EXHIBIT 10.1
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ASSETS SALE AND PURCHASE AGREEMENT
by
and among:
WESTERN POWER & EQUIPMENT CORP.,
a Delaware corporation
WESTERN POWER & EQUIPMENT CORP.,
an Oregon corporation
and
CNH DEALER HOLDING COMPANY LLC,
a Delaware limited liability company
Dated as of June __, 2008
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS.........................................................1
ARTICLE II SALE AND PURCHASE OF ASSETS AND ASSUMPTION OF
CERTAIN
LIABILITIES...........................................................5
2.1 SALE AND PURCHASE OF
ASSETS...........................................5
2.2 EXCLUDED
ASSETS.......................................................7
2.3 ASSUMPTION OF
LIABILITIES.............................................7
2.4 CONSIDERATION FOR ASSET
PURCHASE; HOLDBACK............................8
2.5 ADJUSTMENTS TO PURCHASE
PRICE.........................................9
2.6
SCHEDULES............................................................10
2.7
CLOSING..............................................................10
2.8 DELIVERY TO
BUYER....................................................10
2.9 DELIVERY TO
SELLERS..................................................11
2.10 REQUIRED
CONSENTS....................................................12
2.11 FURTHER
ASSURANCE....................................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
SELLERS........................12
3.1 CORPORATE
STATUS.....................................................12
3.2
AUTHORIZATION........................................................13
3.3 CONSENTS AND
APPROVALS...............................................13
3.4 FINANCIAL
DISCLOSURES................................................13
3.5 TITLE TO PURCHASED ASSETS
AND RELATED MATTERS........................13
3.6 REAL PROPERTY
LEASES.................................................14
3.7
ACCOUNTS.............................................................15
3.8
INVENTORY............................................................15
3.9
CONTRACTS............................................................15
3.10 LEGAL
PROCEEDINGS....................................................15
3.11
EMPLOYEES............................................................16
3.12 ENVIRONMENTAL
MATTERS................................................16
3.13 FINDER'S
FEES........................................................17
3.14
TAXES................................................................17
3.15 INTENTIONALLY
DELETED................................................18
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3.16 AFFILIATED
TRANSACTIONS..............................................18
3.17 BENEFITS
PLANS.......................................................18
3.18 OVERTIME, BACK WAGES, VACATION AND
MINIMUM WAGES.....................19
3.19 DISCRIMINATION, WORKERS
COMPENSATION AND OCCUPATIONAL
SAFETY AND
HEALTH....................................................20
3.20 INTENTIONALLY
DELETED................................................20
3.21 LABOR DISPUTES; UNFAIR LABOR
PRACTICES...............................20
3.22 INSURANCE
POLICIES...................................................20
3.23 PRODUCT
WARRANTIES...................................................20
3.24 COMPLIANCE WITH LAWS; LICENSES AND
PERMITS...........................20
3.25 PRODUCT SAFETY
AUTHORITIES...........................................20
3.26 INTENTIONALLY
DELETED................................................21
3.27 FULL
DISCLOSURE......................................................21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
BUYER...........................21
4.1 ORGANIZATIONAL
STATUS................................................21
4.2
AUTHORIZATION........................................................21
4.3 CONSENTS AND
APPROVALS...............................................21
ARTICLE V COVENANTS OF
SELLERS...............................................22
5.1 OPERATION OF THE
BUSINESS............................................22
5.2
ACCESS...............................................................22
5.3 INSURANCE AND MAINTENANCE OF
THE PURCHASED ASSETS....................22
5.4
EMPLOYEES............................................................23
5.5 FULFILLMENT OF
CONDITIONS............................................23
5.6 NOTIFICATION OF CERTAIN
MATTERS......................................23
5.7 NEW
LEASE............................................................23
5.8
NON-COMPETITION......................................................23
5.9 USE OF
NAME..........................................................24
ARTICLE VI COVENANTS OF
BUYER................................................24
6.1 FULFILLMENT OF
CONDITIONS............................................24
6.2
EMPLOYEES............................................................25
6.3 PRO RATA SHARE OF PREPAID
RENT AND LEASE EXPENSES....................25
6.4
ACCOUNTS.............................................................25
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ARTICLE VII FURTHER
COVENANTS................................................25
7.1
CONFIDENTIALITY......................................................25
7.2 COMMERCIALLY REASONABLE
EFFORTS......................................26
7.3
EXPENSES.............................................................26
7.4 TRANSFER
TAXES.......................................................26
7.5 RECEIPT OF PAYMENTS
POST-CLOSING.....................................26
7.6 TERMINATION OF DEALER
AGREEMENTS AND RELEASE OF CLAIMS...............27
ARTICLE VIII CONDITIONS PRECEDENT TO THE
TRANSACTIONS........................27
8.1 CONDITIONS TO EACH PARTY'S
OBLIGATIONS...............................27
8.2 CONDITIONS TO OBLIGATIONS OF
BUYER...................................27
8.3 CONDITIONS TO OBLIGATIONS OF
SELLERS.................................29
ARTICLE IX
INDEMNIFICATION...................................................30
9.1 BY
SELLERS...........................................................30
9.2 BY
BUYER.............................................................31
9.3 PROCEDURE FOR
CLAIMS.................................................31
9.4 THIRD PARTY
CLAIMS...................................................31
9.5
HOLDBACK.............................................................32
9.6 SURVIVAL OF REPRESENTATIONS,
WARRANTIES AND COVENANTS................33
ARTICLE X
TERMINATION........................................................33
10.1
GROUNDS FOR
TERMINATION..............................................33
10.2
EFFECT OF
TERMINATION................................................34
ARTICLE XI PUBLIC
ANNOUNCEMENTS..............................................35
ARTICLE XII CONTENTS OF AGREEMENT, AMENDMENT, PARTIES IN
INTEREST,
ASSIGNMENT,
ETC..............................................................35
ARTICLE XIII
INTERPRETATION..................................................35
ARTICLE XIV
NOTICES..........................................................36
ARTICLE XV GOVERNING LAW; CONSENT TO JURISDICTION; CONSENT TO
SERVICE OF
PROCESS...........................................................37
ARTICLE XVI
COUNTERPARTS.....................................................38
ARTICLE XVII
SEVERABILITY....................................................38
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EXHIBITS
Exhibit A List
of Acquired Locations
Exhibit B Form
of Bill of Sale
Exhibit C Form
of Assignment and Assumption
SCHEDULES
2.1(a) Leases
2.1(b) Fixed
Assets
2.1(c)(i) New
Equipment Inventory
2.1(c)(ii) Used and
Rental Equipment Inventory
2.1(c)(iii) Parts Inventory
2.1(d) Customer
Deposits, Rent Deposits, Prepaid Items
2.1(e)(i)
Accounts, Notes, Other Receivables Under 90 Days
2.1(e)(ii) Accounts,
Notes, Other Receivables Over 90 Days
2.1(f) Assigned
Contracts
2.1(g) Assigned
Permits
2.1(j)
Intellectual Property
2.1(k) Work
Orders in Process
2.3(a)(ii) Scheduled
Liabilities
2.4
Purchase Price
2.5
Inventory
3.3(a) Required
Consents
3.4
Financial Disclosures
3.5
Title Exceptions
3.7
Adjustments to Accounts
3.8
Consignment/Materials
3.9
Defaults, etc. Under Assigned Contracts
3.10(a) Pending
Litigation
3.10(b) Claims
3.11(a) Employees;
Collective Bargaining Agreements
3.11(b) Indebtedness to
Employees
3.12
Environmental
3.14
Taxes
3.16
Affiliated Transactions
3.17(a) Benefit
Plans
3.17(c) Determination
Letters
3.18
Employee Claims
3.19
Workers Compensation Claims
3.21
Labor Disputes/Unfair Labor Practices
3.22
Insurance Policies
3.23
Product Warranties
3.24
Compliance with Laws, Licenses, Permits
6.2
Vacation/Sick Leave
8.2(f)
Creditors
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ASSETS SALE AND PURCHASE AGREEMENT
THIS
ASSETS SALE AND PURCHASE AGREEMENT is made effective as of June
__, 2008, by and among WESTERN POWER & EQUIPMENT CORP., a
Delaware corporation
(the "Parent"), WESTERN POWER & EQUIPMENT CORP., an Oregon
corporation and a
wholly owned subsidiary of the Parent ("WPE"), and CNH DEALER
HOLDING COMPANY
LLC ("Buyer"), a Delaware limited liability company which is a
wholly-owned
subsidiary of CNH America, LLC ("CNH"). The Parent and WPE are
hereinafter
sometimes referred to individually as a "Seller" and collectively
as "Sellers."
Certain terms are used herein as defined below in Article I or
elsewhere in this
Agreement.
BACKGROUND
WPE desires to sell, and Buyer desires to purchase, the
Purchased
Assets (as such term is defined in Section 2.1) and, as part of
such sale and
purchase, Buyer is willing to assume certain obligations and
liabilities of WPE
as set forth herein.
WITNESSETH
NOW, THEREFORE, in consideration of the respective covenants
contained herein and intending to be legally bound hereby, the
parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
For convenience, certain terms used in more than one part of
this
Agreement are listed in alphabetical order and defined or referred
to below
(such terms, as well as any other terms defined elsewhere in this
Agreement,
shall be equally applicable to both the singular and plural forms
of the terms
defined).
"Accounts" is defined in Section 2.1(e).
"Acquired Locations" means the WPE branch locations identified
on
Exhibit "A" attached hereto and made a part hereof.
"Adjustment Amount" is defined in Section 2.5(b).
"Affiliates" means, with respect to a particular party, persons
or
entities controlling, controlled by or under common control with
that party,
including but not limited to any members, officers, directors and
majority-owned
entities of that party and of its other Affiliates.
"Agreement" means this Agreement and the exhibits and schedules
hereto.
"Assigned Contracts" means those Contracts of WPE (other than
the
Leases) assigned to and assumed by the Buyer pursuant to Section
2.1(f) hereof.
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"Assigned Permits" is defined in Section 2.1(g).
"Assumed Liabilities" is defined in Section 2.3(a).
"Benefit Plan" is defined in Section 3.17(a).
"Business" means WPE's business of selling, renting, repairing
and
maintaining construction equipment and related parts manufactured
by Buyer or
one of WPE's other suppliers at the Acquired Locations.
"Charter Documents" means an entity's certificate of organization
or
formation, certificate or articles of incorporation, certificate
defining the
rights and preferences of securities, articles of organization,
limited
liability company or operating agreement, general or limited
partnership
agreement, certificate of limited partnership, joint venture
agreement, by-laws
or similar document governing the entity.
"Claim" means any allegation, claim, action, cause of action,
lawsuit or other legal proceeding, whether at law, in equity or
before any
governmental agency or arbitrator, for damages, costs, losses or
expenses
incurred by any person as a result of any actions or failure to act
by any
party, or its officers, directors, employees or agents.
"Closing" means the closing of the Transactions.
"Closing Date" is defined in Section 2.6.
"CNH Capital" means CNH Capital America LLC, a Delaware limited
liability company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any written or oral contract, agreement,
lease,
instrument or other commitment that is binding on any Person or its
property
under applicable law.
"Court Order" means any judgment, decree, injunction, order,
directive or ruling of any federal, state, local or foreign court
or
governmental or regulatory body or authority, whether in the United
States or in
any other jurisdiction, that is binding on any Person or its
property under
applicable law.
"Damages" is defined in Section 9.1.
"Default" means (i) a breach, default or violation or (ii) the
occurrence of an event that with the passage of time or the giving
of notice, or
both, would constitute a breach, default or violation.
"Disclosure Schedules" is defined in Section 2.6.
"Encumbrances" means any lien, mortgage, security interest,
pledge,
restriction on transferability, defect of title or other claim,
charge or
encumbrance of any nature whatsoever on any property or property
interest.
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"Environmental Condition" is defined in Section 3.12(b).
"Environmental Law" is defined in Section 3.12(a).
"Environmental Liabilities" means, without limitation, all
liabilities, losses, claims, debts, assessments, deficiencies,
charges, demands,
fines, penalties, costs, expenses, damages, natural resource
damages, reasonable
fees and disbursements of counsel, costs of Remedial Action, liens
or other
claims against property or improvements thereon for work, labor or
services
performed with respect thereto or other obligations of any kind,
character or
description (whether absolute, contingent, matured, liquidated,
unliquidated,
accrued, known, unknown, direct, indirect, derivative or otherwise)
that pertain
or relate, in whole or in part, to an Environmental Condition.
"ERISA" means the Employee Retirement Income Security Act of
1974,
as amended, and any successor thereto.
"Excluded Assets" is defined in Section 2.2.
"Excluded Liabilities" is defined in Section 2.3(b).
"Fixed Assets" is defined in Section 2.1(b).
"GAAP" means U.S. generally accepted accounting principles,
applied
on a consistent basis.
"Governmental Body" means any federal, state, local or foreign
government entity or any court, administrative or regulatory agency
or
commission or other governmental authority or agency.
"Hazardous Substances" is defined in Section 3.12.
"Holdback Amount" is defined in Section 2.4(c).
"Holdback Period" is defined in Section 9.5.
"Indemnification Obligations" is defined in Section 9.5.
"Indemnified Party" is defined in Section 9.3.
"Indemnitor" is defined in Section 9.3.
"Inventory" is defined in Section 2.1(c).
"Knowledge" means the actual knowledge of the respective party
or
parties, as the case may be, after reasonable inquiry, as well as
knowledge that
a reasonable prudent individual in a similar position would be
likely to have.
In the case of either Seller, "Knowledge" shall mean the knowledge
of Dean
McLain, Mark Wright or Douglas Wiles, including their actual
knowledge and
knowledge attributed to them under the foregoing standard.
"Leases" is defined in Section 2.1(a).
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"Legal Requirement" means any statute, law, ordinance,
regulation,
order, governmental permit or rule of any federal, state, local,
foreign or
other governmental agency or body or of any other type of
regulatory body,
whether in the United States or in any other jurisdiction,
including but not
limited to those covering food and drug, environmental, energy,
safety, health,
transportation, bribery, recordkeeping, zoning, employment,
antidiscrimination,
antitrust, wage and hour, and price and wage control matters.
"Liability" means any direct or indirect liability,
indebtedness,
obligation, expense, claim, loss, damage, deficiency, guaranty or
endorsement of
or by any Person, absolute or contingent, accrued or unaccrued, due
or to become
due, liquidated or unliquidated.
"Litigation" means any lawsuit, action, arbitration,
administrative
or other proceeding, criminal prosecution or governmental
investigation or
inquiry.
"Material Adverse Change" with respect to any Person means any
material adverse change in the business, properties, results of
operations,
condition (financial or otherwise), liquidity, products,
competitive position,
customers and customer relations.
"Material Adverse Effect" means any effect which has resulted in,
or
is reasonably likely to result in, a Material Adverse Change.
"Ordinary Course" or "ordinary course of business" means the
ordinary course of business of a Person that is consistent with
such Person's
past practices.
"Person" means any natural person, limited liability company,
corporation, partnership, proprietorship, association, trust or
other legal
entity.
"Purchased Assets" is defined in Section 2.1.
"Remedial Action" is defined in Section 3.12.
"Required Consents" is defined in Section 3.3.
"Scheduled Liabilities" is defined in Section 2.3(a)(ii).
"Taxes" means all taxes, charges, fees, levies, or other like
assessments, including income, gross receipts, ad valorem, value
added, premium,
excise, real property, personal property, windfall profit, sales,
use, transfer,
license, withholding, employment, payroll, stamp, occupation ,
premium, custom
duties, severance and franchise taxes imposed by a Governmental
Body; and shall
include any interest, fines, penalties, assessments, or additions
to tax
resulting from, attributable to, or incurred in connection with any
such Taxes
or any contest or dispute thereof.
"Termination Date" is defined in Section 10.1(b).
"Transaction Documents" means this Agreement and the other
agreements and documents among the parties contemplated hereby and
thereby.
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"Transactions" means the transactions contemplated by the
Transaction Documents.
"WPE Financial Disclosures" is defined in Section 3.4.
ARTICLE II
SALE AND PURCHASE OF ASSETS
AND ASSUMPTION OF CERTAIN LIABILITIES
2.1 SALE AND PURCHASE OF ASSETS. Subject to the terms and
conditions
of this Agreement, at the Closing Sellers shall sell, transfer,
convey, assign
and deliver to Buyer, free and clear of all Encumbrances or
Liabilities (other
than the Assumed Liabilities and Encumbrances that secure the
Assumed
Liabilities) and with no impairments of title, and Buyer shall
purchase, acquire
and accept from Sellers, all the right, title and interest of
Sellers in and to
the following assets to the extent such assets are associated with
the Acquired
Locations and the Ordinary Course operation of the Business
(collectively, the
"Purchased Assets"):
(a) Leases. All rights and interests under the real
estate leases relating to the Acquired Locations, as described on
Schedule
2.1(a) (including all exhibits and amendments thereto, the
"Leases");
(b) Fixed Assets. All machinery, equipment, computer
hardware, tools, vehicles (other than vehicles included in
Inventory),
furniture, furnishings, leasehold improvements and fixtures (to the
extent owned
by WPE), office and shop supplies and other tangible personal
property located
at the Acquired Locations, in transit thereto or in the possession
of any bailee
and used in the Ordinary Course of the Business at the Acquired
Locations, as
more fully described on Schedule 2.1(b) (the "Fixed Assets"), as
adjusted
pursuant to Section 2.5; provided further, that for purposes of the
Section 2.5
adjustments, the following criteria will be applied in valuing the
Fixed Assets:
(1) office and shop supplies will be sold to Buyer for a total of
$16,000; (2)
service, parts and sales manuals will be sold to Buyer for a total
of $16,000;
(3) leasehold improvements will be sold to Buyer for their net book
value at
Closing Date; and (4) all other Fixed Assets shall be valued at
fair market
replacement value, taking into consideration age and condition;
(c) Inventory. The (i) new equipment inventory listed on
Schedule 2.1(c)(i), (ii) used and rental equipment inventory listed
on Schedule
2.1(c)(ii), and (iii) parts inventory listed on Schedule
2.1(c)(iii), as
adjusted pursuant to Section 2.5 (collectively, the "Inventory");
provided
further, that for purposes of the Section 2.5 adjustments, the
following
criteria will be applied in valuing the Inventory: (1) new
equipment will valued
at dealer net price, minus all applicable discount programs, plus
freight,
assembly, and reasonable handling costs; (2) discounts will be
allowed for
demonstration hours or use; (3) where applicable, normal hourly use
rates will
apply, as set forth in CNH's "Schedule of Terms and Discounts;" (4)
where normal
hourly use rates are not applicable, reasonable depreciation will
be applied by
Buyer, subject to adjustment as provided in Section 2.5 hereof; (5)
WPE will
make reasonable efforts to return all equipment inventory that is
competitive
with CNH equipment to the original manufacturer prior to Closing;
(6) all
unreturned competitive inventory will be acquired by Buyer at its
liquidation
value; (7) equipment owned by WPE but rented to or otherwise in use
by Arizona
Pacific
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Materials LLC (an Affiliate of WPE) will be deemed Excluded Assets,
and
will not be acquired by Buyer; (8) used and rental equipment will
be sold at a
price based on fair market wholesale value; (9) parts with a turn
within the
past twenty-four (24) months will be sold to Buyer at current
dealer net less
all-applicable dealer discounts; (10) parts without a turn for more
than
twenty-four (24) months will be sold at current dealer net less
50%; and (11)
WPE will make reasonable efforts to return all parts inventory that
is
competitive with CNH equipment to the original manufacturer prior
to closing,
provided that all unreturned competitive parts will be purchased by
Buyer at the
prices specified above;
(d) Prepaid Items. The customer deposits, rent deposits
and other prepaid items relating to the Purchased Assets or the
Acquired
Locations, listed on Schedule 2.1(d) ("Prepaid Items"), as adjusted
pursuant to
Section 2.5;
(e) Accounts. The accounts, notes and other receivables
listed on Schedule 2.1(e)(i) (accounts 60 days and under) and
Schedule
2.1(e)(ii) (accounts over 60 days, discounted as hereinafter
provided), as
adjusted pursuant to Section 2.5 (the "Accounts"); provided
further, that for
purposes of the Section 2.5 adjustments, the following criteria
will be applied
in valuing the Accounts: (1) accounts 60 days and under will be
valued at 100%
of face amount; (2) accounts over 60 days but under 121 days will
be valued at
75% of face amount; and (3) accounts over 120 days will be valued
at zero
(subject to the provisions of Section 6.4);
(f) Assigned Contracts. All rights under the Contracts,
including distributor agreements, capital leases, collective
bargaining
agreements, security agreements, mortgages, agreements with
customers (including
without limitation purchase orders, preventive maintenance
agreements, rental
agreements, and recourse and buy-back contracts and obligations),
vehicle
leases, computer leases, mobile telephone agreements, and software
licenses, and
including without limitation any and all liens or security
interests associated
with any of the foregoing rights, to the extent relating to the
Purchased Assets
or the Acquired Locations and identified on Schedule 2.1(f)
(collectively, the
"Assigned Contracts");
(g) Assigned Permits. Any governmental permits or
licenses, to the extent assignable, relating exclusively to the
Acquired
Locations and identified on Schedule 2.1(g) (the "Assigned
Permits");
(h) Causes of Action. All causes of action, demands,
rights against third parties and choses in action arising out of
occurrences
before or after the Closing, including without limitation all
rights under
express or implied warranties, and all other intangible rights and
assets,
relating exclusively to the Purchased Assets, the Acquired
Locations or the
Assumed Liabilities;
(i) Books and Records. The books and records of WPE,
including all service, parts and sales manuals, personnel files,
data, plans and
recorded knowledge, including customer and supplier lists,
equipment maintenance
and warranty information, all correspondence with any customers,
suppliers,
employees or governmental entities relating to the Business, sales
and pricing
data, and any other reports, marketing studies, plans and documents
relating to
the Business, in whatever form, including without limitation
electronic
databases, and whether held by Sellers or stored on behalf of
Sellers by third
parties, directly and exclusively related to any of
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the foregoing (provided that Sellers may retain copies of all of
the foregoing
and the originals of personnel and other records Sellers are
required by law to
retain in their possession or are necessary or desirable to be
retained for
their ongoing business, regulatory compliance, the maintenance of
their
corporate franchises, or for archival purposes);
(j) Intellectual Property. The intellectual property of
WPE listed on Schedule 2.1(j);
(k) Service Work Orders in Process. The rights to
accrued but unbilled obligations arising out of the service work
orders listed
on Schedule 2.1(k) (the "Work Orders in Process"), as adjusted
pursuant to
Section 2.5; provided further, that for purposes of the Section 2.5
adjustments,
the following criteria will be applied in valuing the Work Orders
in Process:
(1) unbilled customer repair labor will be sold to Buyer at 60% of
normal
customer hourly rate; and (2) internal repair labor will be sold to
Buyer at the
various mechanics' hourly rates; and
(l) Other Necessary Assets. All other assets and
property owned by WPE and necessary for the operation of the
Business in the
Ordinary Course.
2.2 EXCLUDED ASSETS. Sellers shall not sell, transfer, convey,
assign or deliver, and shall retain, any and all assets whatsoever
other than
the Purchased Assets (the "Excluded Assets").
2.3 ASSUMPTION OF LIABILITIES.
(a) At the Closing, Buyer shall assume, and shall agree
to pay and discharge when due, only those Liabilities of WPE that
are set forth
below, subject to the further limitations hereinafter set forth
(collectively
the "Assumed Liabilities"):
(i) All Liabilities of WPE under the Leases,
the Assigned Contracts and the Assigned Permits, arising after the
Closing Date;
and
(ii) The Liabilities listed on Schedule
2.3(a)(ii) (the "Scheduled Liabilities"), subject to adjustment as
provided in
Section 2.5.
(b) Buyer shall not be deemed to assume or to be
otherwise liable, and Sellers will be responsible for, any
Liabilities relating
to the Business other than the Assumed Liabilities (the "Excluded
Liabilities").
The Excluded Liabilities include without limitation: (i) all
amounts outstanding
under any and all indebtedness for borrowed money, including lines
of credit,
letters of credit, notes payable and loans payable or deferred
compensation,
except to the extent included in the Scheduled Liabilities and
expressly assumed
by Buyer; (ii) all Environmental Liabilities that arise out of or
result from
events occurring or conditions existing on or prior to the Closing
Date; (iii)
all product liability or claims for injury to any person or
property that relate
to equipment or parts sold or maintenance or repairs made to
equipment or parts
by WPE on or prior to the Closing Date; (iv) all Tax Liabilities of
WPE,
including any such Liabilities of WPE related to consummation of
the
Transactions and any Liabilities of WPE for Taxes of another Person
(but not
including transfer taxes that are Buyer's responsibility under
Section 7.4 of
this Agreement); (v) any Liabilities arising out of WPE's violation
or failure
to comply with any Legal Requirement or any Court Order; (vi)
except as provided
in Section 6.3 with respect to
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accrued vacation and sick leave, any Liability arising under or
relating to any
Benefit Plans or any person's employment or termination of
employment with
either Seller; (vii) any deductibles, self-insured retentions or
retrospective
rating plans connected with any insurance policy of WPE; and (viii)
any fees,
costs and expenses incurred in connection with this Agreement and
the
Transactions.
2.4 CONSIDERATION FOR ASSET PURCHASE; HOLDBACK. Subject to the
terms
and conditions of this Agreement, the consideration (the "Purchase
Price") for
the purchase of the Purchased Assets shall be as follows:
(a) The following amounts payable in cash at Closing
(subject to the Hold-Back):
(i) $13,488,500 for new equipment Inventory
(subject to adjustment as provided in Section 2.5); plus
(ii) $3,181,249 for parts Inventory (subject
to adjustment as provided in Section 2.5); plus
(iii) $7,707,293 for used and rental
equipment Inventory (subject to adjustment as provided in Section
2.5); plus
(iv) An amount representing reimbursement of
the security deposits with respect to the Leases, as identified in
Schedule
2.1(a), plus the amount of any additional prepaid items identified
in Schedule
2.1(d) (subject to adjustment as provided in Section 2.5); plus
(v) $2,829,665 for Fixed Assets (subject to
adjustment as provided in Section 2.5), which includes an aggregate
of $32,000
for (A) office and shop supplies and (B) service, parts and sales
manuals and
literature; plus
(vi) $3,893,634 for the Accounts (subject to
adjustment as provided in Section 2.5); plus
(vii) An amount representing reimbursement
for labor costs related to Work Orders in Process as reflected on
Schedule
2.1(k) (subject to adjustment as provided in Section 2.5);
minus
(viii) The aggregate dollar amount of the
Scheduled Liabilities (subject to adjustment as provided in Section
2.5); minus
(b) An amount equal to the aggregate of all amounts paid
by Buyer (at Buyer's option) directly to creditors of WPE to
discharge
Encumbrances on the Purchased Assets in accordance with payoff
letters delivered
to Buyer as provided in Section 8.2(f) hereof, including without
limitation
repayment of WPE's debt to CNH Capital, which payments shall be
deemed made for
the benefit of WPE; minus
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(c) An amount equal to $1,000,000 (the "Holdback
Amount"), to be held by the Buyer to pay any Adjustment Amount owed
to the Buyer
as provided in Section 2.5 hereof, and to satisfy any
Indemnification
Obligations of the Sellers as provided in Section 9.5 hereof, in
the declining
amounts for the respective periods and otherwise on the terms and
conditions set
forth in Section 9.5; plus
(d) The assumption of the Assumed Liabilities.
2.5 ADJUSTMENTS TO PURCHASE PRICE.
(a) Schedule 2.1(b) (Fixed Assets), Schedule 2.1(c)(i)
(equipment Inventory), Schedule 2.1(c)(ii) (used and rental
equipment
Inventory), Schedule 2.1(c)(iii) (parts Inventory), Schedule
2.1(e)(i) and
Schedule 2.1(e)(ii) (Accounts) and Schedule 2.3(a)(ii) (Scheduled
Liabilities)
attached to this Agreement as executed and delivered by the parties
(together,
the "Interim Purchase Price Schedules") show the Fixed Assets, the
Inventory,
the Accounts and the Scheduled Liabilities as of the effective
dates set forth
therein. On or before that date which is three (3) business days
prior to the
Closing Date (or such other date as the parties may agree in
writing), Buyer
shall prepare and deliver to Sellers up-dated Purchase Price
Schedules showing
the Fixed Assets, the Inventory, the Accounts and the Scheduled
Liabilities as
of the then most recent date for which data is available (the
Interim Purchase
Price Schedules, adjusted as aforesaid, are hereinafter referred to
as the
"Closing Schedules"), using the valuation methodologies as set
forth in Section
2.1 hereof. Sellers shall cooperate with Buyer to assist in the
preparation of
the Closing Schedules. The Closing Schedules as prepared by Buyer
shall be used
for purposes of calculating the Purchase Price payable on the
Closing Date as
provided in Section 2.4 hereof, but shall be subject to further
post-closing
adjustment as provided in Section 2.5(b) hereof.
(b) Within thirty (30) calendar days after the Closing
Date, Buyer shall prepare and deliver to Sellers (i) amended
schedules, listing
(A) the actual Fixed Assets, Inventory, Accounts and Scheduled
Liabilities
transferred to or assumed by Buyer, and (B) the actual value of
Prepaid Items
and Work Orders in Process as of the Closing Date (the "Amended
Schedules"),
using the valuation methodologies as set forth in Section 2.1
hereof, and (ii) a
statement showing an adjustment amount (the "Adjustment Amount")
equal to the
net of change in the aggregate value of the Fixed Assets, the
Inventory, the
Accounts, the Prepaid Items and the Work Orders in Process, net of
the Scheduled
Liabilities, as determined based on the Amended Schedules, from
such value as
determined based on the Closing Schedules. If the Adjustment Amount
is a
negative amount, then the Purchase Price shall be reduced by such
amount. If the
Adjustment Amount is a positive amount, then the Purchase Price
shall be
increased by such amount.
(c) Sellers shall have ten (10) calendar days to review
the Adjustment Amount as determined by Buyer pursuant to subsection
(b) hereof
and to notify Buyer of their agreement or disagreement thereto,
provided that,
if Sellers fail to so notify Buyer within such 10-day period they
shall be
deemed to have agreed with the Adjustment Amount determined by
Buyer in all
respects. If Sellers agree (or are deemed to have agreed) with the
Adjustment
Amount as determined by Buyer, then within five (5) calendar days
following the
end of the aforesaid 10-day period, or if earlier, within five (5)
calendar days
of Sellers notifying Buyer of
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such agreement, Buyer shall pay WPE the Adjustment Amount if such
amount is a
positive number, and Sellers shall pay Buyer the Adjustment Amount
if such
amount is a negative number. Sellers' obligation to pay the
Adjustment Amount
(if any) shall be satisfied by deducting the Adjustment Amount from
the Holdback
Amount as provided in Section 9.5 hereof.
(d) If
Sellers disagree with Buyer's calculation of the
Adjustment Amount, then Sellers and Buyer shall have fifteen (15)
calendar days
following the date Sellers send the notice of disagreement provided
for in
subsection (c) hereof to resolve such issues. If any issues remain
unresolved
after that period of time, the parties will, within five (5)
calendar days,
submit the dispute for resolution to an independent financial
consulting firm
(the "Arbiter") for review and resolution of all matters that are
in dispute,
based on the valuation methodologies as set forth in Section 2.1
hereof. The
Arbiter shall be a mutually acceptable nationally recognized
independent
financial consulting firm agreed upon by Buyer and Sellers in
writing. Buyer and
Sellers will use reasonable efforts to cause the Arbiter to render
a decision
resolving the matters in dispute within fifteen (15) calendar days
after the
submission of such matters to the Arbiter or such longer period as
the parties
may mutually agree upon in writing. Buyer and Sellers agree that
the
determination of the Arbiter (the "Determination") shall be final
and binding
upon Buyer and Sellers (absent manifest error). Promptly following
issuance of
the Determination, the Adjustment Amount will be calculated in
accordance with
the Determination, and Sellers shall pay Buyer the Adjustment
Amount if such
amount is a negative number, and Buyer shall pay WPE the Adjustment
Amount if
such amount is a positive number. Sellers' obligation to pay the
Adjustment
Amount (if any) shall be satisfied by deducting the Adjustment
Amount from the
Holdback Amount as provided in Section 9.5 hereof. The fees, costs
and expenses
of the Arbiter shall be borne equally by Sellers and Buyer.
2.6 SCHEDULES. The Schedules to this Agreement other than the
Interim Purchase Price Schedules, the Closing Schedules and the
Amended
Schedules are referred to herein as the "Disclosure Schedules."
This Agreement
may be executed and delivered by the parties, and shall be binding
upon them in
accordance with and subject to its terms and conditions,
notwithstanding the
fact that the Disclosure Schedules are not attached to this
Agreement at the
time of such execution and delivery. Sellers shall prepare and
deliver to Buyer
the Disclosure Schedules as soon as practicable following the
execution and
delivery of this Agreement, but in any event on or before that date
which is ten
(10) business days prior to the Closing Date (or such other date as
the parties
may agree in writing). The obligation of Buyer to consummate the
Transactions
shall be subject to its review and approval of the form and content
of the
Disclosure Schedules, as provided in Section 8.2 hereof. Once
approved by Buyer,
the Disclosure Schedules shall be attached to this Agreement and
made a part
hereof.
2.7 CLOSING. Unless this Agreement shall have been terminated
and
the Transactions abandoned pursuant to Article X, and subject to
the conditions
to the Transactions set forth in Article VIII, the Closing shall
take place as
promptly as practicable after satisfaction or waiver of such
conditions but in
any event by that date which is sixty (60) days following the date
of this
Agreement, at 10:00 AM local time, at the offices of Buyer's
counsel, unless the
parties hereto agree in writing to another date, time or place. The
date on
which the Closing occurs is referred to herein as the "Closing
Date."
2.8 DELIVERY TO BUYER. At the Closing, Sellers shall deliver to
Buyer:
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(a) a duly executed Bill of Sale in the form attached
hereto as Exhibit "B" (the "Bill of Sale");
(b) a duly executed Assignment and Assumption Agreement
in the form attached hereto as Exhibit "C (the "Assignment and
Assumption
Agreement");
(c) duly executed assignment and assumption agreements
with respect to each of the Leases in form and substance
satisfactory to Buyer;
(d) duly executed estoppel certificates with respect to
each of the Leases, in form and substance satisfactory to
Buyer;
(e) duly executed instruments of assignment and
assumption and other instruments where required to transfer any
Purchased
Assets;
(f) executed copies of each of the Required Consents
referred to in Schedule 3.3(a), except to the extent waived by
Buyer and
Sellers;
(g) all business records and other documents containing
or relating to the Purchased Assets (or otherwise make such records
and
documents available to Buyer);
(h) all such other endorsements, assignments and
instruments as, in the reasonable opinion of Buyer or its counsel,
are necessary
to vest in Buyer good and marketable title to the Purchased
Assets;
(i) the New Lease, as required by Section 5.7 hereof;
(j) the Non-Competition Agreement of Dean McLain, as
required by Section 5.8(d) hereof;
(k) the Release, as required by Section 7.6 hereof;
(l) possession of the Purchased Assets, free and clear
of all Encumbrances; and
(m) all other previously undelivered documents required
to be delivered by Sellers to Buyer at or prior to the Closing in
connection
with the Transactions, including those contemplated by Article
VIII.
2.9 DELIVERY TO SELLERS. At the Closing, Buyer shall deliver to
Sellers:
(a) a duly executed Assignment and Assumption Agreement;
(b) assignment and assumption agreements with respect to
each of the Leases;
(c) duly executed instruments of assignment and
assumption and other instruments where required to effect Buyer's
assumption of
the Assumed Liabilities;
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<PAGE>
(d) payment by wire transfer, in immediately available
funds, of the Purchase Price as provided in Section 2.4;
(e) the Release, as required by Section 7.6 hereof;
(f) such other certificates, documents and instruments
as may reasonably be requested by Sellers to carry out the purposes
or intent of
this Agreement; and
(g) all previously undelivered documents required
hereunder to be delivered by Buyer to Sellers at or prior to the
Closing,
including those contemplated by Article VIII.
2.10 REQUIRED CONSENTS. Sellers shall use their commercially
reasonable efforts to obtain the Required Consents on or before the
Closing Date
and Buyer shall use its commercially reasonable efforts to assist
Sellers in
obtaining the Required Consents. If and to the extent Sellers are
unable to
obtain any Required Consents by the Closing Date, Buyer may waive
the closing
condition as to any such Required Consents and elect to have
Sellers continue
using their commercially reasonable efforts to obtain such consents
after the
Closing Date, in which event the affected Purchased Assets and/or
Assigned
Contracts will be held by Sellers in trust for Buyer and shall be
performed by
Buyer in the name of Sellers and all benefits and obligations
derived thereunder
(except as otherwise provided in the Transaction Documents) shall
be for the
account of Buyer, until such time as the applicable Required
Consents are
obtained. Where entitlement of Buyer to such Purchased Assets
and/or Assigned
Contracts hereunder is not recognized by any third party, Sellers
shall, at the
request of Buyer, enforce in a reasonable manner, at the cost of
and for the
account of Buyer, any and all rights of Sellers against such third
party.
2.11 FURTHER ASSURANCE. After the Closing: (a) Sellers shall
from
time to time, at the request of Buyer and without further cost or
expense to
Sellers, execute and deliver such other instruments of conveyance
and transfer
and take such other actions as Buyer may reasonably request in
order to more
effectively consummate the Transactions and to vest in Buyer good
and marketable
title to the Purchased Assets; and (b) Buyer shall from time to
time, at the
request of Sellers and without further cost to Buyer, execute and
deliver such
other instruments of assumption and take such other actions as
Sellers may
reasonably request in order to more effectively consummate the
Transactions and
to confirm the assumption by Buyer of the Assumed Liabilities.
Nothing in this
Section 2.10 shall be construed to require Buyer to pay Sellers any
additional
consideration for the Purchased Assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally represent and warrant to
Buyer
that the following statements contained in this Article III are
true and correct
and complete as of the date of this Agreement and will be true,
correct and
complete as of the Closing Date:
3.1 CORPORATE STATUS. Each of the Sellers is a corporation duly
organized, validly existing and in good standing under the laws of
the
jurisdiction under which it was incorporated. Each Seller, as
applicable, has
all requisite corporate power and authority to own, lease and
use
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the Purchased Assets and conduct the Business as now conducted.
Each of the
Sellers is qualified to do business as a foreign corporation and is
in good
standing in any jurisdiction where it is required to be so
qualified, except
where the failure to so qualify would not have a Material Adverse
Effect.
Sellers have made available to Buyer true and complete copies of
the certificate
of incorporation and bylaws of each Seller, in each case as amended
to date.
3.2 AUTHORIZATION. Each of the Sellers has the requisite power
and
authority to execute and deliver the Transaction Documents to which
it is or
will be a party and to perform its obligations under such of the
Transaction
Documents to which it is a party. Such execution, delivery and
performance by
the Sellers has been duly authorized by all necessary corporate
action,
including approval by the respective Boards of Directors of the
Sellers, as
required by the laws of the jurisdiction under which the Sellers
are
incorporated. The Transaction Documents executed on or before the
date hereof
constitute, and the Transaction Documents to be executed after the
date hereof
will constitute, valid and binding obligations of the Sellers,
enforceable
against each such party in accordance with their respective terms,
except as
enforceability may be restricted, limited or delayed by applicable
bankruptcy or
other laws affecting creditors' rights generally, and except as
enforceability
may be subject to general principles of equity.
3.3 CONSENTS AND APPROVALS. (a) Except for the consents and
filings
specified in Schedule 3.3(a) (the "Required Consents"), or consents
the failure
of which to obtain would not have a Material Adverse Effect,
neither the
execution and delivery by either Seller of the Transaction
Documents to which it
is or will be a party, nor the performance of the Transactions to
be performed
by either Seller, will (i) violate or require any filing, consent
or approval or
constitute a Default under (x)any Legal Requirement, pending filing
with any
Governmental Body, or Court Order to which a Seller is subject, (y)
the Charter
Documents of either Seller or (z) any Contract, Assigned Permit or
other
document to which a Seller is a party or to which any of the
Business, the
Purchased Assets or the Acquired Locations may be subject; (ii)
result in the
creation or imposition of any Encumbrance on any Purchased Asset;
or (iii)
prevent the consummation of the Transactions.
(b) Except as provided in Section 3.3(a) hereof, no
consent, waiver, approval, order, permit or authorization of, or
declaration or
filing with, or notification to, any Person or Governmental Body is
required on
the part of Sellers in connection with the execution and delivery
of this
Agreement or any Transaction Documents, or on the part of Sellers
in connection
with the consummation of the Transactions or the performance or
compliance by
Sellers with any of the provisions hereof or thereof.
3.4 FINANCIAL DISCLOSURES. In connection with the Transactions,
Sellers have delivered to Buyer's representative, Navigant Capital
Advisors,
certain financial data and other disclosures with respect to the
Business as set
forth on Schedule 3.4 (referred to herein as the "WPE Financial
Disclosures").
The WPE Financial Disclosures have been prepared from the books and
records of
WPE in accordance with GAAP, present accurately the assets,
liabilities and
results of operations of WPE as of the dates thereof and for the
periods stated
therein, and accurately present in all material respects the
financial condition
of WPE and the Business.
3.5 TITLE TO PURCHASED ASSETS AND RELATED MATTERS. Except as
set
forth on Schedule 3.5, WPE has good and marketable title to, or
valid leasehold
interests in, all of the
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Purchased Assets, free from any Encumbrances (other than the
Assumed Liabilities
and Encumbrances that secure the Assumed Liabilities). The use of
the Purchased
Assets is not subject to any Encumbrances (other than those
specified in the
preceding sentence), and such use does not materially encroach on
the property
or rights of anyone else. The Purchased Assets, the Assumed
Liabilities and the
Acquired Locations constitute all property and property rights now
used or
necessary for the conduct of the Business in the manner and to the
extent
presently conducted by WPE.
3.6 REAL PROPERTY LEASES. (a) WPE has delivered to Buyer true,
correct and complete copies of the Leases. With respect to the
Leases, and
except as reflected in Schedule 2.1(a), the Leases have not been
modified or
amended by any written or oral agreement and are in full force and
effect and
are valid and subsisting; neither WPE nor any person on behalf of
WPE has
received any notice of cancellation or termination from any
landlord under any
of the Leases; WPE is not in Default under the terms of any of the
Leases; to
WPE's Knowledge, no lessor under any of the Leases is in Default
under the terms
of any such Leases; the current monthly rentals under each of the
Leases is
correctly set forth in Schedule 2.1(a), and WPE has paid its
monthly rental,
additional rent and all other monetary obligations due under each
of the Leases
through the last day of the month of this Agreement; the
commencement dates and
expiration dates of each of the Leases are correctly set forth in
Schedule
2.1(a); no ongoing dispute exists with any landlord concerning the
payment of
rent or WPE's performance of any of its obligations under the
Leases; WPE has
not assigned or otherwise transferred its rights under any of the
Leases, nor
has WPE sublet or permitted any other person to occupy all or any
portion of the
leased premises; the amount of any security deposit made by or on
behalf of WPE
under each of the Leases is correctly set forth on Schedule 2.1(a);
and any
renewal option of WPE under the Leases, including the renewal rent,
is correctly
set forth on Schedule 2.1(a). Each Lease constitutes the sole and
entire
agreement between the lessor thereunder and WPE respecting the
premises leased
thereunder. WPE is the lessee of the leasehold estate purported to
be granted by
each Lease, and its possession thereof has not been disturbed, nor
has any claim
been asserted against it adverse to its rights in such leasehold
estate.
(b) To WPE's Knowledge, none of the leasehold
improvements installed by WPE or its representatives at any of the
Acquired
Locations contravenes any zoning ordinance, building code, use or
occupancy
restriction, or other administrative regulation or violates any
restrictive
covenant or other agreement to which the applicable property is
bound, or any
provision of law, the effect of which in any material respect would
interfere
with or prevent the continued use of the applicable property for
the purposes
for which it is now being used by WPE or would materially affect
the value
thereof to Buyer for similar use. To WPE's Knowledge, all of the
Acquired
Locations, buildings, fixtures and improvements thereon are in good
operating
condition and repair (subject to normal wear and tear).
(c) To WPE's Knowledge, there are no pending or
threatened condemnation or similar proceedings affecting any
Acquired Location
or any part thereof. The improvements on the Acquired Locations are
served by
gas, electricity, water, sewage and waste disposal and other
utilities adequate
to operate the improvements located thereon. To WPE's Knowledge,
the buildings
and other facilities located on the Acquired Locations are free of
any patent
and latent structural or engineering defects.
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3.7 ACCOUNTS. Subject to applicable reserves, all Accounts are,
and
all A
