EXHIBIT 10.2
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MEMEBERSHIP INTEREST TRANSFER AGREEMENT
This Agreement for the transfer and assignment of, in the aggregate, a 10%
Class A Membership Interest in Arizona Pacific Materials, LLC (this
"Agreement"), is entered into on April 17, 2007, by and among the transferor,
WESTERN POWER & EQUIPMENT CORP., a Delaware corporation (the "Transferor"),
Arizona Pacific Material, LLC, an Arizona limited liability company (the
"Company") and the transferees signatory hereto (each a "Transferee" and
collectively the "Transferees"), with respect to the following facts:
RECITALS
A. WHEREAS, the Transferor owns 100% of the membership interests in the
Company.
B. WHEREAS, in consideration for the Transferees (or their assignor in
interest) agreeing to waive the existence of certain events of defaults pursuant
to those certain Second Amendment and Waiver Agreements with the Transferor
dated as of March __, 2007 (the "Amendment") relating to the Transferor's Series
A Variable Rate Secured Convertible Debentures issued pursuant to that certain
Securities Purchase Agreement, dated June 8, 2005 by and among the Transferor
and the purchasers signatory thereto (the "Purchase Agreement"), the Transferees
desire to receive and the Transferor desires to grant, in the aggregate, a 10%
Class A Membership Interest in the Company, the only class of membership
interests issued and outstanding.
C. NOW, THEREFORE, for and in consideration of the mutual agreements set
forth herein, and subject to the terms and conditions set forth below, the
parties agree as follows:
AGREEMENT
1. Transfer of Membership Interests: The Transferor hereby transfers,
free and clear of all encumbrances (except for any encumbrances created on
behalf of the Transferees hereunder) to the Transferees, and the Transferees
hereby acquire from the Transferor, in the aggregate, 10% the outstanding Class
A Membership Interests of the Company (the "Membership Interest"). Each
Transferee shall receive a portion of the Membership Interest equal to the
percentage set forth on the signature page of such Transferee attached hereto.
The Transferees shall succeed to 10% of the capital account of the Transferor as
of the date hereof.
2. Consideration for Transfer. The transfer of the Membership Interest
pursuant to this Agreement is being granted hereunder in consideration for the
waiver of certain events of default pursuant to the Amendments.
3. Closing. The closing of this transaction shall take place
contemporaneously with the execution of this Agreement. Within 5 business days
of the date hereof the Company shall deliver such membership certificates, if
any, evidencing the membership interests and any assignments of such interests
as may be required by law to transfer said interests. The Transferee(s) shall
also execute and deliver counterpart signature pages for the Operating Agreement
(as defined below in Section 5(c)).
4. The Transferors Representations and Warranties: The Transferor
represents and warrants that as of this date:
(a) AUTHORIZATION. The Transferor has the power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder, all of which have been duly authorized by all requisite action.
This Agreement has been duly authorized, executed and delivered by it and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(b) NO CONSENTS. No notice to, filing with, or authorization,
registration, consent or approval of any governmental authority or other
individual, partnership, corporation, joint stock company, unincorporated
organization or association, trust or joint venture, or a governmental
agency or political subdivision thereof (each, a "Person") is necessary for
the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby by it.
(c) OWNERSHIP OF THE SECURITIES. The Transferor owns the Membership
Interest beneficially and of record, free and clear of any liens, claims or
encumbrances (except for any encumbrances created on behalf of the
Transferees hereunder) (collectively, "Encumbrances"). The Transferor has
not entered into any agreement, arrangement or other understanding (i)
granting any option, warrant or right of first refusal with respect to the
Membership Interest to any Person, (ii) restricting its right to sell the
Membership Interest to any Person, or (iii) restricting any other of its
rights with respect to the Membership Interest. It has the absolute and
unrestricted right, power and capacity to assign and transfer the
Membership Interest to the Transferees free and clear of any Encumbrances
(except for any encumbrances created on behalf of the Transferees
hereunder). Upon execution of the Amendment and this Agreement, the
Transferees shall acquire good, valid and marketable title to the
Membership Interest, free and clear of any Encumbrances (except for any
encumbrances created on behalf of the Transferees hereunder).
(d) BALANCE SHEET: The Company is the owner or lessee, as applicable,
of the assets listed in the December 31, 2006, Balance Sheet attached
hereto as Exhibit A.
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(e) PENDING SUITS: Except as set forth in Schedule 4(e) attached
hereto, no material suits, actions, or proceedings are pending, or to the
knowledge of the Transferor are threatened against or affecting the Company
or its property.
5. Covenants of the Transferor and the Company.
(a) AMENDMENTS TO ORGANIC DOCUMENTS. The Company shall not, and the
Transferor shall not permit the Company to, directly or indirectly amend
its articles of organization, operating agreement or other charter
documents so as to materially, adversely and disproportionably affect any
rights of any Transferee.
(b) PARTICIPATION IN FUTURE FINANCINGS.
(i) From the date hereof until the date that a Transferee no
longer holds any Membership Interest in the Company, upon any grant of
any additional membership interests in the Company (a "Subsequent
Grant"), each Transferee (or its designated assigns) shall have the
right to participate in up to an amount of the Subsequent Grant equal
to a percentage of the Subsequent Grant equal to the aggregate
Membership Interest then held by the Transferees (10% as of the date
hereof) on the same terms, conditions and price provided for in the
Subsequent Grant.
(ii) At least 10 Trading Days prior to the closing of the
Subsequent Grant, the Company shall deliver to each Transferee a
written notice of its intention to effect a Subsequent Grant (a
"Subsequent Grant Notice"). The Subsequent Grant Notice shall describe
in reasonable detail the proposed terms of such Subsequent Grant, the
amount of proceeds intended to be raised thereunder and the Person or
Persons through or with whom such Subsequent Grant is proposed to be
effected and shall include a term sheet or similar document relating
thereto as an attachment.
(iii) Any Transferee desiring to participate in such Subsequent
Grant must provide written notice to the Company by not later than
5:30 p.m. (New York City time) on the 10th Trading Day after all of
the Transferees have received the Subsequent Grant Notice that the
Transferee is willing to participate in the Subsequent Grant, the
amount of the Transferee's participation, and that the Transferee has
such funds ready, willing, and available for investment on the terms
set forth in the Subsequent Grant Notice. If the Company receives no
notice from a Transferee as of such 10th Trading Day, such Transferee
shall be deemed to have notified the Company that it does not elect to
participate.
(iv) If by 5:30 p.m. (New York City time) on the 10th Trading Day
after all of the Transferees have received the Subsequent Grant
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Notice, notifications by the Transferees of their willingness to
participate in the Subsequent Grant (or to cause their designees to
participate) is, in the aggregate, less than the total amount of the
Subsequent Grant, then the Company may effect the remaining portion of
such Subsequent Grant on the terms and with the Persons set forth in
the Subsequent Grant Notice.
(v) If by 5:30 p.m. (New York City time) on the 10th Trading Day
after all of the Transferees have received the Subsequent Grant
Notice, the Company receives responses to a Subsequent Grant Notice
from Transferees seeking to purchase more than the aggregate amount of
the Subsequent Grant, each such Transferee shall have the right to
purchase its Pro Rata Portion (as defined below) of the Subsequent
Grant. "Pro Rata Portion" means the ratio of (x) the Membership
Interest percentage held by a Transferee participating under this
Section 5(b) and (y) the sum of the aggregate percentage Membership
Interests held by all Transferees participating under this Section
5(b).
(vi) The Company must provide the Transferees with a second
Subsequent Grant Notice, and the Transferees will again have the right
of participation set forth above in this Section 5(b), if the
Subsequent Grant subject to the initial Subsequent Grant Notice is not
consummated for any reason on the terms set forth in such Subsequent
Grant Notice within 60 days after the date of the initial Subsequent
Grant Notice.
(c) OPERATING AGREEMENT. The Amended and Restated Operating Agreement
of the Company, dated June 1, 2000, attached hereto as Exhibit B, is the
operating agreement of the Company in effect as of the date hereof
("Operating Agreement"). Except as expressly provided for under this
Agreement, the terms and conditions of which shall supersede, modify and
amend the terms of that Operating Agreement, the terms and conditions of
Operating Agreement shall remain in effect.
(d) TRANSFERABILITY OF MEMBERSHIP INTEREST. Subject to compliance
with any applicable securities laws the Membership Interest and all rights
thereunder and hereunder are transferable in whole or in part. Upon a
surrender of any certificate(s) (if any) representing the transferred
Membership Interest the Company shall execute and deliver a new certificate
in the name of the assignee or assignees and in the denomination or
denominations as requested by the transferor, and shall issue to transferor
a new certificate evidencing the portion of the Membership Interest not so
assigned and the surrendered certificate shall be cancelled.
Notwithstanding anything in the Operating Agreement to the contrary, the
Transferor shall have no option to purchase the Membership Interest upon a
transfer of all or part of such interest hereunder under Section VIII of
the Operating Agreement.
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(e) CONSENT AS MEMBER. The Transferor hereby consents to the transfer
of the Membership Interest contemplated hereunder and approves the
admittance of the Transferees as full members of the Company.
(f) ADDITIONAL CAPITAL CONTRIBUTIONS. The Transferees shall not be
subject to any demand for additional capital contributions to the Company
pursuant to Section 3.2.2 of the Operating Agreement or any other provision
thereof; provided, however, if a Transferee does not participate in any
such capital call (or participates for less than its share), such
Transferee's Membership Interest shall be diluted in proportion to the size
of the capital call and the fair market value of the Company at the time of
such capital call; provided, further, in the event the Transferee disputes
the fair market value of the Company such Transferee shall have the right
to retain the services of an independent third party appraiser at its
expense and reasonably acceptable to the Company to provide a fair market
valuation of the Company which shall binding on the parties.
(g) TAX LIABILITY DISTRIBUTIONS. Notwithstanding anything in the
Operating Agreement to the contrary, in the event that a Transferee shall
incur any tax liability on account of any allocations or distributions by
the Company, the Company, subject to having the available cash, shall
promptly (and in any event prior to the date such Transferee is required to
pay such tax liability) make a cash distribution to the Transferees in an
amount at equal to such tax liability based on an assumed combined federal
and state tax rate of forty percent (40%).
(h) MANAGEMENT, FIDUCIARY DUTY AND DUTY OF LOYALTY.
(i) NO MANAGEMENT RIGHTS. Notwithstanding anything to the
contrary in the Operating Agreement, management of the Company shall
not be vested in all of the Class A Members of the Company but shall
be vested the holders of a majority of the Class A Members or in a
manager appointed by a majority of the Class A Members of the Company.
(ii) NO FIDUCIARY DUTY. Notwithstanding anything in the Operating
Agreement to the contrary, the Transferees shall have the same status
and duty as a limited partner in a partnership and therefore shall not
be accountable to the Company or the other members of the Company as a
fiduciary.
(iii) NO DUTY OF LOYALTY. Notwithstanding anything to the
contrary in the Operating Agreement, the Transferees shall owe no duty
of loyalty to the Company or the other members of the Company.
6. Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, when delivered by courier, three days after
being deposited in the mail (registered or certified mail, postage prepaid,
return receipt
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requested), or when received by facsimile transmission upon receipt of a
confirmed transmission report, as follows:
If to the Transferor: As set forth in the Purchase Agreement.
If to the Company: Same as the Transferor.
If to the Transferees: as set forth on the signature page of the
Transferees attached hereto.
Any party hereto, by notice given to the other parties hereto in accordance
with this Section 6 may change the address or facsimile transmission number to
which such notice or other communications are to be sent to such party.
7. Expenses. Each of the parties hereto shall pay its own expenses
incident to this Agreement and the transactions contemplated herein.
8. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be determined in accordance with the provisions of the
Purchase Agreement.
9. Assignment; Successors and Assigns; No Third Party Rights. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors, permitted assigns and legal
representatives. This Agreement shall be for the sole benefit of the parties to
this Agreement and their respective heirs, successors, permitted assigns and
legal representatives and is not intended, nor shall be construed, to give any
Person, other than the parties hereto and their respective heirs, successors,
assigns and legal representatives, any legal or equitable right, remedy or claim
hereunder.
10. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original agreement, but all of which together shall
constitute one and the same instrument.
11. Amendments and Waivers. The terms of this Agreement, along with the
Amendment Agreement and the Transaction Documents referenced in the Amendment
Agreement shall not be otherwise changed, altered, waived or amended without the
prior written consent of a majority in interest of the Transferees.
12. Titles and Headings. The titles and headings in this Agreement are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
13. Entire Agreement. This Agreement constitute the entire agreement among
the parties with respect to the matters covered hereby and thereby and supersede
all previous written, oral or implied understandings among them with respect to
such matters.
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14. Severability. The invalidity of any portion hereof shall not affect
the validity, force or effect of the remaining portions hereof. If it is ever
held that any restriction hereunder is too broad to permit enforcement of such
restriction to its fullest extent, such restriction shall be enforced to the
maximum extent permitted by law.
15. Interpretation. Unless otherwise indicated to the contrary herein by
the context or use thereof: (i) the words, "herein," "hereto," "hereof" and
words of similar import refer to this Agreement as a whole and not to any
particular Section or paragraph hereof; (ii) words importing the masculine
gender shall also include the feminine and neutral genders, and vice versa; and
(iii) words importing the singular shall also include the plural, and vice
versa.
16. Consent to Spin-off. Each Transferee, severally and not jointly with
the other Transferees, hereby does consent to (a) the conversion of the Company
into a corporation in connection with any spin-off of the Company's securities
to the public stockholders of the Transferor (the "Spin-Off"), (b) the Spin-Off
and (c) the receipt and acceptance of the Company's securities distributed in
connection with Spin-Off on the same terms and subject to the same conditions
applicable to the Transferor's public stockholders. Notwithstanding anything
herein to the contrary, the consent above to not in any way waive the fiduciary
obligations of the Company and the Transferors to the Transferees in undertaking
such actions.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement:
TRANSFEROR:
WESTERN POWER & EQUIPMENT CORP.
By: ______________________________
Name:
Title:
COMPANY:
ARIZONA PACIFIC MATERIALS, LLC
By: ______________________________
Name:
Title:
[SIGNATURE PAGE OF TRANSFEREES FOLLOW]
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[SIGNATURE PAGE OF TRANSFEREES]
APM ACQUISITION CORPORATION
By: ______________________________
Name: Xxxxxxx Xxxxxxxx
Title: President
% Membership Interest (as a percentage of whole Company): ____%
Address for Notice:
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c/x Xxxxxxxx Capital, LLC
150 East 58t Street, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxxx
e-mail: xx@xxxxxxxxxxxxxxx.xxx
Tel: (000) 000 0000
PORTSIDE WPEC CORPORATION
By: ______________________________
Name:
Title:
% Membership Interest (as a percentage of whole Company): ____%
Address for Notice:
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c/o Ramius Capital Group, L.L.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx / Xxxx Xxxxxxx
e-mail: xxxxxx@xxxxxx.xxx / xxxxxxxx@xxxxxx.xxx
Tel: (000) 000-0000 / (000) 000-0000
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[SIGNATURE PAGE OF TRANSFEREES]
CORAL LTD.
By: ______________________________
Name: Xxxx X. Chill
Title: Authorized Signatory
% Membership Interest (as a percentage of whole Company): ____%
Address for Notice:
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c/o Highbridge Capital Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx X Xxxxxx/Xxxx X. Chill
e-mail: xxx.xxxxxx@xxxxx.xxx/xxxx.xxxxx@xxxxx.xxx
Tel: (000) 000-0000
Fax: (000) 000-0000
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Schedule 4(e)
Pending Litigation
In April, 2006, Arizona Pacific Materials, L.L.C. ("APM") commenced an action
against Copper Basin Railway, Inc. and others in the Superior Court, Pinal
County, State of Arizona. The First Amended Complaint seeks a declaratory
judgment and injunctive relief. The litigation concerns a dispute over
maintaining access to APM's property via a particular road.
There is a railroad line that runs down the border of APM's property. One of the
roads used to access APM's property runs along the side of the railroad line.
The defendant railroad claims that the road infringes upon its railroad
easement. APM has commenced this action for a declaration that it has an
easement relative to this roadway and to prevent the railroad from taking any
action to disrupt access to APM's property. The railroad has counterclaimed for
a declaration of the railroad's rights, ejectment of APM from use of this road,
and rent for alleged wrongful use of this road by APM.
The case is pending without a trial date. Cross motions for summary judgment
have both been denied. The railroad has filed a motion for reconsideration of
the denial of its motion for summary judgment. A finding for the railroad would
make accessing APM's property more difficult but probably not overly
problematic.
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