Exhibit A
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MERGER AGREEMENT
BY AND AMONG
WESTERN POWER & EQUIPMENT CORP., WESTERN POWER ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF WESTERN POWER AND
SUPPLYPOINT, INC.
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MERGER AGREEMENT
Agreement dated as of the 1st day of May, 2001 by and among, Western Power
& Equipment Corp., a Delaware corporation, with an address at 0000 X.X. 00xx
Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX, 00000 ("Western"), Western Power Acquisition
Corp., a Delaware corporation with an address at 0000 X.X. 00xx Xxxxxx, Xxxxx
000, Xxxxxxxxx, XX, 00000 ("Acquisition Corp."), and SupplyPoint, Inc., a
Delaware corporation, with an address at 0000 Xxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxxxx, XX 00000 ("SPI").
WITNESSETH
WHEREAS, Acquisition Corp. is a wholly owned subsidiary of Western.
WHEREAS, the Board of Directors of Western, Acquisition Corp. and SPI deem
it advisable and in the best interests of each corporation and their respective
stockholders that Acquisition Corp. and SPI combine in order to advance the
long-term business interests of Western, Acquisition Corp., and SPI;
WHEREAS, the Board of Directors of Western shall cause Acquisition Corp.
to carry on SupplyPoint's business as it was carried on or prior to the date of
this Agreement and use its best efforts to preserve SupplyPoint's organization,
retain its employees and maintain its business relationships;
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WHEREAS, the stockholders of SPI (hereinafter sometimes referred to,
individually, as a "Stockholder" and collectively as the "Stockholders"), who
are listed on Xxxxxxx "X" ("Xxxx 0") which is annexed hereto and made a part
hereof (the "Stockholders Schedule") are each the owner of the number of shares
of common stock, par value $ .01, of SPI which is set forth on Xxxxxxx "X"
("Xxxx 0") (the total of such shares of SupplyPoint's common stock is
hereinafter referred to as the "SPI Shares");
WHEREAS, the SPI Shares represent all of the issued and outstanding shares
of SPI's Common Stock on the date of this Agreement;
WHEREAS, for Federal income tax purposes, it is intended that the
transactions which are contemplated in this Agreement qualify as a "plan of
reorganization" within the meaning of Section 354(a)(1) of the Internal Revenue
Code of 1986, as amended (the "Code"); and a "reorganization" within the meaning
of Section 368 (a)(1)(A) and Section 368 (a)(2)(D) of the Code;
WHEREAS, at the Effective Time (hereinafter defined in Paragraph "(A)" of
Article "2" of this Agreement), SPI shall be merged with and into Acquisition
Corp.;
WHEREAS, the Boards of Directors of Western, Acquisition Corp and SPI have
approved this Agreement and those Ancillary Documents (hereinafter defined in
Paragraph "(C)" of Article "9" of this Agreement), to which it is a party; and
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NOW, THEREFORE, in consideration of the mutual covenants of the parties
hereinafter set forth, and for good and valuable consideration, receipt of which
is hereby acknowledged,
IT IS AGREED:
1. Recitals. The parties hereby adopt as part of this Agreement each of
the recitals which is contained in the WHEREAS clauses, and agree that such
recitals shall be binding upon the parties hereto by way of contract and not
merely by way of recital or inducement; and such clauses are hereby confirmed
and ratified as being true and accurate by each party as to itself.
2. Merger. (A) Subject to, and consistent with, the provisions of this
Agreement, and in accordance with the relevant provisions of the Delaware
General Corporation Law (the "DGCL"), SPI will merge with and into Acquisition
Corp. (the "Merger"), the separate existence of SPI shall cease, and Acquisition
Corp. shall be the surviving party in the Merger (the "Surviving Corporation")
at the Effective Time. The articles of merger with respect to the Merger (the
"Certificate of Merger") shall be in the form of Exhibit "B" (Article "2(A)")
which is annexed hereto and made a part hereof, and shall be duly executed and
acknowledged and promptly delivered to the Secretary of State of the State of
Delaware for filing, as provided in the DGCL as early as practicable on the
Effective Date (hereinafter defined in Paragraph "(B)" of this Article "2" of
this Agreement). The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of
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State of the State of Delaware (the "Effective Time"). On the Effective Date,
the effect of the Merger shall be as provided in the applicable provisions of
the DGCL.
Without limiting the generality of the foregoing, and subject
thereto, on the Effective Date, all the property, rights, privileges, powers and
franchises of SPI and Acquisition Corp. shall vest in the Surviving Corporation,
and all debts, liabilities and duties of SPI and Acquisition Corp. shall become
the debts, liabilities and duties of the Surviving Corporation. The Merger will
be effected in a single transaction.
(B) The Effective Date shall be the date upon which the Escrow Agent
(hereinafter defined in Paragraph "A" of Article "21" of this Agreement)
notifies the parties that it is releasing the Escrow Items (hereinafter defined
in Paragraph "C" of Article "21" of this Agreement), pursuant to the Escrow
Agreement (hereinafter defined in Paragraph "A" of Article "21" of this
Agreement).
(C) On the Effective Date, the certificate of incorporation of
Acquisition Corp., as in effect immediately prior to the Effective Date, shall
be the certificate of incorporation of the Surviving Corporation and thereafter
shall continue to be its certificate of incorporation until amended as provided
therein and pursuant to DGCL. The bylaws of Acquisition Corp., as in effect
immediately prior to the Effective Date, shall be the bylaws of the Surviving
Corporation and thereafter shall continue to be its bylaws until amended as
provided therein and pursuant to the DGCL.
(D) Two directors of Western and the directors of SPI immediately
prior to the Effective Date shall be the directors of the Surviving Corporation,
with each to hold office in
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accordance with the certificate of incorporation and bylaws of the Surviving
Corporation, the officers of SPI immediately prior to the Effective Date shall
be the officers of the Surviving Corporation, each to hold office in accordance
with the bylaws of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified; provided,
however, that the two Directors of Western shall only hold office until the
Asset Purchase Closing (hereinafter defined in Article "11" of this Agreement).
3. Exchange of Capital Stock.
On the Effective Date, subject and pursuant to the terms and conditions of
this Agreement, all of the shares of SPI Common Stock issued and outstanding as
of the Closing shall by virtue of the Merger and without any action on the part
of the holders thereof, automatically be converted into and shall be deemed to
represent, with respect to the Stockholders of SPI, the right to receive shares
of Western Stock as follows:
(i) 650,000 shares of Western's common stock, par value $.01 (each a
"Common Share" and collectively, the "Western Common Stock") as follows:
(a) 325,000 shares to Ocean Castle Partners, LLC;
(b) 162,500 shares to Old Oak Fund, Inc.; and
(c) 162,500 shares to Allied International Fund Inc.;
(ii) 2,235,000 shares of Western's Series B Preferred Stock, par
value $.01 per share (each a "Preferred Share" and collectively, the "Series B
Preferred Stock"; the "Western Power
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Common Stock" and the "Series B Preferred Stock", are collectively referred to
as the "Western Stock"), shall be issued as set forth on Exhibit "C" (Article
"3(ii)") which is annexed hereto and made a part hereof (the "Preferred
Stockholders Schedule"). The Series B Preferred Stock shall have the rights and
privileges set forth in the "Certificate of Designation, Preferences and Other
Rights of Series A and Series B Preferred Stock of Western Power & Equipment
Corp." ("Certificate of Designation"), which shall be in the form of Exhibit "D"
(Article "3(ii)") which is annexed hereto and made a part hereof.
At the Closing, Western shall deliver the Western Stock to the
Escrow Agent pursuant to Article "21" of this Agreement.
4. Registration Rights.
A. Western shall file a Registration Statement (the "Registration
Statement") promptly after the Effective Date, but no later than 45 days after
the Effective Date (said 45 days is contingent upon SPI promptly providing any
information which is required from SPI to be included in the Registration
Statement) on such form of registration statement as shall be appropriate,
registering for resale by the Stockholders all of the Western Power Common Stock
issued at the Closing and any securities to be issued by Western to the
Stockholders as a result of a capital change, as set forth in Article "6" of the
Certificate of Designation. Subject to the approval of the stockholders of
Western of the conversion of the Series B Preferred Stock into Common Stock (the
"Preferred Stock Conversion"), the Registration Statement shall also include all
of the shares of the
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Western Power Common Stock issuable upon the Preferred Stock Conversion.
B. All expenses in connection with preparing and filing the
Registration Statement pursuant to Paragraph "A" of this Article "4" of this
Agreement shall be borne in full by Western; provided, however, that if Western
does not raise $200,000 pursuant to the Private Placement set forth in Article
"6" of this Agreement, Western shall not bear the foregoing expenses; provided
further, however, that the Stockholders shall pay any and all fees and expenses
of any legal counsel selected by the Stockholders to represent them with respect
to the foregoing.
C. The Registration Statement shall comply with the applicable
Securities and Exchange Commission (the "SEC") rules and regulations.
D. Western shall use its best efforts to cause such Registration
Statement to be promptly declared effective by the SEC and promptly prepare and
file with the SEC such amendments and supplements to the Registration Statement
as may be necessary pursuant to the Securities Act of 1933 (the "'33 Act").
Western shall use its best efforts to keep such Registration Statement effective
at all times until the earlier of (i) the date all registrable securities have
been sold or (ii) the date on which all registrable securities may be
immediately sold to the public without registration or restriction (including
volume) in the opinion of counsel reasonably acceptable to the Stockholders.
Certificates for the Common Stock issued upon conversion of the Series B
Preferred Stock shall be free of restrictive legends.
E. Western shall furnish copies of the Registration Statement and
prospectus to
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each Stockholder as reasonably requested in order to facilitate the disposition
of the shares owned by such Stockholder.
F. Western shall use its best efforts to (i) register or qualify the
registrable shares under the applicable blue sky laws and (ii) secure the
quotation of the registrable securities on the NASDAQ SmallCap Market (or other
relevant market).
G. The foregoing registration rights shall be set forth in a
Registration Rights Agreement in the form of Exhibit "E" (Article "4(G)") which
is attached hereto and made a part hereof, to be executed by and between Western
and each of the Stockholders, and delivered to the Escrow Agent, at the Closing.
5. Western Special Meeting of Stockholders. A Special Meeting of the
Western stockholders shall be held (the "Special Meeting"). The proxy statement
for the Special Meeting (the "Proxy Statement") shall include the recommendation
of the Board of Directors of Western Power in favor of the following:
A. the increase of the authorized Western Common Stock to
150,000,000;
B. the conversion of 2,235,000 shares of Series B Preferred Stock
into 22,350,000 shares of Western Common Stock;
C. the change of Western's name to "SupplyPoint, Inc." or a
derivative thereof;
D. the authorization of a new Employee Stock Option Plan with
3,000,000 shares authorized, which shall be in the form of Exhibit "F" (Article
"5(D)") which is attached hereto and
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made a part hereof;
E. the election to the Board of Directors of either Xxxxx Xxxxx or
an individual to be designated by the Stockholders of SPI;
F. the approval of the Asset Purchase Agreement (hereinafter defined
in Article "11" of this Agreement).
G. the approval of the issuance of 600,000 shares of Western Common
Stock to the Xxxxxx Xxxxx Family Stock Trust.
6. Private Placement. Western intends, but shall not be obligated, to
raise up to five million ($5,000,000) dollars through a private placement (the
"Private Placement") of convertible debentures which shall be in the form of
Exhibit "G" (Article "6") which is annexed hereto and made a part hereof.
Subject to the approval of the stockholders of Western of the conversion of the
Series B Preferred Stock, Western shall include in the Registration Statement
all of the shares of Common Stock which shall be issuable upon conversion of the
Western Series B Preferred Stock received upon conversion of the convertible
debentures. The net proceeds of this private placement shall be allocated as
follows: (i) the first $200,000 to Western's expenses and other operations and
(ii) the balance shall be loaned to SPI to pay off the loans referred to in
Exhibit "Q" (Article "7(K)") and for working capital purposes, and shall be
evidenced by a promissory note which shall be in the form of Exhibit "H"
(Article "6"), which is attached hereto and made a part hereof, which shall be
secured by a security agreement, which shall be in the form of Exhibit "I"
(Article "6"), which is attached hereto
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and made a part hereof.
7. SPI's Representations, Warranties and Covenants.
SPI represents, warrants and covenants to Western and Acquisition
Corp. as follows:
A. Corporate Status.
(i) SPI is a corporation duly organized, validly existing and
in good standing pursuant to the laws of the State of Delaware, with all
requisite power and authority to carry on its business as presently conducted in
all jurisdictions where presently conducted, to enter into this Agreement and to
consummate the transactions set forth in this Agreement;
(ii) SPI does not have an equity interest, as a shareholder,
proprietor, partner, beneficiary, joint venturer or otherwise, in any
corporation, firm, partnership or joint venture;
(iii) Copies of (a) the Articles of Incorporation of SPI, and
all amendments thereto to date, certified by the Secretary of State of the State
of Delaware, (b) the By-Laws of SPI, as amended to date, certified by the
Secretary of SPI and (c) a good standing certificate for SPI issued by the
Secretary of State of the State of Delaware within a date not more than thirty
(30) days prior to the date of this Agreement, are annexed hereto and made a
part hereof as Exhibits "J" (Article "7 (A)(iii)"), "K" (Article "7 (A)(iii)")
and "L", (Article "7 (A)(iii)") respectively, and are
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complete and correct as of the date of this Agreement; and
(iv) At the Closing, SPI shall provide a good standing certificate
for SPI issued by the Secretary of State of the State of Delaware complete and
correct as of five (5) business days prior to the Closing Date.
(v) On the Effective Date, SPI shall provide a good standing
certificate for SPI issued by the Secretary of State of the State of Delaware
complete and correct as of five (5) business days prior to the date of the
Effective Date.
B. Capitalization. SPI's authorized capital stock consists of
45,000,000 shares of SPI Common Stock, $.01 par value, of which 23,000,000
shares are issued and outstanding or reserved for issuance, all of which are, or
will be prior to the Closing validly issued, fully paid and nonassessable. SPI's
issued and outstanding shares are the only shares of stock authorized to be
issued by SPI and, except as set forth on Exhibit "M" (Article "7(B)"), there
are no subscriptions, options, warrants, rights or other agreements outstanding
to acquire shares of stock of SPI or any other equity security or security
convertible into an equity security. There are no agreements or commitments to
increase, decrease or otherwise alter the authorized capital stock of SPI.
C. Stockholder Approval. The holders of 93.8% of the issued and
outstanding
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shares of SPI have consented to SPI entering into this Agreement and the
transactions set forth in this Agreement. A certified consent of such
Stockholders is annexed hereto and made a part hereof as Exhibit "N" (Article
"7(C)").
D. Authority of SPI. SPI has the full corporate power and authority
to execute, deliver, and perform this Agreement and all instruments and
documents which are required to be executed and delivered by SPI pursuant to
this Agreement (the "SPI Ancillary Documents") and has taken all corporate
action required by law and its organizational documents to authorize the
execution and delivery of this Agreement and the SPI Ancillary Documents and the
consummation of the transactions set forth in this Agreement and the SPI
Ancillary Documents. This Agreement and the SPI Ancillary Documents and the
consummation by SPI of the transactions set forth in this Agreement have been
duly and validly authorized, executed, and delivered by SPI, and this Agreement
and the SPI Ancillary Documents are valid and binding upon SPI and enforceable
against SPI in accordance with their terms (except as the enforceability thereof
may be limited by bankruptcy, bank moratorium or similar laws affecting
creditors' rights generally and laws restricting the availability of equitable
remedies and may be subject to general principles of equity whether or not such
enforceability is considered in a proceeding at law or in equity). A certified
resolution of the Board of Directors of SPI is annexed hereto and made a part
hereof as Exhibit "O" (Article "7(D)").
E. Ownership. The Stockholders are the record, beneficial and
equitable owners
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of the SPI Shares, free and clear of all liens, claims or encumbrances. Each
Stockholder has full right and authority to exchange the SPI Shares for the
Western Power Common Stock and the Series B Preferred Stock.
F. Compliance with the Law and Other Instruments. Except as
otherwise provided in this Agreement and in the Exhibits annexed hereto, the
business and operations of SPI have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of all
authorities which affect SPI or its properties, assets, businesses or prospects.
G. Absence of Conflicts. The execution and delivery of this
Agreement and the Ancillary Documents by SPI, the transfer of the SPI shares,
and the consummation by SPI of the transactions set forth in this Agreement: (i)
do not and shall not conflict with or result in a breach of any provision of
SPI's articles of incorporation or bylaws, (ii) do not and shall not result in
any breach of, or constitute a default or cause an acceleration under any
arrangement, agreement or other instrument to which SPI is a party to or by
which any of its assets are bound, (iii) do not and shall not cause SPI to
violate or contravene any provision of law or any governmental rule or
regulation, and (iv) will not and shall not result in the imposition of any
lien, or encumbrance upon, any property of SPI. SPI has performed in all
material respects all of its obligations which are, as of the date of this
Agreement, required to be performed, pursuant to the terms of any such
agreement,
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contract or commitment.
H. Section 203 of the DGCL Not Applicable. The Board of Directors of
SPI has taken all actions which are necessary pursuant to the DGCL, including
approving the transactions which are contemplated by this Agreement and each of
the Ancillary Documents to which it is a party, to ensure that Section 203 of
the DGCL applicable to a "business combination" (as defined in Section 203 of
the DGCL) does not, and will not, apply to the transactions contemplated
hereunder and thereunder. SPI has no prior knowledge that any other "fair
price," "moratorium," "control share acquisition" or other similar anti-takeover
statute or regulation is applicable to: (i) SPI (ii) the Merger (iii) this
Agreement (iv) the other transactions contemplated by this Agreement or (v) the
other Ancillary Documents to which it is a party.
I. Environmental Compliance. (i) SPI is in compliance with all
applicable environmental laws (the "Environmental Laws"). SPI is presently
authorized, if required, to generate, transport through third parties, store,
use, treat, dispose of, release, and conduct other handling of, as required,
those hazardous substances used in SPI's business, which consist of, hazardous
waste, hazardous material, hazardous constituents, toxic substances, pollutants,
contaminants, asbestos, radon, polychlorinated biphenyls, petroleum product or
waste (including crude oil or any fraction thereof), natural gas, liquefied gas,
synthetic gas and other material defined, regulated, controlled or subject to
any remediation requirement under any Environmental Law (collectively the
"Hazardous Materials").
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(ii) SPI possesses all licenses, permits, registrations, and
government authorizations necessary under the Environmental Laws to operate
SPI's business and is in compliance with such licenses or permits.
(iii) SPI has not received any written notice from any
governmental agency or entity or any other person and, to SPI's knowledge there
is no pending or threatened claim, litigation or any administrative agency
proceeding which: (a) alleges a violation of any Environmental Law(s) by SPI,
(b) alleges that SPI is a liable party or potentially responsible party under
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. ss. 9601, et seq., or any state law, (c) would result in the attachment
of an environmental lien on any of SPI's real property ("Real Property"), or (d)
alleges that SPI is liable for any contamination of the environment,
contamination of Real Property, damage to natural resources, property damage, or
personal injury based on its activities involving Hazardous Materials, whether
arising under the Environmental Laws, common law principals or other legal
standards.
(iv) SPI has no Environmental Liability for releases or
disposal of Hazardous Material at the Real Property or at any property to which
the SPI transported or arranged for the transportation of Hazardous Materials.
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J. OSHA Compliance. (i) SPI is in compliance with all applicable
federal, state and local laws, rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder and other
governmental requirements relating to occupational health and safety, including
but not limited to the Occupational Safety and Health Act of 1970, as amended,
and the rules and regulations promulgated thereunder (the "OSHA Laws").
(ii) SPI possesses all license, permits, registrations, and
government authorizations necessary to operate in compliance with all applicable
OSHA Laws and is in compliance with such licenses and permits.
(iii) To SPI's knowledge, there is no pending or threatened
notice, claim, litigation or any administrative agency proceeding that alleges a
violation of any OSHA Law(s) by SPI or, with respect to the SPI Shares or SPI's
business.
K. Audited Financial Statements. Annexed hereto and made a part
hereof as Exhibit "P" (Article "7(K)") are true copies of SPI's audited
statements of profit and loss for the fiscal years ended December 31, 1999 and
2000, and balance sheets as of December 31, 1999 and 2000 (collectively, the
"Audited Financial Statements"; the audited statement of profit and loss for the
fiscal year ended December 31, 2000 and the balance sheet as of December 31,
2000 are
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hereinafter referred to as the "2000 Financial Statements"), which have been
prepared using generally accepted accounting principles ("GAAP") applied on a
consistent basis. SPI shall provide on the Closing Date and the Effective Date a
certificate executed by the Board of Directors, to the effect that the Audited
Financial Statements fairly present the financial condition and results of
operations for SPI. Except as indicated in the 2000 Financial Statements, or in
any Exhibit to this Agreement, SPI does not have any outstanding indebtedness or
other liabilities or obligations of any nature (whether absolute, accrued,
contingent or otherwise, and whether due or to become due). Since December 31,
2000 (the "Financial Statement Date"), there has not been any material adverse
change in SPI 's financial condition, assets, liabilities or business, or any
damage, destruction or loss, whether or not covered by insurance, materially
affecting SPI's properties, assets or business, and except as listed on Exhibit
"Q" (Article "7(K)"), which is annexed hereto and made a part hereof to this
Agreement, SPI has not incurred any indebtedness, liability or other obligation
of any nature whatsoever and SPI has not made any change in its accounting
methods or practices.
L. Financial Statements. The Audited Financial Statements are
suitable or readily adaptable for incorporation in the registration statements,
prospectuses and annual reports to be filed by Western with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act of 1933, as
amended (the "'33 Act"), and the Securities Exchange Act of 1934, as amended
(the "'34 Act").
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M. Books and Records. The books of account and other financial
records of SPI since September 1, 1999, all of which have been or will be made
available to Western, are complete and correct and reflect actual, bona fide
transactions and have been maintained in accordance with sound business
practices and the standards of Section 13(b)(2) of the '34 Act.
N. Minute Book. The minute book of SPI since September 1, 1999, have
been or will be made available to Western and (i) contains accurate and complete
records of all Board of Director meetings held since September 1, 1999, and (ii)
reflect all corporate action taken as a result of such board meetings since
September 1, 1999.
O. Tax Returns and Audits. SPI has timely filed all required
federal, state, city and local tax returns for income, franchise, social
security, withholding, sales, excise, unemployment insurance, real estate and
other taxes, and has paid or made adequate provision for the payment of all such
taxes shown to be due on said returns. SPI has timely filed the required tax
returns for all years through the fiscal year ended December 31, 2000. The
amounts reserved by SPI for taxes on the Financial Statements are sufficient for
the payment of all accrued and unpaid federal, state, city and local taxes of
SPI for the periods reported. Except as shown on the Financial Statements, SPI
has not been advised or notified that it is subject to any other taxes, tax
deficiencies, assessments or penalties. SPI's federal income tax returns have
been audited by the Internal Revenue Service for the
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years indicated on Exhibit "R" (Article "7(O)"), which is annexed hereto and
made a part hereof. SPI's state income and/or franchise tax returns have been
audited by the state(s) and for the years indicated on Exhibit "R" (Article
"7(O)"). No Notice of Audit or Notice of Intent to Audit has been received from
any tax authority for any other period. All tax returns filed by SPI are true,
correct and complete in all material respects.
P. Licenses and Permits. SPI has the operating licenses and permits
described on Exhibit "S" (Article "7(P)"), which is annexed hereto and made a
part hereof, which constitute all of the licenses and permits which SPI is
required to have to carry on its business as presently, and anticipated to be,
conducted. All such licenses and permits are in full force and effect in
accordance with their terms. There exists no event, occurrence, condition or act
which, with the giving of notice, the lapse of time or the happening of any
further condition would become a default under any of the licenses or permits.
None of the licenses or permits shall be canceled or revoked, nor become void,
as a result of the transactions provided for by this Agreement.
Q. Leases. Annexed hereto and made a part hereof as Exhibit "T"
(Article "7(Q)") are true and complete copies of all leases of real and personal
property to which SPI is a party. All of said leases are in all respects in full
force and effect in accordance with their terms. There exists no event,
occurrence, condition or act which, with the giving of notice, the lapse of
time, or the happening of any further event, occurrence, condition or act, would
become a default
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under any of the leases. Neither SPI nor any other party to any sublease has
violated, or is in default pursuant to any terms of any sublease and both SPI
and any other party to any sublease is in compliance with all obligations to be
performed pursuant to each lease. SPI has obtained a certificate of occupancy,
for each location owned or leased by it. SPI's use of leasehold properties does
not violate any certificates of occupancy, or violate any zoning laws or
regulations in any material respect. SPI has not received any complaint that the
use of any leased properties constitutes a noxious use.
R. Title to Property. Annexed hereto and made a part hereof as
Exhibit "U" (Article "7(R)") is a schedule, true and complete in all respects,
of all properties and assets, including, but not limited to, furniture, fixtures
and equipment, (except leases and real property) which are owned by SPI (the
"Properties and Assets"), none of which are subject to mortgage, pledge, lien,
conditional sale or security agreement, encumbrance or charge, other than as
reflected on Exhibit "Q" (Article "7(K)"). SPI is not in default under any
conditional sales agreement .
All of SPI's properties and equipment are in good working order and
operating condition and repair and shall be in good working order and operating
condition and repair on the Closing Date and the Effective Date. SPI covenants
to provide Western and Acquisition Corp. with all warranties which SPI has
received with respect to the equipment installed or used at its premises.
S. Real Property. Annexed hereto and made a part hereof as Exhibit
"V" (Article
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"7(S)") is a true and complete schedule of all real property owned by SPI. SPI
owns good, defensible and marketable title to, and has the right to assign and
transfer, all of the real property on Exhibit "W" (Article "7(S)"), free and
clear of all liens, mortgages, pledges, security interests, restrictions, prior
assignments, encumbrances, leases and claims of any kind or nature whatsoever
other than as reflected on Exhibit "Q" (Article "7(K)"). True copies of all
deeds, title reports and policies of title insurance received and obtained by
SPI at the time of acquisition of the real property or obtained thereafter,
together with true copies of all documents evidencing liens and encumbrances on
the real estate by deeds of trust or otherwise are annexed, as part of Exhibit
"V" (Article "7(S)"). All of SPI's real property is in conformity in all
material respects with all applicable ordinances and regulations, and
environmental, building, zoning and other laws.
T. Insurance. Annexed hereto and made a part hereof as Exhibit "W"
(Article "7(T)") is a true and complete schedule of all outstanding insurance
policies with respect to SPI `s properties and/or business, indicating the names
of the carriers of all such insurance policies, the names of the brokers through
whom such policies were placed, the extent of coverage, the policy termination
dates, the current annual premiums and the premium payment dates. All of such
insurance is in full force and effect with all premiums thereon duly paid. All
insurance policies maintained by SPI are with reputable insurance carriers,
provide full and adequate coverage for all normal risks incident to the business
of SPI and its respective properties and assets, are in character and amount at
least equivalent to that carried by persons engaged in similar businesses and
subject to
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the same or similar perils or hazards and are in full force and effect.
U. Contracts. Annexed hereto and made a part hereof as Exhibit "X"
(Article "7(U)") is a true and complete schedule of all of SPI's material
contracts (other than the leases and insurance contracts described in Exhibits
"T" (Article "7(Q)") and "W" (Article "7(T)"), respectively) including, but not
limited to, license agreements. All of the contracts so listed have been entered
into in the ordinary course of business and neither SPI nor any other party to
any such contract is in default under any such contract.
V. Guarantor of Payment. SPI is not a guarantor of payment or
collection of any obligation.
W. Employees, Compensation and Employee Benefit Plans. Annexed
hereto and made a part hereof as Exhibit "Y" (Article "7(W)") is a true and
complete schedule, as of the date of this Agreement, showing the names of all
persons employed by SPI together with a statement of the amount paid or payable
to each such person for services rendered or to be rendered, including all
accrued and unpaid benefits and the basis therefor, for such person.
Except as set forth in Exhibit "Y", (Article "7(W)") SPI is not a
party to any employment contracts, collective bargaining agreements with
employees, consulting agreements, employees' pension, bonus, retirement, profit
sharing, hospitalization or medical plans, employees'
22
stock purchase or stock option plans, or other employee benefit plans.
Except as set forth in Exhibit "Y" (Article "7(W)"), SPI has
complied with all applicable federal and state laws, including, but not limited
to, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
relating to the employment of labor, including provisions relating to wages,
hours, collective bargaining, and payment of social security taxes, and is not
liable for any arrears of wages, or any taxes or penalties, or for failure to
comply with any of the foregoing.
X. Litigation. Except as set forth on Exhibit "Z" (Article "7(X)")
which is annexed hereto and made a part hereof, there are no legal,
administrative, arbitration, or other proceeding or governmental investigations
adversely affecting SPI or its properties, assets or businesses, or with respect
to any matter arising out of the conduct of the SPI's business pending or to its
knowledge threatened, by or against, any officer or director of SPI in
connection with its affairs, whether or not covered by insurance. Except as set
forth on Exhibit "Z" (Article "7(X)"), neither SPI nor its officers or directors
are subject to any order, writ, injunction, or decree of any Court, department,
agency, or instrumentality, affecting SPI. Except as set forth on Exhibit "Z"
(Article "7(X)"), SPI is not presently engaged in any legal action.
Y. Accounts Receivable. Annexed hereto and made a part hereof as
Exhibit "AA" (Article "7(Y)") is a true and complete schedule of all trade
accounts and notes receivable of SPI as of February 28, 2001, including an aging
of such accounts receivable.
23
Z. Accounts Payable. Annexed hereto and made a part hereof as
Exhibit "BB" (Article "7(Z)") is a true and complete schedule of all accounts
payable of SPI, as of February 28, 2001, including an aging of such accounts
payable.
AA. Financial Accounts. Annexed hereto and made a part hereof as
Exhibit "CC" (Article "7(AA)") is a true and complete schedule of all of SPI's
financial accounts including but not limited to, checking, savings, brokerage,
rental, lease proceeds, and security deposits, including the name and address of
the institution where each account is maintained and the account number.
BB. Patents, Trademarks and Trade Names. (i) Annexed hereto and made
a part hereof as Exhibit "DD" (Article "7(BB)"), is a detailed schedule and
description of all intellectual property, patents, patent applications,
trademarks, trade names, copyrights or licenses presently owned or held by SPI
or with respect to which SPI holds any license which is required or utilized, or
contemplated to be required or utilized, in SPI's business operations
(collectively, the "Intellectual Property"). All rights of SPI to the
Intellectual Property will continue to be legal, valid, binding, enforceable,
and in full force and effect after the consummation of the transactions
contemplated by this Agreement. No activity, or contemplated activity, by SPI,
including but not limited to, the manufacture or sale of products by SPI and
none of the processes or designations used, or contemplated to be used, in its
business, infringes upon any valid patent, trademark or copyright of
24
any other person or entity.
(ii) Except as set forth on Exhibit "DD" (Article "7(BB)"), SPI is
the sole and exclusive owner of all right, title and interest in the
Intellectual Property and all proprietary rights therein, free and clear of any
security interest, license or restriction, and except as set forth on Exhibit
"DD" (Article "7(BB)"), SPI has not granted to any other person, firm, or
corporation, any right, license, shop-right, or privilege with respect to the
Intellectual Property. SPI knows of no statutory bars or prior art which would
adversely affect the Intellectual Property.
(iii) SPI has the sole and exclusive right to manufacture and sell
the products it contemplates selling and perform the services it contemplates
performing under the names set forth on Exhibit "DD" (Article "7(BB)"). There
are no claims of third parties against SPI with respect to the use of any names
set forth on Exhibit "DD" (Article "7(BB)").
(iv) SPI has not interfered with, infringed with, infringed upon,
misappropriated or otherwise come into conflict with any rights of any third
person which would adversely affect the Intellectual Property; and SPI has not
received any charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that SPI must license or refrain from using the Intellectual Property). Except
as set forth on Exhibit "DD" (Article "7(BB)"), no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with the
Intellectual Property. Except as set forth on Exhibit "DD" (Article "7(BB)"),
SPI has not agreed to indemnify any third party for or against any interference,
infringement, misappropriation or other conflict with respect to the
Intellectual Property.
25
(v) SPI has not infringed, and is not now infringing, any trademark,
trade name, service xxxx or copyright belonging to any other person and SPI has
not received any charge, complaint, claim, demand or notice alleging any such
infringement.
(vi) Except as set forth on Exhibit "DD" (Article "7(BB)"), SPI is
not a party to any license, agreement or arrangement, whether as a licensor,
licensee or otherwise, with respect to any trademark, trade name, service xxxx,
copyright or Intellectual Property used by SPI.
(vii) Except as expressly specified in Exhibit "DD" (Article
"7(BB)"), SPI's business may be conducted without a license from others for the
use of any trade name, trademark, service xxxx or copyright.
(viii) Except as set forth on Exhibit "Z" (Article "7(X)") which is
annexed hereto and made a part hereof, there are no legal, administrative,
arbitration, or other proceeding or governmental investigations adversely
affecting the legality, validity, enforceability, use or ownership of the
Intellectual Property or threats of any of the foregoing.
(ix) Except as set forth on Exhibit "Z" (Article "7(X)"), neither
SPI nor its officers or directors are subject to any order, writ, injunction, or
decree of any Court, department, agency, or instrumentality, affecting the
Intellectual Property.
(x) Except as set forth on Exhibit "Z" (Article "7(X)"), SPI is not
presently engaged in any legal action with respect to the Intellectual Property.
CC. Inventory. A current, true and complete itemization of all items
of SPI's inventory is annexed hereto and made a part hereof as Exhibit "EE"
(Article "7(CC)"). All items of
26
SPI's inventory are in good condition and merchantable.
DD. Absence of Changes. Except as indicated on Exhibit "Q" (Article
"7(K)"), subsequent to the Financial Statement Date and through the date of this
Agreement, there has not been any material adverse change in, or any event or
condition (financial or otherwise) affecting the business, properties, assets,
liabilities, historical operations or prospects of SPI, and except as indicated
on Exhibit "Q" (Article "7(K)"). there are no liabilities or obligations of any
nature, whether absolute, contingent or otherwise, whether due or to become due
(including, without limitation, liabilities for taxes with respect to or
measured by income of SPI for any period prior to, and/or subsequent to, the
Financial Statement Date or arising out of any transaction of SPI prior to,
and/or subsequent to, such date). Subsequent to the Financial Statement Date,
there has not been any declaration, or setting aside, or payment of any dividend
or other distribution with respect to SPI's securities, or any direct or
indirect redemption, purchase, or other acquisition of any of SPI's securities.
To SPI's knowledge, there has not been an assertion against SPI of any liability
of any nature or in any amount not fully reflected or reserved against in the
Financial Statements.
EE. No Approvals. No approval of any governmental authority is
required in connection with consummation of the transactions set forth in this
Agreement.
FF. Broker. SPI has not had any dealing with respect to this
transaction
27
with any business broker, firm or salesman, or any person or corporation,
investment banker or financial advisor who is or shall be entitled to any
broker's or finder's fee or any other commission or similar fee with respect to
the transactions set forth in this Agreement, SPI represents that it has not
dealt with any person, firm or corporation and SPI agrees to indemnify and hold
Western harmless from and against any and all claims for brokerage commissions
by any person, firm or corporation on the basis of any act or statement alleged
to have been made by SPI or its affiliates or agents.
GG. Complete Disclosure. No representation or warranty of SPI which
is contained in this Agreement, or in a writing furnished or to be furnished
pursuant to this Agreement to SPI's knowledge contains or shall contain any
untrue statement of a material fact, omits or shall omit to state any fact which
is required to make the statements which are contained herein or therein, in
light of the circumstances under which they were made, not materially
misleading. There is no fact relating to the business, affairs, operations,
conditions (financial or otherwise) or prospects of SPI which would materially
adversely affect same which has not been disclosed to Western in this Agreement.
HH. No Defense. It shall not be a defense to a suit for damages for
any misrepresentation or breach of covenant or warranty that Western knew or had
reason to know that any covenant, representation or warranty in this Agreement
furnished or to be furnished to Western contained untrue statements.
28
8. Western's Representations, Warranties and Covenants. Western
represents, warrants and covenants to SPI as follows:
A. Corporate Status.
(i) Western is a corporation duly organized, validly existing
and in good standing pursuant to the laws of the State of Delaware, with all
requisite power and authority to carry on its business as presently conducted in
all jurisdictions where presently conducted, to enter into this Agreement and to
consummate the transactions set forth in this Agreement.
(ii) At the Closing, Western shall provide a good standing
certificate for Western issued by the Secretary of State of the State of
Delaware complete and correct as of five (5) business days prior to the date of
the Closing Date.
(iii) On the Effective Date, Western shall provide a good
standing certificate for Western issued by the Secretary of State of the State
of Delaware complete and correct as of five (5) business days prior to the date
of the Effective Date.
B. Capitalization. Western's authorized capital stock consists of
20,000,000 shares of Western Common Stock, $.001 par value, of which 4,003,162
shares are issued and outstanding or reserved for issuance, all of which are, or
will be at the Closing validly issued, fully
29
paid and nonassessable, and 10,000,000 shares of Western Preferred Stock, $.01
par value, of which none are outstanding; provided, however, that 600,000 shares
of Common Stock (which are included in the 4,003,162 shares which are issued and
outstanding or reserved for issuance) which are issuable to the Xxxxxx Xxxxx
Family Stock Trust will not be issued as of the Closing because the issuance of
such shares is subject to the approval of the stockholders as set forth in
Paragraph "G" of Article "5" of this Agreement. There are currently issued and
outstanding options to purchase 1,215,000 shares of Western Common Stock and
$182,000 in convertible debt, which is convertible into common shares at $3.00 a
share. Western is in the process of lowering the conversion price from $3.00 to
$1.00. Except as set forth on Exhibit "FF" (Article "8(B)") which is attached
hereto and made a part hereof, there are no agreements or commitments to
increase, decrease or otherwise alter the authorized capital stock of Western.
Except as set forth on Exhibit "FF" (Article "8(B)"), Western has not granted
any registration rights with respect to any series of Western stock outstanding.
Upon Closing, the capitalization of Western, on a fully diluted basis, shall be
as reflected on Exhibit "GG" (Article "8(B)") which is attached hereto and made
a part hereof. Upon issuance in accordance with the terms hereof, the Western
Power Common Stock and Series B Preferred Stock will be validly issued, fully
paid and non-assessable.
C. Authority of Western. Western has the full corporate power and
authority to execute, deliver, and perform this Agreement and all instruments
and documents which are required to be executed and delivered by Western
pursuant to this Agreement (the "Western Ancillary
30
Documents") and has taken all corporate action required by law and its
organizational documents to authorize the execution and delivery of this
Agreement and the Western Ancillary Documents and the consummation of the
transactions set forth in this Agreement and the Western Ancillary Documents.
This Agreement and the Western Ancillary Documents and the consummation by
Western of the transactions set forth in this Agreement and the Western
Ancillary Documents have been duly and validly authorized, executed, and
delivered by Western, and this Agreement and the Western Ancillary Documents are
valid and binding upon Western and enforceable against Western in accordance
with their terms (except as the enforceability thereof may be limited by
bankruptcy, bank moratorium or similar laws affecting creditors' rights
generally and laws restricting the availability of equitable remedies and may be
subject to general principles of equity whether or not such enforceability is
considered in a proceeding at law or in equity). A certified resolution of the
Board of Directors of Western is annexed hereto and made a part hereof as
Exhibit "HH" (Article "8(C)").
D. Compliance with the Law and Other Instruments. Except as
otherwise provided in this Agreement and in the Exhibits annexed hereto, the
business and operations of Western have been and are being conducted in all
material respects in accordance with all applicable laws, rules and regulations
of all authorities which affect Western or its properties, assets, businesses or
prospects.
31
E. Absence of Conflicts. The execution and delivery of this
Agreement and the Ancillary Documents by Western, the transfer of the Western
shares, and the consummation by Western of the transactions set forth in this
Agreement: (i) do not and shall not conflict with or result in a breach of any
provision of Western 's articles of incorporation or bylaws, (ii) do not and
shall not result in any breach of, or constitute a default or cause an
acceleration under any arrangement, agreement or other instrument to which
Western is a party to or by which any of its assets are bound, (iii) do not and
shall not cause Western to violate or contravene any provision of law or any
governmental rule or regulation, and (iv) will not and shall not result in the
imposition of any lien, or encumbrance upon, any property of Western. Western
has performed in all material respects all of its obligations which are, as of
the date of this Agreement, required to be performed, pursuant to the terms of
any such agreement, contract or commitment.
F. Section 203 of the DGCL Not Applicable. The Board of Directors of
Western has taken all actions which are necessary pursuant to the DGCL,
including approving the transactions which are contemplated by this Agreement
and each of the Ancillary Documents to which it is a party, to ensure that
Section 203 of the DGCL applicable to a "business combination" (as defined in
Section 203 of the DGCL) does not, and will not, apply to the transactions
contemplated hereunder and thereunder. Western has no prior knowledge that any
other "fair price," "moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation is
32
applicable to: (i) Western (ii) the Merger (iii) disagreement between the
parties (iv) the other transactions contemplated by this Agreement or (v) the
other Ancillary Documents to which it is a party.
G. Litigation. Except as set forth on Exhibit "II" (Article "8(G)")
which is annexed hereto and made a part hereof, there are no legal,
administrative, arbitration, or other proceeding or governmental investigations
adversely affecting Western or its properties, assets or businesses, or with
respect to any matter arising out of the conduct of Western's business pending
or to its knowledge threatened, by or against, any officer or director of
Western in connection with its affairs, whether or not covered by insurance.
Neither Western nor its officers or directors are subject to any order, writ,
injunction, or decree of any Court, department, agency, or instrumentality,
affecting Western except as set forth on said Exhibit "II" (Article "8(G)").
Except as set forth on Exhibit "II" (Article "8(G)"), Western is not presently
engaged in any legal action.
H. No Approvals. No approval of any governmental authority is
required in connection with the consummation of the transactions set forth in
this Agreement.
I. SEC Filings. Except as set forth on Exhibit "FF" (Article
"8(B)"), to Western's knowledge, Western has filed all forms, reports and
documents required to be filed by Western with the SEC since January 1, 1996
(collectively, the "SEC Reports"). Except as set forth on Exhibit "FF" (Article
"8(B)"), the SEC Reports (i) at the time filed, complied in all material
respects
33
with the applicable requirements of the '33 Act and the '34 Act, as the case may
be, and (ii) did not, to Western's knowledge, at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a fact required to be stated in such SEC Reports or necessary in order
to make the statements in such SEC Reports, in the light of the circumstances
under which they were made, not materially misleading. None of Western's
Subsidiaries are required to file any forms, reports or other documents with the
SEC.
J. Nasdaq Quotation. Western's Common Stock is currently quoted on
the Nasdaq Small Cap Market and there are no current inquiries from Nasdaq with
respect to Western except as set forth in a letter, dated March 27, 2001 from
Nasdaq, a copy of which are annexed hereto and made a part hereof as Exhibit
"JJ" (Article "8(J)").
K. Environmental Compliance. (i) Western is in compliance with all
applicable environmental laws (the "Environmental Laws"). Western is presently
authorized, if required, to generate, transport through third parties, store,
use, treat, dispose of, release, and conduct other handling of, as required,
those hazardous substances used in Western 's business, which consist of,
hazardous waste, hazardous material, hazardous constituents, toxic substances,
pollutants, contaminants, asbestos, radon, polychlorinated biphenyls, petroleum
product or waste (including crude oil or any fraction thereof), natural gas,
liquefied gas, synthetic gas and other material defined,
34
regulated, controlled or subject to any remediation requirement under any
Environmental Law (collectively the "Hazardous Materials").
(ii) Western possesses all licenses, permits, registrations,
and government authorizations necessary under the Environmental Laws to operate
Western 's business and is in compliance with such licenses or permits.
(iii) Western has not received any written notice from any
governmental agency or entity or any other person and, to Western's knowledge
there is no pending or threatened claim, litigation or any administrative agency
proceeding which: (a) alleges a violation of any Environmental Law(s) by
Western, (b) alleges that Western is a liable party or potentially responsible
party under the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601, et seq., or any state law, (c) would result in the
attachment of an environmental lien on any of Western's real property ("Real
Property"), or (d) alleges that Western is liable for any contamination of the
environment, contamination of Real Property, damage to natural resources,
property damage, or personal injury based on its activities involving Hazardous
Materials, whether arising under the Environmental Laws, common law principals
or other legal standards.
(iv) Western has no Environmental Liability for releases or
disposal of Hazardous Material at the Real Property or at any property to which
the Western transported or
35
arranged for the transportation of Hazardous Materials.
L. OSHA Compliance. (i) Western is in compliance with all applicable
federal, state and local laws, rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder and other
governmental requirements relating to occupational health and safety, including
but not limited to the Occupational Safety and Health Act of 1970, as amended,
and the rules and regulations promulgated thereunder (the "OSHA Laws").
(ii) Western possesses all license, permits, registrations,
and government authorizations necessary to operate in compliance with all
applicable OSHA Laws and is in compliance with such licenses and permits.
(iii) To Western's knowledge, there is no pending or
threatened notice, claim, litigation or any administrative agency proceeding
that alleges a violation of any OSHA Law(s) by Western or, with respect to the
Western Shares or Western's business.
M. Books and Records. The books of account and other financial
records of Western since December 31, 1992, all of which have been or will be
made available to SPI, are complete and correct and reflect actual, bona fide
transactions and have been maintained in accordance with sound business
practices and the standards of Section 13(b)(2) of the '34 Act.
36
N. Minute Book. The minute book of Western since March 9, 1995, has
been or will be made available to SPI and (i) contains accurate and complete
records of all Board of Director meetings held since March 9, 1995, and (ii)
reflect all corporate action taken as a result of such board meetings since
March 9, 1995.
O. Tax Returns and Audits. Western has timely filed all required
federal, state, city and local tax returns for income, franchise, social
security, withholding, sales, excise, unemployment insurance, real estate and
other taxes, and has paid or made adequate provision for the payment of all such
taxes shown to be due on said returns. Western has timely filed the required tax
returns for all years through the fiscal year ended July 31, 2000. The amounts
reserved by Western for taxes on Western's last quarterly report on Form 10Q for
the three months ended January 31, 2001 which has been filed with the SEC (the
"Form 10Q") are sufficient for the payment of all accrued and unpaid federal,
state, city and local taxes of Western for the periods reported. Except as shown
on the Form 10Q, Western has not been advised or notified that it is subject to
any other taxes, tax deficiencies, assessments or penalties. Western's federal
income tax returns have been audited by the Internal Revenue Service for the
years indicated on Exhibit "KK" (Article "8(O)"), which is annexed hereto and
made a part hereof. Western's state income and/or franchise tax returns have
been audited by the state(s) and for the years indicated on Exhibit "KK"
(Article "8(O)"). No Notice of Audit or Notice of Intent to Audit has been
received from any tax authority for any other period. All tax returns filed by
Western are true, correct and complete in all material respects.
37
P. Employee Benefit Plans. Except as set forth in Exhibit "FF"
(Article "8(B)"), Western has complied with all applicable federal and state
laws, including, but not limited to, the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), relating to the employment of labor, including
provisions relating to wages, hours, collective bargaining, and payment of
social security taxes, and is not liable for any arrears of wages, or any taxes
or penalties, or for failure to comply with any of the foregoing.
Q. Absence of Changes. Except as indicated on Exhibit "FF" (Article
"8(B)"), subsequent to Western's last quarterly report on the Form 10Q and
through the date of this Agreement, there has not been any material adverse
change in, or any event or condition (financial or otherwise) affecting the
business, properties, assets, liabilities, historical operations or prospects of
Western, there are no liabilities or obligations of any nature, whether
absolute, contingent or otherwise, whether due or to become due (including,
without limitation, liabilities for taxes with respect to or measured by income
of Western for any period prior to, and/or subsequent to, the Form 10Q or
arising out of any transaction of Western prior to, and/or subsequent to, such
date). Subsequent to the Form 10Q, there has not been any declaration, or
setting aside, or payment of any dividend or other distribution with respect to
Western's securities, or any direct or indirect redemption, purchase, or other
acquisition of any of Western's securities. To Western's knowledge, there has
not been an assertion against Western of any liability of any nature or in any
amount not fully reflected or reserved against in the Form 10Q.
38
R. Broker. Western has not had any dealing with respect to this
transaction with any business broker, firm or salesman, or any other person or
corporation, investment banker or financial advisor who is or shall be entitled
to any broker's or finder's fee or any other commission or similar fee with
respect to the transactions set forth in this Agreement. Western represents that
it has not dealt with any person, firm or corporation and agrees to indemnify
and hold harmless SPI from and against any and all claims for brokerage
commissions by any person, firm or corporation on the basis of any act or
statement alleged to have been made by Western or its affiliates or agents.
S. Complete Disclosure. No representation or warranty of Western
which is contained in this Agreement, or in a writing furnished or to be
furnished pursuant to this Agreement, to Western's knowledge contains or shall
contain any untrue statement of a material fact, omits or shall omit to state
any fact which is required to make the statements which are contained herein or
therein, in light of the circumstances under which they were made, not
materially misleading. There is no fact relating to the business, affairs,
operations, conditions (financial or otherwise) or prospects of Western which
would materially adversely affect same which has not been disclosed to SPI in
this Agreement.
T. No Defense. It shall not be a defense to a suit for damages for
any misrepresentation or breach of covenant or warranty that SPI knew or had
reason to know that any covenant, representation or warranty in this Agreement
furnished or to be furnished to SPI contained
39
untrue statements.
9. Acquisition Corp. Representations, Warranties and Covenants:
Acquisition Corp. represents, warrants and covenants to SPI as follows:
A. Corporate Status. Acquisition Corp. is a corporation duly
organized, validly existing and in good standing pursuant to the laws of the
State of Delaware, with all requisite power and authority to carry on its
business as presently conducted in all jurisdictions where presently conducted,
to enter into this Agreement and to consummate the transactions set forth in
this Agreement. Acquisition Corp. is a newly formed, wholly-owned subsidiary of
Western and has no assets or liabilities of any kind.
B. Capitalization. Acquisition Corp.'s authorized capital stock
consists of 1,000 shares of Acquisition Corp. Common Stock, $.001 par value, of
which 100 shares are issued and outstanding or reserved for issuance, all of
which are, or will be prior to the Closing, validly issued, fully paid and
non-assessable. There are no agreements or commitments to increase, decrease or
otherwise alter the authorized capital stock of Acquisition Corp.
C. Authority of Acquisition Corp. Acquisition Corp. has the full
corporate power and authority to execute, deliver, and perform this Agreement
and all instruments and
40
documents which are required to be executed and delivered by Acquisition Corp.
pursuant to this Agreement (the "Acquisition Corp. Ancillary Documents"; the SPI
Ancillary Documents, the Western Ancillary Documents and the Acquisition Corp.
Ancillary Documents, collectively the "Ancillary Documents") and has taken all
corporate action required by law and its organizational documents to authorize
the execution and delivery of this Agreement and the Acquisition Corp. Ancillary
Documents and the consummation of the transactions contemplated by this
Agreement and the Acquisition Corp. Ancillary Documents. This Agreement and the
Acquisition Corp. Ancillary Documents and the consummation by Acquisition Corp.
of the transactions set forth in this Agreement and Acquisition Corp. The
Acquisition Corp. Ancillary Documents have been duly and validly authorized,
executed, and delivered by Acquisition Corp., and each constitutes a valid and
binding agreement of Acquisition Corp. enforceable against Acquisition Corp. in
accordance with its terms (except as the enforceability thereof may be limited
by bankruptcy, bank moratorium or similar laws affecting creditors' rights
generally and laws restricting the availability of equitable remedies and may be
subject to general principles of equity whether or not such enforceability is
considered in a proceeding at law or in equity). A certified resolution of the
Board of Directors of Acquisition Corp. is annexed hereto and made a part hereof
as Exhibit "LL" (Article "9(C)").
D. Compliance with the Law and Other Instruments. Except as
otherwise provided in this Agreement and in the Exhibits annexed hereto,
Acquisition Corp. is in all material respects in compliance with all applicable
laws, rules and regulations of all authorities which affect
41
Acquisition Corp. or its properties, assets, businesses or prospects.
E. Absence of Conflicts. The execution and delivery of this
Agreement and the Ancillary Documents by Acquisition Corp., the transfer of the
Acquisition Corp. shares, and the consummation by Acquisition Corp. of the
transactions set forth in this Agreement: (i) do not and shall not conflict with
or result in a breach of any provision of Acquisition Corp.'s articles of
incorporation or bylaws, (ii) do not and shall not result in any breach of, or
constitute a default or cause an acceleration under any arrangement, agreement
or other instrument to which Acquisition Corp. is a party to or by which any of
its assets are bound, (iii) do not and shall not cause Acquisition Corp. to
violate or contravene any provision of law or any governmental rule or
regulation, and (iv) will not and shall not result in the imposition of any
lien, or encumbrance upon, any property of Acquisition Corp. Acquisition Corp.
has performed in all material respects all of its obligations which are, as of
the date of this Agreement, required to be performed, pursuant to the terms of
any such agreement, contract or commitment.
F. Section 203 of the DGCL Not Applicable. The Board of Directors of
Acquisition Corp. has taken all actions which are necessary pursuant to the
DGCL, including approving the transactions which are contemplated by this
Agreement and each of the Ancillary Documents to which it is a party, to ensure
that Section 203 of the DGCL applicable to a "business combination" (as defined
in Section 203 of the DGCL) does not, and will not, apply to the transactions
42
contemplated hereunder and thereunder. Acquisition Corp. has no prior knowledge
that any other "fair price," "moratorium," "control share acquisition" or other
similar anti-takeover statute or regulation is applicable to: (i) Acquisition
Corp. (ii) the Merger (iii) disagreement between the parties (iv) the other
transactions contemplated by this Agreement or (v) the other Ancillary Documents
to which it is a party.
G. Litigation. There are no legal, administrative, arbitration, or
other proceeding or governmental investigations adversely affecting Acquisition
Corp. or its properties, assets or businesses, or with respect to any matter
arising out of the conduct of the Acquisition Corp.'s business pending or to its
knowledge threatened, by or against, any officer or director of Acquisition
Corp. in connection with its affairs, whether or not covered by insurance.
Neither Acquisition Corp. nor its officers or directors are subject to any
order, writ, injunction, or decree of any Court, department, agency, or
instrumentality, affecting Acquisition Corp. Acquisition Corp. is not presently
engaged in any legal action.
H. No Approvals. No approval of any governmental authority is
required in connection with the consummation of the transactions set forth in
this Agreement.
I. Broker. Acquisition Corp. has not had any dealing with respect to
this transaction with any business broker, firm or salesman, or any other person
or corporation,
43
investment banker or financial advisor who is or shall be entitled to any
broker's or finder's fee or any other commission or similar fee with respect to
the transactions provided for in this Agreement. Acquisition Corp. represents
that it has not dealt with any person, firm or corporation and agree to
indemnify and hold harmless SPI from and against any and all claims for
brokerage commissions by any other person, firm or corporation on the basis of
any act or statement alleged to have been made by Acquisition Corp. or its
affiliates or agents.
J. No Defense. It shall not be a defense to a suit for damages for
any misrepresentation or breach of covenant or warranty that SPI knew or had
reason to know that any covenant, representation or warranty in this Agreement
or furnished or to be furnished to SPI contained untrue statements.
K. Complete Disclosure. No representation or warranty of Acquisition
Corp. which is contained in this Agreement, or in a writing furnished or to be
furnished pursuant to this Agreement, to Acquisition Corp.'s knowledge contains
or shall contain any untrue statement of a material fact, omits or shall omit to
state any fact which is required to make the statements which are contained
herein or therein, in light of the circumstances under which they were made, not
misleading. There is no fact relating to the business, affairs, operations,
conditions (financial or otherwise) or prospects of Acquisition Corp. which
would materially adversely affect same which has not been disclosed to SPI in
this Agreement.
44
10. Mutual Covenants
A. Best Efforts. Western, SPI and Acquisition Corp. each shall use
their best efforts to perform or satisfy each covenant or condition to be
performed or satisfied by each of them before and after the Effective Date.
B. Notice of Developments and Updates. Western, SPI and Acquisition
Corp. each will give prompt written notice to the other parties hereto to of any
act, event or occurrence which may cause or constitute a breach of any of its
own representations and warranties in Article "7", Article "8" and Article "9"
of this Agreement.
C. No Public Announcement. None of the Parties hereto shall, without
the prior written approval of the other Party, make any press release or other
public announcement or communicate with any customer, competitor or supplier of
the other party concerning the transactions contemplated by this Agreement,
except as and to the extent that such Party shall determine is required by law
(which determination shall be made by such Party based upon the advice of its
counsel), in which event the other Party shall be advised and the Parties shall
use their best efforts to cause a mutually agreeable release or announcement to
be issued.
D. Registration Statement. The information to be supplied by
Western, Acquisition Corp., SPI or their respective agents, as the case may be,
for inclusion in the Registration Statement, pursuant to which the Western Stock
will be registered under the '33 Act, and Proxy Statement to be sent to the
stockholders of Western in connection with the Special Meeting, shall not at the
time the Registration Statement is declared effective by the SEC, on the date
the Proxy
45
Statement is first mailed to stockholders of Western, at the time of the Western
Special Stockholders' Meeting contain any untrue statement of a material fact or
omit to state any material fact required to be stated in the Registration
Statement and Proxy Statement or necessary in order to make the statements in
the Registration Statement and Proxy Statement, in light of the circumstances
under which they were made, not materially misleading. If, at any time prior to
the Shareholder's Meeting or during the effectiveness of the Registration
Statement, any event relating to Western, Acquisition Corp., SPI or any of their
Affiliates, officers or directors should be discovered by Western or SPI which
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, Western shall promptly inform SPI and SPI
shall promptly inform Western.
E. Board of Directors Approval Commencing with the Effective Date
and continuing through the date which is ninety (90) days after the Preferred
Stock Conversion, Western shall not take any of the following actions without
the prior unanimous approval by its Board of Directors:
(i) acquire or agree to acquire by merger or consolidation, or by
purchasing an equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof;
(ii) make any change in its Certificate of Incorporation or By-Laws;
46
(iii) authorize or issue any capital stock or any rights, warrants,
options or convertible securities to acquire such stock, except pursuant to the
Private Placement set forth in Article "6" of this Agreement;
(iv) hire any employee other than in the ordinary course of
business;
(v) except for liabilities incurred and obligations under contracts
entered into in the ordinary course of business and the Private Placement set
forth in Article "6" of this Agreement, incur any obligation or liability
(absolute or contingent), including, but not limited to, any debt or guarantee
of any debt or issue or sell any debt securities or guarantee any debt
securities of others;
(vi) declare or make any payment or distribution to the Stockholders
(other than payment of compensation for services rendered) or purchase or redeem
any shares of capital stock, except pursuant to the terms and conditions of this
Agreement;
(vii) mortgage, pledge or subject to lien, charge or any other
encumbrance or replacement security interest therefor, any asset, whether
tangible or intangible, of Western, except for those encumbrances which are set
forth in Exhibit "FF" (Article "8(B)");
(viii) sell, lease or otherwise dispose of, or agree to sell, lease
or otherwise dispose of, any of its assets except in the ordinary course of
business;
(ix) commit any other act or omit to do any other act which would
have a material adverse effect upon the business, financial condition or
earnings of Western.
47
11. Western's Existing Business. SPI acknowledges that it has been advised
of the Asset Purchase Agreement dated November 1, 2000, by and between Western,
Western Power & Equipment, LLC, a Delaware corporation (Western, LLC) and
Western Power & Equipment Corp., an Oregon corporation (Western-Oregon) (the
"Asset Purchase Agreement"), which is annexed hereto and made a part hereof as
Exhibit "MM" (Article "11").
SPI further acknowledges that it has been advised that
Western-Oregon has entered into employment agreements with C. Xxxx XxXxxx and
Xxxx Xxxxxx and a consulting agreement with Xxxxxx Xxxxx, which are annexed
hereto and are made a part hereof as Exhibits "NN" (Article "11"), "OO" (Article
"11") and "PP" (Article "11"), respectively which agreements will be assigned to
Western, LLC upon closing of the transactions contemplated by the Asset Purchase
Agreement (the "Asset Purchase Closing").
12. Change of Name. Western and SPI agree that subsequent to the Effective
Date, Western will take such actions as required in order to do business as
"SupplyPoint" or a derivative thereof, and shall, subject to stockholder
approval, amend its corporate charter to change its corporate name to one not
including the words "Western Power & Equipment" but, including "SupplyPoint" or
a derivative thereof.
48
13. Employment Agreements. Western acknowledges that it has been advised
by SPI that each of Xxxxx Xxxxxx, Xxxxxx Xxxxx and Xxxxx Xxxx have entered into
the following employment agreements with SPI (the "Employment Agreements"): (i)
Xxxxx Xxxxxx Employment Agreement, dated August 22, 2000; (ii) Offer of
employment letter to Xxxxxx Xxxxx, dated February 18, 2000, and (iii) Offer of
employment letter to Xxxxx Xxxx, dated October 27, 1999; each of which are
attached hereto and made a part hereof as Exhibits "QQ" (Article "13"), "RR"
(Article "13"), and "SS" (Article "13") respectively, which agreements will be
assumed by the Surviving Corporation upon the Effective Date.
14. Access by Western. SPI shall give to Western and its authorized
representatives until the Effective Date, full access to all of its properties
and books and records and furnish Western with such financial and operating data
and other information with respect to SPI's business and properties (the "Due
Diligence Materials") as Western shall from time to time request provided that
any such investigation shall be conducted in such manner as not to unreasonably
interfere with the operation of SPI's business.
15. Closing Date. The Closing of this transaction (the "Closing") shall
take place by the delivery of all required executed documents and stock
certificates by the parties hereof at the offices of Xxxxx & Fraade, P.C., 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 11:00 A.M. on May __, 2001, or on
such other date as is mutually agreed to by the parties (the "Closing Date").
49
16. Conduct of SPI's Business Prior to the Effective Date. Between the
date of this Agreement and the Effective Date, SPI shall carry on its business
in the ordinary course and in the same manner as heretofore conducted and shall
preserve intact the existing business organization of SPI, and use its best
efforts to (i) keep available to SPI the services of SPI's present officers and
employees, (ii) maintain all of SPI's properties in their present condition
(ordinary wear and tear excepted), (iii) maintain insurance policies with
respect to SPI's business and properties consistent with current practice, (iv)
maintain SPI's rights and franchises and (v) preserve SPI's relationships with
customers, suppliers and others having business dealings with SPI, to the end
that its goodwill and ongoing business shall not be materially impaired on the
Effective Date. Without the prior written consent of Western, SPI shall not:
A. conduct the business of SPI in any manner other than in the
ordinary course including, but not limited to, acquiring or agreeing to acquire
by merger or consolidation, or by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof;
B. make any change in the Certificate of Incorporation or By-Laws of
SPI;
C. authorize or issue any capital stock or any rights, warrants,
options or
50
convertible securities to acquire such stock.
D. pay any accrued and unpaid compensation, nor increase the
compensation payable to, or to become payable by SPI to any officer, director or
employee or make any bonus, insurance, pension, or other benefit plan, payment
or arrangement to or with any officer, director or employee;
E. hire any employee other than in the ordinary course of business;
F. except for liabilities incurred and obligations under contracts
entered into in the ordinary course of business, incur any obligation or
liability (absolute or contingent), including, but not limited to, any debt or
guarantee any such debt or issue or sell any debt securities or guarantee any
debt securities of others;
G. declare or make any payment or distribution to the Stockholders
(other than payment of compensation for services rendered, if applicable) or
purchase or redeem any shares of capital stock, except pursuant to the terms and
conditions of this Agreement;
H. mortgage, pledge or subject to lien, charge or any other
encumbrance, any asset, whether tangible or intangible, of SPI, except for those
encumbrances which are set forth in
51
Exhibit "Q" (Article "7(K)");
I. sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets except in the ordinary course of
business;
J. take any action or omit to do any act which would cause the
representations or warranties of SPI contained herein to be untrue or incorrect
in any material respect;
K. commit any act or omit to do any act which would cause a material
breach of any agreement, contract or commitment which is listed in an Exhibit
annexed to this Agreement; or
L. commit any other act or omit to do any other act which would have
a material adverse effect upon the business, financial condition or earnings of
SPI.
17. Conduct of Western's Business Prior to the Effective Date. Between the
date of this Agreement and the Effective Date, Western shall carry on its
business in the ordinary course and in the same manner as heretofore conducted
and shall preserve intact the existing business organization of Western, and use
its best efforts to (i) keep available to Western the services of Western's
present officers and employees, (ii) maintain all of Western's properties in
their present condition (ordinary wear and tear excepted), (iii) maintain
insurance policies with respect to
52
Western's business and properties consistent with current practice, and (iv)
maintain Western's rights and franchises. Without the prior written consent of
SPI, Western shall not:
A. conduct the business of Western in any manner other than in the
ordinary course including, but not limited to, acquiring or agreeing to acquire
by merger or consolidation, or by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof;
B. make any change in the Certificate of Incorporation or By-Laws of
Western;
C. authorize or issue any capital stock or any rights, warrants,
options or convertible securities to acquire such stock.
D. except for liabilities incurred and obligations under contracts
entered into in the ordinary course of business and with respect to the Private
Placement set forth in Article "6" of this Agreement, incur any obligation or
liability (absolute or contingent), including, but not limited to, any debt or
guarantee any such debt or issue or sell any debt securities or guarantee any
debt securities of others;
E. declare or make any payment or distribution to the Stockholders
(other
53
than payment of compensation for services rendered, if applicable) or purchase
or redeem any shares of capital stock, except pursuant to the terms and
conditions of this Agreement;
F. mortgage, pledge or subject to lien, charge or any other
encumbrance, any asset, whether tangible or intangible, of Western, except for
those encumbrances which are set forth in Exhibit "FF" (Article "8(B)");
G. sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets except in the ordinary course of
business;
H. take any action or omit to do any act which would cause the
representations or warranties of Western contained herein to be untrue or
incorrect in any material respect;
I. commit any act or omit to do any act which would cause a material
breach of any agreement, contract or commitment which is listed in an Exhibit
annexed to this Agreement; or
J. commit any other act or omit to do any other act which would have
a material adverse effect upon the business, financial condition or earnings of
Western.
18. Conduct of Acquisition Corp.'s Business Prior to the Effective Date.
Between
54
the date of this Agreement and the Effective Date, Acquisition Corp. shall
preserve intact the existing business organization of Acquisition Corp. Without
the prior written consent of SPI, Acquisition Corp. shall not:
A. make any change in the Certificate of Incorporation or By-Laws of
Acquisition Corp.;
B. authorize or issue any capital stock or any rights, warrants,
options or convertible securities to acquire such stock.
C. except for liabilities incurred and obligations under contracts
entered into in the ordinary course of business, incur any obligation or
liability (absolute or contingent), including, but not limited to, any debt or
guarantee any such debt or issue or sell any debt securities or guarantee any
debt securities of others;
D. declare or make any payment or distribution to the Stockholders
(other than payment of compensation for services rendered, if applicable) or
purchase or redeem any shares of capital stock, except pursuant to the terms and
conditions of this Agreement;
E. mortgage, pledge or subject to lien, charge or any other
encumbrance, any asset, whether tangible or intangible, of Acquisition Corp;
55
F. sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets except in the ordinary course of
business;
G. take any action or omit to do any act which would cause the
representations or warranties of Acquisition Corp. contained herein to be untrue
or incorrect in any material respect;
H. commit any act or omit to do any act which would cause a material
breach of any agreement, contract or commitment which is listed in an Exhibit
annexed to this Agreement; or
I. commit any other act or omit to do any other act which would have
a material adverse effect upon the business, financial condition or earnings of
Acquisition Corp.
19. Conditions of Closing.
A. Conditions to Western's Obligation to Close. The obligations of
Western to close the transaction set forth in this Agreement shall be subject to
the following conditions:
(i) Representations and Warranties of SPI to be True. To SPI's
knowledge, the representations and warranties of SPI set forth in this Agreement
shall be true in all
56
material respects on the Closing Date with the same effect as though made at
such time, except to the extent waived or affected by the transactions set forth
in this Agreement; and SPI shall have delivered to Western a certificate of SPI
in the form annexed hereto and made a part hereof as Exhibit "TT" (Article
"19(A)(i)"), signed by the Chairman of SPI and dated the Closing Date to such
effect.
(ii) Performance of Obligations of SPI. SPI shall have
performed all obligations and complied with all covenants set forth in this
Agreement to be performed or complied with in all material respects by it prior
to the Closing Date, and SPI shall have delivered to Western a certificate of
SPI in the form annexed hereto as Exhibit "TT" (Article "19(A)(i)") signed by
the Chairman of SPI and dated the Closing Date to such effect.
(iii) Satisfaction of Loans. Any and all loans by SPI to any
officer or director of SPI including, but not limited to, those loans listed on
Exhibit "Q" (Article "7(K)") shall be satisfied at the Closing and SPI shall
have delivered to Western a certificate of SPI in the form annexed hereto as
Exhibit "TT" (Article "19(A)(i)"), signed by the Chairman of SPI and dated the
Closing Date to such effect.
(iv) No Outstanding Debt. SPI shall have no outstanding debt
except for the loans referred to in Exhibit "Q" (Article "7(K)") and any money
loaned to SPI by Western from the proceeds of the Private Placement referred to
in Article "6" of this Agreement and SPI shall have delivered to Western a
certificate of SPI in the form annexed hereto as Exhibit "TT"
57
(Article "19(A)(i)"), signed by the Chairman of SPI and dated the Closing Date
to such effect.
(v) Employment Agreements. SPI shall assign the Employment
Agreements by and between it and Xxxxx Xxxxxx, Xxxxxx Xxxxx and Xxxxx Xxxx to
the Surviving Corporation, to be effective upon the Effective Date, and SPI
shall have delivered to Western a certificate of SPI in the form annexed hereto
as Exhibit "TT" (Article "19(A)(i)"), signed by the Chairman of SPI and dated
the Closing Date to such effect.
(vi) No Adverse Change. There shall not have occurred any material
adverse change since the Financial Statement Date and through the date of the
Closing Date in the business, properties, results of operations or business or
financial condition of SPI and SPI shall have delivered to Western a certificate
of SPI in the form annexed hereto as Exhibit "TT" (Article "19(A)(i)"), signed
by the Chairman of SPI and dated the Closing Date to such effect.
(vii) Statutory Requirements. Any statutory requirement for the
valid consummation by SPI of the transactions set forth in this Agreement shall
have been fulfilled; any authorizations, consents and approvals of all federal,
state, local and governmental agencies and authorities required to be obtained,
in order to permit consummation by SPI of the transactions set forth in this
Agreement and to permit the business presently carried on by SPI to continue
unimpaired following the Closing Date, shall have been obtained, and SPI shall
have delivered to Western a certificate of SPI in the form annexed hereto as
Exhibit "TT" (Article "19(A)(i)"), signed
58
by the Chairman of SPI and dated the Closing Date to such effect.
(viii) No Governmental Proceedings. No action or proceeding shall
have been instituted before a court or other governmental body by any
governmental agency or public authority to restrain or prohibit the transactions
set forth in this Agreement and SPI shall have delivered to Western a
certificate of SPI in the form annexed hereto as Exhibit "TT" (Article
"19(A)(i)"), signed by the Chairman of SPI and dated the Closing Date to such
effect.
(ix) Consents Under Agreements. SPI shall have obtained the consent
or approval of each person whose consent or approval shall be required in
connection with the transactions set forth in this Agreement and Western shall
have obtained the consent or approval of each person (except for Deutsche
Financial Services ("Bank"), and Case Corporation ("Case") whose consents are
required pursuant to Subparagraph "ix" of Paragraph "(A)" of Article "20" of
this Agreement) whose consent or approval shall be required in connection with
the transactions set forth in this Agreement, and SPI shall have delivered to
Western a certificate of SPI in the form annexed hereto as Exhibit "TT" (Article
"19(A)(i)") signed by the Chairman of SPI and dated the Closing Date to such
effect.
(x) Good Standing Certificate. On the Closing Date, SPI shall
provide a good standing certificate for SPI issued by the Secretary of State of
the State of Delaware complete
59
and correct as of five (5) business days prior to the date of the Closing Date.
(xi) Fairness Opinion. The Board of Directors of Western shall have
received an opinion from Capitalink, L.C. to the effect that the terms of the
Merger and the Asset Purchase Agreement are fair to Western and its stockholders
from a financial point of view substantially in the form annexed hereto and made
a part hereof as Exhibit "UU" (Article "19(A)(xi)").
(xii) Irrevocable Proxy. At the Closing, SPI shall deliver to the
Escrow Agent (hereinafter defined in Article "21" of this Agreement) an
irrevocable proxy executed by Ocean Castle Partners, LLC, Old Oak Fund, Inc.,
and Allied International Fund Inc. in favor of Xxxxxx Xxxxx with respect to all
of the voting stock of Western, which will be delivered to the Escrow Agent by
such entities at the Closing, equal to approximately 19% of the total shares of
Western voting stock outstanding as of the date of this Agreement, in the form
annexed hereto and made a part hereof as Exhibit "VV" (Article "19(A)(xii)").
B. Conditions to SPI's Obligation to Close. The obligation of SPI to
close the transactions set forth in this Agreement shall be subject to the
following conditions:
(i) Representations and Warranties of Western to be True. To
60
Western's knowledge, the representations and warranties of Western set forth in
this Agreement shall be true in all material respects on the Closing Date with
the same effect as though made at such time, except to the extent waived or
affected by the transactions set forth in this Agreement; and Western shall have
delivered to SPI a certificate of Western in the form annexed hereto and made a
part hereof as Exhibit "WW" (Article "19(B)(i)"), signed by the President of
Western and dated the Closing Date to such effect;
(ii) Performance of Obligations of Western. Western shall have
performed all obligations and complied with all covenants set forth in this
Agreement to be performed or complied with in all material respects by it prior
to the Closing Date, and Western shall have delivered to SPI a certificate of
Western in the form annexed hereto as Exhibit "WW" (Article "19 (B)(i)"), signed
by the President of Western and dated the Closing Date to such effect;
(iii) No Adverse Change. There shall not have occurred any
material adverse change since the Form 10Q and through the date of the Closing
Date in the business, properties, results of operations or business or financial
condition of Western and Western shall have delivered to SPI a certificate of
Western in the form annexed hereto as Exhibit "WW" (Article "19(B)(i)"), signed
by the President of Western and dated the Closing Date to such effect.
(iv) Statutory Requirements. Any statutory requirement for the
valid
61
consummation by Western of the transactions set forth in this Agreement shall
have been fulfilled; any authorizations, consents and approvals of all federal,
state and local governmental agencies and authorities required to be obtained,
in order to permit consummation by Western of the transactions set forth in this
Agreement and to permit the business presently carried on by Western to continue
unimpaired following the Closing Date, shall have been obtained and Western
shall have delivered to SPI a certificate of Western in the form annexed as
Exhibit "WW" (Article "19(B)(i)"), signed by the President of Western and dated
the Closing Date to such effect;
(v) No Governmental Proceedings. No action or proceeding shall
have been instituted before a court or other governmental body by any
governmental agency or public authority to restrain or prohibit the transactions
set forth in this Agreement and Western shall have delivered to SPI a
certificate of Western in the form annexed as Exhibit "WW" (Article "19(B)(i)"),
signed by the President of Western and dated the Closing Date to such effect;
(vi) Consents Under Agreements. Western shall have obtained
the consent or approval of each person (except for Bank and Case whose consents
are required pursuant to Subparagraph "ix" of Paragraph "(A)" of Article "20" of
this Agreement), whose consent or approval shall be required in connection with
the transactions set forth in this Agreement, and Western shall have delivered
to SPI a certificate of Western in the form annexed as Exhibit "WW" (Article
"19(B)(i)"), signed by the President of Western and dated the Closing Date to
such effect;
62
(vii) Good Standing Certificate. On the Closing Date, Western
shall provide a good standing certificate for Western issued by the Secretary of
State of the State of Delaware complete and correct as of five (5) business days
prior to the Closing Date;
(viii) Fairness Opinion. The Board of Directors of Western
shall have received an opinion from Capitalink, L.C. to the effect that the
terms of the Merger and the Asset Purchase Agreement are fair to Western and its
stockholders from a financial point of view substantially in the form annexed
hereto and made a part hereof as Exhibit "UU" (Article "19(A)(xi)");
(ix) Irrevocable Proxy. At the Closing, Western shall deliver
to the Escrow Agent (hereinafter defined in Article "21" of this Agreement) an
irrevocable proxy executed by American United Global, Inc. in favor of Xxxxx X.
Xxxxx with respect to all of the voting stock of Western held by such entity
equal to approximately 36.7% of the total shares of Western voting stock
outstanding as of the date of this Agreement, in the form annexed hereto and
made a part hereof as Exhibit "YY" (Article "19(B)(ix)");
63
20. Conditions of Release of Escrow Items and Effective Date.
A. Conditions to SPI's Receipt of the Western Escrow Items. The
delivery of the Western Escrow Items (hereinafter defined in Paragraph "C" of
Article "21" of this Agreement) to SPI set forth in this Agreement shall be
subject to the following conditions:
(i) Representations and Warranties of SPI to be True. To SPI's
knowledge, the representations and warranties of SPI set forth in this Agreement
shall be true in all material respects on the Effective Date with the same
effect as though made at such times, except to the extent waived or affected by
the transactions set forth in this Agreement; and SPI shall have delivered to
Western a certificate of SPI in the form annexed hereto and made a part hereof
as Exhibit "TT" (Article "19(A)(i)"), signed by the President of SPI and dated
the Effective Date to such effect.
(ii) Performance of Obligations of SPI. SPI shall have
performed all obligations and complied with all covenants set forth in this
Agreement to be performed or complied with in all material respects by it prior
to the Effective Date, and SPI shall have delivered to Western a certificate of
SPI in the form annexed hereto as Exhibit "TT" (Article "19(A)(i)") signed by
the President of SPI and dated the Effective Date to such effect.
(iii) Satisfaction of Loans. Any and all loans by SPI to any
officer or director of SPI including, but not limited to, those loans listed on
Exhibit "Q" (Article "7(K)") shall be satisfied at the Effective Date and SPI
shall have delivered to Western a certificate of SPI in
64
the form annexed hereto as Exhibit "TT" (Article "19(A)(i)"), signed by the
President of SPI and dated the Effective Date to such effect.
(iv) No Outstanding Debt. SPI shall have no outstanding debt
except for the loans referred to in Exhibit "Q" (Article "7(K)") and any money
loaned to SPI by Western from the proceeds of the Private Placement referred to
in Article "6" of this Agreement and SPI shall have delivered to Western a
certificate of SPI in the form annexed hereto as Exhibit "TT" (Article
"19(A)(i)"), signed by the President of SPI and dated the Effective Date to such
effect.
(v) No Adverse Change. There shall not have occurred any
material adverse change since the Financial Statement Date and through the date
of the Effective Date in the business, properties, results of operations or
business or financial condition of SPI and SPI shall have delivered to Western a
certificate of SPI in the form annexed hereto as Exhibit "TT" (Article
"19(A)(i)"), signed by the President of SPI and dated the Effective Date to such
effect.
(vi) Statutory Requirements. Any statutory requirement for the
valid consummation by SPI of the transactions set forth in this Agreement shall
have been fulfilled; any authorizations, consents and approvals of all federal,
state, local and governmental agencies and authorities required to be obtained,
in order to permit consummation by SPI of the transactions set forth in this
Agreement and to permit the business presently carried on by SPI to continue
65
unimpaired following the Effective Date, shall have been obtained, and SPI shall
have delivered to Western a certificate of SPI in the form annexed hereto as
Exhibit "TT" (Article "19(A)(i)"), signed by the President of SPI and dated the
Effective Date to such effect.
(vii) No Governmental Proceedings. No action or proceeding
shall have been instituted before a court or other governmental body by any
governmental agency or public authority to restrain or prohibit the transactions
set forth in this Agreement and SPI shall have delivered to Western certificates
of SPI in the form annexed hereto as Exhibit "TT" (Article "19(A)(i)"), signed
by the President of SPI and dated the Effective Date to such effect.
(viii) Consents Under Agreements. SPI shall have obtained the
consent or approval of each person whose consent or approval shall be required
in connection with the transactions set forth in this Agreement including, but
not limited to, Bank and Case, and Western shall have obtained the consent or
approval of each person whose consent or approval shall be required in
connection with the transactions set forth in this Agreement, and SPI shall have
delivered to Western a certificate of SPI in the form annexed hereto as Exhibit
"TT" (Article "19(A)(i)") signed by the President of SPI and dated the Effective
Date to such effect.
(ix) Release. Bank and Case shall have released Western,
Acquisition Corp. and Surviving Corporation, on or prior to the Asset Purchase
Closing, from any and all
66
obligations and liabilities of any kind, including without limitation, all
obligations and liabilities under the Loan or Credit Facilities described on
Exhibit "FF" (Article "8(B)") (collectively, the "Releases");
(x) Good Standing Certificate. On the Effective Date, SPI
shall provide a good standing certificate for SPI issued by the Secretary of
State of the State of Delaware complete and correct as of five (5) business days
prior to the date of the Effective Date.
(xi) Accredited Investor Questionnaire. Each Stockholder, as a
condition to receiving their Western Stock, shall have completed and returned to
SPI and Western a questionnaire which shall be in the form of Exhibit "ZZ"
(Article "20(A)(xi)"), which is attached hereto and made a part hereof,
representing that such Stockholder is an accredited investor.
(xii) Stockholder Escrow Agreement. SPI shall cause 400,000
shares of the Series B Preferred Stock to be delivered to Xxxxx & Fraade, P.C.
(the "Escrow Agent") and execute and deliver an escrow agreement by and between
Western and the Stockholders specified in the escrow agreement (the "Stockholder
Escrow Agreement"), which shall be in the form of Exhibit "AAA" (Article
"20(A)(xii)), which is attached hereto and made a part hereof.
B. Conditions to Western's Receipt of the SPI Escrow Items. The
delivery of the SPI Escrow Items (hereinafter defined in Paragraph "B" of
Article "21" of this Agreement) by
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the Escrow Agent to Western shall be subject to the following conditions:
(i) Representations and Warranties of Western to be True. To
Western's knowledge, the representations and warranties of Western set forth in
this Agreement shall be true in all material respects on the Effective Date with
the same effect as though made at such time, except to the extent waived or
affected by the transactions set forth in this Agreement; and Western shall have
delivered to SPI a certificate of Western in the form annexed hereto and made a
part hereof as Exhibit "XX" (Article "19(B)(i)"), signed by the President of
Western and dated the Effective Date to such effect;
(ii) Performance of Obligations of Western. Western shall have
performed all obligations and complied with all covenants set forth in this
Agreement to be performed or complied with in all material respects by it prior
to the Effective Date, and Western shall have delivered to SPI a certificate of
Western in the form annexed hereto as Exhibit "XX" (Article "19 (B)(i)"), signed
by the President of Western and dated the Effective Date to such effect;
(iii) No Adverse Change. There shall not have occurred any
material adverse change since the Form 10Q and through the date of the Effective
Date in the business, properties, results of operations or business or financial
condition of Western and Western shall have delivered to SPI a certificate of
Western in the form annexed hereto as Exhibit "XX"
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(Article "19(B)(i)"), signed by the President of Western and dated the Effective
Date to such effect.
(iv) Statutory Requirements. Any statutory requirement for the
valid consummation by Western of the transactions set forth in this Agreement
shall have been fulfilled; any authorizations, consents and approvals of all
federal, state and local governmental agencies and authorities required to be
obtained, in order to permit consummation by Western of the transactions set
forth in this Agreement and to permit the business presently carried on by
Western to continue unimpaired following the Effective Date, shall have been
obtained and Western shall have delivered to SPI a certificate of Western in the
form annexed as Exhibit "XX" (Article "19(B)(i)"), signed by the President of
Western and dated the Effective Date to such effect;
(v) No Governmental Proceedings. No action or proceeding shall
have been instituted before a court or other governmental body by any
governmental agency or public authority to restrain or prohibit the transactions
set forth in this Agreement and Western shall have delivered to SPI a
certificate of Western in the form annexed as Exhibit "XX" (Article "19(B)(i)"),
signed by the President of Western and dated the Effective Date to such effect;
(vi) Consents Under Agreements. Western shall have obtained
the consent or approval of each person whose consent or approval shall be
required in connection with the transactions set forth in this Agreement,
including, but not limited to, Bank and Case, and
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Western shall have delivered to SPI a certificate of Western in the form annexed
as Exhibit "XX" (Article "19(B)(i)"), signed by the President of Western and
dated the Effective Date to such effect;
(vii) Release. Bank and Case shall have released Western,
Acquisition Corp. and Surviving Corporation, on or prior to the Asset Purchase
Closing, from any and all obligations and liabilities of any kind, including
without limitation, all obligations and liabilities under the Loan or Credit
Facilities described on Exhibit "FF" (Article "8(B)") (collectively, the
"Releases");
(viii) Good Standing Certificate. On the Effective Date,
Western shall provide good standing certificates for Western issued by the
Secretary of State of the State of Delaware complete and correct as of five (5)
business days prior to the Effective Date;
(ix) Board Member. Western's Board of Directors shall elect
either Xxxxx Xxxxx or an individual to be designated by him to serve as a member
of the Board of Directors;
(x) Officer. The Board of Directors of Western shall select
Xxxxx X. Xxxxx or an individual designated by him to act as an Executive Vice
President of Western; and
(xi) Stockholder Escrow Agreement. SPI shall cause 400,000
shares of the Series B Preferred Stock to be delivered to Xxxxx & Fraade, P.C.
(the "Escrow Agent") and
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execute and deliver the Stockholder Escrow Agreement as set forth in
Subparagraph "(xii)" of Paragraph "(A)" of Article "20" of this Agreement.
(C) Option Plans. Upon the release of the Escrow Items pursuant to
Paragraphs "(A)" and "(B)" of this Article "20" of this Agreement and the
Western stockholders' approval of the conversion of the Series B Preferred Stock
into Common Stock, Western shall take such actions to assume each Stock Option
that remains unexercised in whole or in part as of the Effective Date and
substitute shares of Western Common Stock for the shares of SPI Common Stock
purchasable under each such assumed option ("Assumed Option"), which assumption
and substitution shall be effected as follows:
(i) the Assumed Option shall not give the optionee additional
benefits which such optionee did not have under the Stock Option before such
assumption and shall be assumed on the same terms and conditions as the Stock
Option being assumed, subject to clauses (ii) and (iii) below;
(ii) the number of shares of Western's Common Stock
purchasable under the Assumed Option shall be equal to the number of shares of
Western's Common Stock which the holder of the Stock Option being assumed would
have received (without regard to any vesting schedule) upon consummation of the
Merger had such Stock Option been exercised in full immediately prior to
consummation of the Merger; and
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(iii) the per share exercise price of such Assumed Option
shall be proportionately adjusted relative to the number of shares of Western's
Common Stock purchasable pursuant to this Subparagraph "(iii)" of this Paragraph
"C" of this Article "20" of this Agreement.
It is the intention of the parties that, to the extent that any such Stock
Option constituted an "incentive stock option" (within the meaning of Section
422 of the Code) immediately prior to the Effective Time, such Stock Option
shall continue to qualify as an incentive stock option to the maximum extent
permitted by Section 422 of the Code, and that the assumption of the SPI Stock
Options provided by this Subparagraph "(iii)" of this Paragraph "(C)" of this
Article "20" of this Agreement, satisfy the conditions of Section 424(a) of the
Code.
Western shall take all corporate action necessary to reserve for issuance
a sufficient number of shares of Western Common Stock for delivery upon exercise
of the Assumed Options, and, as soon as practicable after the Shareholders
Meeting but in no event later than ten (10) days after the Shareholders Meeting,
Western shall file a registration statement on Form S-8 (or other appropriate
form) with respect to the shares of Western Common Stock subject to the Assumed
Options, and shall use its best efforts to maintain the effectiveness of such
registration statement for so long as any of the Assumed Options remain
outstanding.
21. Documents, Checks, etc. to be Delivered at Closing.
A. At the Closing, Western and SPI shall execute an escrow agreement
(the "Escrow Agreement"), which shall be in the form of Exhibit "BBB" (Article
"21"), which is attached
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hereto and made a part hereof, pursuant to which Xxxxx & Fraade P.C. (the
"Escrow Agent") shall agree to act as Escrow Agent on behalf of Western to SPI
and receive and hold the items set forth in this Article "21" of this Agreement
until the Effective Date.
B. At the Closing, SPI shall deliver the following items to the
Escrow Agent to be held in escrow (the "SPI Escrow Items"):
(i) the stock certificates for the SPI Shares;
(ii) stock powers transferring the SPI Shares from the
Stockholders to Western, endorsed in blank, with the signatures guaranteed;
(iii) copies of the stock certificate and stock transfer books
of SPI;
(iv) copy of the minute books of SPI;
(v) the corporate seal of SPI;
(vi) all original insurance policies of SPI;
(vii) all book and records of SPI including, but not limited
to, contracts, deeds, bonds, notes, mortgages, leases, books, records,
documents, instruments, invoices, bills, vouchers, cancelled checks, checkbooks,
bank books of SPI and credit cards which are billed to SPI; and
(viii) an irrevocable proxy from Ocean Castle Partners, LLC,
Old Oak Fund, Inc., and Allied International Fund Inc. in favor of Xxxxxx Xxxxx
pursuant to Subparagraph "(xii)" of Paragraph "(A)" of Article "19" of this
Agreement.
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C. At the Closing, Western shall deliver the following items to the
Escrow Agent to be held in escrow (the "Western Escrow Items"; the "SPI Escrow
Items" and the "Western Escrow Items" are collectively referred to as the
"Escrow Items"):
(i) 650,000 shares of Western Power Common Stock for delivery
to Ocean Castle Partners, LLC, Old Oak Fund, Inc., and Allied International
Fund, Inc. pursuant to Paragraph "(i)" of Article "3" of this Agreement;
(ii) 2,235,000 shares of Series B Preferred Stock of Western
for delivery to the Stockholders pursuant to Paragraph "(ii)" of Article "3" of
this Agreement; provided, however 400,000 of such shares of Series B Preferred
Stock of Western shall be held in escrow pursuant to the Stockholder Escrow
Agreement; and
(iii) an irrevocable proxy from American United Global, Inc.
executed in favor of Xxxxx X. Xxxxx pursuant to Subparagraph "(ix)" of Paragraph
"(B)" of Article "19" of this Agreement.
22. Equitable Relief.
A. SPI acknowledges that Western shall be irreparably damaged if
this Agreement is not consummated. Therefore, in the event of any breach by SPI
of this Agreement,
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Western shall have the right, at its election, to obtain equitable relief
including, but not limited to, an order for specific performance of this
Agreement or an injunction, without the need to: (i) post a bond or other
security, (ii) to prove any actual damage or (iii) to prove that money damages
would not provide an adequate remedy. Resort to such equitable relief, however,
shall not be construed to be a waiver of any other rights or remedies which
Western may have for damages or otherwise.
B. Western acknowledges that SPI shall be irreparably damaged if
this Agreement is not consummated. Therefore, in the event of any breach by
Western of this Agreement, SPI shall have the right, at its election, to obtain
equitable relief including, but not limited to, an order for specific
performance of this Agreement or an injunction, without the need to: (i) post a
bond or other security, (ii) to prove any actual damage or (iii) to prove that
money damages would not provide an adequate remedy. Resort to such equitable
relief, however, shall not be construed to be a waiver of any other rights or
remedies which Western may have for damages or otherwise.
23. Method of Termination. This Agreement may be terminated prior to the
Effective Date, by any of the following methods:
(A) mutual consent of Western and SPI;
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(B) by written notice from any of Western, SPI or Acquisition Corp.
(i) if the Closing does not occur on or prior to December 31, 2001 (the
"Termination Date"); provided, however, that if the Closing shall not have
occurred on, or prior to, the Termination Date as a result of any action taken,
or failure to act, by any governmental or regulatory authority including, but
not limited to, the withholding of, or a delay in, any approval in connection
with any aspect of the transactions contemplated hereby, then the Termination
Date shall automatically be extended until a date which is a reasonable time
subsequent to the date upon which such governmental or regulatory action is
resolved which will allow the parties to complete the procedures required to
consummate the transactions contemplated hereby; provided, further, however,
that the right to terminate this Agreement pursuant to this Paragraph "(B)" of
this Article "23" of this Agreement shall not be available to any party whose
failure to fulfill any obligation pursuant to this Agreement has been the cause
of or resulted in the failure of the Closing to occur on or before such date;
(C) by SPI if there is a material breach of any representation or
warranty set forth in Articles "8" or "9" of this Agreement or any covenant or
agreement to be complied with or performed by Western and Acquisition Corp.
pursuant to the terms of this Agreement, including, but not limited to, the
covenants set forth in Article "10" of this Agreement, or the failure of a
condition set forth in Article "19" or Article "20" of this Agreement to be
satisfied (and such condition is not waived in writing by SPI) on or prior to
the Closing Date, or the occurrence of any event which results in the failure of
a condition set forth in Article "19" or Article "20" of this Agreement to be
76
satisfied on or prior to the Closing Date; provided, that, SPI may not terminate
this Agreement prior to the Closing if Western has not had an adequate
opportunity to cure such failure, pursuant to Article "25" of this Agreement; or
(D) by Western if there is a material breach of any representation
or warranty set forth in Article "7" of this Agreement or any covenant or
agreement to be complied with or performed by SPI pursuant to the terms of this
Agreement, including, but not limited to, the covenants set forth in Article
"10" of this Agreement, or the failure of a condition set forth in Article "19"
or Article "20" of this Agreement to be satisfied (and such condition is not
waived in writing by Western) on or prior to the Closing Date, or the occurrence
of any event which results in the failure of a condition set forth in Article
"19" or Article "20" of this Agreement to be satisfied on or prior to the
Closing Date; provided, that, Western may not terminate this Agreement prior to
Closing if SPI has not had an adequate opportunity to cure such failure.
24. Effect of Termination. If this Agreement is terminated pursuant to the
provisions set forth in Article "23" of this Agreement, this Agreement shall
become null and void and shall have no further effect, and no Party shall have
any liability with respect to this Agreement, including but not limited to the
provisions set forth in Subparagraph "(ii)" of Paragraph "(A)" of Article "19"
of this Agreement, Subparagraph "(ii)" of Paragraph "(A)" of Article "20" of
this Agreement, Subparagraph "(ii)" of Paragraph "(B)" of Article "19" of this
Agreement and
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Subparagraph "(ii)" of Paragraph "(B)" of Article "20" of this Agreement;
provided, however, that such termination shall not relieve any Party hereto of
any liability for any breach of this Agreement, and SPI's obligations set forth
in Article "6" of this Agreement, including but not limited to, the promissory
note referred to therein, shall remain in full force and effect.
25. Cooperation; Notice; Cure. Subject to compliance with applicable law,
from the date of this Agreement until the Effective Date, each of Western,
Acquisition Corp. and SPI shall confer on a regular and frequent basis with one
or more representatives of the other party to report on the general status of
ongoing operations. Western shall promptly provide SPI or its counsel with
copies of all of its filings made with the SEC or with any Governmental Entity
in connection with this Agreement, the Merger and the transactions contemplated
hereby and thereby. Each of Western, Acquisition Corp. and SPI shall notify the
other of, and will use all commercially reasonable efforts to cure before the
Effective Date, any event, transaction or circumstance, as soon as practical
after it becomes known to such party, that causes or will cause any covenant or
agreement of Western, Acquisition Corp. or SPI under this Agreement to be
breached or that renders or will render untrue any representation or warranty of
Western, Acquisition Corp. or SPI contained in this Agreement. Each of Western,
Acquisition Corp. and SPI also shall notify the other in writing of, and will
use all commercially reasonable efforts to cure, before the Effective Date, any
violation or breach, as soon as practical after it becomes known to such party,
of any representation, warranty, covenant or agreement made by Western,
Acquisition Corp. or SPI. No notice given pursuant to this paragraph
78
shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein.
26. Expenses. Each Party to this Agreement shall bear and pay its own
costs and expenses incurred in connection with the preparation, execution, and
delivery of this Agreement and the transactions set forth in this Agreement.
27. Survival of Representations, Warranties and Covenants.
A. The following representations and warranties shall survive the
Effective Date:
(i) Paragraphs "(B)", "(E)", and "(BB)" of Article "7" of this
Agreement;
(ii) Paragraph "(GG)" of Article "7" of this Agreement solely
to the extent 3that such Paragraph applies to Paragraphs "(B)",
"(E)", and "(BB)" of Article "7" of this Agreement;
(iii) Paragraph "(B)" of Article "8 of this Agreement;
(iv) Paragraph "(S)" of Article "8" of this Agreement, solely
to the extent that such Paragraph applies to Paragraph "(B)" of
Article "8" of this Agreement;
(v) Paragraph "(B)" of Article "9" of this Agreement; and
(vi) Paragraph "(K)" of Article "9" of this Agreement, solely
to the extent that such Paragraph applies to Paragraph"(B)" of
Article "9" of this Agreement;
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B. The following covenants shall survive the Effective Date:
(i) Article "2" of this Agreement;
(ii) Article "3" of this Agreement;
(iii) Article "4" of this Agreement
(iv) Article "5" of this Agreement;
(v) Article "6" of this Agreement;
(vi) Paragraph "(A)" of Article "10" of this Agreement;
(vii) Paragraph "(C)" of Article "10" of this Agreement
(viii) Paragraph "(D)" of Article "10" of this Agreement;
(ix) Paragraph "(E)" of Article "10" of this Agreement;
(x) Article "11" of this Agreement;
(xi) Article "12" of this Agreement; and
(xii) Article "28" of this Agreement.
C. Except as otherwise provided in Paragraphs "A" and "B" of this
Article "27" of this Agreement, the representations, warranties and covenants
set forth in this Agreement shall not survive the Effective Date.
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28. Indemnification.
A. Indemnification by SPI.
(i) In order to induce Western to enter into and perform this
Agreement, SPI does hereby indemnify, protect, defend and save and hold harmless
Western and each of its shareholders, affiliates, officers, directors, control
persons, employees, attorneys, agents, partners and trustees and personal
representatives of any of the foregoing ("Indemnified Parties"), from and
against any loss resulting to any of them from any material loss, liability,
cost, damage, or expense which the Indemnified Parties may suffer, sustain or
incur arising out of or due to a breach by SPI of the representations,
warranties and covenants set forth in Article "27" of this Agreement.
(ii) In order to induce Western to enter into and perform this
Agreement, SPI does hereby indemnify, protect, defend and save and hold harmless
the Indemnified Parties against any claims including, but not limited to
shareholder appraisal rights pursuant to ss.251 of the DGCL, made by any SPI
Stockholder who has not consented, as set forth in Paragraph "C" of Article "7"
of this Agreement, to SPI entering into this Agreement and the transactions set
forth in this Agreement.
B. Indemnification by Western, Acquisition Corp. and Surviving Corp.
In order to induce SPI to enter into and perform this Agreement, Western,
Acquisition Corp. and Surviving Corp. hereby jointly and severally indemnify,
protect, defend and save and hold harmless SPI and each of its shareholders,
affiliates, officers, directors, control persons, employees, attorneys, agents,
partners and trustees and personal representatives of any of the foregoing
("Indemnified
81
Parties"), from and against any loss resulting to any of them from any material
loss, liability, cost, damage, or expense which the Indemnified Parties may
suffer, sustain or incur arising out of or due to a breach by Western and/or
Acquisition Corp. and/or Surviving Corp. of the representations, warranties and
covenants set forth in Article "27" of this Agreement.
C. Reasonable Costs, Etc. The indemnification, which is set forth in
this Article "28" 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 reasonable costs, expenses, counsel fees, and expenses of
settlement relating thereto, whether or not any such liability or obligation
shall have been reduced to judgment.
D. Third Party Claims. If any demand, claim, action or cause of
action, suit, proceeding or investigation 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 following such Indemnified Party's receipt of such demand
or claim, shall notify the Indemnifying Party which notice shall contain a
reasonably thorough description of the nature and amount of the claim of
indemnification (the "Claim Notice"). The Indemnifying Party shall have ten (10)
days from receipt of the Claim Notice sent pursuant to Paragraph "(C)" of
Article "30" of this Agreement to exercise its 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 pursuant to
82
Paragraph "(C)" of Article "30" of this Agreement within such ten (10) day
period (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 any such demand, claim, action or cause of action, suit,
proceeding or investigation shall not relieve the Indemnifying Party from any
liability which the Indemnifying Party may have under this Article "28" of this
Agreement except to the extent such failure to notify the Indemnifying Party
prejudices the Indemnifying Party. The Indemnified Party shall use all
reasonable efforts to assist in the vigorous defense of such matters. All costs
and expenses incurred by the Indemnified Party in defending such third party
claims 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 any
such claim. If the Indemnifying Party does not elect to control the defense of
any such claim or demand, the Indemnified Party shall be entitled to undertake,
conduct and control the defense of such claim or demand (a failure by the
Indemnifying Party to send the Defense Notice to the Indemnified Party within
the aforesaid ten (10) day period shall be deemed to be an election by the
Indemnifying Party not to control the defense of any such claim or demand);
provided 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;
83
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. Notwithstanding the foregoing provisions of
this Article "28" of this Agreement, as a condition to the Indemnifying Party
either having the right to defend the subject claim, or having control over
settlement as indicated in the immediately proceeding sentence, the Indemnifying
Party shall execute an agreement which shall be in the form of Exhibit "CCC"
(Article "28(D)") which is annexed hereto and made a part hereof, acknowledging
its liability for indemnification pursuant to this of this Agreement. Whether
the Indemnifying Party shall control and assume the defense of such claim or
demand or only participate in the defense or settlement of any such claim or
demand, 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 the employees and counsel of
the Indemnified Party.
29. Construction. Each of the parties hereto hereby further acknowledges
and agrees that each has been advised by counsel during the course of
negotiations and had significant input in the development of this Agreement and
this Agreement shall not, therefore, be construed more strictly against any
party responsible for its drafting regardless of any presumption or rule
requiring construction against the party whose attorney drafted this agreement.
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30. Miscellaneous.
A. Headings. Headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
B. Enforceability. If any provision which is contained in this
Agreement, should, for any reason, be held to be invalid or unenforceable in any
respect under the laws of any State of the United States, such invalidity or
unenforceabilty shall not affect any other provision of this Agreement and in
this Agreement shall be construed as if such invalid or unenforceable provision
had not been contained herein.
C. Notices. Any notice or other communication required or permitted
hereunder shall be sufficiently given if sent by (i) mail by (a) certified mail,
postage prepaid, return receipt requested and (b) First Class mail, (ii)
overnight delivery with confirmation of delivery or (iii) facsimile transmission
with an original mailed by first class mail, postage prepaid, addressed as
follows:
If to SPI: SupplyPoint, Inc.
0000 Xxxxxxxx, Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx/Xxxxx Silver, Esq.
Facsimile No.: (000) 000-0000
85
with a copy to: Xxxxxxxx Xxxxxxxx Xxxxx & Xxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Western: Western Power & Equipment Corp.
0000 X.X. 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: C. Xxxx XxXxxx, President
Facsimile No.: (000) 000-0000
with a copy to: Xxxxx & Fraade, P.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
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If to Acquisition Corp. Western Power Acquisition Corp.
0000 X.X. 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: C. Xxxx XxXxxx, President
Facsimile No.: (000) 000-0000
with a copy to: Xxxxx & Fraade, P.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or in each case to such other address and facsimile number as shall have last
been furnished by like notice. If mailing by certified mail is impossible due to
an absence of postal service, notice shall be in writing and personally
delivered to the aforesaid addresses. Each notice or communication shall be
deemed to have been given as of the date so mailed or delivered as the case may
be; provided, however that any notice sent by facsimile shall be deemed to have
been given as of the date so sent if a copy thereof is also mailed by first
class mail on the date sent by facsimile, if the date of mailing is not the same
as the date of sending by facsimile, then the date of mailing by first class
mail shall be deemed to be the date upon which notice is given.
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D. Governing Law; Disputes. This Agreement shall in accordance with
Section 5-1401 of the General Obligations Law of New York in all respects be
construed, governed, applied and enforced under the internal laws of the State
of New York and the Corporate law of Delaware without giving effect to the
principles of conflicts of laws and be deemed to be an agreement entered into in
the State of New York and made pursuant to the laws of the State of New York.
Except as otherwise provided in this Article "30" of this Agreement, the parties
agree that they shall be deemed to have agreed to binding arbitration in New
York, New York, with respect to the entire subject matter of any and all
disputes relating to or arising under this Agreement including, but not limited
to, the specific matters or disputes as to which arbitration has been expressly
provided for by other provisions of this Agreement. Any such arbitration shall
be by a panel of three arbitrators and pursuant to the commercial rules then
existing of the American Arbitration Association in the State of New York,
County of New York. In all arbitrations, judgment upon the arbitration award may
be entered in any court having jurisdiction. The parties agree, further, that
the prevailing party in any such arbitration as determined by the arbitrators
shall be entitled to such costs and attorney's fees, if any, in connection with
such arbitration as may be awarded by the arbitrators. In connection with the
arbitrators' determination for the purpose of which party, if any, is the
prevailing party, they shall take into account all of the factors and
circumstances including, without limitation, the relief sought, and by whom, and
the relief, if any, awarded, and to whom. In addition, and notwithstanding the
foregoing sentence, a party shall not be deemed to be the prevailing party in a
claim seeking monetary damages, unless the amount of the arbitration award
exceeds the amount
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offered in a legally binding writing by the other party by fifteen percent (15%)
or more. For example, if the party initiating arbitration ("A") seeks an award
of $100,000 plus costs and expenses, the other party ("B") has offered A $50,000
in a legally binding written offer prior to the commencement of the arbitration
proceeding, and the arbitration panel awards any amount less than $57,500 to A,
the panel should determine that B has "prevailed". The parties specifically
designate the Courts in the City of New York, State of New York as properly
having jurisdiction for any proceeding to confirm and enter judgment upon any
such arbitration award. The parties hereby consent to and submit to personal
jurisdiction over each of them by the Courts of the State of New York in any
action or proceeding, waive personal service of any and all process and
specifically consent that in any such action or proceeding, any service of
process may be effectuated upon any of them by certified mail, return receipt
requested, in accordance with Paragraph "C" of this Article "30" of this
Agreement.
E. Entire Agreement. This Agreement and all documents and
instruments referred to herein (a) constitute the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and thereof, and (b)
except as provided in Paragraph "(I)" of this Article "30" of this Agreement,
are not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, neither Western,
Acquisition Corp. or SPI makes any other representations or
89
warranties, and each hereby disclaims any other representations and warranties
made by itself or any of its officers, directors, employees, agents, financial
and legal advisors or other representatives, with respect to the execution and
delivery of this Agreement or the transactions contemplated hereby,
notwithstanding the delivery or disclosure to the other or the other's
representatives of any documentation or other information with respect to any
one or more of the foregoing. This Agreement may not be amended, changed,
modified, extended, terminated or discharged orally, but only by an Agreement in
writing, which is signed by all of the parties to this Agreement.
F. Further Assurances. The parties agree to execute any and all such
other further instruments and documents, and to take any and all such further
actions which are reasonably required to effectuate this Agreement and the
intents and purposes hereof.
G. Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their heirs, executors, administrators,
personal representatives, successors and assigns.
H. Non-Waiver. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressly in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to insist
in any one or more cases upon the performance of any of the provisions,
90
covenants or conditions of this Agreement or to exercise any option herein
contained shall not be construed as a waiver or relinquishment for the future of
any such provisions, covenants or conditions, (ii) the acceptance of performance
of anything required by this Agreement to be performed with knowledge of the
breach or failure of a covenant, condition or provision hereof shall not be
deemed a waiver of such breach or failure, and (iii) no waiver by any party of
one breach by another party shall be construed as a waiver of any other or
subsequent breach.
I. Third Party Beneficiaries. This Agreement and all documents and
instruments referred to herein, except as provided in Articles "3" and "4" of
this Agreement, are not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
J. Confidentiality.
(i) Western and Acquisition Corp. recognize and acknowledge that
they had in the past and currently have access to certain confidential
information of SPI that is valuable, special and unique to SPI. Western and
Acquisition Corp. agree that, prior to the Effective Date, or if the
transactions contemplated by this Agreement are not consummated, they will not
use any of the confidential information for any purpose other than as
contemplated by and in accordance with the terms of this Agreement and will not
disclose such confidential information to any person, firm, corporation,
association or other entity for any purpose or reason whatsoever, except (a) to
SPI and to authorized representatives of SPI, and (b) to counsel and other
advisers and representatives of
91
Western, provided that such advisors or representatives (other than counsel)
agree to the confidentiality provisions of this Paragraph "(J)" of this Article
"30" of this Agreement, unless (a) such information becomes known to the public
generally through no fault of Western or Acquisition Corp., (b) disclosure is
required by law or the order of any governmental authority under color of law,
provided, that prior to disclosing any information pursuant to Paragraph "(J)"
of this Article "30" of this Agreement, Western and Acquisition Corp. shall, if
possible, give prior written notice thereof to SPI and provide SPI with the
opportunity to contest such disclosure, or (c) the disclosing party reasonably
believes that such disclosure is required in connection with the defense of a
lawsuit against the disclosing party. In the event of a breach or threatened
breach by Western or Acquisition Corp. of the provisions of this Paragraph "(J)"
of this Article "30" of this Agreement, SPI shall be entitled to an injunction
restraining Western and Acquisition Corp. from disclosing or using, in whole or
in part, such confidential information. Nothing herein shall be construed as
prohibiting SPI from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
(ii) SPI recognizes and acknowledges that it had in the past and
currently has access to certain confidential information of Western and
Acquisition Corp. that is valuable, special and unique to Western and
Acquisition Corp. SPI agrees that, prior to the Effective Date, or if the
transactions contemplated by this Agreement are not consummated, it will not use
any of the confidential information for any purpose other than as contemplated
by and in accordance with the terms of this Agreement and will not disclose such
confidential information to any person, firm,
92
corporation, association or other entity for any purpose or reason whatsoever,
except (a) to Western and Acquisition Corp. and to authorized representatives of
Western and Acquisition Corp., and (b) to counsel and other advisers and
representatives of SPI, provided that such advisors or representatives (other
than counsel) agree to the confidentiality provisions of this Paragraph "(J)" of
this Article "30" of this Agreement, unless (a) such information becomes known
to the public generally through no fault of SPI, (b) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this Paragraph "(J)" of
this Article "30" of this Agreement, SPI shall, if possible, give prior written
notice thereof to Western and Acquisition Corp. and provide Western and
Acquisition Corp. with the opportunity to contest such disclosure, or (c) the
disclosing party reasonably believes that such disclosure is required in
connection with the defense of a lawsuit against the disclosing party. In the
event of a breach or threatened breach by SPI of the provisions of this Section,
Western and Acquisition Corp. shall be entitled to an injunction restraining SPI
from disclosing or using, in whole or in part, such confidential information.
Nothing herein shall be construed as prohibiting Western and Acquisition Corp.
from pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
K. Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
93
L. Exhibits. All Exhibits annexed or attached to this Agreement are
incorporated into this Agreement by reference thereto and constitute an integral
part of this Agreement.
[END OF PAGE]
94
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
Attest:
Western Power & Equipment Corp.
By:_____________________________________
Name: C. Xxxx XxXxxx
Title: President, Chairman & CEO
SupplyPoint, Inc.
By:_____________________________________
Name: Xxxxx Xxxxx
Title: President, Chairman & CEO
95
EXHIBIT INDEX
Exhibit "A" Page 2 -- SupplyPoint Stockholder Schedule
Exhibit "B" Article "2(A)" -- Western Certificate of Merger
Exhibit "C" Article "3(ii)" -- Preferred Stockholder Schedule
Exhibit "D" Article "3(ii)" -- Western Certificate of Designation
Exhibit "E " Article "4(G)" -- Registration Rights Agreement
Exhibit "F" Article "5(D)" -- Employee Stock Option Plan
Exhibit "G" Article "6" -- Western Convertible Debenture
Exhibit "H" Article "6" -- SupplyPoint Promissory Note
Exhibit "I" Article "6" -- SupplyPoint Security Agreement
Exhibit "J" Article "7 (A)(iii)" -- SupplyPoint Articles of Incorporation
Exhibit "K" Article "7 (A)(iii)" -- SupplyPoint By-Laws
Exhibit "L" Article "7 (A)(iii)" -- SupplyPoint Certificate of Good Standing
Exhibit "M" Article "7(B)" -- SupplyPoint Capitalization Schedule
Exhibit "N" Article "7(C)" -- Certified Consent of the SupplyPoint
Stockholders
Exhibit "O" Article "7(D)" -- Certified Resolution of the
SupplyPoint Board of Directors
Exhibit "P" Article "7(K)" -- SupplyPoint Financial Statements Schedule
Exhibit "Q" Article "7(K)" -- SupplyPoint Disclosure Schedule
Exhibit "R" Article "7(O)" -- SupplyPoint Tax Schedule
Exhibit "S" Article "7(P)" -- SupplyPoint License Schedule
Exhibit "T" Article "7(Q)" -- SupplyPoint Lease Schedule
Exhibit "U" Article "7(R)" -- SupplyPoint Properties and Assets Schedule
Exhibit "V" Article "7(S)" -- SupplyPoint Real Property Schedule
Exhibit "W" Article "7(T)" -- SupplyPoint Insurance Schedule
Exhibit "X" Article "7(U)" -- SupplyPoint Contracts Schedule
Exhibit "Y" Article "7(W)" -- SupplyPoint Employee Compensation and Benefits
Schedule
Exhibit "Z" Article "7(X)" -- SupplyPoint Litigation Schedule
Exhibit "AA" Article "7(Y)" -- SupplyPoint Accounts Receivable Schedule
Exhibit "BB" Article "7(Z)" -- SupplyPoint Accounts Payable Schedule
Exhibit "CC" Article "7(AA)" -- SupplyPoint Financial Accounts Schedule
Exhibit "DD" Article "7(BB)" -- SupplyPoint Patents, Trademarks &
Tradenames Schedule
Exhibit "EE" Article "7(CC)" -- SupplyPoint Inventory Schedule
Exhibit "FF" Article "8(B)" -- Western Power Disclosure Schedule
Exhibit "GG" Article "8(B)" -- Western Power Capitalization Schedule
Exhibit "HH" Article "8(C)" -- Certified Resolution of the Western Power
Board of Directors
Exhibit "II" Article "8(G)" -- Western Power Litigation Schedule
Exhibit "JJ" Article "8(J)" -- Nasdaq Letters
Exhibit "KK" Article "8(O)" -- Western Power Tax Schedule
Exhibit "LL" Article "9(C)" -- Certified Resolution of the Acquisition
Corp. Board of Directors
Exhibit "MM" Article "11" -- Western Power Asset Purchase Agreement
96
Exhibit "NN" Article "11" -- Xxxx Xxxxxx Employment Agreement
Exhibit "OO" Article "11" -- Xxxx XxXxxx Employment Agreement
Exhibit "PP" Article "11" -- Xxxxxx Xxxxx Consulting Agreement
Exhibit "QQ" Article "13" -- Xxxxx Xxxxxx Employment Agreement, ,
Exhibit "RR" Article "13" -- Xxxxxx Xxxxx Offer Letter
Exhibit "SS" Article "13" -- Xxxxx Xxxx Offer Letter
Exhibit "TT" Article "19(A)(i)" -- SupplyPoint Certificate of
Representations and Warranties
Exhibit "UU" Article "19(A)(xi)" -- Fairness Opinion of Capitalink, L.C.
Exhibit "VV" Article "19(A)(xii)" -- SupplyPoint Irrevocable Proxy
Exhibit "WW" Article "19(B)(i)" -- Western Power Certificate of
Representations and Warranties
Exhibit "XX" Article "19(B)(i)" -- Western Power Certificate of
Representations and Warranties
Exhibit "YY" Article "19(B)(x)" -- Western Power Irrevocable Proxy
Exhibit "ZZ" Article "7(C)" -- Stockholder Questionnaire
Exhibit "AAA" Article "19(A)(xiii)" -- Stockholder Escrow Agreement
Exhibit "BBB" Article "20" -- Escrow Agreement
Exhibit "CCC" Article "27(D)" -- Indemnification Agreement
97
SUPPLYPOINT, INC.
Exhibit A
Stockholder Schedule
================================================================================
----------------------------------------------------------
Shares Upon
Shareholder Conversion
----------------------------------------------------------
----------------------------------------------------------
Ocean Castle Partners 8,505,604
----------------------------------------------------------
Gross Annuity Trust 1,992,840
----------------------------------------------------------
Gross Unit Trust 1,992,840
----------------------------------------------------------
Xxxxx, Xxxxxxx X. 79,589
----------------------------------------------------------
Xxxxxxx, Xxxxx X. 159,178
----------------------------------------------------------
Silver, X. Xxxxx 159,178
----------------------------------------------------------
Xxxxxxx, Xxxxx 1,592
----------------------------------------------------------
Xxxxx, Xxx 79,589
----------------------------------------------------------
Xxxxxxx, Xxxxxxx 39,795
----------------------------------------------------------
Xxxxx, Xxxxx 39,795
----------------------------------------------------------
Xxxxx, Xxx 100,000
----------------------------------------------------------
M.S.R.K. Holding 50,000
----------------------------------------------------------
Adika, Elan 150,000
----------------------------------------------------------
Allied International Fund, Inc. 2,222,501
----------------------------------------------------------
Xxxxxxx, Xxxxx 45,000
----------------------------------------------------------
Convergence Capital LLC 250,000
----------------------------------------------------------
D.C. Capital LLC 500,000
----------------------------------------------------------
Xxxxxxx, Xxxxxx 10,000
----------------------------------------------------------
Xxxxxxxx, Xxxxx 45,000
----------------------------------------------------------
Old Oak Fund LLC 1,492,749
----------------------------------------------------------
Wate, Xxxxx X. 25,000
----------------------------------------------------------
Xxxxxx, Xxxxxxxxx 50,000
----------------------------------------------------------
Xxxxxx, Xxxxxx 25,000
----------------------------------------------------------
Xxxxxx, Xxxxxxx 25,000
----------------------------------------------------------
Com Ind Multiformas LTDA 1,000,000
----------------------------------------------------------
Empire Ventures LTDA 1,000,000
----------------------------------------------------------
Xxxxxx Portfolio 500,000
----------------------------------------------------------
Harbor View Fund, Inc. 1,892,750
----------------------------------------------------------
XxXxxx, Xxxxxx 500,000
----------------------------------------------------------
Xxxxx, Xxxxxx 20,000
----------------------------------------------------------
Old Westbury Hebrew Congregation 27,000
----------------------------------------------------------
Xxxx, Xxx 20,000
----------------------------------------------------------
----------------------------------------------------------
Authorized Shares of Common Stock 23,000,000
----------------------------------------------------------
SUPPLYPOINT, INC.
Exhibit A
Stockholder Schedule (cont.)
================================================================================
------------------------------------------------
Options
------------------------------------------------
------------------------------------------------
Xxxxx, Xxxxxxx X. 100,000
------------------------------------------------
Xxxxxxx, Xxxxx X. 50,000
------------------------------------------------
Silver, X. Xxxxx 50,000
------------------------------------------------
Xxxxxxxxxxx, Xxxxx 126,000
------------------------------------------------
------------------------------------------------
Xxxxxx, Xxxxx 1,137,500
------------------------------------------------
Current Employees 390,000
------------------------------------------------
------------------------------------------------
Xxxxxxxx, Xxxxxx 25,000
------------------------------------------------
Xxxxxxxxx, Xxxx 25,000
------------------------------------------------
Xxxxxx, Xxxxxx 5,000
------------------------------------------------
Xxxxxxx, Xxxxx 5,000
------------------------------------------------
------------------------------------------------
Reserved for issuance pursuant to
ESOP 1,086,500
------------------------------------------------
------------------------------------------------
Total Options 3,000,000
------------------------------------------------
Exhibit B
CERTIFICATE OF MERGER
CERTIFICATE OF MERGER, dated this ___, day of May, 2001 pursuant to
Section 251 of the General Corporation Law of Delaware, between WPEC Acquisition
Corp., a Delaware corporation and SupplyPoint, Inc., a Delaware corporation.
WITNESSETH that:
WHEREAS, each of the constituent corporations desire to merge into a
single corporation, as hereinafter specified; and
WHEREAS, the registered office of said WPEC Acquisition Corp., the
surviving corporation, in the State of Delaware is located at _________________,
and the name of its registered agent at such address is _______________________;
and the registered office of SupplyPoint, Inc., the merged corporation, in the
State of Delaware is located at 0000 Xxxxxx Xxxxxx in the City of Wilmington,
County of New Castle, and the name of its registered agent at such address is
The Corporation Trust Company.
--------------------------------------------------------------------------------
NOW, THEREFORE, the corporations, parties to this Agreement, in
consideration of the mutual covenants, agreements and provisions hereinafter
contained do hereby prescribe the terms and conditions of said merger and mode
of carrying the same into effect as follows:
FIRST: SupplyPoint, Inc., the merged corporation, hereby merges into WPEC
Acquisition Corp., the surviving corporation.
SECOND: The Certificate of Incorporation of WPEC Acquisition Corp., which
is the surviving corporation, as in effect on the date of the merger provided
for in this Agreement, shall continue in full force and effect as the
Certificate of Incorporation of the corporation surviving this merger.
THIRD: The manner of converting the outstanding shares of the capital
stock of the merged corporation into the shares or other securities of the
surviving corporation shall be as follows:
(a) Pursuant to the Merger Agreement dated as of the 1st day of May, 2001
by and among Western Power & Equipment Corp., WPEC Acquisition Corp. and
SupplyPoint, Inc., 650,000 shares of the common stock of Western Power &
Equipment Corp., the parent corporation of WPEC Acquisition Corp., and 2,235,000
shares of preferred stock of Western Power & Equipment Corp., each of which is
convertible into 10 shares of
2
common stock of Western Power & Equipment Corp. upon approval of Western Power &
Equipment Corp.'s stockholders and the satisfaction of certain other conditions,
shall be outstanding on the effective date of this merger, and all rights in
respect thereof shall forthwith be issued to the stockholders of SupplyPoint,
Inc. in accordance with the Merger Agreement, and
(b) After the effective date of this merger, each outstanding certificate
representing shares of common stock of the merged corporation shall be deemed
null and void and each such holder shall be entitled to receive the number of
shares of common stock and/or preferred stock of Western Power & Equipment
Corp., the parent of the surviving corporation, on the basis provided herein.
Until the shares of common stock of the merged corporation are deemed null and
void on the effective date of the merger, the outstanding shares of the stock of
the merged corporation to be converted into the stock of the parent of the
surviving corporation provided herein may be treated by the surviving
corporation for all corporate purposes as evidencing the ownership of shares of
the surviving corporation though said exchange had not taken place. After the
effective date of this Agreement, each registered owner of any uncertificated
shares of common stock of the merged corporation shall have said shares
cancelled and said registered owner shall be entitled to the number of common
shares and/or preferred shares of Western Power & Equipment Corp., the parent of
the surviving corporation, on the basis provided herein.
FOURTH: The terms and conditions of the merger are as follows:
3
(a) The bylaws of the surviving corporation as they shall exist on the
effective date of this merger shall be and remain the bylaws of the surviving
corporation until the same shall be altered, amended or repealed as therein
provided,
(b) The directors and officers of the surviving corporation shall be: (A)
Xxxxxx X. Xxxxx, (B) C. Xxxx XxXxxx, (C) Xxxxx. X. Xxxxx, (D) Xxxxxxx X. Xxxxx,
(E) Xxxxx X. Xxxxxx and (F) Xx. Xxxxxx X. Xxxxx until the next annual meeting of
stockholders and until their successors shall have been elected and qualified,
(c) This merger shall become effective upon filing with the Secretary of
State of Delaware. However, for all accounting purposes the effective date of
the merger shall be as of the close of business on _______________, 2001.
This merger shall become effective on _______________, 2001.
(d) Upon the merger becoming effective, all the property, rights,
privileges, franchises, patents, trademarks, licenses, registrations and other
assets of every kind and description of the merged corporation shall be
transferred to, vested in and devolve upon the surviving corporation without
further act or deed and all property, rights, and every other interest of the
surviving corporation and the merged corporation shall be as effectively the
property of the surviving corporation as they were of the surviving corporation
and the merged corporation respectively. The merged corporation hereby agrees
from time to time, as and when requested by the surviving corporation or by its
4
successors or assigns, to execute and deliver or cause to be executed and
delivered all such deeds and instruments and to take or cause to be taken such
further or other action as the surviving corporation may deem necessary or
desirable in order to vest in and confirm to the surviving corporation title to
and possession of any property of the merged corporation acquired or to be
acquired by reason of or as a result of the merger herein provided for and
otherwise to carry out the intent and purposes hereof and the proper officers
and directors of the merged corporation and the proper officers and directors of
the surviving corporation are fully authorized in the name of the merged
corporation or otherwise to take any and all such action.
FIFTH: Anything herein or elsewhere to the contrary notwithstanding, this
Agreement may be terminated and abandoned by the Board of Directors of the
surviving corporation or the merged corporation at any time prior to the time
that this merger filed with the Secretary of State becomes effective. This
Agreement may be amended by the Boards of Directors of the surviving corporation
or the merged corporation at any time prior to the time that this Certificate of
Merger filed with the Secretary of State becomes effective, provided that an
amendment made subsequent to the adoption of the Agreement by the stockholders
of any constituent corporation shall not (A) alter or change the amount or kind
of shares, securities, cash, property and/or rights to be received in exchange
for or on conversion of all or any of the shares of any class or series thereof
of such constituent corporation, (B) alter or change any term of the Certificate
of Incorporation of the surviving corporation to be effected by the merger or
(C) alter or change any of the terms and conditions of the Agreement if such
alteration or change
5
would adversely affect the holders of any class or series thereof of such
constituent corporation.
IN WITNESS WHEREOF, the parties to this Agreement, pursuant to the
approval and authority duly given by resolutions adopted by their respective
Board of Directors and that fact having been certified on said Agreement of
Merger by the Secretary (or Assistant Secretary) of each corporate party
thereto, have caused these presents to be executed by the President of each
party hereto as the respective act, deed and agreement of each of said
corporations, on this ____ day of ____, 2001.
WPEC Acquisition Corp.
By: ____________________________________
President
SupplyPoint, Inc.
By: ____________________________________
President
6
Exhibit B
CERTIFICATE OF THE SECRETARY
OF THE DELAWARE CORPORATION
I, Xxxx X. Xxxxxx, Secretary of WPEC Acquisition Corp., the surviving
corporation, a corporation organized and existing under the laws of the State of
Delaware, hereby certify, as such Secretary, that the Certificate of Merger to
which this Certificate is attached, after having been first duly signed on
behalf of said corporation and having been signed on behalf of SupplyPoint,
Inc., the merged corporation, a corporation of the State of Delaware, was duly
adopted pursuant to Section 228 of the General Corporation Law of Delaware by
the written consent of the stockholders holding shares of the capital stock of
the corporation, same being one hundred (100%) percent of the shares issued and
outstanding having voting power, which Certificate of Merger was thereby adopted
as the act of the stockholders of said WPEC Acquisition Corp., the surviving
corporation, and the duly adopted agreement and act of said corporation.
WITNESS, my hand on this ___________ day of May, 2001.
________________________________________
Secretary
Exhibit C
SUPPLYPOINT PREFERRED
STOCKHOLDER SCHEDULE
--------------------------------------------------------------------------------
Stockholder Shares of
----------- Common Stock
------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Adika, Elan 15,000
--------------------------------------------------------------------------------
Allied International Fund, Inc. 206,000.1
--------------------------------------------------------------------------------
Xxxxxxx, Xxxxxxx 3,979.5
--------------------------------------------------------------------------------
Xxxxxxx, Xxxxx 4,500
--------------------------------------------------------------------------------
Xxxxxx Portfolio 50,000
--------------------------------------------------------------------------------
Xxxxx, Xxx 10,000
--------------------------------------------------------------------------------
Com Ind Multiforms LTDA 100,000
--------------------------------------------------------------------------------
Xxxxx, Xxxxxxx T 7,958.9
--------------------------------------------------------------------------------
Convergence Capital LLC 25,000
--------------------------------------------------------------------------------
D. C. Capital LLC 50,000
--------------------------------------------------------------------------------
Xxxxxx, Xxxxx 159.2
--------------------------------------------------------------------------------
Empire Ventures LTDA 100,000
--------------------------------------------------------------------------------
Xxxxxxx, Xxxxxx 1,000
--------------------------------------------------------------------------------
Gross Annuity Trust 199,284
--------------------------------------------------------------------------------
Gross Unit Trust 199,284
--------------------------------------------------------------------------------
Xxxxx, Xxx 7,958.9
--------------------------------------------------------------------------------
Harbor View Fund, Inc. 189,275
--------------------------------------------------------------------------------
Xxx Xxxx 2,000
--------------------------------------------------------------------------------
M.S.R.K. Holding Inc. 5,000
--------------------------------------------------------------------------------
Xxxxxxxx, Xxxxx 4,500
--------------------------------------------------------------------------------
Ocean Castle Partners 818,060.4
--------------------------------------------------------------------------------
Old Oak Fund LLC 133,024.9
--------------------------------------------------------------------------------
Old Westbury Hebrew 2,700
Congregation
--------------------------------------------------------------------------------
Xxxxxx XxXxxx 50,000
--------------------------------------------------------------------------------
Xxxxxx Xxxxx 2,000
--------------------------------------------------------------------------------
Xxxxx, Xxxxx 3,979.5
--------------------------------------------------------------------------------
Xxxxxxx, Xxxxx N 15,917.8
--------------------------------------------------------------------------------
Silver, X. Xxxxx 15,917.8
--------------------------------------------------------------------------------
Xxxxxx, Xxxxxx 2,500
--------------------------------------------------------------------------------
Xxxxxx, Xxxxxxxxx 5,000
--------------------------------------------------------------------------------
Xxxxxx, Xxxxxxx 2,500
--------------------------------------------------------------------------------
Wate, Devin J 2,500
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL 2,235,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Exhibit D
CERTIFICATE OF DESIGNATION, PREFERENCES
AND OTHER RIGHTS OF
SERIES A AND SERIES B PREFERRED STOCK OF
WESTERN POWER & EQUIPMENT CORP.
The undersigned, duly authorized officers of Western Power &
Equipment Corp., a Delaware corporation (the "Corporation"), do hereby certify:
1. The Certificate of Incorporation of the Corporation, provides the
following: (A) authorization for the issuance of Ten Million (10,000,000) shares
of Preferred Stock with a par value of $.01 each, and (B) the authorization of
the Board of Directors to cause the issuance, from time to time, of preferred
shares in one or more series. The Board of Directors is expressly vested with
the right:
"to provide for the issuance of Preferred Stock and in
connection therewith to fix by resolution providing for the
issue of such series, the number of shares to be included and
such of the preferences and relative participating, optional
or other special rights and limitations of such series,
including, without limitation, rights of redemption or
conversion into Common Stock to the fullest extent now or
hereafter permitted by the Delaware General Corporation Law."
2. The Board of Directors of the Corporation, pursuant to the
authorization of the Board of Directors expressly vested in it as aforesaid, on
May __, 2001 adopted the following resolution:
RESOLVED, that 1,000,000 of the Corporation's
authorized shares of Preferred Stock, shall be
designated "Series A Preferred Stock", par value $.01
per share, and shall have the rights, designation and
preferences set forth in the Certificate of Designation
which is annexed hereto as Exhibit "A", the form and the
terms of which are hereby approved.
3. The Board of Directors of the Corporation, pursuant to the
authorization of the Board of Directors expressly vested in it as aforesaid, on
May __, 2001 adopted the following resolution:
RESOLVED, that 2,500,000 of the Corporation's
authorized shares of Preferred Stock, shall be
designated "Series B Preferred Stock", par value $.01
per share, and shall have the rights, designation and
preferences set forth in the Certificate of Designation
which is annexed hereto as Exhibit "A", the form and the
terms of
which are hereby approved.
IN WITNESS WHEREOF, Western Power & Equipment Corp. has caused this
Certificate to be signed by C. Xxxx XxXxxx, its President and Xxxx X. Xxxxxx,
its Secretary, this ___ day of May __ 2001.
Attest: WESTERN POWER & EQUIPMENT CORP.
____________________________ By: ____________________________________
Xxxx X. Xxxxxx C. Xxxx XxXxxx
Secretary President
(SEAL)
EXHIBIT "A"
1. Designation, Amount and Par Value
The Board of Directors hereby designates the following two series of
preferred stock: "Series A Convertible Preferred Stock" and "Series B
Convertible Preferred Stock" (collectively, the "Preferred Stock"). The
authorized number of shares shall be 1,000,000 shares of Series A Convertible
Preferred Stock and 2,500,000 shares of Series B Convertible Preferred Stock .
Each share of Series A Convertible Preferred Stock shall have a par value of
$0.01 and a stated value (the "Series A Stated Value") equal to the sum of $2.00
plus all accrued dividends to the date of determination. Each share of Series B
Convertible Preferred Stock shall have a par value of $0.01 and a stated value
(the "Series B Stated Value") equal to the sum of $10.00 plus all accrued
dividends to the date of determination
2. Dividends.
A. The holder of each share of Series A Convertible Preferred Stock, par
value $.01, shall be entitled to receive, out of funds legally available for
that purpose, cumulative dividends accruing from and after the date of the Final
Closing of the Private Offering of its ten (10%) percent convertible promissory
notes, (the "Series A Commencement Date") equal to the rate of five (5 %)
percent of the Stated Value per share per annum, and no more, payable in shares
of Series A Preferred Stock in quarterly installments. All dividends declared
upon the Series A Convertible Preferred Stock shall be declared pro rata per
share. If any dividend with respect to the Series A Convertible Preferred Stock
would otherwise result in a fractional share, such fractional share shall be
rounded up to the nearest whole share if equal to or greater than a one half
(.5) share. Such fractional share shall be rounded down to the nearest whole
share if less than a one half (.5) share. Shares of Series A Convertible
Preferred Stock issued in payment of dividends shall be valued at the time of
such payment of dividends at the Series A Stated Value.
B. The holder of each share of Series B Convertible Preferred Stock, par
value $.01, shall be entitled to receive, out of funds legally available for
that purpose, cumulative dividends accruing after October 31, 2001, (the "Series
B Commencement Date") equal to the rate of five (5 %) percent of the Stated
Value per share per annum, and no more, payable in shares of Series B
Convertible Preferred Stock in quarterly installments. All dividends declared
upon the Preferred Stock shall be declared pro rata per share. If any dividend
with respect to the Series B Convertible Preferred Stock would otherwise result
in a fractional share, such fractional share shall be rounded up to the nearest
whole share if equal to or greater than a one half (.5) share. Such fractional
share shall be rounded down to the nearest whole share if less than a one half
(.5) share. Shares of Series B Preferred Stock issued in payment of dividends
shall be valued at all times at the Series B Stated Value.
C. Accrued dividends for the period commencing with the Series A
Commencement Date and the Series B Commencement Date (jointly, the "Commencement
Dates") and terminating with the date upon which the stockholders of the
Corporation approve the conversion of the Preferred Stock into Common Stock (the
"Shareholder Approval Date") shall be payable on the last day of each quarter of
the Corporation's fiscal year commencing with January 31, 2002. The Preferred
Stock shall be entitled to cumulative dividends which shall be deemed to accrue
from the Commencement Dates whether or not earned or declared and whether or not
there shall be net profits or net assets of the Corporation legally available
for the payment of such dividends. Any unpaid dividends upon the Preferred Stock
shall not bear interest. No dividends shall be declared, paid or set apart for
payment on any other stock of the Corporation (the "Other Stock"), including but
not limited to, the Corporation's common stock, $.001 par value (the "Common
Stock"), no distribution shall be made on the Other Stock (other than dividends
on the Common Stock payable in Common Stock) or any sum or sums set aside for or
applied to the purchase or redemption of any shares of Other Stock for any
reason prior to the full payment of cumulative dividends due with respect to the
Preferred Stock.
3. Rights upon Liquidation, Dissolution or Winding Up.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of shares of Preferred Stock then
outstanding shall be entitled, on a pro rata basis, to be paid out of the assets
of the Corporation available for distribution to its stockholders, whether from
capital, surplus or earnings, prior to any payment being made to the holders of
shares of Other Stock, an amount equal to the Stated Value per share of
Preferred Stock, plus an amount equal to the sum of all accumulated and unpaid
dividends through the date fixed for the payment of the distribution on the
shares of the Preferred Stock. If, upon any liquidation, dissolution or winding
up of the Corporation, the assets of the Corporation available for distribution
to its stockholders shall be insufficient to pay the holders of shares of
Preferred Stock the full amounts to which they shall be entitled, the holders of
shares of Preferred Stock shall share ratably in any distribution of assets in
proportion to their respective ownership of Preferred Stock. In the event of any
liquidation, dissolution or winding up of the Corporation, after payment shall
have been made to the holders of shares of Preferred Stock of the full amount to
which they shall be entitled, the holders of all other classes and series of the
capital stock of the Corporation, to the exclusion of the holders of shares of
the Preferred Stock, shall be entitled to share on a pro rata basis, according
to their respective rights and preferences, in all remaining assets of the
Corporation available for distribution to its stockholders. The consolidation or
merger of the Corporation with or into one or more other corporations, or the
sale or transfer by the Corporation of all or substantially all of its assets
shall not be deemed to be a liquidation, dissolution or winding up of the
Corporation.
4. Voting.
(A) Except as otherwise set forth in Paragraph "B" of this Article "4" of
this Exhibit "A" to the Certificate of Designation, Preferences and Other Rights
of Series A and Series B Preferred
2
Stock of Western Power & Equipment Corp. (the "Certificate of Designation") or
required by law, the holders of shares of Series A Preferred Stock and Series B
Preferred Stock shall not have the right to vote upon matters submitted to the
stockholders of the Corporation or to receive notice of any meeting of the
stockholders of the Corporation.
(B) The Corporation shall not, without the affirmative vote or consent of
the holders of shares representing a majority of the shares of Preferred Stock
then outstanding, acting as a separate class:
(i) in any manner authorize or create any class of capital stock
ranking, either as to payment of dividends or distribution of assets, prior to
or on a parity with the Preferred Stock;
(ii) in any manner, alter or change the designations, powers,
preferences or rights or the qualifications, limitations or restrictions of the
Preferred Stock;
(iii) authorize the issuance of any additional Preferred Stock;
(iv) agree to any provision in any agreement which would impose any
restriction upon the Corporation's ability to honor the exercise of any rights
of the holders of the Preferred Stock; or
(v) agree or otherwise commit to take any of the actions set forth
above; provided, however, that, except as otherwise provided by law, any such
vote or consent as set forth in this Paragraph "B" of this Article "4" of this
Exhibit "A" to the Certificate of Designation shall be sufficient authorization,
by the holders of the Preferred Stock, for any such action, and when such action
is effected upon such vote or consent, holders of shares of the Preferred Stock
dissenting from such action shall not have any rights other than the same rights
as all holders of the Preferred Stock, including, but not limited to, the right
to payment for their shares by reason of this provision.
(C) In addition to the other voting rights set forth herein, the
holders of Series B Preferred Stock shall have the exclusive right, voting
separately as a single class, to elect one person, to serve on the Board of
Directors of the Corporation (such director is referred to as the "Preferred
Stock Director"). The election of Xxxxx Xxxxx or an individual to be designated
by the Stockholders of SPI to serve on the Board of Directors of the Corporation
as set forth in Subparagraph "(ix)" of Paragraph "(B)" of Article "20" of the
Merger Agreement shall be deemed to be the Preferred Stock Director; provided,
however, that if the size of the Board of Directors shall be increased to
greater than five persons, then the holders of Series B Preferred Stock shall
have the right to elect that number of Preferred Stock Directors so that the
number of Preferred Stock Directors divided by the total number of members of
the Board of Directors (the "Preferred Director Percentage") is at least equal
to the Preferred Director Percentage immediately prior to the increase in the
size of the Board of Directors (without regard to any vacancy that shall exist
from time to time); provided further, however, that such number of Preferred
Stock Directors shall be rounded down to the nearest whole number. For example,
if there are five members of the Board of Directors
3
immediately prior to the increase in the size of the Board of Directors, the
Preferred Director Percentage immediately prior to the increase in the size of
the Board of Directors is twenty (20%) percent. If the size of the Board
subsequently increases to eight members, the holders of Series B Preferred Stock
shall have the right to elect one person to serve on the Board of Directors. If
the size of the Board subsequently increases to ten members, the holders of
Series B Preferred Stock shall have the right to elect two persons to serve on
the Board of Directors. In connection with any such vote of the Series B
Preferred Stock for Preferred Stock Directors, the holders of Series A Preferred
Stock shall be entitled to cast one vote per share of Series B Preferred Stock
held of record on the record date for the determination of the holders of Series
B Preferred Stock entitled to vote on such election. The Board of Directors may
not remove a Preferred Stock Director without approval of holders of shares
representing a majority of the Series B Preferred Stock.
5. Conversion.
Each holder of shares of Preferred Stock shall have the following rights
with respect to the conversion of his, her or its Preferred Stock into shares of
Common Stock:
(A) Subject to, and in compliance with the provisions of this Article "5"
of this Exhibit "A" to the Certificate of Designation, each holder of shares of
Series A Preferred Stock outstanding shall without any action on the part of the
holder thereof or the Corporation, be automatically converted into ten (10)
fully paid, validly issued, and non-assessable shares of Common Stock of the
Corporation, upon the occurrence of each of the following: (i) a vote of the
stockholders of the Corporation which approves the Merger Agreement, and (ii)
the Corporation has received the Releases from Deutsche Bank and Case
Corporation contemplated by Subparagraph "(ix) of Paragraph "A" of Article "20"
of the Merger Agreement.
(B) Upon the conversion of the Series A Preferred Stock, all rights of the
holders of the Preferred Stock including, but not limited to, any rights to
future dividends with respect to the Preferred Stock, shall cease and the person
or persons in whose name or names the certificate or certificates for the
Preferred Stock are held shall be treated for all purposes as having become
record owners of the Common Stock of the Corporation at that time.
(C) Subject to, and in compliance with the provisions of this Article "5"
of this Exhibit "A" to the Certificate of Designation, each holder of shares of
Series B Preferred Stock outstanding shall have the right to convert such
Preferred Stock, upon the occurrence of each of the following: (i) a vote of the
stockholders of the Corporation which approves the conversion of each share of
the Preferred Stock, into ten (10) fully paid, validly issued, and
non-assessable shares of Common Stock of the Corporation, (ii) a Registration
Statement contemplated by Article "4" of the Merger Agreement is declared
effective by the Securities and Exhange Commission (the "SEC"), and (iii) the
Corporation has received the Releases from Deutsche Bank and Case Corporation
contemplated
4
by Subparagraph "(ix) of Paragraph "A" of Article "20" of the Merger Agreement .
(D) Subject to, and in compliance with the provisions of this Article "5"
of this Exhibit "A" to the Certificate of Designation, each share of Series B
Preferred Stock outstanding shall without any action on the part of the holder
thereof or the Corporation, be automatically converted into ten (10) fully paid,
validly issued, and non-assessable shares of Common Stock of the Corporation,
upon the occurrence of the three events set forth in Paragraph "(B)" of this
Article "5" of this Exhibit "A" to the Certificate of Designation and the Asset
Purchase Closing contemplated in Article "11" of the Merger Agreement,
(E) Upon the conversion of the Series B Preferred Stock, all rights of the
holders of the Preferred Stock including, but not limited to, any rights to
future dividends with respect to the Preferred Stock, shall cease and the person
or persons in whose name or names the certificate or certificates for the
Preferred Stock are held shall be treated for all purposes as having become
record owners of the Common Stock of the Corporation at that time.
(F) At the time of conversion, the Corporation shall pay to the holder of
record of any share or shares of Preferred Stock surrendered for conversion any
accrued and unpaid cumulative dividends on the stock being converted.
(G) The issuance of certificates for shares of Common Stock upon the
conversion of Preferred Stock shall be made without charge for any tax with
respect to the issuance. However, if any certificate is to be issued in a name
or names other than the name or names of the holder of record of the Preferred
Stock converted, the person or persons requesting the issuance shall pay to the
Corporation the amount of any tax that may be payable in connection with any
transfer involved in the issuance, or shall establish to the satisfaction of the
Corporation that the tax has been paid or is not due and payable.
(E) The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Preferred Stock, such number of
its shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of the Preferred Stock, and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all of the then outstanding shares of the
Preferred Stock, the Corporation shall take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
(F) The Corporation shall not be required to issue fractional shares of
Common Stock upon the conversion of the Preferred Stock. The number of full
shares of Common Stock which shall be issued upon the conversion of the Series A
Preferred Stock shall be computed upon the basis of
5
the aggregate number of shares of Preferred Stock. If any interest in a
fractional share of Common Stock would otherwise be deliverable upon conversion
of the Preferred Stock, such fractional share shall be rounded up to the nearest
whole share if equal to or greater than a one half (.5) share. Such fractional
share shall be rounded down to the nearest whole share if less than a one half
(.5) share.
6. Capital Changes.
If the Corporation takes any action to increase or decrease the number of
outstanding shares of Common Stock (a "Capital Change"), then the number of
shares of Common Stock issuable upon the conversion of the Preferred Stock shall
be proportionately increased or decreased, as the case may be, so that, upon
conversion into Common Stock, the percentage interest of any holder of shares of
the Preferred Stock shall not be modified from what his, her or its then current
percentage interest in the Corporation would have been if the Preferred Stock
had been converted into Common Stock immediately prior to any such Capital
Change, effective in either case at the close of business on the date that the
Capital Change becomes effective. Notwithstanding the foregoing, (i) any
transaction in which securities of the Corporation are, pursuant to unanimous
approval by the Board of Directors of the Corporation, issued for reasonable and
fair consideration which is received by the Corporation after the date of this
Exhibit "A" to the Certificate of Designation, (ii) the Private Placement (as
defined in the Merger Agreement) and (iii) the issuance of any additional shares
of Common Stock upon the exercise of stock options granted prior to the date of
the Merger Agreement, shall be excluded from any adjustment pursuant to this
Article "6" of this Exhibit "A" to the Certificate of Designation. Any Capital
Change shall include, but shall not be limited to, any of the events which are
set forth below:
(A) a merger, reorganization or consolidation of the Corporation with or
into another entity or entities, whether or not the Corporation is the surviving
entity;
(B) the issuance of any previously authorized or newly authorized shares
of the Common Stock of the Corporation;
(C) a recapitalization of the outstanding shares of the Common Stock of
the Corporation, which has the effect of changing the percentage of shares of
Common Stock which shall be received by holders of shares of the Preferred Stock
upon conversion in relation to the total number of outstanding shares of the
Common Stock of the Corporation;
(D) the payment of any stock dividend or stock split;
(E) the distribution to any holders of securities of evidences of
indebtedness of the Corporation or of assets (excluding cash dividends paid from
retained earnings);
(F) the issuance after the date hereof of any stock options, warrants or
other rights to acquire shares of the capital stock of the Corporation; and
6
(G) if at any time or from time to time it shall appear to the Board of
Directors that conditions may arise by reason of any action proposed to be taken
by the Corporation, which conditions, in the opinion of the Board of Directors,
are not adequately provided for by any of the other provisions of this Article
"6" of this Exhibit "A" to the Certificate of Designation and which would affect
the conversion rights of the holders of the Preferred Stock, the conversion
ratio then in effect shall be adjusted in such manner as the Board of Directors,
in its reasonable discretion, may determine to be equitable under the
circumstances.
Upon the occurrence of any of the Capital Changes which are described in
this Article "6" of this Exhibit "A" to the Certificate of Designation or any
other event which might result in an adjustment to the number of shares of
Common Stock issuable upon the conversion of the Preferred Stock (any of such
Capital Changes is hereinafter referred to as an "Adjustment Event"), then, in
any such event, the Corporation shall immediately take whatever measures are
necessary including, but not limited to, the issuance of additional shares of
Common Stock of the Corporation or a surviving entity as the case may be, to
insure that the percentage interest in the Corporation of the holders of shares
of Preferred Stock is not modified from the percentage of stock which the
holders would own had no Adjustment Event occurred. Any adjustment which is
required by this Article "6" of this Exhibit "A" to the Certificate of
Designation shall be deemed effective retroactive to the date of the Adjustment
Event. These adjustments shall be made successively if more than one Adjustment
Event occurs. The provisions of this Article "6" of this Exhibit "A" to the
Certificate of Designation shall be applicable to any Adjustment Event which
occurs on or after the filing date of this Exhibit "A" to the Certificate of
Designation with the Secretary of State of the State of Delaware, which shall
occur on the Closing Date (as defined pursuant to the Merger Agreement).
7. Right to Put Shares.
(A) If the Series B Preferred Stock has not been converted into shares of
Common Stock pursuant to Article "5" of this Exhibit "A" to the Certificate of
Designation, each holder of shares of Series B Preferred Stock (individually, a
"Series B Preferred Holder") shall have the right, to be exercised as provided
for in Paragraph "B" of this Article "7" of this Exhibit "A" to the Certificate
of Designation, at any time and from time to time after September 30, 2002, to
require the Corporation, upon the terms and conditions set forth in this Article
"7" of this Exhibit "A" to the Certificate of Designation, to repurchase his,
her or its shares of Series B Preferred Stock (the "Put Option"), in whole or in
part, by paying to the Preferred Holders an aggregate of $7,000,000 which, based
upon 2,235,000 shares initially issued and outstanding, shall equal
approximately three dollars and thirteen cents ($3.13) for each share of Series
B Preferred Stock owned, plus any accrued and unpaid dividends;
(B) The Put Option shall be exercised by written notice (the "Put Notice")
from the Preferred Holder to the Corporation at 0000 X.X. 00xx Xxxxxx, Xxxxx
000, Xxxxxxxxx, XX, 00000, sent by either (i) certified mail, postage prepaid,
return receipt requested, (ii) overnight delivery with
7
confirmation of delivery or (iii) facsimile transmission with an original mailed
by first class mail, postage prepaid, demanding that the Corporation purchase
the number of shares of Series B Preferred Stock specified in the Put Notice.
(C) The closing of any purchase by the Corporation of shares of Series B
Preferred Stock pursuant to any exercise of a Put Option shall be held at the
offices of the Corporation upon a date selected by the Corporation, but not
later than thirty (30) days after delivery by the Preferred Holder to the
Corporation of a Put Notice relating to the shares of Series B Preferred Stock
to be purchased. At the closing:
(i) the Preferred Holder shall deliver to the Corporation the certificates
representing the shares of Series B Preferred Stock to be purchased, duly
endorsed for transfer or accompanied by stock powers transferring the shares.
(ii) the Preferred Holder shall provide the Corporation with certification
in a form acceptable to the Corporation's counsel that the shares of Series B
Preferred Stock conveyed are free and clear of all liens, encumbrances, charges
and other claims.
(iii) the Corporation shall pay the Purchase Price to the Preferred Holder
by delivery of the Corporation's check payable to the Preferred Holder.
The right to put the Series B Preferred Stock which is set forth in this
Article "7" of this Exhibit "A" to the Certificate of Designation is subject to
the condition precedent that both Deutsche Financial Services ("DFS") and Case
Corporation ("Case") , or any successor secured creditor to either of DFS or
Case (DFS, Case or any successor secured creditor are hereinafter collectively
referred to as the "Secured Creditors"), shall give their written consent to
this Article "7" of this Exhibit "A" to the Certificate of Designation; if any
of the Secured Creditors shall fail to give such consent, this Article "7" of
this Exhibit "A" to the Certificate of Designation shall be of no force and
effect and shall be null and void.
8
Exhibit E
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of the 1st day of May, 2001
by and between Western Power & Equipment Corp., a Delaware corporation with its
principal office at 0000 X.X. 00xx Xxxxxx, Xxxxx 000,Xxxxxxxxx, XX 00000 (the
"Company"), and the person whose name appears on the signature page attached
hereto (individually a "Holder" and collectively, with the other holders of the
Company's Series B Preferred Stock, the "Holders").
WHEREAS, pursuant to a Merger Agreement dated as of the 1st day of May,
2001 by and between Western Power & Equipment Corp., WPEC Acquisition Corp., a
wholly owned subsidiary of Western Power, and SupplyPoint, Inc. ("SPI"), the
Company has agreed to issue 650,000 shares of its Common Stock (the "Common
Stock") and 2,235,000 shares of its Series A Preferred Stock, each of which is
convertible into ten (10) shares of Common Stock pursuant to the terms and
conditions of the Merger Agreement.
WHEREAS, pursuant to the terms of, and in order to induce SPI to enter
into, the Merger Agreement and the Holders to consent thereto, the Company has
agreed to enter into this Registration Rights Agreement (the "Agreement");
WHEREAS, it is intended by the Company and the Holder that this Agreement
shall become effective immediately upon the Effective Date as defined in the
Merger Agreement;
NOW, THEREFORE, in consideration of the covenants of the parties which are
hereinafter set forth, and for other good and valuable consideration, receipt of
which is hereby acknowledged:
1
IT IS AGREED:
1. (A) Mandatory Registration. The Company shall file with the Securities
and Exchange Commission (the "Commission") a registration statement with respect
to the Common Stock and the shares of Common Stock issuable upon conversion of
the Series A Preferred Stock (collectively, the "Registrable Securities").
(B) Cooperation with Company - The Holder will cooperate with the Company
in all respects in connection with this Registration Rights Agreement,
including, but not limited to, timely supplying all information reasonably
requested by the Company and timely executing and returning all documents
reasonably requested in connection with the registration and sale of the
Registrable Securities.
2. Registration Procedures. Except as otherwise provided in this
Registration Rights Agreement, the Company shall:
(A) prepare and file with the Commission a registration statement within
forty-five (45) days after the Effective Date (said 45 days is contingent upon
SPI promptly providing any information which is required from SPI to be included
in the Registration Agreement).
(B) use its best efforts to cause such registration statement to become
effective and remain effective for a period of two (2) years after the date that
such registration statement becomes effective.
(C) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep
2
such registration statement effective and to comply with the provisions of the
Securities Act of 1933, as amended (the "Act") with respect to the sale or other
disposition of all securities covered by such registration statement.
(D) use its best efforts to (i) register or qualify the Registrable
Securities under the applicable blue sky laws and (ii) secure the quotation of
the Registrable Securities on the NASDAQ Small Cap Market (or other relevant
market).
(E) notify each Holder of Registrable Securities covered at any time by
such registration statement when a prospectus relating thereto covered by such
registration statement is required to be delivered under the Act, of the
happening of any event of which it has knowledge as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in view of the circumstances then existing.
3. Expenses. All expenses incurred in any registration of the Holders'
Registrable Securities under this Agreement shall be paid by the Company;
provided, however that if the Company does not raise $200,000 pursuant to the
Private Placement set forth in Article "6" of the Merger Agreement, the Company
shall not be required to bear the foregoing expenses; provided further, however,
that the Holders shall pay any and all fees and expenses of any legal counsel
selected by the Holders to represent them with respect to the foregoing.
3
4. Indemnification.
(A) Company's Indemnity. To the extent permitted by law, the Company shall
indemnify and hold harmless each Holder against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under the Act,
the Securities Exchange Act of 1934 (the "Exchange Act") or other Federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission to state therein a material
fact required to be stated therein, or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, (iii)
any violation by the Company of the Act, the Exchange Act, or (iv) any state
securities law or any rule or regulation promulgated under the Act, the Exchange
Act or any state securities law, and the Company shall reimburse each such
Holder for any legal or other expenses incurred by them in connection with
defending against any such loss, claim, damage, liability or action; provided,
however, that the company shall not be liable to any Holder or have any duties
to such Holder in any such case for any such loss, claim, damage, liability or
action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder or any
officer, director or controlling person of the Holder.
(B) Holders' Indemnity. Each Holder shall indemnify and hold harmless the
Company, its affiliates, its counsel, officers, directors, shareholders and
representatives, and each person, if
4
any, who controls the Company, against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under the Act,
the Exchange Act or any state securities law which arise out of or are based
upon any statements or information provided by such Holder to the Company in
connection with the offer or sale of Registrable Securities, and the Holder
shall reimburse the Company, its affiliates, officers, directors or partners or
controlling persons for any legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action.
(C) Notice; Right to Defend. Promptly after receipt by an indemnified
party under this Article "4" of this Registration Rights Agreement, of notice of
the commencement of any action (including any governmental action), such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party pursuant to this Article "4", deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in and if the indemnifying party agrees in
writing that it will be responsible for any costs, expenses, judgments, damages
and losses incurred by the indemnified party with respect to such claim, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof. The failure to deliver written notice to the indemnifying party within
a reasonable time after the commencement of any such action shall relieve such
indemnifying party of any liability to the indemnified party under this
Registration Rights Agreement only if and to the extent that such failure is
prejudicial to its ability to defend such action, and the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Registration
Rights Agreement.
5
(D) Contribution. If the indemnification provided for in this Registration
Rights Agreement is held by a court of competent jurisdiction to be unavailable
to an indemnified party with respect to any loss, liability, claim, damage or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other hand in connection with the statements or omissions which
resulted in such loss, liability, claim, damage or expense as well as any other
relevant equitable considerations. The relevant fault of the indemnifying party
and the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Notwithstanding the foregoing, the amount any Holder
shall be obligated to contribute pursuant to the Registration Rights Agreement
shall be limited to an amount equal to the proceeds to such Holder of the
Registrable Securities sold pursuant to the registration statement which gives
rise to such obligation to contribute (less the aggregate amount of any damages
which the Holder has otherwise been required to pay in respect of such loss,
claim, damage, liability or action or any substantially similar loss, claim,
damage, liability or action arising from the sale of such Registrable
Securities).
(E) Survival of Indemnity. The Indemnification provided by this
Registration Rights Agreement shall be a continuing right to indemnification and
shall survive the registration and sale
6
of any Registrable Securities by any person entitled to indemnification
hereunder and the expiration or termination of this Registration Rights
Agreement.
5. Assignment of Registration Rights. The rights of the Holders under this
Agreement, including the rights to cause the Company to register Registrable
Securities may not be assigned without the prior written consent of the Company.
6. Miscellaneous.
(A) Headings. Headings contained in this Registration Rights Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Registration Rights Agreement.
(B) Enforceability. If any provision which is contained in this
Registration Rights Agreement should, for any reason, be held to be invalid or
unenforceable in any respect under the laws of any state or of the United
States, such invalidity or unenforceability shall not affect any other provision
of this Agreement. Instead, this Registration Rights Agreement shall be
construed as if such invalid or unenforceable provisions had not been contained
herein.
(C) Notices. Any notices or other communication required or permitted
hereunder shall be sufficiently given if sent by (i) certified or registered
mail, postage prepaid, return receipt requested, (ii) overnight delivery with
confirmation of delivery or (iii) facsimile transmission with an original mailed
by first class mail, postage prepaid, addressed as follows:
7
To the Company: Western Power & Equipment Corp.
0000 X.X. 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: C. Xxxx XxXxxxx, President
Fax no.: (000) 000-0000
Copy To: Xxxxx & Fraade, P.C.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxx, Esq.
Fax No.: (000) 000-0000
To Holder:
or in each case to such other address as shall have last been by like notice. If
mailing by Registered or Certified Mail is impossible due to an absence of
postal service, notice shall be in writing and personally delivered to the
aforesaid address. Each notice or communication shall be deemed to have been
given as of the date so mailed or delivered, as the case may be; provided,
however that any notice sent by facsimile shall be deemed to have been given as
of the date sent by the facsimile if a copy of such notice is also mailed by
first class mail on the date sent by the facsimile, if the date of the mailing
is not the same as the date of sending by facsimile, then the date of mailing by
first class mail shall be deemed to be the date upon which notice is given.
(D) Governing Law; Disputes. This Registration Rights Agreement shall in
accordance with Section 5-1401 of the General Obligation Law of New York in all
respects be construed, governed, applied and enforced under the internal laws of
the State of New York and the Corporate law of Delaware without giving effect to
the principals of conflicts of laws and be deemed to be an agreement entered
into in the State of New York and made pursuant to the laws of the State of New
York. The parties of this Registration Rights Agreement shall be deemed to have
agreed to binding
8
arbitration in New York, New York with respect to the entire subject matter of
any and all disputes relating to or arising under this Registration Rights
Agreement. Any such arbitration shall be by a panel of three arbitrators
pursuant to the commercial rules then existing of the American Arbitration
Association in the State of New York, County of New York. In all arbitrations,
judgment upon the arbitration award may be entered in any court having
jurisdiction. The parties agree, further, that the prevailing party in any such
arbitration as determined by the arbitrators shall be entitled to such costs and
attorney's fees, if any, in connection with such arbitration as may be awarded
by the arbitrators. In connection with the arbitrators' determination for the
purpose of which party, if any, is the prevailing party, they shall take into
account all of the factors and circumstances including, without limitation, the
relief sought, and by whom, and the relief, if any, awarded, and to whom. In
addition, and notwithstanding the foregoing sentence, a party shall not be
deemed to be the prevailing party in a claim seeking monetary damages, unless
the amount of the arbitration award exceeds the amount offered in a legally
binding writing by the other party by fifteen percent (15%) or more. For
example, if the party initiating arbitration ("A") seeks an award of $100,000
plus costs and expenses, the other party ("B") has offered A $50,000 in a
legally binding written offer prior to the commencement of the arbitration
proceeding, and the arbitration panel awards any amount less than $57,500 to A,
the panel should determine that B has prevailed. The parties specifically
designate the Courts in the City of New York, State of New York as properly
having jurisdiction for any proceeding to confirm and enter judgment upon any
such arbitration award. The parties hereby consent to and submit to personal
jurisdiction over each of them by the Courts of the State of New York in any
action or proceeding, waive personal service of any and all process and
specifically consent that in any such action or proceeding, any service of
process may be effectuated upon any of them by certified mail, return receipt
requested.
9
E. Entire Agreement. This Registration Rights Agreement and all documents
and instruments referred to herein (a) constitute the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and thereof, and (b) are
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder. This Registration Rights Agreement may not be amended,
changed, modified, extended, terminated or discharged orally, but only by an
agreement in writing, which is signed by all of the parties to this Registration
Rights Agreement.
(F) Further Assurances. The parties agree to execute any and all such
other further instruments and documents, and to take any and all such further
actions which are reasonably required to effectuate this Registration Rights
Agreement and the intents and purposes hereof.
(G) Binding Agreement. This Registration Rights Agreement shall be binding
upon and inure to the benefit of the parties hereto and their heirs, executors,
administrators, personal representatives, successors and assigns.
(H.) Non-Waiver. Except as otherwise expressly provided herein, no waiver
of any covenant, condition, or provision of this Registration Right Agreement
shall be deemed to have been made unless expressly in writing and signed by the
party against whom such waiver is charged; and (i) the failure of any party to
insist in any one or more cases upon the performance of any of the provisions,
covenants or conditions of this Registration Rights Agreement or to exercise any
option herein contained shall not be construed as a waiver or relinquishment for
the future of
10
any such provisions, covenants or conditions, (ii) the acceptance of performance
of anything required by this Registration Rights Agreement to be performed with
knowledge of the breach or failure of a covenant, condition or provision hereof
shall not be deemed a waiver of such breach or failure, and (iii) no waiver by
any party of one breach by another party shall be construed as a waiver of any
other or subsequent breach.
(I.) Third Party Beneficiaries. This Registration Rights Agreement and all
documents and instruments referred to herein are not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
(J) Counterparts. This Registration Rights Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, undersigned have executed this Agreement as of the
date first above written.
________________________________________
Signature of Holder
Western Power & Equipment Corp.
By: __________________________________ ________________________________________
President Print Name of Holder
11
________________________________________
________________________________________
Print Address of Holder
12
Exhibit G
THIS NOTE AND THE CONVERTIBLE PREFERRED STOCK ISSUABLE UPON CONVERSION OF THIS
NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THE CONVERTIBLE PREFERRED
STOCK HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR
OFFERED FOR SALE, IN WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THAT ACT COVERING THIS NOTE AND/OR THE CONVERTIBLE
PREFERRED STOCK AND THE COMMON STOCK ISSUABLE UPON CONVERSION THEREOF, OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
CONVERTIBLE PROMISSORY NOTE
(the "Note")
WESTERN POWER & EQUIPMENT CORP.
Principal Sum: $___________________
Holder: __________________________
WESTERN POWER & EQUIPMENT CORP., a Delaware corporation (hereinafter
called "Western Power & Equipment" or the "Company"), hereby promises to pay the
Principal Sum set forth above (the "Principal Sum") to the order of the
above-referenced holder (the "Holder") on or before December 31, 2001 subject to
conversion as described below. This Note shall accrue interest at the rate of
ten percent (10%) per annum payable in stock from and after the date of
purchase. Accrued interest shall be payable upon maturity or on conversion
(each, an "interest payment date"). Interest shall be computed on the basis of a
360-day year.
1. Issuance. This Note is being issued pursuant to the terms of a Note Purchase
Agreement between the Company and the Holder (the "Subscription Agreement")
which contains, among other things, certain representations by the Holder as to
Holder's sophistication as an investor. In addition, the Subscription Agreement
contains certain covenants of the Company relating to the registration of the
Common Stock into which the Convertible Preferred Shares and the Note may be
converted under the Securities Act of 1933, as amended (the "Act").
2. Conversion.
(a) The Note shall be automatically converted into shares of Convertible
Preferred Stock upon the Final Closing of the Offering which shall take place on
before August 31, 2001, subject to one or more extensions in the sole and
absolute discretion of the Company (the "Closing"), at
1
the rate of $1,000 amount of the Note to one hundred (100) Shares of Convertible
Preferred Stock. The Convertible Preferred Stock shall be convertible into ten
(10) Shares of Common Stock $0.001 par value (the "Conversion Shares") for each
share of Convertible Preferred Stock (the "Conversion Rate") on the Western
Power & Equipment Stockholder Approval Date.
(b) Simultaneously with the issuance of this Note, the Company shall
reserve for issuance upon conversion of the Convertible Preferred Stock, the
total number of shares of Common Stock issuable upon conversion (as such number
may be adjusted from time to time in accordance with (c) below). The Company
shall use its best reasonable efforts promptly to list on NASDAQ, all of the
Conversion Shares.
(c) If any capital reorganization or reclassification of the Common Stock,
stock split, reverse stock split, stock combination, or consolidation or merger
of the Corporation with or into another corporation, or distribution of the
proceeds of any sale or conveyance of all or substantially all of its assets to
another corporation (a "Capital Event") shall be effected, then, as a condition
precedent of such Capital Event, the following provision shall be made: The
Holder of the Note shall, from and after the date of such Capital Event have the
right to receive upon the conversion of the Convertible Preferred Stock (in lieu
of the shares of Common Stock of the Corporation immediately theretofore
issuable upon the exercise of conversion rights), such shares of stock,
securities or assets as would have been issued or payable with respect to or in
exchange for the number of shares of Common Stock immediately theretofore
issuable upon conversion of the Convertible Preferred Stock received upon
conversion of the Note (regardless of whether the Convertible Preferred Stock
received upon conversion of the Note was actually convertible at such time). In
any such case, appropriate provision shall be made with respect to the rights
and interests of the Holders to the end that such conversion rights (including,
without limitation, provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable, in relation to any shares of stock,
securities or assets thereafter deliverable upon the conversion of the
Convertible Preferred Stock received upon conversion of the Note.
(d) In conjunction with the transactions contemplated hereby, the Company
undertakes and agrees to call one or more special stockholders meetings as
follows:
(i) After the closing pursuant to the Purchase Agreement (as that
term is defined in the Note Purchase Agreement) the Company
shall call a special meeting of its stockholders to vote upon
various matters, including, among other things, the conversion
of the Convertible Preferred Stock into shares of Common Stock
of the Company. The Corporation shall use its best efforts to
cause the special stockholders meeting to be held on or before
December 31, 2001. The date, if ever, on which the
stockholders of the Company approve the Purchase Agreement is
referred to herein as the "Western Power Stockholder Approval
Date".
(ii) If, for any reason, the Western Power Stockholder Approval
Date has not occurred by December 31, 2001, or the Purchase
Agreement has been terminated or abandoned prior to that date,
the Company will take all steps necessary to permit the
conversion of the Convertible Preferred Stock at the
2
Conversion Rate including, but not limited to, the call of a
special stockholders meeting and filing appropriate proxy
statements and other documents with the Securities and
Exchange Commission and NASDAQ. The Board of Directors of the
Company will recommend that the stockholders of the Company
vote in favor of such proposal.
3. Issuance of Conversion Shares. The Company covenants and agrees that all
Conversion Shares will, upon conversion of the Convertible Preferred Stock and
issuance in accordance with the terms hereof, be duly and validly issued, fully
paid and non-assessable.
4. Registration of Conversion Shares.
(a) Registration. The Company covenants and agrees that it shall
automatically and without any further instruction by the Holder, include the
maximum number of Conversion Shares under this Note in a S-3 or S-4 Registration
Statement pursuant to the Act to take effect within a reasonable time after the
Western Power Stockholder Approval Date and shall file such applications and
take such other commercially reasonable steps as may be necessary in order to
permit the resale by the Holder of the Conversion Shares under the laws of the
state in which the Holder's principal residence is located. The Company agrees
to use its best reasonable efforts to cause such registration to become
effective as soon as practical following the filing date. In the event that
shareholder approval is not obtained the Company agrees to file a Registration
Statement that includes the Conversion Shares on or before January 15, 2002.
(b) Expenses of Registration. All registration expenses incurred in
connection with any registration, qualification or compliance pursuant to
Paragraph 8(a) above, excluding any legal fees for separate counsel to the
Holder, underwriter discounts or non-accountable expense allowances payable with
respect to any Conversion Shares sold, shall be borne by the Corporation.
(c) Cooperation in Registration. As a condition to the registration of any
Conversion Shares, the Holder agrees to fully cooperate with the Company in
connection with the preparation of any registration statement or filings with
federal or state securities regulators, including, without limitation, the
completion and execution of questionnaires, representation letters and other
documents customarily required of selling stockholder in registered offerings of
securities. The Investor understands and agrees that the representations and
warranties of the Investor contained in this Agreement and the Purchaser
Statement, executed by each Holder, will be relied on by the Company in
preparing any such registration statement and related filings and that the
Investors will promptly notify the Company in writing of any material change in
or inaccuracy of such information, representations or warranties.
(d) Termination of Registration Rights. Notwithstanding anything to the
contrary set forth in this Section 8, the registration rights granted in this
Section 8 shall terminate with respect to any Conversion Shares at such time as
such Conversion Shares may be legally sold by the Holder in the public market
without volume limitations.
3
(e) Indemnification.
(i) The Company shall indemnify and hold harmless the Holder from
and against any and all losses, claims, damages and
liabilities caused by any untrue statement of a material fact
contained in any registration statement filed by the Company
under the Act by reason of this Section 8, any post-effective
amendment to such registration statement, or any prospectus
included therein, or caused by any omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any
such untrue statement or omission based upon information
furnished or required to be furnished in writing to the
Company by any Holder ( or the authorized representatives or
agents of such Holder) expressly for use therein, which
indemnification shall include each person, if any, who
controls the Holder within the meaning of the Act and each
officer, director, employee and agent of the Holders.
(ii) Each Holder shall indemnify and hold harmless the Company from
and against any and all losses, claims, damages and
liabilities caused by any untrue statement of a material fact
contained in any registration statement filed by the Company
under the Act by reason of this Section 8, any post-effective
amendment to such registration statement, or any prospectus
included therein, or caused by any omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any
such untrue statement or omission based upon information
furnished or required to be furnished in writing to the
Company by any Holder (or the authorized representatives or
agents of such Holder) expressly for use therein, which
indemnification shall include each person, if any, who
controls the Holder within the meaning of the Act and each
officer, director, employee and agent of the Company .
(iii) If for any reason the indemnification provided for in the
preceding paragraphs is held by a court of competent
jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or expense
referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by the indemnified
party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any
other relevant equitable considerations.
5. Events of Default and Acceleration of the Note.
(a) An "event of default" with respect to this Note shall exist if any one
or more of the following shall occur:
4
(i) The Company shall breach or fail to comply with any provision
of this Note and such breach or failure shall continue for
fifteen (15) days after written notice thereof to the Company
by any Holder of Notes.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties shall be appointed by court
order and such order shall remain in effect for more than
forty five (45) days; or the Company shall be adjudicated
bankrupt or insolvent; or a substantial part of the property
of the Company shall be sequestered by court order and such
order shall remain in effect for more than forty five (45)
days; or a petition to reorganize the Company under any
bankruptcy, reorganization or insolvency law shall be filed
against the Company and shall not be dismissed within sixty
(60) days after such filing.
(iii) The Company shall file a petition in voluntary bankruptcy or
request reorganization under any provision of any bankruptcy,
reorganization or insolvency law, or shall consent to the
filing of any petition against it under any such law.
(iv) The Company shall make an assignment for the benefit of its
creditors, or consent to the appointment of a receiver,
trustee or liquidator of the Company, or of all or any
substantial part of its properties.
(b) If an event of default referred to in clause (i) shall occur, the
Holder may, in addition to such Holder's other remedies, by written notice to
the Company, declare the principal amount of this Note, together with all
interest accrued thereon, to be due and payable immediately. Upon any such
declaration, such amount shall become immediately due and payable and the Holder
shall have all such rights and remedies provided for under the terms of this
Note and the Subscription Agreement. If an event of default referred to in
clauses (ii), (iii) or (iv) shall occur, the principal amount of this Note,
together with all interest accrued thereon, shall become immediately due and
payable and the Holder shall have all such rights and remedies, if any, provided
for under the terms of this Note and the Subscription Agreement.
6. Interest Rate Limitation. It is the intent of Holder and the Company in the
execution of this Note, that the loan evidenced hereby be exempt from the
restrictions of applicable state usury laws. In the event that for any reason,
it should be determined that any such usury law is applicable to this Note,
Holder and the Company stipulate and agree that none of the terms and provisions
contained herein shall ever be construed to create a contract for the use,
forbearance or detention of money requiring payment of interest at a rate in
excess of the maximum interest rate permitted to be charged by the laws of such
state. In such event, if the Company shall collect monies which are deemed to
constitute interest which would otherwise increase the effective interest rate
on this Note to a rate in excess of the maximum rate permitted to be charged by
applicable state law, all such sums shall, at the option of Holder, be credited
to the payment of the sums due hereunder or returned by the Company.
3. Commissions.
5
The Company will pay any member of the NASD a commission equal to ten
percent (10%) on any placement made by the member.
8. Miscellaneous.
(a) All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telegram, by facsimile,
recognized overnight mail carrier, telex or other standard form of
telecommunications, or by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows: (a) if to the Holder, to such address
as such Holder shall furnish to the Company in accordance with this Section, or
(b) if to the Company, to it at its headquarters office, or to such other
address as the Company shall furnish to the Holder in accordance with this
Section.
(b) This Note shall be governed and construed in accordance with the laws
of the State of New York applicable to agreements made and to be performed
entirely within such state.
(c) The Company waives protest, notice of protest, presentment, dishonor,
notice of dishonor and demand.
(d) If any provision of this Note shall for any reason be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereof, but this Note shall be construed as if such invalid
or unenforceable provision had never been contained herein.
(e) The waiver of any event of default or the failure of the Holder to
exercise any right or remedy to which it may be entitled shall not be deemed a
waiver of any subsequent event of default or of the Holder's right to exercise
that or any other right or remedy to which the Holder is entitled.
(f) Upon the occurrence of an uncured event of default, the Holder of this
Note shall be entitled to recover its legal and other costs of collecting on
this Note, and such costs shall be deemed added to the principal amount of this
Note.
(g) In addition to all other remedies to which the Holder may be entitled
hereunder, Holder shall also be entitled to decrees of specific performance
without posting bond or other security.
(h) This Note may not be changed, modified, extended, terminated or
discharged orally, but only by an agreement in writing, which is signed by the
Company and the Holder.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
on the date set forth below.
Dated: ___________________
6
WESTERN POWER & EQUIPMENT CORP.
By:____________________________________________
C. Xxxx XxXxxx, Chief Executive Officer
7
EXHIBIT "H"
PROMISSORY NOTE
$100,000.00
New York, NY
March 30, 2001
FOR VALUE RECEIVED, SupplyPoint, Inc., a Delaware corporation, having an address
at 0000 Xxxxxxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000 (the "Payor"), agrees to pay
to the order of Western Power & Equipment Corp., a Delaware Corporation, having
an address at 0000 X.X. 00xx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX, 00000 (the
"Payee") and its successors-in-interest or assigns, in accordance with the terms
of this Promissory Note (the "Promissory Note"), upon demand, the principal sum
of One Hundred Thousand ($100,000.00) Dollars pursuant to the provisions of
Section 1.1 of Article I of this Promissory Note, with interest on the aforesaid
amount as calculated pursuant to the provisions of Section 1.2 of Article I of
this Promissory Note.
This Promissory Note evidences a loan being made by the Payee to the
Payor. Upon execution of a proposed merger agreement by and among the Payor,
Payee, and Western Power Acquisition Corp. (the "Merger Agreement"), this
Promissory Note will be superceded and replaced with a promissory note in the
form of Exhibit "A", which is attached hereto and made a part hereof. This
Promissory Note is entitled to the benefits and security provided by that
certain Security Agreement in the form of Exhibit "B" which is attached hereto
and made a part hereof , executed simultaneously with this Promissory Note by
and between the Payee and the Payor (the "Security Agreement").
1
ARTICLE I
METHOD OF PAYMENT
1.1 Payment of Principal
Payment of the principal sum of One Hundred Thousand ($100,000.00)
Dollars, shall be immediately due and payable, upon demand, at which time, all
amounts of principal and interest outstanding pursuant to this Promissory Note
shall become due and payable. All payments of principal pursuant to this
Promissory Note shall be made without offset or deduction.
1.2 Payment of Interest
Interest on the unpaid principal balance shall be calculated from the date
of this Promissory Note through and including the date of repayment at an
interest rate equal to ten (10%) percent per annum until this Note is paid in
full and shall be due and payable upon demand, at which time, all outstanding
amounts due pursuant to this Promissory Note shall become due and payable.
Interest shall be calculated upon the basis of a three hundred sixty (360) day
year of twelve (12) thirty (30) day months (as to all outstanding amounts),
calculated for the actual number of days elapsed. All payments of interest
pursuant to this Promissory Note shall be made without offset or deduction.
1.3 Place and Manner of Repayment
(A) Repayment of this Promissory Note by the Payor shall be made by either
(i) bank, cashier's or teller's check which is drawn upon a member bank of the
Federal Reserve System to the Payee at the Payee's address which is set forth
above or at such other place as shall be designated in writing by the Payee to
the Payor, or (ii) wire transfer pursuant to the Payee's written instructions.
(B) All payments shall be made in lawful money of the United States of
America. If any
2
payment of principal or interest becomes due and payable on a Saturday, Sunday
or such other day upon which banks are not required to be open for business in
the State of New York, such payment shall be made on the next such succeeding
day on which banks are required to be open for business in the State of New
York, and such extension of time shall in such case be included in computing
interest in connection with such payment.
1.4 Default on Any Payment.
Any principal and interest and other amounts, payable pursuant to this
Promissory Note which is not paid when due (whether on a scheduled payment date,
by acceleration pursuant to this Promissory Note or otherwise) shall bear
interest from and including the date due to but excluding the date paid in full
at the lesser of twenty-four and ninety-nine hundredths (24.99%) percent or the
highest permissible rate then allowable under the law of the State of New York
("Default Interest"). Default Interest shall be payable ON DEMAND together with
any payment of principal or interest due pursuant to this Promissory Note.
Default Interest shall be calculated upon the basis of a three hundred sixty
(360) day year of twelve (12) thirty (30) day months (as to all outstanding
amounts), calculated for the actual number of days elapsed. All payments of
Default Interest shall be made without offset or deduction.
ARTICLE II
THE PAYOR'S REPRESENTATIONS
The Payor represents and warrants to the Payee that:
2.1 Company Status (i) The Payor is a corporation duly organized, validly
existing and in good standing under the laws of Delaware with all requisite
power and authority to carry on its business as presently conducted in all
jurisdictions where presently conducted, to execute and deliver
3
this Promissory Note and to perform its obligations pursuant to this Promissory
Note (the "Obligations").
(ii) Copies of (a) the Certificate of Incorporation, and all amendments
thereto to date for the Grantor, certified by the Secretary of State of the
State of Delaware, and (b) the Bylaws of the Payor, as amended to date,
certified by the Secretary of the Payor, in the forms of Exhibits "C" and "D",
respectively, which are annexed hereto and made a part hereof, and are complete
and correct as of the date of this Promissory Note.
2.2 Collateral. (i) . (i) All collateral (the "Collateral") including, but
not limited to, the Intellectual Property (as defined in the Security Agreement)
is described on Exhibit "C", which is attached to the Security Agreement and
made a part thereof, and is located at the locations set forth on Exhibit "C" to
the Security Agreement (the "Collateral Locations"), and the Payor has no other
place or places of business;
(ii) The Payor is the legal and beneficial owner of all Collateral.
2.3 Authority and Due Authorization. The Payor has full authority, right,
power and legal capacity to execute and deliver this Promissory Note and to
consummate the transactions which are provided for herein. The execution of this
Promissory Note by the Payor, and its delivery to the Payee and the consummation
by the Payor of the transactions which are contemplated herein have been duly
approved and authorized by all necessary action by the Payor's Board of
Directors. A certified copy of the Board of Directors resolution approving and
authorizing this Promissory Note
4
in the form of Exhibit "E"which is attached hereto and made a part hereof. No
consent of any person is necessary in connection with the execution or delivery
of this Promissory Note by the Payor or the performance by the Payor of the
Obligations pursuant to this Promissory Note. No further action shall be
necessary on the part of the Payor for the performance and consummation by the
Payor of the transactions which are contemplated by this Promissory Note.
2.4 Compliance with the Law and other Instruments. Except as otherwise
provided in this Promissory Note and in the Exhibits annexed hereto, the
business and operations of the Payor have been and are being conducted in
accordance with all applicable laws, rules and regulations of all authorities
which affect the Payor or its properties, assets, businesses or prospects. The
execution, delivery and performance of this Promissory Note does not violate any
law or any agreement or undertaking to which the Payor is a party or by which
the Payor may be bound and shall not result in any breach of, or constitute a
default under, or result in the imposition of any lien or encumbrance, upon any
of the Collateral, including, but not limited to Intellectual Property, other
than the lien created by the Security Agreement, or cause an acceleration under
any arrangement, agreement or other instrument to which the Payor is a party or
by which any of the Collateral is bound. The Payor has performed in all respects
all of its obligations which are, as of the date of this Promissory Note,
required to be performed by it pursuant to the terms of any such agreement,
contract or commitment. The Payor is not in default with respect to any
agreement, contract or commitment to which it is a party or by which it is
bound, which default could reasonably be expected to have an adverse effect upon
the business of the Payor, its ability to perform its
5
Obligations hereunder or under the Security Agreement, or upon the
enforceability of this Promissory Note or the Security Agreement.
2.5 Other Liens. The Payor has not created and is unaware of any lien on
or affecting any of the Collateral other than the lien created by the Security
Agreement in favor of the Payee which constitutes a valid and legal security
interest in all of the Collateral for the payment and performance of the
Obligations hereunder or pursuant to the Security Agreement. The Payor has
executed and delivered to the Payee such Uniform Commercial Code financing
statements containing the description of the Collateral set forth on Exhibit "C"
to the Security Agreement, as the Payee has requested with respect to the
security interest granted pursuant to the Security Agreement.
2.6 Litigation. Except as set forth in Exhibit "F" which is attached
hereto and made a part hereof, there are no legal, administrative, arbitration,
or other proceeding or governmental investigation affecting the Payor or its
assets or with respect to any matter arising out of the conduct of the business
of the Payor, pending or threatened, by or against the Payor or any of its
officers or directors in connection with the Payor's affairs, whether or not
covered by insurance. The Payor is not presently engaged in or contemplating any
legal action to recover claims for monies which are due to it or for damages
which were sustained by it. Neither the Payor nor its officers, directors or
employees are subject to any order, writ, injunction, or decree of any Court,
department, agency or instrumentality, affecting the Payor.
2.7 Solvency. The Payor is solvent, able to pay its debts as they mature,
has capital sufficient to carry on its business and all businesses in which it
is about to engage and the fair saleable value of its assets (calculated on a
going concern basis) is in excess of the amount of its
6
liabilities.
2.8 Complete Disclosure. No representation or warranty of the Payor which
is contained in this Promissory Note, or in a writing furnished to the Payee by
the Payor pursuant to this Promissory Note, contains or shall contain any untrue
statement of material fact, omits or shall omit to state any material fact which
is required to make the statements which are contained herein or therein, in
light of the circumstances under which they were made, not misleading. There is
no fact, known to the Payor, relating to the business, affairs, operations,
conditions (financial or otherwise) or prospects of the Payor which would
materially adversely affect same which has not been disclosed to the Payee in
this Promissory Note.
2.9 No Defense. It shall not be a defense to a suit for damages for any
misrepresentation or breach or warranty that the Payee knew or had reason to
know that any covenant, representation or warranty in this Promissory Note, or
furnished or to be furnished to the Payee contained untrue statements.
ARTICLE III
THE PAYOR'S AFFIRMATIVE COVENANTS
Unless and until all of the Obligations of the Payor have been paid in
full, the Payor shall:
3.1 Keep the Collateral free and clear of any and all liens and
encumbrances of any kind other than the lien created by the Security Agreement;
3.2 Promptly defend the Collateral against any and all claims and demands
of all persons at any time claiming any interest in the Collateral adverse to or
the same as that of the Payee;
3.3 To the Payee's satisfaction, at all times keep all insurable
Collateral insured at the expense of the Payor against loss by fire, theft and
any other risks to which the Collateral may be
7
subject, and cause all such policies to be endorsed in favor of the Payee and to
list the Payee as loss payee and as an additional insured, and if the Payee so
requests, give such policies to the Payee, and the Payor shall cause all such
policies to provide that each insurer will give the Payee not less than thirty
(30) days prior written notice before giving notice of cancellation;
3.4 Keep the Collateral in good condition at all times (normal wear and
tear excepted) and provide to the Payee such information as the Payee from time
to time may request with respect to the Collateral and the Payor's places of
business;
3.5 Give to the Payee at least thirty (30) days prior written notice
before changing the location or disposing of any of the Collateral (other than
in connection with the sale of Inventory, as defined in the Uniform Commercial
Code in effect in the State of New York (the "UCC"), in the ordinary course of
business);
3.6. Permit the Payee, by its officers and agents, to access, examine and
copy during normal business hours the Collateral, properties, minute books and
other corporate records, books of accounts, and financial and other business
records of the Payor including, but not limited to, all books, records, ledger
cards, computer programs, tapes and computer disks and diskettes and other
property recording, evidencing or relating to any Collateral;
3.7 Promptly notify the Payee of the commencement of all proceedings and
investigations by or before and/or the receipt of any notices from, any
governmental or nongovernmental body including, but not limited to, any court or
arbitrator, against or in any way concerning any of the Payor's properties,
assets or business;
3.8 Promptly notify the Payee of the commencement of all actions and
proceedings in any court or before any arbitrator against or in any way
concerning any of the Payor's properties, assets
8
or business;
3.9 Promptly notify the Payee of any change in the Payor's business,
assets, liabilities, condition (financial or otherwise), results of operations
or business prospects;
3.10 Promptly notify the Payor of any default or any event which, with the
passage of time or giving of notice or both, would constitute a default under
any agreement to which the Payor is a party or by which the Payor or any of the
Payor's properties may be bound.
3.11 Promptly notify the Payee of any delay in the Payor's performance of
any of its obligations to any of its customers and of any assertion of any
claims, offsets or counterclaims by any of the Payor's customers.
3.12 Promptly notify the Payee of all adverse information relating to the
financial condition of any of the Payor's customers.
3.13 Promptly notify the Payee of the occurrence of any Event of Default
(hereinafter defined).
ARTICLE IV
THE PAYOR'S NEGATIVE COVENANTS
Unless and until all of the Obligations have been paid in full, the Payor shall
not:
4.1 Conduct its business in any manner other than in the ordinary course;
4.2 Make any change in its Certificate of Incorporation or Bylaws;
4.3 Issue any securities or issue any options, warrants or other rights to
acquire any of the Payor's securities;
4.4 Except as set forth in the Employment Agreements described in Exhibit
"G" which is attached hereto and made a part hereof, the Payor shall not
increase the compensation payable or
9
to become payable by the Payor to any officer and/or director or any of the
immediate family of any officer and/or director including, but not limited to,
the following: any spouse, parent, spouse of a parent, mother-in-law,
father-in-law, child, spouse of a child, sibling, spouse of a sibling,
grandparent, spouse of a grandparent or any issue of the foregoing.
4.5 Mortgage, pledge or subject to lien, charge or any other encumbrance,
any tangible or intangible asset of the Payor;
4.6 Declare or pay any dividend or make any other payment or distribution
to its stockholders, or purchase or redeem any of its securities;
4.7 Sell, liquidate, or otherwise dispose of any of its assets, other than
in the ordinary course of business;
4.8 Borrow or guarantee the borrowing of money; and
4.9 Enter into any agreement of merger, reorganization or consolidation of
the Payor with or into another entity or entities, regardless of whether the
Payor is the surviving entity.
ARTICLE V
EVENTS OF DEFAULT
5.1 Events of Default
The term "Event of Default" as used herein shall mean the occurrence of
any one or more of the following events:
(A) The default in the due observance or performance of any
covenant, condition, agreement or obligation on the part of
the Payor to be observed or performed pursuant to the terms
hereof, or of the Security Agreement;
(B) The failure, on the part of the Payor, to pay any of its rent
obligations;
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(C) The breach of, or default of, on the part of the Payor of any
of the Payor's obligations pursuant to any of its contracts,
agreements or obligations when due;
(D) Any sale, disposal, waste, destruction or any transfer of any
portion of the Collateral (other than in connection with the
sale of Inventory, as defined in the Uniform Commercial Code
in effect in the State of New York (the "UCC"), in the
ordinary course of business) by the Payor without the Payee's
prior written consent;
(E) If The Payor fails to pay when due any payment due hereunder
and such failure continues for five (5) days after the Payee
notifies the Payor thereof in writing pursuant to Section 8.3
of this Promissory Note;
(F) The admission in writing by the Payor of its inability to pay
its debts as they mature;
(G) The filing by the Payor of a petition in bankruptcy;
(H) The making of an assignment by the Payor for the benefit of
its creditors;
(I) Consent by the Payor to the appointment of, or possession by,
a custodian for itself or any of its property;
(J) The filing of a petition in bankruptcy against the Payor with
the consent of the Payor;
(K) The filing of a petition in bankruptcy against the Payor
without the consent of the Payor, and the failure to have such
petition dismissed within sixty (60) days after the date upon
which such petition is filed;
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(L) Notwithstanding the sixty (60) day provision in Paragraph
"(K)" of this Section "5.1" of this Promissory Note, on a
petition in bankruptcy filed against the Payor, the Payor is
adjudicated insolvent;
(M) The entry by a court of competent jurisdiction of an order,
judgment or decree appointing a receiver, trustee or custodian
for the Payor or of all or any of the property or assets of
the Payor;
(N) The commencement of a proceeding to foreclose the security
interest in, or lien on, any of the Payor's property or assets
to satisfy the security interest or lien therein of any
creditor of the Payor;
(O) The entry of a judgment for the payment of money by a court of
competent jurisdiction against the Payor, which judgment the
Payor shall not discharge within sixty (60) days after the
date of entry thereof, or procure a stay of execution thereof
within sixty (60) days after the date of entry thereof and
within such period during which execution of such judgment
shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal;
(P) The imposition of any lien, attachment or levy, or the
issuance of any note of eviction against the assets or
properties of the Payor, which lien, attachment, levy or note
of eviction the Payor shall not discharge or post a bond
within sixty (60) days.
(Q) The Payor takes any action which would prevent the Payee from
receiving payments due pursuant to this Promissory Note; and
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(R) If any representation of the Payor set forth in this
Promissory Note, the Security Agreement, or the Merger
Agreement proves to have been false or misleading when made.
ARTICLE VI
REMEDIES UPON DEFAULT
6.1 Acceleration of Payment
Upon the occurrence of an Event of Default (as defined in Article V of
this Promissory Note), and any time thereafter while such Event of Default is
continuing, the entire unpaid principal balance of this Promissory Note, and all
accrued and unpaid interest which is due pursuant to this Promissory Note shall,
at the Payee's option upon written notice to the Payor, or shall be accelerated
and become and be immediately due and payable without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by the
Payor.
6.2 Liability Upon Default
The liability of the Payor upon default shall be unconditional and shall
not be in any manner affected by any indulgence whatsoever granted or consented
to by the Payee including, but not limited to, any extension of time, renewal,
waiver or other modification.
6.3 Non-Exclusive Remedy
Any remedies which are provided herein are cumulative and are not
exclusive of any remedies which are provided by law.
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6.4 Exercise of Remedy Upon Default
No failure on the part of the Payee to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
6.5 The Payor's Waiver of Defenses.
The Payor hereby waives any defense of presentment, notice of dishonor,
protest, set-offs, counterclaims, or other objections to the payment hereof and
any other notice or formality with respect to this Promissory Note. The Payor
waives its right to a jury trial.
6.6 Full Recourse.
Anything in this Promissory Note to the contrary notwithstanding, the
Payor hereunder shall be liable on the Promissory Note for the full amount of
the interest and principal due pursuant to this Promissory Note.
6.7 Reimbursement of Payee.
The Payor agrees to reimburse the Payee upon demand for all reasonable
costs, expenses and charges (including, without limitation, fees and charges of
legal counsel for the Payee and costs allocated by its internal legal
department) in connection with the performance or enforcement of this Promissory
Note.
6.8 Validity of Provisions.
The provisions of this Promissory Note are intended to be severable. Any
provision of this Promissory Note which may be unenforceable under any law shall
not affect the validity of any other provision of this Promissory Note. If, as a
result of any circumstances whatsoever, fulfillment of any provision of this
Promissory Note, the Security Agreement or other instrument evidencing or
14
securing the indebtedness evidenced hereby, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
presently prescribed by any applicable usury statute or any other applicable
law, with respect to obligations of like character and amount, then ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity,
so that in no event shall any exaction be possible under this Promissory Note or
under any other instrument evidencing or securing the indebtedness evidenced
hereby, that is in excess of the current limit of such validity, but such
obligation shall be fulfilled to the limit of such validity.
ARTICLE VII
SECURITY
7.1 Payee's Security Interest.
This Promissory Note shall be secured as set forth in the Security
Agreement executed simultaneously with this Promissory Note. The Payor agrees to
take any and all such further actions reasonably required to effectuate this
Promissory Note and the purposes hereof including, but not limited to, executing
and delivering to the Payee any and all additional instruments and documents as
the Payee may reasonably request for the purpose of perfecting or confirming the
security interest of the Payee created by the Security Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 Headings. Headings contained in this Promissory Note are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Promissory Note.
15
8.2 Enforceability. If any provision which is contained in this
Promissory Note, should, for any reason, be held to be invalid or unenforceable
in any respect under the laws of any State of the United States, such invalidity
or unenforceabilty shall not affect any other provision of this Promissory Note
and in this Promissory Note shall be construed as if such invalid or
unenforceable provision had not been contained herein.
8.3 Notices.
Any notice or other communication required or permitted hereunder must be
in writing and sent by either (i) certified mail, postage prepaid, return
receipt requested, (ii) overnight delivery with confirmation of delivery or
(iii) facsimile transmission with an original mailed by first class mail,
postage prepaid, addressed as follows:
To the Payor: SupplyPoint, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, President
Facsimile No.: (408) 324 - 4813
Copy to: Xxxxxxxx Xxxxxxxx Xxxxx & Xxxxx, LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
To the Payee: Western Power & Equipment Corp.
0000 X.X. 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Attn.: Mr. C. Xxxx XxXxxx
Facsimile No.: (000) 000-0000
16
Copy to: Xxxxx & Fraade, P.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or in each case to such other address and facsimile number as shall have last
been furnished by like notice. If mailing by certified mail is impossible due to
an absence of postal service, notice shall be in writing and personally
delivered to the aforesaid addresses. Each notice or communication shall be
deemed to have been given as of the date so mailed or delivered as the case may
be; provided, however that any notice sent by facsimile shall be deemed to have
been given as of the date so sent if a copy thereof is also mailed by first
class mail on the date sent by facsimile, if the date of mailing is not the same
as the date of sending by facsimile, then the date of mailing by first class
mail shall be deemed to be the date upon which notice is given.
8.4 Governing Law. This Promissory Note shall, in accordance with
Section 5-1401 of the General Obligations Law of New York, in all respects be
construed, governed, applied and enforced under the internal laws of the State
of New York without giving effect to the principles of conflicts of laws and be
deemed to be an agreement entered into in the State of New York and made
pursuant to the laws of the State of New York. The parties hereby consent to and
submit to personal jurisdiction over each of them by the Courts of the State of
New York in any action or proceeding, waive personal service of any and all
process and specifically consent that in any such action or proceeding, any
service of process may be effectuated upon any of them by certified mail, return
receipt requested, in accordance with "8.3" of this Article "VIII" of this
Agreement.
17
8.5. Entire Agreement. This Promissory Note and the Security
Agreement and the other documents delivered in connection therewith or herewith
constitute the entire agreement between the parties and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and thereof, and are not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
Each party hereto agrees that, except for the representations and warranties
contained in this Agreement, neither the Payee nor the Payor makes any other
representations or warranties, and each hereby disclaims any other
representations and warranties made by itself or any of its officers, directors,
employees, agents, financial and legal advisors or other representatives, with
respect to the execution and delivery of this Promissory Note or the
transactions contemplated hereby, notwithstanding the delivery or disclosure to
the other or the other's representatives of any documentation or other
information with respect to any one or more of the foregoing.
8.6 Modification This Promissory Note may not be amended, changed,
modified, extended, terminated or discharged orally, but only by an agreement in
writing, which is signed by all of the parties to this Promissory Note.
8.7 Further Assurances. The parties agree to execute any and all
such other further instruments and documents, and to take any and all such
further actions which are reasonably required to effectuate this Agreement and
the intents and purposes hereof.
8.8 Binding Agreement. This Promissory Note shall be binding upon
and inure to the benefit of the parties hereto and their successors and assigns.
18
8.9 Non-Waiver. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Promissory Note shall be
deemed to have been made unless expressly in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to insist
in any one or more cases upon the performance of any of the provisions,
covenants or conditions of this Promissory Note or to exercise any option herein
contained shall not be construed as a waiver or relinquishment for the future of
any such provisions, covenants or conditions, (ii) the acceptance of performance
of anything required by this Promissory Note to be performed with knowledge of
the breach or failure of a covenant, condition or provision hereof shall not be
deemed a waiver of such breach or failure, and (iii) no waiver by any party of
one breach by another party shall be construed as a waiver of any other or
subsequent breach.
8.10 Construction. Each of the Parties hereby acknowledges and
agrees that each has been advised by counsel during the course of negotiations
and had significant input in the drafting of this Promissory Note and shall not,
therefore, be construed more strictly against any party responsible for its
drafting regardless of any presumption or rule requiring construction against
the party whose attorney drafted this Promissory Note.
8.11 Counterparts. This Promissory Note may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
8.12. Exhibits. All Exhibits annexed or attached to this Promissory
Note are incorporated into this Promissory Note by reference thereto and
constitute an integral part of this Promissory Note.
19
IN WITNESS WHEREOF, the Payor has executed this Promissory Note as of the
30th day of March, 2001.
SupplyPoint, Inc..
By:_____________________________________
Title: _________________________________
20
EXHIBIT "H"
PROMISSORY NOTE
$4,500,000.00
New York, NY
______, 2001
FOR VALUE RECEIVED, SupplyPoint, Inc., a Delaware corporation, having an address
at 0000 Xxxxxxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000 (the "Payor"), agrees to pay
to the order of Western Power & Equipment Corp., a Delaware Corporation, having
an address at 0000 X.X. 00xx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX, 00000 (the
"Payee") and its successors-in-interest or assigns, in accordance with the terms
of this Promissory Note (the "Promissory Note"), the principal sum of Four
Million Five Hundred Thousand ($4,500,000.00) Dollars or such lesser amount as
may be loaned to the Payor pursuant to the provisions of Section 1.1 of Article
I of this Promissory Note, with interest on the aforesaid amount as calculated
pursuant to the provisions of Section 1.2 of Article I of this Promissory Note.
This Promissory Note supercedes and replaces all Promissory Notes executed prior
to the execution of this Promissory Note, payable by the Payor to the Payee.
This Promissory Note evidences the loan being made by the Payee to the
Payor pursuant to the terms and conditions of the merger agreement, dated the
________ day of ________, 2001, by and among the Payor, Payee, and Western Power
Acquisition Corp. (the "Merger Agreement"), which is attached hereto and made a
part hereof as Exhibit "A". This Promissory Note is entitled to the benefits and
security provided by that certain Security Agreement attached hereto and made a
part hereof as Exhibit "B" dated the 30th day of March 2001 by and between the
Payee and the Payor (the "Security Agreement").
1
ARTICLE I
METHOD OF PAYMENT
1.1 Payment of Principal
Payment of the principal sum of Four Million Five Hundred Thousand
($4,500,000.00) Dollars, shall be immediately due and payable on the ________
day of _________, 200_ at which time, all amounts of principal and interest
outstanding pursuant to this Promissory Note shall become due and payable (the
"Maturity Date"). All payments of principal pursuant to this Promissory Note
shall be made without offset or deduction.
1.2 Payment of Interest
Interest on the unpaid principal balance shall be calculated from the date
of this Promissory Note or such other date(s) as loans may be made hereunder to
the Payor through and including the date of repayment at an interest rate equal
to ten (10%) percent per annum until this Note is paid in full and shall be due
and payable monthly commencing on the 30th day after the date of this Promissory
Note continuing until the ______ day of ______ 200_, at which time, all
outstanding amounts due pursuant to this Promissory Note shall become due and
payable. Interest shall be calculated upon the basis of a three hundred sixty
(360) day year of twelve (12) thirty (30) day months (as to all outstanding
amounts), calculated for the actual number of days elapsed. All payments of
interest pursuant to this Promissory Note shall be made without offset or
deduction.
1.3 Place and Manner of Repayment
(A) Repayment of this Promissory Note by the Payor shall be made by either
(i) bank, cashier's or teller's check which is drawn upon a member bank of the
Federal Reserve System to the
2
Payee at the Payee's address which is set forth above or at such other place as
shall be designated in writing by the Payee to the Payor, or (ii) wire transfer
pursuant to the Payee's written instructions.
(B) All payments shall be made in lawful money of the United States of
America. If any payment of principal or interest becomes due and payable on a
Saturday, Sunday or such other day upon which banks are not required to be open
for business in the State of New York, such payment shall be made on the next
such succeeding day on which banks are required to be open for business in the
State of New York , and such extension of time shall in such case be included in
computing interest in connection with such payment.
1.4 Default on Any Payment.
Any principal and interest and other amounts, payable pursuant to this
Promissory Note which is not paid when due (whether on a scheduled payment date,
by acceleration pursuant to this Promissory Note or otherwise) shall bear
interest from and including the date due to but excluding the date paid in full
at the lesser of twenty-four and ninety-nine hundredths (24.99%) percent or the
highest permissible rate then allowable under the law of the State of New York
("Default Interest"). Default Interest shall be payable ON DEMAND together with
any payment of principal or interest due pursuant to this Promissory Note.
Default Interest shall be calculated upon the basis of a three hundred sixty
(360) day year of twelve (12) thirty (30) day months (as to all outstanding
amounts), calculated for the actual number of days elapsed. All payments of
Default Interest shall be made without offset or deduction.
ARTICLE II
THE PAYOR'S REPRESENTATIONS
The Payor represents and warrants to the Payee that:
3
2.1 Company Status (i) The Payor is a corporation duly organized, validly
existing and in good standing under the laws of Delaware with all requisite
power and authority to carry on its business as presently conducted in all
jurisdictions where presently conducted, to execute and deliver this Promissory
Note and to perform its obligations pursuant to this Promissory Note (the
"Obligations").
(ii) Copies of (a) the Certificate of Incorporation, and all amendments
thereto to date for the Grantor, certified by the Secretary of State of the
State of Delaware, and (b) the Bylaws of the Payor, as amended to date,
certified by the Secretary of the Payor, in the forms of Exhibits "C" and "D",
respectively, which are annexed hereto and made a part hereof, and are complete
and correct as of the date of this Promissory Note.
2.2 Collateral. (i) All collateral (the "Collateral") including, but not
limited to, the Intellectual Property (as defined in the Security Agreement) is
described on Exhibit "C", which is attached to the Security Agreement and made a
part thereof, and is located at the locations set forth on Exhibit "C" thereto
(the "Collateral Locations"), and the Payor has no other place or places of
business;
(ii) The Payor is the legal and beneficial owner of all Collateral.
2.3 Authority and Due Authorization. The Payor has full authority, right,
power and legal capacity to execute and deliver this Promissory Note and to
consummate the transactions which are provided for herein. The execution of this
Promissory Note by the Payor, and its delivery to the Payee and the consummation
by the Payor of the transactions which are contemplated herein have
4
been duly approved and authorized by all necessary action by the Payor's Board
of Directors. A certified copy of the Board of Directors resolution approving
and authorizing this Promissory Note in the form of Exhibit "E" which is
attached hereto and made a part hereof. No consent of any person is necessary in
connection with the execution or delivery of this Promissory Note by the Payor
or the performance by the Payor of its Obligations pursuant to this Promissory
Note. No further action shall be necessary on the part of the Payor for the
performance and consummation by the Payor of the transactions which are
contemplated by this Promissory Note.
2.4 Compliance with the Law and other Instruments. Except as otherwise
provided in this Promissory Note and in the Exhibits annexed hereto, the
business and operations of the Payor have been and are being conducted in
accordance with all applicable laws, rules and regulations of all authorities
which affect the Payor or its properties, assets, businesses or prospects. The
execution, delivery and performance of this Promissory Note does not violate any
law or any agreement or undertaking to which the Payor is a party or by which
the Payor may be bound and shall not result in any breach of, or constitute a
default under, or result in the imposition of any lien or encumbrance, upon any
of the Collateral, including, but not limited to Intellectual Property, other
than the lien created by the Security Agreement, or cause an acceleration under
any arrangement, agreement or other instrument to which the Payor is a party or
by which any of the Collateral is bound. The Payor has performed in all respects
all of its obligations which are, as of the date of this Promissory Note,
required to be performed by it pursuant to the terms of any such agreement,
contract or commitment. The Payor is not in default with respect to any
agreement, contract or
5
commitment to which it is a party or by which it is bound, which default could
reasonably be expected to have an adverse effect upon the business of the Payor,
its ability to perform its Obligations hereunder or under the Security
Agreement, or upon the enforceability of this Promissory Note or the Security
Agreement.
2.5 Other Liens. The Payor has not created and is unaware of any lien on
or affecting any of the Collateral other than the lien created by the Security
Agreement in favor of the Payee which constitutes a valid and legal security
interest in all of the Collateral for the payment and performance of the
Obligations hereunder or pursuant to the Security Agreement. The Payor has
executed and delivered to the Payee such Uniform Commercial Code financing
statements containing the description of the Collateral set forth on Exhibit "C"
to the Security Agreement, as the Payee has requested with respect to the
security interest granted pursuant to the Security Agreement.
2.6 Litigation. Except as set forth in Exhibit "F" which is attached
hereto and made a part hereof, there are no legal, administrative, arbitration,
or other proceeding or governmental investigation affecting the Payor or its
assets or with respect to any matter arising out of the conduct of the business
of the Payor, pending or threatened, by or against the Payor or of its officers
or directors in connection with the Payor's affairs, whether or not covered by
insurance. The Payor is not presently engaged in or contemplating any legal
action to recover claims for monies which are due to it or for damages which
were sustained by it. Neither the Payor nor its officers, directors or employees
are subject to any order, writ, injunction, or decree of any Court, department,
agency or instrumentality, affecting the Payor.
2.7 Solvency. The Payor is solvent, able to pay its debts as they mature,
has capital sufficient to carry on its business and all businesses in which it
is about to engage and the fair
6
saleable value of its assets (calculated on a going concern basis) is in excess
of the amount of its liabilities.
2.8 Complete Disclosure. No representation or warranty of the Payor which
is contained in this Promissory Note, or in a writing furnished to the Payee by
the Payor pursuant to this Promissory Note, contains or shall contain any untrue
statement of material fact, omits or shall omit to state any material fact which
is required to make the statements which are contained herein or therein, in
light of the circumstances under which they were made, not misleading. There is
no fact, known to the Payor, relating to the business, affairs, operations,
conditions (financial or otherwise) or prospects of the Payor which would
materially adversely affect same which has not been disclosed to the Payee in
this Promissory Note.
2.9 No Defense. It shall not be a defense to a suit for damages for any
misrepresentation or breach or warranty that the Payee knew or had reason to
know that any covenant, representation or warranty in this Promissory Note, or
furnished or to be furnished to the Payee contained untrue statements.
ARTICLE III
THE PAYOR'S AFFIRMATIVE COVENANTS
Unless and until all of the Obligations of the Payor have been paid in
full, the Payor shall:
3.1 Keep the Collateral free and clear of any and all liens and
encumbrances of any kind other than the lien created by the Security Agreement;
3.2 Promptly defend the Collateral against any and all claims and demands
of all persons at any time claiming any interest in the Collateral adverse to or
the same as that of the Payee;
3.3 To the Payee's satisfaction, at all times keep all insurable
Collateral insured at the
7
expense of the Payor against loss by fire, theft and any other risks to which
the Collateral may be subject, and cause all such policies to be endorsed in
favor of the Payee and to list the Payee as loss payee and as an additional
insured, and if the Payee so requests, give such policies to the Payee, and the
Payor shall cause all such policies to provide that each insurer will give the
Payee not less than thirty (30) days prior written notice before giving notice
of cancellation;
3.4 Keep the Collateral in good condition at all times (normal wear and
tear excepted) and provide to the Payee such information as the Payee from time
to time may request with respect to the Collateral and the Payor's places of
business;
3.5 Give to the Payee at least thirty (30) days prior written notice
before changing the location or disposing of any of the Collateral (other than
in connection with the sale of Inventory, as defined in the Uniform Commercial
Code in effect in the State of New York (the "UCC"), in the ordinary course of
business);
3.6. Permit the Payee, by its officers and agents, to access, examine and
copy during normal business hours the Collateral, properties, minute books and
other corporate records, books of accounts, and financial and other business
records of the Payor including, but not limited to, all books, records, ledger
cards, computer programs, tapes and computer disks and diskettes and other
property recording, evidencing or relating to any Collateral;
3.7 Promptly notify the Payee of the commencement of all proceedings and
investigations by or before and/or the receipt of any notices from, any
governmental or nongovernmental body including, but not limited to, any court or
arbitrator, against or in any way concerning any of the Payor's properties,
assets or business;
3.8 Promptly notify the Payee of the commencement of all actions and
proceedings in any
8
court or before any arbitrator against or in any way concerning any of the
Payor's properties, assets or business;
3.9 Promptly notify the Payee of any change in the Payor's business,
assets, liabilities, condition (financial or otherwise), results of operations
or business prospects;
3.10 Promptly notify the Payor of any default or any event which, with the
passage of time or giving of notice or both, would constitute a default under
any agreement to which the Payor is a party or by which the Payor or any of the
Payor's properties may be bound.
3.11 Promptly notify the Payee of any delay in the Payor's performance of
any of its obligations to any of its customers and of any assertion of any
claims, offsets or counterclaims by any of the Payor's customers.
3.12 Promptly notify the Payee of all adverse information relating to the
financial condition of any of the Payor's customers.
3.13 Promptly notify the Payee of the occurrence of any Event of Default
(hereinafter defined).
ARTICLE IV
THE PAYOR'S NEGATIVE COVENANTS
Unless and until all of the Obligations have been paid in full, the Payor shall
not:
4.1 Conduct its business in any manner other than in the ordinary course;
4.2 Make any change in its Certificate of Incorporation or Bylaws;
4.3 Issue any securities or issue any options, warrants or other rights to
acquire any of the Payor's securities;
4.4 Except as set forth in the Employment Agreements described in Exhibit
"G" which is
9
attached hereto and made a part hereof, the Payor shall not increase the
compensation payable or to become payable by the Payor to any officer and/or
director or any of the immediate family of any officer and/or director
including, but not limited to, the following: any spouse, parent, spouse of a
parent, mother-in-law, father-in-law, child, spouse of a child, sibling, spouse
of a sibling, grandparent, spouse of a grandparent or any issue of the
foregoing.
4.5 Mortgage, pledge or subject to lien, charge or any other encumbrance,
any tangible or intangible asset of the Payor;
4.6 Declare or pay any dividend or make any other payment or distribution
to its stockholders, or purchase or redeem any of its securities;
4.7 Sell, liquidate, or otherwise dispose of any of its assets, other than
in the ordinary course of business;
4.8 Borrow or guarantee the borrowing of money; and
4.9 Enter into any agreement of merger, reorganization or consolidation of
the Payor with or into another entity or entities, regardless of whether the
Payor is the surviving entity.
ARTICLE V
EVENTS OF DEFAULT
5.1 Events of Default
The term "Event of Default" as used herein shall mean the occurrence of
any one or more of the following events:
(A) The default in the due observance or performance of any
covenant, condition, agreement or obligation on the part of
the Payor to be observed or performed pursuant to the terms
hereof, or of the Security Agreement;
10
(B) The failure, on the part of the Payor, to pay any of its rent
obligations;
(C) The breach of, or default of, on the part of the Payor of any
of the Payor's obligations pursuant to any of its contracts,
agreements or obligations when due;
(D) Any sale, disposal, waste, destruction or any transfer of any
portion of the Collateral (other than in connection with the
sale of Inventory, as defined in the Uniform Commercial Code
in effect in the State of New York (the "UCC"), in the
ordinary course of business) by the Payor without the Payee's
prior written consent;
(E) If The Payor fails to pay when due any payment due hereunder
and such failure continues for five (5) days after the Payee
notifies the Payor thereof in writing pursuant to Section 8.3
of this Promissory Note;
(F) The admission in writing by the Payor of its inability to pay
its debts as they mature;
(G) The filing by the Payor of a petition in bankruptcy;
(H) The making of an assignment by the Payor for the benefit of
its creditors;
(I) Consent by the Payor to the appointment of, or possession by,
a custodian for itself or any of its property;
(J) The filing of a petition in bankruptcy against the Payor with
the consent of the Payor;
(K) The filing of a petition in bankruptcy against the Payor
without the consent of the Payor, and the failure to have such
petition dismissed within sixty (60)
11
days after the date upon which such petition is filed;
(L) Notwithstanding the sixty (60) day provision in Paragraph
"(K)" of this Section "5.1" of this Promissory Note, on a
petition in bankruptcy filed against the Payor, the Payor is
adjudicated insolvent;
(M) The entry by a court of competent jurisdiction of an order,
judgment or decree appointing a receiver, trustee or custodian
for the Payor or of all or any of the property or assets of
the Payor;
(N) The commencement of a proceeding to foreclose the security
interest in, or lien on, any of the Payor's property or assets
to satisfy the security interest or lien therein of any
creditor of the Payor;
(O) The entry of a judgment for the payment of money by a court of
competent jurisdiction against the Payor, which judgment the
Payor shall not discharge within sixty (60) days after the
date of entry thereof, or procure a stay of execution thereof
within sixty (60) days after the date of entry thereof and
within such period during which execution of such judgment
shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal;
(P) The imposition of any lien, attachment or levy, or the
issuance of any note of eviction against the assets or
properties of the Payor, which lien, attachment, levy or note
of eviction the Payor shall not discharge or post a bond
within sixty (60) days.
(Q) The Payor takes any action which would prevent the Payee
12
from receiving payments due pursuant to this Promissory Note;
and
(R) If any representation of the Payor set forth in this in this
Promissory Note, the Security Agreement, or the Merger
Agreement, proves to have been false or misleading when made.
ARTICLE VI
REMEDIES UPON DEFAULT
6.1 acceleration of Payment
Upon the occurrence of an Event of Default (as defined in Article V of
this Promissory Note), and any time thereafter while such Event of Default is
continuing, the entire unpaid principal balance of this Promissory Note, and all
accrued and unpaid interest which is due pursuant to this Promissory Note shall,
at the Payee's option upon written notice to the Payor, or shall be accelerated
and become and be immediately due and payable without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by the
Payor.
6.2 Liability Upon Default
The liability of the Payor upon default shall be unconditional and shall
not be in any manner affected by any indulgence whatsoever granted or consented
to by the Payee including, but not limited to, any extension of time, renewal,
waiver or other modification.
6.3 Non-Exclusive Remedy
Any remedies which are provided herein are cumulative and are not
exclusive of any remedies which are provided by law.
13
6.4 Exercise of Remedy Upon Default
No failure on the part of the Payee to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
6.5 The Payor's Waiver of Defenses.
The Payor hereby waives any defense of presentment, notice of dishonor,
protest, set-offs, counterclaims, or other objections to the payment hereof and
any other notice or formality with respect to this Promissory Note. The Payor
waives its right to a jury trial.
6.6 Full Recourse.
Anything in this Promissory Note to the contrary notwithstanding, the
Payor hereunder shall be liable on the Promissory Note for the full amount of
the interest and principal due pursuant to this Promissory Note.
6.7 Reimbursement of Payee.
The Payor agrees to reimburse the Payee upon demand for all reasonable
costs, expenses and charges (including, without limitation, fees and charges of
legal counsel for the Payee and costs allocated by its internal legal
department) in connection with the performance or enforcement of this Promissory
Note.
6.8 Validity of Provisions.
The provisions of this Promissory Note are intended to be severable. Any
provision of this Promissory Note which may be unenforceable under any law shall
not affect the validity of any other provision of this Promissory Note. If, as a
result of any circumstances whatsoever, fulfillment of any provision of this
Promissory Note, the Security Agreement or other instrument evidencing or
14
securing the indebtedness evidenced hereby, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
presently prescribed by any applicable usury statute or any other applicable
law, with respect to obligations of like character and amount, then ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity,
so that in no event shall any exaction be possible under this Promissory Note or
under any other instrument evidencing or securing the indebtedness evidenced
hereby, that is in excess of the current limit of such validity, but such
obligation shall be fulfilled to the limit of such validity.
ARTICLE VII
SECURITY
7.1 Payee's Security Interest.
This Promissory Note shall be secured as set forth in the Security
Agreement dated the 30th day of March, 2001. The Payor agrees to take any and
all such further actions reasonably required to effectuate this Promissory Note
and the purposes hereof including, but not limited to, executing and delivering
to the Payee any and all additional instruments and documents as the Payee may
reasonably request for the purpose of perfecting or confirming the security
interest of the Payee created by the Security Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 Headings. Headings contained in this Promissory Note are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Promissory Note.
15
8.2 Enforceability. If any provision which is contained in this
Promissory Note, should, for any reason, be held to be invalid or unenforceable
in any respect under the laws of any State of the United States, such invalidity
or unenforceabilty shall not affect any other provision of this Promissory Note
and in this Promissory Note shall be construed as if such invalid or
unenforceable provision had not been contained herein.
8.3 Notices.
Any notice or other communication required or permitted hereunder must be
in writing and sent by either (i) certified mail, postage prepaid, return
receipt requested, (ii) overnight delivery with confirmation of delivery or
(iii) facsimile transmission with an original mailed by first class mail,
postage prepaid, addressed as follows:
To the Payor: SupplyPoint, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, President
Facsimile No.: (408) 324 - 4813
Copy to: Xxxxxxxx Xxxxxxxx Xxxxx & Xxxxx, LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
To the Payee: Western Power & Equipment Corp.
0000 X.X. 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Attn.: Mr. C. Xxxx XxXxxx
Facsimile No.: (000) 000-0000
16
Copy to: Xxxxx & Fraade, P.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or in each case to such other address and facsimile number as shall have last
been furnished by like notice. If mailing by certified mail is impossible due to
an absence of postal service, notice shall be in writing and personally
delivered to the aforesaid addresses. Each notice or communication shall be
deemed to have been given as of the date so mailed or delivered as the case may
be; provided, however that any notice sent by facsimile shall be deemed to have
been given as of the date so sent if a copy thereof is also mailed by first
class mail on the date sent by facsimile, if the date of mailing is not the same
as the date of sending by facsimile, then the date of mailing by first class
mail shall be deemed to be the date upon which notice is given.
8.4 Governing Law. This Promissory Note shall, in accordance with
Section 5-1401 of the General Obligations Law of New York, in all respects be
construed, governed, applied and enforced under the internal laws of the State
of New York without giving effect to the principles of conflicts of laws and be
deemed to be an agreement entered into in the State of New York and made
pursuant to the laws of the State of New York. The parties hereby consent to and
submit to personal jurisdiction over each of them by the Courts of the State of
New York in any action or proceeding, waive personal service of any and all
process and specifically consent that in any such action or proceeding, any
service of process may be effectuated upon any of them by certified mail, return
receipt requested, in accordance with "8.3" of this Article "VIII" of this
Agreement.
8.5. Entire Agreement. This Promissory Note, the Security Agreement,
the Merger Agreement and the other documents delivered in connection therewith
or herewith constitute the entire agreement
17
between the parties and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and thereof, and are not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder. Each party hereto agrees that,
except for the representations and warranties contained in this Agreement,
neither the Payee nor the Payor makes any other representations or warranties,
and each hereby disclaims any other representations and warranties made by
itself or any of its officers, directors, employees, agents, financial and legal
advisors or other representatives, with respect to the execution and delivery of
this Promissory Note or the transactions contemplated hereby, notwithstanding
the delivery or disclosure to the other or the other's representatives of any
documentation or other information with respect to any one or more of the
foregoing.
8.6 Modification This Promissory Note may not be amended, changed,
modified, extended, terminated or discharged orally, but only by an agreement in
writing, which is signed by all of the parties to this Promissory Note.
8.7 Further Assurances. The parties agree to execute any and all
such other further instruments and documents, and to take any and all such
further actions which are reasonably required to effectuate this Agreement and
the intents and purposes hereof.
8.8 Binding Agreement. This Promissory Note shall be binding upon
and inure to the benefit of the parties hereto and their successors and assigns.
18
8.9 Non-Waiver. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Promissory Note shall be
deemed to have been made unless expressly in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to insist
in any one or more cases upon the performance of any of the provisions,
covenants or conditions of this Promissory Note or to exercise any option herein
contained shall not be construed as a waiver or relinquishment for the future of
any such provisions, covenants or conditions, (ii) the acceptance of performance
of anything required by this Promissory Note to be performed with knowledge of
the breach or failure of a covenant, condition or provision hereof shall not be
deemed a waiver of such breach or failure, and (iii) no waiver by any party of
one breach by another party shall be construed as a waiver of any other or
subsequent breach.
8.10 Construction. Each of the Parties hereby acknowledges and
agrees that each has been advised by counsel during the course of negotiations
and had significant input in the drafting of this Promissory Note and shall not,
therefore, be construed more strictly against any party responsible for its
drafting regardless of any presumption or rule requiring construction against
the party whose attorney drafted this Promissory Note.
8.11 Counterparts. This Promissory Note may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
8.12. Exhibits. All Exhibits annexed or attached to this Promissory
Note are incorporated into this Promissory Note by reference thereto and
constitute an integral part of this Promissory Note.
IN WITNESS WHEREOF, the Payor has executed this Promissory Note as of the
___ day of
19
_____, 2001.
SupplyPoint, Inc..
By:_____________________________________
Title: _________________________________
20
EXHIBIT "I"
SECURITY AGREEMENT
AGREEMENT dated as of the 30th day of March, 2001 by and between
SupplyPoint, Inc., a Delaware corporation, having an address at 0000 Xxxxxxxx,
Xxxxx 000, Xxxxxxxxxxxx, XX 00000 (the "Grantor") and Western Power & Equipment
Corp., a Delaware corporation having an address at 0000 X.X. 00xx Xxxxxx, Xxxxx
000, Xxxxxxxxx, XX, 00000 (the "Secured Party").
W I T N E S S E T H :
WHEREAS, the Grantor has issued to the Secured Party a promissory
note executed simultaneously with this Security Agreement herewith in the
principal amount of One Hundred Thousand ($100,000.00) Dollars, a copy of which
is annexed hereto and made a part hereof as Exhibit "A, which shall be
superceded and replaced by a promissory note in the principal amount of Four
Million Five Hundred Thousand ($4,500,000.00) Dollars (the "Replacement
Promissory Note"), a copy of which is annexed hereto and made a part hereof as
Exhibit "B", which Replacement Promissory Note shall be entered into pursuant to
the merger agreement by and among the Grantor, the Secured Party and Western
Power & Equipment Acquisition Corp. (the "Merger Agreement"); and
WHEREAS, to induce the Secured Party to make the loan evidenced by
the Promissory Note, the Grantor agreed to grant to the Secured Party a lien
with respect to all of its assets including, but not limited to, the Grantor's
intellectual property, to secure full payment of the Promissory Note by
executing and delivering this Security Agreement to the Secured Party,
1
are hereinafter set forth and for other good and valuable consideration, receipt
of which is hereby acknowledged,
IT IS AGREED:
1. Recitals Adopted. The parties hereto adopt as part of this Security
Agreement each of the recitals which are contained above in the WHEREAS clauses,
and agree that such recitals shall be binding upon the parties hereto by way of
contract and not merely by way of recital or inducement; and such clauses are
hereby confirmed and ratified as being true and accurate by each party as to
itself and himself.
2. Security Interest. To secure the payment of all principal and interest
pursuant to the Promissory Note and the payment and performance by the Grantor
of all obligations and liabilities of the Grantor to the Secured Party ("the
Obligations") including, but not limited to, pursuant to the Promissory Note,
the Security Agreement and the Merger Agreement (collectively referred to as the
"Relevant Agreements"), the Grantor shall and hereby does, on and as of the date
hereof, grant, convey, assign and transfer to the Secured Party a continuing
lien upon and security interest in all of the assets including, but not limited
to, Intellectual Property, of the Grantor (hereinafter defined), whether now
owned or hereafter acquired, and its successors and assigns and all additions,
accessions or attachments to or replacements of any of the Grantor's assets (the
"Collateral"), including, but not limited to, those assets set forth on Exhibit
"C" which is annexed hereto and made a part hereof.
3. Representations of the Grantor. The Grantor represents and warrants to
the Secured Party that:
2
A. Company Status (i) The Grantor is a corporation duly organized,
validly existing and in good standing under the laws of Delaware with all
requisite power and authority to carry on its business as presently conducted in
all jurisdictions where presently conducted, to execute and deliver this
Security Agreement and to perform its obligations pursuant to this Security
Agreement.
(ii) Copies of (a) the Certificate of Incorporation, and all
amendments thereto to date for the Grantor, certified by the Secretary of State
of the State of Delaware, and (b) the Bylaws of the Grantor, as amended to date,
certified by the Secretary of the Grantor, are annexed hereto, and made a part
hereof, as Exhibits "D" and "E", respectively, and are complete and correct as
of the date of this Security Agreement.
B. Collateral. (i) All Collateral including, but not limited to, the
Intellectual Property is located at the locations set forth on Exhibit "F",
which is attached hereto and made a part hereof (the "Collateral Locations"),
and the Grantor has no other place or places of business;
(ii) For purposes of this Security Agreement "Intellectual Property"
shall mean (a) all inventions (whether patentable or unpatentable and whether or
not reduced to practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuances, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all trade secrets and confidential
business information (including ideas, research and
3
development, know-how, formulas, data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (e) all computer software (including source
code, data and related documentation), (f) all other proprietary rights, and (g)
all copies and tangible embodiments thereof (in whatever form or medium).
(iii) The Grantor is the legal and beneficial owner of all
Collateral.
C. Authority and Due Authorization. The Grantor has full authority,
right, power and legal capacity to enter into this Security Agreement and to
consummate the transactions which are provided for herein. The execution of this
Security Agreement by the Grantor, and its delivery to the Secured Party and the
consummation by the Grantor of the transactions which are contemplated herein
have been duly approved and authorized by all necessary action by the Grantor's
Board of Directors. A certified copy of the Board of Directors resolution
approving and authorizing this Security Agreement is annexed hereto and made a
part hereof as Exhibit "G". No consent of any person is necessary in connection
with the execution or delivery of this Security Agreement by the Grantor or of
the performance by the Grantor of its obligations pursuant to this Security
Agreement. No further action shall be necessary on the part of the Grantor for
the performance and consummation by the Grantor of the transactions which are
contemplated by this Security Agreement.
D Compliance with the Law and other Instruments. Except as otherwise
provided in this Security Agreement and in the Exhibits annexed hereto, the
business and operations
4
of the Grantor have been and are being conducted in accordance with all
applicable laws, rules and regulations of all authorities which affect the
Grantor or its properties, assets, businesses or prospects. The execution,
delivery and performance of this Security Agreement does not violate any law or
any agreement or undertaking to which the Grantor is a party or by which the
Grantor may be bound and shall not result in any breach of, or constitute a
default under, or result in the imposition of any lien or encumbrance, upon any
of the Collateral, other than the lien created by this Security Agreement, or
cause an acceleration under any arrangement, any security agreement or other
instrument to which the Grantor is a party or by which any of the Collateral is
bound. The Grantor has performed in all respects all of its obligations which
are, as of the date of this Security Agreement, required to be performed by it
pursuant to the terms of any such agreement, contract or commitment. The Grantor
is not in default with respect to any agreement, contract or commitment to which
it is a party or by which it is bound, which default could reasonably be
expected to have an adverse effect upon the business of the Grantor, its ability
to perform its Obligations, or upon the enforceability of the Promissory Note or
this Security Agreement.
E. Other Liens. The security interest granted under this Security
Agreement constitutes a valid and legal security interest in all of the
Collateral for the payment and performance of the Obligations. The Grantor has
executed and delivered to the Secured Party such Uniform Commercial Code
financing statements, containing the description of Collateral set forth on
Exhibit "F" hereto, as the Secured Party has requested with respect to the
security interest granted pursuant to this Security Agreement.
F. Litigation. Except as set forth in Exhibit "H" which is attached
hereto and
5
made a part hereof, there are no legal, administrative, arbitration, or other
proceeding or governmental investigation affecting the Grantor or its assets or
with respect to any matter arising out of the conduct of the business of the
Grantor, or pending or threatened, by or against, the Grantor or any of its
officers or directors in connection with the Grantor's affairs, whether or not
covered by insurance. The Grantor is not presently engaged in or contemplating
any legal action to recover claims for monies which are due to it or damages
which were sustained by it. Neither the Grantor, nor any of its officers,
directors or employees are subject to any order, writ, injunction, or decree of
any Court, department, agency or instrumentality, affecting the Grantor.
G. Solvency. The Grantor is solvent, able to pay its debts as they
mature, has capital sufficient to carry on its business and all businesses in
which it is about to engage and the fair saleable value of its assets
(calculated on a going concern basis) is in excess of the amount of its
liabilities.
H. Complete Disclosure. No representation or warranty of the Grantor
which is contained in this Security Agreement, or in a writing furnished or to
be furnished pursuant to this Security Agreement, contains or shall contain any
untrue statement of a material fact, omits or shall omit to state any material
fact which is required to make the statements which are contained herein or
therein, in light of the circumstances under which they were made, not
misleading. There is no fact, known to the Grantor, relating to the business,
affairs, operations, conditions (financial or otherwise) or prospects of the
Grantor which would materially adversely affect same which has not been
disclosed to Secured Party in this Security Agreement.
I. No Defense. It shall not be a defense to a suit for damages for
any
6
misrepresentation or breach or warranty that the Secured Party knew or had
reason to know that any covenant, representation or warranty in this Security
Agreement, or furnished or to be furnished to the Secured Party contained untrue
statements.
4. Affirmative Covenants. Unless and until all of the Obligations
have been paid in full, the Grantor shall do all that is necessary to protect
the Secured Party's Security Interest in the Collateral, including but not
limited to the following:
A. The Grantor shall execute and deliver simultaneously with the execution
of this Security Agreement to the Secured Party Form UCC-1, such forms which may
be required to perfect the Secured Party's lien with respect the Grantor's
Intellectual Property and such other forms as the Secured Party may request or
deem necessary to evidence, perfect, and continue the perfection of a security
interest in the Collateral in favor of the Secured Party in any and all
jurisdictions as the Secured Party deems advisable.
B. The Grantor shall, at its own cost, take any and all actions necessary
to defend its title to the Collateral and defend the Secured Party's lien on the
Collateral granted pursuant to this Security Agreement against any adverse lien.
The assertion by anyone of any claim with respect to any portion of the
Collateral shall not constitute a default hereunder if such claim is diligently,
adequately and successfully contested by the Grantor or is settled or discharged
by the Grantor with reasonable diligence. In the event of failure by the Grantor
to diligently defend or contest any such claim, the Secured Party may contest,
settle or discharge any such claim, and the Grantor shall pay to the Secured
Party within five (5) days of demand, all costs and expenses, in connection with
the foregoing, including reasonable attorneys' fees and expenses.
C. The Grantor shall keep the Collateral free and clear of any and all
liens and
7
encumbrances of any kind other than the lien created by this Security Agreement;
D. The Grantor shall bear the full risk of loss from any loss of any
nature whatsoever with respect to the Collateral. The Grantor shall, to the
Secured Party's satisfaction, at all times, keep all Collateral fully insured by
financially sound and reputable insurers reasonably acceptable to the Secured
Party at the expense of the Grantor against loss by fire, theft and any other
risks, hazards and liabilities to which the Collateral may be subject, and cause
all such policies to be endorsed in favor of the Secured Party and to list the
Secured Party as loss payee and as additional insured, and if the Secured Party
so requests, give such policies to the Secured Party, and the Grantor shall
cause all such policies to provide that each insurer will give the Secured Party
not less than thirty (30) days prior written notice before giving notice of
cancellation;
E. The Grantor shall keep the Collateral in good condition at all times
(normal wear and tear excepted) and from time to time make all necessary and
proper repairs, renewals, replacements, additions, and improvements thereto and
provide to the Secured Party such information as the Secured Party from time to
time may request with respect to the condition of the Collateral and the
Grantor's places of business;
F. The Grantor shall give to the Secured Party at least thirty (30) days
prior written notice before changing the location or disposing of any Collateral
(other than a motor vehicle, or in connection with the sale of Inventory, as
defined in the Uniform Commercial Code in effect in the State of New York (the
"UCC"), in the ordinary course of business);
G. The Grantor shall keep records and books of account in which accurate
and complete entries will be made of all dealings or transactions in relation to
its business and affairs in accordance with generally accepted accounting
principles applied on a consistent basis, and the Grantor shall
8
deliver to the Secured Party as soon as available and in any event:
(i) within thirty (30) days after the end of each of the first three
quarterly accounting periods in each fiscal year, consolidated profit and loss
statements of the Grantor and its subsidiaries for such quarterly period and on
a consolidated basis for the expired portion of the fiscal year ending with the
end of such period and a consolidated balance sheet of the Grantor and its
subsidiaries as at the end of such quarterly period--all in reasonable detail,
subject to audited year-end adjustments and certified by an authorized financial
officer of the Grantor to have been prepared in accordance with generally
accepted accounting principles consistently maintained by the Grantor and its
subsidiaries during the fiscal year preceding the period covered by each
quarterly statement, except for inconsistencies explained in such certificate;
and
(ii) within sixty (60) days after the end of each fiscal year,
consolidated profit and loss statements of the Grantor and its subsidiaries for
such year, and a consolidating balance sheet of the Grantor and its subsidiaries
as at the end of such year, setting forth in each case in comparative form the
corresponding consolidated figures of the preceding fiscal year--all in
reasonable detail, including all supporting schedules and comments, and
certified by independent public accountants of recognized standing, selected by
the Grantor and satisfactory to the Secured Party, to have been prepared in
accordance with generally accepted accounting principles consistently maintained
by the Grantor and its subsidiaries during the fiscal year preceding that for
which each statement is being furnished, except for inconsistencies explained in
such certificate. In addition, the Grantor will use its best efforts to obtain
from the accountants and deliver to the Secured Party within such sixty (60) day
period, their written statement that, in making the examination necessary to
their certification, they have no knowledge of any default by the Grantor in the
performance of any obligation under
9
this Security Agreement or the Promissory Note, or disclosing all defaults of
which they have obtained knowledge; provided however, in making their
examination the accountants shall not be required to go beyond the bounds of
generally accepted auditing procedures.
H. The Grantor shall deliver to the Secured Party, concurrently with the
delivery of the annual financial statements pursuant to Paragraph "G" of this
Article "4" of this Security Agreement, an officers' certificate substantially
in the form as Exhibit "I", which is annexed hereto and made a part hereof,
stating that (i) all taxes, assessments and charges which have become due by the
Grantor and its subsidiaries have been paid, or specifying any such taxes,
assessments or charges which have not been paid and stating why they have not
been paid, and (ii) the Grantor is not to the knowledge of the signers in
default in the performance of any obligation under this Security Agreement or
the Promissory Note, or specifying each default of which the signers, or either
of them, have knowledge.
I. In addition to the Grantor's obligations pursuant to Paragraph "G" of
this Article "4" of this Security Agreement, the Grantor shall furnish to the
Secured Party (i) copies of such financial statements, reports and proxy
statements as the Grantor shall send to its stockholders; (ii) copies of such
financial statements, reports and returns as it may make to or file with the
Securities and Exchange Commission or any securities exchange; (iii) copies of
any special and significant reports by independent public accountants,
appraisals, engineering surveys and other reports submitted to or prepared by
the Grantor concerning its properties or operations which, in the opinion of the
Grantor, would be helpful to the Secured Party in evaluating its investment in
the Promissory Note; and (iv) all other reasonable information as the Secured
Party may from time to time request.
J. The Grantor shall permit the Secured Party, by its officers and agents,
to visit and inspect any of the properties of the Grantor or any subsidiary and
shall permit the Secured Party, by
10
its officers and agents, to access, examine and copy during normal business
hours the Collateral, minute books and other corporate records, books of
accounts, and financial and other business records of the Grantor including, but
not limited to, all books, records, ledger cards, computer programs, tapes and
computer disks and diskettes and other property recording, evidencing or
relating to any Collateral;
K. The Grantor shall take all necessary action in order to avoid
subjecting the Collateral to any lien, charge, claim or encumbrance arising
under or relating to any environmental law or regulation or the release or
threatened release of any Hazardous Materials (as defined under applicable state
and federal environmental laws). If the Grantor shall fail to comply with any of
the requirements of any environmental law or regulation, the Secured Party may,
but without the obligation to do so, for the sole purpose of protecting the
Secured Party's interest in the Collateral, enter onto the Grantor's property
(or authorize third parties to enter onto such property) and take such actions
as the Secured Party (or such third parties as directed by the Secured Party)
deem reasonably necessary or advisable, to clean up, remove, mitigate or
otherwise deal with such Hazardous Materials or environmental violation or
claim. All reasonable costs and expenses incurred by the Secured Party (or such
third parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the lesser of twenty four and ninety-nine hundredths (24.99%) percent or the
maximum rate of interest allowable under applicable law, shall be paid by the
Grantor upon the Secured Party's demand, and until paid, shall be added to and
become a part of the Obligations secured by the liens created by the terms of
this Security Agreement or any other agreement between the Secured Party and the
Grantor.
11
L. The Grantor shall promptly pay and discharge, or cause to be paid and
discharged, when due and payable, all lawful taxes, assessments, and
governmental charges or levies imposed upon the income, profits, property, or
business of the Grantor or any subsidiary of the Grantor (collectively referred
hereinafter as the "Grantor");
M. The Grantor shall at all times comply with the provisions of all leases
to which it is a party or under which it occupies property so as to prevent any
loss or forfeiture thereof or thereunder;
N. The Grantor shall comply with requirements of all applicable laws,
rules, regulations, and orders of any governmental authority, a breach of which
could have an adverse effect on its business or credit;
O. The Grantor shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
patents, processes, licenses, trademarks, trade names, or copyrights owned or
possessed by it and necessary to the conduct of the Grantor's business;
P. The Grantor shall promptly notify the Secured Party of any default or
any event which, with the passage of time or giving of notice or both, would
constitute a default under any agreement for the payment of money to which the
Grantor is a party or by which the Grantor or any the of Grantor's properties
may be bound which would have a material adverse effect on the Grantor's
business, operations, property or condition (financial or otherwise) or the
Collateral;
Q. The Grantor shall promptly notify the Secured Party of the commencement
of all proceedings and investigations by or before and/or the receipt of any
notices from, any governmental or nongovernmental body and all actions and
proceedings in any court or before any arbitrator
12
against or in any way concerning any of the Grantor's properties, assets or
business, which might singly or in the aggregate, have a materially adverse
effect on the Grantor;
R. The Grantor shall promptly notify the Secured Party of any attachment
or other legal process levied against any part of the Collateral and any
information received by the Grantor relative to the Collateral, which may in any
way materially and adversely affect the value of the Collateral as a whole or
the rights and remedies of the Secured Party in respect thereto;
S. The Grantor shall promptly notify the Secured Party of any change in
the Grantor's business, assets, liabilities, condition (financial or otherwise),
results of operations or business prospects;
T. The Grantor shall promptly notify the Secured Party of the occurrence
of any Event of Default.
5. Negative Covenants Unless and until all of the Obligations have been
paid in full, the Grantor shall not:
A. Conduct its business in any manner other than in the ordinary course;
B. Make any change in its Certificate of Incorporation or Bylaws;
C. Make any changes in its authorized or issued capital stock, or issue
any options, warrants or other rights to acquire shares of the capital stock of
the Grantor.
D. Except as set forth in the Employment Agreements described in Exhibit
"J", the Grantor shall not increase the compensation payable or to become
payable by the Grantor to any officer and/or director or any of the immediate
family of any officer and/or director including, but not limited to, the
following: any spouse, parent, spouse of a parent, mother-in-law, father-in-law,
child,
13
spouse of a child, sibling, spouse of a sibling, grandparent, spouse of a
grandparent or any issue of any of the foregoing.
E. Not mortgage, pledge or subject to lien, charge or any other
encumbrance, any asset tangible or intangible of the Grantor;
F. Declare or make any payment or distribution to its stockholders or
purchase or redeem any of its securities;
G. Make or permit any Subsidiary, a majority of the voting stock of which
is owned or controlled by the Grantor, to make any loan or advance to, or own
any stock or other securities of, any subsidiary or other corporation,
partnership or other entity unless it is wholly owned by the Grantor;
H. Make any loan or advance to any person, including but not limited to
any employee or director of the Grantor.
I. Guarantee directly or indirectly, any indebtedness except for trade
accounts of the Grantor, or any subsidiary, arising in the ordinary course of
business;
J. Acquire all or substantially all of the properties or assets of any
other corporation or entity; and
K. Enter into any agreement of merger, reorganization or consolidation of
the Grantor with or into another entity or entities, whether or not the Grantor
is the surviving entity.
6. Right of the Secured Party to Perform. If the Grantor fails to perform
any of its affirmative covenants set forth in Article "4" or breaches any of the
negative covenants set forth in Article "5" of this Security Agreement, or if
the Grantor is in breach of any of its obligations under the Promissory Note,
the Secured Party, after five (5) days prior written notice to the Grantor, may,
14
but shall not be obligated to, cure any such failure to perform or to cure any
such breach and take any action that it deems necessary and appropriate for the
maintenance and preservation of the Collateral or its security interest therein;
and the expenses so incurred in connection therewith shall be payable by the
Grantor upon demand, with interest at a rate per annum equal to the Default
Interest (as defined in the Promissory Note). All sums advanced or paid by the
Secured Party pursuant to this Article "6" of this Security Agreement shall be
reimbursed by the Grantor to the Secured Party on demand, with interest at the
lesser of twenty-four and ninety-nine hundredths (24.99%) percent or the highest
permissible rate then allowable under applicable law until paid by the Grantor
to the Secured Party, and shall be secured as additional Obligations hereunder.
7. Default.
A. Event of Default. The term "Event of Default" as used in this
Security Agreement shall mean:
(i) If the Grantor fails to take all necessary measures to prevent
the cancellation of any insurance policy which covers the
Collateral;
(ii) If the Grantor takes any action which reduces its ability to
repay the Obligations.
(iii) The default in the due observance or performance of any
covenant, condition, agreement or obligation on the part of
the Grantor to be observed or performed pursuant to this
Security Agreement or the Promissory Note.
(iv) The default in the due observance or performance of any
covenant, condition, agreement or obligation on the part of
the Grantor to be observed or performed pursuant to the terms
of this Security Agreement or the
15
Promissory Note.
(v) The failure, on the part of the Grantor, to pay when due any
of its rent obligations;
(vi) If the Grantor is in breach, of or default of, any of its
obligations pursuant to any of its contracts, agreements or
obligations;
(vii) Any sale, disposal, waste, destruction or other transfer of
any portion of the Collateral (other than in connection with
the sale of Inventory, as defined in the Uniform Commercial
Code in effect in the State of New York (the "UCC"), in the
ordinary course of business) by the Grantor without the
Secured Party's prior written consent;
(viii) If the Grantor fails to pay when due any payment due
hereunder and such failure continues for five (5) days after
Secured Party notifies the Grantor thereof in writing
pursuant to Paragraph "C" of Article "13" of this Security
Agreement;
(ix) The admission in writing by the Grantor of its inability to
pay its debts as they mature;
(x) The filing by the Grantor of a petition in bankruptcy;
(xi) The making of an assignment by the Grantor for the benefit of
its creditors;
(xii) Consent by the Grantor to the appointment of, or possession
by, a custodian for itself or for all or substantially all of
its property;
(xiii) The filing of a petition in bankruptcy against the Grantor
with the consent of the Grantor;
16
(xiv) The filing of a petition in bankruptcy against the Grantor
without the consent of the Grantor, and the failure to have
such petition dismissed within sixty (60) days from the date
upon which such petition is filed;
(xv) Notwithstanding the sixty (60) day provision in Paragraph
"(A)(xiv)" of this Article "7" of this Security Agreement,
on a petition in bankruptcy filed against the Grantor, the
Grantor is adjudicated insolvent;
(xvi) The entry by a court of competent jurisdiction of an order,
judgment or decree appointing a receiver, trustee or
custodian for the Grantor or of all or substantially all of
the property or assets of Grantor;
(xvii) The commencement of a proceeding to foreclose the security
interest in, or lien on, any of the Grantor's property or
assets to satisfy the security interest or lien therein of
any creditor of the Grantor;
(xviii) The entry of a judgment for the payment of money by a court
of competent jurisdiction against the Grantor, which
judgment the Grantor shall not discharge within sixty (60)
days after the date of entry thereof, or procure a stay of
execution thereof within sixty (60) days after the date of
entry thereof and, within such sixty (60) day period, or
such longer period during which execution of such judgment
shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal.
(xviv) The imposition of any lien attachment or levy, or the
issuance of any note of eviction against the assets or
properties of the Grantor.
(xx) The Grantor takes any action which would prevent the Secured
Party
17
from receiving payments due pursuant to the Promissory Note;
(xxi) If, in the judgment of Secured Party, there is any
deterioration, depreciation or impairment of the value of
the Collateral, or any part thereof, which causes the
Collateral to have less value than the amount due to the
Secured Party pursuant to the Promissory Note;
(xxii) The Grantor should, for any reason, cease to be a going
concern; and
(xxiii) If any representation set forth in this Security Agreement,
the Promissory Note or the Merger Agreement proves to have
been false or misleading when made.
B. Acceleration. If an Event of Default occurs, the Secured Party
shall have all of the rights and remedies with respect to the Collateral of a
secured party holding a security interest under the UCC. The Secured Party shall
give the Grantor reasonable notice of the time and place of any public or
private sale or other intended disposition of all or any portion of the
Collateral. The Grantor agrees that the requirements of reasonable notice shall
be met if notice is sent not less than ten (10) business days prior to the sale
or other disposition. Costs of retaking, holding, preparing for sale, selling or
the like, shall include, but not be limited to, the Secured Party' attorneys'
fees and expenses. The Secured Party's rights and remedies, whether pursuant to
this Security Agreement, the UCC or any other statute or rule of law conferring
rights similar to those conferred by the UCC, shall be cumulative.
C. Collections Following Event of Default. If an Event of Default
shall have occurred:
(i) The Secured Party may notify any parties obligated to the
Grantor on
18
any Account (as defined in the UCC) to make payment to the Secured Party of any
amounts due or to become due thereunder and enforce collection of any Account by
suit or otherwise and surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer than the
original period) any indebtedness obligated thereunder or evidenced thereby.
Upon request of the Secured Party, the Grantor will, at its own expense, notify
all parties obligated on any Account to make payment to the Secured Party of any
amount due or to become due thereafter.
(ii) All payments received by the Grantor in connection with
the Collateral shall be held by the Grantor in trust for the Secured Party,
shall be segregated from other funds of the Grantor and shall be turned over to
the Secured Party upon request by the Secured Party in the same form as received
by the Grantor (duly endorsed by the Grantor to the Secured Party, if required).
(iii) Any and all such payments so received by the Secured
Party (whether from the Grantor or otherwise), may be held, in the sole
discretion of the Secured Party to be applied in whole or in part to the
satisfaction of the Obligations as the Secured Party shall determine, in its
sole and absolute discretion, and any such payments remaining after satisfaction
in full or all of the Obligations shall be paid over to the Grantor, or to
whomever may be entitled lawfully to receive the same.
D. Other Remedies.
(i) If any Event of Default shall occur, in addition to all
other rights and remedies granted to it in this Security Agreement and in the
Promissory Note, the Secured Party may exercise all rights and remedies of a
Secured Party pursuant to the UCC and any other law, and may apply the net
proceeds of any sale, lease, or other disposition of the Collateral, after
deducting all
19
costs and expenses of every kind incurred therein or incidental to the taking,
holding, preparing for sale, selling, leasing of the Collateral or of any
similar acts or in any way relating to the Secured Party' rights hereunder
(including, but not limited to, attorneys' fees and expenses) to the
satisfaction, in whole or in part of the Obligations as the Secured Party shall
determine, in its sole and absolute discretion. Any balance of such proceeds
held by the Secured Party and remaining after satisfaction in full of all of the
Obligations shall be paid to the Grantor or to whomever may be lawfully entitled
to receive same;
(ii) The Secured Party may institute legal proceedings for the
appointment of a receiver or receivers with respect to any or all of the
Collateral pending foreclosure hereunder or for the sale of any or all of the
Collateral under the order of a court of competent jurisdiction or pursuant to
other legal process;
(iii) Either personally, or by means of a court-appointed
receiver, the Secured Party may take possession of all or any of the Collateral
and exclude therefrom the Grantor and all others claiming under the Grantor. If
the Secured Party demands or attempts to take possession of the Collateral in
the exercise of any rights pursuant to this Security Agreement, the Grantor
promises and agrees promptly to turn over and deliver complete possession
thereof to the Secured Party.
(iv) If the Secured Party seeks to take possession of any or
all of the Collateral by court process, the Grantor hereby waives any bonds, and
any surety or security relating thereto regardless of whether required by any
statute, court rule or otherwise as an incident to such possession, and waives
any demand for possession prior to the commencement of any suit or action to
recover with respect thereto;
E. Assembly and Disposition of Collateral. If an Event of Default
occurs
20
and, if requested by the Secured Party, the Grantor agrees to assemble the
Collateral and make it available to the Secured Party at a place or places
reasonably convenient to the Secured Party. The Grantor also agrees to pay all
costs, including, but not limited to, attorneys' fees and expenses incurred by
the Secured Party with respect to the enforcement of any of the Secured Party'
rights pursuant to this Security Agreement. The Grantor hereby waives, to the
fullest extent permitted by law, any and all notices, advertisements, hearings
or process of law in connection with any of the rights and remedies of the
Secured Party upon an Event of Default. Any notice of intended disposition of
any of the Collateral required by law shall be deemed reasonably and properly
given if mailed to the Grantor pursuant to Paragraph "C" of Article "13" of this
Security Agreement.
8. Power of Attorney. (A) Upon the occurrence of an Event of Default, the
Grantor hereby irrevocable constitutes and appoints the Secured Party and its
agents, attorneys, assignees, or any other Person whom the Secured Party may
designate as the Grantor's true and lawful attorney, irrevocably, with full
power of substitution, to take all actions which are reasonably necessary to
protect the Secured Party's security interest including, but not limited to, the
following:
(i) To make all necessary transfers of all or any part of the
Collateral in connection with any sale, lease or other disposition made pursuant
to this Article "8" of this Security Agreement;
(ii) To execute and deliver all necessary or appropriate bills of
sale, assignments or other instruments in connection with any such sale, lease
or other disposition;
(iii) To endorse the Grantor's name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security which
may come into Secured Party's possession;
(iv) To settle, compromise, compound, prosecute or defend any
action, claim or
21
proceeding with respect to the Collateral;
(v) To sign the Grantor's name on any invoice or xxxx of lading
relating to any receivables, drafts against customers, schedules and assignments
of receivables, notices of assignment, financing statements and other public
records, verifications of account and notices to or from customers;
(vi) To verify the validity, amount or any other matter relating to
any receivable by mail, telephone, telegraph or otherwise;
(vii) To execute customs declarations and such other documents as
may be required to clear inventory pursuant to customs rules of any country;
(viii) To do all things necessary to carry out this Security
Agreement and the Promissory Note;
(ix) To continue any insurance existing pursuant to the terms of the
Promissory Note or this Security Agreement and pay all or any part of the
premium therefore and the cost thereof; and
(x) To notify the post office authorities to change the address for
delivery of the Grantor's mail to an address designated by the Secured Party,
and to receive, open and dispose of all mail addressed to the Grantor.
(B) The Grantor hereby ratifies and approves all acts of the Secured Party
pursuant to this Security Agreement and anyone else designated by the Secured
Party and shall execute to and deliver to the Secured Party all proper bills of
sale, assignments, releases, leases and other instruments as may be designated
by the Secured Party pursuant to this Article "8" of this Security Agreement.
The powers conferred on the Secured Party hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to act pursuant
to this Article "8" of this
22
Agreement or any other Article of this Agreement.
9. Restrictions on Transfer. Except in the ordinary course of business,
the Grantor shall not sell, transfer or otherwise convey all or any portion of
the Collateral unless the Secured Party shall consent in writing prior to such
sale, transfer or other conveyance.
10. Termination of Agreement. This Security Agreement and the security
interest created by this Security Agreement shall terminate only when the
Grantor has fully satisfied the Obligations, whether at maturity, by
acceleration or prepayment, or otherwise. Upon full satisfaction of the
Obligations, the Secured Party shall execute and deliver to the Grantor all such
instruments and documents as the Grantor shall reasonably request to confirm and
evidence such termination.
11. Grantor Remains Liable. The Grantor hereby agrees that any and all of
the Secured Party's rights with respect to the Collateral shall continue
unimpaired, and the Grantor shall be and remain obligated in accordance with the
terms hereof, notwithstanding the release or substitution of any Collateral at
any time, or of any rights or interests therein, or the exercise of any remedies
by the Secured Party or any delay, extension of time, renewal, compromise or
other indulgence granted by the Secured Party with respect to any of the
Obligations. The Grantor hereby waives all notice of any such delay, extension,
release, substitution, renewal, compromise or other indulgence and hereby
consents to be bound thereby as fully and effectually as if the Grantor had
expressly agreed thereto in advance.
12. Secured Party Not Liable. Nothing in this Agreement shall be deemed to
constitute an assumption or acceptance by the Secured Party of any of the
obligations of the Grantor and the Grantor hereby specifically confirms and
acknowledges that, the Grantor remains liable for any obligations it may have
under or with respect to any of the Collateral and agrees to indemnify the
23
Secured Party and hold the Secured Party harmless against any such liability or
obligation.
13. Miscellaneous.
A. Headings. The headings contained in this Security Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Security Agreement.
B. Enforceability. If any provision which is contained in this
Security Agreement should, for any reason, be held to be invalid or
unenforceable in any respect under the laws of any State of the United States,
such invalidity or unenforceability shall not affect any other provision of this
Security Agreement. Instead, this Security Agreement shall be construed as if
such invalid or unenforceable provisions had not been contained herein.
C. Notices. Any notice or other communication required or permitted
hereunder must be in writing and sent by either (i) certified mail, postage
prepaid, return receipt requested, (ii) overnight delivery with confirmation of
delivery or (iii) facsimile transmission with an original mailed by first class
mail, postage prepaid, addressed as follows:
To the Grantor: SupplyPoint, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, President
Facsimile No.: (408) 324 - 4813
24
Copy to: Xxxxxxxx Xxxxxxxx Xxxxx & Xxxxx, LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
To the Secured Party: Western Power & Equipment Corp.
0000 X.X. 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Attn.: Mr. C. Xxxx XxXxxx
Facsimile No.: (000) 000-0000
Copy to: Xxxxx & Fraade, P.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or in each case to such other address and facsimile number as shall have last
been furnished by like notice. If mailing is impossible due to an absence of
postal service, and the other methods of sending notice set forth in this
Paragraph "C" of this Article "13" of this Security Agreement are not otherwise
available, notice shall be hand delivered to the aforesaid addresses. Each
notice or communication shall be deemed to have been given as of the date so
mailed or delivered, as the case may be; provided, however, that any notice sent
by facsimile shall be deemed to have been given as of the date sent by facsimile
if a copy of such notice is also mailed by first class mail on the date sent by
facsimile; if the date of mailing is not the same as the date of sending by
facsimile, then the date of mailing by first class mail shall be deemed to be
the date upon which notice is given.
D. Governing Law. This Security Agreement shall in accordance with Section
5-1401
25
of the General Obligations Law of New York in all respects be construed,
governed, applied and enforced under the internal laws of the State of New York
without giving effect to the principles of conflicts of laws and be deemed to be
an agreement entered into in the State of New York and made pursuant to the laws
of the State of New York. The parties hereby consent to and submit to personal
jurisdiction over each of them by the Courts of the State of New York in any
action or proceeding, waive personal service of any and all process and
specifically consent that in any such action or proceeding, any service of
process may be effectuated upon any of them by certified mail, return receipt
requested, in accordance with this Paragraph "D" of this Article "13" of this
Security Agreement.
E. Entire Agreement. The Promissory Note, the Merger Agreement, this
Security Agreement and the other documents delivered in connection therewith or
herewith constitute the entire agreement between the parties and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof and are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder. All understandings and agreements heretofore had between the parties
with respect to the subject matter hereof are superceded by the Promissory Note,
the Merger Agreement and this Security Agreement which alone fully and
completely expresses their agreement.
F. Modification. This Security Agreement may not be amended changed,
modified, extended, terminated or discharged orally, but only by an agreement in
writing which is signed by both of the parties to this Security Agreement.
26
G. Further Assurances. The parties agree to execute any and all such other
further instruments and documents, and to take any and all such further actions
which are reasonably required to consummate, evidence, confirm or effectuate
this Security Agreement and the intents and purposes hereof.
H. Binding Agreement. This Security Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns.
I. Waiver. Except as otherwise expressly provided herein, no waiver of any
covenant, condition, or provision of this Security Agreement shall be deemed to
have been made unless expressly in writing and signed by the party against whom
such waiver is charged; and (i) the failure of any party to insist in any one or
more cases upon the performance of any of the provisions, covenants or
conditions of this Security Agreement or to exercise any option herein contained
shall not be construed as a waiver or relinquishment for the future of any such
provisions, covenants or conditions, (ii) the acceptance of performance of
anything required by this Security Agreement to be performed with knowledge of
the breach or failure of a covenant, condition or provision hereof shall not be
deemed a waiver of such breach or failure, and (iii) no waiver by any party of
one breach by another party shall be construed as a waiver with respect to any
other breach of this Security Agreement.
J. Construction. Each of the Parties hereby acknowledges and agrees that
each has been advised by counsel during the course of negotiations and had
significant input in the drafting of this Security Agreement and shall not,
therefore, be construed more strictly against any party responsible for its
drafting regardless of any presumption or rule requiring construction against
the party whose
27
attorney drafted this Security Agreement.
K. Counterparts. This Security Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Security
Agreement as of the day, month and year first written above,
SupplyPoint, Inc.
By:_____________________________________
Western Power & Equipment Corp.
By:_____________________________________
28
Exhibit J
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
SUPPLYPOINT, INC.
****************************
SUPPLYPOINT, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
1. That the Board of Directors of said corporation, by the unanimous
written consent of its members filed with the minutes of the Board,
adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of SupplyPoint, Inc.
be amended by changing ARTICLE FOUR thereof so that, as amended,
said ARTICLE shall be and read as follows:
"ARTICLE FOUR
CAPITAL STRUCTURE
4.1 Authorized Shares. The total number of shares of all classes
of stock which the Corporation shall have authority to issue
is forty-five million (45,000,000), consisting of two classes
of capital stock:
(a) 40,000,000 shares of Common Stock, par value $.01 per
share (the "Common Shares"); and
(b) 5,000,000 shares of Preferred Stock, par value $.01 per
share (the "Preferred Shares").
4.2 Designations, Preferences, etc. The designations, preferences,
powers and rights, and the qualifications, limitations and
restrictions thereof, of the capital stock of the Corporation
shall be as set forth in ARTICLE FIVE and ARTICLE SIX below."
2. That in lieu of a meeting and vote of the stockholders, the
stockholders have given unanimous consent to said amendment in
accordance with the
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 01/11/2001
010018319 - 3071830
provisions of Section 228 of the General Corporation Law of the
State of Delaware.
3. That the foregoing amendment was duly adopted in accordance with the
provisions of Sections 242 and 228 of the General Corporation Law of
the State of Delaware.
4. IN WITNESS WHEREOF, said SUPPLYPOINT, INC. has caused this
Certificate of Amendment to be executed by a duly authorized officer
this 8th day of January 2001.
SUPPLYPOINT, INC.
By: /s/ Xxxxx Xxxxxx
------------------
Name: Xxxxx Xxxxxx
Title: President
PAGE 2
State of Delaware
Office of the Secretary of State
--------------------------------
I, XXXXXX X. XXXXX, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY
CERTIFY THAT THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "XXXXXXXXXXX.XXX, INC." FILED IN THIS OFFICE ON THE THIRD DAY
OF MAY, A.D. 2000, AT 4:29 O'CLOCK P.M.
[SEAL OF SECRETARY'S OFFICE STATE OF DELAWARE]
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx, Secretary of State
3071830 8100V AUTHENTICATION: 0418478
001227057 DATE: 05-04-00
CERTIFICATE
OF
INCORPORATION
OF
XXXXXXXXXXX.XXX, INC.
(Pursuant to Section 102 of the
Delaware General Corporation Law)
---------------------------
ARTICLE ONE
NAME
The name of the Corporation is XXXXXXXXXXX.XXX, INC. (the "Corporation").
ARTICLE TWO
REGISTERED OFFICE
The address of the Corporation's registered office in the State of
Delaware is c/o The Xxxxxxxx-Xxxx Corporation System, Inc., 0000 Xxxxxx Xxxx, xx
xxx Xxxx xx Xxxxxxxxxx, Xxxxxx of New Castle, State of Delaware. The name of its
registered agent at such address is THE CORPORATION TRUST COMPANY.
ARTICLE THREE
PURPOSES
The nature of the business or purposes to be conducted or promoted by the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
CAPITAL STRUCTURE
4.1 Authorized Shares. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is twenty-five million
(25,000,000), consisting of two classes of capital stock:
(a) 20,000,000 shares of Common Stock, par value $.01 per share (the
"Common Shares"); and
(b) 5,000,000 shares of Preferred Stock, par value $.01 per share
(the "Preferred Shares").
4.2 Designations, Preferences, etc. The designations, preferences, powers
and rights, and the qualifications, limitations and restrictions thereof, of the
capital stock of the Corporation shall be as set forth in ARTICLE FIVE AND
ARTICLE SIX below.
ARTICLE FIVE
COMMON SHARES
5.1 Liquidation Rights. Upon any voluntary or involuntary liquidation,
dissolution, or winding up of the affairs of the Corporation, after payment
shall have been made to holders of outstanding Preferred Shares, if any, of the
full amount to which they are entitled pursuant to the Certificate of
Incorporation, the holders of Common Shares shall be entitled, to the exclusion
of the holders of the Preferred Shares, if any, to share ratably, in accordance
with the number of Common Shares held by each such holder, in all remaining
assets of the Corporation available for distribution among the holders of Common
Shares, whether such assets are capital, surplus, or earnings. For the purposes
of this Paragraph 5.1, neither the consolidation or merger of the Corporation
with or into any other corporation or corporations in which the stockholders of
the Corporation receive capital stock and/or securities (including debt
securities) of the acquiring corporation (or of the direct or indirect parent
corporation of the acquiring corporation) nor the sale, lease or transfer of
assets of the Corporation, shall be deemed to be a voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation as those terms are
used in this Paragraph 5.1.
5.2 Voting Rights.
(a) The holders of the Common Shares shall vote as a single class on
all matters submitted to a vote of the stockholders, with each Common Share
being entitled to one vote, except as otherwise provided by law.
(b) The holders of Common Shares are not entitled to cumulative
votes in the election of any directors.
5.3 Preemptive or Subscription Rights.
No holder of Common Shares shall be entitled to preemptive or
subscription rights.
(2)
ARTICLE SIX
PREFERRED SHARES
The Preferred Shares may be issued from time to time in one or more
series. The Board of Directors of the Corporation is hereby expressly authorized
to provide, by resolution or resolutions duly adopted by it prior to issuances,
for the creation of each such series and to fix the designation and the powers,
preferences, rights, qualifications, limitations and restrictions relating to
the shares of each such series. The authority of the Board of Directors with
respect to each series of Preferred Shares shall include, but not be limited to,
determining the following:
(a) the designation of such series, the number of shares to constitute
such series and the stated value if different from the par value thereof;
(b) whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of such
voting rights, which may be general or limited;
(c) the dividends, if any, payable on such series, whether any such
dividends shall be cumulative, and if so, from what dates, the conditions and
dates upon which such dividends shall be payable, and the preference or relation
which such dividends shall bear to the dividends payable on any shares of stock
of any other class or any other series of Preferred Shares;
(d) whether the shares of such series shall be subject to redemption by
the Corporation, and, if so, the times, prices and other conditions of such
redemption;
(e) the amount or amounts payable upon shares of such series upon, and the
rights of the holders of such series in, the voluntary or involuntary
liquidation, dissolution or winding up, or upon any distribution of the assets,
of the Corporation;
(f) whether the shares of such series shall be subject to the operation of
a retirement or sinking fund and, if so, the extent to and the manner in which
any such retirement or sinking fund shall be applied to the purchase or
redemption of the shares of such series for retirement or other corporate
purposes and the terms and provisions relating to the operation thereof;
(g) whether the shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or other series of
Preferred Shares or any other securities and, if so, the price or prices or the
rate or rates of conversion or exchange and the method, if any, of adjusting the
same, and any other terms and conditions of conversion or exchange;
(h) the limitations and restrictions, if any, to be effective while any
shares of such series are outstanding upon the payment of the dividends or the
making of other distributions on,
(3)
and upon the purchase, redemption or other acquisition by the Corporation of,
the Common Shares or shares of stock of any other class or any other series of
Preferred Shares;
(i) the conditions or restrictions, if any, upon the creation of
indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of Preferred
Shares or of any other class; and
(j) any other powers, preferences and relative, participating, optional
and other special rights, and any qualifications, limitations and restrictions,
thereof.
The powers, preferences and relative, participating, optional and other
special rights of each series of Preferred Shares, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Shares shall be identical in all respects with all other shares of
such series, except that shares of any one series issued at different times may
differ as to the dates from which dividends thereof shall be cumulative.
ARTICLE SEVEN
LIMITATION OF LIABILITY OF DIRECTORS
No director of the Corporation shall be personally liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director; provided, however, that nothing contained in this
ARTICLE SEVEN shall eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware or (iv) for any transaction from which
the director derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is hereafter
amended to authorize the further elimination or limitation of the liability of a
director, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the General Corporation
Law of the State of Delaware, as so amended.
This ARTICLE SEVEN may not be amended or modified to increase the
liability of a director, or repealed, except upon the affirmative vote of the
holders of 75% or more of the outstanding Common Shares. No such amendment,
modification, or repeal shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment,
modification, or repeal.
ARTICLE EIGHT
INDEMNIFICATION
(4)
The Corporation shall, to the fullest extent permitted by Section 145 of
the General Corporation Law of the State of Delaware, as the same may be amended
from time to time, indemnify and reimburse all persons whom it may indemnify and
reimburse pursuant thereto. The indemnification provided for herein shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any By-Law of the Corporation, agreement, vote of stockholders
or disinterested directors, or otherwise.
ARTICLE NINE
CLASSIFIED BOARD OF DIRECTORS
9.1 The Board of Directors shall consist of between one and nine members.
Such number of Directors may be changed from time to time by resolutions of the
Board of Directors, except as otherwise provided by law or the Certificate of
Incorporation. Any Director may resign at any time upon written notice to the
Corporation. Directors need not be stockholders.
9.2 At any such time as there are three of more members of the Board of
Directors, the Board of Directors shall as soon thereafter as practicable be
divided into three classes, as nearly equal in numbers as the then total number
of Directors constituting the entire Board permits, with the term of office of
one class expiring each year. At the first Annual Meeting of Stockholders after
the Board has been classified, Directors of the first class shall be elected to
hold office for a term expiring at the next succeeding Annual Meeting, Directors
of the second class shall be elected to hold office for a term expiring at the
second succeeding Annual Meeting, and Directors of the third class shall be
elected to hold office for a term expiring at the third succeeding Annual
Meeting. Subject to the foregoing, at each Annual Meeting of Stockholders, the
successors to the class of Directors whose term shall then expire shall be
elected to hold office for a term expiring at the third succeeding Annual
Meeting.
ARTICLE TEN
BY-LAWS
The Board of Directors is expressly empowered to adopt, amend or repeal
the By-Laws of the Corporation.
ARTICLE ELEVEN
AMENDMENTS
The Corporation reserves the right to amend or repeal any provisions
contained in the Certificate of Incorporation at any time in the manner now or
hereafter prescribed in the
(5)
Certificate of Incorporation and by the laws of the State of Delaware, and all
rights herein conferred upon stockholders are granted subject to such
reservation.
ARTICLE TWELVE
BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS
The Corporation elects not to be governed by Section 203 of the General
Corporation of the State of Delaware.
ARTICLE THIRTEEN
INCORPORATOR
The name of the Incorporator of the Corporation is X. Xxxxx Silver, whose
address is The Belgravia, 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000.
Executed on May 1, 2000.
/s/ X. Xxxxx Silver
---------------------------------------
X. Xxxxx Silver, Incorporator
(6)
State of Delaware
Office of the Secretary of State
--------------------------------
I, XXXXXX X. XXXXX, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF LIMITED
LIABILITY COMPANY OF "DECISION SOLUTIONS INTERACTIVE, LLC", FILED IN THIS OFFICE
ON THE TWENTIETH DAY OF JULY, A.D. 1999, AT 12 O'CLOCK P.M.
[SEAL OF SECRETARY'S OFFICE STATE OF DELAWARE]
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx, Secretary of State
3071830 8100 AUTHENTICATION: 9874466
991297249 DATE: 07-20-99
CERTIFICATE OF FORMATION
OF
DECISION SOLUTIONS INTERACTIVE, LLC
The undersigned, an authorized natural person, for the purpose of forming
a limited liability company, under the provisions and subject to the
requirements of the State of Delaware (particularly Chapter 18, Title 6 of the
Delaware Code and the acts amendatory thereof and supplemental thereto, and
known, identified, and referred to as the "Delaware Limited Liability Company
Act"), hereby certifies that:
FIRST: The name of the limited liability company (hereinafter called the
"Company") is:
Decision Solutions Interactive, LLC
SECOND: The address of the registered office and the name and the address
of the registered agent of the Company required to be maintained by Section
18-104 of the Delaware Limited Liability Company Act are The Corporation Trust
Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000.
THIRD: Except as expressly provided in the Limited Liability Company
Agreement of the Company, the management of the Company shall vested exclusively
in the Board of Managers designated from time to time in accordance with the
Limited Liability Company Agreement, and no member, in his/her/its capacity as
such, shall have any right or authority to act for or bind (whether as agent or
otherwise) the Company. On behalf of and in the name of the Company, the Board
of Managers, acting in accordance with the requirements of the Limited Liability
Company Agreement, shall have the power and authority to perform all acts which
the Company is authorized and empowered to perform under the Delaware Limited
Liability Company Act and the Limited Liability Company Agreement. All decisions
made and actions taken by the Board of Managers on behalf of the Company in
accordance with the powers granted to it under the Limited Liability Company
Agreement and the Delaware Limited Liability Company Act shall be binding upon
the Company without the need of any further approval or ratification from the
members.
Executed on July 20, 1999.
/s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx, as an authorized person
================================================================================
Exhbit K
BYLAWS
OF
SUPPLYPOINT, INC.
INCORPORATED UNDER THE LAWS
OF THE
STATE OF DELAWARE
ON
May 3, 2000
================================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE I
OFFICES
1.01. Registered Office.............................................. 1
1.02. Other Offices.................................................. 1
ARTICLE II
STOCKHOLDERS' MEETINGS
2.01. Place of Meetings.............................................. 1
2.02. Annual Meeting................................................. 1
2.03. Special Meetings............................................... 2
2.04. Notice of Meetings............................................ 2
2.05. Quorum........................................................ 2
2.06. Stockholders Entitled to Vote.................................. 2
2.07. Judges of Election............................................. 3
2.08. Informal Action by Stockholders................................ 3
ARTICLE III
DIRECTORS
3.01. Number and Term of Office...................................... 4
3.02. Vacancies...................................................... 4
3.03. General Powers................................................ 4
3.04. Place of Meetings............................................. 4
3.05. First Meeting................................................. 4
3.06. Regular Meetings............................................... 5
3.07. Special Meetings............................................... 5
3.08. Quorum......................................................... 5
3.09. Informal Action................................................ 5
3.10. Telecommunications............................................. 5
3.11. Committees..................................................... 5
3.12. Compensation of Directors...................................... 6
3.13. Removal of Directors........................................... 6
ARTICLE IV
NOTICES
4.01. Notices........................................................ 7
4.02. Waiver of Notice.............................................. 7
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PAGE
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ARTICLE V
OFFICERS
5.01. Officers...................................................... 7
5.02. Other Officers and Agents...................................... 7
5.03. Salaries....................................................... 7
5.04. Removal of Officers; Vacancies................................. 7
5.05. Chairman of the Board.......................................... 8
5.06. President...................................................... 8
5.07. Executive Vice-President....................................... 8
5.08. Vice-Presidents................................................ 8
5.09. Secretary and Assistant Secretary.............................. 8
5.10. Treasurer and Assistant Treasurers............................. 9
ARTICLE VI
SHARES OF CAPITAL STOCK
6.01. Certificates of Stock......................................... 10
6.02. Facsimile Signature........................................... 10
6.03. Lost Certificates............................................. 10
6.04. Transfers of Stock............................................ 11
6.05. Fixing Record Date............................................ 11
6.06. Registered Stockholders....................................... 11
ARTICLE VII
CONTRACTS, LOANS, CHECKS, DEPOSITS AND PROXIES
7.01. Contracts..................................................... 11
7.02. Loans......................................................... 12
7.03. Checks........................................................ 12
7.04. Deposit Accounts.............................................. 12
7.05. Proxies....................................................... 12
ARTICLE VIII
INDEMNIFICATION
8.01. Third Party Actions........................................... 12
8.02. Derivative Actions............................................ 12
8.03. Procedure for Effecting Indemnification....................... 13
ARTICLE IX
GENERAL PROVISIONS
9.01. Dividends..................................................... 13
9.02. Reserves...................................................... 13
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PAGE
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9.03. Annual Statement.............................................. 13
9.04. Fiscal Year................................................... 13
9.05. Seal.......................................................... 13
ARTICLE X
AMENDMENT OF BYLAWS
10.01. Amendments................................................... 14
-iii-
BYLAWS
of
SUPPLYPOINT, INC.
(a Delaware corporation)
ARTICLE I
OFFICES
Section 1.01. Registered Office. The address of the registered office of
the corporation is 0000 Xxxxxx Xxxxxx, in the City of Wilmington, County of New
Castle, State of Delaware. The registered office need not be identical with the
principal office of the corporation and may be changed from time to time by the
board of directors.
Section 1.02. Other Offices. The corporation may have its principal office
and other offices at such other places within and without the State of Delaware
as the board of directors may from time to time determine or the business of the
corporation requires.
ARTICLE II
STOCKHOLDERS' MEETINGS
Section 2.01. Place of Meetings. All meetings of the stockholders for the
election of directors shall be held at the registered office of the corporation
in the State of Delaware, at such place as may be fixed from time to time by the
board of directors, or at such other place either within or without the State of
Delaware as shall be designated from time to time by the board of directors and
stated in the notice of the meeting. Meetings of stockholders for any other
purpose may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2.02. Annual Meeting. Annual meetings of stockholders, commencing
with the year 2001, shall be held on the second Wednesday of April of each year
at 10:00 a.m. or at such date and time as shall be designated from time to time
by the board of directors and stated in the notice of the meeting. At such
meetings they shall elect a board of directors which election need not be by
written ballot and transact such other business as may properly be brought
before the meeting. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 2.03. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president and shall be called
by the president or secretary at the request in writing of a majority of the
board of directors, or at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting. The officer shall not fix upon a date which
unduly delays the meeting or shall have the effect of defeating the purpose of
the meeting.
Section 2.04. Notice of Meetings. Written notice of a special meeting
stating the place, date and hour of the meeting and the purpose or purposes for
which the meeting is called shall be given not less than ten nor more than sixty
days before the date of the meeting to each stockholder entitled to vote at such
meeting. Business transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
Section 2.05. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum for all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
Section 2.06. Stockholders Entitled to Vote. At each meeting of the
stockholders every stockholder entitled to vote thereat shall be entitled to one
vote in person or by proxy for each share of capital stock held by such
stockholder, but no proxy shall be entitled to vote after three (3) years from
its date, unless the proxy provides for a longer period. Every proxy shall have
been executed in writing (which shall include telegraphing, cabling or
telephotographic transmission), and shall be filed with the secretary of the
corporation before or at the time of the meeting. When a quorum is present at
any meeting, the vote of the holders of the majority of the shares having voting
power present in person or represented by proxy shall decide any question
brought before such meeting, other than the election of
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directors for which the vote of the holders of a plurality of the shares having
voting power present in person or represented by proxy is required, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation or these bylaws a different vote is required, in
which case such express provision shall govern and control the decision of such
question.
Section 2.07. Judges of Election. The board of directors may appoint
judges of election to serve at any election of directors and at voting on any
other matter that may properly come before a meeting of stockholders. The judges
of election shall decide all questions regarding the qualifications of voters,
the validity of proxies and the acceptance or rejection of votes. If no such
appointment shall be made, or if any of the judges so appointed shall fail to
attend, or refuse or be unable to serve, then such appointment may be made by
the presiding officer of the meeting.
Section 2.08. Informal Action by Stockholders. Unless otherwise provided
in the certificate of incorporation, any action required to be taken at any
annual or special meeting of stockholders of a corporation, or any action which
may be taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office in the State
of Delaware or to its principal place of business or to an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the corporation's registered office
shall be by hand or by certified mail, return receipt requested. Every written
consent shall bear the date of signature of each stockholder who signs it and no
written consent shall be effective to take the corporate action referred to
therein unless, within sixty days of the earliest consent delivered to the
corporation in the manner provided above, written consents signed by a
sufficient number of holders to take action are delivered to the corporation in
the manner provided above. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
-3-
ARTICLE III
DIRECTORS
Section 3.01. Number and Term of Office. The number of directors which
shall constitute the whole board shall be not less than one nor more than ten.
Within the limits above specified, the number of directors shall be determined
by resolution of the board of directors, or by the stockholders at the annual
meeting. The directors shall be elected at the annual meeting of stockholders,
except as provided in Section 3.02 of this Article, and each director shall hold
office until the next annual meeting of stockholders and thereafter until his
successor is duly elected and qualified, unless a prior vacancy shall occur by
reason of his death, resignation or removal from office. Directors need not be
stockholders.
Section 3.02. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, or by the stockholders, and the directors so chosen
shall hold office until the next annual meeting of stockholders and until their
successors are duly elected and qualified, unless a prior vacancy shall occur by
reason of his death, resignation or removal from office. If there are no
directors in office, then an election of directors may be held in the manner
provided by statute. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten percent of the total number of the shares at the time
outstanding giving the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office.
Section 3.03. General Powers. The business and affairs of the corporation
shall be managed by its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these bylaws directed or required to
be exercised or done by the stockholders.
Section 3.04. Place of Meetings. The board of directors of the corporation
may hold meetings, both regular and special, either within or without the State
of Delaware.
Section 3.05. First Meeting. The first meeting of each newly elected board
of directors shall be held at such time and place as shall be fixed by the vote
of the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
-4-
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 3.06. Regular Meetings. Regular meetings of the board of directors
may be held without notice at such time and at such place as shall from time to
time be determined by the board.
Section 3.07. Special Meetings. Special meetings of the board may be
called by the president on two days' notice to each director, either personally
or by mail or by telegram; special meetings shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors.
Section 3.08. Quorum. At all meetings of the board a majority of the
directors in office shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum shall not be present at any meeting of the board of
directors the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 3.09. Informal Action. Unless otherwise restricted by the
certificate of incorporation or these bylaws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.
Section 3.10. Telecommunications. Members of the board of directors, or
any committee designated by such board, may participate in a meeting of such
board or committee by means of conference telephone or similar communications
equipment by means of which all such persons participating in the meeting can
hear each other, and such participation in a meeting shall constitute presence
in person at such meeting.
Section 3.11. Committees. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternative members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a
-5-
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at any
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
shall have and may exercise all the powers and authority of the board of
directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to amending the certificate of incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, recommending
to the stockholders a dissolution of the corporation or a revocation of a
dissolution, or amending the bylaws of the corporation; and, unless the
resolution or the certificate of incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
Section 3.12. Compensation of Directors. Unless otherwise restricted by
the certificate of incorporation or by these bylaws, the board of directors
shall have the authority to fix the compensation of directors. The directors may
be paid their expenses, if any, of attendance at each meeting of the board of
directors and may be paid a fixed sum for attendance at each meeting of the
board of directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed similar compensation for attending committee meetings.
Section 3.13. Removal of Directors. At any special meeting of the
stockholders, duly called as provided in these bylaws, any director or directors
may, by the affirmative vote of the holders of a majority of all the shares of
stock outstanding and entitled to vote for the election of directors, be removed
from office, either with or without cause. At such meeting a successor or
successors may be elected, or if any such vacancy is not so filled it may be
filled by the directors as provided in Section 3.02 above. If stockholders are
entitled to vote cumulatively to elect directors then, unless the entire Board
be removed, no individual director shall be removed in case the votes of a
sufficient number of shares are cast against the resolution for his removal
which, if cumulatively voted at an annual election, would be sufficient to elect
one or more directors.
-6-
ARTICLE IV
NOTICES
Section 4.01. Notices. Whenever, under the provisions of the statutes or
of the certificate of incorporation or of these bylaws, notice is required to be
given to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 4.02. Waiver of Notice. Whenever any notice is required to be
given under the provisions of the statutes or of the certificate of
incorporation or of these bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
ARTICLE V
OFFICERS
Section 5.01. Officers. The officers of the corporation shall be chosen by
the board of directors and shall be a president, a secretary and a treasurer.
The board of directors may also choose a chairman of the board, one or more
vice-presidents, assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these bylaws otherwise provide. The board of directors at its first meeting
after each annual meeting of stockholders shall choose the appropriate officers
of the corporation. Each officer shall hold his office until his successor is
elected and qualified or until his earlier resignation or removal. Any officer
may resign at any time upon written notice to the corporation.
Section 5.02. Other Officers and Agents. The board of directors may
appoint such other officers and agents as it shall deem necessary who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the board.
Section 5.03. Salaries. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5.04. Removal of Officers; Vacancies. The officers of the
corporation shall hold office until their successors are
-7-
elected and qualified. Any officer elected or appointed by the board of
directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
Section 5.05. Chairman of the Board. The chairman of the board, if one be
designated by the board of directors, shall be the chief executive officer of
the corporation (unless such title has been otherwise assigned by employment
agreement or otherwise), shall preside at all meetings of the stockholders and
of the board of directors, shall act in an advisory capacity to the other
principal officers and shall have such powers and perform such duties as the
board may prescribe.
Section 5.06. President. The president shall be the chief operating
officer of the corporation, and in the absence of or inability to act of a
chairman of the board, shall be the chief executive officer of the corporation
and shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. He shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation.
Section 5.07. Executive Vice-President. The executive vice-president, if
one be designated by the board of directors, shall perform such executive and
administrative functions and duties as are delegated to him by the president,
shall, in the absence of or inability to act of the president, temporarily act
in his place, and shall perform such other duties as the board of directors may
prescribe.
Section 5.08. Vice-Presidents. In the absence or inability to act of the
president and executive vice-president, the vice-president (or in the event
there be more than one vice-president, the vice-presidents in the order
designated, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president or executive vice-president,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the president or executive vice-president. The vice-presidents
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
Section 5.09. Secretary and Assistant Secretary. The secretary shall
attend all meetings of the board of directors and all meetings of the
stockholders and record all the proceedings of the meetings of the corporation
and of the board of directors in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. He shall give,
-8-
or cause to be given, notice of all meetings of the stockholders and special
meetings of the board of directors, and shall perform such other duties as may
be prescribed by the board of directors or president, under whose supervision he
shall be. He shall have custody of the corporate seal of the corporation and he,
or an assistant secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by his signature
or by the signature of such assistant secretary. The board of directors may give
general authority to any other officer to affix the seal of the corporation and
to attest the affixing by his signature.
The assistant secretary, or if there be more than one, the assistant
secretaries in the order determined by the board of directors (of if there be no
such determination, then in the order of their election), shall, in the absence
of the secretary or in the event of his inability to act, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
Section 5.10. Treasurer and Assistant Treasurers. The treasurer shall have
the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the board of directors. He shall disburse the funds of the corporation as may
be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the board of directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the treasurer or in the event of his inability to act, perform
the duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
-9-
ARTICLE VI
SHARES OF CAPITAL STOCK
Section 6.01. Certificates of Stock. Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the chairman of the board of directors, or the president
or a vice-president and the treasurer or an assistant treasurer, or the
secretary or an assistant secretary of the corporation, certifying the number of
shares owned by him in the corporation. If the corporation shall be authorized
to issue more than one class of stock or more than one series of any class, the
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in Section 202 of the General Corporation Law
of Delaware, in lieu of the foregoing requirements, there may be set forth on
the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Section 6.02. Facsimile Signature. Where a certificate is countersigned
(l) by a transfer agent other than the corporation or its employee, or, (2) by a
registrar other than the corporation or its employee, any other signature on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 6.03. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that
-10-
may be made against the corporation with respect to the certificate alleged to
have been lost, stolen or destroyed.
Section 6.04. Transfers of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 6.05. Fixing Record Date. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting. In order that the corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the board of directors may fix, in advance, a record date, which shall
not be more than ten days after the date upon which the resolution fixing the
record date is adopted by the board of directors.
Section 6.06. Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
ARTICLE VII
CONTRACTS, LOANS, CHECKS, DEPOSITS AND PROXIES
Section 7.01. Contracts. The board of directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
-11-
Section 7.02. Loans. No loans shall be contracted on behalf of the
corporation, and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
Section 7.03. Checks. All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation and in such manner as shall from time to time be determined by
resolution of the board of directors.
Section 7.04. Deposit Accounts. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositories as the board of directors
may select.
Section 7.05. Proxies. Proxies to vote with respect to shares of stock of
other corporations owned by or standing in the name of the corporation may be
executed and delivered from time to time on behalf of the corporation by the
president or a vice-president or by any other person or persons thereunto
authorized by the board of directors.
ARTICLE VIII
INDEMNIFICATION
Section 8.01. Third Party Actions. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that the person is or was a
director or officer of the corporation, or is or was serving at the request of
the corporation as a director, officer or representative of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement,
actually and reasonably incurred by the person in connection with such
threatened, pending or completed action, suit or proceeding.
Section 8.02. Derivative Actions. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that the
person is or was a director or officer of the corporation, or is or was serving
at the request of the corporation as a director, officer or representative of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement, actually
-12-
and reasonably incurred by the person in connection with such threatened,
pending or completed action or suit by or in the right of the corporation.
Section 8.03. Procedure for Effecting Indemnification. Indemnification
under Sections 8.01 and 8.02 shall be automatic and shall not require any
determination that indemnification is proper, except that no indemnification
shall be made in any case where the act or failure to act giving rise to the
claim for indemnification is determined by a court to have constituted willful
misconduct or recklessness.
ARTICLE IX
GENERAL PROVISIONS
Section 9.01. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
Section 9.02. Reserves. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 9.03. Annual Statement. The board of directors shall present at
each annual meeting, and at any special meeting of the stockholders when called
for by vote of the stockholders, a full and clear statement of the business and
condition of the corporation.
Section 9.04. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 9.05. Seal. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
-13-
ARTICLE X
AMENDMENT OF BYLAWS
Section 10.1. Amendments. These bylaws may be altered, amended or repealed
or new bylaws may be adopted by the board of directors or by the stockholders at
any regular meeting of the board of directors or of the stockholders, or at any
special meeting of the board of directors or of the stockholders if notice of
such alteration, amendment, repeal or adoption of new bylaws is contained in the
notice of such special meeting.
-14-
SUPPLYPOINT, INC.
Exhibit M
Capitalization Schedule
================================================================================
The following is a list of holders of options to acquire shares of stock of
SupplyPoint, Inc.
------------------------------------------------
Option Holder Options
------------------------------------------------
------------------------------------------------
Xxxxx, Xxxxxxx X. 100,000
------------------------------------------------
Xxxxxxx, Xxxxx X. 50,000
------------------------------------------------
Silver, X. Xxxxx 50,000
------------------------------------------------
Xxxxxxxxxxx, Xxxxx 126,000
------------------------------------------------
Xxxxxx, Xxxxx 1,137,500
------------------------------------------------
Xxxxxxxx, Xxxxxx 25,000
------------------------------------------------
Xxxxxxxxx, Xxxx 25,000
------------------------------------------------
Xxxxxx, Xxxxxx 5,000
------------------------------------------------
Xxxxxxx, Xxxxx 5,000
------------------------------------------------
------------------------------------------------
Current Employees 390,000
------------------------------------------------
------------------------------------------------
Reserved for issuance pursuant to
ESOP 1,086,500
------------------------------------------------
------------------------------------------------
Total Options 3,000,000
------------------------------------------------
------------------------------------------------
Exhibit N
WRITTEN CONSENT OF THE STOCKHOLDERS
-OF-
SUPPLYPOINT, INC.
The undersigned, being a majority of the stockholders of SupplyPoint,
Inc., a Delaware Corporation ("the Company"), in accordance with the provisions
of Section 228(a) of the General Corporation Law of the State of Delaware, do
hereby consent to and adopt the following:
WHEREAS, the undersigned believe it is in the best interests of the
Company to enter into a Merger Agreement dated as of the 1st day of May 2001
(the "Merger Agreement") with Western Power & Equipment Corp., a Delaware
Corporation ("Western") and Western's subsidiary, WPEC Acquisition Corp., a
Delaware Corporation ("Acquisition Corp.");
NOW THEREFORE, it is
RESOLVED, that the Stockholders ratify and approve the Company entering
into the Merger Agreement in the form annexed hereto as Exhibit "A" and to do
all acts necessary to consummate the Merger and all ancillary transactions
pursuant to which the
Company shall be merged with and into Acquisition Corp. pursuant to a "plan of
reorganization" within the meaning of Section 368(a)(1)(A) and Section 368
(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code"); and it
is further
RESOLVED, that the officers of the Company, and each of them, are hereby
authorized and empowered, in the name and on behalf of the Company, to execute
such documents and to take such additional action as they or any of them may
deem necessary or desirable in order to implement the intents and purposes of
all the foregoing resolutions.
IN WITNESS WHEREOF, the undersigned have executed this Written Consent as
of the ___ day of May, 2001.
Stockholders Number
of Shares
____________________
____________________
____________________
____________________
2
Exhibit O
UNANIMOUS WRITTEN CONSENT OF DIRECTORS
IN LIEU OF A MEETING OF THE BOARD OF DIRECTORS
-OF-
SUPPLYPOINT, INC.
The undersigned, being all of the directors of SupplyPoint, Inc., a
Delaware Corporation ("the Company"), in accordance with the provisions of
Section 141(f) of the General Corporation Law of the State of Delaware, do
hereby consent to and adopt the following:
WHEREAS, the Board of Directors of the Company believes it is in the best
interests of the Company to enter into a Merger Agreement dated as of the 1st
day of May 2001 (the "Merger Agreement") with Western Power & Equipment Corp., a
Delaware Corporation ("Western") and Western's subsidiary, WPEC Acquisition
Corp., a Delaware Corporation ("Acquisition Corp.");
NOW THEREFORE, it is
RESOLVED, that the Board of Directors authorizes the Company to enter into
the Merger Agreement in the form annexed hereto as Exhibit "A" and to do all
acts necessary to consummate the Merger and all ancillary transactions pursuant
to which the Company shall be merged with and into Acquisition Corp. pursuant to
a "plan of
reorganization" within the meaning of Section 368(a)(1)(A) and Section 368
(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code"); and it
is further
RESOLVED, that articles of merger shall be filed with the Secretary of
State of the State of Delaware; and it is further
RESOLVED, that the officers of the Company, and each of them, are hereby
authorized and empowered, in the name and on behalf of the Company, to execute
such documents and to take such additional action as they or any of them may
deem necessary or desirable in order to implement the intents and purposes of
all the foregoing resolutions.
IN WITNESS WHEREOF, the undersigned has executed this Written Consent as
of the ___ day of May, 2001.
_______________________
Xxxxx X. Xxxxx
_______________________
Xxxxxxx X. Xxxxx
_______________________
Xxxxx X. Xxxxxx
_______________________
Xxxxxx X. Xxxxx
2
Exhibit P
SUPPLYPOINT, INC.
Index to Financial Statements
for the Year Ended December 31, 2000
Independent Auditors' Reports F - 2
Balance Sheet F - 3 - 4
Statements of Operations F - 5
Statements of Changes in Stockholders' Deficiency F - 6
Statements of Cash Flows F - 7
Notes to Financial Statements F - 8 - 18
F-1
INDEPENDENT AUDITORS' REPORT
To The Board of Directors
SupplyPoint, Inc.
We have audited the accompanying balance sheet of SupplyPoint, Inc. as of
December 31, 2000 and the related statements of operations, changes in
stockholders' deficiency and cash flows for the period from July 22, 1999
("Inception") to December 31, 1999 and the year ended December 31, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly, in all
material respects, the financial position of SupplyPoint, Inc. as of December
31, 2000 and the results of its operations and its cash flows for the period
from Inception to December 31, 1999 and the year ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 10 to the
financial statements, the Company has had recurring losses since inception along
with a minimum amount of revenues. These conditions raise substantial doubt
about its ability to continue as a going concern. Management's plans regarding
those matters are also described in Note 10. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Xxxxxxxx & Xxxxxxxxxxxx, LLP
N. White Plains, NY
May 9, 2001
F-2
SUPPLYPOINT, INC.
Balance Sheet
December 31, 2000
Page 1 of 2
ASSETS
Current assets:
Cash $195,562
Accounts receivable 38,200
Prepaid expenses 13,353
--------
Total current assets $247,115
Fixed assets (net of accumulated
depreciation of $41,512) 231,156
Other assets:
Security deposits 27,780
--------
Total assets $506,051
========
See notes to financial statements.
F-3
SUPPLYPOINT, INC.
Balance Sheet
December 31, 2000
Page 2 of 2
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Notes payable $ 100,000
Notes payable-related party 2,703,000
Accounts payable 188,714
Accrued expenses 206,606
-----------
Total liabilities $ 3,198,320
Commitments and contingencies
Stockholders' deficiency:
Preferred stock, $.01 par value, 5,000,000
authorized, none issued and outstanding --
Common stock, $.01 par value, 40,000,000
authorized, 9,073,260 issued and outstanding 90,733
Additional paid-in-capital 105,737
Retained deficit (2,888,739)
-----------
Total stockholders' deficiency (2,692,269)
-----------
Total liabilities and stockholders' deficiency $ 506,051
===========
See notes to financial statements.
F-4
SUPPLYPOINT, INC.
Statements of Operations
July 22, 1999,
Year Ended Date of Inception
December 31, 2000 to December 31, 1999
----------------- --------------------
Income $ 292,506 $ 16,800
Cost of sales 1,257,261 613,710
Gross loss (964,755) (596,910)
----------- -----------
Operating expenses:
Selling 1,007,767 32,706
General and administrative 2,204,397 262,837
Development costs -- 490,422
Depreciation 36,098 5,414
Total operating expenses 3,248,262 791,379
----------- -----------
Loss from operations (4,213,017) (1,388,289)
Other income (expense)
Interest income 137 625
Interest expense (75,034) --
----------- -----------
Loss before income taxes (4,287,914) (1,387,664)
Income taxes 2,657 800
----------- -----------
Net loss $(4,290,571) $(1,388,464)
=========== ===========
Weighted shares outstanding:
Basic 9,073,260 6,804,945
Diluted 9,073,260 6,804,945
Loss per share:
Basic $ (.47) $ (.20)
Diluted $ (.47) $ (.20)
F-5
SUPPLYPOINT, INC.
Statement of Stockholders' Deficiency
For the Period From July 22, 1999 (Inception) Through December 31, 1999 and for
the Year Ended December 31, 2000
Additional
Members Preferred Stock Common Stock Paid-in Retained
Equity Shares Amount Shares Amount Capital Deficit
------ ------ ------ ------ ------ ------- -------
Balance - July 22, 1999,
date of inception $ -- -- $ -- -- $ -- $ -- $ --
Capital contributed 1,561,766 -- -- -- -- -- --
Net loss (1,388,464) -- -- -- -- -- --
----------- ------ ------ --------- ------- -------- -----------
Balance - December 31, 1999 173,302 -- -- -- -- -- --
Capital contributed 1,425,000 -- -- -- -- -- --
Net loss (1,401,832) -- -- -- -- -- (2,888,739)
Conversion of LLC to corporation (196,470) -- -- 9,073,260 90,733 105,737 --
----------- ------ ------ --------- ------- -------- -----------
Balance - December 31, 2000 $ -- -- -- 9,073,260 $90,733 $105,737 $(2,888,739)
=========== ====== ====== ========= ======= ======== ===========
See notes to financial statements.
F-6
SUPPLYPOINT, INC.
Statements of Cash Flows
Period From
July 22, 1999,
Year Ended (Inception)
December 31, 2000 to December 31, 1999
----------------- --------------------
OPERATING ACTIVITIES:
Net loss $(4,290,571) $(1,388,464)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 36,098 5,414
Write-down of software development costs -- 490,422
Changes in operating assets and liabilities:
Accounts receivable (21,400) (16,800)
Prepaid expenses 16,989 (30,342)
Security deposits (5,521) (1,875)
Accounts payable 98,846 69,488
Accrued expenses 156,222 50,380
----------- -----------
NET CASH FLOWS FROM OPERATING ACTIVITIES (4,009,337) (821,777)
----------- -----------
INVESTING ACTIVITIES:
Acquisition of fixed assets (186,094) (86,574)
----------- -----------
FINANCING ACTIVITIES:
Capital contributions 1,425,000 1,071,344
Proceeds from notes payable 2,803,000 --
----------- -----------
NET CASH FLOWS FROM FINANCING ACTIVITIES 4,228,000 1,071,344
----------- -----------
NET CHANGE IN CASH 32,569 162,993
CASH AT BEGINNING OF PERIOD 162,993 --
----------- -----------
CASH AT END OF PERIOD $ 195,562 $ 162,993
=========== ===========
Supplemental cash flow information:
Cash paid during year for:
Interest $ 64,149 $ --
=========== ===========
Income taxes $ 2,758 $ 800
=========== ===========
Member capital contributions for
software development costs $ -- $ 490,422
=========== ===========
See notes to financial statements.
F-7
SUPPLYPOINT, INC.
Notes to Financial Statements
December 31, 2000
NOTE 1 - ORGANIZATION AND DESCRIPTION OF COMPANY'S BUSINESS
XxxxxxXxxxx.xxx, Inc. (the "Company") was incorporated in the State of Delaware
on May 3, 2000 as a developer of software to be used by medium to large
manufacturing companies. In November 2000, the Company changed its name to
SupplyPoint, Inc.
The Company originally commenced operations in July 1999 as Decision Solutions
Interactive, LLC ("DSI"), a Delaware limited liability company. The operations
of DSI were transferred to the Company through a certificate of conversion dated
May 3, 2000.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Revenue from license agreements are recognized upon completion of the
installation of the Company's software. These revenues are typically a one-time
non-refundable fee. Revenues from maintenance contracts are recognized ratably
over the term of the contract. Revenues from services are recognized as services
are rendered.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less to be cash equivalents.
Reserve for Bad Debts
The Company, due to its current customer base, has not provided for a reserve
for bad debts.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash and accounts receivable. The Company
maintains substantially all its cash balances in a limited number of financial
institutions. The balances are insured by the Federal Deposit Insurance
Corporation up to $100,000. At December 31, 2000, the Company's uninsured cash
balances totaled $34,522.
F-8
SUPPLYPOINT, INC.
Notes to Financial Statements
December 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Depreciation and Amortization
Fixed assets are recorded at cost. Depreciation is generally provided on a
straight-line method over the estimated useful lives of the various assets as
follows:
Computer equipment 5 years
Furniture and fixtures 7 years
Office equipment 7 years
Maintenance and repairs are expensed as incurred while renewals and betterments
are capitalized.
Software Development
Upon formation of DSI, certain of its original members contributed software
development costs. During 1999 and 2000, the Company made substantial changes to
its products. As a result, the Company has written off these original costs.
Income Taxes
The Company's deferred income taxes arise primarily from net operating losses
and the differences in the reporting of depreciation and amortization for
financial reporting and income tax purposes. The Company was organized as a
limited liability company until May 3, 2000, and as such losses reported by DSI
are not included in net operating losses. The losses by DSI were reported on the
income tax returns of its members. There was no income tax expense reported by
the Company through May 3, 2000.
Accrued Vacation
Employees can accrue up to 20 days of vacation time per year. Any unused
vacation time may be carried forward to the following year.
F-9
SUPPLYPOINT, INC.
Notes to Financial Statements
December 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounting for Stock-Based Compensation
The Company accounts for its employee stock-based compensation plans under
Accounting Principles Board Opinion ("APB") No. 25, Accounting for Stock Issued
to Employees" and its related interpretations. In October 1995, the Financial
Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based
Compensation", which established a fair value-based method of accounting for
stock-based compensation plans. The Company has adopted the disclosure only
alternative under SFAS No. 123, which requires disclosure of the pro forma
effects on net income (loss) and net income (loss) per share as if the
stock-based compensation was measured utilizing the fair value method as well as
certain other information. The Company accounts for stock-based compensation to
nonemployees using the fair value method in accordance with SFAS No. 123.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Fair Value
The Company has a number of financial instruments, none of which is held for
trading purposes. The Company estimates that the fair value of all financial
instruments at December 31, 2000, does not differ materially from the aggregate
carrying values of these financial instruments recorded in the accompanying
balance sheets. The estimated fair value amounts have been determined by the
Company using available market information and appropriate valuation
methodologies. Considerable judgment is necessarily required in interpreting
market data to develop the estimates of fair value, and, accordingly, the
estimates are not necessarily indicative of the amounts that the Company could
realize in a current market exchange.
F-10
SUPPLYPOINT, INC.
Notes to Financial Statements
December 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Earnings (loss) per Share
Earnings (loss) per share for the years ended December 31, 2000 were computed by
dividing net income by the weighted average number of common and common
equivalent shares outstanding and also is adjusted for the assumed conversion of
shares issuable upon exercise of options. The Company had a net loss for the
years ended December 31, 2000 and 1999, accordingly, common stock equivalents
are excluded as the effect would be anti-dilutive.
NOTE 3 - FIXED ASSETS
Fixed assets at December 31, 2000 were comprised of the following:
Computer equipment $218,413
Furniture and fixtures 42,176
Office equipment 12,079
--------
272,668
Less: accumulated depreciation 41,512
--------
$231,156
========
Depreciation expense for the year ended December 31, 2000 and for the period
July 1999, date of inception, through December 31, 1999 was $36,098 and $5,414,
respectively.
NOTE 4 - NOTE PAYABLE RELATED PARTY
During 2000, a shareholder and related entities, loaned the Company $2,703,000.
The loans incur interest at the rate of 9.24% and are due on demand. Interest
accrued through December 31, 2000 totaled $75,034. In January 2001, the notes
were converted to common stock with each share of stock converted for $1 in
notes owed (Note 11 - conversion of debt).
F-11
SUPPLYPOINT, INC.
Notes to Financial Statements
December 31, 2000
NOTE 5 - NOTES PAYABLE
During 2000, three investors made interest free advances to the Company
aggregating $100,000. In January 2001, these loans were converted into 100,000
shares (159,179 shares after giving effect to the 1.5918 for 1 stock split) of
the Company's common stock.
NOTE 6 - STOCKHOLDERS DEFICIENCY
Preferred Stock
The Company is authorized to issue 5,000,000 shares of $.01 par value preferred
stock. The stock may be issued by the Board of Directors in one or more series
and with such preferences, conversion of other rights, voting powers and other
provisions as may be fixed by the Board of Directors in the resolution
authorizing their issuance without any further action by the stockholders.
Common Stock Issuance Upon Conversion of DSI
In May 2000, 5,700,000 shares (9,073,260 shares after giving effect to the
1.5918 for 1 stock split) of the Company's common stock were issued for owner
shares in DSI.
Stock Split
In January 2001, the Company effected a 1.5918 for 1 stock split. All common
share and per share amounts have been adjusted to give retroactive effect to the
split.
Stock Option Plan
In September 1999, the Company adopted the 1999 Share Option Plan (the "DSI
Plan"). The DSI Plan provided for the grant of options to qualified employees of
the Company to purchase an aggregate of 1,320,000 owner shares in the Company.
In May 2000, upon conversion of DSI into SupplyPoint, the Company adopted and
shareholders approved the 2000 Long-Term Incentive Plan (the "2000 Plan"). The
2000 Plan, which is in effect for a ten year period, provides for the grant of
options to employees and directors of the Company, to purchase an aggregate of
3,000,000 shares of the Company's common stock. Options granted under the DSI
Plan were canceled and a like number of options granted under the 2000 Plan.
F-12
SUPPLYPOINT, INC.
Notes to Financial Statements
December 31, 2000
NOTE 6 - STOCKHOLDERS DEFICIENCY (continued)
Stock Option Plan activity is summarized as follows:
Weighted Average
Shares Exercise Price
------ --------------
Options outstanding July 22, 1999 -- $ --
Granted 343,284 1.00
Exercised -- --
Canceled -- --
-------
Options outstanding - December 31, 1999 343,284 1.00
Granted 593,200 1.00
Exercised -- --
Canceled -- --
-------
Options outstanding - December 31, 2000 936,484 1.00
Options exercisable - December 31, 2000 41,516 1.00
Exercise prices for options outstanding as of December 31, 2000 were $1.00. The
weighted-average remaining contractual life of these options is approximately
five years.
In January 2001, the Company granted an employee options to purchase 10,000
shares of the Company's common stock. The options are exercisable at $1.00 per
share and vest during the first three years of the term and expire in January
2008.
In 2001, employees holding options to purchase 197,284 shares of the Company's
common stock were terminated. As a result, options to purchase 158,496 shares of
the Company's common stock were immediately canceled, while vested options to
purchase 38,788 shares remain temporarily outstanding.
In April 2000, a newly appointed director of the Company, was granted options to
purchase 200,000 shares of the Company's common stock. The options are
exercisable at $1 per share and vest over a two year period.
F-13
SUPPLYPOINT, INC.
Notes to Financial Statements
December 31, 2000
NOTE 6 - STOCKHOLDERS DEFICIENCY (continued)
Stock Options
The Company currently accounts for its employee stock-based compensation plans
using the accounting prescribed by Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees". The Company has determined its pro
forma net earnings (loss) and earnings (loss) per share information as required
by SFAS No. 123 "Accounting for Stock Issued to Employees" as if the Company had
elected to account for these options utilizing SFAS No. 123 fair value methods.
The fair value of each option grant was estimated on the date of the grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions: there has been virtually no volatility during 1999 and 2000; risk
free interest rate of 6.75% in 2000 and 1999; and expected lives of 4 to 5
years. The fair value of the options granted was $169,751, in 2000 and $98,235
in 1999.
The pro forma basic net loss and loss per share for the year ended December 31,
2000 and 1999 would have been $(4,460,322) and $(1,486,699) and $(.49) and
$(.22) respectively, had the fair value method been applied.
The effects of applying SFAS 123 in the above pro forma disclosures are not
indicative of future amounts as they are likely to be affected by the number of
equity instruments granted and the vesting of such awards.
F-14
SUPPLYPOINT, INC.
Notes to Financial Statements
December 31, 2000
NOTE 7 - INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes using the enacted tax
rates in effect in the years in which the differences are expected to reverse.
The Company's deferred income taxes are comprised of the following:
Deferred tax assets
Net operating losses $1,235,057
Software development costs 103,378
----------
Total deferred tax assets 1,338,435
Deferred tax liabilities
Depreciation 14,101
----------
Net deferred tax assets 1,324,334
Valuation allowance 1,324,334
----------
Deferred tax assets $ --
==========
The Company's income tax expense consists of the following:
July 22, 1999,
Year Ended Date of Inception
December 31, 2000 to December 31, 1999
----------------- --------------------
Current:
Federal $ -- $ --
States 2,657 800
------ ------
2,657 800
------ ------
Deferred:
Federal -- --
States -- --
------ ------
------ ------
------ ------
Provision for income taxes $2,657 $ 800
====== ======
F-15
SUPPLYPOINT, INC.
Notes to Financial Statements
December 31, 2000
NOTE 7 - INCOME TAXES (continued)
The Company has net operating loss carryforwards of approximately 3,000,000,
which expire through 2020. The utilization of this operating loss carryforward
may be limited based upon changes in ownership as defined in the Internal
Revenue Code.
A reconciliation of the difference between the expected income tax rate using
the statutory federal tax rate and the Company's effective rate is as follows:
July 22, 1999,
Year Ended Date of Inception
December 31, 2000 to December 31, 1999
----------------- --------------------
U.S. Federal income tax statutory rate (34)% (34)%
State income tax, net of Federal income
tax benefit (6) (6)
Tax benefit from losses while an LLC 13 40
Effect of net operating losses for which
there is no tax benefit 27 --
--- ---
Effective tax rate --% --%
=== ===
NOTE 8 - LEASE COMMITMENTS
The Company has entered into lease agreements for several office and sales
facilities. The leases for all facilities other than the Company's headquarters,
expire during 2001. The lease for the headquarters facility runs through April
2003, and includes provisions for an annual increase in the base rent based upon
inflation. The following is a summary of the future minimum rental commitments
at December 31, 2000.
Year Ended
December 31,
------------
2001 $ 92,099
2002 61,152
2003 20,384
---------
$173,635
========
F-16
SUPPLYPOINT, INC.
Notes to Financial Statements
December 31, 2000
NOTE 9 - EMPLOYMENT AGREEMENTS
In September 2000, the Company entered into a one year employment agreement with
its president and chief executive officer. Among other provisions, the agreement
provides for a base salary of $240,000 and annual and quarterly bonuses based on
performance and stock options equal to 5% of the outstanding shares on the date
of the agreement. The agreement provides for additional options to be granted
upon sale of the Company based upon the value of the consideration received.
NOTE 10 - SIGNIFICANT OPERATING LOSSES
The Company has incurred significant operating and development costs since
inception. These costs are expected to be significant into the foreseeable
future. In addition, the Company has begun expending significant funds on
marketing its products. The Company expects to be able to fund these
expenditures through increased sales as well as through the issuance of debt and
equity securities.
NOTE 11 - SUBSEQUENT EVENTS
Proposed Acquisition
In January 2001, the Company entered into a letter of intent with Western Power
& Equipment Corp. ("WPEC"). Pursuant to the agreement as currently proposed,
WPEC would acquire the Company in exchange for 650,000 shares of WPEC's common
stock and 2,235,000 shares of WPEC series A Preferred Stock. The Series A
Preferred Stock would be convertible into 22,350,000 shares of WPEC's common
stock upon shareholder approval. In addition, WPEC intends to raise up to
$5,000,000 in an offering of convertible debentures. The majority of the funds
from this offering are to be used to make interest-bearing advances to the
Company. Also subsequent to the merger, a corporation owned by certain officers
and directors of WPEC, has entered into an asset purchase agreement to purchase
substantially all of the assets and operations of the pre-merger WPEC.
F-17
SUPPLYPOINT, INC.
Notes to Financial Statements
December 31, 2000
NOTE 11 - SUBSEQUENT EVENTS (continued)
Conversion of Debt
In January 2001, the Company converted debt from related parties totaling
$2,523,000 into 2,523,000 shares (4,016,111 shares after giving effect to the
1.5918 for 1 stock split) of the Company's common stock.
Additional Financing
In January 2001, the Company was loaned $910,451 from related parties. The notes
are due August 5, 2001 and incur interest at the rate of ten percent (10%) per
annum. In addition, the Company incurred $100,000 in fees relating to these
loans.
In March 2001, WPEC loaned the Company $70,000. The loan incurs interest at the
rate of 10% per annum and is due on demand.
Sale of Common Stock
In January 2001, the Company sold 6,282,264 shares of the Company's common stock
(10,000,000 shares after giving to the 1.5918 for 1 split) in exchange for
$100,000. In April 2001, 250,000 of the shares were repurchased by the Company
for $2,500.
F-18
SUPPLYPOINT, INC.
Exhibit Q
Disclosure Schedule
--------------------------------------------------------------------------------
Amount Date Issued Payee
------ ----------- -----
* $250,000 January 11, 2001 The Gross Charitable Unit Trust
* $250,000 January 11, 2001 The Gross Charitable Annuity Trust
* $500,000 February 5, 2001 Allied International/Old Oak Fund
* $70,000 March 30, 2001 Western Power & Equipment Corp.
$1,272,000 January 1, 2001 The Gross Charitable Unit Trust (canceled)
$1,272,000 January 1, 2001 The Gross Charitable Annuity Trust (canceled)
$2,429,000 January 1, 2001 Ocean Castle Partners, LLC (canceled)
* These notes are secured by all assets.
SUPPLYPOINT, INC.
Exhibit R
Tax Schedule
================================================================================
None.
SUPPLYPOINT, INC.
Exhibit S
License Schedule
================================================================================
SupplyPoint does not have any licenses necessary for the operation of this
business.
SUPPLYPOINT, INC.
Exhibit T
Lease Schedule
================================================================================
Real Property:
Landlord Property Location
Cal-Mont Development Co. 0000 X. Xxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx,
XX 00000
Lantern Communication 0000 X. Xxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx,
XX 00000
Lakeside I Limited Partnership 0000X X. Xxxxxxx Xxxxxx, Xxxx Xxxxx, XX 00000
Terranomics Development 0 Xxxxx Xxxxxx, Xxxxx 0X-00, Xxxxxxx, XX 00000
000 Xxxxx Xxxxxx Associates, LP 000 Xxxxx Xxxxxx, Xxxxxx Xxxxx, XX 00000
Personal Property:
None
SUPPLYPOINT, INC.
Exhibit U
Properties and Assets Schedule
--------------------------------------------------------------------------------
Include schedule of PC's and Sever's.
None of the above listed SupplyPoint, Inc. property and assets is encumbererd.
February 28, 2001
Description Date Memo Amount
---------------------------------------------------------------------------------------------------------
Computer Equipment
10/15/1999 Demo PC and disk drive. 1,748.61
10/15/1999 Desktop workstation with NT4.0 1,515.50
10/15/1999 Desktop with Workstation NT 1,244.88
10/21/1999 1 PC and monitor 2,460.31
11/19/1999 10-9337 4,952.44
11/19/1999 10-9343 2,005.56
11/19/1999 Xxxxxx XxXxxxxx laptop 2,153.00
11/19/1999 Dell Latitude notebook - home office equipment 3,502.35
7/20/1999 To reclass purchase account. 7,900.00
1/10/2000 Blue Fin Tech. 352.25
1/11/2000 Hitachi Notebook etc. 1,271.60
1/21/2000 Palm VII 650.37
1/21/2000 47gb hard drive/2 yr warranty 793.32
1/24/2000 Netserver & mini cartridge 4,739.76
1/24/2000 Dell laptop 3,164.00
1/26/2000 Gateway laptop 4,112.42
1/26/2000 Expense report dated 1/26/0O 2,888.12
1/27/2000 Dell laptop 2,420.00
1/27/2000 Dell laptop 2,975.00
3/6/2000 Xxx #00-0000 1,052.96
3/6/2000 Xxx #00-0000 2,968.99
3/8/2000 Xxx #00-0000 2,059.69
3/13/2000 Inv #02-9521 1,848.60
3/20/2000 IBM Thinkpad 3,479.00
3/21/2000 24 port switch 1,257.36
4/18/2000 Powerstation 1,485.96
4/25/2000 Computer 1,669.99
6/16/2000 Computer equipment 1,134.29
7/17/2000 Powerstation Pro 5000 5,605.43
8/2/2000 Computer 2,502.76
8/18/2000 Laptops 6,073.91
8/21/2000 Server/Laptop Hardware 511.48
8/28/2000 Powerstation Pro 5000 3,465.89
8/30/2000 LCD Monitor 4,183.86
9/6/2000 Monitor Shipping Cases 1,109.50
9/12/2000 2 IBM ThinkPads 9,007.49
9/12/2000 Power Station Pro 5000 3,477.02
9/27/2000 Tape Drive 683.88
10/1/2000 Power Station Pro 5000 3,427.34
10/4/2000 IBM Computer 1,165.21
1O/12/2000 IBM Computer 3,553.00
11/17/2000 3 IBM Computer 11,377.62
11/29/2000 IBM Computer 7,583.51
12/6/2000 2 IBM ThinkPads 7,167.23
2/1/2001 2 IBM ThinkPads 971.99
----------
Total 139,673.45
----------
Computer Software
9/30/1999 PHOTO SHOP 5.5 569.90
10/15/1999 Windows NT Server Program 641.93
2/7/2000 Chart Bytecode 699.00
7/20/1999 To reclass purchase account. 18,530.00
7/21/2000 Software 628.81
7/1/2000 Xxx 0000 software 1,093.45
8/3/2000 Software 526.27
8/31/2000 Computer License 18,238.73
11/1/2000 Software 4,432.75
12/7/2000 Enterprise Software 9,521.67
2/1/2001 PHOTO SHOP 6.0 615.59
---------
Total 55,498.10
---------
Furniture & Fixtures
9/30/1999 CONF TABLE & 6 CHAIRS 1,818.22
10/15/1999 cubicle deposit #42415 65544 281290 5,400.00
11/8/1999 Invoice #990811 1,500.00
11/18/1999 6 chairs @$139.99 ea 839.94
11/23/1999 Cubicles - Invoice 64371 5,366.27
11/30/1999 Lobby chairs 1,683.71
1/27/2000 Office refrigerator 266.44
3/7/2000 Conference table for ste. 201 2,133.61
3/21/2000 tables and bookcases 1,485.19
3/21/2000 Office chairs 1,689.87
6/1/2000 50% deposit for partition 1,738.06
6/6/2000 Lamp, end table and pics for lobby 878.89
6/30/2000 Shelving racks 3,193.39
7/6/2000 Cubicles 1,997.85
8/22/2000 Tradeshow booth 3,590.46
8/28/2000 Cubicles 4,296.85
8/28/2000 Cubicles 4,296.85
----------
Total 42,175.60
----------
Office Equipment
7/20/1999 To reclass purchase account. 1,524.00
1/24/2000 Epson laptop projector 4,364.00
2/9/2000 projector 4,051.00
3/13/2000 Inv #13947100 834.90
5/11/2000 DVD Player 776.19
9/1/2000 Speaker Phone 528.94
----------
Total 12,079.03
----------
Qual Servers
10/20/1999 IBM Netfinity Server - Inv. 17266 17,076.00
12/1/1999 Sun Solaris server for Sun Product Qual 4,140.56
4/18/2000 Server 3,613.08
----------
Total 24,829.64
----------
Software Intellectual Property
7/20/1999 Software Intellectual Property 490,422.00
2/28/2001 Software Quark Photoshop 1,423.20
----------
491,845.20
========================================================================================================
SUPPLYPOINT, INC.
Exhibit V
Real Property Schedule
================================================================================
SupplyPoint, Inc. does not own any Real Property.
SUPPLYPOINT, INC.
Exhibit W
Insurance Schedule
================================================================================
Payment Expiration
Company/Broker Type Insurance Policy # Premium Coverages Date Date
Unum Insurance Group Life 3719895 $605.49 Basic Cov. 5th of each Active
Xxxxxxx Xxxxx Insurance month
Life Guard Medical 7260 $7,281.83 HMO/PPO 5th of each Active
Xxxxxxx Xxxxx Insurance month
Principal Insurance Dental N9607-12737 $1,274.76 Basic Cov. 5th of each Cancelled
Xxxxxxx Xxxxx Insurance month 04/30/01
VSP Vision 121428980001 $134.32 Basic Cov. 5th of each Cancelled
Xxxxxxx Xxxxx Insurance month 04/30/01
SUPPLYPOINT, INC.
Exhibit X
Contracts Schedule
================================================================================
1. J2N, Inc.
00000 Xxx Xxx Xxxxxx
Xxx Xxxx Xxxxxxxxxx, XX 00000
2. Sandisk, Corp.
000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
3. Promissory Notes
(see Exhibit O, Disclosure Schedule)
4. Employment Agreement / Letters
(see Exhibits LL, MM and NN , Employment Agreements/Offer Letters
5. Stock Option Plans
(see Exhibit 1, Stock Option Plan)
SUPPLYPOINT, INC.
Exhibit Y
Employee Compensation and Benefits Schedule
================================================================================
Medical Insurance
Prescription
Dental Insurance
Vision Insurance
Life Insurance
Accidental Death and Dismemberment
Long Term Disability
Short Term Disability
401K Savings and Investment Plan
Paid Sick Leave
Paid Holidays
Paid Vacation
Stock Option Plan
Note: All plan descriptions are attached.
SUPPLYPOINT, INC.
Exhibit Y
Employee Compensation and Benefits Schedule (cont.)
================================================================================
Hourly Vacation Hours Vacation Days
Employee Date of Hire Annual Salary Rate Accrual Accrued Used/Payoff Accrued Accrual
-------------------------------------------------------------------------------------------------------------------
Xxxxxx, Xxxxx 9/1/00 240,000.00 115.38 8,068.85 79.93 9.99 9,222.69
Xxxxxx, Xxxxx 8/22/99 70,000.00 33.65 6,644.62 207.44 25.93 6,981.15
Xxxx, Xxxxx 11/10/99 150,000.00 72.12 3,196.15 54.32 6.79 3,917.31
Min, Xxxx 9/18/00 110,000.00 52.88 1,383.46 36.16 4.52 1,912.31
Nagawani, Bharat 1/5/01 105,000.00 50.48 1,514.42 40.00 5.00 2,019.23
Xxxxx, Xxxxxx 2/21/00 100,000.00 48.08 4,817.31 143.60 17.95 6,903.85
Xxxxxxx, Xxx Xxxxx 12/26/00 55,000.00 26.44 845.63 41.98 5.25 1,110.05
830,000.00 399.04 26,470.43 603.43 75.43 32,066.59
0
Vacation Accrual for 02/2000 0.00 75.43 32,066.59
3 weeks vacation - 10 hours per month
3 weeks vacation - .33 hour per day
SUPPLYPOINT, INC.
Exhibit Z
Litigation Schedule
================================================================================
SupplyPoint, Inc. has no known current or pending litigation.
EXHIBIT AA
SUPPLYPOINT, INC.
Accounts Receivable Schedule
================================================================================
Type Date Num Name Terms Due Date Aging Open Balance
=====================================================================================================
Current
Invoice 02/15/2001 3009 SanDisk Corporation Net 30 03/17/2001 6,000.00
Invoice 02/28/2001 3010 SanDisk Corporation Net 30 03/30/2001 5,800.00
----------
11,800.00
Total Current
1 - 30
Invoice 01/01/2001 3006 SanDisk Corporation Net 30 01/31/2001 28 5,200.00
----------
5,200.00
Total 1 - 30
31 - 60
Total 31 - 60
61 - 90
Total 61 - 90
> 90
Total > 90
----------
TOTAL 17,000.00
==========
================================================================================
EXHIBIT BB
SUPPLYPOINT, INC.
Accounts Payable Schedule
================================================================================
Date Num Name Due Date Aging Open Balance
-------------------------------------------------------------------------------------------------------------
Current
01/31/2001 200101222 Sierra Atlantic, Inc. 03/02/2001 10,000.00
01/31/2001 5830 Axiom Systems 03/02/2001 5,720.00
02/15/2001 521628542 Qwest 03/02/2001 421.75
02/23/2001 478950 ADP, Inc. 03/02/2001 40.00
02/21/2001 14697 NationJobs, Inc 03/03/2001 95.00
02/21/2001 February AT&T 019-356-2642-001 03/03/2001 418.13
02/22/2001 February AT&T 030-027-1470-001 03/04/2001 235.25
02/20/2001 February 01 Pacific Xxxx 03/07/2001 1,681.20
02/25/2001 March'01 Ameritech 03/07/2001 353.45
02/26/2001 B545010001 Black Mountain Spring Water 03/08/2001 87.45
02/26/2001 February'O1 PG& E 03/08/2001 105.63
02/08/2001 14812 XXXxxx.xxx 03/10/2001 100.00
02/23/2001 572108818 FedEx 03/10/2001 141.24
02/28/2001 2001130 International Stock 03/10/2001 1,550.00
02/12/2001 118289923-1 Office Depot 03/14/2001 15.20
02/14/2001 5910 Axiom Systems 03/16/2001 5,863,00
02/28/2001 15222 XXXxxx.xxx 03/30/2001 50.00
----------
26,877.31
Total Current
1 - 30
01/15/2001 0189367313 AMR Research 01/30/2001 29 6,875.00
01/01/2001 117962889 Office Depot 01/31/2001 28 44.26
02/09/2001 March'01 Principal Financial Group 02/09/2001 19 1,274.46
01/31/2001 13127 Xxxx, Pilger & Xxxxx - SF 02/10/2001 18 5,257.56
01/31/2001 13375 Xxxx, Pilger & Xxxxx - SF 02/10/2001 18 2,608.75
01/28/2001 l-103280 Armada Group, The 02/12/2001 16 12,400.00
01/16/2001 118730510-1 Office Depot 02/15/2001 13 178.72
02/08/2001 March'01 Vision Service Plan 02/18/2001 10 134.32
02/09/2001 3322 CGRAFX 02/19/2001 9 1,069.20
02/09/2001 3124 Ohio Specialty Peoducts, Inc. 02/19/2001 9 945.84
02/09/2001 February'Ol American Express - Acct#0000-000000-00000 02/19/2001 9 1,442.97
02/12/2001 CAW2125 Computer Associates International, Inc. 02/22/2001 6 3,800.00
02/12/2001 March'01 UNUM Life Insurance 02/22/2001 6 605.49
02/11/2001 l-103312 Armada Group, The 02/26/2001 2 1,860.00
02/17/2001 95798680 Deluxe Buxiness Forms and Supplies 02/27/2001 1 129.83
----------
Total 1 - 30 38,626.40
31 -60
12/08/2000 14337, 14324 XXX Systems 01/07/2001 52 6,000.00
----------
Total 31 -60 6,000.00
61 -90
11/16/2000 Xxxxxxxx Xxxxxxxx Xxxxx & Xxxxx, LLP 12/16/2000 74 13,089.45
----------
Total 61 -90 13,089.45
> 90
06/30/2000 BPM Other 369.40
----------
Total > 90 369.40
----------
----------
TOTAL 84,962.56
==========
================================================================================
SUPPLYPOINT, INC.
Exhibit CC
Financial Accounts Schedule
================================================================================
1. First Union National Xxxx
XXXX. XX 0000
Xxxxxxx, XX 00000-0000
Tel# 0000-000-0000
Acct# 2000007514076
Acct# 2000008153546 Private Placement Escrow
2. Silicone Valley Bank
0000 Xxxxxx
Xxxxx Xxxxx, XX 00000
Tel# 000 000-0000
Acct# 3302260907 Investment Subscriptions Account
Acct# 3300267319 Operating Account
Acct# 3300272102 Services Account
SUPPLYPOINT, INC.
Exhibit DD
Patents, Trademarks and Trade Names Schedule
================================================================================
I.
SCHEDULE APPLICABLE TO ARTICLE 7(BB)(i)
A. Patents and Patent Applications
None.
B. Trademarks and Trade Names
(1) SUPPLYPOINT
SPI owns common law rights arising from its use of the xxxx
SUPPLYPOINT for computer software and services. SPI has the following three (3)
applications pending before the U.S. Patent and Trademark Office involving the
xxxx SUPPLYPOINT:
(a) XXXXXXXXXXX.XXX and Design, Application Serial No. 78/022633,
filed August 23, 2000, for computer software design for others and software
development and consulting services for others in the field of supply chain
management, searching and retrieving supply chain information on computer
networks primarily for the manufacturing and distribution market. An amendment
to delete ".COM" from the word xxxx has been filed and is pending.
[LOGO SupplyPoint]
(b) SUPPLYPOINT and Design, Application Serial No. 76/183877, filed
December 19, 2000, for computer software utilized to manage supply, procurement,
manufacturing and delivery of products.
[LOGO SupplyPoint]
(c) SUPPLYPOINT, Application Serial No. 76/182834, filed December
19, 2000, for computer software utilized to manage supply, procurement,
manufacturing and delivery of products and computer services, namely managing
the supply, procurement, manufacturing and delivery of products for others
utilizing the Internet.
SPI has registered the domain name xxxxxxxxxxx.xxx with Network
Solutions, Inc.
(2) SUPPLYVANTAGE
SPI owns common law rights arising from its use of the xxxx
SUPPLYVANTAGE for computer software and services. SPI has not registered or
applied for registration of the xxxx SUPPLYVANTAGE. SPI has terminated use of
the xxxx SUPPLYVANTAGE in SPI's business operations, and SPI does not
contemplate that the xxxx SUPPLYVANTAGE will be required or utilized in SPI's
business operations.
SPI has registered the domain names xxxxxxxxxxxxx.xxx,
xxxxxxxxxxxxx.xxx, and xxxxxxxxxxxxx.xxx with Domain Registration Services. The
foregoing domain names are not utilized or required in SPI's business
operations.
C. Copyrights
SPI has not registered any of its copyrights.
SPI owns rights under applicable United States and international
copyright laws with respect to, among others, the following works of authorship:
SupplyVantage software (all versions)
SupplyPoint software (all versions)
SupplyPoint(TM) Reference Manual
Description: The SupplyPoint software product provides real-time supply chain
analytic and optimization software, referred to as Supply Chain Performance
Management (SCPM) software, for manufacturers and distributors. SupplyPoint
offers a business-to-business (B2B) suite of applications that facilitate
synchronization, visibility, alerts and collaboration of vital information and
processes among selected supply chain members. SupplyPoint's technology is
designed to enable extended enterprise members including suppliers, customers
and business partners with disparate Enterprise Resource Planning (ERP) systems
to have the ability to extract, link and synchronize information across multiple
ERP, CRM and other legacy backroom systems among one or more manufacturing
locations. SupplyPoint utilizes a standard browser interface accessible via
Intranet/Extranet exchanges to facilitate communications among internal users,
customers, suppliers and other Partners. SupplyPoint applications' proprietary
pegging methodology provides unique
multi-dimensional links between sales orders, work orders, procurement and
inventory across one or more manufacturing locations and disparate backroom
systems.
SupplyPoint's "out-of-the-box" software solution is designed to permit
organizations to achieve seamless interaction in the end-to-end order
fulfillment process. SupplyPoint provides a unique, next generation solution
that pushes business processes, collaboration and synchronization beyond the
insular enterprise to customers, suppliers and business partners. Users are
provided with predictive, actionable information that reveals upcoming
bottlenecks or shortages or other problems that may arise in the Supply Chain,
to allow time to effectively manage these issues.
The SupplyPoint application suite is differentiated from other business
intelligence and analytics software packages in several key ways:
(1) Offers a finished application solution as opposed to a tool set or series
of templates.
(2) Enables companies to re-use single or multiple Enterprise Resource
Planning (ERP) solutions from different vendors in a real-time,
multi-plant setting.
(3) Integrates and synchronizes critical data to transform information so that
decision-makers at all levels can access the right knowledge to make
decisions.
(4) Customizable user interface is easy to use by all levels of employees and
can be personalized based on a series of rules (needs) provided by the
end-user.
(5) Operates on its own dedicated server, which is firewall protected and
available with appropriate levels of security, for both internal and
external use.
(6) Targets discrete and repetitive manufacturing industries where there is
Made-To-Order and/or complex packaging/distribution requirements.
(7) Provides Time-To-Market advantages over in-house development alternatives.
(8) Installs in 30-days or less including Training.
SupplyPoint's 2.x suite of applications has completed development and entered
production for customers. Release 3.x is currently under development, and will
include features such as advanced alert and feedback capabilities to include
WAP-based functionality for PDAs and other mobile communication devices.
SupplyPoint intends to add an Available-To-Promise ("ATP") feature in its
release 3.7 which does not use complicated market demand models or extensive
algorithms for prediction. SupplyPoint plans to use the results of its developed
synchronization engine to predict ATP status based on current orders in
production plus those in backlog, and rank-order them by the MRP's production
schedule.
D. Licenses Accepted by SPI
(1) License Agreement, from Visio Corporation, Serial Number
000-000-000000.
(2) MKS Software Program License Agreement, from Mortice Xxxx
Systems International SRL ("MKS").
(3) Oracle Program License Terms, from Oracle Corporation.
(4) Interact Commerce Corporation License Agreement, from Interact
Commerce Corporation, for ACT! 2000 software.
(5) BEA Systems, Inc. Software License Agreement.
(6) StarTeam License from StarBase Corp.
II.
SCHEDULE APPLICABLE TO ARTICLE 7(BB)(ii)
A. Exceptions to Ownership
(1) SPI is aware of the following third party uses of the trademark,
service xxxx, or trade name SUPPLYPOINT:
(a) BuildPoint Corporation, a Redwood City, California-based
company, on September 22, 2000, filed an intent-to-use application for the xxxx
SUPPLYPOINT for on-line project bidding and procurement services, namely,
purchasing construction-related goods and services for others and marketing and
promotional services for manufacturers of construction-related goods and
services. SPI, through its attorneys, sent a cease and desist letter to the
attorney of record for this application, Xxxx Xxxxxxx, and is in communication
with Xx. Xxxxxxx in an effort to resolve this amicably.
(b) The xxxx SUPPLYPOINT has been used by the Centre for
Electronic Commerce at the University of Sunderland, located in Xxxxx Xxxxx,
Xxxxxxxxxx, Xxxxxx Xxxxxxx, with a web site located at
xxxx://xxx.xxxxxxxxxxx.xxx. SPI has taken no action to date with regard to such
use.
(2) SPI is not the sole and exclusive owner of all right, title and
interest in the trademark, service xxxx, or trade name SUPPLYVANTAGE, or all
proprietary rights therein. SPI does not use the SUPPLYVANTAGE xxxx or name in
its operations.
(3) SPI is not the sole and exclusive owner of those items of
Intellectual Property described in Section 1D (Licenses Accepted by SPI).
B. Rights and Licenses Granted by SPI
Technology Purchase, Development and Support Services, and License
Agreement, between SPI and J2N, Inc., dated April 21, 2000.
Software License Agreement, between SPI and SanDisk Corporation,
dated June 30, 2000
III.
SCHEDULE APPLICABLE TO ARTICLE 7(BB)(iii)
A. Names in Which SPI Has Sole and Exclusive Rights
SupplyPoint, subject to the exceptions set forth above in IIA.(1).
IV.
SCHEDULE APPLICABLE TO ARTICLE 7(BB)(iv)
A. Interference, Infringement, Misappropriation, Conflict by Third Parties
None, except as set forth above in IIA.(1).
B. Indemnifications by SPI
Technology Purchase, Development and Support Services, and License
Agreement, between SPI and J2N, Inc., dated April 21, 2000.
Software License Agreement, between SPI and SanDisk Corporation,
dated June 30, 2000.
With respect to the domain name xxxxxxxxxxx.xxx: Domain Name
Registration Agreement between SPI and Network Solutions, Inc.
With respect to the domain names xxxxxxxxxxxxx.xxx,
xxxxxxxxxxxxx.xxx, and xxxxxxxxxxxxx.xxx: Domain Registration Form, provided by
Domain Registration Services.
V.
SCHEDULE APPLICABLE TO ARTICLE 7(BB)(vi)
See Part II, Schedule Applicable to Article 7(BB)(ii), section B.
SUPPLYPOINT, INC.
Exhibit EE
Inventory Schedule
================================================================================
Due to the nature of the business, SupplyPoint, Inc. does not maintain any form
of Inventory.
Exhibit FF
Western Power Disclosure Schedule
I. Agreements or Commitments to Increase, Decrease or Otherwise Alter the
Authorized Capital Stock of Western (Article "8(B)"):
None.
II. Western Registration Rights Outstanding (Article "8(B)"):
X. Xxxxx & Fraade, P.C.
B. Xxxxx Capital Group LLC
III. Securities and Exchange Commission Filings (Article "8(I)"):
A. Western's October 30, 2000 Annual Report on Form 10K was timely at
the time filed. The Form 10K incorporated by reference information in certain
sections with respect to the management of Western which was to be subsequently
filed in a Proxy Statement. Because such Proxy Statement was not filed, the Form
10K became untimely. Western is in the process of preparing an amendment to cure
the omissions.
IV. Employee Benefit Plans (Article "8(P)"):
N/A.
V. Material Adverse Change Since Western's March 22, 2001 Form 10Q (Article
"8(Q)"):
None.
VI. Mortgage, Pledge, Lien, Charge or any Other Encumbrance Upon Western
Assets (Article "17(H)"):
A. Deutsche Financial
B. Case Corporation
C. Case Credit Corporation
D. G.E. Financial Services
E. Daewoo America
F. Citicorp
X. Xxxxx Corporation
X. Xxxxxx
X. Xxxx
I. Interstate Trailers
J. Link Belt
K. Kubota
L. Oshkosh
X. Xxxxxx
X. Xxxxxx
X. Xxxxxxx Credit
X. Xxxx Manufacturing
X. Xxxxxx
X. Xxxxx Xxxxxx
2
X. Xxxxxx Manufacturing
T. John Deere Consumer Products
U. Nynapac
V. Champion
W. Kawasaki
X. Xxxxxxxx
Y. Xxxxxxx
X. Xxxxxx
AA. Lay-Mor
BB. American Sign
CC. TCM
DD. Lift Xxxx
XX. Xxxxxxx
FF. Ingeroll-Xxxx
XX. Multiquip
HH. American Manufacturing
3
WESTERN POWER & EQUIPMENT CORP.
Exhibit GG
Capitalization Schedule
================================================================================
To be agreed to by the parties separately.
Exhibit HH
UNANIMOUS WRITTEN CONSENT OF DIRECTORS
IN LIEU OF A MEETING OF THE BOARD OF DIRECTORS
-OF-
WESTERN POWER & EQUIPMENT CORP.
The undersigned, being all of the directors of Western Power & Equipment
Corp., a Delaware Corporation ("the Company"), in accordance with the provisions
of Section 141(f) of the General Corporation Law of the State of Delaware, do
hereby consent to and adopt the following:
WHEREAS, the Board of Directors of the Company believes it is in the best
interests of the Corporation to enter into a Merger Agreement (the "Agreement")
with SupplyPoint, Inc., a Delawre Corporation ("SPI"), dated as of the 1st day
of May 2001;
NOW THEREFORE, it is
RESOLVED, that the Board declares it advisable and in the best interests
of the Company that the Company negotiate, execute and deliver a Merger
Agreement and all ancillary documents as are necessary in order to effectuate
the Merger (collectively the "Transaction Documents"), and the Board hereby
approves, authorizes, ratifies and confirms in all respects the Company entering
into and consummating the Merger and all ancillary transactions; and it is
further
RESOLVED, that C. Xxxx XxXxxx, the President, Chairman and Chief Executive
Officer of the Company and Xxxx X. Xxxxxx, the Vice President of Finance, Chief
Financial and Principal Accounting Officer, Treasurer and Secretary of the
Company, (each an "Authorized Officer" and collectively, the "Authorized
Officers") are hereby, and each of them hereby is, empowered, authorized and
directed, in the name and on behalf of the Company, to negotiate, execute and
deliver any and all Transaction Documents; and it is further
RESOLVED, that the Board of Directors authorizes WPEC Acquisition Corp.
("Acquisition Corp."), a Delaware corporation and wholly owned subsidiary of the
Company to enter into and consummate the Merger and all ancillary transactions
pursuant to which SPI shall be merged with and into Acquisition Corp. under a
"plan of reorganization" within the meaning of Section 368(a)(1)(A) Section 368
(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code"); and it
is further
RESOLVED, that the Company will authorize Acquisition Corp. to enter into
and consummate the Merger and all ancillary transactions pursuant to which SPI
shall be merged with and into Acquisition Corp. in exchange for stock in the
Company. The consideration to be paid by the Company to the shareholders of SPI
for all issued and outstanding stock of SPI (the "Purchase Price") shall be (i)
650,000 shares (but no more than 20% of current outstanding shares of common
stock) of Common Stock of the Company, par value $.01 per share (each a "Common
Share"), and (ii) 2,235,000 shares
2
of Series Preferred Stock of the Company, par value $.01 per share (each a
"Preferred Share" and collectively, the ("Preferred Stock"), which will be
initially convertible into Common Stock of the Company on a 10 for 1 basis which
is subject to stockholder approval; and it is further
RESOLVED, that upon the acquisition, Company will file a "DBA" to do
business as "SupplyPoint"; and it is further
RESOLVED, that articles of merger shall be filed with the Secretary of
State of the State of Delaware; and it is further
RESOLVED, that the officers of the Company, and each of them, are hereby
authorized and empowered, in the name and on behalf of the Company, to execute
such documents and to take such additional action as they or any of them may
deem necessary or desirable in order to implement the intents and purposes of
all the foregoing resolutions.
3
IN WITNESS WHEREOF, the undersigned has executed this Written Consent as
of the ___ day of ____________, 2001.
_______________________
C. Xxxx XxXxxx
_______________________
Xxxxxx Xxxxx
_______________________
Xx. Xxxxxxx Xxxxxxx
_______________________
Xxxxx Xxxxxx
4
Exhibit II
WESTERN POWER MATERIAL LITIGATION
On or about June 12, 2000, Xxxxxxx & Xxxxxxxxx Power, Inc. (one of Western's
suppliers) filed suit in United States District Court for the Eastern District
of California alleging, inter alia, breach of contract and wrongful rejection of
goods for snow removal equipment ordered by Western for the State of California
Department of Transportation. The machines were rejected by the State of
California as non-conforming after which Western returned the machines to the
plaintiff. Plaintiff is alleging that the State of California's rejection of the
goods was a breach of contract and wrongful and is seeking damages of
approximately $2.8 million. The suit is pending. Western believes that the suit
is wholly without merit and is vigorously defending the suit.
Exhibit JJ
NASDAQ LETTER
1. Inquiry letter from NASDAQ dated March 27, 2001 requesting information
with respect to the merger with SupplyPoint, Inc.
Exhibit KK
WESTERN POWER & EQUIPMENT
TAX SCHEDULE
--------------------------------------------------------------------------------
Western Power & Equipment Corp.'s 1996 federal income tax return has been
audited.
Exhibit LL
UNANIMOUS WRITTEN CONSENT OF DIRECTORS
IN LIEU OF A MEETING OF THE BOARD OF DIRECTORS
-OF-
WPEC ACQUISITION CORP.
The undersigned, being all of the directors of WPEC Acquisition Corp.
("the Company"), a Delaware Corporation and wholly owned subsidiary of Western
Power & Equipment Corp., in accordance with the provisions of Section 141(f) of
the General Corporation Law of the State of Delaware, do hereby consent to and
adopt the following:
WHEREAS, the Board of Directors of Acquisition Corp. believes it is in the
best interests of the Company to enter into a Merger Agreement (the "Agreement")
with SupplyPoint, Inc. dated as of the ___ day of _________ 2001;
NOW THEREFORE, it is
RESOLVED, that the Board of Directors authorizes the Company to enter into
and consummate the Merger and all ancillary transactions pursuant to which SPI
shall be merged with and into the Company under a "plan of reorganization"
within the meaning of Section 368(a)(1)(A) and Section 368 (a)(2)(D) of the
Internal Revenue Code of 1986, as amended (the "Code"); and it is further
RESOLVED, that articles of merger shall be filed with the Secretary of
State of the State of Delaware; and it is further
RESOLVED, that the officers of the Company, and each of them, are hereby
authorized and empowered, in the name and on behalf of Acquisition Corp., to
execute such documents and to take such additional action as they or any of them
may deem necessary or desirable in order to implement the intents and purposes
of all the foregoing resolutions.
IN WITNESS WHEREOF, the undersigned has executed this Written Consent as
of the ___ day of ____________, 2001.
_______________________
C. Xxxx XxXxxx
_______________________
Xxxxxx Xxxxx
_______________________
Xx. Xxxxxxx Xxxxxxx
_______________________
Xxxxx Xxxxxx
EXHIBIT "MM"
ASSET PURCHASE AGREEMENT
between
WESTERN POWER & EQUIPMENT, L.L.C.,
and
WESTERN POWER & EQUIPMENT CORP.
Dated as of November 1, 2000
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as
of the 1st day of November, 2000 by and between WESTERN POWER & EQUIPMENT,
L.L.C., a Delaware limited liability company ("Purchaser") and WESTERN POWER &
EQUIPMENT CORP., a Delaware corporation ("Seller" and, together with Purchaser,
the "Parties").
R E C I T A L S
A. Seller owns all of the issued and outstanding capital stock of
Western Power & Equipment Corp. ("Subsidiary"), an Oregon corporation, (the
"Shares") which is engaged in the business of selling and leasing construction
equipment.
B. Purchaser desires to purchase from Seller and Seller desires to
sell to Purchaser substantially all of the assets of Seller, including, without
limitation, the Shares, and Purchaser agrees to assume substantially all of the
liabilities of Seller in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and promises contained herein, the Parties hereby
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "Acquired Assets" has the meaning set forth in Section 2.2 below.
1.2 "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
1.3 "Ancillary Agreements" means the Xxxx of Sale, the Assumption
Agreement, the Purchase Price Promissory Note, the Security Agreement and the
Employment Agreements.
1.4 "Approval" means any approval, authorization, consent, qualification,
or registration, or any waiver of any of the foregoing, required to be obtained
from, or any notice, statement or other communication required to be filed with
or delivered to, any Person.
1.5 "Approval Cure Agreement" means one or more agreements described in
Section 8.1 below.
1.6 "Assumed Liabilities" has the meaning set forth in Section 2.4 below.
2
1.7 "Assumption Agreement" has the meaning set forth in Section 11.2(a)
below.
1.8 "Closing" has the meaning set forth in Article 4 below.
1.9 "Closing Date" has the meaning set forth in Article 4 below.
1.10 "Code" means the Internal Revenue Code of 1986, as amended.
1.11 "Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan), or (d)
Employee Welfare Benefit Plan.
1.12 "Employee Pension Benefit Plan" has the meaning set forth in ERISA
Sec. 3(2).
1.13 "Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Sec. 3(1).
1.14 "Employment Agreement" has the meaning set forth in Section 9.10
below.
1.15 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.16 "Excluded Assets" has the meaning set forth in Section 2.3 below.
1.17 "Excluded Liabilities" has the meaning set forth in Section 2.5
below.
1.18 "FIRPTA Certificate" means a certificate executed by an appropriate
officer of Seller stating that Seller is not a "foreign person" for purposes of
Section 1445 of the Code and providing such other information that may be
required to avoid the withholding of tax under Section 1445.
1.19 "GAAP" means United States generally accepted accounting principles
as in effect from time to time.
1.20 "Governmental Authority" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision, tribunal
or other instrumentality of any government, whether federal, state or local,
domestic or foreign.
1.21 "Income Tax" or "Income Taxes" means any federal, state, local or
foreign income tax, franchise tax, gross income tax or similar income tax,
including any interest, addition or penalty thereon, whether disputed or not,
but excluding any Transfer Taxes.
3
1.22 "Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks, service marks, trade
dress, logos, and trade names (including, without limitation, the name "Western
Power & Equipment"), together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated therewith, and
all applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including, research, know-how, formulae,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, mailing
lists, pricing and cost information, and business and marketing plans and
proposals), and (f) all computer software (including data and related
documentation).
1.23 "Law" means any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute or treaty.
1.24 "Liability" means any liability, whether known or unknown, asserted
or unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, and due or to become due, of any nature whatsoever, and any costs,
expenses or damages.
1.25 "Lien" means any charge, claim, encumbrance, lien, option, pledge,
security interest or right of first refusal, including without limitation any
(a) mechanics, materialmen or similar lien relating to repairs or improvements
to real or personal property, (b) lien for Taxes and (c) lien securing rental
payments under any lease agreement.
1.26 "Material Adverse Effect" means a material adverse effect on the
assets, business, condition (financial or otherwise), operations or prospects of
Seller or Subsidiary.
1.27 "Merger Agreement" has the meaning set forth in Section 10.9 below.
1.28 "Mergers" has the meaning set forth in Section 9.7.
1.29 "Parties" has the meaning set forth in the preface above.
1.30 "Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
4
1.31 "Prohibited Transaction" has the meaning set forth in ERISA Sec. 406
and Code Sec. 4975.
1.32 "Purchase Price" has the meaning set forth in Section 3.1 below.
1.33 "Purchaser" has the meaning set forth in the preface above.
1.34 "Securities Act" means the Securities Act of 1933, as amended.
1.35 "Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
1.36 "Seller" has the meaning set forth in the preface above.
1.37 "Shares" has the meaning set forth in the recitals above.
1.38 "Subsidiary" has the meaning set forth in the recitals above.
1.39 "Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, branch profits, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, ad valorem, excise, customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, business, occupational, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not, imposed,
assessed or collected by or under the authority of any Governmental Authority or
payable pursuant to any tax-sharing agreement or any other contract relating to
the sharing or payment of any such tax.
1.40 "Tax Return" means any return, declaration, report, claim for refund,
form or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
1.41 "Threatened" means a claim, proceeding, dispute, action, or other
matter in respect of which any demand or statement has been made (orally or in
writing) or any notice has been given (orally or in writing), or if any other
event has occurred or any other circumstances exist, that would lead a prudent
Person to conclude that such a claim, proceeding, dispute, action, or other
matter is likely to be asserted, commenced, taken, or otherwise pursued in the
future.
1.42 "Transfer Taxes" or "Transfer Tax" means all excise, sales, use,
transfer, real estate transfer, value added, documentary, stamp registration and
similar Taxes and fees (but not Income Taxes), together with any interest,
additions, or penalties, resulting directly from the sale and transfer by Seller
to Purchaser of the Acquired Assets and Assumed Liabilities.
5
ARTICLE 2
SALE OF ASSETS
2.1 Purchase and Sale of Assets. On the terms and conditions set forth in
this Agreement, at the Closing, Seller shall sell, transfer, assign, convey, and
deliver to Purchaser, and Purchaser shall purchase and acquire from Seller, all
of the right, title and interest of Seller in and to the Acquired Assets.
2.2 Definition of Acquired Assets. The Acquired Assets consist of all of
Seller's right, title and interest in, to and under all of the assets, capital
stock, cash, properties, interests, contracts and claims of every kind and
description, wherever located, owned, used or held by Seller, real, personal or
mixed, tangible or intangible, with such changes, deletions or additions thereto
as may occur from the date of this Agreement to the Closing and consistent with
the terms and conditions of this Agreement, including but not limited to
Seller's right, title and interest in and to the Shares, but in all cases
excluding any Excluded Assets (collectively, the "Acquired Assets").
2.3 Excluded Assets. The assets of Seller being excluded from the Assets
sold, conveyed and transferred to Purchaser (collectively, the "Excluded
Assets") are the following:
(a) the corporate charter, qualifications to conduct business as a
foreign corporation, taxpayer identification numbers, seals, minute books, stock
transfer books, blank stock certificates, and other documents relating to the
organization, maintenance, and existence of Seller as a corporation;
(b) all portions of all books, records, ledgers, files, documents
and correspondence which relate solely or in part to Excluded Assets or Excluded
Liabilities;
(c) all of Seller's right, title and interest in, to and under this
Agreement, the Ancillary Agreements and all related documents;
(d) all claims, causes of action, counterclaims, and proceeds of
insurance which relate to Excluded Liabilities or Excluded Assets, in each case
as listed on Schedule 2.3(d); and
(e) an amount of cash, if any, equal to the difference between (i)
$450,000, and (ii) (A) the amount of Seller's costs and expenses incurred with
respect to this Agreement, the Ancillary Agreements, the Merger Agreement and
all exhibits and schedules attached hereto and thereto, and the transactions
contemplated hereby and thereby, plus (B) the amount of Purchaser's fees and
expenses which are payable to Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
("KS"); provided, however, that for purposes of this calculation, the amount
payable to KS may not exceed $75,000.
2.4 Assumption of Certain Liabilities. At the Closing, Purchaser shall
assume, pay, perform, defend and discharge, if and when due, to the extent not
paid, performed, defended or
6
discharged on or prior to the Closing Date, all of Seller's liabilities incurred
on or prior to the Closing Date, other than Excluded Liabilities (collectively,
the "Assumed Liabilities").
2.5 Excluded Liabilities. Purchaser shall not be obligated to assume, and
Seller agrees and acknowledges that Purchaser is not assuming, "Excluded
Liabilities," defined to mean Liabilities, obligations and expenses of Seller
relating to obligations and Liabilities of Seller under Article 12 of this
Agreement.
ARTICLE 3
CONSIDERATION
3.1 Purchase Price and Payment. The aggregate consideration for the
transfer of the Acquired Assets hereunder shall be equal to $4,100,000 (the
"Purchase Price"). At the Closing, Purchaser shall pay the Purchase Price by
executing a promissory note substantially in the form of Exhibit A hereto (the
"Purchase Price Promissory Note") and causing Subsidiary to execute and deliver
to Seller a security agreement securing the Purchase Price Promissory Note
substantially in the form of Exhibit B hereto (the "Security Agreement").
3.2 Allocation of Purchase Price. The aggregate amount of the Purchase
Price and any Assumed Liabilities that are properly included in Purchaser's tax
basis for the Acquired Assets shall be allocated as determined and agreed upon
by the Parties in accordance with the requirements of Section 1060 of the Code.
To facilitate such agreement, Purchaser shall provide a schedule of allocations
to Seller within120 days following the Closing Date and deliver same to Seller,
whose approval shall not be unreasonably delayed or withheld, absent manifest
error. Such allocations shall be used by the Parties in preparing and filing all
relevant Tax Returns, and the Parties agree to cooperate with each other in good
faith in preparing any such Tax Returns, including IRS Form 8594 (or any
successor form) and any required exhibits thereto (or other forms required
pursuant to Section 1060 of the Code, or other applicable tax laws); provided,
however, that in determining the adjusted basis of Purchaser with respect to any
of the Acquired Assets, Purchaser may increase the amount allocated to any of
the Acquired Assets to the extent permissible under applicable tax laws for
Purchaser's additional costs and expenses that are neither actually received nor
treated as received by Seller pursuant to such tax laws.
ARTICLE 4
CLOSING
4.1 Closing. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxx & Fraade,
P.C. within [five ] days of the satisfaction or waiver of all conditions
precedent of Purchaser and Seller, as set forth in Articles 9 and 10,
respectively, or at such other time, date or place as Purchaser and Seller
mutually may
7
agree (the "Closing Date"). The parties intend that the Closing will occur
simultaneously with the closing of the Mergers.
4.2 Delivery and Payment. On the Closing Date, Purchaser and Seller shall
deliver to each other such documents as are required pursuant to Articles 9 and
10 hereof, including delivery by Seller of all instruments and certificates
necessary to transfer to Purchaser all right, title and interest in and to the
Acquired Assets, including, without limitation, the Shares, and Purchaser shall
deliver to Seller the Purchase Price in the manner set forth in Section 3.1.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as of the date of this
Agreement and as of the Closing Date as follows:
5.1 Organization of Seller. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware
and Subsidiary is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Oregon.
5.2 Authority of Seller. Seller has full corporate power and authority to
execute, deliver, and perform this Agreement and the Ancillary Agreements to
which it is a party and has taken all corporate action required by Law and its
organizational documents to authorize the execution and delivery of this
Agreement and the Ancillary Agreements to which it is a party and the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, subject to obtaining approval of the shareholders of
Seller. This Agreement and the Ancillary Agreements to which Seller is a party
and all instruments and documents required to be executed and delivered by
Seller pursuant to this Agreement and the Ancillary Agreements and the
consummation by Seller of the transactions contemplated by this Agreement and
the Ancillary Agreements have been duly and validly authorized by the board of
directors of Seller, and, except for Seller obtaining approval of its
stockholders, no other corporate proceedings on the part of Seller or Subsidiary
are necessary to authorize this Agreement or the Ancillary Agreements or to
consummate the transactions contemplated hereby or thereby. Each of this
Agreement and the Ancillary Agreements to which Seller is a party constitutes a
valid and binding agreement of Seller enforceable against Seller in accordance
with its terms, subject to Seller obtaining approval of its stockholders (except
as the enforceability thereof may be limited by bankruptcy, bank moratorium or
similar laws affecting creditors' rights generally and laws restricting the
availability of equitable remedies and may be subject to general principles of
equity whether or not such enforceability is considered in a proceeding at Law
or in equity).
5.3 Capitalization. Seller is the lawful record and beneficial owner of
the Shares and owns the Shares free and clear of all Liens. Upon delivery of the
Shares, Purchaser will acquire the record, beneficial and legal title to the
Shares, free and clear of all Liens. Except as set forth on Schedule 5.3, no
legend or other reference to any purported Lien appears on any certificate
8
representing the Shares. Except for the Shares, as of the Closing, Subsidiary
shall not have outstanding any capital stock or securities convertible or
exchangeable for any shares of its capital stock, nor shall it have outstanding
any rights or options to subscribe for or to purchase its capital stock or any
stock or securities convertible into or exchangeable for its capital stock or
any stock appreciation rights or phantom stock plans. There are no statutory or
contractual stockholders' preemptive rights or rights of refusal with respect to
the sale or issuance of Subsidiary's capital stock.
5.4 Absence of Conflicts. The execution and delivery by Seller of this
Agreement and the Ancillary Agreements to which it is a party and all other
instruments and documents required to be executed by Seller pursuant to this
Agreement and the Ancillary Agreements, the transfer of the Acquired Assets and
assumption of the Assumed Liabilities, and the consummation by Seller of the
transactions contemplated by this Agreement and the Ancillary Agreements do not
and shall not conflict with or result in a breach of any provision of Seller's
certificate of incorporation or bylaws. Seller has no knowledge that any of the
following will cause Seller or Subsidiary to violate or contravene any provision
of Law or any rule or regulation of any Governmental Authority: the execution
and delivery by Seller of this Agreement and the Ancillary Agreements to which
Seller is a party; the execution and delivery by Seller of all other instruments
and documents required to be executed by Seller and/or Subsidiary pursuant to
this Agreement and the Ancillary Agreements; the transfer of the Acquired
Assets, including, without limitation, the Shares; and the consummation by the
Seller of the transactions contemplated by this Agreement and the Ancillary
Agreements.
5.5 Title to Assets; Condition of Assets. Except as set forth in Schedule
5.5, Seller has good and marketable title to each of the Acquired Assets owned
by it, and the Acquired Assets which are owned by Seller are owned free and
clear of all Liens, claims, and encumbrances, except for Liens for current Taxes
not yet due or payable.
5.6 No Finder or Broker. None of E-Mobile, Inc., E-Mobile Holdings, Inc.
or any party acting on behalf of either of the foregoing has paid or has become
obligated to pay any fee or commission to any broker, finder or intermediary,
for or on account of the transactions contemplated by this Agreement.
5.7 Accuracy of Representations and Warranties. All representations and
warranties of Seller set forth in this Agreement and in any agreement,
certificate or other document required to be delivered or given to Purchaser by
Seller pursuant to this Agreement or referred to in this Agreement or in any
such other agreement, certificate or document will be true and correct at the
Closing Date with the same force and effect as if made on that date.
5.8 Disclosure. No representation or warranty contained in this Agreement
and none of the information furnished by Seller set forth herein, in the
exhibits or schedules hereto or in any other document required to be delivered
by Seller or Subsidiary to Purchaser, or its accountants, counsel or other
advisers pursuant to this Agreement or referred to in this Agreement or in any
9
such other document, contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements herein or therein not
misleading.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as of the date of this
Agreement and as of the Closing Date as follows:
6.1 Organization of Purchaser. Purchaser is a limited liability company
duly organized, validly existing, and in good standing under the laws of the
State of Delaware, with all requisite power and authority to carry on its
business.
6.2 Authority of Purchaser. Purchaser has full power and authority to
execute, deliver, and perform this Agreement and the Ancillary Agreements to
which Purchaser is a party and has taken all action required by Law and its
organizational documents to authorize the execution and delivery of this
Agreement and the Ancillary Agreements to which Purchaser is a party and the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements. This Agreement and the Ancillary Agreements to which
Purchaser is a party and all instruments and documents required to be executed
and delivered by Purchaser pursuant to this Agreement and the Ancillary
Agreements to which Purchaser is a party, and the consummation by Purchaser of
the transactions contemplated by this Agreement and the Ancillary Agreements to
which Purchaser is a party, have been duly and validly authorized, executed, and
delivered by Purchaser, and each constitutes a valid and binding obligation of
Purchaser enforceable in accordance with their terms (except as the
enforceability thereof may be limited by bankruptcy, bank moratorium or similar
laws affecting creditors' rights generally and laws restricting the availability
of equitable remedies and may be subject to general principles of equity whether
or not such enforceability is considered in a proceeding at Law or in equity).
6.3 Absence of Conflicts. The execution and delivery by Purchaser of this
Agreement and the Ancillary Agreements to which Purchaser is a party and all
other instruments and documents required to be executed by Purchaser pursuant to
this Agreement and the Ancillary Agreements to which Purchaser is a party, the
acquisition of the Acquired Assets and assumption of the Assumed Liabilities,
and the consummation by Purchaser of the transactions contemplated by this
Agreement and the Ancillary Agreements to which Purchaser is a party (a) do not
and will not conflict with or result in a breach of any provision of Purchaser's
certificate of formation or operating agreement, (b) do not and will not
conflict with or result in a breach of contract to which Purchaser is a party or
by which its assets are bound, (c) do not result in a breach of and will not
result in any Prohibited Transaction nor cause Purchaser to violate or
contravene any provision of Law, any governmental rule or regulation or any
order, writ, judgment, injunction, decree, determination or award, and (d) will
not require any Approval on the part of Purchaser.
10
6.4 Litigation and Administrative Proceedings. There are no material
legal, judicial, administrative, or arbitration actions or proceedings filed, or
charges or other actions, proceedings, or governmental investigations pending
or, to the knowledge of Purchaser, Threatened against Purchaser which, if
adversely determined, would materially and adversely affect the business or
financial condition of Purchaser or which seeks to enjoin or obtain damages with
respect to the consummation of the transactions contemplated by this Agreement.
6.5 No Finder or Broker. Neither Purchaser nor any party acting on
Purchaser's behalf has paid or has become obligated to pay any fee or commission
to any broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
6.6 Accuracy of Representations and Warranties. All representations and
warranties of Purchaser set forth in this Agreement and in any agreement,
certificate or other document required to be delivered or given to Seller by
Purchaser pursuant to this Agreement or referred to in this Agreement or in any
such other agreement, certificate or document will be true and correct at the
Closing Date with the same force and effect as if made on that date.
6.7 Disclosure. No representation or warranty contained in this Agreement
and none of the information furnished by Purchaser set forth herein, in the
exhibits or schedules hereto or in any other document required to be delivered
by Purchaser to Seller, or its accountants, counsel or other advisers pursuant
to this Agreement or referred to in this Agreement or in any such other
document, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.
ARTICLE 7
COVENANTS OF SELLER
Seller covenants with Purchaser as follows:
7.1 Change of Name. Seller agrees from and after the Closing Date, to
cease any and all use of any of the Seller's and Subsidiary's Intellectual
Property, and Seller will, on the Closing Date, amend its corporate charter to
change its corporate name to one not including the words "Western Power &
Equipment" or any element or portion thereof, or any other confusingly similar
name.
7.2 Transfer Taxes. All Transfer Taxes shall be borne by Seller when due,
and Seller shall file all necessary Tax Returns and other documentation with
respect to all such Transfer Taxes and shall pay all expenses in connection
therewith.
7.3 Further Assurances. Effective upon the Closing, Seller hereby
authorizes Purchaser, and its permitted successors and assigns, in the name of
Purchaser, or in the name of Seller, on behalf of, and for the benefit of,
Purchaser, to collect all accounts receivable included in the Acquired Assets
and other items being transferred, conveyed and assigned to Purchaser as part
of, the Acquired Assets, to endorse, without recourse, checks, notes and other
instruments in
11
the name of Seller that constitute Acquired Assets, to institute and prosecute,
in the name of Seller or otherwise, all proceedings which Purchaser may deem
proper in order to collect, assert or enforce any claim, right or title of any
kind in or to the Acquired Assets and to defend, subject to Article 12 below,
legal proceedings relating thereto. Seller further agrees that Purchaser shall
retain for its own account any amounts collected pursuant to the foregoing
authorization, and Seller shall promptly transfer and deliver to Purchaser any
cash or other property received by Seller after the Closing Date in respect of
any accounts receivable included in the Acquired Assets, if any. Seller further
agrees to notify, immediately after the Closing, all financial institutions at
which it conducts business that Purchaser has acquired the Acquired Assets and
that such financial institutions shall deliver to Purchaser all monies collected
and to be collected by such institutions relating to the Acquired Assets from
and after the Closing Date.
7.4 Books; Records; Access. At the Closing, Seller shall deliver to
Purchaser all the Books and Records of Seller and Subsidiary relating to the
Acquired Assets. Until the sixth anniversary of the Closing Date, Purchaser and
Seller agree to retain all Books and Records pertaining to the Acquired Assets
and Subsidiary in existence on the Closing Date and to make the same available
after the Closing Date for inspection and copying by the other or its agents at
such Party's expense, upon reasonable request and upon reasonable notice.
7.5 Competition and Solicitation.
(a) In consideration of Purchaser's obligations hereunder, for a
period of five years from the Closing Date, each of Seller and its Affiliates
shall not anywhere in the United States, in any capacity, whether for its own
account or for any other person or organization, directly or indirectly, with or
without compensation, (i) own, operate, manage, or control, or (ii) serve as a
partner, agent, consultant, advisor or developer or in any similar capacity to
or (iii) have any financial interest in, or aid or assist anyone else in the
conduct of, any person or enterprise which competes with any product line of or
service offered by Subsidiary at the time of the Closing, provided, however,
that Seller and its Affiliates shall be permitted to have an ownership interest
in a publicly-held corporation, which does not exceed two percent (2%) of the
issued and outstanding shares of such publicly-held corporation.
(b) For a period of five years from the Closing Date, none of Seller
or any of its Affiliates shall offer any product or service which is competitive
with the products or services offered by Seller or Subsidiary prior to the
Closing.
(c) For a period of five years from the Closing Date, none of Seller
or any of its Affiliates shall, directly or indirectly, call upon, solicit,
divert, take away or attempt to solicit any employee of Purchaser or Subsidiary
with a view to inducing or encouraging such employee to leave the employ of
Purchaser or Subsidiary.
(d) Seller acknowledges that the provisions of this Section 7.6 are
reasonable, fair and equitable in scope, term and duration, are necessary to
protect the legitimate business interests of Purchaser, and are necessary for
the protection of Purchaser and that Purchaser will be irrevocably damaged if
such covenants are not specifically enforced. Accordingly, Seller
12
agrees that it will not challenge the enforceability of this Section or any
provision hereof nor will it raise any equitable defenses to such enforcement
and that, in addition to any other relief to which Purchaser may be entitled in
the form of actual or punitive damages, Purchaser shall be entitled to seek and
obtain injunctive relief from a court of competent jurisdiction for the purpose
of restraining Seller from any actual or Threatened breach of such covenants. To
the extent that a court finds that any provision hereof is unenforceable, such
court shall seek to enforce the intention of the Parties as set forth herein to
the greatest extent allowable by Law.
7.6 Shareholder Approval. Seller shall take all actions necessary to
obtain shareholder approval of the transactions contemplated by this Agreement
in accordance with Delaware General Corporation Law, Oregon Corporation Law, the
rules and regulations of the National Association of Securities Dealers, all
federal and state securities laws and all other applicable laws.
ARTICLE 8
MUTUAL COVENANTS
8.1 Best Efforts. Purchaser and Seller each shall use their best efforts
to perform or satisfy each covenant or condition to be performed or satisfied by
each of them before and after the Closing, including without limitation
obtaining the Approvals listed on Schedule 9.4. If any of the Approvals listed
on Schedule 9.4 is not obtained prior to the Closing Date, at Purchaser's
option, Purchaser and Seller shall enter into one or more agreements in form and
substance reasonably satisfactory to each Party (such as service agreements,
sublease agreements, or independent contractor agreements; any one or more of
the foregoing, an "Approval Cure Agreement") which will permit the transactions
contemplated hereby to be consummated and pursuant to which Purchaser will have
the ability to operate Subsidiary's business on terms that are no more
burdensome or costly to Purchaser or Seller than the terms which would have
existed had such Approvals been obtained. To the extent necessary to effectuate
the foregoing, Seller shall agree to act as agent for, and to act for the
account of, Purchaser. In any such case, Purchaser and Seller shall continue,
subsequent to the Closing Date, to use their best efforts to obtain any such
Approvals which have not been obtained prior to the Closing Date.
Notwithstanding the foregoing, none of Purchaser or Seller shall be obligated to
enter into any agreement or take any action or refrain from taking any action
which would result in any material breach of any agreement to which Purchaser or
Seller is a party, or by which its assets are bound or would result in a
violation of any Law, regulation, order, permit, or similar requirement of any
Governmental Authority.
8.2 Governmental Filings. Purchaser and Seller shall, and Seller shall
cause Subsidiary to, cooperate with each other in filing any necessary
applications, reports, government novations, assignments or other documents with
any governmental authority having jurisdiction with respect to the transactions
contemplated by this Agreement and in seeking necessary consultation with and
favorable action by any such authority, in all cases, at Purchaser's expense.
For purposes of this Section 8.2, "necessary applications" includes any document
which must be filed in order
13
either to transfer from Seller to Purchaser a license, permit, or governmental
authorization necessary to operate Subsidiary's business or to apply for and
successfully prosecute an application for a new license, permit or governmental
authorization in the name of Purchaser.
8.3 Delivery of Documents. The Parties will execute and deliver all
documents required to be delivered pursuant to Sections 11.1 and 11.2 below.
8.4 Notice of Developments and Updates. Each Party will give prompt
written notice to the other Party of any act, event or occurrence that may cause
or constitute a breach of any of its own representations and warranties in
Article 5 and Article 6 above. Each Party shall have the right to correct or
supplement the Schedules attached hereto to disclose matters that were not
required to be disclosed as of the date of this Agreement and which arose after
the date of this Agreement other than as a result of a breach by the disclosing
party of any representation, warranty, covenant or obligation under this
Agreement; provided, however, any correction or supplement that relates to a
matter which, if not corrected, would have caused the representations and
warranties in Article 5 or Article 6 not to be true, shall be subject to the
other Party's prior written consent (and, otherwise, such consent is not
required).
8.5 Cooperation After Closing. After the Closing Date, Purchaser and
Seller shall execute, acknowledge, and deliver, or cause to be executed,
acknowledged, and delivered, any and all further instruments as may be necessary
or expedient to consummate the transactions provided in this Agreement.
8.6 No Public Announcement. None of the Parties hereto shall without the
approval of the other Party (which may not be unreasonably withheld), and Seller
shall not permit Subsidiary without Purchaser's approval (which may not be
unreasonably withheld) to, make any press release or other public announcement
or communicate with any customer, competitor or supplier of Seller or Subsidiary
concerning the transactions contemplated by this Agreement, except as and to the
extent that such Party shall determine is required by Law (which determination
shall be made by such Party based upon the advice of its counsel), in which case
the other Party shall be advised and the Parties shall use their best efforts to
cause a mutually agreeable release or announcement to be issued.
8.7 Successor Employee. Seller and Purchaser agree that pursuant to the
"Alternate Procedure" provided in Section 5 of Revenue Procedure 96-60, 1996-2
C.B. 399, with respect to preparing, filing and furnishing Internal Revenue
Service Forms W-2, W-3, W-4, 941 and W-5, Seller and Purchaser shall report
using the "Alternate Procedure" as set forth therein.
8.8 Confidentiality. Subject to compliance by each Party with federal
securities laws, from and after the date of this Agreement, Purchaser and Seller
shall, and Seller shall cause Subsidiary to, maintain in confidence, and shall
cause their respective directors, officers, employees, agents, advisors and
Affiliates to maintain in confidence, any written, oral or other information
obtained in confidence from another Party or Subsidiary in connection with this
14
Agreement or the transactions contemplated hereby. If the transactions
contemplated hereby are not consummated, each Party shall, and Seller shall
cause Subsidiary to, return or destroy as much of such written information as
the other Party may reasonably request.
8.9 Registrations; Consents; Filings. Purchaser and Seller shall, and
Seller shall cause Subsidiary to, cooperate and use their respective best
efforts to make all registrations, filings and applications, to give all notices
and to obtain the Approvals set forth on Schedule 9.4 or any other governmental
consents, transfers, approvals, orders, qualifications and waivers necessary for
the consummation of the transactions contemplated hereby, except that none of
Seller, Purchaser or Subsidiary shall be required to incur any significant
current or future expense or liability or to consent to any modification of the
terms of any contract which, taking into account the nature of Purchaser,
Seller, Subsidiary and Subsidiary's business, is significant.
8.10 Employee Benefits.
(a) Effective as of the Closing Date, Purchaser and Seller shall
take all actions necessary for Purchaser to assume the sponsorship of any
Employee Benefit Plans maintained by Seller that were qualified within the
meaning of Section 401(a) of the Code and in which any employees of Seller or
Subsidiary participated as of such Closing Date. Seller shall have no further
responsibility with respect to any such Employee Benefit Plan following the
Closing Date.
(b) Purchaser shall establish or provide Employee Welfare Benefit
Plans for the employees of Seller and Subsidiary that it employs on or after the
Closing Date which are comparable in the aggregate to those covering such
employees on the Closing Date. To the extent practicable, Purchaser may satisfy
such obligation by assuming any such Employee Welfare Benefit Plan maintained by
Seller prior to the Closing Date.
ARTICLE 9
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to purchase the Acquired Assets, assume the
Assumed Liabilities, and to carry out its other obligations under this Agreement
and the Ancillary Agreements shall be subject to the fulfillment of the
following express conditions precedent on the Closing Date, unless waived in
writing by Purchaser or as otherwise provided herein:
9.1 Representations and Warranties. The representations and warranties of
Seller made in this Agreement shall be true and correct in all material respects
as of the Closing Date with the same force and effect as though such
representations were made on and as of the Closing Date.
9.2 Compliance with Agreement. All the terms, covenants and conditions of
this Agreement to be complied with and performed by Seller on or before the
Closing Date shall have been duly complied with or performed.
15
9.3 Absence of Litigation. No action, suit or proceeding shall have been
instituted and remain pending before a court or other governmental body by any
applicable government or agency thereof or any person to restrain or prohibit
the consummation of the transactions contemplated by this Agreement.
9.4 Approvals. Seller, Subsidiary or Purchaser shall have obtained the
Approvals listed on Schedule 9.4 or the Parties shall have entered into an
Approval Cure Agreement with respect to any Approvals not obtained.
9.5 Officer's Certificate. Seller shall have delivered to Purchaser a
certificate of its President and Secretary to the effect that each of the
conditions specified above in Sections 9.1, 9.2, 9.3 and 9.4 are satisfied in
all respects.
9.6 Instruments of Transfer. Seller shall have delivered to Purchaser:
(a) executed Ancillary Agreements without any material changes to
the forms attached as Exhibits to this Agreement;
(b) all documents described in Section 11.1 below; and
(c) such other instruments or documents as may be reasonably
requested by Purchaser or Purchaser's counsel to fully and effectively convey
the Acquired Assets to Purchaser.
9.7 Merger. The mergers contemplated by the Agreement and Plan of
Reorganization and Merger by and among Seller, E-Mobile, Inc., and E-Mobile
Holdings, Inc. dated as of November 1, 2000 (the "Mergers") shall be consummated
simultaneously with the Closing.
9.8 No Material Adverse Effect. Since June 30, 2000, none of Seller,
Subsidiary or Subsidiary's business shall have suffered a Material Adverse
Effect and the Acquired Assets shall not have been lost, damaged or otherwise
materially impaired.
9.9 No Liens. There shall be no Lien upon, or with respect to, the
Acquired Assets which was created pursuant to the Merger Agreement or pursuant
to any document or agreement executed in connection with the Merger Agreement.
9.10 Employment Agreements. Purchaser shall have entered into Employment
Agreements to be effective upon the Closing with the persons listed on Schedule
9.10 substantially upon the terms of the Employment Agreement attached hereto as
Exhibit 9.10 (the "Employment Agreements").
16
ARTICLE 10
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligations of Seller to transfer and deliver to Purchaser all of
Seller's rights, title, and interest in and to the Acquired Assets and to carry
out its other obligations under this Agreement and the Ancillary Agreements
shall be subject to the fulfillment of the following express conditions
precedent on the Closing Date, unless waived in writing by Seller:
10.1 Representations and Warranties. The representations and warranties of
Purchaser made in this Agreement shall be true and correct in all material
respects as of the Closing Date with the same force and effect as though such
representations and warranties were made on and as of the Closing Date.
10.2 Compliance with Agreement. All the terms, covenants, and conditions
of this Agreement to be complied with and performed by Purchaser on or before
the Closing Date shall have been duly complied with or performed.
10.3 Approvals. Seller, Subsidiary or Purchaser shall have obtained the
Approvals listed on Schedule 9.4 or the Parties shall have entered into an
Approval Cure Agreement with respect to any Approvals not obtained.
10.4 Absence of Litigation. To Purchaser's knowledge, no action or
proceeding shall have been instituted and remain pending before a court or other
applicable governmental body or agency thereof or any person to restrain or
prohibit the consummation of the transactions contemplated by this Agreement.
10.5 Purchase Price. Purchaser shall have delivered to Seller the Purchase
Price Promissory Note and the Security Agreement.
10.6 Officer's Certificate. Purchaser shall have delivered to Seller a
certificate of its President and Secretary to the effect that each of the
conditions specified above in Sections 10.1, 10.2, 10.3 and 10.4 are satisfied
in all respects.
10.7 Instruments of Transfer. Purchaser shall have delivered to Seller:
(a) executed Ancillary Agreements without any material changes to
the forms attached as Exhibits to this Agreement;
(b) all documents described in Section 11.2 below; and
(c) such other instruments or documents as may be reasonably
requested by Seller or Seller's counsel.
17
10.8 Fairness Opinion. Seller shall have received an opinion from Capital
Link Inc. reasonably satisfactory to Seller that the consideration to be
received by Seller from Purchaser for the Acquired Assets is fair to Seller from
a financial point of view (the "Fairness Opinion").
10.9 Merger. The mergers contemplated by the Agreement and Plan of
Reorganization and Merger by and among Western Power & Equipment Corp.,
E-Mobile, Inc., and E-Mobile Holdings, Inc. dated as of November 1, 2000 (the
"Merger Agreement") shall be consummated simultaneously with the Closing.
10.10 Employment Agreements. Purchaser shall have entered into the
Employment Agreements.
ARTICLE 11
DELIVERIES AT CLOSING
All transactions at the Closing shall be deemed to take place
simultaneously and no transaction at the Closing shall be deemed to have been
completed until all documents set forth in this Article 11 have been delivered
by the Parties hereto except as waived by the Party to which such document is to
be delivered.
11.1 Obligations of Seller. At the Closing, Seller shall deliver the
following instruments and documents to Purchaser:
(a) a Xxxx of Sale substantially in the form of Exhibit 11.1(a);
(b) a certificate representing the Shares, duly endorsed or
accompanied by a duly executed stock power;
(c) duly endorsed certificates of title in respect of all vehicles
included in the Acquired Assets;
(d) the executed certificate described in Section 9.5 above;
(e) resolutions of Seller's board of directors and shareholders
certified by a secretary or assistant secretary of Seller, in a form
satisfactory to Purchaser, authorizing the execution and performance of the
Agreement and all other actions to be taken by Seller hereunder;
(f) all Approvals listed on Schedule 9.4;
(g) an opinion of Seller's counsel in the form attached hereto as
Exhibit 11.1(g);
18
(h) all consents necessary for the consummation of the transactions
contemplated by this Agreement, including, inter alia, the consents necessary
for the valid execution, delivery and performance of the transfer and assignment
of the Acquired Assets;
(i) a FIRPTA Certificate;
(j) the Employment Agreements; and
(k) such other instruments or documents as may be reasonably
requested by Purchaser or Purchaser's counsel to fully and effectively convey
the Acquired Assets to Purchaser and retain the Excluded Liabilities in
accordance with the provisions of this Agreement.
11.2 Obligations of Purchaser. At the Closing, Purchaser shall deliver to
Seller:
(a) the Assumption Agreement in the form of Exhibit 11.2(a) (the
"Assumption Agreement");
(b) the executed certificate described in Section 10.6;
(c) certified copies of resolutions of the board of managers and, to
the extent legally required, interest holders of Purchaser authorizing this
transaction;
(d) an opinion of Purchaser's counsel in the form attached hereto as
Exhibit 11.2(d);
(e) the Employment Agreements;
(f) the Purchase Price Promissory Note;
(g) the Security Agreement; and
(h) such other instruments and documents as may be reasonably
requested by Seller or Seller's counsel to fully and effectively evidence the
assumption of liabilities and obligations of Seller pursuant hereto.
ARTICLE 12
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
12.1 Survival of Representations and Warranties; Limitations. The
representations and warranties provided in Sections 6.3, 6.4, 6.6 and 6.7 or in
any certificate delivered by Purchaser
19
pursuant to this Agreement shall survive until the two-year anniversary of the
Closing and thereafter only to the extent of claims for which a notice has been
given on or before such date in accordance with the terms of this Agreement (the
"Time Limitations"). The representations and warranties contained in Sections
5.3, 5.5, 5.6, 6.1, 6.2 and 6.5 shall survive until the expiration of the
applicable statutes of limitations with respect thereto. In no event shall
Purchaser be liable to Seller unless and until all claims for which Damages (as
defined below) are recoverable hereunder by Seller exceed $100,000 (the
"Basket"); provided, however, that once the level of Damages exceeds the amount
of the Basket, Seller shall be entitled to receive the entire amount of such
Damages. In the event that Seller is liable to Purchaser for Damages, Purchaser
shall only be entitled to Damages up to $100,000 (the "Claims Limit").
Notwithstanding the foregoing, the Time Limitations, the Basket and the Claims
Limit shall not apply to (i) fraud or (ii) any intentional misrepresentation or
breach of a representation, warranty or covenant or (iii) Section
12.2(a)(2)(ii), Section 12.2(a)(2)(iii) or Section 12.2(a)(3)(ii).
12.2 Indemnification.
(a) Subject to the Time Limitations, the Basket and the Claims
Limit, and paragraph (b) hereof, Seller, on the one hand, and Purchaser, on the
other hand (each an "Indemnifying Party"), shall indemnify the other and their
respective shareholders, partners, directors, affiliates, agents, officers,
employees and successors thereof (each an "Indemnified Party"), against and in
respect of all loss, liability, damage and expense (including, without
limitation, reasonable attorneys' fees and other reasonable costs of
investigation or defense) (collectively, "Damages") resulting, (1) in the case
of Seller as the Indemnifying Party, from (i) any breach by Seller of the
representations and warranties contained in Sections 5.3, 5.5 or 5.6, (ii) any
liabilities arising from any lawsuit, claim or action filed by any of Seller's
stockholders which relates to the transactions contemplated by this Agreement or
the Merger Agreement and (iii) any fees or expenses owing to any broker or
finder engaged by E-Mobile, Inc., E-Mobile Holdings, Inc. or any party acting on
behalf of either of the foregoing, and (2) in the case of Purchaser as the
Indemnifying Party, from (i) any breach by Purchaser of its representations and
warranties contained in this Agreement or in any certificate delivered by
Purchaser pursuant to this Agreement, and (ii) any Assumed Liability.
(b) Seller shall indemnify, reimburse and hold harmless Purchaser
and its shareholders, partners, directors, Affiliates, agents, officers,
employees and successors from and against all liabilities for Transfer Taxes of
Seller, Subsidiary and their respective Affiliates imposed as a result of the
transactions contemplated by this Agreement.
12.3 Method of Asserting Claims, etc. To be entitled to indemnity
hereunder, an Indemnified Party must send notice of a claim to the Indemnifying
Party within the applicable Time Limitations and within 15 business days of the
Indemnified Party becoming aware of the state of facts underlying the claim, but
the failure to notify the Indemnifying Party within such time period will not
relieve the indemnifying party of any liability that it may have to any
Indemnified Party, except to the extent that the Indemnifying Party demonstrates
that the defense of such action is actually prejudiced by the Indemnified
Party's failure to give such notice. All claims for indemnification by any
Indemnified Party hereunder shall be asserted and resolved as
20
set forth in this Section 12.3. In the event that any written claim or demand
for which an Indemnifying Party would be liable to any Indemnified Party
hereunder is asserted against or sought to be collected from any Indemnified
Party by a third party, such Indemnified Party shall promptly, but in no event
more than 15 business days following such Indemnified Party's receipt of such
claim or demand, notify the Indemnifying Party of such claim or demand
(providing sufficient details with respect to such claim or demand to put the
Indemnifying Party on notice of such claim or demand) and the amount or the
estimated amount thereof to the extent such estimate is then feasible (which
estimate shall not be conclusive of the final amount of such claim and demand)
(the "Claim Notice"). The Indemnifying Party shall promptly notify the
Indemnified Party (a) whether or not the Indemnifying Party disputes the
liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such claim or demand and (b) whether or not it desires to defend the
Indemnified Party against such claim or demand. All costs and expenses incurred
by the Indemnifying Party in defending such claim or demand shall be a liability
of, and shall be paid by, the Indemnifying Party. Except as hereinafter
provided, in the event that the Indemnifying Party promptly notifies the
Indemnified Party that it accepts liability hereunder with respect thereto and
elects to defend the Indemnified Party against such claim or demand, the
Indemnifying Party shall have the right to defend the Indemnified Party by
appropriate proceedings with counsel reasonably satisfactory to the Indemnified
Party and shall have the sole power to direct and control such defense. If any
Indemnified Party desires to participate in any such defense it may do so at its
sole cost and expense. The Indemnified Party shall not settle a claim or demand
without the consent of the Indemnifying Party, unless (i) the Indemnifying Party
shall have failed to promptly assume the defense thereof and (ii) within 10 days
after the Indemnified Party shall have given the Indemnifying Party written
notice of the proposed settlement, the Indemnifying Party shall not have given
the Indemnified Party written notice accepting liability hereunder with respect
thereto and of its election to assume the defense of such claim or demand, in
which event the Indemnified Party may enter into the proposed settlement and the
Indemnifying Party shall not be entitled to object to the terms thereof. The
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party, settle, compromise or offer to settle or compromise any such
claim or demand on a basis which would result in (i) the imposition of a consent
order, injunction or decree which would restrict the future activity or conduct
of the Indemnified Party's business or any subsidiary or Affiliate thereof, (ii)
any remedy other than damages payable in full by the Indemnifying Party or (iii)
any admission of a violation of Law that would constitute a crime or any other
admission of a violation of Law that would impair in any material respect the
Indemnified Party's conduct of its business or would establish, by collateral
estoppel or by legally admissible evidence, the basis of any other claim against
the Indemnified Party which would not be subject to full indemnity hereunder. If
the Indemnifying Party elects not to defend the Indemnified Party against such
claim or demand, whether by not giving the Indemnified Party timely notice as
provided above or otherwise, then the amount of any such claim or demand, or, if
the same be contested by the Indemnified Party, then that portion thereof as to
which such defense is unsuccessful (and the reasonable costs and expenses
pertaining to such defense) shall be the liability of the Indemnifying Party
hereunder, subject to the limitations set forth in Section 12.1 hereof.
12.4 Indemnification Payments. All indemnification payments shall promptly
be paid in cash. Except in the case of intentional misrepresentation or
intentional breach of any
21
representation, warranty or covenant or fraud, the indemnification provisions of
this Article 12 are the sole remedies for Damages and for any other causes of
action in connection with this Agreement.
ARTICLE 13
TERMINATION
13.1 Method of Termination. This Agreement may be terminated prior to
Closing, by any of the following methods:
(a) mutual consent of Purchaser and Seller;
(b) by written notice from either of Purchaser or Seller if the
Closing does not occur on or before March 31, 2001 (the "Outside Date");
provided, however, that if the Closing shall not have occurred by the Outside
Date, the Outside Date shall automatically be extended until July 31, 2001 (the
"Extension Date") unless both parties object in writing to such extension;
provided, further, however, that if the Closing shall not have occurred by the
Extension Date as a result of any action taken, or failure to act, by any
governmental or regulatory authority including, but not limited to, the
withholding of, or a delay in, any approval in connection with any aspect of the
transactions contemplated hereby, then the Extension Date shall automatically be
extended until a date which is a reasonable time subsequent to the date upon
which such governmental or regulatory action is resolved which will allow the
parties to complete the procedures required to consummate the transactions
contemplated hereby; and provided, further, however, that the right to terminate
this Agreement pursuant to this Section 13.1(b) shall not be available to any
party whose failure to fulfill any obligation pursuant to this Agreement has
been the cause of or resulted in the failure of the Closing to occur on or
before such date;
(c) by Seller if there is a material breach of any representation or
warranty set forth in Article 6 hereof or any material covenant or agreement to
be complied with or performed by Purchaser pursuant to the terms of this
Agreement or the failure of a condition set forth in Article 10 to be satisfied
(and such condition is not waived in writing by Seller) on or prior to the
Closing Date, or the occurrence of any event which results in the failure of a
condition set forth in Article 10 to be satisfied on or prior to the Closing
Date; provided, that, Seller may not terminate this Agreement prior to Closing
if Purchaser has not had an adequate opportunity to cure such failure;
(d) by Purchaser if there is a material breach of any representation
or warranty set forth in Article 5 hereof or any material covenant or agreement
to be complied with or performed by Seller pursuant to the terms of this
Agreement or the failure of a condition set forth in Article 9 to be satisfied
(and such condition is not waived in writing by Purchaser) on or prior to the
Closing Date, or the occurrence of any event which results in the failure of a
condition set forth in Article 9 to be satisfied on or prior to the Closing
Date; provided, that, Purchaser may not
22
terminate this Agreement prior to Closing if Seller has not had an adequate
opportunity to cure such failure; or
(e) by Purchaser or Seller if a court of competent jurisdiction or
other Governmental Entity shall have issued a non-appealable final order, decree
or ruling or taken any other non-appealable final action, in each case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby.
13.2 Effect of Termination. In the event that this Agreement is terminated
pursuant to the provisions of Section 13.1, this Agreement shall become null and
void and shall have no further effect, and no Party shall have any liability
with respect thereto, except that Section 14.1 shall survive the termination of
this Agreement; provided, however, that such termination shall not relieve any
Party hereto of any liability for any breach of this Agreement.
ARTICLE 14
MISCELLANEOUS
14.1 Expenses. Each Party to this Agreement shall bear and pay its own
costs and expenses incurred in connection with the preparation, execution, and
delivery of this Agreement and the Ancillary Agreements, and the transactions
contemplated hereby and thereby.
14.2 Notices. All notices, claims, certificates, requests, demands and
other communications under this Agreement shall be made in writing and shall be
sent by prepaid telex, cable or telecopy, or sent, postage prepaid, by
registered, certified or express mail, or reputable overnight courier service,
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, seven (7) days after mailing (one (1) business day in
the case of express mail or overnight courier service) to the Parties at the
following addresses (or at such other address for a Party as shall be specified
by like notice):
If to Seller: Western Power & Equipment Corp.
c/o Xxxxxxx Xxxxxxx, Esq.
Vanderkam & Xxxxxxx
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxxx, Esq.
Telecopy: (000) 000-0000
23
With a copy to: Xxxxxxx-Xxxxxxxx Law Offices
0 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy: 011-972-3-604-5775
If to Purchaser: Western Power & Equipment, L.L.C.
0000 X.X. 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx XxXxxx
Telecopy: (000) 000-0000
With a copy to: Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telecopy: (000) 000-0000
14.3 Amendments. This Agreement may be amended or modified only by a
written instrument executed by the Parties to this Agreement.
14.4 Assignment. This Agreement may not be assigned, by operation of Law
or otherwise; provided, however, that Purchaser may assign this Agreement, to
any Affiliate of Purchaser. This Agreement shall be binding upon and inure to
the benefit of successors and assigns of the Parties hereto.
14.5 Benefits; No Third Party Rights. Nothing expressed or referred to in
this Agreement is intended or shall be construed to give any person or entity,
other than the Parties, or their respective successors and assigns, any legal or
equitable right, remedy or claim under or in respect thereof or any provision
contained herein, it being the intention of the Parties that this Agreement is
for the sole and exclusive benefit of such Parties, and such successors and
assigns of this Agreement and for the benefit of no other person or entity.
14.6 Headings. The paragraph and other headings contained in this
Agreement are for reference purposes only and shall not constitute a part hereof
or be deemed to limit or expand the scope of any provision of this Agreement.
14.7 Governing Law; Venue. This Agreement shall, in accordance with
Section 5-1401 of the General Obligation Law of New York, be governed by and
construed in accordance with the Laws of the state of New York without regard to
any conflicts of law principles thereof that would call for the application of
the laws of any other jurisdiction. Each Party hereto hereby (a) irrevocably and
unconditionally submits in any legal action or proceeding relating to this
Agreement, or for recognition and enforcement of any judgment in respect
thereof, to the general
24
jurisdiction of the state and federal courts in the State of New York, and
appellate courts thereof, and (b) consents that any action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same.
14.8 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed as original, but all of which taken together shall
constitute one and the same agreement.
14.9 Severability. If any provision of this Agreement, or any covenant,
obligation or agreement contained herein is determined by a court to be invalid
or unenforceable, such determination shall not affect any other provision,
covenant, obligation or agreement, each of which shall be construed and enforced
as if such invalid or unenforceable provision were not contained herein. Such
invalidity or unenforceability shall not affect any valid and enforceable
application thereof, and each such provision, covenant, obligation or agreement,
shall be deemed to be effective, operative, made, entered into or taken in the
matter and to the full extent permitted by Law.
14.10 Entire Agreement. This Agreement, including the Schedules and
Exhibits attached hereto and hereby incorporated herein, together with the
Ancillary Agreements, constitutes the entire agreement of the Parties with
respect to the subject matter of this Agreement and supersedes all prior
agreements, understandings, or representations relating to the subject matter of
this Agreement.
[Signature page follows]
25
IN WITNESS WHEREOF, Purchaser and Seller have caused their
respective duly authorized officers to execute this Asset Purchase Agreement as
of the day and year first above written.
WESTERN POWER & EQUIPMENT, L.L.C.
By: /s/ Xxxxxx Xxxxx
----------------------------------------
Xxxxxx Xxxxx
Manager
WESTERN POWER & EQUIPMENT CORP. (DE)
By: /s/ Xxxxxxx Xxxx Xx Xxxx
----------------------------------------
Xxxxxxx Xxxx XxXxxx
President and Chief Executive Officer
Exhibit TT
CERTIFICATE OF REPRESENTATIONS AND WARRANTIES
OF
SUPPLYPOINT, INC.
Pursuant to Section "(i)" of Paragraph "A" of Article "19" of the Merger
Agreement (the "Agreement") dated as of the 1st day of May, 2001, by and among
Western Power & Equipment Corp., a Delaware corporation ("Western"), WPEC
Acquisition Corp., a Delaware corporation ("Acquisition Corp."), and
SupplyPoint, Inc., a Delaware corporation ("SPI"), SPI hereby represents,
warrants and covenants to Western and Acquisition Corp., that, as of the date
hereof, all of the representations, warranties and covenants which are contained
in the Agreement are true and accurate, including, but not limited to, those set
forth below. Each of the capitalized terms which are used in this Certificate
shall have the same meaning as is set forth in the Agreement.
SPI represents, warrants and covenants to Western and Acquisition Corp.,
as follows:
A. Corporate Status.
(i) SPI is a corporation duly organized, validly existing and
in good standing pursuant to the laws of the State of Delaware, with all
requisite power and authority to carry on its business as presently conducted in
all jurisdictions where presently conducted, to enter into the Agreement and to
consummate the transactions set forth in the Agreement;
(ii) SPI does not have an equity interest, as a shareholder,
proprietor, partner, beneficiary, joint venturer or otherwise, in any
corporation, firm, partnership or joint venture;
1
(iii) Copies of (a) the Articles of Incorporation of SPI, and
all amendments thereto to date, certified by the Secretary of State of the State
of Delaware, (b) the By-Laws of SPI, as amended to date, certified by the
Secretary of SPI and (c) a good standing certificate for SPI issued by the
Secretary of State of the State of Delaware within a date not more than thirty
(30) days prior to the date of the Agreement, are annexed hereto and made a part
hereof as Exhibits "A" (Article "7 (A)(iii)"; references to the articles in the
Agreement), "B" (Article "7 (A)(iii)") and "C", (Article "7 (A)(iii)")
respectively, and are complete and correct as of the date of this Certificate;
and
(iv) SPI shall provide a good standing certificate for SPI
issued by the Secretary of State of the State of Delaware complete and correct
as of five (5) business days prior to the Closing Date.
B. Capitalization. SPI's authorized capital stock consists of
45,000,000 shares of SPI Common Stock, $.01 par value, of which 23,000,000
shares are issued and outstanding or reserved for issuance, all of which are, or
will be validly issued, fully paid and nonassessable. SPI's issued and
outstanding shares are the only shares of stock authorized to be issued by SPI
and, except as set forth on Exhibit "D" (Article "7(B)"), there are no
subscriptions, options, warrants, rights or other agreements outstanding to
acquire shares of stock of SPI or any other equity security or security
convertible into an equity security. There are no agreements or commitments to
increase, decrease or otherwise alter the authorized capital stock of SPI.
2
C. Stockholder Approval. The holders of 93.8% of the issued and
outstanding shares of SPI have consented to SPI entering into the Agreement and
the transactions set forth in the Agreement. A certified consent of such
Stockholders is annexed hereto and made a part hereof as Exhibit "E" (Article
"7(C)").
D. Authority of SPI. SPI has the full corporate power and authority
to execute, deliver, and perform the Agreement and all instruments and documents
which are required to be executed and delivered by SPI pursuant to the Agreement
(the "SPI Ancillary Documents") and has taken all corporate action required by
law and its organizational documents to authorize the execution and delivery of
the Agreement and the SPI Ancillary Documents and the consummation of the
transactions set forth in the Agreement and the SPI Ancillary Documents. The
Agreement and the SPI Ancillary Documents and the consummation by SPI of the
transactions set forth in the Agreement have been duly and validly authorized,
executed, and delivered by SPI, and the Agreement and the SPI Ancillary
Documents are valid and binding upon SPI and enforceable against SPI in
accordance with their terms (except as the enforceability thereof may be limited
by bankruptcy, bank moratorium or similar laws affecting creditors' rights
generally and laws restricting the availability of equitable remedies and may be
subject to general principles of equity whether or not such enforceability is
considered in a proceeding at law or in equity). A certified resolution of the
Board of Directors of SPI is annexed hereto and made a part hereof as Exhibit
"F" (Article "7(D)").
E. Ownership. The Stockholders are the record, beneficial and
equitable owners of the SPI Shares, free and clear of all liens, claims or
encumbrances. Each Stockholder
3
has full right and authority to exchange the SPI Shares for the Western Power
Common Stock and the Series B Preferred Stock.
F. Compliance with the Law and Other Instruments. Except as
otherwise provided in the Agreement and in the Exhibits annexed hereto, the
business and operations of SPI have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of all
authorities which affect SPI or its properties, assets, businesses or prospects.
G. Absence of Conflicts. The execution and delivery of the Agreement
and the Ancillary Documents by SPI, the transfer of the SPI shares, and the
consummation by SPI of the transactions set forth in the Agreement: (i) do not
and shall not conflict with or result in a breach of any provision of SPI's
articles of incorporation or bylaws, (ii) do not and shall not result in any
breach of, or constitute a default or cause an acceleration under any
arrangement, agreement or other instrument to which SPI is a party to or by
which any of its assets are bound, (iii) do not and shall not cause SPI to
violate or contravene any provision of law or any governmental rule or
regulation, and (iv) will not and shall not result in the imposition of any
lien, or encumbrance upon, any property of SPI. SPI has performed in all
material respects all of its obligations which are, as of the date of the
Agreement, required to be performed, pursuant to the terms of any such
agreement, contract or commitment.
H. Section 203 of the DGCL Not Applicable. The Board of Directors of
SPI has taken all actions which are necessary pursuant to the DGCL, including
approving the transactions which are contemplated by the Agreement and each of
the Ancillary Documents to
4
which it is a party, to ensure that Section 203 of the DGCL applicable to a
"business combination" (as defined in Section 203 of the DGCL) does not, and
will not, apply to the transactions contemplated hereunder and thereunder. SPI
has no prior knowledge that any other "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation is applicable
to: (i) SPI (ii) the Merger (iii) the Agreement (iv) the other transactions
contemplated by the Agreement or (v) the other Ancillary Documents to which it
is a party.
I. Environmental Compliance. (i) SPI is in compliance with all
applicable environmental laws (the "Environmental Laws"). SPI is presently
authorized, if required, to generate, transport through third parties, store,
use, treat, dispose of, release, and conduct other handling of, as required,
those hazardous substances used in SPI's business, which consist of, hazardous
waste, hazardous material, hazardous constituents, toxic substances, pollutants,
contaminants, asbestos, radon, polychlorinated biphenyls, petroleum product or
waste (including crude oil or any fraction thereof), natural gas, liquefied gas,
synthetic gas and other material defined, regulated, controlled or subject to
any remediation requirement under any Environmental Law (collectively the
"Hazardous Materials").
(ii) SPI possesses all licenses, permits, registrations, and
government authorizations necessary under the Environmental Laws to operate
SPI's business and is in compliance with such licenses or permits.
(iii) SPI has not received any written notice from any
governmental agency or entity or any other person and, to SPI's knowledge there
is no pending or threatened
5
claim, litigation or any administrative agency proceeding which: (a) alleges a
violation of any Environmental Law(s) by SPI, (b) alleges that SPI is a liable
party or potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601, et seq., or any
state law, (c) would result in the attachment of an environmental lien on any of
SPI's real property ("Real Property"), or (d) alleges that SPI is liable for any
contamination of the environment, contamination of Real Property, damage to
natural resources, property damage, or personal injury based on its activities
involving Hazardous Materials, whether arising under the Environmental Laws,
common law principals or other legal standards.
(iv) SPI has no Environmental Liability for releases or
disposal of Hazardous Material at the Real Property or at any property to which
the SPI transported or arranged for the transportation of Hazardous Materials.
J. OSHA Compliance. (i) SPI is in compliance with all applicable
federal, state and local laws, rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder and other
governmental requirements relating to occupational health and safety, including
but not limited to the Occupational Safety and Health Act of 1970, as amended,
and the rules and regulations promulgated thereunder (the "OSHA Laws").
(ii) SPI possesses all license, permits, registrations, and
government authorizations necessary to operate in compliance with all applicable
OSHA Laws and is in compliance with such licenses and permits.
6
(iii) To SPI's knowledge, there is no pending or threatened
notice, claim, litigation or any administrative agency proceeding that alleges a
violation of any OSHA Law(s) by SPI or, with respect to the SPI Shares or SPI's
business.
K. Audited Financial Statements. Annexed hereto and made a part
hereof as Exhibit "G" (Article "7(K)") are true copies of SPI's audited
statements of profit and loss for the fiscal years ended December 31, 1999 and
2000, and balance sheets as of December 31, 1999 and 2000 (collectively, the
"Audited Financial Statements"; the audited statement of profit and loss for the
fiscal year ended December 31, 2000 and the balance sheet as of December 31,
2000 are hereinafter referred to as the "2000 Financial Statements"), which have
been prepared using generally accepted accounting principles ("GAAP") applied on
a consistent basis. SPI shall provide a certificate executed by the Board of
Directors, to the effect that the Audited Financial Statements fairly present
the financial condition and results of operations for SPI. Except as indicated
in the 2000 Financial Statements, or in any Exhibit to the Agreement, SPI does
not have any outstanding indebtedness or other liabilities or obligations of any
nature (whether absolute, accrued, contingent or otherwise, and whether due or
to become due). Since December 31, 2000 (the "Financial Statement Date"), there
has not been any material adverse change in SPI's financial condition, assets,
liabilities or business, or any damage, destruction or loss, whether or not
covered by insurance, materially affecting SPI's properties, assets or business,
and except as listed on Exhibit "H" (Article "7(K)"), which is annexed hereto
and made a part hereof to the Agreement, SPI has not incurred any indebtedness,
liability or other obligation of any nature whatsoever and SPI has not made any
change in its accounting methods or practices.
7
L. Financial Statements. The Audited Financial Statements are
suitable or readily adaptable for incorporation in the registration statements,
prospectuses and annual reports to be filed by Western with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act of 1933, as
amended (the "'33 Act"), and the Securities Exchange Act of 1934, as amended
(the "'34 Act").
M. Books and Records. The books of account and other financial
records of SPI since September 1, 1999, all of which have been or will be made
available to Western, are complete and correct and reflect actual, bona fide
transactions and have been maintained in accordance with sound business
practices and the standards of Section 13(b)(2) of the '34 Act.
N. Minute Book. The minute book of SPI since September 1, 1999, have
been or will be made available to Western and (i) contains accurate and complete
records of all Board of Director meetings held since September 1, 1999, and (ii)
reflect all corporate action taken as a result of such board meetings since
September 1, 1999.
O. Tax Returns and Audits. SPI has timely filed all required
federal, state, city and local tax returns for income, franchise, social
security, withholding, sales, excise, unemployment insurance, real estate and
other taxes, and has paid or made adequate provision for the payment of all such
taxes shown to be due on said returns. SPI has timely filed the required tax
returns for all years through the fiscal year ended December 31, 2000. The
amounts
8
reserved by SPI for taxes on the Financial Statements are sufficient for the
payment of all accrued and unpaid federal, state, city and local taxes of SPI
for the periods reported. Except as shown on the Financial Statements, SPI has
not been advised or notified that it is subject to any other taxes, tax
deficiencies, assessments or penalties. SPI's federal income tax returns have
been audited by the Internal Revenue Service for the years indicated on Exhibit
"I" (Article "7(O)"), which is annexed hereto and made a part hereof. SPI's
state income and/or franchise tax returns have been audited by the state(s) and
for the years indicated on Exhibit "I" (Article "7(O)"). No Notice of Audit or
Notice of Intent to Audit has been received from any tax authority for any other
period. All tax returns filed by SPI are true, correct and complete in all
material respects.
P. Licenses and Permits. SPI has the operating licenses and permits
described on Exhibit "J" (Article "7(P)"), which is annexed hereto and made a
part hereof, which constitute all of the licenses and permits which SPI is
required to have to carry on its business as presently, and anticipated to be,
conducted. All such licenses and permits are in full force and effect in
accordance with their terms. There exists no event, occurrence, condition or act
which, with the giving of notice, the lapse of time or the happening of any
further condition would become a default under any of the licenses or permits.
None of the licenses or permits shall be canceled or revoked, nor become void,
as a result of the transactions provided for by the Agreement.
Q. Leases. Annexed hereto and made a part hereof as Exhibit "K"
(Article "7(Q)") are true and complete copies of all leases of real and personal
property to which SPI is a party. All of said leases are in all respects in full
force and effect in accordance with their terms. There exists no event,
occurrence, condition or act which, with the giving of notice,
9
the lapse of time, or the happening of any further event, occurrence, condition
or act, would become a default under any of the leases. Neither SPI nor any
other party to any sublease has violated, or is in default pursuant to any terms
of any sublease and both SPI and any other party to any sublease is in
compliance with all obligations to be performed pursuant to each lease. SPI has
obtained a certificate of occupancy, for each location owned or leased by it.
SPI's use of leasehold properties does not violate any certificates of
occupancy, or violate any zoning laws or regulations in any material respect.
SPI has not received any complaint that the use of any leased properties
constitutes a noxious use.
R. Title to Property. Annexed hereto and made a part hereof as
Exhibit "L" (Article "7(R)") is a schedule, true and complete in all respects,
of all properties and assets, including, but not limited to, furniture, fixtures
and equipment, (except leases and real property) which are owned by SPI (the
"Properties and Assets"), none of which are subject to mortgage, pledge, lien,
conditional sale or security agreement, encumbrance or charge, other than as
reflected on Exhibit "H" (Article "7(K)"). SPI is not in default under any
conditional sales agreement.
All of SPI's properties and equipment are in good working order and
operating condition and repair and shall be in good working order and operating
condition and repair. SPI covenants to provide Western and Acquisition Corp.
with all warranties which SPI has received with respect to the equipment
installed or used at its premises.
S. Real Property. Annexed hereto and made a part hereof as Exhibit
"M" (Article "7(S)") is a true and complete schedule of all real property owned
by SPI. SPI owns
10
good, defensible and marketable title to, and has the right to assign and
transfer, all of the real property on Exhibit "M" (Article "7(S)"), free and
clear of all liens, mortgages, pledges, security interests, restrictions, prior
assignments, encumbrances, leases and claims of any kind or nature whatsoever
other than as reflected on Exhibit "H" (Article "7(K)"). True copies of all
deeds, title reports and policies of title insurance received and obtained by
SPI at the time of acquisition of the real property or obtained thereafter,
together with true copies of all documents evidencing liens and encumbrances on
the real estate by deeds of trust or otherwise are annexed, as part of Exhibit
"M" (Article "7(S)"). All of SPI's real property is in conformity in all
material respects with all applicable ordinances and regulations, and
environmental, building, zoning and other laws.
T. Insurance. Annexed hereto and made a part hereof as Exhibit "N"
(Article "7(T)") is a true and complete schedule of all outstanding insurance
policies with respect to SPI's properties and/or business, indicating the names
of the carriers of all such insurance policies, the names of the brokers through
whom such policies were placed, the extent of coverage, the policy termination
dates, the current annual premiums and the premium payment dates. All of such
insurance is in full force and effect with all premiums thereon duly paid. All
insurance policies maintained by SPI are with reputable insurance carriers,
provide full and adequate coverage for all normal risks incident to the business
of SPI and its respective properties and assets, are in character and amount at
least equivalent to that carried by persons engaged in similar businesses and
subject to the same or similar perils or hazards and are in full force and
effect.
11
U. Contracts. Annexed hereto and made a part hereof as Exhibit "O"
(Article "7(U)") is a true and complete schedule of all of SPI's material
contracts (other than the leases and insurance contracts described in Exhibits
"K" (Article "7(Q)") and "N" (Article "7(T)"), respectively) including, but not
limited to, license agreements. All of the contracts so listed have been entered
into in the ordinary course of business and neither SPI nor any other party to
any such contract is in default under any such contract.
V. Guarantor of Payment. SPI is not a guarantor of payment or
collection of any obligation.
W. Employees, Compensation and Employee Benefit Plans. Annexed
hereto and made a part hereof as Exhibit "P" (Article "7(W)") is a true and
complete schedule, as of the date of the Agreement, showing the names of all
persons employed by SPI together with a statement of the amount paid or payable
to each such person for services rendered or to be rendered, including all
accrued and unpaid benefits and the basis therefor, for such person.
Except as set forth in Exhibit "P", (Article "7(W)") SPI is not a
party to any employment contracts, collective bargaining agreements with
employees, consulting agreements, employees' pension, bonus, retirement, profit
sharing, hospitalization or medical plans, employees' stock purchase or stock
option plans, or other employee benefit plans.
Except as set forth in Exhibit "P" (Article "7(W)"), SPI has
complied with all applicable federal and state laws, including, but not limited
to, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
relating to the employment of labor, including provisions relating to wages,
hours, collective bargaining, and payment of social security taxes,
12
and is not liable for any arrears of wages, or any taxes or penalties, or for
failure to comply with any of the foregoing.
X. Litigation. Except as set forth on Exhibit "Q" (Article "7(X)")
which is annexed hereto and made a part hereof, there are no legal,
administrative, arbitration, or other proceeding or governmental investigations
adversely affecting SPI or its properties, assets or businesses, or with respect
to any matter arising out of the conduct of the SPI's business pending or to its
knowledge threatened, by or against, any officer or director of SPI in
connection with its affairs, whether or not covered by insurance. Except as set
forth on Exhibit "Q" (Article "7(X)"), neither SPI nor its officers or directors
are subject to any order, writ, injunction, or decree of any Court, department,
agency, or instrumentality, affecting SPI. Except as set forth on Exhibit "Q"
(Article "7(X)"), SPI is not presently engaged in any legal action.
Y. Accounts Receivable. Annexed hereto and made a part hereof as
Exhibit "R" (Article "7(Y)") is a true and complete schedule of all trade
accounts and notes receivable of SPI as of February 28, 2001, including an aging
of such accounts receivable.
Z. Accounts Payable. Annexed hereto and made a part hereof as
Exhibit "S" (Article "7(Z)") is a true and complete schedule of all accounts
payable of SPI, as of February 28, 2001, including an aging of such accounts
payable.
AA. Financial Accounts. Annexed hereto and made a part hereof as
Exhibit "T" (Article "7(AA)") is a true and complete schedule of all of SPI's
financial accounts
13
including but not limited to, checking, savings, brokerage, rental, lease
proceeds, and security deposits, including the name and address of the
institution where each account is maintained and the account number.
BB. Patents, Trademarks and Trade Names. (i) Annexed hereto and made
a part hereof as Exhibit "U" (Article "7(BB)"), is a detailed schedule and
description of all intellectual property, patents, patent applications,
trademarks, trade names, copyrights or licenses presently owned or held by SPI
or with respect to which SPI holds any license which is required or utilized, or
contemplated to be required or utilized, in SPI's business operations
(collectively, the "Intellectual Property"). All rights of SPI to the
Intellectual Property will continue to be legal, valid, binding, enforceable,
and in full force and effect after the consummation of the transactions
contemplated by the Agreement. No activity, or contemplated activity, by SPI,
including but not limited to, the manufacture or sale of products by SPI and
none of the processes or designations used, or contemplated to be used, in its
business, infringes upon any valid patent, trademark or copyright of any other
person or entity.
(ii) Except as set forth on Exhibit "U" (Article "7(BB)"), SPI is
the sole and exclusive owner of all right, title and interest in the
Intellectual Property and all proprietary rights therein, free and clear of any
security interest, license or restriction, and except as set forth on Exhibit
"U" (Article "7(BB)"), SPI has not granted to any other person, firm, or
corporation, any right, license, shop-right, or privilege with respect to the
Intellectual Property. SPI knows of no statutory bars or prior art which would
adversely affect the Intellectual Property.
(iii) SPI has the sole and exclusive right to manufacture and sell
the products it contemplates selling and perform the services it contemplates
performing under the names set
14
forth on Exhibit "U" (Article "7(BB)"). There are no claims of third parties
against SPI with respect to the use of any names set forth on Exhibit "U"
(Article "7(BB)").
(iv) SPI has not interfered with, infringed with, infringed upon,
misappropriated or otherwise come into conflict with any rights of any third
person which would adversely affect the Intellectual Property; and SPI has not
received any charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that SPI must license or refrain from using the Intellectual Property). Except
as set forth on Exhibit "U" (Article "7(BB)"), no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with the
Intellectual Property. Except as set forth on Exhibit "U" (Article "7(BB)"), SPI
has not agreed to indemnify any third party for or against any interference,
infringement, misappropriation or other conflict with respect to the
Intellectual Property.
(v) SPI has not infringed, and is not now infringing, any trademark,
trade name, service xxxx or copyright belonging to any other person and SPI has
not received any charge, complaint, claim, demand or notice alleging any such
infringement.
(vi) Except as set forth on Exhibit "U" (Article "7(BB)"), SPI is
not a party to any license, agreement or arrangement, whether as a licensor,
licensee or otherwise, with respect to any trademark, trade name, service xxxx,
copyright or Intellectual Property used by SPI.
(vii) Except as expressly specified in Exhibit "U" (Article
"7(BB)"), SPI's business may be conducted without a license from others for the
use of any trade name, trademark, service xxxx or copyright.
(viii) Except as set forth on Exhibit "Q" (Article "7(X)") which is
annexed hereto and made a part hereof, there are no legal, administrative,
arbitration, or other proceeding or
15
governmental investigations adversely affecting the legality, validity,
enforceability, use or ownership of the Intellectual Property or threats of any
of the foregoing.
(ix) Except as set forth on Exhibit "Q" (Article "7(X)"), neither
SPI nor its officers or directors are subject to any order, writ, injunction, or
decree of any Court, department, agency, or instrumentality, affecting the
Intellectual Property.
(x) Except as set forth on Exhibit "Q" (Article "7(X)"), SPI is not
presently engaged in any legal action with respect to the Intellectual Property.
CC. Inventory. A current, true and complete itemization of all items
of SPI's inventory is annexed hereto and made a part hereof as Exhibit "V"
(Article "7(CC)"). All items of SPI's inventory are in good condition and
merchantable.
DD. Absence of Changes. Except as indicated on Exhibit "H" (Article
"7(K)"), subsequent to the Financial Statement Date and through the date of this
Certificate, there has not been any material adverse change in, or any event or
condition (financial or otherwise) affecting the business, properties, assets,
liabilities, historical operations or prospects of SPI, and except as indicated
on Exhibit "H" (Article "7(K)"), there are no liabilities or obligations of any
nature, whether absolute, contingent or otherwise, whether due or to become due
(including, without limitation, liabilities for taxes with respect to or
measured by income of SPI for any period prior to, and/or subsequent to, the
Financial Statement Date or arising out of any transaction of SPI prior to,
and/or subsequent to, such date). Subsequent to the Financial Statement Date,
there has not been any declaration, or setting aside, or payment of any dividend
or other distribution with respect to SPI's securities, or any direct or
indirect redemption,
16
purchase, or other acquisition of any of SPI's securities. To SPI's knowledge,
there has not been an assertion against SPI of any liability of any nature or in
any amount not fully reflected or reserved against in the Financial Statements.
EE. No Approvals. No approval of any governmental authority is
required in connection with consummation of the transactions set forth in the
Agreement.
Dated:
May __, 2001
SupplyPoint, Inc.
By:_________________________________________
, Title
17
Exhibit TT
CERTIFICATE OF PERFORMANCE
OF OBLIGATIONS OF
SUPPLYPOINT, INC.
In accordance Section "(ii)" of Paragraph "A" of Article "19" of the
Merger Agreement (the "Agreement") dated as of the 1st day of May, 2001, by and
among Western Power & Equipment Corp., a Delaware corporation, WPEC Acquisition
Corp., a Delaware corporation, and SupplyPoint, Inc., a Delaware corporation
("SPI"), SPI hereby hereby represents, warrants and covenants that SPI has
performed all obligations and complied with all covenants required by the
Agreement to be performed or complied with by it on or prior to the Closing
Date.
SUPPLYPOINT, INC.
By: __________________________________
,Title
Dated: New York, New York
May __, 2001
Exhibit TT
CERTIFICATE OF REPRESENTATIONS AND WARRANTIES
OF
SUPPLYPOINT, INC.
Pursuant to Section "(i)" of Paragraph "A" of Article "20" of the Merger
Agreement (the "Agreement") dated as of the 1st day of May, 2001, by and among
Western Power & Equipment Corp., a Delaware corporation ("Western"), WPEC
Acquisition Corp., a Delaware corporation ("Acquisition Corp."), and
SupplyPoint, Inc., a Delaware corporation ("SPI"), SPI hereby represents,
warrants and covenants to Western and Acquisition Corp., that, as of the date
hereof, all of the representations, warranties and covenants which are contained
in the Agreement are true and accurate, including, but not limited to, those set
forth below. Each of the capitalized terms which are used in this Certificate
shall have the same meaning as is set forth in the Agreement.
SPI represents, warrants and covenants to Western and Acquisition Corp.,
as follows:
A. Corporate Status.
(i) SPI is a corporation duly organized, validly existing and
in good standing pursuant to the laws of the State of Delaware, with all
requisite power and authority to carry on its business as presently conducted in
all jurisdictions where presently conducted, to enter into the Agreement and to
consummate the transactions set forth in the Agreement;
(ii) SPI does not have an equity interest, as a shareholder,
proprietor, partner, beneficiary, joint venturer or otherwise, in any
corporation, firm, partnership or joint venture;
1
(iii) Copies of (a) the Articles of Incorporation of SPI, and
all amendments thereto to date, certified by the Secretary of State of the State
of Delaware, (b) the By-Laws of SPI, as amended to date, certified by the
Secretary of SPI and (c) a good standing certificate for SPI issued by the
Secretary of State of the State of Delaware within a date not more than thirty
(30) days prior to the date of the Agreement, are annexed hereto and made a part
hereof as Exhibits "A" (Article "7 (A)(iii)"; references to the articles in the
Agreement), "B" (Article "7 (A)(iii)") and "C", (Article "7 (A)(iii)")
respectively, and are complete and correct as of the date of this Certificate;
and
(iv) SPI shall provide a good standing certificate for SPI
issued by the Secretary of State of the State of Delaware complete and correct
as of five (5) business days prior to the Effective Date.
B. Capitalization. SPI's authorized capital stock consists of
45,000,000 shares of SPI Common Stock, $.01 par value, of which 23,000,000
shares are issued and outstanding or reserved for issuance, all of which are, or
will be validly issued, fully paid and nonassessable. SPI's issued and
outstanding shares are the only shares of stock authorized to be issued by SPI
and, except as set forth on Exhibit "D" (Article "7(B)"), there are no
subscriptions, options, warrants, rights or other agreements outstanding to
acquire shares of stock of SPI or any other equity security or security
convertible into an equity security. There are no agreements or commitments to
increase, decrease or otherwise alter the authorized capital stock of SPI.
2
C. Stockholder Approval. The holders of 93.8% of the issued and
outstanding shares of SPI have consented to SPI entering into the Agreement and
the transactions set forth in the Agreement. A certified consent of such
Stockholders is annexed hereto and made a part hereof as Exhibit "E" (Article
"7(C)").
D. Authority of SPI. SPI has the full corporate power and authority
to execute, deliver, and perform the Agreement and all instruments and documents
which are required to be executed and delivered by SPI pursuant to the Agreement
(the "SPI Ancillary Documents") and has taken all corporate action required by
law and its organizational documents to authorize the execution and delivery of
the Agreement and the SPI Ancillary Documents and the consummation of the
transactions set forth in the Agreement and the SPI Ancillary Documents. The
Agreement and the SPI Ancillary Documents and the consummation by SPI of the
transactions set forth in the Agreement have been duly and validly authorized,
executed, and delivered by SPI, and the Agreement and the SPI Ancillary
Documents are valid and binding upon SPI and enforceable against SPI in
accordance with their terms (except as the enforceability thereof may be limited
by bankruptcy, bank moratorium or similar laws affecting creditors' rights
generally and laws restricting the availability of equitable remedies and may be
subject to general principles of equity whether or not such enforceability is
considered in a proceeding at law or in equity). A certified resolution of the
Board of Directors of SPI is annexed hereto and made a part hereof as Exhibit
"F" (Article "7(D)").
E. Ownership. The Stockholders are the record, beneficial and
equitable owners of the SPI Shares, free and clear of all liens, claims or
encumbrances. Each Stockholder
3
has full right and authority to exchange the SPI Shares for the Western Power
Common Stock and the Series B Preferred Stock.
F. Compliance with the Law and Other Instruments. Except as
otherwise provided in the Agreement and in the Exhibits annexed hereto, the
business and operations of SPI have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of all
authorities which affect SPI or its properties, assets, businesses or prospects.
G. Absence of Conflicts. The execution and delivery of the Agreement
and the Ancillary Documents by SPI, the transfer of the SPI shares, and the
consummation by SPI of the transactions set forth in the Agreement: (i) do not
and shall not conflict with or result in a breach of any provision of SPI's
articles of incorporation or bylaws, (ii) do not and shall not result in any
breach of, or constitute a default or cause an acceleration under any
arrangement, agreement or other instrument to which SPI is a party to or by
which any of its assets are bound, (iii) do not and shall not cause SPI to
violate or contravene any provision of law or any governmental rule or
regulation, and (iv) will not and shall not result in the imposition of any
lien, or encumbrance upon, any property of SPI. SPI has performed in all
material respects all of its obligations which are, as of the date of the
Agreement, required to be performed, pursuant to the terms of any such
agreement, contract or commitment.
H. Section 203 of the DGCL Not Applicable. The Board of Directors of
SPI has taken all actions which are necessary pursuant to the DGCL, including
approving the transactions which are contemplated by the Agreement and each of
the Ancillary Documents to
4
which it is a party, to ensure that Section 203 of the DGCL applicable to a
"business combination" (as defined in Section 203 of the DGCL) does not, and
will not, apply to the transactions contemplated hereunder and thereunder. SPI
has no prior knowledge that any other "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation is applicable
to: (i) SPI (ii) the Merger (iii) the Agreement (iv) the other transactions
contemplated by the Agreement or (v) the other Ancillary Documents to which it
is a party.
I. Environmental Compliance. (i) SPI is in compliance with all
applicable environmental laws (the "Environmental Laws"). SPI is presently
authorized, if required, to generate, transport through third parties, store,
use, treat, dispose of, release, and conduct other handling of, as required,
those hazardous substances used in SPI's business, which consist of, hazardous
waste, hazardous material, hazardous constituents, toxic substances, pollutants,
contaminants, asbestos, radon, polychlorinated biphenyls, petroleum product or
waste (including crude oil or any fraction thereof), natural gas, liquefied gas,
synthetic gas and other material defined, regulated, controlled or subject to
any remediation requirement under any Environmental Law (collectively the
"Hazardous Materials").
(ii) SPI possesses all licenses, permits, registrations, and
government authorizations necessary under the Environmental Laws to operate
SPI's business and is in compliance with such licenses or permits.
(iii) SPI has not received any written notice from any
governmental agency or entity or any other person and, to SPI's knowledge there
is no pending or threatened
5
claim, litigation or any administrative agency proceeding which: (a) alleges a
violation of any Environmental Law(s) by SPI, (b) alleges that SPI is a liable
party or potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601, et seq., or any
state law, (c) would result in the attachment of an environmental lien on any of
SPI's real property ("Real Property"), or (d) alleges that SPI is liable for any
contamination of the environment, contamination of Real Property, damage to
natural resources, property damage, or personal injury based on its activities
involving Hazardous Materials, whether arising under the Environmental Laws,
common law principals or other legal standards.
(iv) SPI has no Environmental Liability for releases or
disposal of Hazardous Material at the Real Property or at any property to which
the SPI transported or arranged for the transportation of Hazardous Materials.
J. OSHA Compliance. (i) SPI is in compliance with all applicable
federal, state and local laws, rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder and other
governmental requirements relating to occupational health and safety, including
but not limited to the Occupational Safety and Health Act of 1970, as amended,
and the rules and regulations promulgated thereunder (the "OSHA Laws").
(ii) SPI possesses all license, permits, registrations, and
government authorizations necessary to operate in compliance with all applicable
OSHA Laws and is in compliance with such licenses and permits.
6
(iii) To SPI's knowledge, there is no pending or threatened
notice, claim, litigation or any administrative agency proceeding that alleges a
violation of any OSHA Law(s) by SPI or, with respect to the SPI Shares or SPI's
business.
K. Audited Financial Statements. Annexed hereto and made a part
hereof as Exhibit "G" (Article "7(K)") are true copies of SPI's audited
statements of profit and loss for the fiscal years ended December 31, 1999 and
2000, and balance sheets as of December 31, 1999 and 2000 (collectively, the
"Audited Financial Statements"; the audited statement of profit and loss for the
fiscal year ended December 31, 2000 and the balance sheet as of December 31,
2000 are hereinafter referred to as the "2000 Financial Statements"), which have
been prepared using generally accepted accounting principles ("GAAP") applied on
a consistent basis. SPI shall provide a certificate executed by the Board of
Directors, to the effect that the Audited Financial Statements fairly present
the financial condition and results of operations for SPI. Except as indicated
in the 2000 Financial Statements, or in any Exhibit to the Agreement, SPI does
not have any outstanding indebtedness or other liabilities or obligations of any
nature (whether absolute, accrued, contingent or otherwise, and whether due or
to become due). Since December 31, 2000 (the "Financial Statement Date"), there
has not been any material adverse change in SPI's financial condition, assets,
liabilities or business, or any damage, destruction or loss, whether or not
covered by insurance, materially affecting SPI's properties, assets or business,
and except as listed on Exhibit "H" (Article "7(K)"), which is annexed hereto
and made a part hereof to the Agreement, SPI has not incurred any indebtedness,
liability or other obligation of any nature whatsoever and SPI has not made any
change in its accounting methods or practices.
7
L. Financial Statements. The Audited Financial Statements are
suitable or readily adaptable for incorporation in the registration statements,
prospectuses and annual reports to be filed by Western with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act of 1933, as
amended (the "'33 Act"), and the Securities Exchange Act of 1934, as amended
(the "'34 Act").
M. Books and Records. The books of account and other financial
records of SPI since September 1, 1999, all of which have been or will be made
available to Western, are complete and correct and reflect actual, bona fide
transactions and have been maintained in accordance with sound business
practices and the standards of Section 13(b)(2) of the '34 Act.
N. Minute Book. The minute book of SPI since September 1, 1999, have
been or will be made available to Western and (i) contains accurate and complete
records of all Board of Director meetings held since September 1, 1999, and (ii)
reflect all corporate action taken as a result of such board meetings since
September 1, 1999.
O. Tax Returns and Audits. SPI has timely filed all required
federal, state, city and local tax returns for income, franchise, social
security, withholding, sales, excise, unemployment insurance, real estate and
other taxes, and has paid or made adequate provision for the payment of all such
taxes shown to be due on said returns. SPI has timely filed the required tax
returns for all years through the fiscal year ended December 31, 2000. The
amounts
8
reserved by SPI for taxes on the Financial Statements are sufficient for the
payment of all accrued and unpaid federal, state, city and local taxes of SPI
for the periods reported. Except as shown on the Financial Statements, SPI has
not been advised or notified that it is subject to any other taxes, tax
deficiencies, assessments or penalties. SPI's federal income tax returns have
been audited by the Internal Revenue Service for the years indicated on Exhibit
"I" (Article "7(O)"), which is annexed hereto and made a part hereof. SPI's
state income and/or franchise tax returns have been audited by the state(s) and
for the years indicated on Exhibit "I" (Article "7(O)"). No Notice of Audit or
Notice of Intent to Audit has been received from any tax authority for any other
period. All tax returns filed by SPI are true, correct and complete in all
material respects.
P. Licenses and Permits. SPI has the operating licenses and permits
described on Exhibit "J" (Article "7(P)"), which is annexed hereto and made a
part hereof, which constitute all of the licenses and permits which SPI is
required to have to carry on its business as presently, and anticipated to be,
conducted. All such licenses and permits are in full force and effect in
accordance with their terms. There exists no event, occurrence, condition or act
which, with the giving of notice, the lapse of time or the happening of any
further condition would become a default under any of the licenses or permits.
None of the licenses or permits shall be canceled or revoked, nor become void,
as a result of the transactions provided for by the Agreement.
Q. Leases. Annexed hereto and made a part hereof as Exhibit "K"
(Article "7(Q)") are true and complete copies of all leases of real and personal
property to which SPI is a party. All of said leases are in all respects in full
force and effect in accordance with their terms. There exists no event,
occurrence, condition or act which, with the giving of notice,
9
the lapse of time, or the happening of any further event, occurrence, condition
or act, would become a default under any of the leases. Neither SPI nor any
other party to any sublease has violated, or is in default pursuant to any terms
of any sublease and both SPI and any other party to any sublease is in
compliance with all obligations to be performed pursuant to each lease. SPI has
obtained a certificate of occupancy, for each location owned or leased by it.
SPI's use of leasehold properties does not violate any certificates of
occupancy, or violate any zoning laws or regulations in any material respect.
SPI has not received any complaint that the use of any leased properties
constitutes a noxious use.
R. Title to Property. Annexed hereto and made a part hereof as
Exhibit "L" (Article "7(R)") is a schedule, true and complete in all respects,
of all properties and assets, including, but not limited to, furniture, fixtures
and equipment, (except leases and real property) which are owned by SPI (the
"Properties and Assets"), none of which are subject to mortgage, pledge, lien,
conditional sale or security agreement, encumbrance or charge, other than as
reflected on Exhibit "H" (Article "7(K)"). SPI is not in default under any
conditional sales agreement.
All of SPI's properties and equipment are in good working order and
operating condition and repair and shall be in good working order and operating
condition and repair. SPI covenants to provide Western and Acquisition Corp.
with all warranties which SPI has received with respect to the equipment
installed or used at its premises.
S. Real Property. Annexed hereto and made a part hereof as Exhibit
"M" (Article "7(S)") is a true and complete schedule of all real property owned
by SPI. SPI owns
10
good, defensible and marketable title to, and has the right to assign and
transfer, all of the real property on Exhibit "M" (Article "7(S)"), free and
clear of all liens, mortgages, pledges, security interests, restrictions, prior
assignments, encumbrances, leases and claims of any kind or nature whatsoever
other than as reflected on Exhibit "H" (Article "7(K)"). True copies of all
deeds, title reports and policies of title insurance received and obtained by
SPI at the time of acquisition of the real property or obtained thereafter,
together with true copies of all documents evidencing liens and encumbrances on
the real estate by deeds of trust or otherwise are annexed, as part of Exhibit
"M" (Article "7(S)"). All of SPI's real property is in conformity in all
material respects with all applicable ordinances and regulations, and
environmental, building, zoning and other laws.
T. Insurance. Annexed hereto and made a part hereof as Exhibit "N"
(Article "7(T)") is a true and complete schedule of all outstanding insurance
policies with respect to SPI `s properties and/or business, indicating the names
of the carriers of all such insurance policies, the names of the brokers through
whom such policies were placed, the extent of coverage, the policy termination
dates, the current annual premiums and the premium payment dates. All of such
insurance is in full force and effect with all premiums thereon duly paid. All
insurance policies maintained by SPI are with reputable insurance carriers,
provide full and adequate coverage for all normal risks incident to the business
of SPI and its respective properties and assets, are in character and amount at
least equivalent to that carried by persons engaged in similar businesses and
subject to the same or similar perils or hazards and are in full force and
effect.
11
U. Contracts. Annexed hereto and made a part hereof as Exhibit "O"
(Article "7(U)") is a true and complete schedule of all of SPI's material
contracts (other than the leases and insurance contracts described in Exhibits
"K" (Article "7(Q)") and "N" (Article "7(T)"), respectively) including, but not
limited to, license agreements. All of the contracts so listed have been entered
into in the ordinary course of business and neither SPI nor any other party to
any such contract is in default under any such contract.
V. Guarantor of Payment. SPI is not a guarantor of payment or
collection of any obligation.
W. Employees, Compensation and Employee Benefit Plans. Annexed
hereto and made a part hereof as Exhibit "P" (Article "7(W)") is a true and
complete schedule, as of the date of the Agreement, showing the names of all
persons employed by SPI together with a statement of the amount paid or payable
to each such person for services rendered or to be rendered, including all
accrued and unpaid benefits and the basis therefor, for such person.
Except as set forth in Exhibit "P", (Article "7(W)") SPI is not a
party to any employment contracts, collective bargaining agreements with
employees, consulting agreements, employees' pension, bonus, retirement, profit
sharing, hospitalization or medical plans, employees' stock purchase or stock
option plans, or other employee benefit plans.
Except as set forth in Exhibit "P" (Article "7(W)"), SPI has
complied with all applicable federal and state laws, including, but not limited
to, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
relating to the employment of labor, including provisions relating to wages,
hours, collective bargaining, and payment of social security taxes,
12
and is not liable for any arrears of wages, or any taxes or penalties, or for
failure to comply with any of the foregoing.
X. Litigation. Except as set forth on Exhibit "Q" (Article "7(X)")
which is annexed hereto and made a part hereof, there are no legal,
administrative, arbitration, or other proceeding or governmental investigations
adversely affecting SPI or its properties, assets or businesses, or with respect
to any matter arising out of the conduct of the SPI's business pending or to its
knowledge threatened, by or against, any officer or director of SPI in
connection with its affairs, whether or not covered by insurance. Except as set
forth on Exhibit "Q" (Article "7(X)"), neither SPI nor its officers or directors
are subject to any order, writ, injunction, or decree of any Court, department,
agency, or instrumentality, affecting SPI. Except as set forth on Exhibit "Q"
(Article "7(X)"), SPI is not presently engaged in any legal action.
Y. Accounts Receivable. Annexed hereto and made a part hereof as
Exhibit "R" (Article "7(Y)") is a true and complete schedule of all trade
accounts and notes receivable of SPI as of February 28, 2001, including an aging
of such accounts receivable.
Z. Accounts Payable. Annexed hereto and made a part hereof as
Exhibit "S" (Article "7(Z)") is a true and complete schedule of all accounts
payable of SPI, as of February 28, 2001, including an aging of such accounts
payable.
AA. Financial Accounts. Annexed hereto and made a part hereof as
Exhibit "T" (Article "7(AA)") is a true and complete schedule of all of SPI's
financial accounts
13
including but not limited to, checking, savings, brokerage, rental, lease
proceeds, and security deposits, including the name and address of the
institution where each account is maintained and the account number.
BB. Patents, Trademarks and Trade Names. (i) Annexed hereto and made
a part hereof as Exhibit "U" (Article "7(BB)"), is a detailed schedule and
description of all intellectual property, patents, patent applications,
trademarks, trade names, copyrights or licenses presently owned or held by SPI
or with respect to which SPI holds any license which is required or utilized, or
contemplated to be required or utilized, in SPI's business operations
(collectively, the "Intellectual Property"). All rights of SPI to the
Intellectual Property will continue to be legal, valid, binding, enforceable,
and in full force and effect after the consummation of the transactions
contemplated by the Agreement. No activity, or contemplated activity, by SPI,
including but not limited to, the manufacture or sale of products by SPI and
none of the processes or designations used, or contemplated to be used, in its
business, infringes upon any valid patent, trademark or copyright of any other
person or entity.
(ii) Except as set forth on Exhibit "U" (Article "7(BB)"), SPI is
the sole and exclusive owner of all right, title and interest in the
Intellectual Property and all proprietary rights therein, free and clear of any
security interest, license or restriction, and except as set forth on Exhibit
"U" (Article "7(BB)"), SPI has not granted to any other person, firm, or
corporation, any right, license, shop-right, or privilege with respect to the
Intellectual Property. SPI knows of no statutory bars or prior art which would
adversely affect the Intellectual Property.
(iii) SPI has the sole and exclusive right to manufacture and sell
the products it contemplates selling and perform the services it contemplates
performing under the names set
14
forth on Exhibit "U" (Article "7(BB)"). There are no claims of third parties
against SPI with respect to the use of any names set forth on Exhibit "U"
(Article "7(BB)").
(iv) SPI has not interfered with, infringed with, infringed upon,
misappropriated or otherwise come into conflict with any rights of any third
person which would adversely affect the Intellectual Property; and SPI has not
received any charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that SPI must license or refrain from using the Intellectual Property). Except
as set forth on Exhibit "U" (Article "7(BB)"), no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with the
Intellectual Property. Except as set forth on Exhibit "U" (Article "7(BB)"), SPI
has not agreed to indemnify any third party for or against any interference,
infringement, misappropriation or other conflict with respect to the
Intellectual Property.
(v) SPI has not infringed, and is not now infringing, any trademark,
trade name, service xxxx or copyright belonging to any other person and SPI has
not received any charge, complaint, claim, demand or notice alleging any such
infringement.
(vi) Except as set forth on Exhibit "U" (Article "7(BB)"), SPI is
not a party to any license, agreement or arrangement, whether as a licensor,
licensee or otherwise, with respect to any trademark, trade name, service xxxx,
copyright or Intellectual Property used by SPI.
(vii) Except as expressly specified in Exhibit "U" (Article
"7(BB)"), SPI's business may be conducted without a license from others for the
use of any trade name, trademark, service xxxx or copyright.
(viii) Except as set forth on Exhibit "Q" (Article "7(X)") which is
annexed hereto and made a part hereof, there are no legal, administrative,
arbitration, or other proceeding or
15
governmental investigations adversely affecting the legality, validity,
enforceability, use or ownership of the Intellectual Property or threats of any
of the foregoing.
(ix) Except as set forth on Exhibit "Q" (Article "7(X)"), neither
SPI nor its officers or directors are subject to any order, writ, injunction, or
decree of any Court, department, agency, or instrumentality, affecting the
Intellectual Property.
(x) Except as set forth on Exhibit "Q" (Article "7(X)"), SPI is not
presently engaged in any legal action with respect to the Intellectual Property.
CC. Inventory. A current, true and complete itemization of all items
of SPI's inventory is annexed hereto and made a part hereof as Exhibit "V"
(Article "7(CC)"). All items of SPI's inventory are in good condition and
merchantable.
DD. Absence of Changes. Except as indicated on Exhibit "H" (Article
"7(K)"), subsequent to the Financial Statement Date and through the date of this
Certificate, there has not been any material adverse change in, or any event or
condition (financial or otherwise) affecting the business, properties, assets,
liabilities, historical operations or prospects of SPI, and except as indicated
on Exhibit "H" (Article "7(K)"), there are no liabilities or obligations of any
nature, whether absolute, contingent or otherwise, whether due or to become due
(including, without limitation, liabilities for taxes with respect to or
measured by income of SPI for any period prior to, and/or subsequent to, the
Financial Statement Date or arising out of any transaction of SPI prior to,
and/or subsequent to, such date). Subsequent to the Financial Statement Date,
there has not been any declaration, or setting aside, or payment of any dividend
or other distribution with respect to SPI's securities, or any direct or
indirect redemption,
16
purchase, or other acquisition of any of SPI's securities. To SPI's knowledge,
there has not been an assertion against SPI of any liability of any nature or in
any amount not fully reflected or reserved against in the Financial Statements.
EE. No Approvals. No approval of any governmental authority is
required in connection with consummation of the transactions set forth in the
Agreement.
Dated:
, 2001
SupplyPoint, Inc.
By:_________________________________________
, Title
17
Exhibit TT
CERTIFICATE OF PERFORMANCE
OF OBLIGATIONS OF
SUPPLYPOINT, INC.
In accordance Section "(ii)" of Paragraph "A" of Article "20" of the
Merger Agreement (the "Agreement") dated as of the 1st day of May, 2001, by and
among Western Power & Equipment Corp., a Delaware corporation, WPEC Acquisition
Corp., a Delaware corporation, and SupplyPoint, Inc., a Delaware corporation
("SPI"), SPI hereby hereby represents, warrants and covenants that SPI has
performed all obligations and complied with all covenants required by the
Agreement to be performed or complied with by it on or prior to the Effective
Date.
SUPPLYPOINT, INC.
By: __________________________________
, Title
Dated: New York, New York
______, 2001
Exhibit VV
SUPPLYPOINT, INC.
IRREVOCABLE PROXY
The undersigned, stockholders of American United Global, Inc., a Delaware
Corporation (the "Company"), does hereby constitute and appoint Xxxxx X. Xxxxx
with full power of substitution to vote, in the undersigned's name, place and
stead, in the same manner and to the same extent, were the undersigned present,
as proxy all of the shares of the Company standing in the undersigned's name on
the Company's books, at any scheduled vote of the stockholders of the Company
held upon legally required written notice, or any and all adjournments thereof,
for the sole purpose set forth below. This Proxy shall not be utilized to vote
for or against any matter other than (A) the approval of the conversion of
2,235,000 shares of Series Preferred Stock of the Company, par value $.01 per
share into Common Stock of the Company on a 10 for 1 basis, (B) the issuance of
600,000 shares of the Company's common stock to the Xxxxxx Xxxxx Family Stock
Trust and (C) the approval of the Asset Purchase Agreement (collectively the
"Transactions").
This Proxy shall only be utilized to vote in favor of the Transactions.
This Proxy shall be deemed to be issued in accordance with Paragraph "(c)" of
Section 218 of the Delaware General Corporation Law.
The undersigned hereby revokes all proxies by the undersigned previously given,
with respect to the Transaction, for any meeting of the shareholders of the
Company;
1
This Proxy shall be valid upon the date hereof and shall terminate if the
Transaction does not close on or prior to the "Termination Date" which is
defined in the Merger Agreement.
This Proxy shall be irrevocable, and the undersigned hereby expressly
acknowledges that it shall have no power, whether alone or in conjunction with
others, in whatever capacity, to alter, amend, revoke, or terminate this Proxy,
or any of the terms of the this Proxy, in whole or in part.
In witness whereof the undersigned sets the undersigned's name as of the ___ day
of May, 2001.
American United Global, Inc.
By:_____________________________
Title:
Shares Owned: 2,485,001
2
Exhibit WW
CERTIFICATE OF REPRESENTATIONS AND WARRANTIES
OF
WESTERN POWER & EQUIPMENT CORP.
AND WPEC ACQUISITION CORP.
Pursuant to Section "(i)" of Paragraph "B" of Articles "19" of the Merger
Agreement (the "Agreement") dated as of the 1st day of May, 2001, by and among
Western Power & Equipment Corp., a Delaware corporation ("Western"), WPEC
Acquisition Corp., a Delaware corporation ("Acquisition Corp."), and
SupplyPoint, Inc., a Delaware corporation ("SPI"), Western and Acquisition Corp.
hereby represent, warrant and covenant to SPI, that, as of the date hereof, all
of the representations, warranties and covenants which are contained in the
Agreement are true and accurate, including, but not limited to, those set forth
below. Each of the capitalized terms which are used in this Certificate shall
have the same meaning as is set forth in the Agreement.
Western represents, warrants and covenants to SPI, as follows:
A. Corporate Status.
(i)Western is a corporation duly organized, validly existing
and in good standing pursuant to the laws of the State of Delaware, with all
requisite power and authority to carry on its business as presently conducted in
all jurisdictions where presently conducted, to enter into the Agreement and to
consummate the transactions set forth in the Agreement.
(ii) Western shall provide a good standing certificate for
Western issued by the Secretary of State of the State of Delaware complete and
correct as of five (5) business days prior to the date of the Closing Date.
1
B. Capitalization. Western's authorized capital stock consists of
20,000,000 shares of Western Common Stock, $.001 par value, of which 4,003,162
shares are issued and outstanding or reserved for issuance, all of which are, or
will be validly issued, fully paid and nonassessable, and 10,000,000 shares of
Western Preferred Stock, $.01 par value, of which none are outstanding;
provided, however, that 600,000 shares of Common Stock (which are included in
the 4,003,162 shares which are issued and outstanding or reserved for issuance)
which are issuable to the Xxxxxx Xxxxx Family Stock Trust will not be issued
because the issuance of such shares is subject to the approval of the
stockholders as set forth in Paragraph "G" of Article "5" of the Agreement.
There are currently issued and outstanding options to purchase 1,215,000 shares
of Western Common Stock and $182,000 in convertible debt, which is convertible
into common shares at $3.00 a share. Western is in the process of lowering the
conversion price from $3.00 to $1.00. Except as set forth on Exhibit "A"
(Article "8(B)"; references to the articles in the Agreement) which is attached
hereto and made a part hereof, there are no agreements or commitments to
increase, decrease or otherwise alter the authorized capital stock of Western.
Except as set forth on Exhibit "A" (Article "8(B)"), Western has not granted any
registration rights with respect to any series of Western stock outstanding. The
capitalization of Western, on a fully diluted basis, shall be as reflected on
Exhibit "B" (Article "8(B)") which is attached hereto and made a part hereof.
Upon issuance in accordance with the terms hereof, the Western Power Common
Stock and Series B Preferred Stock will be validly issued, fully paid and
non-assessable.
C. Authority of Western. Western has the full corporate power and
authority to execute, deliver, and perform the Agreement and all instruments and
documents which are
2
required to be executed and delivered by Western pursuant to the Agreement (the
"Western Ancillary Documents") and has taken all corporate action required by
law and its organizational documents to authorize the execution and delivery of
the Agreement and the Western Ancillary Documents and the consummation of the
transactions set forth in the Agreement and the Western Ancillary Documents. The
Agreement and the Western Ancillary Documents and the consummation by Western of
the transactions set forth in the Agreement and the Western Ancillary Documents
have been duly and validly authorized, executed, and delivered by Western, and
the Agreement and the Western Ancillary Documents are valid and binding upon
Western and enforceable against Western in accordance with their terms (except
as the enforceability thereof may be limited by bankruptcy, bank moratorium or
similar laws affecting creditors' rights generally and laws restricting the
availability of equitable remedies and may be subject to general principles of
equity whether or not such enforceability is considered in a proceeding at law
or in equity). A certified resolution of the Board of Directors of Western is
annexed hereto and made a part hereof as Exhibit "C" (Article "8(C)").
D. Compliance with the Law and Other Instruments. Except as
otherwise provided in the Agreement and in the Exhibits annexed hereto, the
business and operations of Western have been and are being conducted in all
material respects in accordance with all applicable laws, rules and regulations
of all authorities which affect Western or its properties, assets, businesses or
prospects.
3
E. Absence of Conflicts. The execution and delivery of the Agreement
and the Ancillary Documents by Western, the transfer of the Western shares, and
the consummation by Western of the transactions set forth in the Agreement: (i)
do not and shall not conflict with or result in a breach of any provision of
Western's articles of incorporation or bylaws, (ii) do not and shall not result
in any breach of, or constitute a default or cause an acceleration under any
arrangement, agreement or other instrument to which Western is a party to or by
which any of its assets are bound, (iii) do not and shall not cause Western to
violate or contravene any provision of law or any governmental rule or
regulation, and (iv) will not and shall not result in the imposition of any
lien, or encumbrance upon, any property of Western. Western has performed in all
material respects all of its obligations which are, as of the date of the
Agreement, required to be performed, pursuant to the terms of any such
agreement, contract or commitment.
F. Section 203 of the DGCL Not Applicable. The Board of Directors of
Western has taken all actions which are necessary pursuant to the DGCL,
including approving the transactions which are contemplated by the Agreement and
each of the Ancillary Documents to which it is a party, to ensure that Section
203 of the DGCL applicable to a "business combination" (as defined in Section
203 of the DGCL) does not, and will not, apply to the transactions contemplated
hereunder and thereunder. Western has no prior knowledge that any other "fair
price," "moratorium," "control share acquisition" or other similar anti-takeover
statute or regulation is applicable to: (i) Western (ii) the Merger (iii)
disagreement between the parties (iv) the other transactions contemplated by the
Agreement or (v) the other Ancillary Documents to which it is a party.
4
G. Litigation. Except as set forth on Exhibit "D" (Article "8(G)")
which is annexed hereto and made a part hereof, there are no legal,
administrative, arbitration, or other proceeding or governmental investigations
adversely affecting Western or its properties, assets or businesses, or with
respect to any matter arising out of the conduct of Western's business pending
or to its knowledge threatened, by or against, any officer or director of
Western in connection with its affairs, whether or not covered by insurance.
Neither Western nor its officers or directors are subject to any order, writ,
injunction, or decree of any Court, department, agency, or instrumentality,
affecting Western except as set forth on said Exhibit "D" (Article "8(G)").
Except as set forth on Exhibit "D" (Article "8(G)"), Western is not presently
engaged in any legal action.
H. No Approvals. No approval of any governmental authority is
required in connection with the consummation of the transactions set forth in
the Agreement.
I. SEC Filings. Except as set forth on Exhibit "A" (Article "8(B)"),
to Western's knowledge, Western has filed all forms, reports and documents
required to be filed by Western with the SEC since January 1, 1996
(collectively, the "SEC Reports"). Except as set forth on Exhibit "A" (Article
"8(B)"), the SEC Reports (i) at the time filed, complied in all material
respects with the applicable requirements of the '33 Act and the '34 Act, as the
case may be, and (ii) did not, to Western's knowledge, at the time they were
filed (or if amended or superseded by a filing prior to the date of the
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a fact required to be stated in such SEC Reports
or necessary in order to make the statements in such SEC Reports, in the light
of the
5
circumstances under which they were made, not materially misleading. None of
Western's Subsidiaries are required to file any forms, reports or other
documents with the SEC.
J. Nasdaq Quotation. Western's Common Stock is currently quoted on
the Nasdaq Small Cap Market and there are no current inquiries from Nasdaq with
respect to Western except as set forth in a letter, dated March 27, 2001 from
Nasdaq, a copy of which are annexed hereto and made a part hereof as Exhibit "E"
(Article "8(J)").
K. Environmental Compliance. (i) Western is in compliance with all
applicable environmental laws (the "Environmental Laws"). Western is presently
authorized, if required, to generate, transport through third parties, store,
use, treat, dispose of, release, and conduct other handling of, as required,
those hazardous substances used in Western's business, which consist of,
hazardous waste, hazardous material, hazardous constituents, toxic substances,
pollutants, contaminants, asbestos, radon, polychlorinated biphenyls, petroleum
product or waste (including crude oil or any fraction thereof), natural gas,
liquefied gas, synthetic gas and other material defined, regulated, controlled
or subject to any remediation requirement under any Environmental Law
(collectively the "Hazardous Materials").
(ii) Western possesses all licenses, permits, registrations,
and government authorizations necessary under the Environmental Laws to operate
Western's business and is in compliance with such licenses or permits.
6
(iii) Western has not received any written notice from any
governmental agency or entity or any other person and, to Western's knowledge
there is no pending or threatened claim, litigation or any administrative agency
proceeding which: (a) alleges a violation of any Environmental Law(s) by
Western, (b) alleges that Western is a liable party or potentially responsible
party under the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601, et seq., or any state law, (c) would result in the
attachment of an environmental lien on any of Western's real property ("Real
Property"), or (d) alleges that Western is liable for any contamination of the
environment, contamination of Real Property, damage to natural resources,
property damage, or personal injury based on its activities involving Hazardous
Materials, whether arising under the Environmental Laws, common law principals
or other legal standards.
(iv) Western has no Environmental Liability for releases or
disposal of Hazardous Material at the Real Property or at any property to which
the Western transported or arranged for the transportation of Hazardous
Materials.
L. OSHA Compliance. (i) Western is in compliance with all applicable
federal, state and local laws, rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder and other
governmental requirements relating to occupational health and safety, including
but not limited to the Occupational Safety and Health Act of 1970, as amended,
and the rules and regulations promulgated thereunder (the "OSHA Laws").
7
(ii) Western possesses all license, permits, registrations,
and government authorizations necessary to operate in compliance with all
applicable OSHA Laws and is in compliance with such licenses and permits.
(iii) To Western's knowledge, there is no pending or
threatened notice, claim, litigation or any administrative agency proceeding
that alleges a violation of any OSHA Law(s) by Western or, with respect to the
Western Shares or Western's business.
M. Books and Records. The books of account and other financial
records of Western since December 31, 1992, all of which have been or will be
made available to SPI, are complete and correct and reflect actual, bona fide
transactions and have been maintained in accordance with sound business
practices and the standards of Section 13(b)(2) of the '34 Act.
N. Minute Book. The minute book of Western since March 9, 1995, has
been or will be made available to SPI and (i) contains accurate and complete
records of all Board of Director meetings held since March 9, 1995, and (ii)
reflect all corporate action taken as a result of such board meetings since
March 9, 1995.
O. Tax Returns and Audits. Western has timely filed all required
federal, state, city and local tax returns for income, franchise, social
security, withholding, sales, excise, unemployment insurance, real estate and
other taxes, and has paid or made adequate provision
8
for the payment of all such taxes shown to be due on said returns. Western has
timely filed the required tax returns for all years through the fiscal year
ended July 31, 2000. The amounts reserved by Western for taxes on Western's last
quarterly report on Form 10Q for the three months ended January 31, 2001 which
has been filed with the SEC (the "Form 10Q") are sufficient for the payment of
all accrued and unpaid federal, state, city and local taxes of Western for the
periods reported. Except as shown on the Form 10Q, Western has not been advised
or notified that it is subject to any other taxes, tax deficiencies, assessments
or penalties. Western's federal income tax returns have been audited by the
Internal Revenue Service for the years indicated on Exhibit "F" (Article
"8(O)"), which is annexed hereto and made a part hereof. Western's state income
and/or franchise tax returns have been audited by the state(s) and for the years
indicated on Exhibit "F" (Article "8(O)"). No Notice of Audit or Notice of
Intent to Audit has been received from any tax authority for any other period.
All tax returns filed by Western are true, correct and complete in all material
respects.
P. Employee Benefit Plans. Except as set forth in Exhibit "A"
(Article "8(B)"), Western has complied with all applicable federal and state
laws, including, but not limited to, the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), relating to the employment of labor, including
provisions relating to wages, hours, collective bargaining, and payment of
social security taxes, and is not liable for any arrears of wages, or any taxes
or penalties, or for failure to comply with any of the foregoing.
Q. Absence of Changes. Except as indicated on Exhibit "A" (Article
"8(B)"), subsequent to Western's last quarterly report on the Form 10Q and
through the date of
9
this Certificate, there has not been any material adverse change in, or any
event or condition (financial or otherwise) affecting the business, properties,
assets, liabilities, historical operations or prospects of Western, there are no
liabilities or obligations of any nature, whether absolute, contingent or
otherwise, whether due or to become due (including, without limitation,
liabilities for taxes with respect to or measured by income of Western for any
period prior to, and/or subsequent to, the Form 10Q or arising out of any
transaction of Western prior to, and/or subsequent to, such date). Subsequent to
the Form 10Q, there has not been any declaration, or setting aside, or payment
of any dividend or other distribution with respect to Western's securities, or
any direct or indirect redemption, purchase, or other acquisition of any of
Western's securities. To Western's knowledge, there has not been an assertion
against Western of any liability of any nature or in any amount not fully
reflected or reserved against in the Form 10Q.
R. Broker. Western has not had any dealing with respect to this
transaction with any business broker, firm or salesman, or any other person or
corporation, investment banker or financial advisor who is or shall be entitled
to any broker's or finder's fee or any other commission or similar fee with
respect to the transactions set forth in the Agreement. Western represents that
it has not dealt with any person, firm or corporation and agrees to indemnify
and hold harmless SPI from and against any and all claims for brokerage
commissions by any person, firm or corporation on the basis of any act or
statement alleged to have been made by Western or its affiliates or agents.
10
S. Complete Disclosure. No representation or warranty of Western
which is contained in the Agreement, or in a writing furnished or to be
furnished pursuant to the Agreement, to Western's knowledge contains or shall
contain any untrue statement of a material fact, omits or shall omit to state
any fact which is required to make the statements which are contained herein or
therein, in light of the circumstances under which they were made, not
materially misleading. There is no fact relating to the business, affairs,
operations, conditions (financial or otherwise) or prospects of Western which
would materially adversely affect same which has not been disclosed to SPI in
the Agreement.
T. No Defense. It shall not be a defense to a suit for damages for
any misrepresentation or breach of covenant or warranty that SPI knew or had
reason to know that any covenant, representation or warranty in the Agreement
furnished or to be furnished to SPI contained untrue statements.
Acquisition Corp. represents, warrants and covenants to SPI, as follows:
A. Corporate Status. Acquisition Corp. is a corporation duly
organized, validly existing and in good standing pursuant to the laws of the
State of Delaware, with all requisite power and authority to carry on its
business as presently conducted in all jurisdictions where presently conducted,
to enter into the Agreement and to consummate the transactions set forth in the
Agreement. Acquisition Corp. is a newly formed, wholly-owned subsidiary of
Western and has no assets or liabilities of any kind.
11
B. Capitalization. Acquisition Corp.'s authorized capital stock
consists of 1,000 shares of Acquisition Corp. Common Stock, $.001 par value, of
which 100 shares are issued and outstanding or reserved for issuance, all of
which are, or will be, validly issued, fully paid and non-assessable. There are
no agreements or commitments to increase, decrease or otherwise alter the
authorized capital stock of Acquisition Corp.
C. Authority of Acquisition Corp. Acquisition Corp. has the full
corporate power and authority to execute, deliver, and perform the Agreement and
all instruments and documents which are required to be executed and delivered by
Acquisition Corp. pursuant to the Agreement (the "Acquisition Corp. Ancillary
Documents"; the SPI Ancillary Documents, the Western Ancillary Documents and the
Acquisition Corp. Ancillary Documents, collectively the "Ancillary Documents")
and has taken all corporate action required by law and its organizational
documents to authorize the execution and delivery of the Agreement and the
Acquisition Corp. Ancillary Documents and the consummation of the transactions
contemplated by the Agreement and the Acquisition Corp. Ancillary Documents. The
Agreement and the Acquisition Corp. Ancillary Documents and the consummation by
Acquisition Corp. of the transactions set forth in the Agreement and Acquisition
Corp. The Acquisition Corp. Ancillary Documents have been duly and validly
authorized, executed, and delivered by Acquisition Corp., and each constitutes a
valid and binding agreement of Acquisition Corp. enforceable against Acquisition
Corp. in accordance with its terms (except as the enforceability thereof may be
limited by bankruptcy, bank moratorium or similar laws affecting creditors'
rights generally and laws restricting the availability of equitable remedies and
may be subject to general principles of equity whether or not such
enforceability is considered in a proceeding at law or in equity). A certified
resolution
12
of the Board of Directors of Acquisition Corp. is annexed hereto and made a part
hereof as Exhibit "G" (Article "9(C)").
D. Compliance with the Law and Other Instruments. Except as
otherwise provided in the Agreement and in the Exhibits annexed hereto,
Acquisition Corp. is in all material respects in compliance with all applicable
laws, rules and regulations of all authorities which affect Acquisition Corp. or
its properties, assets, businesses or prospects.
E. Absence of Conflicts. The execution and delivery of the Agreement
and the Ancillary Documents by Acquisition Corp., the transfer of the
Acquisition Corp. shares, and the consummation by Acquisition Corp. of the
transactions set forth in the Agreement: (i) do not and shall not conflict with
or result in a breach of any provision of Acquisition Corp.'s articles of
incorporation or bylaws, (ii) do not and shall not result in any breach of, or
constitute a default or cause an acceleration under any arrangement, agreement
or other instrument to which Acquisition Corp. is a party to or by which any of
its assets are bound, (iii) do not and shall not cause Acquisition Corp. to
violate or contravene any provision of law or any governmental rule or
regulation, and (iv) will not and shall not result in the imposition of any
lien, or encumbrance upon, any property of Acquisition Corp. Acquisition Corp.
has performed in all material respects all of its obligations which are, as of
the date of the Agreement, required to be performed, pursuant to the terms of
any such agreement, contract or commitment.
13
F. Section 203 of the DGCL Not Applicable. The Board of Directors of
Acquisition Corp. has taken all actions which are necessary pursuant to the
DGCL, including approving the transactions which are contemplated by the
Agreement and each of the Ancillary Documents to which it is a party, to ensure
that Section 203 of the DGCL applicable to a "business combination" (as defined
in Section 203 of the DGCL) does not, and will not, apply to the transactions
contemplated hereunder and thereunder. Acquisition Corp. has no prior knowledge
that any other "fair price," "moratorium," "control share acquisition" or other
similar anti-takeover statute or regulation is applicable to: (i) Acquisition
Corp. (ii) the Merger (iii) disagreement between the parties (iv) the other
transactions contemplated by the Agreement or (v) the other Ancillary Documents
to which it is a party.
G. Litigation. There are no legal, administrative, arbitration, or
other proceeding or governmental investigations adversely affecting Acquisition
Corp. or its properties, assets or businesses, or with respect to any matter
arising out of the conduct of the Acquisition Corp.'s business pending or to its
knowledge threatened, by or against, any officer or director of Acquisition
Corp. in connection with its affairs, whether or not covered by insurance.
Neither Acquisition Corp. nor its officers or directors are subject to any
order, writ, injunction, or decree of any Court, department, agency, or
instrumentality, affecting Acquisition Corp. Acquisition Corp. is not presently
engaged in any legal action.
H. No Approvals. No approval of any governmental authority is
required in connection with the consummation of the transactions set forth in
the Agreement.
14
I. Broker. Acquisition Corp. has not had any dealing with respect to
this transaction with any business broker, firm or salesman, or any other person
or corporation, investment banker or financial advisor who is or shall be
entitled to any broker's or finder's fee or any other commission or similar fee
with respect to the transactions provided for in the Agreement. Acquisition
Corp. represents that it has not dealt with any person, firm or corporation and
agree to indemnify and hold harmless SPI from and against any and all claims for
brokerage commissions by any other person, firm or corporation on the basis of
any act or statement alleged to have been made by Acquisition Corp. or its
affiliates or agents.
J. No Defense. It shall not be a defense to a suit for damages for
any misrepresentation or breach of covenant or warranty that SPI knew or had
reason to know that any covenant, representation or warranty in the Agreement or
furnished or to be furnished to SPI contained untrue statements.
K. Complete Disclosure. No representation or warranty of Acquisition
Corp. which is contained in the Agreement, or in a writing furnished or to be
furnished pursuant to the Agreement, to Acquisition Corp.'s knowledge contains
or shall contain any untrue statement of a material fact, omits or shall omit to
state any fact which is required to make the statements which are contained
herein or therein, in light of the circumstances under which they were made, not
misleading. There is no fact relating to the business, affairs, operations,
conditions (financial or otherwise) or prospects of Acquisition Corp. which
would materially adversely affect same which has not been disclosed to SPI in
the Agreement.
15
Dated:
May , 2001
Western Power & Equipment Corp.
By:___________________________
, Title
WPEC Acquisition Corp.
By:___________________________
, Title
16
Exhibit WW
CERTIFICATE OF PERFORMANCE
OF OBLIGATIONS OF
WESTERN POWER & EQUIPMENT CORP.
AND
WPEC ACQUISITION CORP.
In accordance with Section "(ii)" of Paragraph "B" of Articles "19" of the
Merger Agreement (the "Agreement") dated as of the 1st day of May, 2001, by and
among Western Power & Equipment Corp., a Delaware corporation ("Western"), WPEC
Acquisition Corp., a Delaware corporation ("Acquisition Corp."), and
SupplyPoint, Inc., a Delaware corporation, Western and Acquisition Corp. hereby
represent, warrant and covenant that Western and Acquisition Corp. have
performed all obligations and complied with all covenants required by the
Agreement to be performed or complied with by each of them on or prior to the
Closing Date.
WESTERN POWER & EQUIPMENT CORP.
By: _____________________________
President
WPEC ACQUISITION CORP.
By: _____________________________
President
Dated: New York, New York
May , 2001
Exhibit XX
CERTIFICATE OF REPRESENTATIONS AND WARRANTIES
OF
WESTERN POWER & EQUIPMENT CORP.
AND WPEC ACQUISITION CORP.
Pursuant to Section "(i)" of Paragraph "B" of Article "20" of the Merger
Agreement (the "Agreement") dated as of the 1st day of May, 2001, by and among
Western Power & Equipment Corp., a Delaware corporation ("Western"), WPEC
Acquisition Corp., a Delaware corporation ("Acquisition Corp."), and
SupplyPoint, Inc., a Delaware corporation ("SPI"), Western and Acquisition Corp.
hereby represent, warrant and covenant to SPI, that, as of the date hereof, all
of the representations, warranties and covenants which are contained in the
Agreement are true and accurate, including, but not limited to, those set forth
below. Each of the capitalized terms which are used in this Certificate shall
have the same meaning as is set forth in the Agreement.
Western represents, warrants and covenants to SPI, as follows:
A. Corporate Status.
(i)Western is a corporation duly organized, validly existing
and in good standing pursuant to the laws of the State of Delaware, with all
requisite power and authority to carry on its business as presently conducted in
all jurisdictions where presently conducted, to enter into the Agreement and to
consummate the transactions set forth in the Agreement.
(ii) Western shall provide a good standing certificate for
Western issued by the Secretary of State of the State of Delaware complete and
correct as of five (5) business days prior to the date of the Effective Date.
1
B. Capitalization. Western's authorized capital stock consists of
20,000,000 shares of Western Common Stock, $.001 par value, of which 4,003,162
shares are issued and outstanding or reserved for issuance, all of which are, or
will be validly issued, fully paid and nonassessable, and 10,000,000 shares of
Western Preferred Stock, $.01 par value, of which none are outstanding;
provided, however, that 600,000 shares of Common Stock (which are included in
the 4,003,162 shares which are issued and outstanding or reserved for issuance)
which are issuable to the Xxxxxx Xxxxx Family Stock Trust will not be issued
because the issuance of such shares is subject to the approval of the
stockholders as set forth in Paragraph "G" of Article "5" of the Agreement.
There are currently issued and outstanding options to purchase 1,215,000 shares
of Western Common Stock and $182,000 in convertible debt, which is convertible
into common shares at $3.00 a share. Western is in the process of lowering the
conversion price from $3.00 to $1.00. Except as set forth on Exhibit "A"
(Article "8(B)"; references to the articles in the Agreement) which is attached
hereto and made a part hereof, there are no agreements or commitments to
increase, decrease or otherwise alter the authorized capital stock of Western.
Except as set forth on Exhibit "A" (Article "8(B)"), Western has not granted any
registration rights with respect to any series of Western stock outstanding. The
capitalization of Western, on a fully diluted basis, shall be as reflected on
Exhibit "B" (Article "8(B)") which is attached hereto and made a part hereof.
Upon issuance in accordance with the terms hereof, the Western Power Common
Stock and Series B Preferred Stock will be validly issued, fully paid and
non-assessable.
C. Authority of Western. Western has the full corporate power and
authority to execute, deliver, and perform the Agreement and all instruments and
documents which are
2
required to be executed and delivered by Western pursuant to the Agreement (the
"Western Ancillary Documents") and has taken all corporate action required by
law and its organizational documents to authorize the execution and delivery of
the Agreement and the Western Ancillary Documents and the consummation of the
transactions set forth in the Agreement and the Western Ancillary Documents. The
Agreement and the Western Ancillary Documents and the consummation by Western of
the transactions set forth in the Agreement and the Western Ancillary Documents
have been duly and validly authorized, executed, and delivered by Western, and
the Agreement and the Western Ancillary Documents are valid and binding upon
Western and enforceable against Western in accordance with their terms (except
as the enforceability thereof may be limited by bankruptcy, bank moratorium or
similar laws affecting creditors' rights generally and laws restricting the
availability of equitable remedies and may be subject to general principles of
equity whether or not such enforceability is considered in a proceeding at law
or in equity). A certified resolution of the Board of Directors of Western is
annexed hereto and made a part hereof as Exhibit "C" (Article "8(C)").
D. Compliance with the Law and Other Instruments. Except as
otherwise provided in the Agreement and in the Exhibits annexed hereto, the
business and operations of Western have been and are being conducted in all
material respects in accordance with all applicable laws, rules and regulations
of all authorities which affect Western or its properties, assets, businesses or
prospects.
3
E. Absence of Conflicts. The execution and delivery of the Agreement
and the Ancillary Documents by Western, the transfer of the Western shares, and
the consummation by Western of the transactions set forth in the Agreement: (i)
do not and shall not conflict with or result in a breach of any provision of
Western 's articles of incorporation or bylaws, (ii) do not and shall not result
in any breach of, or constitute a default or cause an acceleration under any
arrangement, agreement or other instrument to which Western is a party to or by
which any of its assets are bound, (iii) do not and shall not cause Western to
violate or contravene any provision of law or any governmental rule or
regulation, and (iv) will not and shall not result in the imposition of any
lien, or encumbrance upon, any property of Western. Western has performed in all
material respects all of its obligations which are, as of the date of the
Agreement, required to be performed, pursuant to the terms of any such
agreement, contract or commitment.
F. Section 203 of the DGCL Not Applicable. The Board of Directors of
Western has taken all actions which are necessary pursuant to the DGCL,
including approving the transactions which are contemplated by the Agreement and
each of the Ancillary Documents to which it is a party, to ensure that Section
203 of the DGCL applicable to a "business combination" (as defined in Section
203 of the DGCL) does not, and will not, apply to the transactions contemplated
hereunder and thereunder. Western has no prior knowledge that any other "fair
price," "moratorium," "control share acquisition" or other similar anti-takeover
statute or regulation is applicable to: (i) Western (ii) the Merger (iii)
disagreement between the parties (iv) the other transactions contemplated by the
Agreement or (v) the other Ancillary Documents to which it is a party.
4
G. Litigation. Except as set forth on Exhibit "D" (Article "8(G)")
which is annexed hereto and made a part hereof, there are no legal,
administrative, arbitration, or other proceeding or governmental investigations
adversely affecting Western or its properties, assets or businesses, or with
respect to any matter arising out of the conduct of Western's business pending
or to its knowledge threatened, by or against, any officer or director of
Western in connection with its affairs, whether or not covered by insurance.
Neither Western nor its officers or directors are subject to any order, writ,
injunction, or decree of any Court, department, agency, or instrumentality,
affecting Western except as set forth on said Exhibit "D" (Article "8(G)").
Except as set forth on Exhibit "D" (Article "8(G)"), Western is not presently
engaged in any legal action.
H. No Approvals. No approval of any governmental authority is
required in connection with the consummation of the transactions set forth in
the Agreement.
I. SEC Filings. Except as set forth on Exhibit "A" (Article "8(B)"),
to Western's knowledge, Western has filed all forms, reports and documents
required to be filed by Western with the SEC since January 1, 1996
(collectively, the "SEC Reports"). Except as set forth on Exhibit "A" (Article
"8(B)"), the SEC Reports (i) at the time filed, complied in all material
respects with the applicable requirements of the `33 Act and the '34 Act, as the
case may be, and (ii) did not, to Western's knowledge, at the time they were
filed (or if amended or superseded by a filing prior to the date of the
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a fact required to be stated in such SEC Reports
or necessary in order to make the statements in such SEC Reports, in the light
of the
5
circumstances under which they were made, not materially misleading. None of
Western's Subsidiaries are required to file any forms, reports or other
documents with the SEC.
J. Nasdaq Quotation. Western's Common Stock is currently quoted on
the Nasdaq Small Cap Market and there are no current inquiries from Nasdaq with
respect to Western except as set forth in a letter, dated March 27, 2001 from
Nasdaq, a copy of which are annexed hereto and made a part hereof as Exhibit "E"
(Article "8(J)").
K. Environmental Compliance. (i) Western is in compliance with all
applicable environmental laws (the "Environmental Laws"). Western is presently
authorized, if required, to generate, transport through third parties, store,
use, treat, dispose of, release, and conduct other handling of, as required,
those hazardous substances used in Western 's business, which consist of,
hazardous waste, hazardous material, hazardous constituents, toxic substances,
pollutants, contaminants, asbestos, radon, polychlorinated biphenyls, petroleum
product or waste (including crude oil or any fraction thereof), natural gas,
liquefied gas, synthetic gas and other material defined, regulated, controlled
or subject to any remediation requirement under any Environmental Law
(collectively the "Hazardous Materials").
(ii) Western possesses all licenses, permits, registrations,
and government authorizations necessary under the Environmental Laws to operate
Western 's business and is in compliance with such licenses or permits.
6
(iii) Western has not received any written notice from any
governmental agency or entity or any other person and, to Western's knowledge
there is no pending or threatened claim, litigation or any administrative agency
proceeding which: (a) alleges a violation of any Environmental Law(s) by
Western, (b) alleges that Western is a liable party or potentially responsible
party under the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601, et seq., or any state law, (c) would result in the
attachment of an environmental lien on any of Western's real property ("Real
Property"), or (d) alleges that Western is liable for any contamination of the
environment, contamination of Real Property, damage to natural resources,
property damage, or personal injury based on its activities involving Hazardous
Materials, whether arising under the Environmental Laws, common law principals
or other legal standards.
(iv) Western has no Environmental Liability for releases or
disposal of Hazardous Material at the Real Property or at any property to which
the Western transported or arranged for the transportation of Hazardous
Materials.
L. OSHA Compliance. (i) Western is in compliance with all applicable
federal, state and local laws, rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder and other
governmental requirements relating to occupational health and safety, including
but not limited to the Occupational Safety and Health Act of 1970, as amended,
and the rules and regulations promulgated thereunder (the "OSHA Laws").
7
(ii) Western possesses all license, permits, registrations,
and government authorizations necessary to operate in compliance with all
applicable OSHA Laws and is in compliance with such licenses and permits.
(iii) To Western's knowledge, there is no pending or
threatened notice, claim, litigation or any administrative agency proceeding
that alleges a violation of any OSHA Law(s) by Western or, with respect to the
Western Shares or Western's business.
M. Books and Records. The books of account and other financial
records of Western since December 31, 1992, all of which have been or will be
made available to SPI, are complete and correct and reflect actual, bona fide
transactions and have been maintained in accordance with sound business
practices and the standards of Section 13(b)(2) of the '34 Act.
N. Minute Book. The minute book of Western since March 9, 1995, has
been or will be made available to SPI and (i) contains accurate and complete
records of all Board of Director meetings held since March 9, 1995, and (ii)
reflect all corporate action taken as a result of such board meetings since
March 9, 1995.
O. Tax Returns and Audits. Western has timely filed all required
federal, state, city and local tax returns for income, franchise, social
security, withholding, sales, excise, unemployment insurance, real estate and
other taxes, and has paid or made adequate provision
8
for the payment of all such taxes shown to be due on said returns. Western has
timely filed the required tax returns for all years through the fiscal year
ended July 31, 2000. The amounts reserved by Western for taxes on Western's last
quarterly report on Form 10Q for the three months ended January 31, 2001 which
has been filed with the SEC (the "Form 10Q") are sufficient for the payment of
all accrued and unpaid federal, state, city and local taxes of Western for the
periods reported. Except as shown on the Form 10Q, Western has not been advised
or notified that it is subject to any other taxes, tax deficiencies, assessments
or penalties. Western's federal income tax returns have been audited by the
Internal Revenue Service for the years indicated on Exhibit "F" (Article
"8(O)"), which is annexed hereto and made a part hereof. Western's state income
and/or franchise tax returns have been audited by the state(s) and for the years
indicated on Exhibit "F" (Article "8(O)"). No Notice of Audit or Notice of
Intent to Audit has been received from any tax authority for any other period.
All tax returns filed by Western are true, correct and complete in all material
respects.
P. Employee Benefit Plans. Except as set forth in Exhibit "A"
(Article "8(B)"), Western has complied with all applicable federal and state
laws, including, but not limited to, the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), relating to the employment of labor, including
provisions relating to wages, hours, collective bargaining, and payment of
social security taxes, and is not liable for any arrears of wages, or any taxes
or penalties, or for failure to comply with any of the foregoing.
Q. Absence of Changes. Except as indicated on Exhibit "A" (Article
"8(B)"), subsequent to Western's last quarterly report on the Form 10Q and
through the date of
9
this Certificate, there has not been any material adverse change in, or any
event or condition (financial or otherwise) affecting the business, properties,
assets, liabilities, historical operations or prospects of Western, there are no
liabilities or obligations of any nature, whether absolute, contingent or
otherwise, whether due or to become due (including, without limitation,
liabilities for taxes with respect to or measured by income of Western for any
period prior to, and/or subsequent to, the Form 10Q or arising out of any
transaction of Western prior to, and/or subsequent to, such date). Subsequent to
the Form 10Q, there has not been any declaration, or setting aside, or payment
of any dividend or other distribution with respect to Western's securities, or
any direct or indirect redemption, purchase, or other acquisition of any of
Western's securities. To Western's knowledge, there has not been an assertion
against Western of any liability of any nature or in any amount not fully
reflected or reserved against in the Form 10Q.
R. Broker. Western has not had any dealing with respect to this
transaction with any business broker, firm or salesman, or any other person or
corporation, investment banker or financial advisor who is or shall be entitled
to any broker's or finder's fee or any other commission or similar fee with
respect to the transactions set forth in the Agreement. Western represents that
it has not dealt with any person, firm or corporation and agrees to indemnify
and hold harmless SPI from and against any and all claims for brokerage
commissions by any person, firm or corporation on the basis of any act or
statement alleged to have been made by Western or its affiliates or agents.
10
S. Complete Disclosure. No representation or warranty of Western
which is contained in the Agreement, or in a writing furnished or to be
furnished pursuant to the Agreement, to Western's knowledge contains or shall
contain any untrue statement of a material fact, omits or shall omit to state
any fact which is required to make the statements which are contained herein or
therein, in light of the circumstances under which they were made, not
materially misleading. There is no fact relating to the business, affairs,
operations, conditions (financial or otherwise) or prospects of Western which
would materially adversely affect same which has not been disclosed to SPI in
the Agreement.
T. No Defense. It shall not be a defense to a suit for damages for
any misrepresentation or breach of covenant or warranty that SPI knew or had
reason to know that any covenant, representation or warranty in the Agreement
furnished or to be furnished to SPI contained untrue statements.
Acquisition Corp. represents, warrants and covenants to SPI, as follows:
A. Corporate Status. Acquisition Corp. is a corporation duly
organized, validly existing and in good standing pursuant to the laws of the
State of Delaware, with all requisite power and authority to carry on its
business as presently conducted in all jurisdictions where presently conducted,
to enter into the Agreement and to consummate the transactions set forth in the
Agreement. Acquisition Corp. is a newly formed, wholly-owned subsidiary of
Western and has no assets or liabilities of any kind.
11
B. Capitalization. Acquisition Corp.'s authorized capital stock
consists of 1,000 shares of Acquisition Corp. Common Stock, $.001 par value, of
which 100 shares are issued and outstanding or reserved for issuance, all of
which are, or will be, validly issued, fully paid and non-assessable. There are
no agreements or commitments to increase, decrease or otherwise alter the
authorized capital stock of Acquisition Corp.
C. Authority of Acquisition Corp. Acquisition Corp. has the full
corporate power and authority to execute, deliver, and perform the Agreement and
all instruments and documents which are required to be executed and delivered by
Acquisition Corp. pursuant to the Agreement (the "Acquisition Corp. Ancillary
Documents"; the SPI Ancillary Documents, the Western Ancillary Documents and the
Acquisition Corp. Ancillary Documents, collectively the "Ancillary Documents")
and has taken all corporate action required by law and its organizational
documents to authorize the execution and delivery of the Agreement and the
Acquisition Corp. Ancillary Documents and the consummation of the transactions
contemplated by the Agreement and the Acquisition Corp. Ancillary Documents. The
Agreement and the Acquisition Corp. Ancillary Documents and the consummation by
Acquisition Corp. of the transactions set forth in the Agreement and Acquisition
Corp. The Acquisition Corp. Ancillary Documents have been duly and validly
authorized, executed, and delivered by Acquisition Corp., and each constitutes a
valid and binding agreement of Acquisition Corp. enforceable against Acquisition
Corp. in accordance with its terms (except as the enforceability thereof may be
limited by bankruptcy, bank moratorium or similar laws affecting creditors'
rights generally and laws restricting the availability of equitable remedies and
may be subject to general principles of equity whether or not such
enforceability is considered in a proceeding at law or in equity). A certified
resolution
12
of the Board of Directors of Acquisition Corp. is annexed hereto and made a part
hereof as Exhibit "G" (Article "9(C)").
D. Compliance with the Law and Other Instruments. Except as
otherwise provided in the Agreement and in the Exhibits annexed hereto,
Acquisition Corp. is in all material respects in compliance with all applicable
laws, rules and regulations of all authorities which affect Acquisition Corp. or
its properties, assets, businesses or prospects.
E. Absence of Conflicts. The execution and delivery of the Agreement
and the Ancillary Documents by Acquisition Corp., the transfer of the
Acquisition Corp. shares, and the consummation by Acquisition Corp. of the
transactions set forth in the Agreement: (i) do not and shall not conflict with
or result in a breach of any provision of Acquisition Corp.'s articles of
incorporation or bylaws, (ii) do not and shall not result in any breach of, or
constitute a default or cause an acceleration under any arrangement, agreement
or other instrument to which Acquisition Corp. is a party to or by which any of
its assets are bound, (iii) do not and shall not cause Acquisition Corp. to
violate or contravene any provision of law or any governmental rule or
regulation, and (iv) will not and shall not result in the imposition of any
lien, or encumbrance upon, any property of Acquisition Corp. Acquisition Corp.
has performed in all material respects all of its obligations which are, as of
the date of the Agreement, required to be performed, pursuant to the terms of
any such agreement, contract or commitment.
13
F. Section 203 of the DGCL Not Applicable. The Board of Directors of
Acquisition Corp. has taken all actions which are necessary pursuant to the
DGCL, including approving the transactions which are contemplated by the
Agreement and each of the Ancillary Documents to which it is a party, to ensure
that Section 203 of the DGCL applicable to a "business combination" (as defined
in Section 203 of the DGCL) does not, and will not, apply to the transactions
contemplated hereunder and thereunder. Acquisition Corp. has no prior knowledge
that any other "fair price," "moratorium," "control share acquisition" or other
similar anti-takeover statute or regulation is applicable to: (i) Acquisition
Corp. (ii) the Merger (iii) disagreement between the parties (iv) the other
transactions contemplated by the Agreement or (v) the other Ancillary Documents
to which it is a party.
G. Litigation. There are no legal, administrative, arbitration, or
other proceeding or governmental investigations adversely affecting Acquisition
Corp. or its properties, assets or businesses, or with respect to any matter
arising out of the conduct of the Acquisition Corp.'s business pending or to its
knowledge threatened, by or against, any officer or director of Acquisition
Corp. in connection with its affairs, whether or not covered by insurance.
Neither Acquisition Corp. nor its officers or directors are subject to any
order, writ, injunction, or decree of any Court, department, agency, or
instrumentality, affecting Acquisition Corp. Acquisition Corp. is not presently
engaged in any legal action.
H. No Approvals. No approval of any governmental authority is
required in connection with the consummation of the transactions set forth in
the Agreement.
14
I. Broker. Acquisition Corp. has not had any dealing with respect to
this transaction with any business broker, firm or salesman, or any other person
or corporation, investment banker or financial advisor who is or shall be
entitled to any broker's or finder's fee or any other commission or similar fee
with respect to the transactions provided for in the Agreement. Acquisition
Corp. represents that it has not dealt with any person, firm or corporation and
agree to indemnify and hold harmless SPI from and against any and all claims for
brokerage commissions by any other person, firm or corporation on the basis of
any act or statement alleged to have been made by Acquisition Corp. or its
affiliates or agents.
J. No Defense. It shall not be a defense to a suit for damages for
any misrepresentation or breach of covenant or warranty that SPI knew or had
reason to know that any covenant, representation or warranty in the Agreement or
furnished or to be furnished to SPI contained untrue statements.
K. Complete Disclosure. No representation or warranty of Acquisition
Corp. which is contained in the Agreement, or in a writing furnished or to be
furnished pursuant to the Agreement, to Acquisition Corp.'s knowledge contains
or shall contain any untrue statement of a material fact, omits or shall omit to
state any fact which is required to make the statements which are contained
herein or therein, in light of the circumstances under which they were made, not
misleading. There is no fact relating to the business, affairs, operations,
conditions (financial or otherwise) or prospects of Acquisition Corp. which
would materially adversely affect same which has not been disclosed to SPI in
the Agreement.
15
Dated:
May , 2001
Western Power & Equipment Corp.
By:___________________________
, Title
WPEC Acquisition Corp.
By:___________________________
, Title
Exhibit XX
CERTIFICATE OF PERFORMANCE
OF OBLIGATIONS OF
WESTERN POWER & EQUIPMENT CORP.
AND
WPEC ACQUISITION CORP.
In accordance with Section "(ii)" of Paragraph "B" of Articles "20" of the
Merger Agreement (the "Agreement") dated as of the 1st day of May, 2001, by and
among Western Power & Equipment Corp., a Delaware corporation ("Western"), WPEC
Acquisition Corp., a Delaware corporation ("Acquisition Corp."), and
SupplyPoint, Inc., a Delaware corporation, Western and Acquisition Corp. hereby
represent, warrant and covenant that Western and Acquisition Corp. have
performed all obligations and complied with all covenants required by the
Agreement to be performed or complied with by each of them on or prior to the
Effective Date.
WESTERN POWER & EQUIPMENT CORP.
By: _____________________________
President
WPEC ACQUISITION CORP.
By: _____________________________
President
Dated: New York, New York
______, 2001
Exhibit YY
WESTERN POWER & EQUIPMENT CORP.
IRREVOCABLE PROXY
The undersigned, stockholders of Western Power & Equipment Corp., a Delaware
Corporation (the "Company"), does hereby constitute and appoint Xxxxxx Xxxxx
with full power of substitution to vote, in the undersigned's name, place and
stead, in the same manner and to the same extent, were the undersigned present,
as proxy all of the shares of the Company standing in the undersigned's name on
the Company's books, at any scheduled vote of the stockholders of the Company
held upon legally required written notice, or any and all adjournments thereof,
for the sole purpose set forth below.
This Proxy shall not be utilized to vote for or against any matter other than
(A) the approval of the conversion of 2,235,000 shares of Series Preferred Stock
of the Company, par value $.01 per share into Common Stock of the Company on a
10 for 1 basis, (B) the issuance of 600,000 shares of the Company's common stock
to the Xxxxxx Xxxxx Family Stock Trust and (C) the approval of the Asset
Purchase Agreement (collectively the "Transactions").
This Proxy shall only be utilized to vote in favor of the Transactions.
This Proxy shall be deemed to be issued in accordance with Paragraph "(c)" of
Section 218 of the Delaware General Corporation Law.
1
The undersigned hereby revokes all proxies by the undersigned previously given,
with respect to the Transaction, for any meeting of the shareholders of the
Company;
This Proxy shall be valid upon the date hereof and shall terminate if the
Transaction does not close on or prior to the "Termination Date" which is
defined in the Merger Agreement.
This Proxy shall be irrevocable, and the undersigned hereby expressly
acknowledges that it shall have no power, whether alone or in conjunction with
others, in whatever capacity, to alter, amend, revoke, or terminate this Proxy,
or any of the terms of the this Proxy, in whole or in part.
2
In witness whereof the undersigned sets the undersigned's name as of the ___ day
of May, 2001.
Ocean Castle Partners, LLC
By:_____________________
Title:
Shares Owned: 325,000
Old Oak Fund, Inc.
By:_____________________
Title:
Shares Owned: 162,500
Allied International Fund Inc.
By:_____________________
Title:
Shares Owned: 162,500
_______________________
Witness:
3
Exhibit ZZ
STOCKHOLDER QUESTIONNAIRE
The information requested herein is being solicited in connection with the
Merger Agreement by and among Western Power & Equipment Corporation, Western
Power Acquisition Corp., a wholly owned subsidiary of Western Power & Equipment
Corporation, and SupplyPoint, Inc. The purpose of this Stockholder Questionnaire
(the "Questionnaire") is to determine whether you are an "accredited investor",
as defined in Rule 501 of Regulation D promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the
"Securities Act").
If you are acting as agent for a corporation, partnership, trust, or any
other entity, any reference to the term "you" shall mean such corporation,
partnership, trust or other entity.
Except as set forth herein, or except in connection with applicable
securities and other laws, your answers to this questionnaire will, at all
times, be kept strictly confidential.
Please complete this questionnaire as fully as possible, and sign, date
and deliver one copy thereof to the Company, c/o Mintz & Fraade, P.C., 000
Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000.
PLEASE PRINT OR TYPE. IF THE ANSWER TO ANY QUESTION IS "NONE" OR "NOT
APPLICABLE," PLEASE SO STATE.
I. Please provide the following information if you are an individual (if you
are a corporation, partnership, trust, or any other entity, please
complete part II on page 3). In addition please provide the same
information for any joint tenant or tenant-in-common:
Name(s)___________________________________________________________________
Date(s) of Birth__________________________________________________________
Marital Status(es) _______________________________________________________
Permanent Home Address(es) _______________________________________________
________________________________________________________________________________
________________________________________________________________________________
Home Telephone Number(s) (____)___________________(____)________________________
Social Security No.(s) _________________________________________________________
Citizenship(s) _________________________________________________________________
Names of Employer(s) ___________________________________________________________
Nature of Business(es) _________________________________________________________
Position(s)
________________________________________________________________________________
Business Address(es) ___________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Business Telephone Number(s) ___________________________________________________
Please describe your employment positions or occupations during the last five
years (listing the inclusive dates of each) indicating any and all vocationally
related experience in financial and business matters:
Employment, Position Nature of
or Occupation Duties From To
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Are you acting for your own account? Yes |_| No |_|
If you are not acting for your own account, please complete the following:
(i) Capacity in which you are acting (Agent, Trustee or Otherwise):
__________________________________________________________________________
2
(ii) Name, address and telephone number of persons you represent:
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(iii) Please attach evidence of authority.
II. Please complete the following if you are investing as a corporation,
partnership, trust or other entity.
Name of Corporation, Partnership, Trust or Entity ______________________________
________________________________________________________________________________
Employer Identification No. ____________________________________________________
Business Activities_____________________________________________________________
State and Year of Organization _________________________________________________
Calendar Year __________________________________________________________________
Business Address _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Business Telephone Number ______________________________________________________
Authorized Person to Contact ___________________________________________________
(Title) ________________________________________________________________________
Has the corporation, partnership, trust or other entity been formed for
the specific purpose of making the investment contemplated herein?
3
Yes |_| No |_|
Has the corporation, partnership, trust or other entity been in existence
for less than 90 days prior to the date hereof?
Yes |_| No |_|
Does the corporation, partnership, trust or other entity have total assets
in excess of $5,000,000?
Yes |_| No |_|
III. ALL PURCHASERS, PLEASE ANSWER THE FOLLOWING QUESTIONS.
1. Please indicate your net worth as of this date. For purposes of this
questionnaire, net worth shall mean the excess of total assets over
liabilities as determined by generally accepted accounting principles,
except that if any such assets have been depreciated, then the amount of
depreciation relative to any particular asset may be added to the
depreciated cost of such asset to compute total assets, provided that the
amount of depreciation may be added only to the extent that the amount
resulting after adding such depreciation does not exceed the fair market
value of the assets (check one):
/ / $100,000+ / / $200,000+ / / $400,000+ / / $1,000,000+
Please indicate what amount of the current net worth, shown above, relates
to your home, furnishings and automobiles. _____________________
3. If the answer to item #2 does not include the net worth of your spouse, if
any, please indicate your combined net worth as of this date (check one):
/ / $100,000+ / / $200,000+ / / $400,000+ / / $1,000,000+
4. Has your income from all sources for each of the two taxable years
preceding this date exceeded $200,000? For individuals, "income" shall
mean your adjusted gross income as reported on your Federal individual
income tax returns increased by (i) any deduction for long term capital
gain; (ii) any deduction for depletion; (iii) any exclusion for interest;
and (iv) any losses allocated to you as an individual limited partner.
Yes |_| No |_|
4
5. If you have had income from all sources of $200,000 for each of the past
two taxable years, do you reasonably expect your income from all sources
for the current taxable year to exceed $200,000?
Yes |_| No |_|
6. Has the total of your income from all sources combined with your spouse's
income for each of the two taxable years preceding this date exceeded
$300,000?
Yes |_| No |_|
7. If you and your spouse have had total combined income from all sources of
at least $300,000 for each of the past two taxable years, do you
reasonably expect you and your spouse's total combined income from all
sources for the current taxable year to exceed $300,000?
Yes |_| No |_|
8. Please indicate the general, business or professional education and the
degrees received by you (or, if the Purchaser is a corporation,
partnership, trust or other entity, by the person completing this
questionnaire on its behalf).
Degree
College Received Year
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
5
9. Please indicate your principal business activities, or if the Purchaser is
a corporation, partnership, trust or other entity, the business activities
of the corporation, partnership, trust or entity during the last five
years.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
10. Investment Experience:
(a) Frequency of investment in marketable securities:
often |_| ; occasionally |_| ; seldom |_| ; never |_|
(b) Frequency of investment in commodities futures:
often |_| ; occasionally |_| ; seldom |_| ; never |_|
(c) Frequency of investment in options:
often |_| ; occasionally |_| ; seldom |_| ; never |_|
(d) Frequency of investment in securities purchased on margin:
often |_| ; occasionally |_| ; seldom |_| ; never |_|
(e) Frequency of investment in illiquid securities:
often |_| ; occasionally |_| ; seldom |_| ; never |_|
11. NASD Association or Affiliation:
(a) Are you or any member of your family a member of the NASD or a
person associated with a member or do you have any association or
other affiliation through share ownership, loans or otherwise with a
member of the NASD or with an underwriter or related person?
Yes |_| No |_|
6
(b) Do you have any oral or written agreements with any NASD member or
any associated persons of such member concerning the disposition of
any Shares of the Company beneficially owned by you?
Yes |_| No |_| (If Yes, describe)
If the investor answering this form is not an individual, please answer
question (c) below.
(c) Do you know of any director, officer, or holder of any class of
securities of the investor (including a member of their family) who
is (i) a member of the NASD, (ii) a controlling stockholder of a
member of the NASD, (iii) associated or affiliated with a member of
the NASD, or (iv) associated with any placement agent or financial
or legal advisor involved in the Company's offering?
Yes |_| No |_| (If Yes, describe)
I (we) acknowledge that the foregoing statements are true and accurate to
the best of my (our) information and belief, and that I (we) will promptly
notify the Company of any changes in the foregoing answers.
[SIGNATURE PAGE FOLLOWS]
7
IN WITNESS WHEREOF, I (we) have executed this questionnaire this day of
_____ , 2001.
Individuals: Entities:
_______________________________ _________________________________
Name (Please Print) Name of Entity (Please Print)
By:
_______________________________ _________________________________
Signature Signature and Title
_______________________________ _________________________________
Social Security Number Employer Identification Number
_______________________________
Signature of Joint Tenant or
Tenant in-Common, if applicable
(Please Print)
[Corporate Seal (if applicable)]
_______________________________
Signature of Joint Tenant
or Tenant-in-Common, if
applicable.
_______________________________
Social Security Number
8
Exhibit AAA
May __, 2001
Western Power & Equipment Corp.
0000 X.X. 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Stockholders who are listed
on Exhibit "A" annexed hereto,
c/o Schnader Xxxxxxxx Xxxxx & Xxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Re: Escrow Agreement
We agree to act as escrow agent pursuant to the terms of this Escrow
Agreement on behalf of
1
Western Power & Equipment Corp. (the "Company") and the stockholders of
SupplyPoint, Inc., who are set forth on Exhibit "A" of this Escrow Agreement,
which is attached hereto and made a part hereof (hereinafter collectively
referred to as the "Stockholders") pursuant to the terms and conditions which
are hereinafter set forth:
1. We hereby acknowledge receipt of four hundred thousand (400,000) shares
of Series B Preferred Stock of the Company together with stock powers executed
in blank, copies of which are annexed hereto and made a part hereof as Exhibit
"B" (the "Escrow Items") representing a portion of the stock which the
Stockholders have the right to receive, pursuant to the Merger Agreement dated
as of the 1st day of May, 2001 by and among the Company, WPEC Acquisition Corp.,
a wholly owned subsidiary of the Company and SupplyPoint, Inc.(the "Merger
Agreement"). Following is a breakdown of the four hundred thousand (400,000)
shares:
a. Ocean Castle Partners, LLC 200,000
b. Old Oak Fund, Inc. 100,000
c. Allied International Fund, Inc. 100,000
2. We hereby agree to hold the Escrow Items in escrow in accordance with
the following terms and conditions:
A. The Escrow Items shall remain in escrow and shall be released to
the Stockholders ten (10) business days after we receive written notification
that either of the following
2
conditions has occurred, unless within said ten (10) business days period we are
in receipt of written notification from the Company disputing that such
condition has occurred:
(i) a written notification to us from the Stockholders that an
audited financial statement (the "Audited Statement"), for the Company, for the
year ending December 31, 2002 which sets forth that the revenues of the Company
which are attributable to the business of SupplyPoint (exclusive of mergers,
acquisitions and the existing business of the Company prior to the closing
pursuant to the Merger Agreement, i.e. selling, leasing and servicing
construction equipment) were four million ($4,000,000) dollars or more (the
"Revenue Notice"); or
(ii) a written notification to us from the Stockholders that the
business of the Company which is attributable to the business of SupplyPoint
(exclusive of mergers, acquisitions and the existing business of the Company
prior to the closing pursuant to the Merger Agreement, i.e. selling, leasing and
servicing construction equipment) has been sold for twenty million ($20,000,000)
dollars or more, in cash or in securities, on or prior to December 31, 2002 (the
"Acquisition Notice"). If there is a dispute with respect to the value of the
payment received or to be received, the determination of such value shall be
made by the unanimous decision of the board of directors of the Company.
B. If we have not received notice from the Stockholders on or prior
to April 30,
3
2003 that either of the conditions which are set forth in Sections "(i)" or
"(ii)" of Paragraph "A" of Article "2" of this Escrow Agreement has occurred, we
shall return the Escrow Items to the Company.
C. If there is a dispute with respect to the release of the Escrow
Items, including, but not limited to, the failure of the board of directors of
the Company to reach a unanimous decision, pursuant to Section "(ii)" of
Paragraph "A" of this Article "2" of this Escrow Agreement, we may in our sole
and absolute discretion, either continue to hold the Escrow Items or deposit the
Escrow Items with a court of competent jurisdiction in New York County, New York
State pursuant to an action of interpleader, and upon such deposit we shall be
released from any further liability or obligation as escrow agent. We shall be
entitled to rely upon the decision of any such court with respect to the
disposition of the Escrow Items.
D. Our obligation to act as escrow agent pursuant to this Escrow
Agreement shall terminate at such time as (i) we deliver the Escrow Items to the
Stockholders or the Company as the case may be, or (ii) we deposit the Escrow
Items in court pursuant to Paragraph "C" of Article "2" of this Escrow
Agreement.
3. We are hereby released and exculpated from all liability, costs, and
expenses whatsoever which arise out of or in connection with our activities as
escrow agent hereunder, and we
4
shall be liable only to the extent of any loss or damage which is caused by our
willful misconduct.
4. We may act or refrain from acting with respect to any matter which is
referred to herein in reliance upon either: (A) the advice of any counsel who
may be selected by us from time to time; or (B) a good faith determination by
us. We are hereby released and exculpated from all liability whatsoever which
arises out of or in connection with so acting or in so refraining from acting
upon either: (A) the advice of any counsel; or (B) a good faith determination by
us.
5. We may rely and are hereby released and exculpated from all liability,
including, but not limited to losses, costs, and expenses whatsoever which
arises out of or in connection with our actions based upon any paper or other
document which may be submitted to us in connection with our duties hereunder
which is believed by us to be genuine and to have been signed by the proper
party or parties and we shall have no liability or responsibility with respect
to the form, execution or validity thereof.
6. We may institute or defend any action or legal process which involves
any matter which is referred to herein which in any manner affects us or our
duties or liabilities hereunder, but we shall not be required to institute or
defend such action or process unless or until requested to do so, and then only
upon receiving full indemnity, against any and all claims, liabilities,
judgments, reasonable attorneys' fees and other expenses of every kind in
relation thereto in form and amount
5
satisfactory to us in our sole and absolute discretion and from such parties
defended by us in our sole and absolute discretion.
7. The Company and the Stockholders agree to and shall jointly and
severally indemnify and save us harmless from and against any losses, claims,
liabilities, judgments, reasonable attorneys' fees and other expenses of every
kind and nature which may be suffered, sustained or incurred by us by reason of
our acceptance of, and our performance under, this Escrow Agreement except for
our willful misconduct. In addition, we shall be entitled to the fair value of
the legal services incurred by us if we determine to act as our own counsel, in
our sole and absolute discretion, with respect to our acceptance of, and our
performance pursuant to this Escrow Agreement.
8. In the event of any dispute which is referred to herein, we shall be
entitled to consult with our counsel and commence or defend any legal proceeding
if we, in our good faith determination, determine to do so, and shall be
reimbursed by the Company for all legal fees and expenses in connection with
such consultation and legal proceeding and shall be further entitled to receive
from the Company all reasonable expenses which are incurred by us in connection
with our acting as escrow agent. We shall furthermore be entitled to the fair
value of the legal fees incurred by us if we decide to act as our own counsel,
in our sole and absolute discretion. If the Company does not fulfill its
obligations pursuant to this Article "8" of this Escrow Agreement, the Company
6
and the Stockholders shall be jointly and severally liable for any such
obligation.
9. We shall notify the parties to this Escrow Agreement of every written
notice which we receive hereunder if either we determine to do so or if such
written notice requests that we notify the other parties to this Escrow
Agreement of our receipt thereof.
10. Nothing in this Escrow Agreement shall limit our right to represent as
counsel anyone including, but not limited to, the Company, in any matter
whatsoever.
11. Except as otherwise specifically provided for hereunder, no party to
this Escrow Agreement shall be deemed to have waived any of his, her or its
rights hereunder or under any other agreement, instrument or paper signed by any
of them with respect to the subject matter hereof, unless such waiver is in
writing and signed by the party waiving said right. Except as otherwise
specifically provided for hereunder, no delay or omission by any party to this
Escrow Agreement in exercising any right with respect to the subject matter
hereof shall operate as a waiver of such right or of any such other right. A
waiver on any one occasion with respect to the subject matter hereof shall not
be construed as a bar to, or waiver of, any right or remedy on any future
occasion.
12. The parties to this Escrow Agreement have not made any
representations, warranties, or covenants which are not set forth herein with
respect to the subject matter hereof, and this Escrow
7
Agreement constitutes the entire agreement between them with respect to the
subject matter hereof. All understandings and agreements heretofore between the
parties with respect to the subject matter hereof are merged in this Escrow
Agreement.
13. This Escrow Agreement may not be changed, modified, extended,
terminated, or discharged orally, but only by an agreement, in writing, signed
by all of the parties to this Escrow Agreement.
14. Any notice or other communication required or permitted hereunder
shall be sufficiently given if sent by (i) mail by (a) certified mail, postage
prepaid, return receipt requested and (b) First Class mail, (ii) overnight
delivery with confirmation of delivery or (iii) facsimile transmission with an
original mailed by first class mail, postage prepaid, addressed as follows:
If to a Stockholder: Name of Stockholder
c/o SupplyPoint, Inc.
0000 Xxxxxxxx, Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx/Xxxxx Silver, Esq.
Facsimile No.: (000) 000-0000
8
with a copy to: Xxxxxxxx Xxxxxxxx Xxxxx & Xxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to the Company: Western Power & Equipment Corp.
0000 X.X. 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: C. Xxxx XxXxxx, President
Facsimile No.: (000) 000-0000
with a copy to: Xxxxx & Fraade, P.C.
9
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or in each case to such other address and facsimile number as shall have last
been furnished by like notice. If mailing by certified mail is impossible due to
an absence of postal service, notice shall be in writing and personally
delivered to the aforesaid addresses. Each notice or communication shall be
deemed to have been given as of the date so mailed or delivered as the case may
be; provided, however that any notice sent by facsimile shall be deemed to have
been given as of the date so sent if a copy thereof is also mailed by first
class mail on the date sent by facsimile, if the date of mailing is not the same
as the date of sending by facsimile, then the date of mailing by first class
mail shall be deemed to be the date upon which notice is given.
15. This Escrow Agreement shall in all respects be construed governed,
applied and enforced in accordance with the internal laws of the State of New
York, without giving effect to conflicts of law.
16. This Agreement shall be deemed to be an agreement entered into in the
State of New
10
York and made pursuant to the laws of the State of New York. Except as otherwise
provided in Paragraph "C" of Article "2" of this Escrow Agreement, the parties
agree that they shall be deemed to have agreed to binding arbitration in New
York, New York with respect to the entire subject matter of any and all disputes
relating to or arising under this Agreement including, but not limited to, the
specific matters or disputes as to which arbitration has been expressly provided
for by other provisions of this Agreement. Any such arbitration shall by and
pursuant to the rules then existing of the American Arbitration Association in
New York, New York. In all arbitrations, judgment upon the arbitration award may
be entered in any court having jurisdiction. The parties specifically designate
the Courts in the City, County and State of New York as properly having venue
for any proceeding to confirm and enter judgment upon any such arbitration
award. The parties hereby consent to and submit to personal jurisdiction over
each of them by Courts of the State of New York in any action or proceeding to
enforce the arbitration award, waive personal service of any and all process and
specifically consent that in any such action or proceeding, any service of
process may be effectuated upon any of them by certified mail, return receipt
requested in accordance with Article "14" of this Agreement. The parties agree,
further, that the prevailing party in any such arbitration as determined by the
arbitrators shall be entitled to such costs and attorney's fees, if any, in
connection with such arbitration as may be awarded by the arbitrators; provided,
however, that if a proceeding is commenced to confirm and enter a judgment
thereon by the Courts of the State of New York and such application is denied,
no such costs or attorney's fees shall be paid. In connection with the
arbitrator's determination for the purpose of which party, if any, is the
prevailing party, they shall take into account all of the factors and
11
circumstances including, without limitation, the relief sought, and by whom, and
the relief, if any, awarded, and to whom. In addition, and notwithstanding the
foregoing sentence, a party shall not be deemed to be the prevailing party
unless the amount of the arbitration award exceeds the amount offered in writing
by the other party by fifteen (15%) percent or more. For example, if the party
initiating arbitration (") seeks an award of $10,000 plus costs and expenses,
the other party (B) has offered A $5,000 prior to the commencement of the
arbitration proceeding, and the arbitration panel awards any amount less than
$5,750 to A, the panel should determine that B has prevailed.
17. The parties to this Escrow Agreement agree to execute any and all such
other and further instruments and documents, and to take any and all such
further actions reasonably required to effectuate this Escrow Agreement and the
intents and purposes hereof.
18. This Escrow Agreement shall be binding upon and inure to the benefit
of the parties hereto and their heirs, executors, administrators, personal
representatives, successors and assigns.
19. Nothing which is contained herein or in any instruments executed
simultaneously herewith shall prevent us from representing the Company in any
action or proceeding which relates to this Escrow Agreement, or any instruments
which are executed simultaneously herewith.
20. This Escrow Agreement may be executed in two or more counterparts,
each of which
12
shall be deemed an original, but all of which together shall constitute one and
the same Agreement.
Please sign the attached counterpart of this Escrow Agreement where
indicated below to acknowledge your agreement with the foregoing.
Very truly yours,
Xxxxx & Fraade, P.C.
By:______________________________________
Xxxxxxxxx X. Xxxxx
ACKNOWLEDGED AND AGREED:
13
Western Power & Equipment Corp.
By:_____________________
Title:
Stockholders
_________________________
_________________________
_________________________
14
Exhibit BBB
May 14, 2001
Western Power & Equipment Corp.
0000 X.X. 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Supply Point Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Re: Escrow Agreement
We agree to act as escrow agent pursuant to the terms of this Escrow
Agreement on behalf of Western Power & Equipment Corp. (the "Company") and
SupplyPoint, Inc. ('Supply Point"), pursuant to the terms and conditions which
are hereinafter set forth:
1. A. We hereby acknowledge receipt of the following documents
(collectively referred to as the "Escrow Items")
Supply Point Escrow Items
(i) the stock certificates for the shares of SupplyPoint (the "SPI
Shares"), which are set forth on Exhibit "A" which is annexed hereto and made a
part hereof;
(ii) stock powers transferring the SPI Shares from the stockholders
of SupplyPoint to the Company, endorsed in blank, with the signatures
guaranteed;
(iii) copies of the stock certificate and stock transfer books of
SPI;
(iv) copy of the minute book of SPI; and
(v) the corporate seal of SPI.
Western Power Escrow Items
(i) 650,000 shares of Western Power Common Stock issued as follows:
(a) 325,000 shares to Ocean Castle Partners, LLC;
(b) 162,500 shares to Old Oak Fund, Inc., and
(c) 162,500 shares to Allied International Fund Inc.;
(ii) 2,235,000 shares of Western's Series B Preferred Stock, par
value $.01 per
1
share issued as set forth on Exhibit "B" which is annexed hereto and made a part
hereof .
B. Upon our receipt of an irrevocable proxy (the "AUGI Proxy")
executed by American United Global, Inc. ("AUGI") in favor of Xxxxx X. Xxxxx
with respect to 1,250,000 shares of Common Stock of Western, such proxy shall be
held in escrow by us pursuant to the terms and conditions of this Escrow
Agreement and shall be deemed to be included in the Western Power Escrow Items
above.
C. Upon our receipt of the following items from SupplyPoint, they
shall be held in escrow by us pursuant to the terms and conditions of this
Escrow Agreement and shall be deemed to be included in the SupplyPoint Escrow
Items:
(i) all original insurance policies of SPI;
(ii) all books and records of SPI including, but not limited to
contracts, deeds, bonds, notes, mortgages, leases, books, records, documents,
instruments, invoices, bills, vouchers, cancelled checks, checkbooks, bank books
of SPI and credit cards which are billed to SPI.
2. We hereby agree to hold the Escrow Items in escrow in accordance with
the following terms and conditions:
A. The Escrow Items shall remain in escrow and shall be released to
the parties ten (10) business days after we receive written notification (the
"Written Notification") from either party that all of the Conditions of Release
of the Escrow Items And Effective Date pursuant to Article "20" of the Merger
Agreement dated as of the 1st day of May, 2001 by and between the Company, WPEC
Acquisition Corp., a wholly owned subsidiary of the Company, and SupplyPoint
(the "Merger Agreement") have been satisfied or waived by the applicable party,
unless the party which has not sent the Written Notification objects (an
"Objection") within ten (10) business days after we receive the Written
Notification. If there is no Objection within said ten (10) day period, we shall
deliver the SupplyPoint Escrow Items to the Company and the Western Power Escrow
Items to SupplyPoint; provided, however, that 400,000 of the shares of Series B
Preferred Stock will continue to be held in escrow pursuant to a separate Escrow
Agreement in the form which is annexed hereto and made a part hereof as Exhibit
"C".
B. If we do not receive the Written Notification pursuant to
Paragraph "A" of this Article "2" of this Escrow Agreement on or prior to
September 30, 2002, we shall deliver the SupplyPoint Escrow Items to SupplyPoint
and the Western Power Escrow Items to the Company.
C. If there is a dispute with respect to the release of the Escrow
Items pursuant to Paragraph "A" of this Article "2" of this Escrow Agreement, we
may in our sole and absolute discretion, either continue to hold the Escrow
Items or deposit the Escrow Items with a court of competent jurisdiction in New
York County, New York State pursuant to an action of interpleader, and upon such
deposit we shall be released from any further liability or obligation as escrow
agent. We shall be entitled to rely upon the decision of any such court with
respect to the disposition of the Escrow Items.
2
D. Our obligation to act as escrow agent pursuant to this Escrow
Agreement shall terminate at such time as (i) we deliver the Escrow Items to the
parties pursuant to either Paragraph "A" or Paragraph "B" of Article "2" of this
Escrow Agreement or (ii) we deposit the Escrow Items in court pursuant to
Paragraph "C" of Article "2" of this Escrow Agreement.
3. We are hereby released and exculpated from all liability, costs, and
expenses whatsoever which arise out of or in connection with our activitiy as
escrow agent hereunder, and we shall be liable only to the extent of any loss or
damage which is caused by our willful misconduct.
4. We may act or refrain from acting with respect to any matter which is
referred to herein in reliance upon either: (A) the advice of any counsel who
may be selected by us from time to time; or (B) a good faith determination us.
We are hereby released and exculpated from all liability whatsoever which arises
out of or in connection with so acting or in so refraining from acting upon
either: (A) the advice of any counsel; or (B) a good faith determination by us.
5. We may rely and are hereby released and exculpated from all liability,
including, but not limited to losses, costs, and expenses whatsoever which
arises out of or in connection with our actions based upon any paper or other
document which may be submitted to us in connection with our duties hereunder
which is believed by us to be genuine and to have been signed by the proper
party or parties and we shall have no liability or responsibility with respect
to the form, execution or validity thereof.
6. We may institute or defend any action or legal process which involves
any matter which is referred to herein which in any manner affects us or our
duties or liabilities hereunder, but we shall not be required to institute or
defend such action or process unless or until requested to do so, and then only
upon receiving full indemnity, against any and all claims, liabilities,
judgments, reasonable attorneys' fees and other expenses of every kind in
relation thereto in form and amount satisfactory to us in our sole and absolute
discretion and from such parties defended by us in our sole and absolute
discretion.
7. The Company and SupplyPoint agree to and shall jointly and severally
indemnify and hold us harmless from and against any losses, claims, liabilities,
judgments, reasonable attorneys' fees and other expenses of every kind and
nature which may be suffered, sustained or incurred by us by reason of our
acceptance of, and our performance under, this Escrow Agreement except for our
willful misconduct. In addition, we shall be entitled to the fair value of the
legal services incurred by us if we determine to act as our own counsel, in our
sole and absolute discretion, with respect to our acceptance of, and our
performance pursuant to this Escrow Agreement.
8. In the event of any dispute which is referred to herein, we shall be
entitled to consult with our counsel and commence or defend any legal proceeding
if we, in our good faith
3
determination, determine to do so, and shall be reimbursed by the Company for
all legal fees and expenses in connection with such consultation and legal
proceeding and shall be further entitled to receive from the Company all
reasonable expenses which are incurred by us in connection with us acting as
escrow agent. We shall furthermore be entitled to the fair value of the legal
fees incurred by us if we decide to act as our own counsel, in our sole and
absolute discretion. If the Company does not fulfill its obligations pursuant to
this Article "8" of this Escrow Agreement, the Company and the Stockholders
shall be jointly and severally liable for any such obligation.
9. We shall notify the parties to this Escrow Agreement of every written
notice which it receives hereunder if either we determine to do so or if such
written notice requests that we notify the other parties to this Escrow
Agreement of our receipt thereof.
10. Nothing in this Escrow Agreement shall limit our right to represent as
counsel anyone including, but not limited to the Company, in any matter
whatsoever.
11. Except as otherwise specifically provided for hereunder, no party to
this Escrow Agreement shall be deemed to have waived any of his, her or its
rights hereunder or under any other agreement, instrument or paper signed by any
of them with respect to the subject matter hereof, unless such waiver is in
writing and signed by the party waiving said right. Except as otherwise
specifically provided for hereunder, no delay or omission by any party to this
Escrow Agreement in exercising any right with respect to the subject matter
hereof shall operate as a waiver of such right or of any such other right. A
waiver on any one occasion with respect to the subject matter hereof shall not
be construed as a bar to, or waiver of, any right or remedy on any future
occasion.
12. The parties to this Escrow Agreement have not made any
representations, warranties, or covenants which are not set forth herein with
respect to the subject matter hereof, and this Escrow Agreement constitutes the
entire agreement between them with respect to the subject matter hereof. All
understandings and agreements heretofore between the parties with respect to the
subject matter hereof are merged in this Escrow Agreement.
13. This Escrow Agreement may not be changed, modified, extended,
terminated, or discharged orally, but only by an agreement, in writing, signed
by all of the parties to this Escrow Agreement.
14. Any notice or other communication required or permitted hereunder
shall be sufficiently given if sent by (i) mail by (a) certified mail, postage
prepaid, return receipt requested and (b) First Class mail, (ii) overnight
delivery with confirmation of delivery or (iii) facsimile transmission with an
original mailed by first class mail, postage prepaid, addressed as follows:
If to SupplyPoint SupplyPoint, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
0
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx/Xxxxx Silver, Esq.
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxxxx Xxxxxxxx Xxxxx & Xxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Western: Western Power & Equipment Corp.
0000 X.X. 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: C. Xxxx XxXxxx, President
Facsimile No.: (000) 000-0000
with a copy to: Xxxxx & Fraade, P.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or in each case to such other address and facsimile number as shall have last
been furnished by like notice. If mailing by certified mail is impossible due to
an absence of postal service, notice shall be in writing and personally
delivered to the aforesaid addresses. Each notice or communication shall be
deemed to have been given as of the date so mailed or delivered as the case may
be; provided, however that any notice sent by facsimile shall be deemed to have
been given as of the date so sent if a copy thereof is also mailed by first
class mail on the date sent by facsimile, if the date of mailing is not the same
as the date of sending by facsimile, then the date of mailing by first class
mail shall be deemed to be the date upon which notice is given.
15. This Escrow Agreement shall in all respects be construed governed,
applied and enforced in accordance with the internal laws of the State of New
York, without giving effect to conflicts of law.
5
16. This Agreement shall be deemed to be an agreement entered into in the
State of New York and made pursuant to the laws of the State of New York. Except
as otherwise provided in Paragraph "C" of Article "2" of this Escrow Agreement,
the parties agree that they shall be deemed to have agreed to binding
arbitration in New York, New York with respect to the entire subject matter of
any and all disputes relating to or arising under this Agreement including, but
not limited to, the specific matters or disputes as to which arbitration has
been expressly provided for by other provisions of this Agreement. Any such
arbitration shall by and pursuant to the rules then existing of the American
Arbitration Association in New York, New York. In all arbitrations, judgment
upon the arbitration award may be entered in any court having jurisdiction. The
parties specifically designate the Courts in the City, County and State of New
York as properly having venue for any proceeding to confirm and enter judgment
upon any such arbitration award. The parties hereby consent to and submit to
personal jurisdiction over each of them by Courts of the State of New York in
any action or proceeding to enforce the arbitration award, waive personal
service of any and all process and specifically consent that in any such action
or proceeding, any service of process may be effectuated upon any of them by
certified mail, return receipt requested in accordance with Article "14" of this
Agreement. The parties agree, further, that the prevailing party in any such
arbitration as determined by the arbitrators shall be entitled to such costs and
attorney's fees, if any, in connection with such arbitration as may be awarded
by the arbitrators; provided, however, that if a proceeding is commenced to
confirm and enter a judgment thereon by the Courts of the State of New York and
such application is denied, no such costs or attorney's fees shall be paid. In
connection with the arbitrator's determination for the purpose of which party,
if any, is the prevailing party, they shall take into account all of the factors
and circumstances including, without limitation, the relief sought, and by whom,
and the relief, if any, awarded, and to whom. In addition, and notwithstanding
the foregoing sentence, a party shall not be deemed to be the prevailing party
unless the amount of the arbitration award exceeds the amount offered in writing
by the other party by fifteen (15%) percent or more. For example, if the party
initiating arbitration (") seeks an award of $10,000 plus costs and expenses,
the other party (B) has offered A $5,000 prior to the commencement of the
arbitration proceeding, and the arbitration panel awards any amount less than
$5,750 to A, the panel should determine that B has prevailed.
17. The parties to this Escrow Agreement agree to execute any and all such
other and further instruments and documents, and to take any and all such
further actions reasonably required to effectuate this Escrow Agreement and the
intents and purposes hereof.
18. This Escrow Agreement shall be binding upon and inure to the benefit
of the parties hereto and their heirs, executors, administrators, personal
representatives, successors and assigns.
19. Nothing which is contained herein or in any instruments executed
simultaneously herewith, shall prevent us from representing the Company in any
action or proceeding which relates to this Escrow Agreement, or any instruments
which are executed simultaneously herewith.
6
20. This Escrow Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same Agreement.
Please sign the attached counterpart of this Escrow Agreement where
indicated below to acknowledge your agreement with the foregoing.
Very truly yours,
Xxxxx & Fraade, P.C.
By:_____________________
Xxxxxxxxx X. Xxxxx
ACKNOWLEDGED AND AGREED:
Western Power & Equipment Corp.
By:_______________________
Title:
SupplyPoint, Inc.
By:_______________________
Title:
7
Exhibit CCC
FORM OF LETTER AGREEMENT TO BE
EXECUTED PURSUANT TO ARTICLE 25
OF THE MERGER AGREEMENT
From: The Indemnifying Party
(Name and Address)
To: The Indemnified Party
(Name and Address)
Date:
Gentlemen/Ladies:
This will confirm and acknowledge that pursuant to Article "25" of the
Merger Agreement (the "Agreement") dated as of the ___ day of April, 2001, by
and among Western Power & Equipment Corp., Western Acquisition Corp., and
SupplyPoint, Inc., the undersigned acknowledges its liability for
indemnification to you with respect to _________________ (description of claim)
(the "Claim"), and will not take the position that it is not liable to you with
respect to the Claim. Such obligation is subject to all of the provisions, terms
and conditions of the Agreement.
Very truly yours,
_________________________________
Name of Indemnifying Party
By: _________________________________
(Authorized Signature)
STATE OF NEW YORK )
)ss.:
COUNTY NEW YORK )
On the ____ day of __________, ____ before me personally came __________
to me known, who, being by me duly sworn, did depose and say that he resides at
that he is the ____________ of __________________________, the corporation
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the board of directors of said
corporation, and that he signed his name thereto by like order.
__________________________________
Notary Public
