AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into effective as of
July 12, 1999 (the "Effective Date"), by and between ZAP XXXXX.xxx, a California
corporation having its principal place of business at 000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxx 00000 ("ZAP"), and American Scooter and Cycle Rentals,
Inc. a California corporation having its principal place of business at 0000
Xxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 ("ASCR"). ZAP and ASCR are referred
to collectively herein as the "parties."
1. RECITALS
A. The parties contemplate a two-stage process to the end that
ZAP will initially sublease a portion of ASCR's premises at
0000 Xxxx Xxxxxx in San Francisco where ZAP will maintain
business offices and conduct a bicycle rental business.
Subsequently, ZAP will acquire a substantial portion of ASCR's
rental equipment and assume certain listed liabilities.
B. Stage One, which entails the leasing of some of ASCR's rental
equipment, the leasing of approximately 49% of ASCR's
premises, and the hiring of Xxxx and Xxxxxx Xxxxx to manage
ZAP's bicycle rental business, will end on October 31, 1999.
C. Stage Two is contingent upon SBA approval of the proposed
transaction. It will entail the acquisition of certain
specified ASCR assets and the assumption of certain listed
liabilities for the sum of $150,000; $70,000 in cash and
$80,000 of market value of ZAP common stock. Stage Two will
follow immediately after Stage One. Xxxx and Xxxxxx Xxxxx will
continue to manage the operation until April 30, 2001.
D. The purpose of this Agreement is to set forth the
understanding of the parties relative to the matters above. By
this reference these Recitals are incorporated into the
Agreement which follows below.
a. AGREEMENT
NOW, THEREFORE, in consideration of these premises, the benefits to be
derived by the parties, and the terms, conditions, representations and covenants
set forth herein, the parties hereby agree as follows:
ARTICLE I
STAGE ONE
1.01 Lease of Rental Equipment. Subject to the terms and conditions set
forth in this Agreement, on the Stage One Closing Date (as hereinafter defined),
ZAP shall lease from ASCR, and ASCR shall lease and deliver to ZAP, all of the
ASCR's inventory of
conventional bicycles, used ZAP bicycles, and new ZAP products (collectively,
the "Rental Equipment"), as described in Exhibit A attached hereto.
1.02 Consideration For Lease of Rental Equipment. In consideration of
ASCR's lease of the Rental Equipment as provided herein, ZAP shall issue the
number of shares of Common Stock of ZAP, having no par value, with the rights,
preferences, privileges and restrictions set forth in the Articles of
Incorporation (the "Shares") that result from the division of $50,000 by the
number equal to the average closing price of the Shares as reported on the
"Bulletin Board" for the ten (10) days prior to the date of the Stage One
Closing. These shares shall be "restricted", subject to Rule 144 promulgated by
the Securities and Exchange Commission. The issuance of stock by ZAP is exempt
from registration with the securities regulators pursuant to Section 25102(f) of
the California Corporations Code.
1.03 Equipment Lease Agreement. At the Stage One Closing Date, the
parties shall execute a standard form equipment lease to cover ZAP's lease of
the Rental Equipment. The lease shall be in substantially the form of the
attached Exhibit B.
1.04 Premises Lease Agreement. ZAP will lease, commencing July
14, 1999, a certain portion of the premises at 0000 Xxxx Xxxxxx ("the
Premises"), as defined in Exhibit C attached hereto, through April 30, 2001. ZAP
will use such Premises as a showroom/office and also to operate a rental
business specializing in electric powered bicycles and scooters as well as
conventional bikes. ZAP intends to make certain improvements to the Premises,
also defined in Exhibit C attached hereto. The rent for the leased portion of
the Premises, payable monthly by ZAP, shall be $1.00 per month until October 31,
1999 and $5,950 for November, 1999 and $10,500 per month thereafter until April
30, 2001, plus a $13,000 cash deposit covering the last month's rent and
security. The security will carry over to the Stage Two lease and be returned at
the end of the term. The security is for complying with lease obligations only.
ASCR will retain the major portion of the lower garage area
from which ASCR will continue to operate its gasoline powered scooter business,
as well as a portion of the ground level Premises also as shown on Exhibit C, to
display its products and maintain a small office.
1.05 Operating and Advertising Expenses. ZAP hereby agrees to
assume responsibility for all of the normal operating expenses related to
bicycles and electric powered scooters, and will contribute approximately $3,000
per month towards advertising expenses related to the bicycle and scooter rental
business in the form, media and times as approved by ZAP.
1.06 Bicycle and Electric Powered Scooter Revenue. ASCR hereby
agrees to transfer all revenues generated after the Stage One Closing Date
related to bicycles and electric powered scooters to ZAP.
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1.07 Xxxx and Xxxxxx Xxxxx Employment Agreement. ZAP hereby
agrees to employ Xxxx and Xxxxxx Xxxxx as Operation Consultants to manage
operations of ZAP's bicycle and scooter rental business through the end of
April, 2001. Xxxx and Xxxxxx Xxxxx, together (i.e. not "each"), will work a
total of 40 hours per week, and will receive a combined (i.e. not "each") salary
of $5,000 per month, in addition to receiving medical benefits.
1.08 ASCR's Existing Employees. ZAP hereby agrees to offer
ASCR's existing employees the opportunity to continue as employees of ZAP.
1.09 Stage One Closing. The Stage One Closing under this
Agreement shall take place in the offices of Xxxxx & Xxxxxxxxxxx, LLP in San
Francisco, California at 2:00 p.m. on July 12, 1999 (the "Stage One Closing
Date"); provided, that if ZAP and ASCR are not in a position on such date to
close due to the failure to meet the conditions precedent to close as set forth
in Article V hereof, the Stage One Closing Date shall be extended to a date two
(2) business days after the date on which such conditions are satisfied or
otherwise waived in writing by both ZAP and ASCR, but in no event shall the
Stage One Closing Date be later than July 20, 1999.
1.10 Cooperation in Transfer of Business. Both prior and
subsequent to the Stage One Closing Date, ZAP shall cooperate and assist ASCR in
the transfer of the possession of the Rental Equipment as contemplated by this
Agreement.
ARTICLE II
2. STAGE TWO
2.01 Purchase and Sale of the Assets. Subject to the terms and
conditions set forth in this Agreement, on the Stage Two Closing Date (as
hereinafter defined), ZAP shall purchase and accept from ASCR, and ASCR shall
sell, transfer, convey and deliver to ZAP, all of the Rental Equipment and all
other tangible and intangible assets of ASCR listed on the attached Exhibit D
(collectively, the "Assets"), including, but not limited to, the following:
(a) All of ASCR's rights of every kind and nature with respect
to its scooter and cycle rental business (the "Business") including, without
limitation, all goodwill and intellectual property assets of ASCR applicable to
ASCR's Business;
(b) Any remaining physical and fixed assets and equipment
described in Exhibit D attached hereto and incorporated herein by this
reference. Exhibit D may be supplemented at the time of the Stage Two Closing in
order to reflect any change in assets which occurred between the Stage One
closing and the Stage Two Closing.
ASCR shall retain all of its gasoline-powered motor scooters,
tools related to such equipment, cash on hand, and such other assets as are
described on Exhibit D.
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2.02 Purchase Price of Assets. In consideration of ASCR's sale of the
Assets as provided herein, ZAP shall tender $70,000 in cash and issue the number
of shares of Common Stock of ZAP, having no par value, with the rights,
preferences, privileges and restrictions set forth in the Articles of
Incorporation (the "Shares") that result from the division of $80,000 by the
number equal to the average closing price of the Shares as reported on the
"Bulletin Board" for the ten (10) days prior to the date of the Stage One
Closing. The cash and the currency shall be deposited in a purchase escrow
account at Xxxxx & Xxxxxxxxxxx, LLP, 000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxxxxxxx, XX 00000 on the Stage One Closing Date, to be held until the Stage
Two Closing Date and pending the satisfaction or waiver of the ASCR's closing
conditions and obligations as set forth in Article V, hereof; provided, however,
that in consideration of the purchase, ASCR may withdraw from the escrow,
towards the purchase price (assuming ultimate approval by the Small Business
administration ("SBA")) the sum of $10,500 per month until the Second Closing.
Such withdrawals shall be made in the following manner: The July withdrawal of
$10,500 shall be made immediately following the Stage One Closing. Thereafter,
ASCR may withdraw the sum of $10,500 on the first day of each month commencing
on August 1, 1999 and continuing on the first day of each month thereafter until
the Second Closing. In the event the SBA does not consent, these payments shall
be treated as advances of lease payments (see Section 3.16 below).
2.03 Assumption of Liabilities. It is expressly understood and agreed
that ZAP is not assuming and shall not be liable for any of the debts,
obligations or liabilities of ASCR whether now known or unknown, accrued,
absolute, contingent or otherwise, except for the liabilities and obligations
directly related to ASCR's business as specifically assumed in Schedule 2.03
attached hereto, and incorporated herein by reference; provided, in no event
shall the amount of liabilities assumed by ZAP exceed the aggregate amount of
seventeen thousand dollars ($17,000).
2.04 Delivery of Assets. At the Closing, the following shall be
delivered by ASCR to ZAP:
(a) A xxxx of sale in a form mutually agreeable to ASCR and
ZAP, transferring to ZAP the Assets to be acquired by it under the terms of this
Agreement free and clear of any encumbrance of any kind upon any of the Assets;
(b) Evidence of payment of all debts which are secured by
liens on the Assets with evidence of release of all such liens to be provided
within five (5) days after Closing; and
(c) Such other deeds, instruments of assignment and other
appropriate documents as may be reasonably requested by ZAP in order to carry
out the intentions of this Agreement and the transfer of the Assets.
2.05 Stage Two Closing. The closing under this Agreement shall
take place in the offices of Xxxxx & Xxxxxxxxxxx, LLP in San Francisco,
California at 10:00 a.m. on October 31, 1999 (the "Stage Two Closing Date");
provided, that if ZAP and ASCR are not
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in a position on such date to close due to the failure to meet the conditions
precedent to close as set forth in Article V hereof, the Stage Two Closing Date
shall be extended to a date two (2) business days after the date on which such
conditions are satisfied or otherwise waived in writing by both ZAP and ASCR,
but in no event shall the Stage Two Closing Date be later than November 15,
1999.
2.06 Effective Date. Notwithstanding the Stage Two Closing
Date, the close of business on October 31, 1999 (the "Effective Date") shall be
deemed to be the effective date for certain purposes set forth herein.
2.07 Bulk Transfer Compliance. The sale and purchase of the
Assets described in this Agreement shall be conducted according to and in full
compliance with the requirements of the Bulk Transfer Provisions of the
California Uniform Commercial Code (Business and Commerce Code Sections 6101 et
seq.) (the "Bulk Transfer Provisions"). At the Closing Date, ASCR shall furnish
to ZAP, as Exhibit E attached hereto, a list of (I) the names of existing
creditors of ASCR, including the amounts owed to such creditors, if known; and
(II) the names of all persons who are known to ASCR to assert claims against
ASCR, even though such claims are disputed. ASCR shall also furnish ZAP, as
Exhibit D attached hereto, a list of the property that is to be transferred
sufficient to identify such property. ASCR shall, as necessary, cooperate with
ZAP by furnishing the information to ZAP that may be needed by ZAP in order to
give notice to creditors pursuant to the provisions of Section 6105 of the Bulk
Transfer Provisions.
2.08 Taxes. ZAP shall pay all costs associated with bulk
transfer compliance and all sales and use taxes, if any, arising out of the
transfer of the Assets, or otherwise as a consequence of the transactions
contemplated by this Agreement.
2.09 Cooperation in Transfer of Business. Both prior and
subsequent to the Closing Date, ZAP shall cooperate and assist ASCR in the
transfer of the ownership of the assets as contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASCR
3.01 General. ASCR hereby represents and warrants the following:
3.02 Organization and Good Standing. ASCR is a corporation
duly organized, validly existing and in good standing under the applicable laws
of the State of California, and qualified to do business in the State of
California, with requisite corporate power and authority to enter into and
perform this Agreement.
3.03 Financial Statements. ASCR has previously furnished to
ZAP ASCR's Balance Sheet as of December 31, 1998, a copy of which is attached
hereto as Exhibit E. ASCR represents and warrants that such financial
statements, which are unaudited, have been
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prepared in accordance with the books and records of ASCR and correctly presents
ASCR's financial condition, sales, operations and net income (loss) as therein
specified.
3.04 Authorization and Consents. The execution of this
Agreement by ASCR and the consummation by ASCR of the transactions contemplated
hereby has been duly authorized and approved by ASCR's Board of Directors and
its shareholders, which authorization and approval has not since been amended or
revoked. ASCR has the corporate power and requisite authority to enter into this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by ASCR and constitutes the valid and
binding obligation of ASCR enforceable against ASCR in accordance with its
terms. No agreement, consent, approval, release or waiver of any person or
entity, not a party to this Agreement, and no consent of any governmental agency
or authority is required (i) to permit the performance by ASCR of its
obligations under the terms of this Agreement; or (ii) in order to make the
representations and warranties within this Article 2. true and accurate.
3.05 Absence of Restrictions. ASCR shall not be subject to any
provision of any agreement, charter, bylaw, mortgage, lease, indenture,
instrument, order, judgment, decree or other restriction or right of other
parties which would prohibit the execution of this Agreement by ASCR or which
would prevent the consummation of the transactions contemplated hereunder or
which would prevent or affect in any way compliance by ASCR with the terms,
conditions and provisions hereof. With respect to the Assets and the Business,
except as set forth in section 3.16, the execution and delivery of this
Agreement by ASCR and performance by ASCR of its obligations under the terms
hereof will not accelerate, terminate, or result in a breach, under any existing
material agreements, contract, lease, loan, loan commitment, joint venture or
combination of any kind, to which ASCR is a party, or result in the creation of
any lien or encumbrance under any indenture, mortgage, deed of trust, or other
contract or agreement to which ASCR is a party or by which it is bound.
3.06 Title to Assets. ASCR has good and marketable title to
all the Assets set forth in Exhibits A and D, attached hereto, except as
provided in Schedule 3.06, attached hereto. The assets set forth in Exhibits A
and D, attached hereto, are in good condition, normal wear and tear excepted,
and usable in the ordinary course of business.
3.07 Litigation and Claims. ASCR is aware of no material
claims, actions, proceedings or investigations pending, asserted or threatened
against, or involving the Business or the Assets, except as disclosed in
Schedule 3.07, attached hereto.
3.08 Taxes. There are no unpaid taxes to ASCR for which ZAP
would be liable as a transferee of ASCR's Assets pursuant to the Internal
Revenue Code or other applicable Federal, state or local law. ASCR shall remain
liable for any obligations of ASCR which arose either subsequent or prior to
Closing, except those obligations and liabilities which ZAP has expressly
assumed as provided hereunder.
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3.09 Agreements, Contracts and Commitments. ASCR is not a
party to or otherwise subject to any oral or written agreements or arrangement
for the purchase or sale of any of the Assets or agreement, contract or
commitment containing any covenant limiting the freedom of ASCR to engage in the
Business. ASCR is not in default in any material respect under any agreement,
contract, lease or other material document relating to the Business or the
Assets, except as indicated in Schedule 2.09, attached hereto. Except as stated
in such Schedule 3.09, there have been no claims of such material defaults and,
to the best of ASCR's knowledge, information and belief, there are no facts or
conditions which can reasonably be expected to result in such a material default
by ASCR.
3.10 Compliance with Laws. ASCR has complied in all material
respects with, and is not in violation in any material respect of any federal,
state or local statute, law, rule, or regulation with respect to the conduct of
its Business, or the ownership, operation, sale, purchase or possession of the
Assets.
3.11 Intellectual Property. ASCR's Intellectual Property
constitutes all such proprietary rights which are owned or held by ASCR and
which are reasonably necessary to, or used in the conduct of, the business of
ASCR. ASCR has taken all reasonably necessary steps required under applicable
law to protect its trade secrets. ASCR owns or has valid rights to use its
Intellectual Property without conflict with the rights of others. Except as set
forth in Schedule 3.11, attached hereto, no person has made or, to the knowledge
of ASCR, threatened to make any claim that ASCR's use of Intellectual Property
is in violation of any license held by ASCR or infringes any proprietary right
or interest of any third party. To the knowledge of ASCR, no third party is
infringing upon any of ASCR's Intellectual Property. ASCR holds its Intellectual
Property free and clear of all Liens.
3.12 Expenses and Broker's Fees. To the knowledge of ASCR, ZAP
shall not incur, directly or indirectly, any liability for brokerage, finder's,
financial advisor's or agent's fees or commissions or expenses in connection
with this Agreement, or the transactions contemplated hereby, by reason of any
action or agreement on the part of ASCR. Each Party shall bear its own costs
incurred in connection with this Agreement, including attorneys' fees.
3.13 Full Disclosure. The representations and warranties
contained in this Agreement are subject to the exceptions specifically noted in
the disclosure schedules attached hereto and the Supplemental Schedules, if any,
provided by the parties after the date of execution of this Agreement and up
until the Closing. By this reference, such Schedules are incorporated in and
made a part of this Agreement. No representation or warranty, as supplemented
pursuant to the terms and provisions hereof, by ASCR in this Agreement or in any
Exhibit or schedule hereto, nor any documents, written information, written
statements or certificates furnished or to be furnished by or on behalf of ASCR
to ZAP pursuant hereto or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact; and,
in the case of the statements set forth in Paragraph 3.03 hereof, omits or will
omit to state a material fact necessary to make the statement contained therein
not misleading.
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3.14 Notice of Certain Events. ASCR shall give prompt notice
to ZAP of any event subsequent to the date of this Agreement and prior to the
Closing of which ASCR has knowledge which would render inaccurate, in any
material respect, any representation or warranty of ASCR herein.
3.15 Implementation of Representations and Warranties and
Certificates. ASCR shall take all reasonable action necessary to render true,
complete and accurate, as of the Stage One and Stage Two Closing Dates, as if
made on those dates, ASCR's representations and warranties contained in this
Agreement as supplemented above, and to perform or cause to be performed as of
the Stage One and Stage Two Closing Dates the covenants and the obligations of
ASCR contained in this Agreement and ASCR shall refrain from taking any action
(other than action permitted under this Agreement or with the consent of ZAP)
which would render inaccurate, as of the Stage One and Stage Two Closing Dates,
any such representations or warranties.
3.16 SBA Approval. Notwithstanding the provisions of Section 3.05
herein or any other provision of this Agreement, the parties acknowledge that
ASCR has recently acted as a guarantor of an SBA loan, and that such guaranty
imposes certain restrictions on the use of ASCR's business premises and the
disposition of ASCR's assets. The parties further understand that ASCR's ability
to perform its Stage Two Closing obligations depends on the waiver of certain of
these restrictions by SBA. ASCR has advised SBA of the transactions contemplated
by this Agreement, and has received preliminary assurances that such waivers
will probably be granted on or before the scheduled Stage Two Closing Date. Both
parties agree to cooperate and use their reasonable best efforts to obtain such
SBA approval. However, in the event that SBA does not approve the proposed
transactions, the parties agree to extend the term of the Rental Equipment lease
until April 30, 2001, and Xxxx and Xxxxxx Xxxxx will continue to manage ZAP's
equipment rental business at the 0000 Xxxx Xxxxxx premises until such date. The
purchase price specified in Sections 2.02 and 2.03 herein shall be paid as
provided therein, but such payment shall be treated as an advance of the lease
payments, and the amount of the payment shall be reduced by the salvage value of
the Rental Equipment as of April 30, 2001.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ZAP
4.01 General. ZAP hereby represents and warrants the following:
4.02 Organization and Good Standing. ZAP is a California
corporation duly organized, validly existing and in good standing under the
applicable laws of the State of California, with requisite corporate power and
authority to enter into and perform this Agreement.
4.03 Financial Statement. ZAP has heretofore furnished to ASCR
ZAP's Balance Sheet as of March 30, 1999, a copy of which is attached hereto as
Exhibit F. ZAP represents and warrants that such financial statements are in
accordance with the books and
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records of ZAP, and correctly presents, in all material respects, ZAP's
financial condition, sales, operations and net income (loss) as therein
specified.
4.04 Authorization and Consents. The execution of this
Agreement by ZAP and the consummation by it of the transactions contemplated
hereby has been duly authorized and approved or ratified by all necessary
corporate action. ZAP has the corporate power and requisite authority to enter
into this Agreement and consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by ZAP and constitutes the valid
and binding obligation of ZAP, enforceable against ZAP in accordance with its
terms. No agreement, consent, approval, release or waiver of any person or
entity, not a party to this Agreement and no consent of any governmental agency
or authority is required (i) to permit the performance by ZAP of its obligations
under the terms of this Agreement; or (ii) in order to render the
representations and warranties within this Article IV true and accurate.
4.05 Absence of Restrictions. ZAP is not subject to any
provision of any charter, bylaw, mortgage, lease, indenture, agreement,
instrument, order, judgment, or decree or any other restriction or right of
other parties which would prohibit the execution of this Agreement by ZAP, or
which would prevent the consummation of the transactions contemplated hereunder,
or which would prevent or affect in any way compliance by ZAP with the terms,
conditions and provisions hereof.
4.06 Litigation and Claims. ZAP is aware of no material claim,
action, proceeding or investigation pending, asserted or threatened against, or
involving its business or assets.
4.07 Agreements, Contracts and Commitments. ZAP is not a party
to, or otherwise subject to, any oral or written agreement or arrangement for
the purchase or sale of any of its assets or agreement, contract or commitment,
containing any covenant limiting the freedom of ZAP to engage in its business.
ZAP is not in default in any material respect under any agreement, contract,
lease or other material document relating to its business or assets. There have
been no claims of such material defaults and, to the best of ZAP's knowledge,
information and belief, there are no facts or conditions which can reasonably be
expected to result in such a material default by ZAP.
4.08 Compliance with Laws. ZAP has complied in all material
respects with, and is not in violation in any material respect of any federal,
state or local statute, law, rule, or regulation with respect to the conduct of
its business, or the ownership, operation, sale, purchase or possession of its
assets.
4.09 Expenses and Broker's Fees. To the knowledge of ZAP, ASCR
shall not incur, directly or indirectly, any liability for brokerage, finder's,
financial advisor's or agent's fees or commissions or expenses in connection
with this Agreement, or the transactions contemplated hereby, by reason of any
action or agreement on the part of ZAP; provided, however, that, except as
otherwise provided in Paragraph 8.07 hereof, each of the
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parties shall bear their respective costs incurred, including attorneys' fees,
in connection with this Agreement.
4.10 Capitalization.
(a) Authorized and Outstanding Shares. The total authorized
capital stock of ZAP is ten million (10,000,000) shares of common stock,,
4,319,210 shares of which are issued and outstanding as of the date of this
Agreement, and will be issued and outstanding as of the Stage One Closing Date
prior to the issuance of the Shares. Upon the issuance of the Shares to ASCR,
ASCR shall become the record and beneficial owner of 8,077 Shares of ZAP. Said
Shares shall be "Restricted" subject to Rule 144.
(b) Valid Issuance. The Shares are validly issued, fully
paid and nonassessable.
(c) No Options or Rights. There are no outstanding options,
warrants or other rights to purchase any Shares or other capital stock of ZAP,
nor are there any securities which are convertible into capital stock of ZAP,
except as listed in Exhibit G, attached hereto.
(d) No Encumbrances. The Shares to be issued to the ASCR shall
be free from any mortgages, pledges, liens, charges, restrictions, conditional
sales agreements, interests (security or otherwise), or other encumbrances of
any kind. The Shares will be "Restricted" and subject to the restraints of Rule
144 promulgated by the Securities and Exchange Commission.
(e) Stock Transfer and Voting Agreements. None of the ZAP's
outstanding Common Shares are subject to any voting trusts, voting agreements,
or other agreements between or among ZAP and any other person. This
representation does not, and is not intended to limit in any way ZAP's right to
enter into a shareholders agreement with any or all of its shareholders after
the Closing Date.
(f) No Distributions. Between the effectiveness of this
Agreement and the Closing the ZAP shall not make any distributions to its
shareholders or purchase any of its shares of common stock.
4.11 Full Disclosure. The representations and warranties
contained in this Agreement are subject to the exceptions specifically noted in
the disclosure Schedules attached hereto and the Supplemental Schedules, if any,
provided by the parties after the date of execution of this Agreement and up
until the Stage One and Stage Two Closing Dates. By this reference, such
schedules are incorporated in and made a part of this Agreement. No
representation or warranty, as supplemented pursuant to the terms and provisions
hereof, by ZAP in this Agreement or in any Exhibit or schedule hereto, nor any
documents, written information, written statements or certificates furnished or
to be furnished by or on behalf of ZAP to ASCR pursuant hereto or in connection
with the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact.
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ZAP has furnished to ASCR its latest 10K filed with the
Securities and Exchange Commission and has provided ASCR with answers to all
questions ASCR may have had relative to the financial and operating condition of
ZAP to the end that the owners of ASCR have been supplied by ZAP with all
material information necessary for them to make an informed judgment as to
accepting ZAP common stock in payment for the assets of their business.
4.12 Notice of Certain Events. ZAP shall give prompt notice to
ASCR of any event subsequent to the date of this Agreement and prior to the
Stage One and Stage Two Closing Dates of which ZAP has knowledge or should have
knowledge which would render inaccurate, in any material respect, any
representation or warranty of ZAP herein, or which would materially affect the
financial condition of ZAP
4.13 Implementation of Representations and Warranties and
Certificates. ZAP shall take all reasonable action necessary to render true,
complete and accurate, as of the Stage One and Stage Two Closing Dates, as if
made on those dates, ZAP's representations and warranties contained in this
Agreement as supplemented pursuant above, and to perform or cause to be
performed as of the Stage One and Stage Two Closing Dates the covenants and the
obligations of ZAP contained in this Agreement and ZAP shall refrain from taking
any action (other than action permitted under this Agreement or with the consent
of ASCR) which would render inaccurate, as of the Stage One and Stage Two
Closing Dates, any such representations or warranties.
ARTICLE V
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF ZAP AND ASCR TO CLOSE
5.01 Conditions Precedent to Obligation of ZAP to Close. The
obligations of ZAP to consummate the transactions contemplated by this Agreement
are subject to the fulfillment to ZAP's satisfaction on or before the Closing of
each of the following conditions set forth below, subject to ZAP's rights to
waive in writing any such condition:
(a) Representations, Warranties and Covenants. All
representations and warranties of ASCR contained in this Agreement, as
supplemented pursuant to Paragraph 3.14 above, shall be true and correct in all
material respects as of the Stage One and Two Closing Dates as if such
representations and warranties were made as of the Stage One and Two Closing
Dates, respectively, and ASCR shall have performed and shall have caused to be
performed all agreements, obligations and covenants required by this Agreement
to be performed by it on or prior to the Stage One and Two Closing Dates.
(b) Adverse Changes. There shall have been no adverse change
in the Business or the Assets including, without limitation, any adverse change
in ASCR's relationship with its customers, distributors, and suppliers, except
as listed in Schedule 5.01, attached hereto.
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(c) Financial Statements. ASCR shall have delivered to ZAP for
ZAP's review and approval ASCR's financial statements described in Paragraph
3.03, which approval shall not be unreasonably withheld.
(d) Supplemental Schedules Approved. All Supplemental
Schedules given by ASCR, if any, shall have been reviewed and approved by ZAP,
which approval shall not be unreasonably withheld.
(e) Litigation. No action or proceeding before a court or any
other governmental agency or body shall have been instituted and be pending or
threatened by a third party to restrain or prohibit any of the transactions
contemplated hereby.
(f) Delivery of Certificate and Resolutions. ASCR shall have
delivered to ZAP a certificate of ASCR's president and secretary: (i) stating
that the representations and warranties made by ASCR herein are true and correct
in all material respects on the Closing Date with the same force and effect as
if they had been made on and as of the Closing Date, (ii) stating that there has
been no breach of any covenant contained herein by ASCR, (iii) stating that all
ASCR conditions to Closing stated in this Agreement have been satisfied or
waived, (iv) stating that there has been no material adverse change with respect
to ASCR, (v) stating that ASCR knows of no challenge to the consummation of the
transactions contemplated by this Agreement and (vi) containing a copy of the
resolutions of ASCR's board of directors and its shareholders approving this
Agreement and the consummation of the transactions contemplated hereby.
(g) Agreement and Consents. At or prior to the Closing, ASCR
shall have obtained all necessary consents to the transfer of the Assets to ZAP.
(h) Delivery of Assets; No Encumbrances. ASCR shall deliver
good and marketable title to the Assets free and clear of any encumbrances of
any kind, except for any encumbrances disclosed in Schedule 3.06, attached
hereto.
5.02 Conditions Precedent to Obligation of ASCR to Close. The
obligations of ASCR to consummate the transactions contemplated by this
Agreement are subject to the fulfillment to ASCR's satisfaction on or before the
Closing Date of each of the following conditions set forth below, subject to
ASCR's rights to waive in writing any such condition:
(a) Representations, Warranties and Covenants. All
representations and warranties of ZAP contained in this Agreement, as
supplemented pursuant to Paragraph 4.11 above, shall be true and correct in all
material respects as of the Stage One and Two Closing Dates as if such
representations and warranties were made as of the Stage One and Two Closing
Dates, respectively, and ZAP shall have performed and shall have caused to be
performed all agreements, obligations and covenants required by this Agreement
to be performed by it on or prior to the Stage One and Two Closing Dates.
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(b) Adverse Changes. There shall have been no adverse change
in the ZAP's business or its financial condition, except as described in
Schedule 5.02, attached hereto.
(c) Supplemental Schedules Approved. All Supplemental
Schedules given by ZAP, if any, shall have been reviewed and approved by ASCR,
which approval shall not be unreasonably withheld.
(d) Litigation. No action or proceeding before a court or any
other governmental agency or body shall have been instituted and be pending or
threatened by a third party to restrain or prohibit any of the transactions
contemplated hereby.
(e) Delivery of Certificate and Resolutions. ZAP shall have
delivered to ASCR a certificate of ZAP's president and secretary: (i) stating
that the representations and warranties made by ZAP herein are true and correct
in all material respects on the Stage One and Two Closing Dates with the same
force and effect as if they had been made on and as of the Stage One and Two
Closing Dates, respectively, (ii) stating that there has been no breach of any
covenant contained herein by ZAP, (iii) stating that all ZAP conditions to the
Stage One and Two Closings stated in this Agreement have been satisfied or
waived, (iv) stating that there has been no material adverse change with respect
to ZAP, (v) stating that ZAP knows of no challenge to the consummation of the
transactions contemplated by this Agreement and (vi) containing a copy of the
resolutions of ZAP's board of director and shareholders approving this Agreement
and the consummation of the transactions contemplated hereby.
(f) Delivery of Initial Share Certificates; No Encumbrances.
ZAP shall , within sixty (60) days from the Stage One Closing Date, deliver the
certificates representing the Shares free and clear of any encumbrances of any
kind.
ARTICLE VI
INDEMNIFICATION; SURVIVAL OR REPRESENTATIONS,
WARRANTIES AND AGREEMENTS
6.01 Indemnification by ASCR. ASCR agrees to indemnify and
hold ZAP, its directors, officers, shareholders, agents, employees, successors
and assigns (collectively, "ZAP Indemnitees"), harmless from and against any and
all claims, causes of action, demands, losses, cost, expenses, obligations,
damages, deficiencies, or liabilities, including interest, penalties, and
reasonable attorneys fees resulting from (I) any liability of ASCR relating to
the operation of ASCR's Business prior to the Closing Date except for those
liabilities specifically assumed by ZAP pursuant to Paragraph 2.03 hereof and
(II) a breach of any representation, warranty or agreement of ASCR contained in
this Agreement. The foregoing indemnification shall survive the Closing, and
shall remain operative and in full force and effect, regardless of any
investigation or statement as to the result thereof made by or on behalf of any
party.
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6.02 Claims. In the event a claim is made against ZAP or any
ZAP Indemnitee for which they are (or either of them is) indemnified hereunder,
ZAP shall notify ASCR of such claim. In the event that any action indemnified
hereunder is brought against ZAP or a ZAP Indemnitee and ZAP shall notify ASCR
of the commencement thereof, ASCR shall, at its sole expense, assume the defense
thereof with counsel reasonably satisfactory to ZAP. ZAP shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such separate counsel shall be at the
expense of ZAP unless ASCR has authorized the employment of such counsel in
writing. ASCR shall have the right to settle any such action or judgment, based
on any such action, provided that ASCR has previously rendered to ZAP
satisfactory evidence of its ability to pay any action or judgment, and
contemporaneously with such settlement ASCR shall pay the amount of such
settlement. If ASCR shall fail to diligently defend such action, ZAP, after
written notice to ASCR, may do so with attorneys of its own selection and ASCR
shall be responsible for and shall pay any settlement or judgment effected by
ZAP and all attorneys' fees.
6.03 Indemnification by ZAP. ZAP agrees to indemnify and hold
ASCR, its directors, officers, shareholders, agents, employees, successors and
assigns (collectively, "ASCR's Indemnitees"), harmless from and against any and
all claims, causes of action, demands, losses, cost, expenses, obligations,
damages, deficiencies, or liabilities, including interest, penalties, and
reasonable attorneys fees resulting from a breach of any representation,
warranty or agreement of ZAP contained in this Agreement. The foregoing
indemnification shall survive the Closing, and shall remain operative and in
full force and effect, regardless of any investigation or statement as to the
result thereof made by or on behalf of any party.
6.04 Claims. In the event a claim is made against ASCR or any
ASCR Indemnitee for which they are (or either of them is) indemnified hereunder,
ASCR shall notify ZAP of such claim. In the event that any action indemnified
hereunder is brought against ASCR or a ASCR Indemnitee and ASCR shall notify ZAP
of the commencement thereof, ZAP shall, at its sole expense, assume the defense
thereof with counsel reasonably satisfactory to ASCR. ASCR shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such separate counsel shall be at the
expense of ASCR unless ZAP has authorized the employment of such counsel in
writing. ZAP shall have the right to settle any such action or judgment, based
on any such action provided that ZAP has previously rendered to ASCR
satisfactory evidence of its ability to pay any action or judgment, and
contemporaneously with such settlement ZAP shall pay the amount of such
settlement. If ZAP shall fail to diligently defend such action, ASCR, after
written notice to ZAP, may do so with attorneys of its own selection and ZAP
shall be responsible for and shall pay any settlement or judgment effected by
ASCR and all attorneys' fees.
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ARTICLE VII
ACCESS TO INFORMATION
7.01 Confidentiality. All information not previously disclosed
to the public which shall have been furnished by ASCR or ZAP to the other party
shall not be disclosed prior to the Closing to any person other than the party's
respective employees, legal counsel, and accountants, in confidence, or used for
any purpose other than as contemplated herein. In the event that the sale of the
Assets shall not be consummated, all such information, including any schedule,
analysis or other documents prepared by ASCR or ZAP, which shall be in writing,
shall remain confidential. The parties acknowledge that disclosure by a party of
such information except as permitted hereunder may result in substantial harm to
the other party.
7.02 Effect of Investigation. Any investigation of ASCR or ZAP
by the other party shall not affect any of the representations, agreements,
covenants or warranties set forth herein. Except as expressly waived in writing
or otherwise provided herein, all representations and warranties shall continue
in full force and effect, and the parties shall continue to be bound by them. If
an exception to any representation or warranty has been disclosed on a
disclosure Schedule or Supplemental Schedule delivered by a party prior to
Closing, and the other party receiving such disclosure proceeds to close
notwithstanding such disclosure, then such other party's right to damages or
indemnification from the disclosing party as to matters covered by such
disclosure shall be deemed waived by such other party.
ARTICLE VIII
GENERAL
8.01 Notices. Any notice or demand required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have been
duly given when delivered personally and signed receipt for such notice or
demand is secured, or mailed by registered mail or certified mail, postage
prepaid, return receipt requested, and addressed to the following persons at the
following respective address unless by any such notice a different person or
address shall have been designated by the addressee:
Notices to ZAP shall be sent to:
ZAP XXXXX.xxx
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Notice to ASCR shall be sent to:
American Scooter & Cycle Rental
0000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
8.02 Governing Law; Arbitration. The validity, construction,
interpretation and enforcement of this Agreement shall be determined and
governed by the laws of the State of California. Further, in the event of any
dispute between the parties relative to this Agreement,
15
the inducements or representations to enter into this Agreement, or the parties'
performance of the terms of this Agreement, said dispute(s) shall be resolved
through binding arbitration pursuant to the rules of the American Arbitration
Association or other mutually agreeable body, before one (1) arbitrator selected
by the parties, with the sites of the arbitration agreed to be in San Francisco,
California.
8.03 Waiver and Modification. Any term or provision of this
Agreement may be waived at any time by a written instrument executed by the
party which is entitled to the benefit thereof; provided, however, that no such
waiver shall constitute a waiver by such party of any of its other rights and
remedies, at law or in equity. This Agreement may be amended, modified or
supplemented at any time only by a written instrument executed by all the
parties hereto.
8.04 Cooperation and Further Assurances. The parties to this
Agreement shall fully cooperate with each other in connection with all general
matters and tax matters (including tax audits) involving either party, which
relate in any way to this Agreement. Such cooperation shall include, but not be
limited to the preparation of an asset purchase valuation and classification
schedule, prepared pursuant to Internal Revenue Code Section 1060 et seq., as
revised, and the granting to the individual party and the taxing authorities
reasonable access to relevant business records and evidence of payment;
provided, however, the party requesting such cooperation shall pay costs and
expenses of the cooperating party in connection with such cooperation.
8.05 Entire Agreement. This Agreement, including documents
incorporated herein by reference, the Exhibits and schedules attached hereto
when duly executed and delivered, constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
proposals, oral and written, all previous negotiations and all other
communications between the parties with respect to the subject matter hereof
(except to the extent any other agreement may be incorporated into this
Agreement by writing executed by ZAP and ASCR).
8.06 Headings. The titles to articles and paragraphs hereof
are used for convenience only and shall not be deemed to be a part hereof, or
affect the construction or interpretation of any provision hereof.
8.07 Attorneys' Fees. Except as otherwise provided herein, in
connection with enforcement of their respective rights hereunder, the parties
shall each be entitled to any right or remedy available at law or in equity, and
the prevailing party shall be entitled to reasonable attorneys' fees actually
incurred in connection therewith.
8.08 Severability. If any provision of this Agreement is held
invalid under any applicable statute or rule of law, such invalidity shall not
affect the other provisions of this Agreement which can be given effect without
the invalid provisions, and to this end the provisions of this Agreement are
declared severable. Notwithstanding the above, such invalid
16
provision or clause shall be construed and enforced, to the extent possible, in
accordance with the original intent of the parties.
8.09 Assignment. This Agreement may not be assigned to any
party without the written consent of the other party hereto.
8.10 Recitals. The recitals herein are incorporated by this
reference into this Agreement and shall bind the parties in accordance with
their terms.
8.11 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be considered to be an original, but all
of which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers, thereunto duly authorized, as of the date first above
written.
ASCR:
American Scooter and Cycle Rental, Inc., a California corporation
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxxxx Xxxxx
----------------------------- -----------------------
Xxxxxxx Xxxxx Xxxxxx Xxxxx
Its: ----------------------------- Its: ----------------------
ZAP:
ZAP XXXXX.xxx, a California corporation
By: /s/ Signature
----------------------------
Its: ____________________________
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AGREEMENT
BY AND AMONG
ZAP XXXXX.XXX,
A CALIFORNIA CORPORATION
AND
AMERICAN SCOOOTER AND CYCLE RENTALS, INC.,
A CALIFORNIA CORPORATION
DISCLOSURE SCHEDULES
The following is the schedule of exceptions to the representations and
warranties of American Scooter and Cycle Rentals, Inc. ("ASCR"), a California
corporation, which is being provided pursuant to the Agreement by and among ASCR
and ZAP XXXXX.xxx ("ZAP"). The numbers below correspond to those sections of the
Agreement to which the exceptions to the representations and warranties pertain.
Unless otherwise defined herein, all capitalized terms and other definitions
shall have the same meanings in these disclosure schedules as they have in the
Agreement.
ASCR has provided ZAP, at ZAP's request, with various materials
(including but not limited to those described in these schedules) regarding the
financial condition and business of the ASCR.
------------------------------------------------------------------------------
Schedule 2.03 Assumption of Liabilities
Schedule 3.06 Title to Assets
Schedule 3.07 Litigation and Claims
Schedule 3.09 Agreements, Contracts and Commitments
Schedule 3.11 Intellectual Property
Schedule 5.01 Adverse Changes to ASCR.
Schedule 5.02 Adverse Changes to ZAP.
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Schedule 5.02(e)
OFFICER'S CERTIFICATE
ZAP XXXXX.XXX,
A CALIFORNIA CORPORATION
The undersigned, being the duly elected President and Secretary of ZAP
XXXXX.XXX, a California corporation ("ZAP"), hereby certify that, as of the date
indicated below:
(i) the representations and warranties made by ZAP in the Agreement with
American Scooter and Cycle Rental, Inc., dated July 12, 1999 (the "Agreement")
are true and correct in all material respects; and
(ii) there has been no breach of any covenant contained in the Agreement by ZAP;
and
(iii) all ZAP conditions to the Stage One Closings (as this phrase is defined in
the Agreement) as stated in the Agreement have been satisfied or waived; and
(iv) there has been no material adverse change with respect to ZAP; and
(v) ZAP knows of no challenge to the consummation of the transactions
contemplated by this Agreement; and
(vi) attached hereto is a true and correct copy of the resolutions of ZAP's
board of directors approving the Agreement and the consummation of the
transactions contemplated thereby.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
this ____ day of July, 1999.
/s/ Xxxxx XxXxxxx /s/ Xxxxx X. Xxxxxxx
------------------------ ----------------------------
Xxxxx XxXxxxx Xxxxx X. Xxxxxxx
President Secretary
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AGREEMENT
BY AND AMONG
ZAP XXXXX.XXX,
A CALIFORNIA CORPORATION
AND
AMERICAN SCOOOTER AND CYCLE RENTALS, INC.,
A CALIFORNIA CORPORATION
LIST OF EXHIBITS
Exhibit A List of Assets, Equipment and Inventory for Stage One Closing
Exhibit B Equipment Lease
Exhibit C Lease and Plat of the Premises Showing Contemplated
Improvements of Space
Exhibit D List of Assets Being Transferred in Stage Two
Exhibit E ASCR's Balance Sheet as of December 31, 1998
Exhibit F Balance Sheet of ZAP as of March 30, 1999
Exhibit G List of ZAP Options and Warrants
