EXHIBIT 10.2
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MEMBERSHIP INTEREST TRANSFER AGREEMENT
This Agreement for the transfer and assignment of, in the
aggregate, a
5% Class A Membership Interest in Arizona Pacific Materials, LLC
(this
"Agreement"), is entered into on September 26, 2007, by and among
the
transferor, WESTERN POWER & EQUIPMENT CORP., a Delaware
corporation (the
"Transferor"), Arizona Pacific Material, LLC, an Arizona limited
liability
company (the "Company") and the transferees signatory hereto (each
a
"Transferee" and collectively the "Transferees"), with respect to
the following
facts:
RECITALS
A. WHEREAS, the Transferor owns 90% of the membership interests in
the
Company.
B. WHEREAS, in consideration for the Transferees (or their assignor
in
interest) agreeing to waive the existence of certain events of
defaults pursuant
to the certain Letter Agreement with the Transferor and Rockmore
Investment
Master Fund Ltd., as agent, dated as of September 19, 2007 (the
"Letter
Agreement") relating to the Transferor's Series A Variable Rate
Secured
Convertible Debentures issued pursuant to that certain Securities
Purchase
Agreement, dated June 8, 2005 by and among the Transferor and the
purchasers
signatory thereto (the "Purchase Agreement"), the Transferees
desire to receive
and the Transferor desires to grant, in the aggregate, a 5% Class A
Membership
Interest in the Company, the only class of membership interests
issued and
outstanding.
C. The 5% Class A Membership Interest in the Company is in addition
to
the 10% Class A Membership Interest granted to the Transferees
pursuant to that
certain Membership Interest Transfer Agreement dated April 17, 2007
giving the
Transferees, in the aggregate and as of the date hereof, a 15%
Class A
Membership Interest in the Company.
D. NOW, THEREFORE, for and in consideration of the mutual
agreements
set forth herein, and subject to the terms and conditions set forth
below, the
parties agree as follows:
AGREEMENT
1. Transfer of Membership Interests. The Transferor hereby
transfers,
free and clear of all encumbrances (except for any encumbrances
created on
behalf of the Transferees hereunder) to the Transferees, and the
Transferees
hereby acquire from the Transferor, in the aggregate, 5% the
outstanding Class A
Membership Interests of the Company (the "Membership Interest").
Each Transferee
shall receive a portion of the Membership Interest equal to the
percentage set
forth on the signature page of such
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Transferee attached hereto. The Transferees shall succeed to 5% of
the capital
account of the Transferor as of the date hereof.
2. Consideration for Transfer. The transfer of the Membership
Interest
pursuant to this Agreement is being granted hereunder in
consideration for the
waiver of certain events of default pursuant to the Letter
Agreement.
3. Closing. The closing of this transaction shall take place
contemporaneously with the execution of this Agreement. Within 5
business days
of the date hereof the Company shall deliver such membership
certificates, if
any, evidencing the membership interests and any assignments of
such interests
as may be required by law to transfer said interests. The
Transferee(s) shall
also execute and deliver counterpart signature pages for the
Operating Agreement
(as defined below in Section 5(c)).
4. The Transferors Representations and Warranties: The
Transferor
represents and warrants that as of this date:
(a) AUTHORIZATION. The Transferor has the power and authority
to execute and deliver this Agreement and to perform its
obligations
hereunder, all of which have been duly authorized by all
requisite
action. This Agreement has been duly authorized, executed and
delivered
by it and constitutes its valid and binding obligation,
enforceable
against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar
laws of general applicability relating to or affecting
creditors'
rights and to general equity principles.
(b) NO CONSENTS. No notice to, filing with, or authorization,
registration, consent or approval of any governmental authority
or
other individual, partnership, corporation, joint stock
company,
unincorporated organization or association, trust or joint venture,
or
a governmental agency or political subdivision thereof (each, a
"Person") is necessary for the execution, delivery or performance
of
this Agreement or the consummation of the transactions
contemplated
hereby by it.
(c) OWNERSHIP OF THE SECURITIES. The Transferor owns the
Membership Interest beneficially and of record, free and clear of
any
liens, claims or encumbrances (except for any encumbrances created
on
behalf of the Transferees hereunder) (collectively,
"Encumbrances").
The Transferor has not entered into any agreement, arrangement or
other
understanding (i) granting any option, warrant or right of
first
refusal with respect to the Membership Interest to any Person,
(ii)
restricting its right to sell the Membership Interest to any
Person, or
(iii) restricting any other of its rights with respect to the
Membership Interest. It has the absolute and unrestricted right,
power
and capacity to assign and transfer the Membership Interest to
the
Transferees free and clear of any Encumbrances (except for any
encumbrances created on behalf of the Transferees hereunder).
Upon
execution of the Letter Agreement and this Agreement, the
Transferees
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shall acquire good, valid and marketable title to the
Membership
Interest, free and clear of any Encumbrances (except for any
encumbrances created on behalf of the Transferees hereunder).
(d) BALANCE SHEET: The Company is the owner or lessee, as
applicable, of the assets listed in the December 31, 2006,
Balance
Sheet attached hereto as Exhibit A.
(e) PENDING SUITS: Except as set forth in Schedule 4(e)
attached hereto, no material suits, actions, or proceedings are
pending, or to the knowledge of the Transferor are threatened
against
or affecting the Company or its property.
5. Covenants of the Transferor and the Company.
(a) AMENDMENT TO ORGANIC DOCUMENTS. The Company shall not, and
the Transferor shall not permit the Company to, directly or
indirectly
amend its articles of organization, operating agreement or
other
charter documents so as to materially, adversely and
disproportionably
affect any rights of any Transferee.
(c) PARTICIPATION IN FUTURE FINANCINGS.
(i) From the date hereof until the date that a
Transferee no longer holds any Membership Interest in the
Company, upon any grant of any additional membership interests
in the Company (a "Subsequent Grant"), each Transferee (or its
designated assigns) shall have the right to participate in up
to an amount of the Subsequent Grant equal to a percentage of
the Subsequent Grant equal to the aggregate Membership
Interest then held by the Transferees (15% as of the date
hereof) on the same terms, conditions and price provided for
in the Subsequent Grant.
(ii) At least 10 Trading Days prior to the closing of
the Subsequent Grant, the Company shall deliver to each
Transferee a written notice of its intention to effect a
Subsequent Grant (a "Subsequent Grant Notice"). The Subsequent
Grant Notice shall describe in reasonable detail the proposed
terms of such Subsequent Grant, the amount of proceeds
intended to be raised thereunder and the Person or Persons
through or with whom such Subsequent Grant is proposed to be
effected and shall include a term sheet or similar document
relating thereto as an attachment.
(iii) Any Transferee desiring to participate in such
Subsequent Grant must provide written notice to the Company by
not later than 5:30 p.m. (New York City time) on the 10th
Trading Day after all of the Transferees have received the
Subsequent Grant Notice that the Transferee is willing to
participate in the Subsequent Grant, the amount of the
Transferee's participation, and that the Transferee has such
funds ready,
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willing, and available for investment on the terms set forth
in the Subsequent Grant Notice. If the Company receives no
notice from a Transferee as of such 10th Trading Day, such
Transferee shall be deemed to have notified the Company that
it does not elect to participate.
(iv) If by 5:30 p.m. (New York City time) on the 10th
Trading Day after all of the Transferees have received the
Subsequent Grant Notice,
