,
claims, charges, rights of others, security interests or other
encumbrances of any nature whatsoever, including without
limitation, any leases, escrows, options, security or other
deposits, rights of redemption, chattel mortgages, conditional
sales contracts, Liens, collateral security arrangements and
other title or interest retention arrangements, except for liens
for current taxes not yet due.
(d) Except as set forth in Section 3.10(d) of the Disclosure Schedule
and the Excluded Assets, the Assets include all rights,
properties and other assets (however, employees, to the extent
that they could be considered assets, are not included as assets
in this Section) necessary to conduct and to continue to conduct
the Business after the Closing (assuming Buyer conducts the
Business in the same manner as Seller) in the same manner as the
Business has since July 31, 2002 been and is now being conducted
except for licenses and permits which Buyer may be required to
obtain in its own name, and except that the transfer of certain
of the Assets and Leases requires the consent of those third
parties required to be identified pursuant to Section 3.3 above.
(e) Except as set forth in Section 3.10(e) of the Disclosure
Schedule, Seller does not, own, lease or use in the Business any
machinery and equipment which is not located at Real Property
described in Section 3.11.
3.11 Real Property.
--------------
(a) Real Property Defined. All real property (including, without
limitation, all interests in and rights to real property) and
improvements located thereon which are owned or leased by Seller
and used in connection with the Business or included in the
Assets are listed in Section 3.11(a) or Section 3.11(b) of the
Disclosure Schedule (the "Real Property").
(b) Leased Real Property. With respect to the Real Property that is
leased by Seller, all of which property is identified in Section
3.11(b) of the Disclosure Schedule (the "Leased Property"):
(i) Seller has delivered to Buyer a true and complete copy of
every lease and sublease to which Seller is a tenant or
subtenant (the "Leases"), and has described each Lease in
Section 3.11(b) of the Disclosure Schedule by listing the
name of the landlord or sublandlord, the address of the
leased premises, the commencement and expiration dates of
the current term, the security deposited by Seller with the
landlord or sublandlord, if any, and the monthly rental
(including base and all additional rents).
17
(ii) each Lease is, and at Closing shall be, in full force and
effect and has not been assigned, modified, supplemented or
amended except as listed on the Disclosure Schedule, and
neither Seller nor, to Seller's knowledge, the landlord or
sublandlord under any Lease is in default under any of the
Leases, and to Seller's knowledge, no circumstances or state
of facts presently exists which, with the giving of notice
or passage of time, or both, would permit the landlord or
sublandlord under any Lease to terminate any Lease; and
(iii)subject to Section 1.3(d) above, at Closing Seller shall
assign to the Buyer all right, title and interest of Seller
in and to all Leases (and shall deliver to Buyer original
copies of all consents required for such assignments) and
all security deposits made by Seller pursuant to any of the
Leases, including, but not limited to, the security deposits
listed on the Disclosure Schedule, together with all
interest earned on such deposits.
(c) Utility Services. With respect to the Leased Property, the water,
electric, gas and sewer utility services and the septic tank and
storm drainage facilities currently available are adequate for
the present use of the Real Property by Seller in conducting the
Business, Seller has not experienced any material shortage in any
such service in the last three years, are not being appropriated
by Seller but rather are being supplied to Seller by utility
companies or municipalities pursuant to valid and enforceable
contracts, and there is no condition which will result in the
termination of the present access from the Real Property to such
utility services and other facilities. To the knowledge of
Seller, without having made any independent investigation, no
curtailment of any such utility services is proposed by any
provider of any of such services.
(d) Access. With respect to the Leased Property, Seller has obtained
all Authorizations and rights-of-way, including
proof-of-dedication, which are necessary to ensure vehicular and
pedestrian ingress and egress to and from the Real Property; and
there are no restrictions on entrance to or exit from the Real
Property to adjacent public streets and to Seller's knowledge no
conditions which will result in the termination of the present
access from the Real Property to existing highways and roads.
(e) Assessments or Hazards. Seller has received no written notices,
nor, to Seller's knowledge, any oral notice, from any
governmental body, that the assessed value of the Leased Property
has been determined to be greater than that upon which county,
township or school tax was paid for the current tax year
applicable to each such tax, or from any insurance carrier of
Seller of fire hazards with respect to the Real Property.
18
(f) Eminent Domain. Seller has received no written notices, nor, to
Seller's knowledge, any oral notice, and has no actual knowledge,
that any governmental body having the power of eminent domain
over the Real Property has commenced or intends to exercise the
power of eminent domain or a similar power with respect to all or
any part of the Real Property.
(g) No Violations. The Real Property and the present uses thereof
comply with all Regulations of all governmental bodies having
jurisdiction over the Wichita Property and, to Seller's
knowledge, the Leased Properties, and Seller has received no
written notices, nor, to Seller's knowledge, any oral notice,
from any governmental body, and has no actual knowledge, that the
Real Property or any improvements erected or situate thereon, or
the uses conducted thereon or therein, violate any Regulations of
any governmental body having jurisdiction over the Real Property.
(h) Improvements. The improvements located on the Real Property are
in good condition and are, to Seller's knowledge, structurally
sound, and all mechanical and other systems located therein are
in good operating condition, subject to normal wear, and no
condition exists requiring material repairs, alterations or
corrections.
(i) No Encumbrances. Between the date of this Agreement and the
Closing Date Seller shall not sell, mortgage or encumber the Real
Property, or do or permit any act which diminishes title to or
value of the Real Property.
(j) Public Improvements. No work for municipal improvements that
would have a material adverse effect on the Business has been
commenced on or in connection with the Real Property or any
street adjacent thereto. No assessment for public improvements
has been made, to Seller's knowledge, against the Leased
Properties which remains unpaid. No notice from any county,
township or other governmental body has been served upon the Real
Property or received by Seller since August 1, 1999 requiring or
calling attention to the need for any work, repair, construction,
alteration or installation on or in connection with the Real
Property which has not been complied with.
(k) Executory Contracts. Set forth in Section 3.11(k) of the
Disclosure Schedule is a list of all executory contracts
currently in effect made by or on behalf of Seller, or by which
Seller is bound, with respect to the Real Property ("Executory
Contracts") including, without limitation, operation, management,
maintenance, utility, and construction contracts. At Closing
Seller shall deliver to the Buyer a true and complete copy (the
original execution copy, if available) of each of the Executory
Contracts.
19
3.12 Equipment; Waste Handling.
--------------------------
(a) Except as set forth in Section 3.12 of the Disclosure Schedule,
(i) the Equipment included in the Assets is, to Seller's
knowledge, structurally sound and with no material defects (for
purposes of this Section 3.13(a) "material" shall mean defects
that would cost in excess of $2,500 to remedy in any one
instance) and (ii) all material items and pieces of Equipment are
on the date hereof used in the ordinary course of the Business,
are suitable for the uses to which they are put by the Seller,
and are adequate in the aggregate to conduct the Business as
presently conducted, subject to normal maintenance requirements
and reasonable wear and tear.
(b) Except as set forth in Section 3.12 of the Disclosure Schedule,
there are no outstanding requirements or recommendations which
have been communicated to Seller in writing during the past two
years and Seller has no knowledge of any insurance company which
has issued a policy covering any part of any of the properties,
plants, structures or equipment included in the Assets, or by any
board of fire underwriters or other body exercising similar
functions, requiring or recommending that any repairs or work be
done on any part of such properties, plants, structures or
equipment.
(c) Except as set forth in Section 3.12 of the Disclosure Schedule,
all material obligations to contractors, subcontractors and
suppliers of labor and materials to Seller in connection with any
construction or renovation of any structures or improvements
thereon have been paid in full, and there are no known pending
disputes with any such contractors, subcontractors or suppliers.
3.13 Patents, Copyrights, Trademarks, Trade Names and Licenses.
----------------------------------------------------------
(a) Except as set forth in Section 3.13(a) of the Disclosure
Schedule, there are no (i) patents held or used by Seller, or
reissues, divisions, continuations, and extensions thereof, or
pending patent applications by Seller which are or were, within
the past three (3) years, for or intended to be for Seller's
benefit; (ii) registered or unregistered trademarks or service
marks of or used by Seller or pending applications for
registration of trademarks which are or were, within the past
three (3) years, intended to be used by or for the benefit of
Seller; or (iii) registered copyrights of or used by Seller, or
applications for registration of copyrights that are or were,
within the past three (3) years, intended to be used by or for
the benefit of Seller ("Intellectual Property").
(b) Except as set forth in Section 3.13(b) of the Disclosure
Schedule, there are no licenses (whether as licensor, licensee or
otherwise) or other contracts or commitments to which Seller is a
party or to which it or any of its assets is otherwise subject
relating to any of the Intellectual Property.
20
(c) Except as set forth in Section 3.13(c) of the Disclosure
Schedule: (i) during the past three (3) years no claims have been
asserted by any person against or otherwise in respect of the use
by Seller of any of the Intellectual Property, or challenging or
questioning the validity or effectiveness of any license or
agreement referred to in this Section 3.13, and, to the knowledge
of Seller, there is no valid basis for any such claim; (ii)
during the past three (3) years Seller has not received notice of
any allegation that it has infringed upon any patent, trademark,
service xxxx, trade name or copyright or misappropriated or
misused any invention, trade secret or other proprietary
information of any other person entitled to legal protection;
(iii) during the past three (3) years Seller has not asserted any
claim of such infringement, misappropriation or misuse against
any person; (iv) Seller has good and valid title to, or otherwise
possesses adequate rights to use all patents, trademarks, service
marks, trade names, copyrights, inventions, trade secrets and
other proprietary information necessary to conduct its business
in the same manner as its business has been conducted since
August 1, 1999; and (v) no shareholder, officer, director or
employee of Seller or affiliates of any of the foregoing owns or
has any interest in any of the Intellectual Property.
3.14 Personal Property Leases.
-------------------------
(a) Section 3.14 of the Disclosure Schedule sets forth a complete and
accurate list of all personal property leases, subleases,
concessions, licenses, conditional sales agreements or other
title retention agreements (collectively, the "Personal Property
Leases" and individually a "Personal Property Lease") to which
Seller is a party, as lessor, lessee, licensor or licensee.
(b) Except as set forth in Section 3.14 of the Disclosure Schedule,
(i) each of the Personal Property Leases is valid, binding and
enforceable in accordance with its terms, and is in full force
and effect; (ii) there are no existing defaults on the part of
Seller and, to the best knowledge of the Seller, any other party,
under any Personal Property Lease and to Seller's knowledge, no
event of default under any such Personal Property Lease has
occurred and is continuing which (whether with or without the
giving of notice, lapse of time or both, or the happening of any
other event) would constitute a default under such Personal
Property Lease; (iii) each such Personal Property Lease will,
subject to obtaining any consent listed in Section 3.14 of the
Disclosure Schedule, continue to be in full force and effect on
the same terms and conditions immediately after the Closing
without the need for any action on the part of Buyer except for
Buyer's performance of the Assumed Obligations and the execution
of documents and instruments in connections with such assignment;
(iv) each such Personal Property Lease reflects the complete
understanding among the parties thereto in connection with the
subject matter thereof; and (v) accurate and complete copies of
each such Personal Property Lease including all amendments
thereto, have been delivered or will be delivered to Buyer at or
prior to the Closing.
21
(c) Except as set forth in Section 3.14 of the Disclosure Schedule,
Seller's interest in each of the Personal Property Leases (i) is
free and clear of all Liens (other than any created by Buyer) and
(ii) are not, in the case of real property, except as set forth
in Section 3.14 of the Disclosure Schedule or in the Personal
Property Leases, subject to any rights of way, building use
restrictions, exceptions, variances, easements (recorded or
unrecorded), rights of redemption, reservations or limitations of
any nature whatsoever of which Seller has knowledge which may
materially and adversely interfere with Buyer's use thereof in a
manner substantially consistent with Seller's use thereof prior
to Closing.
3.15 Taxes.
------
(a) For any and all periods still open or subject to audit, Seller or
its predecessors have duly filed all tax reports and returns
(including information returns) required to be filed by it or any
of its predecessors relating to or covering the Business and each
of such reports and returns were true, correct and complete.
(b) For any and all periods still open or subject to audit, Seller
has duly paid all taxes and other charges due or claimed to be
due or shown on any return or declaration to be due from it to
any federal, state, local or foreign taxing authority (including,
without limitation, those due in respect of properties, income,
franchises, licenses, sales and payrolls); and there are no tax
liens upon any of the Assets except liens for current taxes not
yet due.
(c) For any and all periods still open or subject to audit, all taxes
and other assessments and levies required to be withheld by
Seller from customers with respect to the provision of services,
or from or on behalf of employees for income, social security,
unemployment insurance and any other taxes or similar charges
have been collected or withheld and either paid to the
appropriate government agency or properly set aside and held in
accounts for such purpose.
3.16 Contracts and Commitments.
--------------------------
Except as set forth in Section 3.16 of the Disclosure Schedule:
(a) Seller is not a party to or bound by any written or binding
agreements, contracts or commitments, which are material to the
Business, Seller's operations or prospects (for purposes of this
Section 3.16(a), an agreement, contract or binding commitment
shall be deemed to be material if it (i) shall call for the
expenditure of $1,000 or more in any 12-month period, or (ii)
shall not be terminable according to its terms without liability
on not more than 30 days' notice);
22
(b) no purchase contract, contract for the performance of services or
other written or binding bid or commitment of Seller (i)
continues for a period of more than three (3) months from the
date hereof and is not terminable by Seller according to its
terms without liability on not more than 30 days' notice; (ii) is
in excess of the normal, ordinary and usual requirements of the
Business; (iii) is with any Affiliate of Seller; (iv) has been
prepaid in whole or part; and/or (v) has had any delivery
thereunder requested to be delayed to a date past the Closing
Date;
(c) Seller is not a party to or bound by any contracts, agreement or
arrangements: (i) with any federal, state, local or foreign
government, or any governmental or quasi-governmental agency,
board, bureau, authority or commission, or any utility company
except for customer contracts entered into in the ordinary course
of business, (ii) with any charitable organization, (iii) with
any officer or director of the Seller or any Affiliate of the
Seller or members of the immediate family of the foregoing (a
"Related Person") or (iv) providing for the payment of any bonus
or commission, whether based on sales or earnings or otherwise;
(d) Seller is not a party to or otherwise bound by any written or
binding (i) employment agreements, (ii) non-competition
agreements or (iii) any other agreements, practices or
understandings that contain or will impose on Buyer any severance
or termination pay liabilities or obligations;
(e) Seller is not a party to or bound by any (i) collective
bargaining or union contracts or agreements or (ii) material
practices or understandings with any of employees which will be
binding on Buyer and are not embodied in a written collective
bargaining or union contract or other written agreement listed in
Section 3.16 of the Disclosure Schedule;
(f) Seller is not in default, nor to Seller's knowledge is there any
basis for any valid claim of default against Seller, and to the
best of Seller's knowledge no other party is in default, under
any contract, agreement, commitment or restriction which is an
Assumed Obligation, and no event of default has occurred which
(whether with or without the giving of notice, lapse of time, or
both, or the happening or occurrence of any other event) would
constitute a default thereunder;
(g) Seller is not a party to or bound by any consulting agreement;
(h) Except pursuant to the Agreement dated May 12, 1997, by and
between Seller and Case Corporation, Seller is not restricted by
any agreement from carrying on the Business anywhere in the
world;
23
(i) Seller is not a party to or bound by any outstanding powers of
attorney (except for powers of attorney issued to customs brokers
in the ordinary and usual course of business) or any other
outstanding obligations or liabilities (whether absolute,
accrued, contingent or otherwise), as guarantor, surety,
co-signer, endorser, co-maker, indemnitor or otherwise in respect
of the obligation of any other person, corporation, partnership,
joint venture, association, organization or other entity;
(j) Seller is not a party to or bound by any partnership or joint
venture agreement, or any written or binding oral royalty,
distribution, agency, territorial or license agreement;
(k) There are no credit cards issued to any of Sellers employees or
for which Seller is directly liable and for which any liability
will be sought to be imposed on Buyer;
(l) Seller is not a party to or bound by any barter or counter trade
agreement;
(m) Seller is not a party to or bound by any cooperative advertising
agreement or arrangement;
(n) Seller has no debt obligation for borrowed money;
(o) Seller has no outstanding loans to any person; and
(p) There are no outstanding sales contracts, commitments or bids of
Seller which (i) continue for a period of more than six (6)
months from the date hereof, (ii) were entered into more than six
(6) months prior to the date hereof, or (iii) have been prepaid
in whole or part;
(q) all contracts, agreements, and leases, referred to in Section
3.16 of the Disclosure Schedule (i) are valid and in full force
and effect, (ii) will, except for the obtaining of any consents
listed in Section 3.23 of the Disclosure Schedule that shall not
have been obtained by the Closing, continue to be so on the same
terms and conditions immediately after the Closing without the
need for any action on the part of Buyer, other than Buyer's
performance of the Assumed Obligations and, where specifically
and expressly set forth in Section 3.7 of the Disclosure
Schedule, execution of documents and instruments in connection
with such assignment, and, (iii) reflect the complete
understanding among the parties thereto in connection with the
subject matter thereof; true and complete copies of each thereof,
including all amendments thereto, have been delivered to Buyer at
or prior to the date hereof (regarding material contracts) and
will be delivered by Closing (for all others).
24
3.17 Customers and Suppliers; Trade Programs.
----------------------------------------
(a) Section 3.17 of the Disclosure Schedule sets forth:
(i) an accurate and complete list of the ten (10) largest
customers of Seller in terms of revenues in each case during
(x) the twelve month period ended July 31, 2002, and (y) the
three months ended October 31, 2002, showing the approximate
total revenues in dollars received by Seller from each such
customer during each such period; and
(ii) an accurate and complete list of the ten (10) largest
suppliers of Seller in terms of purchases during (x) the
twelve month period ended July 31, 2002, and (y) the three
months ended October 31, 2002 showing the approximate total
purchases in dollars by Seller from each such supplier
during each such period.
(b) Except to the extent set forth in Section 3.17 of the Disclosure
Schedule, since July 31, 2002, there has not been any material
adverse change, and Seller has no knowledge that any material
adverse change is reasonably likely, in the business
relationship, or volume of business, of the Business with any
customer or supplier named in Section 3.17 of the Disclosure
Schedule.
(c) Except for the customers and suppliers named in Section 3.17 of
the Disclosure Schedule, Seller has not had any customer which
accounted for more than 5% of Seller's revenues during the three
months ended October 31, 2002, or any supplier from which Seller
purchased more than 5% of the goods and services which it
purchased during (i) Seller's fiscal year ended July 31, 2002, or
(ii) the three months ended October 31, 2002.
(d) All trade programs of Seller, if any, instituted since August 1,
1999, whether or not in the ordinary and usual course of business
or consistent with past practice, which may result in claims
against Buyer for money, credit or goods, including but not
limited to bonuses, billbacks, in-house programs, accruals, other
sales or commission incentives or allowances, discounts, returns,
credits, allowances and contests, are disclosed in Section 3.17
of the Disclosure Schedule.
3.18 Sales Practices; Warranties.
----------------------------
(a) Since July 31, 2002, except as set forth in Section 3.18 to the
Disclosure Schedule, Seller has not received any written notice,
nor, to its knowledge, any oral notice, of any claim (actual or
threatened) of any consumer or customer based on any warranty
other than claims in the ordinary course of business and not in
excess of $5,000.
25
(b) Since July 31, 2002, Seller has not accelerated its sales of
services except, and has made sales of services only, in the
ordinary course of the business consistent with Seller's past
practices.
(c) Section 3.18 of the Disclosure Schedule also sets forth, as at
October 31, 2002, each material pending claim against Seller in
connection with provision or services.
3.19 Insurance.
----------
(a) Section 3.19 of the Disclosure Schedule contains an accurate and
complete list of all policies of fire, liability, keyman life
insurance, workers' compensation, products liability, and other
forms of insurance owned or held by or beneficially for Seller.
All such policies are in full force and effect and will not be
canceled or modified by Seller prior to Closing without the
express written consent of Buyer (except to extend the maturity
dates thereof), all premiums with respect thereto covering all
periods up to and including the Closing Date have been or will be
paid by Seller, and no written, or to Seller's knowledge oral,
notice of cancellation or termination has been received by Seller
with respect to any such policy.
(b) The aforesaid policies are sufficient for Seller's compliance
with, to Seller's knowledge, all requirements of law and of all
material agreements to which Seller is a party; are valid,
outstanding and enforceable policies; are, in the opinion of
management of Seller, in amounts customarily deemed to be
adequate and cover all risks customarily insured against in the
type of business conducted by Seller in the locality where Seller
operates its business; have been issued by reputable insurance
companies which are in good standing, adequately capitalized and
actively engaged in the insurance business; and in the judgment
of Seller provide adequate insurance coverage for its assets and
operations.
(c) Section 3.19 of the Disclosure Schedule also identifies (i) all
risks for which Seller is self-insured and (ii) the workers'
compensation and if possible unemployment insurance (for
California and Nevada) ratings of Seller (or, if applicable,
Seller's Parent).
(d) Except as set forth in Section 3.19 of the Disclosure Schedule,
in connection with its operations, (i) Seller has not, since
August 1, 2001, been unable to obtain any insurance coverage in
the amounts desired by Seller; (ii) since August 1, 1999, neither
the amount nor scope of any insurance referred to in Section 3.19
of the Disclosure Schedule or premiums therefor has been
materially changed; and (iii) Seller has not been notified of any
material adverse change or proposed material adverse change in
the workers' compensation or unemployment insurance ratings or
insurance rates for Seller.
26
3.20 Labor Difficulties.
-------------------
Except to the extent set forth in Section 3.20 of the Disclosure
Schedule:
(a) there is no labor strike, formal dispute, formal grievance,
arbitration proceeding, general slowdown or stoppage, or charge
of unfair labor practice actually pending before a court,
regulatory body or arbitration tribunal, or to the best of
Seller's knowledge threatened against or affecting Seller;
(b) no union representation campaign is pending or, to Seller's
knowledge, threatened respecting any employees of Seller;
(c) Seller has not experienced any material work stoppage by its work
force or other material labor difficulty since August 1, 1999;
(d) to Seller's knowledge, there are no charges or complaints of
discrimination pending before the United States Equal Employment
Opportunity Commission or any state, local or foreign agency
against Seller;
(e) to the best of Seller's knowledge, Seller, does not presently
employ, and at no time during the past year did it employ, any
illegal alien;
(f) (i) to Seller's knowledge, Seller is not engaged in any unfair
labor practice, and (ii) at no time during the past three (3)
years has any unfair labor practice, complaint, charge or similar
claim against Seller been filed with, or to Seller's knowledge,
threatened to be filed by any employee with, the National Labor
Relations Board, Equal Employment Opportunity Commission,
Department of Labor or any similar state, local or foreign
agency; and
(g) no collective bargaining agreement which is binding on Seller
will be binding on Buyer or restricts the owner of the Business
from relocating or closing any of the Business's facilities or
operations.
3.21 Litigation, Judgments and Decrees.
----------------------------------
(a) Except as set forth in Section 3.21 of the Disclosure Schedule,
and except for workers compensation claims, there has not been in
the three (3) years prior to the date hereof, nor is there
currently, any action, suit or proceeding of any nature
whatsoever, at law or in equity or both, by or before any
domestic or foreign court, or to the best of Seller's knowledge
any proceeding or claim pending or threatened before any
government or other regulatory or administrative agency,
arbitration tribunal, board, bureau, authority or commission or
involving Seller, any of the Assets or any of the Assumed
Obligations, in any such case which would have a material adverse
effect on the Business or which questions or challenges the
27
validity of this Agreement or any action taken or to be taken by
Seller pursuant to this Agreement or in connection with the
transactions contemplated hereby.
(b) Except as set forth in Section 3.21 of the Disclosure Schedule,
Seller is not subject to any judgment, order, award or decree of
any domestic or, foreign court or government or other regulatory
or administrative agency, arbitration tribunal, board, bureau,
authority or commission (i) which has or, to Seller's knowledge,
may have a material adverse effect on Seller's practices in the
Business or on its ability to acquire any property or conduct its
Business in any area, (ii) which is or will be binding on Buyer,
or (iii) with respect to which Seller is in default.
3.22 No Condemnation or Expropriation.
---------------------------------
Neither the whole nor any portion of the Assets is subject to any
government decree or order to be sold or is being condemned, expropriated or
otherwise taken by any domestic or foreign public authority with or without
payment of compensation thereof, nor, to Seller's knowledge, has any such
condemnation, expropriation or taking been proposed in writing within the past
two years.
3.23 Consents and Approvals of Government Authorities and Others.
------------------------------------------------------------
Except as set forth in Section 3.23 of the Disclosure Schedule, no
consent, approval or authorization of, or declaration, filing or registration
with, or the giving of notice to, any domestic or, to Seller's knowledge,
foreign government or regulatory authority or any other person or entity is
required of Seller in connection with the execution, delivery and performance by
Seller of this Agreement or the consummation by Seller of the transactions
contemplated hereby. Accurate and complete copies of each of the forgoing which
have been obtained or made have been delivered to Buyer at or prior to the date
hereto.
3.24 ERISA; Employee Benefit Plans.
------------------------------
(a) As used in this Section 3.24, the term "Plan" means any bonus,
deferred compensation, pension, profit-sharing, retirement, stock
purchase, stock option, phantom stock, medical or any other
benefit plan, arrangement or practice, whether written or
unwritten including but not limited to any such plan, arrangement
or practice which constitutes an "employee welfare benefit plan"
within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended and the regulations
thereunder ("ERISA") or an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA, covering any employee of
the Business. Section 3.24 of the Disclosure Schedule sets forth
a complete list of all Plans maintained by Seller. Seller has no
legally binding commitment, whether formal or informal, to create
any additional such plan or arrangement.
28
(b) To Seller's knowledge, except as set forth in Section 3.24(b) of
the Disclosure Statement, all of Seller's Plans are in all
material respects in compliance in operation and in form with the
currently prescribed requirements prescribed by any and all
statutes, orders or governmental rules or regulations currently
in effect with respect to such Plans, including, but not limited
to ERISA and the Code, and there are no pending or, to the
Seller's knowledge, threatened claims, lawsuits or arbitrations
(other than routine claims for benefits) which have been asserted
or instituted against the Seller, any Plan or the assets of any
trust for any Plan.
(c) Seller has complied in all material respects with the
requirements of Section 4980B of the Code and applicable
regulations. Seller has not contributed to, nor has it been
obligated to contribute to, any multi-employer plan (as defined
in Section 3(37) of ERISA), or any other plan subject to Title IV
of ERISA within the preceding three calendar years.
3.25 Absence of Questionable Payments.
---------------------------------
Since August 1, 1999, neither Seller nor any of its officers, agents,
employees or any other person, entity or corporation acting on behalf of any of
them, has, to Seller's knowledge, accepted, received or made any unlawful
contributions, payments, gifts, or expenditures in respect of the Business.
3.26 Distinct Entity.
----------------
Except as set forth in Section 3.26 of the Disclosure Schedule, Seller
does not, share any Assets with any related or unrelated third party.
3.27 Personnel.
----------
(a) Section 3.27 of the Disclosure Schedule sets forth an accurate
and complete list as of October 31, 2002 of:
(i) the names and current salaries of Seller's salaried
employees;
(ii) the wage rates for Seller's non-salaried employees;
(iii)the customary increases on a periodic basis in the
compensation of each of the foregoing or any increases
required by any agreement or understanding with each of the
foregoing;
(iv) a description of any informal understanding generally
concerning employees' rights to continue to receive
compensation during any periods during which such employees
are not performing any services for Seller other than with
respect to vacation, disability and sick time; and
29
(v) any increase granted or committed to for any period
subsequent to November 1, 2002 in the compensation of any
employee including, without limitation, any change in any
bonus, pension, profit-sharing or other benefit plan or
commitment except for obligations imposed on Seller by the
Code, ERISA or ADEA.
For a period of 18 months following the Closing, Seller will,
upon the reasonable request of Buyer, provide Buyer with
information relating to Seller's employees.
(b) (i) The vacation period for employees of Seller occurs normally
during the periods described in Section 3.27 of the Disclosure
Schedule. (ii) Except as set forth in Section 3.27 of the
Disclosure Schedule, as at the Closing Date there will be no
bonuses, profit sharing, incentives, commissions or other
compensation of any kind due to or expected by present or former
employees of Seller which have not been fully paid prior to such
date.
(c) Except to the extent set forth in Section 3.27 of the Disclosure
Schedule, all employees of Seller are at-will employees.
(d) Except to the extent set forth in Section 3.27 of the Disclosure
Schedule, Seller has no knowledge that any material adverse
change in the relationship of the Business with its employees is
reasonably likely.
3.28 Compliance with Law; Necessary Authorizations.
----------------------------------------------
(a) In conducting the Business, Seller has, except as set forth in
Section 3.28 of the Disclosure Schedule, since August 1, 1999, in
all material respects duly complied and is presently in all
material respects duly complying with all applicable laws
(whether statutory or otherwise), rules, regulations, orders,
building and other codes, zoning and other ordinances, permits,
licenses, authorizations, judgments and decrees of all federal,
state, local or, to Seller's knowledge, foreign governmental
authorities, including, but not limited to, the Federal
Occupational Safety and Health Act, ERISA, National Labor
Relations Act, Worker Adjustment and Retraining Notification Act,
Civil Rights Act, Immigration Reform and Control Act of 1986, Age
Discrimination in Employment Act, the Water Pollution Control Act
and all applicable domestic and foreign laws, rules and
regulations relating to the safe conduct of business, employment
discrimination, wages and hours, employment of illegal aliens,
collective bargaining, the payment of withholding and social
security taxes, product labeling, antitrust, consumer protection,
occupational safety and health, consumer product safety, the
importation of goods, product liability, currency exchange,
securities and trading-with-the-enemy matters, except where the
failure to so comply would not have a material adverse effect on
the Business.
30
(b) Except as set forth in Section 3.29 of the Disclosure Schedule,
since August 1, 1999, (i) Seller has obtained and adhered to all
necessary permits and other approvals, including interim status
under the Federal Solid Waste Disposal Act, necessary to store,
dispose of and otherwise handle hazardous wastes, if any, and has
reported, to the extent required by all federal, state, local
and, to Seller's knowledge, foreign statutes, laws, ordinances,
regulations, rules, permits, judgments, orders and decrees
(accurate and complete copies of all such permits, judgments,
orders and decrees received by Seller or in Seller's possession
being included in Section 3.28 of the Disclosure Schedule), all
past and present sites, if any, owned and/or operated by Seller
where hazardous wastes have been treated, stored or disposed of;
(ii) there has been no spill, discharge, leak, emission,
injection, escape, dumping or any other release of any kind onto
any property of or used by Seller or into the environment
surrounding any such property of any toxic or hazardous waste or
substance, as such terms are defined under any applicable law,
ordinance, regulation or rule; and (iii) there is no on-site or
to Seller's knowledge off-site location to which Seller has
transported hazardous wastes or arranged for the transportation
of hazardous wastes, which site is the subject of any federal,
state, local or foreign enforcement action or any other
investigation which could lead to any claim against Seller or
Buyer for any clean-up cost, remedial work, damage to natural
resources or personal injury, including, but not limited to,
claims under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
(c) Except as set forth in Section 3.28 of the Disclosure Schedule,
Seller (i) has no knowledge and (ii) has not received any written
notification from any third party (including but not limited to
employees and government agencies) of any present or, within the
past three years, past failure so to comply or has knowledge of
any present condition, activity, incident, action or plan which
may interfere with or prevent continued compliance with any laws,
rules or regulations or which may give rise to any common law or
statutory liability, or otherwise form the basis of any material
claim, action, suit, proceeding, hearing or investigation which
would have a material adverse effect on the Business.
(d) Seller has duly obtained all permits, concessions, grants,
franchises, licenses and other government authorizations and
approvals necessary for the conduct of the Business except where
such failure would not have a material adverse effect on the
Business; each of the foregoing is set forth in Section 3.28 of
the Disclosure Schedule and is in full force and effect; to the
best of Seller's knowledge, there are no proceedings pending or
threatened which may result in the revocation, cancellation,
suspension or modification of any thereof.
31
3.29 Disclosure.
-----------
No representation or warranty by Seller in this Agreement and no
statement contained in the Disclosure Schedule contains any untrue statement of
any material fact or omits to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements made
herein or therein not misleading.
3.30 Insider Interests.
------------------
Except as set forth in Section 3.30 of the Disclosure Schedule, to
Seller's knowledge, no person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with
(an "Affiliate"), the Seller, and no Significant Person (as defined in Section
3.9(k)) has an interest in any contract or agreement pertaining to the business
of Seller wherein more than $5,000 in any twelve month period is involved.
3A. REPRESENTATIONS AND WARRANTIES OF SELLER'S PARENT.
--------------------------------------------------
The Seller's Parent represents and warrants to Buyer as follows:
3A.1 Corporate Organization.
-----------------------
Seller's Parent is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Seller's Parent has
full corporate power and authority to carry on its businesses as they are now
being conducted and to own, lease and operate its properties and assets as and
in the places where such businesses are now conducted and where such properties
and assets are now owned, leased or operated.
3A.2 Authorization.
--------------
Seller's Parent has full corporate power and authority to execute,
deliver and perform its obligations under this Agreement and to carry out the
transactions contemplated hereby. Seller's Parent has taken all action required
by law or otherwise to be taken by Seller's Parent to authorize Seller's
Parent's execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement and the other agreements and
instruments contemplated hereunder to which Seller's Parent is a party have been
duly and validly executed and delivered by Seller's Parent and constitutes a
valid and binding agreement of and upon Seller's Parent enforceable against
Seller's Parent in accordance with its terms, except that such enforcement may
be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and (ii)
general principles of equity.
32
3A.3 No Violation.
-------------
Neither the execution and delivery of this Agreement by Seller's
Parent nor the consummation by Seller's Parent of the transactions contemplated
hereby will violate any provision of the Certificate of Incorporation or by-laws
of Seller's Parent, or be in conflict with, or constitute a material default (or
an event which, with or without notice, lapse of time or both, would constitute
a material default) under, or result in the termination or invalidity of, or
accelerate the performance required by, or cause the acceleration of the
maturity of any obligations or liabilities of the Seller's Parent or violate any
statute or law or any judgment, decree, order, regulation or rule of any
domestic or foreign court or governmental authority applicable to Seller's
Parent. For purposes of this Agreement, "to Seller's Parent's knowledge," "to
the best of Seller's Parent's knowledge, " or any similar formulation thereof
shall mean to the actual knowledge of any of the current: (i) quality assurance
and/or quality control directors of Seller's Parent's, (ii) hazardous material
directors of Seller's Parent's, or (iii) officers and directors of Seller's
Parent.
3A.4 Litigation.
-----------
There is no action, suit or proceeding or any claim or investigation
of any nature whatsoever (including, but not limited to, products liability), at
law or in equity or both, by or before any domestic or foreign court or
government or other regulatory or administrative agency, arbitration tribunal,
board, bureau, authority or commission pending or, to Seller's Parent's
knowledge, which questions or challenges the validity of this Agreement or any
action taken or to be taken by Seller's Parent pursuant to this Agreement or in
connection with the transactions contemplated hereby.
3A.5 Financial Statements.
---------------------
The financial statements of Parent and the related notes contained in
Seller's Parent's Form 10-K for the year ended July 31, 2002 and Form 10-Q for
the quarterly period ending October 31, 2002 present fairly the financial
position of Parent as of the dates indicated, and the results of its operations
and cash flows for the periods therein specified. Such financial statements
(including the related notes) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods therein specified.
3A.6 No Material Adverse Change.
---------------------------
Subsequent to October 31, 2002, Seller's Parent and its subsidiaries,
taken as a whole, have not incurred any material liabilities or obligations,
direct or contingent, other than in the ordinary course of business, and there
has not been any material adverse change in their consolidated condition (in
each case, financial or other), results of operations, business, prospects, key
personnel or capitalization.
33
3A.7 Additional Information.
-----------------------
Parent has filed in a timely manner all documents that Seller's Parent
was required to file under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") during the 12 months preceding the date of this Agreement. The
following documents complied in all material respects with the requirements of
the Exchange Act as of their respective filing dates, and the information
contained therein as of the date thereof did not contain 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 not misleading:
(a) Seller's Parent's Annual Report on Form 10-K, as amended, for the
fiscal year ended July 31, 2002;
(b) Seller's Parent's Quarterly Report on Form 10-Q for the period
ended October 31, 2002; and
(c) all other documents, if any, filed by Seller's Parent with the
Securities and Exchange Commission since December 15, 2002
pursuant to the reporting requirements of the Exchange Act.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
--------------------------------------------
Buyer represents and warrants to Seller and Seller's Parent as follows:
4.1 Corporate Organization.
-----------------------
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of its State of Incorporation. Buyer has full corporate
power and authority to carry on its businesses as they are now being conducted
and to carry on the Business being acquired hereunder and to own, lease and
operate its properties and assets as and in the places where such businesses are
now conducted and where such properties and assets are now owned, leased or
operated. Buyer is, or will be at the time of the Closing, duly qualified or
licensed to do business as a foreign corporation in all jurisdictions where the
failure to so qualify would have a material adverse effect on the business,
financial condition, properties or operations of Buyer, after taking into
consideration the purchase of the Assets and the Business hereunder.
4.2 Authorization.
--------------
Buyer has full corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to carry out the transactions
contemplated hereby. Buyer has taken all action required by law or otherwise to
be taken by Buyer, to authorize Buyer's, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Buyer and
constitutes a valid and binding agreement of and upon the Buyer enforceable
against the Buyer in accordance with its terms, except that such enforcement may
be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and (ii)
general principles of equity.
34
4.3 No Violation.
-------------
Neither the execution and delivery of this Agreement by the Buyer nor
the consummation by the Buyer of the transactions contemplated hereby will
violate any provision of the Certificate of Incorporation or by-laws of the
Buyer, or be in conflict with, or constitute a material default (or an event
which, with or without notice, lapse of time or both, would constitute a
material default) under, or result in the termination or invalidity of, or
accelerate the performance required by, or cause the acceleration of the
maturity of any obligations or liabilities of Buyer or result in the creation or
imposition of any security interest, lien or other encumbrance upon any of its
assets or properties under any agreement or commitment to which Buyer is a party
or by which it is bound or to which any of its assets are subject, or violate
any statute or law or any judgment, decree, order, regulation or rule of any
domestic or foreign court or governmental authority applicable to the Buyer. For
purposes of this Agreement, "to Buyer's knowledge" "to the best of Buyer's
knowledge" or any similar formulation thereof shall mean to the actual knowledge
of any of the current: (i) quality assurance and/or quality control directors of
Buyer, (ii) hazardous material directors of Buyer, or (iii) officers and
directors of Buyer or Buyer's Parent.
4.4 Brokers and Finders.
--------------------
No person has been authorized by the Buyer, or by anyone acting on any
of its behalf or by any of its officers, directors, employees or trustees, to
act as a broker, finder or in any other similar capacity in connection with the
transactions contemplated by this Agreement in such manner as to give rise to
any valid claim against Buyer or Seller for any broker's or finder's fee or
commission or similar type of compensation.
4.5 Litigation.
-----------
There is no action, suit or proceeding or any claim or investigation
of any nature whatsoever (including, but not limited to, products liability), at
law or in equity or both, by or before any domestic or foreign court or
government or other regulatory or administrative agency, arbitration tribunal,
board, bureau, authority or commission pending or, to the Buyer's knowledge,
which questions or challenges the validity of this Agreement or any action taken
or to be taken by the Buyer pursuant to this Agreement or in connection with the
transactions contemplated hereby; and to the best of their knowledge, there is
no valid basis for any such action, suit, inquiry proceeding or investigation.
4.6 Capitalization.
---------------
All of the issued and outstanding capital stock of Buyer is, and will
be on the Closing Date, owned, beneficially and of record by Buyer's Parent. All
such issued and outstanding capital stock has been duly authorized, validly
35
issued, and is fully paid and nonassessable. As of the date hereof and on the
Closing Date, there are and will be no outstanding rights (including, without
limitation, preemptive rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock or other
equity interest in the Buyer, or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance of any capital
stock of Buyer, any such convertible or exchangeable securities or any such
rights, warrants or options.
4.7 Consents.
---------
No consent, approval, authorization or other order of, or
registration, qualification or filing with, any regulatory body, administrative
agency, or any other person or entity is required of Buyer in connection with
the execution, delivery and performance of this Agreement or the consummation by
Buyer of the transactions contemplated hereby which consent, approval, etc. has
not been obtained or will not be obtained on or prior to the Closing Date.
Accurate and complete copies of each of the foregoing which have been obtained
or made have been delivered to Seller at or prior to the date hereof.
4A. REPRESENTATIONS AND WARRANTIES OF THE BUYER'S PARENT.
-----------------------------------------------------
The Buyer's Parent represents and warrants to Seller and Seller's Parent
as follows:
4A.1 Corporate Organization.
-----------------------
Buyer's Parent is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Buyer's Parent has
full corporate power and authority to carry on its businesses as they are now
being conducted and to own, lease and operate its properties and assets as and
in the places where such businesses are now conducted and where such properties
and assets are now owned, leased or operated.
4A.2 Authorization.
--------------
Buyer's Parent has full corporate power and authority to execute,
deliver and perform its obligations under this Agreement and to carry out the
transactions contemplated hereby. Buyer's Parent has taken all action required
by law or otherwise to be taken by Buyer's Parent, to authorize Buyer's
Parent's, execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement and the other agreements and
instruments contemplated hereunder to which Buyer's Parent is a party have been
duly and validly executed and delivered by Buyer's Parent and constitutes a
valid and binding agreement of and upon Buyer's Parent enforceable against
Buyer's Parent in accordance with its terms, except that such enforcement may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and (ii)
general principles of equity.
36
4A.3 No Violation.
-------------
Neither the execution and delivery of this Agreement by Buyer's Parent
nor the consummation by Buyer's Parent of the transactions contemplated hereby
will violate any provision of the Certificate of Incorporation or by-laws of
Buyer's Parent, or be in conflict with, or constitute a material default (or an
event which, with or without notice, lapse of time or both, would constitute a
material default) under, or result in the termination or invalidity of, or
accelerate the performance required by, or cause the acceleration of the
maturity of any obligations or liabilities of the Buyer's Parent result in the
creation or imposition of any security interest, lien or other encumbrance upon
any of its assets or properties under any agreement or commitment to which
Buyer's Parent is a party or by which it is bound or to which any of its assets
are subject, or violate any statute or law or any judgment, decree, order,
regulation or rule of any domestic or foreign court or governmental authority
applicable to Buyer's Parent. For purposes of this Agreement, "to Buyer's
Parent's knowledge" "to the best of Buyer's Parent's knowledge" or any similar
formulation thereof shall mean to the actual knowledge of any of the current
officers and directors of Buyer's Parent.
4A.4 Litigation.
-----------
There is no action, suit or proceeding or any claim or investigation
of any nature whatsoever (including, but not limited to, products liability), at
law or in equity or both, by or before any domestic or foreign court or
government or other regulatory or administrative agency, arbitration tribunal,
board, bureau, authority or commission pending or, to Buyer's Parent's
knowledge, which questions or challenges the validity of this Agreement or any
action taken or to be taken by Buyer's Parent pursuant to this Agreement or in
connection with the transactions contemplated hereby.
4A.5 Financial Statements.
---------------------
The financial statements of Buyer's Parent and the related notes
contained in Buyer's Parent's Form 10-KSB for the year ended June 30, 2002
present fairly the financial position of Buyer's Parent as of the dates
indicated, and the results of its operations and cash flows for the periods
therein specified. Such financial statements (including the related notes) have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods therein specified.
4A.6 No Material Adverse Change.
---------------------------
Except as set forth on Schedule 4A.6, subsequent to June 30, 2002,
Buyer's Parent and its subsidiaries, taken as a whole, have not incurred any
material liabilities or obligations, direct or contingent, other than in the
ordinary course of business, and there has not been any material adverse change
in their consolidated condition (in each case, financial or other), results of
operations, business, prospects, key personnel or capitalization.
37
4A.7 Additional Information.
-----------------------
Except as set forth on Schedule 4A.7, Buyer's Parent has filed in a
timely manner all documents that Buyer's Parent was required to file under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") during the 12
months preceding the date of this Agreement. The following documents complied in
all material respects with the requirements of the Exchange Act as of their
respective filing dates, and the information contained therein as of the date
thereof did not contain 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 not misleading:
(a) Buyer's Parent's Annual Report on Form 10-KSB, as amended, for
the fiscal year ended June 30, 2002;
(b) Buyer's Parent's Quarterly Report on Form 10-QSB for the period
ended September 30, 2002; and
(b) all other documents, if any, filed by Buyer's Parent with the
Securities and Exchange Commission since November 15, 2002
pursuant to the reporting requirements of the Exchange Act.
5. AGREEMENTS PENDING CLOSING.
---------------------------
5.1 Agreements of Seller Pending the Closing. Seller covenants and agrees
that, pending the Closing and except as otherwise agreed to in writing
by Buyer:
(a) Business in the Ordinary Course. The Business shall be conducted
solely in the ordinary course consistent with past practice.
(b) Existing Condition. Seller shall not cause nor permit to occur
any of the events or occurrences described in Section 3.9 hereof.
(c) Maintenance of Physical Assets. Seller shall continue to maintain
and service the physical assets used in the conduct of the
Business in the same manner as has been its consistent past
practice.
(d) Employees and Business Relations. Seller shall use its reasonable
best efforts to keep available the services of the present
employees and agents of the Business and to maintain the
relations and goodwill with the suppliers, customers,
distributors and any others having business relations with the
Business.
(e) Maintenance of Insurance. Seller shall notify Buyer of any
changes in the terms of the insurance policies and binders
referred to on Schedule 3.19 of the Disclosure Schedule.
38
(f) Compliance with Laws. etc. Seller shall comply with all laws,
ordinances, rules, regulations and orders applicable to the
Business, or Seller's operations, assets or properties in respect
thereof the noncompliance with which might materially affect the
Business or Assets.
(g) Update Schedules. Seller shall promptly disclose to Buyer any
information contained in its representations and warranties or
the Schedules which, because of an event occurring after the date
hereof, is incomplete or is no longer correct in any material
respect as of all times after the date hereof until the Closing
Date; provided, however, that none of such disclosures shall be
deemed to modify, amend or supplement the representations and
warranties of Seller or the schedules hereto for the purposes of
Article 6 hereof, unless Buyer shall have consented thereto in
writing.
(h) Conduct of Business. Seller shall conduct its business in such a
manner that on the Closing Date the representations and
warranties of Seller contained in this Agreement shall be true,
in all material respects, except as specifically contemplated by
this Section 5, as though such representations and warranties
were made on and as of such date. Furthermore, Seller shall
cooperate with Buyer and use its reasonable best efforts to cause
all of the conditions to the obligations of Buyer under this
Agreement to be satisfied on or prior to the Closing Date.
(i) Sale of Assets; Negotiations. Seller shall not, directly or
indirectly, sell or encumber all or any part of the Assets, other
than in the ordinary course of the Business consistent with past
practice, or initiate or participate in any discussions or
negotiations or enter into any agreement to do any of the
foregoing. Seller shall not provide any confidential information
concerning the Business or its properties or assets to any third
party other than in the ordinary course of business.
(j) Access. Upon reasonable notice to Seller, Seller shall give to
Buyer's officers, employees, counsel, accountants and other
representatives all reasonable opportunity and access to and the
right to inspect, during normal business hours, all of the
premises, properties, assets, records, contracts and other
documents relating to the Business and shall permit them to
consult with the officers, employees, accountants, counsel and
agents of Seller for the purpose of making such investigation of
the Business and in furtherance of the transaction proposed
herein, including without limitation the financial information
set forth in paragraph 3.5(a) above as Buyer shall desire to
make, provided that such investigation shall not unreasonably
interfere with Seller's business operations, Furthermore, Seller
shall furnish to Buyer all such documents and copies of documents
and records and information with respect to the affairs of the
Business and copies of any working papers relating thereto as
Buyer shall from time to time reasonably request and shall permit
Buyer and its agents to make such inspections of the Assets as
Buyer may request from time to time.
39
(k) Press Releases. Except as required by applicable law, neither
Seller nor Seller's Parent shall give notice to third parties or
otherwise make any public statement or releases concerning this
Agreement or the transactions contemplated hereby except for such
written information as shall have been approved in writing as to
form and content by Buyer; provided that Seller may continue such
communications with employees, customers, suppliers,
shareholders, lenders, franchisers, lessors and other particular
groups as may be legally required or necessary or appropriate and
not inconsistent with the best interests of Buyer or the Closing
under this Agreement.
(l) No Default. Seller shall not do any act or omit to do any act, or
permit any act or omission to act, which will cause a breach of
any material contract or commitment of Seller.
5.2 Agreements of Buyer Pending the Closing. Buyer covenants and agrees
that, pending the Closing and except as otherwise agreed to in writing
by Seller:
(a) Actions of Buyer. Buyer will not knowingly take any action which
would result in a breach of any of its representations and
warranties hereunder. Furthermore, Buyer shall cooperate with
Seller and use its reasonable best efforts to cause all of the
conditions to the obligations of Buyer and Seller under this
Agreement to be satisfied on or prior to the Closing Date.
(b) Press Releases. Except as required by applicable law, neither
Buyer nor Buyer's Parent will not give notice to third parties or
otherwise make any public statement or releases concerning this
Agreement or the transactions contemplated hereby except for such
written information as shall have been approved in writing as to
form and content by Seller, which approval shall not be
unreasonably withheld; provided that Buyer may continue such
communications with employees, customers, suppliers,
shareholders, lenders, franchisers, lessors and other particular
groups as may be legally required or necessary or appropriate and
not inconsistent with the best interests of Seller or the Closing
under this Agreement. In addition, Buyer and Buyer's Parent will
provide Seller with information concerning press releases and
filings relating to these transactions not less than two days
prior to proposed release.
6. CONDITIONS PRECEDENT TO THE CLOSING.
------------------------------------
6.1 Conditions Precedent to Buyer's Obligations. All obligations of Buyer
under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions
precedent:
40
(a) Representations and Warranties True as of the Closing Date. The
representations and warranties of Seller and Seller's Parent
contained in this Agreement or in any schedule, certificate or
document delivered by Seller or Seller's Parent to Buyer pursuant
to the provisions hereof shall have been true in all material
respects on the date hereof without regard to any schedule
updates furnished by Seller after the date hereof and shall be
true in all material respects on the Closing Date with the same
effect as though such representations and warranties were made as
of such date.
(b) Compliance with this Agreement. Each of Seller and Seller's
Parent shall have performed and complied in all material respects
with all agreements and conditions required by this Agreement to
be performed or complied with by it prior to or at the Closing.
(c) Closing Certificate. Buyer shall have received a certificate from
each of Seller and Seller's Parent dated the Closing Date,
certifying that the conditions specified in Sections 6.1(a) and
6.1(b) hereof have been fulfilled and certifying that Seller has
obtained all consents and approvals required with respect to it
or the Business by Section 6.1(f) hereof.
(d) Opinions of Counsel for Seller. Xxxxxxx, Savage, Kaplowitz, Wolf
& Marcus, LLP, counsel for Seller, shall have delivered to Buyer
a written opinion, dated the Closing Date, in the form of Exhibit
D hereto with only such changes as shall be in form and substance
reasonably satisfactory to the Buyer and its counsel.
(e) No Threatened or Pending Litigation. On the Closing Date, no
suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be threatened or be pending before any
court or governmental or regulatory official, body or authority
in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or
proceeding shall be pending or threatened.
(f) Consents and Approvals. Except for consents required by the terms
of the contracts, commitments, agreements listed in Section
6.1(f) of the Disclosure Statement, and subject to the provisions
of Sections 1.3(d) above, the holders of any indebtedness of
Seller, the lessors or lessees of any real or personal property
or assets leased by Seller, the parties (other than Seller) to
any contract, commitment or agreement to which Seller is a party
or subject, any governmental or regulatory official, body or
authority or any other person, and any governmental, judicial or
regulatory official, body or authority having jurisdiction over
Seller or Buyer or their respective affiliates to the extent that
their consent or approval is required or necessary under the
pertinent debt, lease, contract, commitment or agreement or other
document or instrument or under applicable orders, laws, rules or
41
regulations, for the consummation of the transactions
contemplated hereby in the manner herein provided, shall have
granted such consent or approval, provided such debt, lease,
contract, etc. is material to the Business.
(g) Material Adverse Changes. The assets or the operations of the
Business taken as a whole, shall not have been and shall not be
threatened to be materially adversely affected in any way as a
result of any event or occurrence (except as a result of general
economic conditions).
(h) Sales and Service Agreement. Case Equipment shall have entered
into a Sales and Service Agreement with Purchaser for the
territories in which Seller conducts the Business upon terms
substantially the same as those contained in an agreement between
Seller and Case dated May 12, 1997.
(i) Revolving Credit Facility. Deutsche Financial Services
Corporation ("DFSC"), or another lending institution, as lender
and as representative of several institutional lenders shall have
funded a revolving credit facility in an amount not less than $12
million, which is substantially similar to the credit facility
pursuant to an agreement between Seller and DFSC dated June 30,
1999, as last amended on March 22, 2001, in addition to
approximately $5 million inventory financing to be provided by
Case.
(j) Environmental Audit. The completion of a Phase One environmental
audit at Seller's expense of the Real Property used by the
business result in a report reasonably satisfactory to Seller.
(k) Change in Business. Buyer having no reasonable basis to believe
that either: (i) the net sales of the Business was less than
$47,000,000 for the year ended July 31, 2002 or less than
$11,000,000 for the three fiscal months ended October 31, 2002;
or (ii) the sum of PP&E being less than $740,000 as of October
31, 2002.
(l) Capital Structure. The Buyer shall have the approximate shares of
common stock and equivalents outstanding as set forth on Schedule
6.1(l).
(m) Approval of Counsel; Corporate Matters. All actions, proceedings,
resolutions, instruments and documents required to carry out this
Agreement or incidental hereto and all other related legal
matters shall have been approved on the Closing Date by Xxxxxx &
Xxxxxxxxx LLP, counsel for Buyer, in the exercise of their
reasonable judgment. Seller's Parent and Seller shall also have
delivered to Buyer such other documents, instruments,
certifications and further assurances as such counsel may
reasonably require.
42
(n) Registration Rights. The Buyer's Parent shall have entered into
the Registration Rights Agreement with the holders of shares of
the Seller's Parent's Preferred Stock substantially in the form
annexed hereto as Exhibit H.
(o) Employment, Consulting and Management Agreements. Seller shall
have entered into the employment, consulting and management
agreements described in Section 6.2(l).
(p) Audited Statements. The delivery to Buyer of financial
information described in Section 3.5(a)(i), audited and reported
upon by Xxxxxx & Co., CPA's, P.C., having no modifications,
qualifications or emphasis on or any material matter contained in
the statements.
(q) Shareholders' and Voting Agreement substantially in the form
annexed hereto as Exhibit I.
6.2 Conditions Precedent to the Obligations of Seller. All obligations of
Seller under this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following
conditions precedent:
(a) Representations and Warranties True as of the Closing Date. The
representations and warranties of Buyer and Parent contained in
this Agreement or in any list, certificate or document delivered
by Buyer or Parent to Seller pursuant to the provisions hereof
shall have been true in all material respects on the date hereof
and shall be true in all material respects on the Closing Date
with the same effect as though such representations and
warranties were made as of such date.
(b) Compliance with this Agreement. Each of Buyer and Parent shall
have performed and complied in all material respects with all
agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
(c) Closing Certificates. Seller shall have received a certificate
from each of Buyer and Parent dated the Closing Date certifying
that the conditions specified in Sections 6.2(a) and 6.2(b)
hereof have been fulfilled.
(d) Opinion of Counsel for Buyer. Xxxxxx & Xxxxxxxxx LLP, counsel to
Buyer, shall have delivered to Seller a written opinion, dated
the Closing Date, in the form of Exhibit E hereto with only such
changes as shall be in form and substance reasonably satisfactory
to Seller and its counsel.
(e) No Threatened or Pending Litigation. On the Closing Date, no
suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be threatened or be pending before any
court or governmental or regulatory official, body or authority
43
in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or
proceeding shall be pending or threatened.
(f) Sales and Service Agreement. Case Equipment shall have entered
into a Sales and Service Agreement with Purchaser for the
territories in which Seller conducts the Business upon terms
substantially the same as those contained in an agreement between
Seller and Case dated May 12, 1997.
(g) Revolving Credit Facility. Deutsche Financial Services
Corporation ("DFSC"), or another lending institution, as lender
and as representative of several institutional lenders shall have
funded a revolving credit facility in an amount not less than $10
million, which is substantially similar to the credit facility
pursuant to an agreement between Seller and DFSC dated June 30,
1999, as last amended on March 22, 2001.
(h) Capital Structure. The Buyer shall have the approximate shares of
common stock and equivalents outstanding as set forth on Schedule
6.1(l).
(i) Assignment and Assumption Agreement. Buyer shall have executed
and delivered the Assignment and Assumption Agreement.
(j) Note. The Buyer shall have executed and delivered the Note and
Guaranty of the Note, substantially in the forms annexed as
hereto as Exhibit C and Exhibit F, respectively.
(k) Fairness Opinion. The Seller's Parent's Board of Directors shall
have received an opinion from Capitalink LLC, Coral Gables,
Florida, to the effect that the terms of this Agreement are fair
to the Seller's Parent's stockholders from a financial point of
view.
(l) Employment and Consulting Agreements. Buyer shall have entered
into the following agreements:
(i) seven year employment agreement with C. Xxxx XxXxxx in the
form annexed hereto as Exhibit G1;
(ii) two year employment agreement with Xxxx Xxxxxx in the form
annexed hereto as Exhibit G2;
(iii)two year consulting agreement with Xxxxxx Xxxxx in the form
annexed hereto as Exhibit G3; and
44
(iv) Seller, Seller's Parent and Buyer and Buyer's Parent shall
enter into a management services agreement in the form
annexed hereto as Exhibit G4.
(m) Buyer's Parent. Buyer's Parent having not less than $2 million in
cash and a $550,000 secured note related to the sale of certain
assets at Closing.
(n) Approval of Counsel; Corporate Matters. All actions, proceedings,
resolutions, instruments and documents required to carry out this
Agreement or incidental hereto and all other related legal
matters shall have been approved on the Closing Date by Xxxxxxx,
Savage, Kaplowitz, Wolf & Marcus, LLP, counsel for Seller, in the
exercise of their reasonable judgment. Buyer shall also have
delivered to Seller such other documents, instruments,
certifications and further assurances as such counsel for Seller
may reasonably require.
(o) Appointment of Directors. At closing, all directors of Buyers
Parent except Xxxxxx Xxxxxxxx will resign and C. Xxxx XxXxxx,
Xxxxxx X. Xxxxx, Xxxxxxx Xxxxxx and Xxxxxx Xxxxxxxxx will be
appointed as directors.
6.3 Termination.
------------
(a) Methods of Termination. Anything in this Agreement to the
contrary notwithstanding, the transactions contemplated hereby
may be terminated and abandoned at any time prior to the Closing:
(i) by mutual consent of the Buyer and Seller; or
(ii) by Seller if, as of the Closing Date, any of the conditions
set forth in Section 6.2 shall not have been met;
(iii)by Seller if, it does not obtain shareholder approval of
the transactions contemplated by this Agreement
(iv) by Buyer if, as of the Closing Date, any of the conditions
set forth in Section 6.1 shall not have been met;
(v) by Buyer if the net sales of the Business was less than
$47,000,000 for the year ended July 31, 2002 or $11,000,000
for the three fiscal months ended October 31, 2002;
(vi) by Buyer if the sum of net property, plant and equipment
included in the Assets was less than $740,000 as of October
31, 2002; or
(vii)by either party if, without fault of the terminating party,
the Closing shall not have occurred on or prior to March 27,
2003.
45
(b) Procedure Upon Termination. In the event of termination and
abandonment pursuant to Section 6.3(a) hereof, written notice
thereof shall forthwith be given to the other party hereto and
this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned without further action by the Buyer or
the Seller.
(c) Effect of Termination. In the event of termination of this
Agreement as expressly provided in Section 6.3(a) above, this
Agreement shall forthwith become void and neither Buyer, on the
one hand, nor Seller on the other, shall have any liability to
the other, except for either party's breach of any of its
obligations which breach shall be existing at the time of such
termination.
7. RESERVED.
---------
8. CERTAIN COVENANTS, AGREEMENTS AND CLOSING DOCUMENTS.
----------------------------------------------------
8.1 Non-Competition of Seller.
--------------------------
(a) Except as set forth on Schedule 8.1, neither Seller nor Seller's
Parent or any subsidiary or Affiliate of Seller's Parent, except
for Xxxxxx Xxxxx and C. Xxxx XxXxxx, in which Seller's Parent
owns or has the right, directly or indirectly, to vote 50.1% or
more of the voting stock of such entity (collectively the
"Western Group") shall, without the written consent of Buyer, for
a period of five years from the Closing Date, operate, directly a
construction equipment sales, leasing or maintenance business in
the States of California or Nevada.
(b) Notwithstanding the provisions of this Section 8.1: (i) nothing
herein shall prevent members of the Western Group from investing
in the securities of any company listed on a national securities
exchange or quoted on the NASDAQ quotation system, which
investment, but for this Section 8.1(b), would be a violation of
Section 8.1(a), provided Seller's and Western Group's ownership
is not more than 5% of any class of securities of any such
company and Seller's and Western Group's involvement with any
such company is solely that of a passive stockholder, (ii)
nothing herein shall prevent an acquisition by or of Seller's
Parent or members of Western Group involving, peripherally
equipment sales, leasing or maintenance business in California or
Nevada provided such business is disposed of or divested within
90 days following such transaction; and (iii) if any provision of
this Section 8.1 is determined to be unenforceable because of the
duration of such provision or the area covered thereby, the court
making such determination shall have the power to and shall
reduce the scope of such provision with respect to such duration
and/or area, and/or to delete ("blue-pencil") specific words or
phrases, and in its reduced or blue-penciled form such provision
shall be enforceable and shall be enforced.
46
(c) Seller and Seller's Parent agrees that they will not, directly or
indirectly, for a period of 24 months after the Closing, for its
own account or for the account of any other person, interfere
with Buyer's relationships with any of its suppliers or customers
or directly solicit Buyer's employees in the States of California
and Nevada.
(d) At or prior to Closing, Seller and Seller's Parent will: (i) use
reasonable efforts to enforce or if it chooses not to so enforce,
assign to Buyer all confidentiality agreements signed by parties
from whom Seller or Seller's Parent had communications in
connection with a possible purchase of the Assets, Business or
any interest or part thereof (collectively the "Offerees") on
behalf of Buyer; (ii) provide Buyer with a list of such Offerees;
and (iii) request from such Offerees a return of all such
confidential information.
(e) Seller expressly agrees and understands that Buyer's remedy at
law for any breach of Section 8.1(a), (b), (c), or (d) will
likely be inadequate if it were Buyer's exclusive remedy and that
the damages flowing from any such breach are not readily
susceptible to being measured solely in monetary terms.
Accordingly, it is acknowledged that upon adequate proof of
Seller's violation or threatened violation of any legally
enforceable provisions of any of the above enumerated Subsections
of Section 8.1, and Buyer's satisfaction of any applicable legal
or judicial requirements to support its claim for equitable
relief, Buyer will be entitled to specific performance of the
above enumerated Subsections of Section 8.1, including but not
limited to, immediate injunctive relief, a temporary order
restraining any threatened or further breach and such other
equitable relief as may be appropriate. Nothing in this Section
8.1 shall be deemed to limit Buyer's remedies at law or in equity
for any breach by Seller of any of the provisions of this
Agreement, including but not limited to the above enumerated
Subsections of Section 8.1, which may be pursued or availed of by
Buyer. Seller has carefully considered the nature and extent of
the restrictions upon it and the rights and remedies conferred
upon Buyer under this Section 8.1 and hereby acknowledges and
agrees that the same are reasonable, are fully required to
protect the legitimate interests of Buyer and do not confer a
benefit upon Buyer disproportionate to the detriment of Seller.
(g) The provisions of this Section 8.1 shall be terminated upon the
occurrence of an Event of Default subject to applicable grace
periods under the Note.
8.2 Licenses.
---------
At the Closing, Seller shall assign any and all federal, state,
county, local and foreign licenses necessary for the operation of the Business
to the extent the same may be assigned, and shall cooperate with Buyer and
47
assist Buyer, at Buyer's expense, in obtaining any other licenses that are not
assignable or that are necessary for Buyer to continue to operate the Business.
8.3 Consummation of Transactions; Further Assurances.
-------------------------------------------------
(a) Each of the parties agrees to use its reasonable best efforts to
bring about the satisfaction of the conditions required to be
performed, fulfilled or complied with by it hereunder and to take
or cause to be taken, all action, and to do, or cause to be done,
all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement as expeditiously
as practicable.
(b) In case at any time after the Closing any further action is
reasonably necessary or desirable to carry out the purposes of
this Agreement, the appropriate party will take all such
necessary action, including without limitation, the execution and
delivery of such further instruments and documents as may be
reasonably requested by the other party or parties for such
purposes or otherwise to complete or perfect the transactions
contemplated hereby. After the Closing, Buyer and Seller shall
cooperate fully with the other and shall make available to the
other and to any taxing authority all information, records or
documents in its possession which are reasonably requested in
connection with the preparation of any tax returns or in
connection with any tax liability of Seller for any period prior
to the Closing, and otherwise shall cooperate in connection with
all matters, such as but not limited to litigations and personnel
matters, involved in the transfer of the Assets and the Business
operations from Seller to Buyer.
8.4 Risk of Loss.
-------------
Prior to the Closing Date, the risk of loss or damage to, or
destruction of, any or all of the Business and any or all of the Assets shall
remain with Seller.
8.5 Payment of Taxes.
-----------------
Seller shall file when due, giving effect to all applicable extension
provisions, all federal, state, local and foreign tax returns required to be
filed by it (including but not limited to income, sales, use and payroll taxes)
for all periods to the Closing Date and shall pay all taxes, interest or
penalties (i) shown on, or which are otherwise due and payable pursuant to, such
returns, (ii) which shall become due with respect to any such period pursuant to
any deficiency notice or similar notice or (iii) which otherwise shall become
due with respect to any such period.
8.6 Best Efforts to Obtain Consents.
--------------------------------
Each of Seller and Buyer shall use its reasonable best efforts to
obtain promptly all the consents and authorizations of third parties for which
it is responsible to obtain, and to cooperate with the other as the other may
48
reasonably request, to make all filings, if any, and to give all notices to
third parties which may be required in order to effect the transactions
contemplated by this Agreement.
8.7 Other Government Filings.
-------------------------
Buyer and Seller agree to cooperate with each other in filing any
necessary applications, reports or other documents with any federal or state
authorities (including federal, state or local taxing authorities as to the
allocation, if agreed, of the Purchase Price to the Assets) having jurisdiction
with respect to the transactions contemplated by this Agreement and in seeking
necessary consultation with and favorable action by any such agencies,
authorities or bodies.
8.8 Closing Apportionments.
-----------------------
(a) The following items shall be apportioned as of the close of
business on the day immediately prior to the Closing Date (with
such meter readings as shall be appropriate) and paid by Seller
or Buyer to the other, as the case may be, in respect of all
periods prior to the Closing Date:
(i) All water, utility and other similar charges, and sewer rent
and assessments, affecting Real Property which constitutes
part of the Assets;
(ii) All payments required to be paid under the Assumed
Contracts;
(iii)All real estate taxes and assessments with respect to the
Real Property, which become due and payable in respect of
any and all periods prior to the date of Closing shall be
paid by Seller, and all real estate taxes and assessments
becoming due and payable in respect of any and all periods
on or after the Closing Date shall be paid by Buyer,
whenever the same become due or payable. Buyer shall pay all
taxes and assessments after the Closing Date and Seller
shall immediately upon receipt of a xxxx therefore (which
may be an unreceipted xxxx) pay Buyer to Seller's pro rata
portion thereof in respect of all periods to the Closing
Date.
(b) The adjustments above-described (i) shall be determined in
accordance with generally accepted accounting principles,
consistently applied and (ii) shall, to the extent practicable,
be paid by Seller to Buyer or by Buyer to Seller, as the case may
be, at the Closing, by check, subject to collection.
(c) The provisions of this Section 8.8 shall survive the Closing. Any
errors or omissions in computing apportionments at the Closing,
or any recomputations required as a result of facts that become
known after the Closing, shall be corrected as soon as
practicable thereafter.
49
8.9 Retention of Records.
---------------------
(a) Seller shall preserve all files and records directly pertaining
to its operation of the Business (and not delivered to Buyer at
Closing) for a period of seven years after the date of the
respective documents constituting such files and records. Seller
shall, upon prior reasonable notice, allow Buyer access thereto
and the right to make copies and extracts therefrom at any time
during normal business hours, and shall not dispose of any
thereof during said seven year period without giving at least 30
days' prior written notice to Buyer of its intention to dispose
of same, specifying the items to be disposed of in reasonable
detail. Buyer may, within a period of 30 days after receipt of
any such notice, notify Seller of Buyer's desire to retain one or
more of the items to be disposed of. Seller shall, upon receipt
of such notice from Buyer, deliver to Buyer, at Buyer's expense,
the items specified in Buyer's notice. If Buyer shall not so
notify Seller within such 30 day period, Seller may dispose of
such items. Seller shall preserve all financial records related
to the Business and shall provide Buyer with access to such
records in accordance with the foregoing provisions of this
Section 8.9.
(b) Buyer shall preserve all files and records included in the Assets
and delivered by Seller, pertaining directly to its operation of
the Business, for a period of seven years after the date of the
respective documents constituting such files and records. Buyer
shall, upon prior reasonable notice, allow Seller access thereto
and the right to make copies and extracts therefrom at any time
during normal business hours, and shall not dispose of any
thereof during said seven year period without giving at least 30
days' prior written notice to Seller of its intention to dispose
of same, specifying the items to be disposed of in reasonable
detail. Seller may, within a period of 30 days after receipt of
any such notice, notify Buyer of Seller's desire to retain one or
more of the items to be disposed of. Buyer shall, upon receipt of
such notice from Seller, deliver to Seller, at Seller's expense,
the items specified in Seller's notice.
8.10 Offer of Employment.
--------------------
(a) Buyer agrees that as of the Closing Date, it will offer to hire
all of the employees of Seller who were Seller's employees as
reflected in Seller's payroll records on the preceding business
day and were terminated by Seller, on an at-will basis, and for
positions or comparable positions, at the location at which such
employees are currently engaged and on terms (including
compensation and benefit plans and arrangements) that are
reasonably comparable to those offered by Sellers as if such
employees had been employed by Seller on the effective date of
the Closing on an at-will basis. Buyer will credit each such
employee's period of service with Seller when determining the
eligibility, coverage or benefits of any such employee under any
employee benefit plan, program or arrangement of Buyer.
50
(b) Buyer has no present intention to immediately terminate any
employee to whom it offered employment or to make any immediate
material change to any of Buyer's employment contracts,
relationships, practices, plans or programs; however, Buyer may
in its sole discretion amend or terminate any of Buyer's
employment contracts, relationships or practices, or employee
benefit plans or programs, if any, at any time after the Closing
Date.
(c) Seller agrees to allow any and all such employees hired by Buyer
to continue, from the Closing Date through the effective date of
the Closing, to receive and be included in the medical, dental,
supplemental life, basic life and short and long term disability
benefit programs and plans which would have been offered to such
employees as of the effective date of the Closing, but for the
transactions contemplated by this Agreement by Seller or Seller's
Parent, provided Buyer reimburses Seller or Seller's Parent, as
the case may be, for any out of pocket employer contributions or
payments of premiums for such plans or programs. Continued
inclusion of employees in such plans will be in Buyer's sole
discretion.
8.11 Accountants Consents.
---------------------
During the period beginning on the Closing Date and ending the last
date for which such statements would be required to be included in a filing made
by Buyer's Parent with the Securities and Exchange Commission ("SEC"), Seller's
Parent will, at its expense, procure and deliver to Buyer's Parent, the consent
of Xxxxxx & Co., CPA's, P.C. to include and incorporate their reports on the
Closing Balance Sheet and the information described in Section 3.5(a)(i) in
Buyer's Parent's filings with the SEC.
8.12 Performance of Services.
------------------------
Buyer agrees to perform services on Seller's behalf, in connection
with warranty claims arising from equipment sold or leased by Seller prior to
the date of Closing. Seller agrees to pay the invoices generated by such
warranty work within 30 days. Nothing contained herein shall obligate Buyer to
bear the cost of such warranty work except to extent of any reserve on the
Closing Balance Sheet.
8.13 Certain Financial Services.
---------------------------
Seller's Parent agrees, for a period not exceeding 90 days from the
Closing to continue processing payments relating to the accounts receivable
assigned to Buyer and accounts payable assumed by Buyer. Seller's Parent will
remit the cash amount due to such vendors on Buyer's behalf, if it receives
prior payment from Buyer.
51
8.14 Payments Received.
------------------
Seller and Buyer each agree that after the Closing they will hold and
will promptly transfer and deliver to the other, from time to time as and when
received by them, any cash, checks with appropriate endorsements (using their
best efforts not to convert such checks into cash), or other property that they
may receive on or after the Closing which properly belongs to the other party,
including without limitation any insurance proceeds, and will account to the
other for all such receipts.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
------------------------------------------------------------
9.1 Survival of Representations.
----------------------------
All representations and warranties contained in this Agreement shall
survive the Closing for a period (the "Survival Period") of three years after
the Closing Date, except for those related to the representations set forth in
Sections 3.15 and 3.24 hereof which shall continue through the applicable
statute of limitations and those related to third party claims in connection
with Excluded Obligations which shall survive the Closing for a period of five
years.
9.2 Indemnification by Buyer.
-------------------------
Each of Buyer and Parent agree, jointly and severally, to indemnify,
protect, defend and hold harmless Seller and any Affiliate thereof and each of
its shareholders, any parent, subsidiary or affiliate thereof and all directors,
officers, employees, attorneys, and agents of any of the foregoing (the "Seller
Group"), at any time after the Closing and during the appropriate Survival
Period (except that such indemnification obligations shall continue beyond the
Survival Period if a Notice of Claim for indemnification shall be delivered to
Parent and Buyer prior thereto, in which case such indemnification obligations
shall continue until the claim as to which such notice has been given is
resolved and any applicable indemnification obligations have been satisfied),
from and against all demands, claims, actions or causes of action, assessments,
deficiencies, taxes, losses, damages, liabilities, costs and expenses, including
without limitation, interest, penalties and reasonable attorneys' fees and
expenses (collectively "Losses"), asserted against, resulting from, imposed upon
or incurred by the Seller Group, directly or indirectly, arising out of or in
connection with (a) the breach or inaccuracy of any of the representations or
warranties of Buyer or Parent made in or pursuant to this Agreement; (b) any
breach of any covenant or agreement of Buyer or Parent contained in this
Agreement; or (c) any failure to pay any obligation, liability, debt or
commitment of the Seller which is an Assumed Obligation or Assumed Liability,
whether or not paid by Seller; or (d) any and all obligations, liabilities,
debts or commitments in connection with the Assets or the operation of the
Business arising after the Closing to the extent that they arise after the
Closing and only in respect of such time period.
52
9.3 Indemnification by Seller.
--------------------------
Each of Seller and Seller's Parent agree, jointly and severally, to
indemnify, protect, defend and hold harmless Buyer and each of its shareholders,
any parent, subsidiary or affiliate thereof and all directors, officers,
employees, attorneys and agents of any of the foregoing (the "Buyer Group"), at
any time after the Closing and during the appropriate Survival Period (except
that such indemnification obligations shall continue beyond the Survival Period
if a Notice of Claim for indemnification shall be delivered to Seller and
Seller's Parent prior thereto, in which case such indemnification obligations
shall continue until the claim as to which such notice has been given is
resolved and any applicable indemnification obligations have been satisfied),
from and against all Losses asserted against, resulting from, imposed upon or
incurred by the Buyer Group or any member thereof, directly or indirectly,
arising out of or in connection with (a) the breach or inaccuracy or alleged
breach or inaccuracy of any of the representations or warranties of Seller made
in or pursuant to this Agreement; (b) any breach of any covenant or agreement of
Seller contained in this Agreement; or (c) any obligation, liability, debt or
commitment of the Seller which is not an Assumed Obligation or an Assumed
Liability (or is an Excluded Obligation), whether or not paid by Buyer.
9.4 Third Party Claims.
-------------------
(a) If any demand, claim, action or cause of action, suit, proceeding
or investigation (collectively, the "Claim") is brought against
an Indemnified Party for which the Indemnified Party intends to
seek indemnity from the other party hereto (the "Indemnifying
Party"), then the Indemnified Party within twenty-one (21) days
after such Indemnified Party's receipt of the Claim, shall notify
the Indemnifying Party pursuant to Article "10.4" of this
Agreement which notice shall contain a reasonably thorough
description of the nature and amount of the Claim (the "Claim
Notice"). The Indemnifying Party shall have the option to
undertake, conduct and control the defense of such claim or
demand. Such option to undertake, conduct and control the defense
of such claim or demand shall be exercised by notifying the
Indemnified Party within twenty (20) days after receipt of the
Claim Notice pursuant to Article "9.4" of this Agreement (such
notice to control the defense is hereinafter referred to as the
"Defense Notice"). The failure of the Indemnified Party to notify
the Indemnifying Party of the Claim shall not relieve the
Indemnifying Party from any liability which the Indemnifying
Party may have pursuant to this Article "9" of this Agreement
except to the extent that such failure to notify the Indemnifying
Party prejudices the Indemnifying Party. The Indemnified Party
shall use all reasonable efforts to assist the Indemnifying Party
in the vigorous defense of the Claim. All costs and expenses
incurred by the Indemnified Party in defending the Claim shall be
paid by the Indemnifying Party. If, however, the Indemnified
Party desires to participate in any such defense or settlement,
it may do so at its sole cost and expense (it being understood
that the Indemnifying Party shall be entitled to control the
defense). The Indemnified Party shall not settle the Claim. If
the Indemnifying Party does not elect to control the defense of
53
the Claim, within the aforesaid twenty (20) day period by proper
notice pursuant to Article "9.4" of this Agreement, then the
Indemnified Party shall be entitled to undertake, conduct and
control the defense of the Claim (a failure by the Indemnifying
Party to send the Defense Notice to the Indemnified Party within
the aforesaid twenty (20) day period by proper notice pursuant to
Article "9.4" of this Agreement shall be deemed to be an election
by the Indemnifying Party not to control the defense of the
Claim); provided, however, that the Indemnifying Party shall be
entitled, if it so desires, to participate therein (it being
understood that in such circumstances, the Indemnified Party
shall be entitled to control the defense). Regardless of which
party has undertaken to defend any claim, the Indemnifying Party
may, without the prior written consent of the Indemnified Party,
settle, compromise or offer to settle or compromise any such
claim or demand; provided however, that if any settlement would
result in the imposition of a consent order, injunction or decree
which would restrict the future activity or conduct of the
Indemnified Party, the consent of the Indemnified Party shall be
a condition to any such settlement. Whether the Indemnifying
Party shall control and assume the defense of the Claim or only
participate in the defense or settlement of the Claim, the
Indemnified Party shall give the Indemnifying Party and its
counsel access, during normal business hours, to all relevant
business records and other documents, and shall permit them to
consult with its employees and counsel.
(b) The amount of any Losses for which indemnification is available
shall be computed without regard to the tax effect of any such
loss or indemnification.
(c) In the event of payment by an Indemnifying Party to the
Indemnified Party as contemplated in this Section 9, the
Indemnifying Party shall be subrogated to and shall stand in the
place of the Indemnified Party as to any events or circumstances
in respect of which the Indemnified Party may have any right or
claim against any third party relating to such event giving rise
to the claim for which the Indemnifying Party shall have made
payment to the Indemnified Party. The Indemnified Party shall
cooperate with the Indemnifying Party in any reasonable manner in
prosecuting any such subrogated right or claim.
9.5 Limitations on Indemnification.
-------------------------------
(a) No claim may be made against an Indemnifying Party pursuant to
its indemnification obligations set forth in Section 9.2 or 9.3
hereof unless the aggregate amount of all matters for which such
party would (but for this provision) be liable (and of which
matters the Indemnified Party followed the provisions of Section
8.4 above) exceeds $50,000 (the "Threshold Amount") and the
Indemnified Party's right to indemnification hereunder shall only
be with respect to such amounts in excess of the Threshold
Amount. For purposes of determining the Threshold Amount and
Maximum Amount hereunder, the Indemnifying Party's obligations
54
shall be with respect to the Seller Group as a whole and the
Buyer Group as a whole.
(b) The Indemnifying Party shall not be obligated for any indirect,
special or consequential damages or lost profits incurred by the
Indemnified Party.
(c) Neither Buyer and Parent, on the one hand, nor Seller and
Seller's Parent, on the other hand, will be liable in the
aggregate to the other for indemnification pursuant hereto in
excess of the amount of $17,000,000, (the "Maximum Amount"). To
the extent that the payments to the Buyer Group from Seller and
Seller's Parent pursuant to this Section 9, in the aggregate, has
exceeded the Maximum Amount less the principal amount of the
Note, as adjusted, the Seller may offset any such further claims
against the principal amount of the Note.
9.6 Successors.
-----------
The merger, consolidation, liquidation, dissolution or winding up of,
or any similar transaction with respect to, the Indemnifying Party shall not
affect in any manner the obligations of the Indemnifying Party pursuant to this
Section or any other term or provision of this Agreement, and the Indemnifying
Party covenants and agrees to make adequate provision for its liabilities and
obligations hereunder in the event of any such transaction.
9.7 Time Action Must be Brought.
----------------------------
No action may be brought under this Section 9 unless brought three
years from the date of Closing except: (i) actions related to the representation
set forth in Section 3.15 and 3.24 which shall be brought by the expiration of
the applicable statute of limitation plus one week; and (ii) actions relating to
third party claims arising from Excluded Obligations shall be brought within
five years from the Closing Date.
9.8 Reasonable Costs, Etc.
----------------------
The indemnification, which is set forth in this Article "9" of this
Agreement shall be deemed to include not only the specific liabilities or
obligation with respect to which such indemnity is provided, but also all
counsel fees, reasonable costs, expenses and expenses of settlement relating
thereto, whether or not any such liability or obligation shall have been reduced
to judgment.
10. MISCELLANEOUS PROVISIONS.
-------------------------
10.1 Amendment.
----------
This Agreement may be amended, modified or supplemented by the parties
hereto only by a written instrument duly signed by or on behalf of the party to
be charged therewith.
55
10.2 Waiver of Compliance.
---------------------
Any failure of Seller, on the one hand, or Buyer, on the other hand,
to comply with any obligation, covenant, agreement or condition herein may be
expressly waived in writing by an authorized officer of Buyer or Seller,
respectively, but such waiver or failure to insist upon strict compliance with
any such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
10.3 Expenses.
---------
(a) Except as set forth in paragraph 10.3(b), whether or not the
transactions contemplated by this Agreement are consummated, each
of the parties hereto shall pay the fees and expenses of their
respective counsel, accountants and other experts, and shall pay
all other expenses incurred by it incident to the negotiation,
preparation, execution and consummation of this Agreement.
(b) Seller shall bear the cost of fees and expenses charged by
Seller's Auditors in connection with the preparation of and
report described in Section 8.12. In addition, Buyer and Seller
shall bear equally the fees and expenses: (i) Seller's Auditors
up to a maximum of $7,500 in connection with performing the
procedures set forth in Schedule 2.5; and (ii) Buyer's Auditors
up to a maximum of $7,500 in connection with their supervision of
the foregoing.
(c) The provisions of Section 10.3 shall survive any termination of
this Agreement.
10.4 Notices.
--------
All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given (i) four business days subsequent to mailing if mailed by express,
certified or registered mail, with postage prepaid, in the continental United
States; (ii) two business days subsequent to pick up by such courier if sent by
a nationally or internationally recognized overnight courier service that
regularly maintains records of items picked up and delivered; or (iii) when
transmitted if sent by telecopier, provided that a written acknowledgment of
receipt signed by or on behalf of the recipient of the telecopy is transmitted
back to the sender by the recipient, as follows:
If to Seller/or
Seller's Parent: Western Power & Equipment Corp.
0000-X X.X. 000xx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
56
with a copy to: Xxxxxxx, Savage, Kaplowitz, Wolf & Marcus, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
or to such other person or address as Seller shall furnish to Buyer in writing.
If to Buyer or
Buyer's Parent: XXXxxx.Xxx, Inc.
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
or to such other person or address as Buyer shall furnish to Seller in writing.
10.5 Binding Effect; Assignment.
---------------------------
This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective
administrators, legal representatives, successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned or assignable by any of the parties hereto without the prior
written consent of the other party, except (i) by operation of law, (ii) that
Buyer may freely assign this Agreement or all or any rights or obligations it
may have hereunder to a direct or indirect wholly-owned subsidiary of Buyer or
Parent, (iii) that Buyer may assign all of its rights but not its obligations
under this Agreement to any institution providing financing or re-financing for
the transactions contemplated by this Agreement, and (iv) that Seller may assign
all of its rights and its obligations under this Agreement to Seller's Parent.
10.6 Remedies.
---------
Except that the indemnification provision of Section 9 above is the
exclusive remedy for breaches of representations, warranties and covenants as
provided therein, the parties acknowledge and agree that each party hereto may
seek any remedies in equity or law that may be available to it. Nothing herein
shall prevent the Parties from impleading or interpleading the other party at
any time in an action brought by a third party relating to what would otherwise
have been an indemnifiable claim.
57
10.7 Governing Law.
--------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to its principles of conflict
or choice of law.
10.8 Counterparts.
-------------
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
the same instrument.
10.9 Headings.
---------
The headings of the sections of this Agreement are inserted for
convenience only and shall not constitute a part or affect in any way the
meaning or interpretation of this Agreement.
10.10 Entire Agreement.
-----------------
(a) This Agreement sets forth the entire agreement and understanding
of the parties hereto in respect of the subject matter contained
herein, and supersedes all prior agreements, promises, letters of
intent, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any party hereto or by
any Related Person of any party hereto.
(b) All Exhibits attached hereto, the Disclosure Schedule, any
exhibits thereto and all certificates, documents and other
instruments delivered or to be delivered pursuant to the terms
hereof are hereby expressly made a part of this Agreement as
fully as though set forth herein, and all references herein to
the terms "this Agreement," "hereunder," "herein," "hereby" or
"hereto" shall be deemed to refer to this Agreement and to all
such writings.
10.11 Third Parties.
--------------
Except as specifically set forth or referred to herein, nothing in
this Agreement, express or implied, is intended or shall be construed to confer
upon or give to any person (including but not limited to Seller's employees),
firm, partnership or corporation other than the parties hereto and their
successors or permitted assigns, any rights or remedies under or by reason of
this Agreement.
58
10.12 Severability.
-------------
The invalidity of any one or more of the words, phrases, sentences,
clauses, sections or subsections contained in this Agreement shall not affect
the enforceability of the remaining portions of this Agreement or any part
hereof, all of which are inserted conditionally on their being valid in law,
and, in the event that any one or more of the words, phrases, sentences,
clauses, sections or subsections contained in this Agreement shall be declared
invalid by a court of competent jurisdiction, this Agreement shall be construed
as if such invalid word or words, phrase or phrases, sentence or sentences,
clause or clauses, section or sections, or subsection or subsections had not
been inserted.
59
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
WESTERN POWER & EQUIPMENT CORP. (Oregon)
By: /s/ Xxxx XxXxxx
------------------------------------
Name: Xxxx XxXxxx
Title: President and CEO
GCS WESTERN POWER & EQUIPMENT CORP.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Agreed as to Section 3A, 8.1 & 9 only.
WESTERN POWER & EQUIPMENT CORP.
(Delaware)
By: /s/ Xxxx XxXxxx
------------------------------------
Name: Xxxx XxXxxx
Title: President and CEO
Agreed as to Section 4A, 8.16 & 9 only.
XXXXXX.XXX, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
60
