EXHIBIT A
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STOCK PURCHASE AND EXCHANGE AGREEMENT
AGREEMENT, dated May 5, 2003, between XXXxxx.xxx, Inc. ("Buyer"),
Western Power & Equipment Corp, a Delaware corporation ("Seller" or "WP") and
Western Power & Equipment Corp., an Oregon corporation and wholly-owned
subsidiary of Seller ("WP Sub").
WHEREAS, WP Sub is a wholly owned subsidiary of Seller;
WHEREAS, WP Sub conducts certain business operations involving the
sale, rental and servicing of construction, and industrial equipment and parts;
WHEREAS, Buyer desires to purchase from Seller all of the issued and
outstanding shares of common stock of WP Sub in exchange for shares of common
stock of Buyer;
WHEREAS, Seller wishes to sell all of the issued and authorized
shares of capital stock of WP Sub to Buyer, all upon the terms and subject to
the conditions hereinafter set forth; and
WHEREAS, the parties intend that the transaction qualify as a
reorganization within the meaning of Section 368(B) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the parties intend this Agreement to
qualify as a "plan of reorganization" within the meaning of the Treasury
Regulations Sections 1.368-2(g) and 1.368-3(a).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations, warranties and agreements contained herein, the
parties hereby agree as follows:
1. PURCHASE AND SALE.
1.1 Purchase and Sale of the Common Stock.
On the terms and subject to the conditions herein set forth, at the
Closing (as defined in Section 2.3 hereof), Seller agrees to sell to Buyer, and
Buyer agrees to purchase from Seller, all of the issued and outstanding shares
of capital stock of WP Sub (the "WP Sub Capital Stock") for the Purchase Price
defined in Section 1.2, below.
1.2 Method of Conveyance.
(a) The sale, transfer, conveyance, assignment and delivery
by Seller of the WP Sub Capital Stock to Buyer in
accordance with Section 1.1 hereof shall be effected on
the Closing Date by Seller's execution and delivery of
certificates representing all issued and outstanding
shares of WP Sub Capital Stock to Buyer, together with
duly executed stock powers with Medallion guaranty of
signature sufficient to transfer all shares of WP Sub
Capital Stock to Buyer.
(b) At the Closing Seller shall transfer, convey, assign and
deliver to Buyer the WP Sub Capital Stock certificates
free and clear of any and all liens, encumbrances,
claims, rights of Seller or any third party rights and
other restrictions of any kind or nature whatsoever
(collectively, "Liens").
2. PURCHASE PRICE AND CLOSING.
2.1 Purchase Price.
(a) In full consideration for the transfer, conveyance,
assignment and delivery of the WP Sub Capital Stock to
Buyer, Buyer will issue to Seller 9,400,000 shares of
fully paid and non-assessable common stock after giving
effect to a one-for-fifty reverse stock split of
outstanding shares of Buyer's common stock approved
December 4, 2002 which will be effective simultaneously
with
the Closing ("Buyers Common Stock"). The 9,400,000
shares of Buyers Common Stock shall, as adjusted
pursuant to paragraph 2.1(b), below; constitute the
"Purchase Price."
(b) The number of shares of Buyer's Common Stock shall be
subject to adjustment as follows:
(i) The number of shares constituting the full
Purchase Price shall be reduced (but not
increased) by a whole number determined by
rounding the result of multiplying
1,000,000 by the fraction determined by
dividing the difference between the
Adjusted Net Earnings (defined below) of
WP Sub for its fiscal year ending July 31,
2003 by $1,000,000. For example, if the
Adjusted Net Earnings of WP Sub for Fiscal
2003 is $750,000, the number of shares by
which the Purchase Price shall be reduced
is ($750,000/$1,000,000) x 1,000,000 =
750,000. In the event the Adjusted Net
Earnings of WP Sub is less than $0, the
number of shares to be released under this
clause shall be zero.
(ii) Of the shares held in escrow after
consideration of 2.1(b)(i) above, the
number of shares constituting the full
Purchase Price shall be further reduced
(but not increased) by a whole number
determined by rounding the result of
multiplying 2,000,000 by the fraction
determined by dividing the difference
between the Adjusted Net Earnings (defined
below) of WP Sub for its fiscal year
ending July 31, 2004 by $2,000,000. For
example, if the Net Earnings of WP Sub for
Fiscal 2004 is $1,500,000 the number of
shares by which the Purchase Price shall
be reduced is ($1,500,000/$2,000,000) x
2,000,000 = 750,000. In the event the
Adjusted Net Earnings of WP Sub is less
than $0, the number of shares to be
released under this clause shall be zero.
(iii) In no event shall the aggregate amount of
the adjustment set forth in paragraphs
2.1(b) (i) and (ii) exceed 1,000,000
shares.
(c) The adjusted consolidated net earnings ("Adjusted Net
Earnings") of WP Sub and its subsidiaries, for the
purpose of computing the adjustments under the
provisions of paragraph 2(b) above, shall be determined,
in accordance with generally accepted accounting
principles, within ninety (90) days after the end of
each fiscal year by the independent accounting firm
employed by WP Sub as its auditors. The computation by
such accounting firm of the Adjusted Net Earnings, made
in the manner herein provided, shall be in all respects
final and binding upon Buyer and Seller.
For the purpose of computing the adjustments, the
Adjusted Net Earnings of WP Sub and its subsidiaries for
the above mentioned periods shall be the consolidated
net earnings of the Company and its subsidiaries for
such period, as audited and reported upon, for the
purposes of Buyer's annual report to stockholders for
such period, by Buyer's independent auditors, plus all
amounts charged against and minus such credits applied
to such consolidated net earnings in respect of the
following:
(i) Taxes of the United States and foreign
governments (including, but without
limitation, excess profits taxes) based
upon or measured, in whole or in part, by
income of WP Sub or its subsidiaries but
exclusive of sate and territorial taxes
and taxes imposed by political
subdivisions thereof;
(ii) Contingent compensation, if any, which may
be payable by WP Sub under any plan or
agreement, other than a profit-sharing
plan qualified under Section 401 of the
Internal Revenue Code or any statutory
provision that may hereafter be enacted to
replace such section;
(iii) All items of non-recurring loss or other
extraordinary charge which, by reason of
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size, character, or other factors did not,
in the sole and uncontrolled judgment of
the Buyer's Board of Directors including
the affirmative vote of a nominee of
Buyer's shareholder pursuant to the
Shareholder Voting Agreement described
below, arise in the ordinary and usual
course of the business of WP Sub and its
subsidiaries, including expenses properly
attributable to such loss or charge.
(d) Certificates representing 1,000,000 shares of the
Purchase Price, together with the two stock powers duly
endorsed in blank by Seller in escrow pursuant to an
escrow agreement in the form annexed hereto as Exhibit A
(the "Escrow Agreement").
2.2 Payment of Purchase Price.
On the Closing Date, the Buyer shall issue to Seller the Buyer's
Common Stock.
2.3 Closing.
The closing of the transactions provided for in this Agreement (the
"Closing") shall take place at the offices of Xxxxxxx, Savage, Kaplowitz, Wolf &
Marcus, LLP within three business days of the satisfaction of all conditions set
forth in Article 6 hereof, but no later than 10:00 a.m., New York time on June
27, 2003 to be effective as of June 30, 2003. The date on which the Closing is
to be effective is herein referred to as the "Closing Date." The Closing shall
be deemed to have occurred at 11:59 P.M. on the Closing Date.
2.4 Closing Financial Statements.
Not later than 30 days after the Closing Date, WP Sub shall prepare
a balance sheet of its business at the Closing Date ("Closing Balance Sheet") in
accordance with generally accepted accounting principles. Such balance sheet
shall specifically identify all assets and all liabilities reflected thereon.
Seller and WP Sub shall cause Xxxxxx & Co., CPA's, P.C., its
independent accountants ("Seller's Auditors"), to issue, as soon as practicable
but in any event not later than 45 days after the Closing Date, its report to
Seller and Buyer to the effect that such balance sheet presents fairly the
financial position of WP Sub's business as of the Closing Date, in conformity
with generally accepted accounting principles.
References in this Agreement to the Closing Balance Sheet shall mean
the balance sheet of WP Sub's business at the Closing Date, prepared and
reported upon as described in this Section 2.5.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to Buyer as follows:
3.1 Corporate Organization.
(a) WP Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of
Oregon. WP Sub has all requisite corporate power and
authority to carry on the business as the same is now
being conducted and to own, lease and operate it's
properties and assets in the places where such business
is now conducted and where such properties and assets
are now owned, leased or operated.
(b) WP Sub is duly qualified or licensed to do business as a
foreign corporation in good standing only in the
jurisdictions set forth in Section 3.1(b) of the
Disclosure Schedule. There are no jurisdictions where WP
Sub is not qualified to do business where the failure to
so qualify would have a material adverse effect on its
business.
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(c) Except as set forth in Section 3.1(c) of the Disclosure
Schedule, WP Sub neither owns nor leases any property,
and does not employ any person or maintain any agent,
with respect to its business, outside of the
jurisdictions set forth in Section 3.1(b) of the
Disclosure Schedule.
3.2 Authorization.
(a) Seller has all requisite corporate power and authority
to execute, deliver and perform its obligations under
this Agreement and to carry out the transactions
contemplated hereby; (b) Seller has taken all necessary
corporate action required by law or otherwise to be
taken by Seller to authorize Seller's execution and
delivery of this Agreement and the consummation by
Seller of the transactions contemplated hereby; and (c)
this Agreement has been duly and validly executed and
delivered by Seller and constitutes a valid and binding
agreement of and upon Seller enforceable against Seller
in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity.
(b) Seller is the lawful owner of the WP Capital Stock and
owns all of the outstanding shares of such stock, free
and clear of all preemptive or similar rights, liens,
encumbrances, restrictions and claims of every kind and
the delivery to Buyer pursuant to the terms of this
Agreement will transfer to Buyer valid title thereto,
free and clear of all liens, encumbrances, restrictions
and claims of every kind.
3.3 Capitalization
(a) The authorized capital stock of WP Sub consists of
500,000 shares of common stock and -0- shares of
preferred stock. As of the date hereof and the Closing
Date, WP Sub had 1,000 shares of common stock
outstanding and -0- shares of preferred stock
outstanding, all of which are held by Seller. WP Sub has
no options, warrants or other securities convertible
into WP Sub capital stock outstanding as of the date
hereof or as of the Closing Date. All such outstanding
shares have been duly authorized and validly issued and
are fully paid and non-assessable.
(b) There are no outstanding options, warrants, rights,
calls, commitments, conversion rights, rights of
exchange, plans or other agreements, commitments or
arrangements of any character providing for the
purchase, subscription, issuance or sale of any shares
of the Capital Stock of SP Sub.
3.4 No Violation.
Except for the required consents of third parties identified in
Sections 3.12 and 3.15 of the Disclosure Schedule, and except as set forth in
Section 3.4 of the Disclosure Schedule, neither the execution and delivery of
this Agreement by WP Sub nor the consummation by WP Sub of the transactions
contemplated hereby will violate any provision of the Certificate of
Incorporation or the by-laws of WP Sub. For purposes of this Agreement, "to
Seller's knowledge," "to the best of Seller's knowledge," "to WP Sub's
knowledge, "to the best of WP Sub's knowledge," or any similar formulation
thereof shall mean to the actual knowledge of any of the current: (i) quality
assurance and/or quality control directors of Seller or WP Sub, (ii) hazardous
material directors of Seller or WP Sub, or (iii) officers and directors of
Seller, each of whom are identified on Schedules 3.12 and 3.15.
3.5 Brokers and Finders.
No person has been authorized by Seller or WP Sub, or by anyone
acting on behalf of Seller or WP Sub or any of their officers, directors,
employees or trustees, to act as a broker, finder or in any other similar
capacity in connection with the transactions contemplated by this Agreement in
such manner as to give rise to any valid claim against Buyer or Seller for any
broker's or finder's fee or commission or similar type of compensation.
3.6 Financial Statements.
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(a) Section 3.6(a) of the Disclosure Schedule sets forth the
following financial information (the "Financial
Information"):
(i) Audited balance sheet of WP Sub as of July
31, 2002 and audited statements of
operations and cash flows of WP Sub for
each of the two years ended July 31, 2002
on a historical basis;
(ii) internal, unaudited balance sheets of WP
Sub as of January 31, 2003 (the "January
Balance Sheet"); and
(iii) internal, unaudited statements of
operations and cash flows (prepared in a
format previously agreed to by the parties
hereto), of WP Sub for the fiscal quarters
ended January 31, 2003 and 2002 on a
historical basis.
(b) The unaudited Financial Information was compiled from
Seller's internal management reports in the ordinary
course of Seller's business, which is not consistent in
all circumstances with generally accepted accounting
principles.
(c) Since July 31, 2002, WP Sub has kept its financial
records in a manner consistent with its practices at the
time and during the periods reflected in clauses (ii)
and (iii) of paragraph (a) above without change, in any
material respect, of policy or procedure, as to nature
of item, amount or otherwise.
(d) The aggregate dollar amount of the net property, plant
and equipment included in the Financial Information does
not exceed the cost of such property, plant and
equipment to WP Sub, less any previous write-downs and
less depreciation, and the value thereof has not been
written up.
3.7 Records and Books of Account; Accounting Practices.
The records and books of account of WP Sub have been regularly kept
and maintained in reasonable detail and accurately and fairly reflect the
transactions and asset dispositions of the WP Sub. WP Sub also maintains an
adequate system of internal controls.
3.8 No Undisclosed Liabilities.
(a) As of January 31, 2003, except as set forth in Section
3.8 of the Disclosure Schedule, WP Sub did not have any
material liabilities or obligations of any nature
(absolute, accrued, contingent or otherwise) which were
not fully disclosed or reserved against in the January
Balance Sheet, and the reserves reflected in the January
Balance Sheet were adequate, appropriate, and reasonable
as to both nature of items and amounts.
(b) Except as set forth in Section 3.8 of the Disclosure
Schedule, since January 31, 2003, WP Sub has not
incurred any material liabilities (contingent or
otherwise) except in the ordinary and usual course of
business and consistent with past practices.
3.9 Inventory.
Except as set forth in Section 3.9 of the Disclosure Schedule, (a)
all material items of the Inventory have been acquired in the ordinary and usual
course of business; (b) all material items of the Inventory are of a quality and
quantity usable in the ordinary and usual course of business; and (c) the
quantities of each type of Inventory are not materially excessive, but are
reasonable, adequate and appropriate.
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3.10 Interim Operations.
Except as set forth in Section 3.10 of the Disclosure Schedule,
since July 31, 2002 WP Sub has conducted its business only in the ordinary and
usual course consistent with past practices. Without limiting the generality of
the foregoing, except as set forth in Section 3.10 of the Disclosure Schedule,
WP Sub has not with respect to its business, since July 31, 2002:
(a) suffered any material adverse change in its assets, or
suffered any material damage, destruction or loss,
whether or not covered by insurance, in either case
materially affecting the business, assets or properties
of the WP Sub;
(b) agreed to, or incurred, assumed or become subject to,
any liabilities or obligations for returns or
allowances, other than in the ordinary and usual course
of business and materially consistent in nature of item
and amount with past practice, or increased, or
experienced any change in any assumption underlying, or
methods of calculating, any bad debt, contingency or
other reserve (except for any such reserve expressly set
forth in the January Balance Sheet);
(c) paid, discharged or satisfied any material claim,
liability or obligation (absolute, accrued, contingent
or otherwise), other than the payment, discharge or
satisfaction of liabilities and obligations reflected or
reserved against in the January Balance Sheet, or
incurred in the ordinary and usual course of business
consistent with past practices;
(d) prepaid any obligation having a fixed maturity of more
than 90 (ninety) days from the date such obligation was
issued or incurred, or not paid, within 60 days of when
due, any account payable, or sought the extension of the
payment date of any material account payable, other than
any account payable which was (until paid) or is being
contested in good faith;
(e) subjected any of its assets or, to the best of Seller's
knowledge, permitted or allowed any of its assets to be
subjected, to any mortgage, pledge, lien, security
interest, encumbrance, restriction or charge of any
kind, except for liens for current taxes not yet due;
(f) waived any claims or rights of substantial value under
any of its contracts or otherwise in connection with any
of its assets;
(g) sold, transferred, licensed or otherwise disposed of any
of its material properties or assets (real, personal or
mixed, tangible or intangible) that, but for such sale,
transfer or other disposition, would have been included
as part of its assets, except in a bona fide transaction
to an unaffiliated third party for fair value and in the
ordinary and usual course of business and consistent
with past practice (the exceptions hereto listed in
Section 3.10 of the Disclosure Schedule show date of
disposition, identity of transferee, amount received and
book value);
(h) disposed of, licensed or permitted to lapse any rights
to the use of any patent, trademark, trade name or
copyright used in the conduct of its business or, to WP
Sub's knowledge, disposed of or disclosed, or permitted
to be disclosed (except as necessary in the conduct of
its business), to any person other than representatives
or agents of Buyer, any trade secret, formula, process,
know-how or similar information not theretofore a matter
of public knowledge;
(i) granted or committed to make any material increase in
any compensation, bonus, pension, profit-sharing or
other benefit plan or commitment of any employee of WP
Sub;
(j) since January 31, 2003, made any capital expenditures or
binding commitments to be assumed by Buyer or to which
any of WP Sub's assets may be or become subject, in
excess of $5,000 in any one case or $50,000 in the
aggregate, for repairs or additions to property, plant,
equipment or tangible assets;
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(k) paid, loaned or advanced any amount to, or sold,
transferred or leased property or asset (real, personal,
mixed, tangible or intangible) to, or entered into any
agreement or arrangement with, any of WP Sub's or
Seller's officers, employees, directors, stockholders or
any "affiliate" or "associate" (as such terms are
defined in Rule 405 under the Securities Act of 1933, as
amended) or any immediate or extended family member (up
to and including first cousins) of any of such persons
(collectively, the "Significant Persons" and,
individually, a ("Significant Person"), except for
compensation to such persons expressly disclosed in
Section 3.28 of the Disclosure Schedule, except for
purchase orders and working capital advances from
Seller;
(l) made any change in any method of accounting;
(m) changed any of the banking or safe deposit arrangements
comprising part of its assets;
(n) failed to maintain the books, accounts and records of
the WP Sub in the usual, regular and ordinary manner; or
(o) agreed, whether in writing or otherwise, to take any
action described in this Section 3.10.
3.11 Title to Assets; Encumbrances.
(a) Section 3.11(a) of the Disclosure Schedule contains an
accurate and complete list (the "Equipment List") of all
of the Equipment and interests therein owned by WP Sub
on the date hereof and such list includes all of the
equipment owned by WP Sub reflected in the January
Balance Sheet or acquired after January 31, 2003 (except
to the extent disposed of to an unaffiliated third party
in a bona fide transaction, for fair value, in the
ordinary and usual course of business and consistent
with past practice) having an original cost in excess of
$500.00. Section 3.11(a) of the Disclosure Schedule also
contains a list of all property in the possession of WP
Sub on the date hereof which is owned by any government
agency or other third party.
(b) Except as set forth in Section 3.11(b) of the Disclosure
Schedule, WP Sub has good and valid title to all of its
assets. WP Sub's assets comprise all of the business,
properties, assets (however, employees, to the extent
that they could be considered assets, are not included
as assets in this Section) and goodwill employed by WP
Sub and its affiliates in connection with its business.
(c) Except as set forth in Section 3.11(c) of the Disclosure
Schedule, all assets (excluding assets that are
described in Section 3.12(b) or Section 3.11(a) of the
Disclosure Schedule as leased assets or assets owned by
third parties) are owned by WP Sub free and clear of all
title defects or objections, liens, claims, charges,
rights of others, security interests or other
encumbrances of any nature whatsoever, including without
limitation, any leases, escrows, options, security or
other deposits, rights of redemption, chattel mortgages,
conditional sales contracts, liens, collateral security
arrangements and other title or interest retention
arrangements, except for liens for current taxes not yet
due.
(d) Except as set forth in Section 3.11(d) of the Disclosure
Schedule, WP Sub's assets include all rights, properties
and other assets (however, employees, to the extent that
they could be considered assets, are not included as
assets in this Section) necessary to conduct and to
continue to conduct WP Sub's business after the Closing
(assuming Buyer conducts its business in the same manner
as WP Sub) in the same manner as the business has since
July 31, 2002 been and is now being conducted.
(e) Except as set forth in Section 3.11(e) of the Disclosure
Schedule, WP Sub does not, own, lease or use in its
business any machinery and equipment which is not
located at Real Property described in Section 3.12.
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3.12 Real Property.
(a) Real Property Defined. All real property (including,
without limitation, all interests in and rights to real
property) and improvements located thereon which are
owned or leased by WP Sub and used in connection with WP
Sub's business or included in WP Sub's assets are listed
in Section 3.12(a) or Section 3.12(b) of the Disclosure
Schedule (the "Real Property").
(b) Leased Real Property. With respect to the Real Property
that is leased by WP Sub, all of which property is
identified in Section 3.12(b) of the Disclosure Schedule
(the "Leased Property"):
(i) WP Sub has delivered to Buyer a true and
complete copy of every lease and sublease
to which WP Sub is a tenant or subtenant
(the "Leases"), and has described each
Lease in Section 3.12(b) of the Disclosure
Schedule by listing the name of the
landlord or sublandlord, the address of
the leased premises, the commencement and
expiration dates of the current term, the
security deposited by WP Sub with the
landlord or sublandlord, if any, and the
monthly rental (including base and all
additional rents);
(ii) each Lease is, and at Closing shall be, in
full force and effect and has not been
assigned, modified, supplemented or
amended except as listed on the Disclosure
Schedule, and neither WP Sub nor, to WP
Sub's knowledge, the landlord or
sublandlord under any Lease is in default
under any of the Leases, and to WP Sub's
knowledge, no circumstances or state of
facts presently exists which, with the
giving of notice or passage of time, or
both, would permit the landlord or
sublandlord under any Lease to terminate
any Lease; and
(iii) subject to Section 1.3(d) above, at WP
Sub's Closing Seller and WP Sub shall
assign to the Buyer all right, title and
interest of Seller in and to all Leases
(and shall deliver to Buyer original
copies of all consents required for such
assignments) and all security deposits
made by Seller and WP Sub pursuant to any
of the Leases, including, but not limited
to, the security deposits listed on the
Disclosure Schedule, together with all
interest earned on such deposits.
(c) Utility Services. With respect to the Leased Property,
the water, electric, gas and sewer utility services and
the septic tank and storm drainage facilities currently
available are adequate for the present use of the Real
Property by Seller and WP Sub in conducting WP Sub's
business, Seller and WP Sub have not experienced any
material shortage in any such service in the last three
years, are not being appropriated by Seller or WP Sub
but rather are being supplied to Seller and WP Sub by
utility companies or municipalities pursuant to valid
and enforceable contracts, and there is no condition
which will result in the termination of the present
access from the Real Property to such utility services
and other facilities. To the knowledge of Seller and WP
Sub, without having made any independent investigation,
no curtailment of any such utility services is proposed
by any provider of any of such services.
(d) Access. With respect to the Leased Property, Seller and
WP Sub have obtained all Authorizations and
rights-of-way, including proof-of-dedication, which are
necessary to ensure vehicular and pedestrian ingress and
egress to and from the Real Property; and there are no
restrictions on entrance to or exit from the Real
Property to adjacent public streets and to WP Sub's and
Seller's knowledge no conditions which will result in
the termination of the present access from the Real
Property to existing highways and roads.
(e) Assessments or Hazards. Seller and WP Sub have received
no written notices, nor, to WP Sub's or Seller's
knowledge, any oral notice, from any governmental body,
that the assessed value of the Leased Property has been
determined to be greater than that upon which county,
township or
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school tax was paid for the current tax year applicable
to each such tax, or from any insurance carrier of WP
Sub of fire hazards with respect to the Real Property.
(f) Eminent Domain. Seller and WP Sub have received no
written notices, nor, to WP Sub's nor Seller's
knowledge, any oral notice, and has no actual knowledge,
that any governmental body having the power of eminent
domain over the Real Property has commenced or intends
to exercise the power of eminent domain or a similar
power with respect to all or any part of the Real
Property.
(g) No Violations. The Real Property and the present uses
thereof comply with all Regulations of all governmental
bodies having jurisdiction over WP Sub and to Seller's
knowledge, the Leased Properties, and WP Sub and Seller
have received no written notices, nor, to WP Sub's or
Seller's knowledge, any oral notice, from any
governmental body, and have no actual knowledge, that
the Real Property or any improvements erected or situate
thereon, or the uses conducted thereon or therein,
violate any Regulations of any governmental body having
jurisdiction over the Real Property.
(h) Improvements. The improvements located on the Real
Property are in good condition and are, to WP Sub's and
Seller's knowledge, structurally sound, and all
mechanical and other systems located therein are in good
operating condition, subject to normal wear, and no
condition exists requiring material repairs, alterations
or corrections.
(i) No Encumbrances. Between the date of this Agreement and
the Closing Date, WP Sub and Seller shall not sell,
mortgage or encumber the Real Property, or do or permit
any act which diminishes title to or value of the Real
Property.
(j) Public Improvements. No work for municipal improvements
that would have a material adverse effect on the WP
Sub's business has been commenced on or in connection
with the Real Property or any street adjacent thereto.
No assessment for public improvements has been made, to
WP Sub or Seller's knowledge, against the Leased
Properties which remains unpaid. No notice from any
county, township or other governmental body has been
served upon the Real Property or received by WP Sub or
Seller since August 1, 1999 requiring or calling
attention to the need for any work, repair,
construction, alteration or installation on or in
connection with the Real Property which has not been
complied with.
(k) Executory Contracts. Set forth in Section 3.12(k) of the
Disclosure Schedule is a list of all executory contracts
currently in effect made by or on behalf of WP Sub, or
by which WP Sub is bound, with respect to the Real
Property ("Executory Contracts") including, without
limitation, operation, management, maintenance, utility,
and construction contracts. At Closing WP Sub shall
deliver to the Buyer a true and complete copy (the
original execution copy, if available) of each of the
Executory Contracts.
3.13 Equipment; Waste Handling.
(a) Except as set forth in Section 3.13 of the Disclosure
Schedule, (i) the equipment included in WP Sub's assets
is, to WP Sub or Seller's knowledge, structurally sound
and with no material defects (for purposes of this
Section 3.13(a) "material" shall mean defects that would
cost in excess of $2,500 to remedy in any one instance)
and (ii) all material items and pieces of equipment are
on the date hereof used in the ordinary course of WP
Sub's business, are suitable for the uses to which they
are put by WP Sub, and are adequate in the aggregate to
conduct WP Sub's business as presently conducted,
subject to normal maintenance requirements and
reasonable wear and tear.
(b) Except as set forth in Section 3.13 of the Disclosure
Schedule, there are no outstanding requirements or
recommendations which have been communicated to WP Sub
in writing during the past two years and WP Sub has no
knowledge of any insurance company which has issued a
9
policy covering any part of any of the properties,
plants, structures or equipment included in WP Sub's
assets, or by any board of fire underwriters or other
body exercising similar functions, requiring or
recommending that any repairs or work be done on any
part of such properties, plants, structures or
equipment.
(c) Except as set forth in Section 3.12 of the Disclosure
Schedule, all material obligations to contractors,
subcontractors and suppliers of labor and materials to
WP Sub in connection with any construction or renovation
of any structures or improvements thereon have been paid
in full, and there are no known pending disputes with
any such contractors, subcontractors or suppliers.
3.14 Patents, Copyrights, Trademarks, Trade Names and
Licenses.
(a) Except as set forth in Section 3.14(a) of the Disclosure
Schedule, there are no (i) patents held or used by WP
Sub, or reissues, divisions, continuations, and
extensions thereof, or pending patent applications by WP
Sub which are or were, within the past three (3) years,
for or intended to be for WP Sub's benefit; (ii)
registered or unregistered trademarks or service marks
of or used by WP Sub or pending applications for
registration of trademarks which are or were, within the
past three (3) years, intended to be used by or for the
benefit of WP Sub; or (iii) registered copyrights of or
used by WP Sub, or applications for registration of
copyrights that are or were, within the past three (3)
years, intended to be used by or for the benefit of WP
Sub ("Intellectual Property").
(b) Except as set forth in Section 3.14(b) of the Disclosure
Schedule, there are no licenses (whether as licensor,
licensee or otherwise) or other contracts or commitments
to which WP Sub is a party or to which it or any of its
assets is otherwise subject relating to any of the
Intellectual Property.
(c) Except as set forth in Section 3.14(c) of the Disclosure
Schedule: (i) during the past three (3) years no claims
have been asserted by any person against or otherwise in
respect of the use by WP Sub of any of the Intellectual
Property, or challenging or questioning the validity or
effectiveness of any license or agreement referred to in
this Section 3.13, and, to the knowledge of WP Sub,
there is no valid basis for any such claim; (ii) during
the past three (3) years WP Sub has not received notice
of any allegation that it has infringed upon any patent,
trademark, service xxxx, trade name or copyright or
misappropriated or misused any invention, trade secret
or other proprietary information of any other person
entitled to legal protection; (iii) during the past
three (3) years WP Sub has not asserted any claim of
such infringement, misappropriation or misuse against
any person; (iv) WP Sub has good and valid title to, or
otherwise possesses adequate rights to use all patents,
trademarks, service marks, trade names, copyrights,
inventions, trade secrets and other proprietary
information necessary to conduct its business in the
same manner as its business has been conducted since
August 1, 1999; and (v) no shareholder, officer,
director or employee of WP Sub or affiliates of any of
the foregoing owns or has any interest in any of the
Intellectual Property.
3.15 Personal Property Leases.
(a) Section 3.15 of the Disclosure Schedule sets forth a
complete and accurate list of all personal property
leases, subleases, concessions, licenses, conditional
sales agreements or other title retention agreements
(collectively, the "Personal Property Leases" and
individually a "Personal Property Lease") to which WP
Sub is a party, as lessor, lessee, licensor or licensee.
(b) Except as set forth in Section 3.15 of the Disclosure
Schedule, (i) each of the Personal Property Leases is
valid, binding and enforceable in accordance with its
terms, and is in full force and effect; (ii) there are
no existing defaults on the part of WP Sub and, to the
best knowledge of the WP Sub, any other party, under any
Personal Property Lease and to WP Sub's knowledge, no
event of default under any such Personal Property Lease
has occurred and is continuing which (whether with or
without the giving of notice, lapse of time or both, or
the happening of any other event) would constitute a
default under such Personal Property Lease; (iii) each
such Personal
10
Property Lease will, subject to obtaining any consent
listed in Section 3.15 of the Disclosure Schedule,
continue to be in full force and effect on the same
terms and conditions immediately after the Closing
without the need for any action on the part of Buyer;
(iv) each such Personal Property Lease reflects the
complete understanding among the parties thereto in
connection with the subject matter thereof; and (v)
accurate and complete copies of each such Personal
Property Lease including all amendments thereto, have
been delivered or will be delivered to Buyer at or prior
to the Closing.
(c) Except as set forth in Section 3.15 of the Disclosure
Schedule, WP Sub's interest in each of the Personal
Property Leases (i) is free and clear of all Liens
(other than any created by Buyer) and (ii) are not, in
the case of real property, except as set forth in
Section 3.15 of the Disclosure Schedule or in the
Personal Property Leases, subject to any rights of way,
building use restrictions, exceptions, variances,
easements (recorded or unrecorded), rights of
redemption, reservations or limitations of any nature
whatsoever of which WP Sub has knowledge which may
materially and adversely interfere with Buyer's use
thereof in a manner substantially consistent with WP
Sub's use thereof prior to Closing.
3.16 Taxes.
(a) For any and all periods still open or subject to audit,
Seller, WP Sub or its predecessors have duly filed all
tax reports and returns (including information returns)
required to be filed by it or any of its predecessors
relating to or covering its business and each of such
reports and returns were true, correct and complete.
(b) For any and all periods still open or subject to audit,
Seller and WP Sub have duly paid all taxes and other
charges due or claimed to be due or shown on any return
or declaration to be due from it to any federal, state,
local or foreign taxing authority (including, without
limitation, those due in respect of properties, income,
franchises, licenses, sales and payrolls); and there are
no tax liens upon any of its assets except liens for
current taxes not yet due.
(c) For any and all periods still open or subject to audit,
all taxes and other assessments and levies required to
be withheld by Seller or WP Sub from customers with
respect to the provision of services, or from or on
behalf of employees for income, social security,
unemployment insurance and any other taxes or similar
charges have been collected or withheld and either paid
to the appropriate government agency or properly set
aside and held in accounts for such purpose.
3.17 Contracts and Commitments.
Except as set forth in Section 3.17 of the Disclosure Schedule:
(a) WP Sub is not a party to or bound by any written or
binding agreements, contracts or commitments, which are
material to its business operations or prospects (for
purposes of this Section 3.17(a), an agreement, contract
or binding commitment shall be deemed to be material if
it (i) shall call for the expenditure of $1,000 or more
in any 12-month period, or (ii) shall not be terminable
according to its terms without liability on not more
than 30 days' notice);
(b) no purchase contract, contract for the performance of
services or other written or binding bid or commitment
of WP Sub (i) continues for a period of more than three
(3) months from the date hereof and is not terminable by
WP Sub according to its terms without liability on not
more than 30 days' notice; (ii) is in excess of the
normal, ordinary and usual requirements of its business;
(iii) is with any Affiliate of WP Sub (as defined under
Section 3.31 hereof); (iv) has been prepaid in whole or
part; and/or (v) has had any delivery thereunder
requested to be delayed to a date past the Closing Date;
11
(c) WP Sub is not a party to or bound by any contracts,
agreement or arrangements: (i) with any federal, state,
local or foreign government, or any governmental or
quasi-governmental agency, board, bureau, authority or
commission, or any utility company except for customer
contracts entered into in the ordinary course of
business, (ii) with any charitable organization, (iii)
with any officer or director of the WP Sub or any
Affiliate of WP Sub or members of the immediate family
of the foregoing (a "Related Person") or (iv) providing
for the payment of any bonus or commission, whether
based on sales or earnings or otherwise;
(d) WP Sub is not a party to or otherwise bound by any
written or binding (i) employment agreements, (ii)
non-competition agreements or (iii) any other
agreements, practices or understandings that contain or
will impose on Buyer any severance or termination pay
liabilities or obligations;
(e) WP Sub is not a party to or bound by any (i) collective
bargaining or union contracts or agreements or (ii)
material practices or understandings with any of
employees which will be binding on Buyer and are not
embodied in a written collective bargaining or union
contract or other written agreement listed in Section
3.17 of the Disclosure Schedule;
(f) WP Sub is not in default, nor to WP Sub's knowledge is
there any basis for any valid claim of default against
WP Sub, and to the best of WP Sub's knowledge no other
party is in default, under any contract, agreement,
commitment or restriction and no event of default has
occurred which (whether with or without the giving of
notice, lapse of time, or both, or the happening or
occurrence of any other event) would constitute a
default thereunder;
(g) WP Sub is not a party to or bound by any consulting
agreement;
(h) Except pursuant to the Agreement dated May 12, 1997, by
and between WP Sub and Case Corporation, WP Sub is not
restricted by any agreement from carrying on its
business anywhere in the world;
(i) WP Sub is not a party to or bound by any outstanding
powers of attorney (except for powers of attorney issued
to customs brokers in the ordinary and usual course of
business) or any other outstanding obligations or
liabilities (whether absolute, accrued, contingent or
otherwise), as guarantor, surety, co-signer, endorser,
co-maker, indemnitor or otherwise in respect of the
obligation of any other person, corporation,
partnership, joint venture, association, organization or
other entity;
(j) WP Sub is not a party to or bound by any partnership or
joint venture agreement, or any written or binding oral
royalty, distribution, agency, territorial or license
agreement;
(k) There are no credit cards issued to any of WP Subs
employees or for which WP Sub is directly liable and for
which any liability will be sought to be imposed on
Buyer;
(l) WP Sub is not a party to or bound by any barter or
counter trade agreement;
(m) WP Sub is not a party to or bound by any cooperative
advertising agreement or arrangement;
(n) WP Sub has no debt obligation for borrowed money;
(o) WP Sub has no outstanding loans to any person; and
(p) There are no outstanding sales contracts, commitments or
bids of WP Sub which (i) continue for a period of more
than six (6) months from the date hereof, (ii) were
entered into more than six (6) months prior to the date
hereof, or (iii) have been prepaid in whole or part;
12
(q) all contracts, agreements, and leases, referred to in
Section 3.17 of the Disclosure Schedule (i) are valid
and in full force and effect, (ii) will, except for the
obtaining of any consents listed in Section 3.24 of the
Disclosure Schedule that shall not have been obtained by
the Closing, continue to be so on the same terms and
conditions immediately after the Closing without the
need for any action on the part of Buyer, where
specifically and expressly set forth in Section 3.8 of
the Disclosure Schedule, and, (iii) reflect the complete
understanding among the parties thereto in connection
with the subject matter thereof; true and complete
copies of each thereof, including all amendments
thereto, have been delivered to Buyer at or prior to the
date hereof (regarding material contracts) and will be
delivered by Closing (for all others).
3.18 Customers and Suppliers; Trade Programs.
(a) Section 3.18 of the Disclosure Schedule sets forth:
(i) an accurate and complete list of the ten
(10) largest customers of WP Sub in terms
of revenues in each case during (x) the
twelve month period ended July 31, 2002,
and (y) the six months ended January 31,
2003, showing the approximate total
revenues in dollars received by WP Sub
from each such customer during each such
period; and
(ii) an accurate and complete list of the ten
(10) largest suppliers of WP Sub in terms
of purchases during (x) the twelve month
period ended July 31, 2002, and (y) the
six months ended January 31, 2003 showing
the approximate total purchases in dollars
by WP Sub from each such supplier during
each such period.
(b) Except to the extent set forth in Section 3.18 of the
Disclosure Schedule, since July 31, 2002, there has not
been any material adverse change, and WP Sub has no
knowledge that any material adverse change is reasonably
likely, in the business relationship, or volume of
business, of WP Sub's business with any customer or
supplier named in Section 3.18 of the Disclosure
Schedule.
(c) Except for the customers and suppliers named in Section
3.18 of the Disclosure Schedule, WP Sub has not had any
customer which accounted for more than 5% of WP Sub's
revenues during the six months ended January 31, 2003,
or any supplier from which WP Sub purchased more than 5%
of the goods and services which it purchased during (i)
WP Sub's fiscal year ended July 31, 2002, or (ii) the
six months ended January 31, 2003.
(d) All trade programs of WP Sub if any, instituted since
August 1, 1999, whether or not in the ordinary and usual
course of business or consistent with past practice,
which may result in claims against Buyer for money,
credit or goods, including but not limited to bonuses,
billbacks, in-house programs, accruals, other sales or
commission incentives or allowances, discounts, returns,
credits, allowances and contests, are disclosed in
Section 3.18 of the Disclosure Schedule.
3.19 Sales Practices; Warranties.
(a) Since July 31, 2002, except as set forth in Section 3.19
to the Disclosure Schedule, WP Sub has not received any
written notice, nor, to its knowledge, any oral notice,
of any claim (actual or threatened) of any consumer or
customer based on any warranty other than claims in the
ordinary course of business and not in excess of $5,000.
(b) Since July 31, 2002, WP Sub has not accelerated its
sales of services except, and has made sales of services
only, in the ordinary course of the business consistent
with WP Sub's past practices.
(c) Section 3.19 of the Disclosure Schedule also sets forth,
as at January 31, 2003, each material pending claim
against WP Sub in connection with provision or services.
13
3.20 Insurance.
(a) Section 3.20 of the Disclosure Schedule contains an
accurate and complete list of all policies of fire,
liability, keyman life insurance, workers' compensation,
products liability, and other forms of insurance owned
or held by or beneficially for WP Sub. All such policies
are in full force and effect and will not be canceled or
modified by WP Sub prior to Closing without the express
written consent of Buyer (except to extend the maturity
dates thereof), all premiums with respect thereto
covering all periods up to and including the Closing
Date have been or will be paid by WP Sub, and no
written, or to WP Sub's knowledge oral, notice of
cancellation or termination has been received by WP Sub
with respect to any such policy.
(b) The aforesaid policies are sufficient for WP Sub's
compliance with, to WP Sub's knowledge, all requirements
of law and of all material agreements to which WP Sub is
a party; are valid, outstanding and enforceable
policies; are, in the opinion of management of WP Sub,
in amounts customarily deemed to be adequate and cover
all risks customarily insured against in the type of
business conducted by WP Sub in the locality where WP
Sub operates its business; have been issued by reputable
insurance companies which are in good standing,
adequately capitalized and actively engaged in the
insurance business; and in the judgment of WP Sub
provide adequate insurance coverage for its assets and
operations.
(c) Section 3.20 of the Disclosure Schedule also identifies
(i) all risks for which WP Sub is self-insured and (ii)
the workers' compensation and if possible unemployment
insurance ratings of WP Sub (or, if applicable, Seller).
(d) Except as set forth in Section 3.20 of the Disclosure
Schedule, in connection with its operations, (i) WP Sub
has not, since August 1, 2001, been unable to obtain any
insurance coverage in the amounts desired by WP Sub;
(ii) since August 1, 1999, neither the amount nor scope
of any insurance referred to in Section 3.20 of the
Disclosure Schedule or premiums therefor has been
materially changed; and (iii) WP Sub has not been
notified of any material adverse change or proposed
material adverse change in the workers' compensation or
unemployment insurance ratings or insurance rates for WP
Sub.
3.21 Labor Difficulties.
Except to the extent set forth in Section 3.21 of the Disclosure
Schedule:
(a) there is no labor strike, formal dispute, formal
grievance, arbitration proceeding, general slowdown or
stoppage, or charge of unfair labor practice actually
pending before a court, regulatory body or arbitration
tribunal, or to the best of WP Sub's knowledge
threatened against or affecting WP Sub;
(b) no union representation campaign is pending or, to WP
Sub's knowledge, threatened respecting any employees of
WP Sub;
(c) WP Sub has not experienced any material work stoppage by
its work force or other material labor difficulty since
August 1, 1999;
(d) to WP Sub's knowledge, there are no charges or
complaints of discrimination pending before the United
States Equal Employment Opportunity Commission or any
state, local or foreign agency against WP Sub;
(e) to the best of WP Sub's knowledge, WP Sub, does not
presently employ, and at no time during the past year
did it employ, any illegal alien;
14
(f) (i) to WP Sub's knowledge, WP Sub is not engaged in any
unfair labor practice, and (ii) at no time during the
past three (3) years has any unfair labor practice,
complaint, charge or similar claim against WP Sub been
filed with, or to WP Sub's knowledge, threatened to be
filed by any employee with, the National Labor Relations
Board, Equal Employment Opportunity Commission,
Department of Labor or any similar state, local or
foreign agency; and
(g) no collective bargaining agreement which is binding on
WP Sub will be binding on Buyer or restricts the owner
of the WP Sub's business from relocating or closing any
of the WP Sub's business's facilities or operations.
3.22 Litigation, Judgments and Decrees.
(a) Except as set forth in Section 3.22 of the Disclosure
Schedule, and except for workers compensation claims,
there has not been in the three (3) years prior to the
date hereof, nor is there currently, any action, suit or
proceeding of any nature whatsoever, at law or in equity
or both, by or before any domestic or foreign court, or
to the best of WP Sub's knowledge any proceeding or
claim pending or threatened before any government or
other regulatory or administrative agency, arbitration
tribunal, board, bureau, authority or commission or
involving WP Sub, in any such case which would have a
material adverse effect on WP Sub's business or which
questions or challenges the validity of this Agreement
or any action taken or to be taken by WP Sub pursuant to
this Agreement or in connection with the transactions
contemplated hereby.
(b) Except as set forth in Section 3.22 of the Disclosure
Schedule, WP Sub is not subject to any judgment, order,
award or decree of any domestic or, foreign court or
government or other regulatory or administrative agency,
arbitration tribunal, board, bureau, authority or
commission (i) which has or, to WP Sub's knowledge, may
have a material adverse effect on WP Sub's practices in
WP Sub's Business or on its ability to acquire any
property or conduct its Business in any area, (ii) which
is or will be binding on Buyer, or (iii) with respect to
which WP Sub is in default.
3.23 No Condemnation or Expropriation.
Neither the whole nor any portion of WP Sub's assets is subject to
any government decree or order to be sold or is being condemned, expropriated or
otherwise taken by any domestic or foreign public authority with or without
payment of compensation thereof, nor, to WP Sub's knowledge, has any such
condemnation, expropriation or taking been proposed in writing within the past
two years.
3.24 Consents and Approvals of Government Authorities and
Others.
Except as set forth in Section 3.24 of the Disclosure Schedule, no
consent, approval or authorization of, or declaration, filing or registration
with, or the giving of notice to, any domestic or, to WP Sub's knowledge,
foreign government or regulatory authority or any other person or entity is
required of WP Sub in connection with the execution, delivery and performance by
WP Sub of this Agreement or the consummation by WP Sub of the transactions
contemplated hereby. Accurate and complete copies of each of the forgoing which
have been obtained or made have been delivered to Buyer at or prior to the date
hereto.
3.25 ERISA; Employee Benefit Plans.
(a) As used in this Section 3.25, the term "Plan" means any
bonus, deferred compensation, pension, profit-sharing,
retirement, stock purchase, stock option, phantom stock,
medical or any other benefit plan, arrangement or
practice, whether written or unwritten including but not
limited to any such plan, arrangement or practice which
constitutes an "employee welfare benefit plan" within
the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended and the
regulations thereunder ("ERISA") or an "employee pension
benefit plan" within the meaning of Section 3(2) of
ERISA, covering any employee of WP Sub. Section 3.25 of
the Disclosure Schedule sets forth a complete list of
all Plans maintained by WP Sub. WP Sub has no
15
legally binding commitment, whether formal or informal,
to create any additional such plan or arrangement.
(b) To WP Sub's knowledge, except as set forth in Section
3.25(b) of the Disclosure Statement, all of WP Sub's
Plans are in all material respects in compliance in
operation and in form with the currently prescribed
requirements prescribed by any and all statutes, orders
or governmental rules or regulations currently in effect
with respect to such Plans, including, but not limited
to ERISA and the Code, and there are no pending or, to
the WP Sub's knowledge, threatened claims, lawsuits or
arbitrations (other than routine claims for benefits)
which have been asserted or instituted against the WP
Sub, any Plan or the assets of any trust for any Plan.
(c) WP Sub has complied in all material respects with the
requirements of Section 4980B of the Code and applicable
regulations. WP Sub has not contributed to, nor has it
been obligated to contribute to, any multi-employer plan
(as defined in Section 3(37) of ERISA), or any other
plan subject to Title IV of ERISA within the preceding
three calendar years.
3.26 Absence of Questionable Payments.
Since August 1, 1999, neither WP Sub nor any of its officers,
agents, employees or any other person, entity or corporation acting on behalf of
any of them, has, to WP Sub's knowledge, accepted, received or made any unlawful
contributions, payments, gifts, or expenditures in respect of WP Sub's business.
3.27 Distinct Entity.
Except as set forth in Section 3.27 of the Disclosure Schedule, WP
Sub does not share any assets with any related or unrelated third party.
3.28 Personnel.
(a) Section 3.28 of the Disclosure Schedule sets forth an
accurate and complete list as of January 31, 2003 of:
(i) the names and current salaries of WP Sub's
salaried employees;
(ii) the wage rates for WP Sub's non-salaried
employees;
(iii) the customary increases on a periodic
basis in the compensation of each of the
foregoing or any increases required by any
agreement or understanding with each of
the foregoing;
(iv) a description of any informal
understanding generally concerning
employees' rights to continue to receive
compensation during any periods during
which such employees are not performing
any services for WP Sub other than with
respect to vacation, disability and sick
time; and
(v) any increase granted or committed to for
any period subsequent to November 1, 2002
in the compensation of any employee
including, without limitation, any change
in any bonus, pension, profit-sharing or
other benefit plan or commitment except
for obligations imposed on WP Sub by the
Code, ERISA or ADEA.
(b) The vacation period for employees of WP Sub occurs
normally during the periods described in Section 3.28 of
the Disclosure Schedule. Except as set forth in Section
3.28 of the Disclosure Schedule, as at the Closing Date
there will be no bonuses, profit sharing, incentives,
commissions or other compensation of any kind due to or
expected by present or former employees of WP Sub which
have not been fully paid prior to such date.
16
(c) Except to the extent set forth in Section 3.28 of the
Disclosure Schedule, all employees of WP Sub are at-will
employees.
(d) Except to the extent set forth in Section 3.28 of the
Disclosure Schedule, WP Sub has no knowledge that any
material adverse change in the relationship of WP Sub's
business with its employees is reasonably likely.
3.29 Compliance with Law; Necessary Authorizations.
(a) In conducting WP Sub's business, WP Sub has, except as
set forth in Section 3.29 of the Disclosure Schedule,
since August 1, 1999, in all material respects duly
complied and is presently in all material respects duly
complying with all applicable laws (whether statutory or
otherwise), rules, regulations, orders, building and
other codes, zoning and other ordinances, permits,
licenses, authorizations, judgments and decrees of all
federal, state, local or, to WP Sub's knowledge, foreign
governmental authorities, including, but not limited to,
the Federal Occupational Safety and Health Act, ERISA,
National Labor Relations Act, Worker Adjustment and
Retraining Notification Act, Civil Rights Act,
Immigration Reform and Control Act of 1986, Age
Discrimination in Employment Act, the Water Pollution
Control Act and all applicable domestic and foreign
laws, rules and regulations relating to the safe conduct
of business, employment discrimination, wages and hours,
employment of illegal aliens, collective bargaining, the
payment of withholding and social security taxes,
product labeling, antitrust, consumer protection,
occupational safety and health, consumer product safety,
the importation of goods, product liability, currency
exchange, securities and trading-with-the-enemy matters,
except where the failure to so comply would not have a
material adverse effect on WP Sub's business.
(b) Except as set forth in Section 3.29 of the Disclosure
Schedule, since August 1, 1999, (i) WP Sub has obtained
and adhered to all necessary permits and other
approvals, including interim status under the Federal
Solid Waste Disposal Act, necessary to store, dispose of
and otherwise handle hazardous wastes, if any, and has
reported, to the extent required by all federal, state,
local and, to WP Sub's knowledge, foreign statutes,
laws, ordinances, regulations, rules, permits,
judgments, orders and decrees (accurate and complete
copies of all such permits, judgments, orders and
decrees received by WP Sub or in WP Sub's possession
being included in Section 3.28 of the Disclosure
Schedule), all past and present sites, if any, owned
and/or operated by WP Sub where hazardous wastes have
been treated, stored or disposed of; (ii) there has been
no spill, discharge, leak, emission, injection, escape,
dumping or any other release of any kind onto any
property of or used by WP Sub or into the environment
surrounding any such property of any toxic or hazardous
waste or substance, as such terms are defined under any
applicable law, ordinance, regulation or rule; and (iii)
there is no on-site or to WP Sub's knowledge off-site
location to which WP Sub has transported hazardous
wastes or arranged for the transportation of hazardous
wastes, which site is the subject of any federal, state,
local or foreign enforcement action or any other
investigation which could lead to any claim against WP
Sub or Buyer for any clean-up cost, remedial work,
damage to natural resources or personal injury,
including, but not limited to, claims under the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
(c) Except as set forth in Section 3.29 of the Disclosure
Schedule, WP Sub (i) has no knowledge and (ii) has not
received any written notification from any third party
(including but not limited to employees and government
agencies) of any present or, within the past three
years, past failure so to comply or has knowledge of any
present condition, activity, incident, action or plan
which may interfere with or prevent continued compliance
with any laws, rules or regulations or which may give
rise to any common law or statutory liability, or
otherwise form the basis of any material claim, action,
suit, proceeding, hearing or investigation which would
have a material adverse effect on WP Sub's business.
(d) WP Sub has duly obtained all permits, concessions,
grants, franchises, licenses and other government
authorizations and approvals necessary for the conduct
of its business except where
17
such failure would not have a material adverse effect on
its business; each of the foregoing is set forth in
Section 3.29 of the Disclosure Schedule and is in full
force and effect; to the best of WP Sub's knowledge,
there are no proceedings pending or threatened which may
result in the revocation, cancellation, suspension or
modification of any thereof.
3.30 Disclosure.
No representation or warranty by WP Sub in this Agreement and no
statement contained in the Disclosure Schedule contains any untrue statement of
any material fact or omits to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements made
herein or therein not misleading.
3.31 Insider Interests.
Except as set forth in Section 3.31 of the Disclosure Schedule, to
WP Sub's knowledge, no person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with
(an "Affiliate"), the WP Sub, and no Significant Person (as defined in Section
3.10(k)) has an interest in any contract or agreement pertaining to the business
of WP Sub wherein more than $5,000 in any twelve month period is involved.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
Buyer represents and warrants to WP Sub and Seller as follows:
4.1 Corporate Organization.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of its State of Incorporation. Buyer has full corporate
power and authority to carry on its businesses as they are now being conducted
and to carry on WP Sub's business being acquired hereunder and to own, lease and
operate its properties and assets as and in the places where such businesses are
now conducted and where such properties and assets are now owned, leased or
operated. Buyer is, or will be at the time of the Closing, duly qualified or
licensed to do business as a foreign corporation in all jurisdictions where the
failure to so qualify would have a material adverse effect on the business,
financial condition, properties or operations of Buyer, after taking into
consideration the purchase of the WP Sub Capital Stock hereunder.
4.2 Authorization.
Buyer has full corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to carry out the transactions
contemplated hereby. Buyer has taken all action (except the filing of a
certificate of amendment to reflect an authorized one-for-fifty reverse stock
split) required by law or otherwise to be taken by Buyer, to authorize Buyer's,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Buyer and constitutes a valid and binding agreement of
and upon the Buyer enforceable against the Buyer in accordance with its terms,
except that such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (ii) general principles of equity.
4.3 No Violation.
Neither the execution and delivery of this Agreement by the Buyer
nor the consummation by the Buyer of the transactions contemplated hereby will
violate any provision of the Certificate of Incorporation or by-laws of the
Buyer, or be in conflict with, or constitute a material default (or an event
which, with or without notice, lapse of time or both, would constitute a
material default) under, or result in the termination or invalidity of, or
accelerate the performance required by, or cause the acceleration of the
maturity of any obligations or liabilities of Buyer or result in the creation or
imposition of any security interest, lien or other encumbrance upon any of its
assets or properties under any agreement or commitment to which Buyer is a party
or by which it is bound or to which any of its assets are subject, or violate
any statute or law or any judgment, decree, order, regulation or rule of any
domestic or foreign court or governmental
18
authority applicable to the Buyer. For purposes of this Agreement, "to Buyer's
knowledge" "to the best of Buyer's knowledge" or any similar formulation thereof
shall mean to the actual knowledge of any of the current: (i) quality assurance
and/or quality control directors of Buyer, (ii) hazardous material directors of
Buyer, or (iii) officers and directors of Buyer.
4.4 Brokers and Finders.
No person has been authorized by the Buyer, or by anyone acting on
any of its behalf or by any of its officers, directors, employees or trustees,
to act as a broker, finder or in any other similar capacity in connection with
the transactions contemplated by this Agreement in such manner as to give rise
to any valid claim against Buyer or WP Sub or Seller for any broker's or
finder's fee or commission or similar type of compensation.
4.5 Litigation.
There is no action, suit or proceeding or any claim or investigation
of any nature whatsoever (including, but not limited to, products liability), at
law or in equity or both, by or before any domestic or foreign court or
government or other regulatory or administrative agency, arbitration tribunal,
board, bureau, authority or commission pending or, to the Buyer's knowledge,
which questions or challenges the validity of this Agreement or any action taken
or to be taken by the Buyer pursuant to this Agreement or in connection with the
transactions contemplated hereby; and to the best of their knowledge, there is
no valid basis for any such action, suit, inquiry proceeding or investigation.
4.6 Capitalization.
The authorized capital stock of the Buyer consists of 40,000,000
shares of common stock and 5,000,000 shares of preferred stock. As of the date
hereof and on the Closing Date there were 36,196,267 shares of common stock
outstanding and 1,529,000 shares of preferred stock outstanding. All such issued
and outstanding capital stock has been duly authorized, validly issued, and is
fully paid and nonassessable. As of the date hereof and on the Closing Date,
there are ____ shares of common stock reserved for issuance in connection with
outstanding warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock or other equity interest in the
Buyer, or any contract, commitment, agreement, understanding or arrangement of
any kind relating to the issuance of any capital stock of Buyer, any such
convertible or exchangeable securities or any such rights, warrants or options.
4.7 Consents.
No consent, approval, authorization or other order of, or
registration, qualification or filing with, any regulatory body, administrative
agency, or any other person or entity is required of Buyer in connection with
the execution, delivery and performance of this Agreement or the consummation by
Buyer of the transactions contemplated hereby which consent, approval, etc. has
not been obtained or will not be obtained on or prior to the Closing Date.
Accurate and complete copies of each of the foregoing which have been obtained
or made have been delivered to Seller at or prior to the date hereof.
4.8 Financial Statements.
The financial statements of Buyer and the related notes contained in
Buyer Form 10-KSB for the year ended June 30, 2002 present fairly the financial
position of Buyer as of the dates indicated, and the results of its operations
and cash flows for the periods therein specified. Such financial statements
(including the related notes) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods therein specified.
4.9 No Material Adverse Change.
Except as set forth on Schedule 4.9, subsequent to June 30, 2002,
Buyer and its subsidiaries, taken as a whole, have not incurred any material
liabilities or obligations, direct or contingent, other than in the ordinary
course of business, and there has not been any material adverse change in their
consolidated condition (in each case, financial or other), results of
operations, business, prospects, key personnel or capitalization.
19
4.10 Additional Information.
Except as set forth on Schedule 4.10, Buyer has filed in a timely
manner all documents that Buyer was required to file under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") during the 12 months
preceding the date of this Agreement. The following documents complied in all
material respects with the requirements of the Exchange Act as of their
respective filing dates, and the information contained therein as of the date
thereof did not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading:
(a) Buyer's Annual Report on Form 10-KSB, as amended, for
the fiscal year ended June 30, 2002;
(b) Buyer's Quarterly Reports on Form 10-QSB for the periods
ended September 30, 2002 and December 31, 2002; and
(c) all other documents, if any, filed by Buyer with the
Securities and Exchange Commission since November 15,
2002 pursuant to the reporting requirements of the
Exchange Act.
5. AGREEMENTS PENDING CLOSING.
5.1 Agreements of Seller and WP Sub Pending the Closing.
Seller and WP Sub covenant and agree that, pending the Closing and except as
otherwise agreed to in writing by Buyer:
(a) Business in the Ordinary Course. WP Sub's business shall
be conducted solely in the ordinary course consistent
with past practice.
(b) Existing Condition. Seller and WP Sub shall not cause
nor permit to occur any of the events or occurrences
described in Section 3.9 hereof.
(c) Maintenance of Physical Assets. Seller and WP Sub shall
continue to maintain and service the physical assets
used in the conduct of WP Sub's business in the same
manner as has been its consistent past practice.
(d) Employees and Business Relations. WP Sub shall use its
reasonable best efforts to keep available the services
of the present employees and agents of WP Sub's business
and to maintain the relations and goodwill with the
suppliers, customers, distributors and any others having
business relations with WP Sub's business.
(e) Maintenance of Insurance. Seller and WP Sub shall notify
Buyer of any changes in the terms of the insurance
policies and binders referred to on Schedule 3.19 of the
Disclosure Schedule.
(f) Compliance with Laws. etc. WP Sub shall comply with all
laws, ordinances, rules, regulations and orders
applicable to WP Sub's business, or WP Sub's operations,
assets or properties in respect thereof the
noncompliance with which might materially affect WP
Sub's business.
(g) Update Schedules. Seller and WP Sub shall promptly
disclose to Buyer any information contained in its
representations and warranties or the Schedules which,
because of an event occurring after the date hereof, is
incomplete or is no longer correct in any material
respect as of all times after the date hereof until the
Closing Date; provided, however, that none of such
disclosures shall be deemed to modify, amend or
supplement the representations and warranties of Seller
and WP Sub or the schedules hereto for the purposes of
Article 6 hereof, unless Buyer shall have consented
thereto in writing.
(h) Conduct of Business. WP Sub shall conduct its business
in such a manner that on the Closing Date the
representations and warranties of Seller and WP Sub
contained in this Agreement shall be
20
true, in all material respects, except as specifically
contemplated by this Section 5, as though such
representations and warranties were made on and as of
such date. Furthermore, Seller and WP Sub shall
cooperate with Buyer and use its reasonable best efforts
to cause all of the conditions to the obligations of
Buyer under this Agreement to be satisfied on or prior
to the Closing Date.
(i) Sale of Assets; Negotiations. Seller and WP Sub shall
not, directly or indirectly, sell or encumber all or any
part of WP Sub's assets, other than in the ordinary
course of WP Sub's business consistent with past
practice, or initiate or participate in any discussions
or negotiations or enter into any agreement to do any of
the foregoing. Seller and WP Sub shall not provide any
confidential information concerning WP Sub's business or
its properties or assets to any third party other than
in the ordinary course of business.
(j) Access. Upon reasonable notice to Seller and WP Sub,
Seller and WP Sub shall give to Buyer's officers,
employees, counsel, accountants and other
representatives all reasonable opportunity and access to
and the right to inspect, during normal business hours,
all of the premises, properties, assets, records,
contracts and other documents relating to WP Sub's
business and shall permit them to consult with the
officers, employees, accountants, counsel and agents of
Seller and WP Sub for the purpose of making such
investigation of WP Sub's business and in furtherance of
the transaction proposed herein, including without
limitation the financial information set forth in
paragraph 3.6(a) above as Buyer shall desire to make,
provided that such investigation shall not unreasonably
interfere with WP Sub's business operations,
Furthermore, Seller shall furnish to Buyer all such
documents and copies of documents and records and
information with respect to the affairs of WP Sub's
business and copies of any working papers relating
thereto as Buyer shall from time to time reasonably
request and shall permit Buyer and its agents to make
such inspections of WP Sub's assets as Buyer may request
from time to time.
(k) Press Releases. Except as required by applicable law,
neither Seller nor WP Sub shall give notice to third
parties or otherwise make any public statement or
releases concerning this Agreement or the transactions
contemplated hereby except for such written information
as shall have been approved in writing as to form and
content by Buyer; provided that WP Sub may continue such
communications with employees, customers, suppliers,
shareholders, lenders, franchisers, lessors and other
particular groups as may be legally required or
necessary or appropriate and not inconsistent with the
best interests of Buyer or the Closing under this
Agreement.
(l) No Default. Seller and WP Sub shall not do any act or
omit to do any act, or permit any act or omission to
act, which will cause a breach of any material contract
or commitment of Seller.
5.2 Agreements of Buyer Pending the Closing. Buyer covenants
and agrees that, pending the Closing and except as otherwise agreed to in
writing by Seller:
(a) Actions of Buyer. Buyer will not knowingly take any
action which would result in a breach of any of its
representations and warranties hereunder. Furthermore,
Buyer shall cooperate with Seller and use its reasonable
best efforts to cause all of the conditions to the
obligations of Buyer and Seller under this Agreement to
be satisfied on or prior to the Closing Date.
(b) Press Releases. Except as required by applicable law,
Buyer will not give notice to third parties or otherwise
make any public statement or releases concerning this
Agreement or the transactions contemplated hereby except
for such written information as shall have been approved
in writing as to form and content by Seller, which
approval shall not be unreasonably withheld; provided
that Buyer may continue such communications with
employees, customers, suppliers, shareholders, lenders,
franchisers, lessors and other particular groups as may
be legally required or necessary or appropriate and not
inconsistent with the best interests of Seller or the
Closing under this Agreement. In addition, Buyer will
provide Seller with information concerning press
releases and filings relating to these transactions not
less than two days prior to proposed release.
21
6. CONDITIONS PRECEDENT TO THE CLOSING.
6.1 Conditions Precedent to Buyer's Obligations. All
obligations of Buyer under this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent:
(a) Representations and Warranties True as of the Closing
Date. The representations and warranties of Seller and
WP Sub contained in this Agreement or in any schedule,
certificate or document delivered by Seller or WP Sub to
Buyer pursuant to the provisions hereof shall have been
true in all material respects on the date hereof without
regard to any schedule updates furnished by Seller or WP
Sub after the date hereof and shall be true in all
material respects on the Closing Date with the same
effect as though such representations and warranties
were made as of such date.
(b) Compliance with this Agreement. Each of Seller and WP
Sub shall have performed and complied in all material
respects with all agreements and conditions required by
this Agreement to be performed or complied with by it
prior to or at the Closing.
(c) Closing Certificate. Buyer shall have received a
certificate from each of Seller and WP Sub dated the
Closing Date, certifying that the conditions specified
in Sections 6.1(a) and 6.1(b) hereof have been fulfilled
and certifying that Seller and WP Sub has obtained all
consents and approvals required with respect to it or WP
Sub's business by Section 6.1(f) hereof.
(d) Opinions of Counsel for Seller. Xxxxxxx, Savage,
Kaplowitz, Wolf & Marcus, LLP, counsel for Seller, shall
have delivered to Buyer a written opinion, dated the
Closing Date, in the form of Exhibit D hereto with only
such changes as shall be in form and substance
reasonably satisfactory to the Buyer and its counsel.
(e) No Threatened or Pending Litigation. On the Closing
Date, no suit, action or other proceeding, or injunction
or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or
regulatory official, body or authority in which it is
sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby,
and no investigation that might result in any such suit,
action or proceeding shall be pending or threatened.
(f) Consents and Approvals. Except for consents required by
the terms of the contracts, commitments, agreements
listed in Section 6.1(f) of the Disclosure Statement,
and subject to the provisions of Sections 1.3(d) above,
the holders of any indebtedness of WP Sub, the lessors
or lessees of any real or personal property or assets
leased by WP Sub, the parties (other than WP Sub) to any
contract, commitment or agreement to which WP Sub is a
party or subject, any governmental or regulatory
official, body or authority or any other person, and any
governmental, judicial or regulatory official, body or
authority having jurisdiction over WP Sub or Buyer or
their respective affiliates to the extent that their
consent or approval is required or necessary under the
pertinent debt, lease, contract, commitment or agreement
or other document or instrument or under applicable
orders, laws, rules or regulations, for the consummation
of the transactions contemplated hereby in the manner
herein provided, shall have granted such consent or
approval, provided such debt, lease, contract, etc. is
material to WP Sub's business.
(g) Material Adverse Changes. The assets or the operations
of WP Sub's business taken as a whole, shall not have
been and shall not be threatened to be materially
adversely affected in any way as a result of any event
or occurrence (except as a result of general economic
conditions).
(h) Shareholder Approval. The shareholders of Seller shall
have approved, by requisite vote or consent under the
Seller's organizational documents and following receipt
of disclosure required by Section 14(a) or 14(c) of the
Securities Exchange Act of 1934, as amended, the sale of
the capital stock of WP Sub to Buyer.
22
(i) Revolving Credit Facility. Deutsche Financial Services
Corporation ("DFSC"), or another lending institution, as
lender and as representative of several institutional
lenders shall have funded a revolving credit facility in
an amount not less than $20 million, which is
substantially similar to the credit facility pursuant to
an agreement between WP Sub and DFSC dated June 30,
1999, as last amended on March 22, 2001, in addition to
approximately $5 million inventory financing to be
provided by Case.
(j) Environmental Audit. The completion of a Phase One
environmental audit at WP Sub's expense of the Real
Property used by the business result in a report
reasonably satisfactory to WP Sub.
(k) Change in Business. Buyer having no reasonable basis to
believe that either: (i) the net sales of WP Sub's
business was less than $60,000,000 for the nine fiscal
months ending April 30, 2003; or (ii) the sum of PP&E
being less than $1,000,000 as of April 30, 2003
(l) Capital Structure. The Buyer shall have the approximate
shares of common stock and equivalents outstanding as
set forth on Schedule 6.1(l).
(m) Approval of Counsel; Corporate Matters. All actions,
proceedings, resolutions, instruments and documents
required to carry out this Agreement or incidental
hereto and all other related legal matters shall have
been approved on the Closing Date by Xxxxxx & Xxxxxxxxx
LLP, counsel for Buyer, in the exercise of their
reasonable judgment. Seller and WP Sub shall also have
delivered to Buyer such other documents, instruments,
certifications and further assurances as such counsel
may reasonably require.
(n) Registration Rights. The Buyer shall have entered into
the Registration Rights Agreement with the holders of
shares of the Seller's Common Stock substantially in the
form annexed hereto as Exhibit H.
(o) Shareholders' and Voting Agreement. The Seller shall
have executed and delivered the Shareholders' and Voting
Agreement substantially in the form annexed hereto as
Exhibit I.
(p) Intercompany Debt. Seller shall have forgiven all
intercompany debt due from WP Sub and paid all
intercompany debt due to WP Sub.
6.2 Conditions Precedent to the Obligations of Seller. All
obligations of Seller under this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent:
(a) Representations and Warranties True as of the Closing
Date. The representations and warranties of Buyer
contained in this Agreement or in any list, certificate
or document delivered by Buyer to Seller pursuant to the
provisions hereof shall have been true in all material
respects on the date hereof and shall be true in all
material respects on the Closing Date with the same
effect as though such representations and warranties
were made as of such date.
(b) Compliance with this Agreement. Buyer shall have
performed and complied in all material respects with all
agreements and conditions required by this Agreement to
be performed or complied with by them prior to or at the
Closing.
(c) Closing Certificates. Seller shall have received a
certificate from Buyer dated the Closing Date certifying
that the conditions specified in Sections 6.2(a) and
6.2(b) hereof have been fulfilled.
(d) Opinion of Counsel for Buyer. Xxxxxx & Xxxxxxxxx LLP,
counsel to Buyer, shall have delivered to Seller a
written opinion, dated the Closing Date, in the form of
Exhibit E hereto with only such changes as shall be in
form and substance reasonably satisfactory to Seller and
its counsel.
23
(e) No Threatened or Pending Litigation. On the Closing
Date, no suit, action or other proceeding, or injunction
or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or
regulatory official, body or authority in which it is
sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby,
and no investigation that might result in any such suit,
action or proceeding shall be pending or threatened.
(f) Fairness Opinion. The Seller's Board of Directors shall
have received an opinion from Vertical Capital Partners,
Inc., New York, New York, to the effect that the terms
of this Agreement are fair to the Seller's stockholders
from a financial point of view.
(g) Buyer. Buyer having not less than $2,000,000 in cash and
a $550,000 secured note related to the sale of certain
assets at Closing.
(h) Approval of Counsel; Corporate Matters. All actions,
proceedings, resolutions, instruments and documents
required to carry out this Agreement or incidental
hereto and all other related legal matters shall have
been approved on the Closing Date by Xxxxxxx, Savage,
Kaplowitz, Wolf & Marcus, LLP, counsel for Seller, in
the exercise of their reasonable judgment. Buyer shall
also have delivered to Seller such other documents,
instruments, certifications and further assurances as
such counsel for Seller may reasonably require.
(i) Employment Agreements. Simultaneously with the Closing
of the Transaction, Buyer shall have entered into the
employment agreements with each of C. Xxxx Xxxxxx, Xxxx
Xxxxxx and Xxxxxx X. Xxxxx, in the forms annexed hereto
as exhibits I(1)(2) and (3).
6.3 Termination.
(a) Methods of Termination. Anything in this Agreement to
the contrary notwithstanding, the transactions
contemplated hereby may be terminated and abandoned at
any time prior to the Closing:
(i) by mutual consent of the Buyer and Seller;
or
(ii) by Seller if, as of the Closing Date, any
of the conditions set forth in Section 6.2
shall not have been met;
(iii) by Seller if, it does not obtain
shareholder approval of the transactions
contemplated by this Agreement
(iv) by Buyer if, as of the Closing Date, any
of the conditions set forth in Section 6.1
shall not have been met;
(v) by Buyer if the net sales of WP Sub's
business was less than $60,000,000 for the
nine fiscal months ended April 30, 2003;
(vi) by Buyer if the sum of net property, plant
and equipment included in WP Sub's assets
was less than $1,000,000 as of April 30,
2003; or
(vii) by either party if, without fault of the
terminating party, the Closing shall not
have occurred on or prior to June 27,
2003.
(b) Procedure Upon Termination. In the event of termination
and abandonment pursuant to Section 6.3(a) hereof,
written notice thereof shall forthwith be given to the
other party hereto and this Agreement shall terminate
and the transactions contemplated hereby shall be
abandoned without further action by the Buyer or the
Seller.
24
(c) Effect of Termination. In the event of termination of
this Agreement as expressly provided in Section 6.3(a)
above, this Agreement shall forthwith become void and
neither Buyer, on the one hand, nor Seller and WP Sub on
the other, shall have any liability to the other, except
for either party's breach of any of its obligations
which breach shall be existing at the time of such
termination.
7. RESERVED.
8. CERTAIN COVENANTS, AGREEMENTS AND CLOSING DOCUMENTS.
8.1 Non-Competition of Seller.
(a) Except as set forth on Schedule 8.1, neither Seller nor
any subsidiary or affiliate of Seller, except for Xxxxxx
Xxxxx and C. Xxxx XxXxxx, in which Seller owns or has
the right, directly or indirectly, to vote 50.1% or more
of the voting stock of such entity (collectively the
"Western Group") shall, without the written consent of
Buyer, for a period of five years from the Closing Date,
operate, directly a construction equipment sales,
leasing or maintenance business in the States of
California or Nevada.
(b) Notwithstanding the provisions of this Section 8.1: (i)
nothing herein shall prevent members of the Western
Group from investing in the securities of any company
listed on a national securities exchange or quoted on
the NASDAQ quotation system, which investment, but for
this Section 8.1(b), would be a violation of Section
8.1(a), provided Seller's and Western Group's ownership
is not more than 5% of any class of securities of any
such company and Seller's and Western Group's
involvement with any such company is solely that of a
passive stockholder, (ii) nothing herein shall prevent
an acquisition by or of Seller or members of Western
Group involving, peripherally equipment sales, leasing
or maintenance business in California or Nevada provided
such business is disposed of or divested within 90 days
following such transaction; and (iii) if any provision
of this Section 8.1 is determined to be unenforceable
because of the duration of such provision or the area
covered thereby, the court making such determination
shall have the power to and shall reduce the scope of
such provision with respect to such duration and/or
area, and/or to delete ("blue-pencil") specific words or
phrases, and in its reduced or blue-penciled form such
provision shall be enforceable and shall be enforced.
(c) Seller agrees that it will not, directly or indirectly,
for a period of 24 months after the Closing, for its own
account or for the account of any other person,
interfere with Buyer's relationships with any of its
suppliers or customers or directly solicit Buyer's
employees in the States of California and Nevada.
(d) At or prior to Closing, Seller and WP Sub will: (i)
assign to Buyer all confidentiality agreements signed by
parties from whom Seller or WP Sub had communications in
connection with a possible purchase of WP Sub's assets,
business or any interest or part thereof (collectively
the "Offerees") on behalf of Buyer; (ii) provide Buyer
with a list of such Offerees; and (iii) request from
such Offerees a return of all such confidential
information.
(e) Seller expressly agrees and understands that Buyer's
remedy at law for any breach of Section 8.1(a), (b),
(c), or (d) will likely be inadequate if it were Buyer's
exclusive remedy and that the damages flowing from any
such breach are not readily susceptible to being
measured solely in monetary terms. Accordingly, it is
acknowledged that upon adequate proof of Seller's
violation or threatened violation of any legally
enforceable provisions of any of the above enumerated
Subsections of Section 8.1, and Buyer's satisfaction of
any applicable legal or judicial requirements to support
its claim for equitable relief, Buyer will be entitled
to specific performance of the above enumerated
Subsections of Section 8.1, including but not limited
to, immediate injunctive relief, a temporary order
restraining any threatened or further breach and
25
such other equitable relief as may be appropriate.
Nothing in this Section 8.1 shall be deemed to limit
Buyer's remedies at law or in equity for any breach by
Seller of any of the provisions of this Agreement,
including but not limited to the above enumerated
Subsections of Section 8.1, which may be pursued or
availed of by Buyer. Seller has carefully considered the
nature and extent of the restrictions upon it and the
rights and remedies conferred upon Buyer under this
Section 8.1 and hereby acknowledges and agrees that the
same are reasonable, are fully required to protect the
legitimate interests of Buyer and do not confer a
benefit upon Buyer disproportionate to the detriment of
Seller.
(g) The provisions of this Section 8.1 shall be terminated
upon the occurrence of an Event of Default subject to
applicable grace periods under the Note.
8.2 [Intentionally left blank.]
8.3 Consummation of Transactions; Further Assurances.
(a) Each of the parties agrees to use its reasonable best
efforts to bring about the satisfaction of the
conditions required to be performed, fulfilled or
complied with by it hereunder and to take or cause to be
taken, all action, and to do, or cause to be done, all
things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make
effective the transactions contemplated by this
Agreement as expeditiously as practicable.
(b) In case at any time after the Closing any further action
is reasonably necessary or desirable to carry out the
purposes of this Agreement, the appropriate party will
take all such necessary action, including without
limitation, the execution and delivery of such further
instruments and documents as may be reasonably requested
by the other party or parties for such purposes or
otherwise to complete or perfect the transactions
contemplated hereby. After the Closing, Buyer and Seller
shall cooperate fully with the other and shall make
available to the other and to any taxing authority all
information, records or documents in its possession
which are reasonably requested in connection with the
preparation of any tax returns or in connection with any
tax liability of Seller for any period prior to the
Closing, and otherwise shall cooperate in connection
with all matters, such as but not limited to litigations
and personnel matters, involved in the sale from Seller
to Buyer.
8.4 Risk of Loss.
Prior to the Closing Date, the risk of loss or damage to, or
destruction of, any or all of WP Sub's business and any or all of WP Sub's
assets shall remain with Seller.
8.5 Payment of Taxes.
Seller shall file when due, giving effect to all applicable
extension provisions, all federal, state, local and foreign tax returns required
to be filed by it (including but not limited to income, sales, use and payroll
taxes) for all periods to the Closing Date and shall pay all taxes, interest or
penalties (i) shown on, or which are otherwise due and payable pursuant to, such
returns, (ii) which shall become due with respect to any such period pursuant to
any deficiency notice or similar notice or (iii) which otherwise shall become
due with respect to any such period.
8.6 Best Efforts to Obtain Consents.
Each of Seller and Buyer shall use its reasonable best efforts to
obtain promptly all the consents and authorizations of third parties for which
it is responsible to obtain, and to cooperate with the other as the other may
reasonably request, to make all filings, if any, and to give all notices to
third parties which may be required in order to effect the transactions
contemplated by this Agreement.
8.7 Other Government Filings.
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Buyer and Seller agree to cooperate with each other in filing any
necessary applications, reports or other documents with any federal or state
authorities having jurisdiction with respect to the transactions contemplated by
this Agreement and in seeking necessary consultation with and favorable action
by any such agencies, authorities or bodies.
8.8 [Intentionally left blank.]
8.9 Retention of Records.
Seller shall deliver to Buyer all files and records directly
pertaining to the operation of WP Sub's business (and not delivered to Buyer at
Closing)
8.10 [Intentionally left blank.]
8.11 Accountants' Consents.
During the period beginning on the Closing Date and ending the last
date for which such statements would be required to be included in a filing made
by Buyer with the Securities and Exchange Commission ("SEC"), Seller will, at
its expense, procure and deliver to Buyer, the consent of Xxxxxx & Co., CPA's,
P.C. to include and incorporate their reports on the Closing Balance Sheet and
the information described in Section 3.6(a)(i) in Buyer's filings with the SEC.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
9.1 Survival of Representations.
All representations and warranties contained in this Agreement shall
survive the Closing for a period (the "Survival Period") of three years after
the Closing Date, except for those related to the representations set forth in
Sections 3.15 and 3.24 hereof which shall continue through the applicable
statute of limitations and those related to third party claims in connection
with Excluded Obligations which shall survive the Closing for a period of five
years.
9.2 Indemnification by Buyer.
Buyer agrees to indemnify, protect, defend and hold harmless Seller
and any Affiliate thereof and each of its shareholders, any parent, subsidiary
or affiliate thereof and all directors, officers, employees, attorneys, and
agents of any of the foregoing (the "Seller Group"), at any time after the
Closing and during the appropriate Survival Period (except that such
indemnification obligations shall continue beyond the Survival Period if a
Notice of Claim for indemnification shall be delivered to Buyer prior thereto,
in which case such indemnification obligations shall continue until the claim as
to which such notice has been given is resolved and any applicable
indemnification obligations have been satisfied), from and against all demands,
claims, actions or causes of action, assessments, deficiencies, taxes, losses,
damages, liabilities, costs and expenses, including without limitation,
interest, penalties and reasonable attorneys' fees and expenses (collectively
"Losses"), asserted against, resulting from, imposed upon or incurred by the
Seller Group, directly or indirectly, arising out of or in connection with (a)
the breach or inaccuracy of any of the representations or warranties of Buyer
made in or pursuant to this Agreement; (b) any breach of any covenant or
agreement of Buyer contained in this Agreement; or (c) any and all obligations,
liabilities, debts or commitments in connection with the operation of WP Sub's
business arising after the Closing to the extent that they arise after the
Closing and only in respect of such time period.
9.3 Indemnification by Seller.
Seller agrees to indemnify, protect, defend and hold harmless Buyer
and each of its shareholders, any parent, subsidiary or affiliate thereof and
all directors, officers, employees, attorneys and agents of any of the foregoing
(the "Buyer Group"), at any time after the Closing and during the appropriate
Survival Period (except that such indemnification obligations shall continue
beyond the Survival Period if a Notice of Claim for indemnification
27
shall be delivered to Seller prior thereto, in which case such indemnification
obligations shall continue until the claim as to which such notice has been
given is resolved and any applicable indemnification obligations have been
satisfied), from and against all Losses asserted against, resulting from,
imposed upon or incurred by the Buyer Group or any member thereof, directly or
indirectly, arising out of or in connection with (a) the breach or inaccuracy or
alleged breach or inaccuracy of any of the representations or warranties of
Seller made in or pursuant to this Agreement; or (b) any breach of any covenant
or agreement of Seller contained in this Agreement.
9.4 Third Party Claims.
(a) If any demand, claim, action or cause of action, suit,
proceeding or investigation (collectively, the "Claim")
is brought against an Indemnified Party for which the
Indemnified Party intends to seek indemnity from the
other party hereto (the "Indemnifying Party"), then the
Indemnified Party within twenty-one (21) days after such
Indemnified Party's receipt of the Claim, shall notify
the Indemnifying Party pursuant to Article "10.4" of
this Agreement which notice shall contain a reasonably
thorough description of the nature and amount of the
Claim (the "Claim Notice"). The Indemnifying Party shall
have the option to undertake, conduct and control the
defense of such claim or demand. Such option to
undertake, conduct and control the defense of such claim
or demand shall be exercised by notifying the
Indemnified Party within twenty (20) days after receipt
of the Claim Notice pursuant to Article "9.4" of this
Agreement (such notice to control the defense is
hereinafter referred to as the "Defense Notice"). The
failure of the Indemnified Party to notify the
Indemnifying Party of the Claim shall not relieve the
Indemnifying Party from any liability which the
Indemnifying Party may have pursuant to this Article "9"
of this Agreement except to the extent that such failure
to notify the Indemnifying Party prejudices the
Indemnifying Party. The Indemnified Party shall use all
reasonable efforts to assist the Indemnifying Party in
the vigorous defense of the Claim. All costs and
expenses incurred by the Indemnified Party in defending
the Claim shall be paid by the Indemnifying Party. If,
however, the Indemnified Party desires to participate in
any such defense or settlement, it may do so at its sole
cost and expense (it being understood that the
Indemnifying Party shall be entitled to control the
defense). The Indemnified Party shall not settle the
Claim. If the Indemnifying Party does not elect to
control the defense of the Claim, within the aforesaid
twenty (20) day period by proper notice pursuant to
Article "9.4" of this Agreement, then the Indemnified
Party shall be entitled to undertake, conduct and
control the defense of the Claim (a failure by the
Indemnifying Party to send the Defense Notice to the
Indemnified Party within the aforesaid twenty (20) day
period by proper notice pursuant to Article "9.4" of
this Agreement shall be deemed to be an election by the
Indemnifying Party not to control the defense of the
Claim); provided, however, that the Indemnifying Party
shall be entitled, if it so desires, to participate
therein (it being understood that in such circumstances,
the Indemnified Party shall be entitled to control the
defense). Regardless of which party has undertaken to
defend any claim, the Indemnifying Party may, without
the prior written consent of the Indemnified Party,
settle, compromise or offer to settle or compromise any
such claim or demand; provided however, that if any
settlement would result in the imposition of a consent
order, injunction or decree which would restrict the
future activity or conduct of the Indemnified Party, the
consent of the Indemnified Party shall be a condition to
any such settlement. Whether the Indemnifying Party
shall control and assume the defense of the Claim or
only participate in the defense or settlement of the
Claim, the Indemnified Party shall give the Indemnifying
Party and its counsel access, during normal business
hours, to all relevant business records and other
documents, and shall permit them to consult with its
employees and counsel.
(b) The amount of any Losses for which indemnification is
available shall be computed without regard to the tax
effect of any such loss or indemnification.
(c) In the event of payment by an Indemnifying Party to the
Indemnified Party as contemplated in this Section 9, the
Indemnifying Party shall be subrogated to and shall
stand in the place of the Indemnified Party as to any
events or circumstances in respect of which the
Indemnified Party may have any right or claim against
any third party relating to such event giving rise to
the claim for which the Indemnifying Party shall have
made payment to the Indemnified Party. The
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Indemnified Party shall cooperate with the Indemnifying
Party in any reasonable manner in prosecuting any such
subrogated right or claim.
9.5 Limitations on Indemnification.
(a) No claim may be made against an Indemnifying Party
pursuant to its indemnification obligations set forth in
Section 9.2 or 9.3 hereof unless the aggregate amount of
all matters for which such party would (but for this
provision) be liable (and of which matters the
Indemnified Party followed the provisions of Section 8.4
above) exceeds $50,000 (the "Threshold Amount") and the
Indemnified Party's right to indemnification hereunder
shall only be with respect to such amounts in excess of
the Threshold Amount. For purposes of determining the
Threshold Amount and Maximum Amount hereunder, the
Indemnifying Party's obligations shall be with respect
to the Seller Group as a whole and the Buyer Group as a
whole.
(b) The Indemnifying Party shall not be obligated for any
indirect, special or consequential damages or lost
profits incurred by the Indemnified Party.
(c) Neither Buyer on the one hand, nor Seller, on the other
hand, will be liable in the aggregate to the other for
indemnification pursuant hereto in excess of the amount
of $17,000,000, (the "Maximum Amount").
9.6 Successors.
The merger, consolidation, liquidation, dissolution or winding up
of, or any similar transaction with respect to, the Indemnifying Party shall not
affect in any manner the obligations of the Indemnifying Party pursuant to this
Section or any other term or provision of this Agreement, and the Indemnifying
Party covenants and agrees to make adequate provision for its liabilities and
obligations hereunder in the event of any such transaction.
9.7 Time Action Must be Brought.
No action may be brought under this Section 9 unless brought three
years from the date of Closing except actions related to the representation set
forth in Section 3.16 and 3.25 which shall be brought by the expiration of the
applicable statute of limitation plus one week.
9.8 Reasonable Costs, Etc.
The indemnification, which is set forth in this Article "9" of this
Agreement shall be deemed to include not only the specific liabilities or
obligation with respect to which such indemnity is provided, but also all
counsel fees, reasonable costs, expenses and expenses of settlement relating
thereto, whether or not any such liability or obligation shall have been reduced
to judgment.
10. MISCELLANEOUS PROVISIONS.
10.1 Amendment.
This Agreement may be amended, modified or supplemented by the
parties hereto only by a written instrument duly signed by or on behalf of the
party to be charged therewith.
10.2 Waiver of Compliance.
Any failure of Seller, on the one hand, or Buyer, on the other hand,
to comply with any obligation, covenant, agreement or condition herein may be
expressly waived in writing by an authorized officer of Buyer or Seller,
respectively, but such waiver or failure to insist upon strict compliance with
any such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
29
10.3 Expenses.
(a) Except as set forth in paragraph 10.3(b), whether or not
the transactions contemplated by this Agreement are
consummated, each of the parties hereto shall pay the
fees and expenses of their respective counsel,
accountants and other experts, and shall pay all other
expenses incurred by it incident to the negotiation,
preparation, execution and consummation of this
Agreement.
(b) WP Sub shall bear the cost of fees and expenses charged
by WP Sub's Auditors in connection with the preparation
of and report described in Section 8.12. In addition,
Buyer and WP Sub shall bear equally the fees and
expenses: (i) WP Sub's Auditors up to a maximum of
$7,500 in connection with performing the procedures set
forth in Schedule 2.5; and (ii) Buyer's Auditors up to a
maximum of $7,500 in connection with their supervision
of the foregoing.
(c) The provisions of Section 10.3 shall survive any
termination of this Agreement.
10.4 Notices.
All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given (i) four business days subsequent to mailing if mailed by express,
certified or registered mail, with postage prepaid, in the continental United
States; (ii) two business days subsequent to pick up by such courier if sent by
a nationally or internationally recognized overnight courier service that
regularly maintains records of items picked up and delivered; or (iii) when
transmitted if sent by telecopier, provided that a written acknowledgment of
receipt signed by or on behalf of the recipient of the telecopy is transmitted
back to the sender by the recipient, as follows:
If to Seller/or WP Sub:
Western Power & Equipment Corp.
0000-X X.X. 000xx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
with a copy to: Xxxxxxx, Savage, Kaplowitz, Wolf & Marcus, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
or to such other person or address as Seller shall furnish to Buyer in writing.
If to Buyer: XXXxxx.Xxx, Inc.
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
or to such other person or address as Buyer shall furnish to Seller in writing.
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10.5 Binding Effect; Assignment.
This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
administrators, legal representatives, successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned or assignable by any of the parties hereto without the prior
written consent of the other party, except (i) by operation of law, (ii) that
Buyer may freely assign this Agreement or all or any rights or obligations it
may have hereunder to a direct or indirect wholly-owned subsidiary of Buyer, and
(iii) that Buyer may assign all of its rights but not its obligations under this
Agreement to any institution providing financing or re-financing for the
transactions contemplated by this Agreement.
10.6 Remedies.
Except that the indemnification provision of Section 9 above is the
exclusive remedy for breaches of representations, warranties and covenants as
provided therein, the parties acknowledge and agree that each party hereto may
seek any remedies in equity or law that may be available to it. Nothing herein
shall prevent the Parties from impleading or interpleading the other party at
any time in an action brought by a third party relating to what would otherwise
have been an indemnifiable claim.
10.7 Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to its principles of conflict
or choice of law.
10.8 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
the same instrument.
10.9 Headings.
The headings of the sections of this Agreement are inserted for
convenience only and shall not constitute a part or affect in any way the
meaning or interpretation of this Agreement.
10.10 Entire Agreement.
(a) This Agreement sets forth the entire agreement and
understanding of the parties hereto in respect of the
subject matter contained herein, and supersedes all
prior agreements, promises, letters of intent,
covenants, arrangements, communications, representations
or warranties, whether oral or written, by any party
hereto or by any Related Person of any party hereto.
(b) All Exhibits attached hereto, the Disclosure Schedule,
any exhibits thereto and all certificates, documents and
other instruments delivered or to be delivered pursuant
to the terms hereof are hereby expressly made a part of
this Agreement as fully as though set forth herein, and
all references herein to the terms "this Agreement,"
"hereunder," "herein," "hereby" or "hereto" shall be
deemed to refer to this Agreement and to all such
writings.
10.11 Third Parties.
Except as specifically set forth or referred to herein, nothing in
this Agreement, express or implied, is intended or shall be construed to confer
upon or give to any person (including but not limited to Seller's employees),
31
firm, partnership or corporation other than the parties hereto and their
successors or permitted assigns, any rights or remedies under or by reason of
this Agreement.
10.12 Severability.
The invalidity of any one or more of the words, phrases, sentences,
clauses, sections or subsections contained in this Agreement shall not affect
the enforceability of the remaining portions of this Agreement or any part
hereof, all of which are inserted conditionally on their being valid in law,
and, in the event that any one or more of the words, phrases, sentences,
clauses, sections or subsections contained in this Agreement shall be declared
invalid by a court of competent jurisdiction, this Agreement shall be construed
as if such invalid word or words, phrase or phrases, sentence or sentences,
clause or clauses, section or sections, or subsection or subsections had not
been inserted.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
WESTERN POWER & EQUIPMENT
CORP. (Delaware)
By: /s/ Xxxx XxXxxx
-----------------------------
Name: Xxxx XxXxxx
Title: President/CEO
XXXXXX.XXX, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
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