AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT FOR PURCHASE AND SALE OF ASSETS (this "Agreement"), is
made effective as of September 5, 1996, by and between INDUSTRIAL ELECTRIC
VEHICLES, INC., a California corporation ("Seller"), a wholly-owned subsidiary
of U.S. ELECTRICAR, INC., a California corporation, U.S. Electricar, Inc., a
California corporation, ("Electricar"), and LEGEND ELECTRIC VEHICLES, a
California corporation ("Buyer").
RECITALS
A. The Seller is engaged in a business relating to the design and
manufacture of electric-powered vehicles, and owns certain properties and assets
used therein.
B. The Buyer desires to purchase from the Seller, and the Seller
desires to sell to Buyer, on the terms and subject to the conditions of this
Agreement, certain properties and assets of the Seller as more specifically set
forth in Paragraph 1.a.(i) through Paragraph 1.a.(v) inclusive.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals, mutual
agreements, covenants, representations and warranties contained in this
Agreement, the parties hereto hereby agree as follows:
1. Purchase and Sale of Assets.
a. Agreement to Purchase and Sell. Subject to the terms and
conditions set forth in this Agreement, the Seller agrees to sell, convey,
transfer, assign, and deliver to Buyer, and Buyer agrees to purchase from the
Seller, certain of the assets and properties and rights thereto located in
Redlands, CA of Industrial Electric Vehicles, Inc., whether tangible,
intangible, real, personal, or mixed, (all of which are sometimes collectively
referred to as the "Assets"), including, but without limitation to, the
following:
(i) The patents, service marks, trademarks,
trade names, copyrights (and registrations and applications therefor),
processes, methods, patterns, devices, formulae, discoveries, trade secrets and
other know-how, all as identified on Exhibit "A" attached hereto (the
"Technology"); and
(ii) The inventory, work-in-progress, parts,
furniture, fixtures, machinery, tools, tooling, supplies, computers, software,
sales and marketing material and equipment listed on Exhibit "B" attached hereto
(the "Personal Property"); and
(iii) The contracts of Seller identified in
Exhibit "C" attached hereto (the "Contracts"); and
(iv) Subject to the provision of Paragraph
1.d. (ii) accounts receivable or other amounts owing Seller as of closing,
identified on Exhibit "D" attached hereto (the "Receivable"); and
(v) All of Seller's data, drawings, files
and records pertaining to the Technology, the Personal Property, the Contracts
and the Receivable.
(vi) Notwithstanding the foregoing, Seller
shall retain certain assets, including furniture, tools, supplies, computer
related equipment, and drawings which are specifically related to the Bus,
Upfit/Retrofit, Electrolite, World Delivery Vehicle, Amtrak designed vehicle,
and ground support vehicles (AQMD project including Lav Carts).
b. Purchase Price. The Fixed Purchase Price for the Assets
shall be One Million Eighty Thousand Dollars ($1,080,000). An additional,
contingent amount which reflects a portion of Receivable collections may be paid
as set forth below and shall not exceed One Hundred Seventeen Thousand Dollars
($117,000).
c. Allocation & Purchase Price. The Purchase Price shall be
allocated among the Assets in the manner mutually agreed to by Buyer and Seller
prior to closing.
d. Payment of Purchase Price.
(i) Fixed Purchase Price Payment. The Fixed
Purchase Price Payment Shall Be As Follows:
(1) Buyer agrees to assume, and shall be
credited with, the principal amount
outstanding under the Promissory Note
("Note") due Vehicle Holding Company as of
closing. Seller shall have no further
obligation or guarantee requirements under
said Note.
(2) Buyer agrees to assume warranty claims
made against U.S. ELECTRICAR, INC. and
INDUSTRIAL ELECTRIC VEHICLES, INC. for
industrial electric vehicles and shall be
credited with a value of Eighty Eight
Thousand Dollars ($88,000), provided that:
a) claims are submitted after date of
closing, and
b) claims are for vehicles shipped and
invoiced during the 12 months
period immediately preceding the
closing date. Buyer shall receive
full credit for Eighty Eight
Thousand Dollars
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($88,000) toward the purchase price
regardless of the aggregate amount
of claims which are subject to the
provisions above.
(ii) Contingent Purchase Price Payment. Buyer
agrees to pay Seller, or its designee, an
amount equal to 50% of the accounts
receivable cash collections over a base
amount of Three Hundred Thousand Dollars
($300,000) as listed on the Industrial
Electric Vehicles, Inc. accounts receivable
trial balance dated July 23, 1996. The total
of such payments shall not exceed One
Hundred Seventeen Thousand Dollars
($117,000).
e. No Assumption of Liabilities. This Agreement pertains
solely to the purchase and sale of the Equipment and the Contracts and, except
for the obligations of Seller under the Contracts set forth in Exhibit C (as
such exhibit is constituted at the closing) which Buyer specifically assumes,
Buyer does not assume and Buyer shall not be obligated to assume any debts,
liabilities, contracts, undertakings or commitments of, or claims against
Seller, whether pertaining to the Assets or otherwise.
2. The Closing.
a. Closing. The closing of the transactions provided for in
Paragraph 1 hereof shall take place at the offices of Seller in Redlands, CA, on
September 5, 1996, at 10:00 am, or such other date (and/or place and/or time) as
may be agreed upon between the parties, such date being referred to herein as
the "Closing Date" or "Closing". If the Closing shall not take place at such
date or time, either party may terminate this Agreement upon written notice to
the other.
b. Delivery at Closing.
i) Seller shall deliver or cause to be delivered the
following at the Closing:
a) One or more bills of sale or assignments
covering the Assets in form and substance satisfactory to counsel for Buyer; and
b) A certified copy of the written consent
of a majority of the Directors of Seller approving the sale of the Assets in
such form as is acceptable to Buyer; and
c) Consent by Vehicle Holding Company to the
transfer of the Promissory Note due Vehicle Holding Company,
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d) Such other documents or certificates as
are required as conditions precedent to the obligations of Buyer under Paragraph
7, or as may be reasonably required by counsel for Buyer to place Buyer in
actual possession and operating control of the Assets pursuant to the provisions
of this Agreement.
The Seller at any time before or after the Closing Date, will execute,
acknowledge, and deliver any further deeds, assignments, conveyances, and other
assurances, documents, and instruments of transfer reasonably requested by
Buyer, and will take any other action consistent with the terms of this
Agreement that may reasonably be requested by Buyer for the purpose of
assigning, transferring, granting, conveying, and confirming to Buyer, or
reducing to possession, any or all property to be conveyed and transferred under
this Agreement. Simultaneously with the consummation of the transfer, the Seller
through its officers, agents, and employees, will put Buyer into full possession
and enjoyment of all properties and Assets to be conveyed and transferred by
this Agreement. If requested by Buyer, the Seller agrees at Seller's expense to
prosecute or otherwise enforce in its own name for the benefit of Buyer any
claims, rights or benefits that are transferred to Buyer under this Agreement
and that require prosecution or enforcement in the Seller's name.
ii) Buyer shall deliver or cause to be delivered to
Seller the following at the Closing:
a) A certified copy of the written consent
of the Directors or a certified copy of the minutes of a meeting of the Board of
Directors of Buyer approving the purchase of the Assets in such form as is
acceptable to Seller; and
b) Such other documents and certificates as
are required as conditions precedent to the obligations of Seller under
Paragraph 8, or as may be reasonably required by counsel for Seller.
3. Representations and Warranties of the Seller. The Seller represents
and warrants to Buyer that, except as set forth on the disclosure schedule
attached hereto as Schedule 1 and incorporated herein by reference (the
"Disclosure Schedule"):
a. Organization. The Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the state in which it
was incorporated; has all necessary corporate powers to own its properties and
to carry on its business as now owned and operated by it; and is duly qualified
to do business and is in good standing in all jurisdictions in which the nature
of the Seller's business or its properties makes such qualification necessary.
b. Authorization. This Agreement has been duly authorized by
Seller's and Electricar's Boards of Directors and constitutes a valid and
binding
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obligation of the Seller and Electricar enforceable in accordance with its
terms, except as limited by bankruptcy, insolvency or other similar laws of
general application affecting creditors' rights. This Agreement will not
violate, with or without the giving of notice and/or the passage of time, the
Articles of Incorporation or the Bylaws of Seller or Electricar, any agreement
to which Seller or Electricar may be a party, or any laws of any state, local or
federal agency which may be applicable to this Agreement, and will be valid,
binding and enforceable against Seller or Electricar in accordance with its
terms.
c. Agreement Will Not Cause Breach or Violation. The
consummation of the transactions contemplated by this Agreement will not result
in or constitute with or without the giving of notice and/or the passage of time
any of the following: (1) a breach of any term or provision of this Agreement;
(2) a default or an event that, with notice or lapse of time or both, would be a
default, breach, or violation of the Articles of Incorporation or Bylaws of the
Seller or Electricar, or any lease, license, promissory note, conditional sales
contract, commitment, indenture, mortgage, deed of trust, or other agreement,
instrument, or arrangement to which the Seller or Electricar is a party or by
which the Seller or Electricar or the property of the Seller or Electricar is
bound; (3) an event that would permit any party to terminate any agreement or to
accelerate the maturity of any indebtedness or other obligation of the Seller or
Electricar; or (4) the creation or imposition of any lien, charge, or
encumbrance on any of the properties of the Seller or Electricar.
d. Authority and Consents. The Seller and Electricar have the
right, power, legal capacity, and authority to enter into, and perform its
obligations under this Agreement, and no approvals or consents of any persons or
entities are necessary in connection with it. The execution and delivery of this
Agreement by the Seller and Electricar has been duly authorized by all necessary
corporate action on the part of the Seller and Electricar.
e. Subsidiaries. Seller does not own, directly or indirectly,
any interest or investment (whether equity or debt) in any corporation,
partnership, business, trust, or other entity.
f. Financial Statements. Exhibit E to this Agreement sets
forth the unaudited interim financial statements of the Seller as of June 30,
1996, and the 10Q of Electricar for the period ended April 30, 1996, certified
by controller of the Seller as accurately reflecting the financial condition of
the Seller for the periods indicated. The financial statements in Exhibit E are
referred to herein as the "Financial Statements." The Financial Statements
fairly represent the financial position of the Seller and contain true and
accurate statements of each and all of the assets and liabilities of Seller as
of the respective dates indicated in the Financial Statements, and the results
of its operations for the respective periods indicated.
g. Claims and Liabilities. Exhibit F to this Agreement
contains a true and complete schedule of all liabilities and obligations of the
Seller. To the best of Seller's knowledge, Seller has no debts, liabilities, or
obligations of any nature, whether
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accrued, absolute, contingent, or otherwise, and whether due or to become due,
that are not set forth in Exhibit F. Notwithstanding the foregoing, only the
Seller Liabilities set forth on Exhibit G are being assumed by Buyer.
h. Tax Returns and Audits. Within the times and in the manner
prescribed by law, the Seller has filed all federal, state, and local tax
returns required by law and has paid all taxes, assessments, and penalties due
and payable. There are no present disputes as to taxes of any nature payable by
the Seller. The Seller has never filed, and will not file on or before the
Closing Date, any consent under ss.341(f) of the Internal Revenue Code of 1986,
as amended.
i. Hazardous Materials. To Seller's and Electricar's best
knowledge, there are no asbestos-containing materials incorporated into the
leased premises set forth in Paragraph 3.j. (above) buildings or interior
improvements that are part of that real property, or into any other Assets of
the Seller, nor is there any electrical transformer, fluorescent light fixture
with ballasts, or other equipment containing PCBs on those leased premises.
j. Inventory. The inventories of raw materials, work in
process, and finished goods (collectively called "Inventories") shown on Exhibit
B, are being sold in their "As Is" condition. Except for sales made in the
ordinary course of business, and except for the inventories relating to the
business of Seller being retained as described in Paragraph 1.a.(vi), all the
Inventories shown on Exhibit B are the property of the Seller. The value of the
Inventories has been determined on a "first-in, first-out" basis consistent with
prior years.
k. Other Tangible Personal Property. Exhibit B to this
Agreement contains a schedule describing, and specifying the location of all
trucks, automobiles, machinery, equipment, furniture, supplies, tools, dies,
jigs, molds, patterns, drawings, and all other tangible personal property owned
by, in the possession of, or used by the Seller in connection with its business
which are to be sold in this transaction.
l. Trade Names, Trademarks and Copyrights. Exhibit A to this
Agreement contains a schedule of all tradenames, trademarks, service marks, and
copyrights and their registrations, owned by the Seller or in which they have
any rights or licenses, together with a brief description of each. The Seller
does not have any knowledge of any infringement or alleged infringement by
others of any such trade name, trademark, service mark, or copyright. To
Seller's knowledge, Seller has not infringed, and is not now infringing, on any
trade name, trademark, service mark, or copyright belonging to any other person,
firm, partnership or corporation. The Seller is not a party to any license,
agreement, or arrangement, whether as licensor, licensee, franchisor,
franchisee, or otherwise, with respect to any trademarks, service marks, trade
names, or applications for them, or any copyrights. The Seller owns, or holds
adequate licenses or other rights to use, all trademarks, service marks, trade
names, and copyrights necessary for its business as now conducted by it
(including without limitation those listed in Exhibit A, and to Seller's
knowledge, that use does not, and will not, conflict with, infringe on, or
otherwise violate any rights of others. The Seller
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has the right to sell or assign to Buyer all such owned trademarks, trade names,
service marks, and copyrights, and all such licenses or other rights.
m. Patents and Patent Rights. Exhibit A to this Agreement
contains a true and complete schedule of all patents, inventions, industrial
models, processes, designs, and applications for patents owned by the Seller in
which it has any rights, licenses, or immunities (the "Intellectual Property").
There have not been any interference actions or other judicial, arbitration, or
other adversary proceedings concerning any of the Intellectual Property. To
Seller's knowledge, the manufacture, use, or sale of the Intellectual Property
do not violate or infringe on any patent or any proprietary or personal right of
any person, firm, or corporation; and to Seller's knowledge, the Seller has not
infringed and is not now infringing on any patent or other right belonging to
any person, firm, or corporation. The Seller is not a party to any license,
agreement, or arrangement, whether as licensee, licensor, or otherwise, with
respect to any patent, application for patent, invention, design, model,
process, trade secret, or formula. The Seller has the right and authority to use
and to transfer to Buyer the Intellectual Property as are necessary to enable it
to conduct and to continue to conduct all phases of its business in the manner
presently conducted by it, and that use does not, and will not, conflict with,
infringe on, or violate any patent or other rights of others.
n. Trade Secrets. Exhibit A to this Agreement contains a true
and complete list, of the Seller's trade secrets, including all customer lists,
processes, know-how, computer programs and routines, archival libraries,
pictures, and other technical data which are to be sold in this transaction. The
specific location of each trade secret's documentation, if any, including its
description, specifications, charts, procedures, and other material relating to
it, is also set forth with it in that Exhibit. To Seller's knowledge, the Seller
is the sole owner of each of these trade secrets, free and clear of any liens,
encumbrances, restrictions, or legal or equitable claims of others. The Seller
has taken all reasonable security measures to protect the secrecy,
confidentiality, and value of these trade secrets; any of its employees and any
other persons who, either alone or in concert with others, developed, invented,
discovered, derived, programmed, or designed these secrets, or who have
knowledge of or access to information relating to them, have been put on notice
and, if appropriate, have entered into agreements that these secrets are
proprietary to the Seller and not to be divulged or misused. To Seller's
knowledge, all these trade secrets are presently valid and protectable and are
not part of the public knowledge or literature; nor to the Seller's knowledge
have they been used, divulged, or appropriated for the benefit of any past or
present employees or other persons, or to the detriment of the Seller.
o. Title to Assets. Seller has good and marketable title to
all its Assets and interests in Assets, whether real, personal, mixed, tangible,
or intangible, which constitute all the assets and interests in Assets that are
used in the business of the Seller. All these assets are free and clear of the
restrictions on or conditions to transfer or assignment, and free and clear of
mortgages, liens, pledges, charges, encumbrances, equities, claims, easements,
rights of way, covenants, conditions or restrictions, except the lien of current
taxes not yet due and payable and possible minor
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matters that, in the aggregate, are not substantial in amount and do not
materially detract from or interfere with the present or intended use of any of
these Assets or materially impair business operations. All real property and
tangible personal property of the Seller is being sold in its "As Is" condition
solely with respect to its operating condition, wear and tear. The Seller is in
possession of all premises leased to it from others. No officer, director, or
employee of the Seller; nor any spouse, child, or other relative of any of these
persons, owns, or has any interest, directly or indirectly, in any of the real
property leased to the Seller or any copyrights, patents, trademarks, trade
names, or trade secrets licensed by the Seller or any other Asset.
p. Employment Contracts and Benefits. Seller has no employment
contracts or collective bargaining agreements, or pension, bonus,
profit-sharing, stock option, or other agreements or arrangements providing for
employee remuneration or benefits to which the Buyer is a party or by which the
Buyer is bound. Seller has not entered into any severance or similar arrangement
in respect of any present or former employee that will result in any obligation,
absolute or contingent, of Buyer, or the Seller to make any payment to any
present or former employee following termination of employment.
q. Insurance Policies. Exhibit H to this Agreement is a
description of all insurance policies held by the Seller and Electricar
concerning its business and properties. All these policies are in the respective
principal amounts set forth in Exhibit H. The Seller has maintained and now
maintains (1) insurance on all its Assets and business of a type customarily
insured, covering property damage and loss of income by fire or other casualty,
and (2) adequate insurance protection against all liabilities, claims, and risks
against which it is customary to insure. The Seller is not in default with
respect to payment of premiums on any such policy. No claim is pending under any
such policy.
r. Other Contracts. The Seller is not a party to, nor is its
property bound by, any distributor's or manufacturer's representative or agency
agreement; any output or requirements agreement; any agreement not entered into
in the ordinary course of business; any indenture, mortgage, deed of trust, or
lease; or any agreement that is unusual in nature, duration, or amount
(including, without limitation, any agreement requiring the performance by the
Seller of any obligation for a period of time extending beyond one month from
the Closing Date or calling for consideration of more than Two Thousand Dollars
($2,000)); except the agreements listed in Exhibit C, copies of which have been
furnished to Buyer. There is no default or event that, with notice or lapse of
time or both, would constitute a default by any party to any of these
agreements. The Seller has not received notice that any party to any of these
agreements intends to cancel or terminate any of these agreements or to exercise
or not exercise any options under any of these agreements. The Seller is not a
party to, nor is any of its property bound by, any agreement that is materially
adverse to the business, properties, or financial condition of the Seller.
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s. Compliance With Laws.
i) Environmental Protection Laws. The Seller and
Electricar have complied in all material respects with all federal, state, and
local environmental protection laws and regulations and have not been cited for
any violation of any such law or regulation. No expenditures calling for
consideration of more than Two Thousand Dollars ($2,000) will be required for
compliance with any applicable federal, state, or local laws or regulations now
in force relating to the protection of the environment. There is no pending
audit known to the Seller or Electricar or any of their officers or Directors by
any federal, state, or local governmental authority with respect to groundwater,
soil, or air monitoring; the storage, burial, release, transportation, or
disposal of hazardous substances; or the use of underground storage tanks by the
Seller or Electricar or relating to the facilities of the Seller or Electricar.
Neither Seller nor Electricar has any agreement with any third party or federal,
state, or local governmental authority relating to any such environmental matter
or any environmental cleanup.
ii) OSHA Laws. The Seller and Electricar have
complied with all requirements of the Occupational Safety and Health Act and its
state equivalents and regulations promulgated under any such legislation, the
consequences of a violation of which could have a material adverse effect on its
operations, and with all orders, judgments, and decrees of any tribunal under
such legislation that apply to its business or properties.
iii) Export Laws. Neither Seller nor Electricar is in
violation of any provision of the Export Administration Act of 1979 or the
Foreign Corrupt Practices Act of 1977.
iv) Fees or Commissions. The Seller has not directly
or indirectly paid or delivered any fee, commission, or other money or property,
however characterized, to any finder, agent, government official, or other
party, in the United States or any other country, that is in any manner related
to the business or operations of the Seller and that the Seller knows or has
reason to believe to have been illegal under any federal, state, or local law of
the United States or any other country having jurisdiction. The Seller has not
participated, directly or indirectly, in any boycott or other similar practice
affecting any of its actual or potential customers. The Seller has at all times
done business in an open and ethical manner.
v) Others. The Seller and Electricar have complied
with, and are not in violation of, any applicable federal, state, or local
statute, law, or regulation (including, without limitation, any applicable
building, zoning, environmental protection, or other law, ordinance, or
regulation) affecting its properties or the operation of its business.
t. Litigation. There is not pending, or, to the best knowledge
of the Seller threatened, any suit, action, arbitration, or legal,
administrative, or other proceeding, or governmental investigation against or
affecting the Seller or any of its
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business, Assets, or financial condition. The Seller is not in default with
respect to any order, writ, injunction, or decree of any federal, state, local,
or foreign court, department, agency, or instrumentality. The Seller is not
presently engaged in any legal action to recover monies due to damages sustained
by it.
u. Interest in Customers, Suppliers and Competitors. No
officer, Director, shareholder, or employee of the Seller, nor any spouse or
child of any of them, has any direct or indirect interest in any competitor,
supplier, or customer of the Seller or in any person from whom or to whom the
Seller leases any real or personal property, or in any other person with whom
the Seller is doing business.
v. Full Disclosure. None of the representations and warranties
made by the Seller or Electricar or made in any certificate or memorandum
furnished or to be furnished by the Seller or Electricar on their behaves,
contains or will contain any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements made, in the light of the
circumstances under which they were made, not misleading.
w. Conflicting Agreements. The consummation of the
transactions contemplated hereby will not violate any provision of any order,
judgment or decree to which Seller is a party or by which it is bound, and will
not violate any trust deed, mortgage, security interest, lien, lease, agreement,
instrument or any other restriction of any kind or character to which Seller is
subject and which affects Seller's ownership or operation of the Assets.
x. Title of Assets. Seller has good and marketable title to
the Assets, whether real, personal, mixed, tangible or intangible. Except as
described on Exhibit F, all Assets are free and clear of restrictions on, or
conditions to, transfer or assignment and free and clear of trust deeds,
mortgages, security interests, liens, pledges, charges, encumbrances, equities,
claims, easements, rights of way, covenants, conditions, or restrictions of any
kind. Unless otherwise agreed by Buyer all conditions, restrictions, liens or
other matters listed on Exhibit F shall be fully satisfied or removed on or
prior to the Closing Date.
y. No Fraudulent Conveyance. Seller is not entering into this
transaction with the intention of hindering, delaying or defrauding any
creditor.
4. Buyer's Representations and Warranties. Buyer represents and
warrants to the Seller that:
a. Corporate Status. Buyer (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, (ii) has the requisite corporate power and authority to own, lease,
use and operate its property and assets and to transact the business in which it
is engaged, and (iii) is duly qualified and is authorized to do business and is
in good standing in each jurisdiction where the ownership, leasing, use or
operation of its property or the conduct of its business makes such
qualification necessary, except where the failure to be so qualified would,
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in the aggregate, not reasonably be expected to have a material adverse effect
on the Buyer and its subsidiaries, taken as a whole. "Material Adverse Effect"
or similar derivatives shall mean where the effect on Buyer would be a liability
in excess of One Hundred Thousand Dollars ($100,000).
b. Directors' Authorization. This Agreement has been duly
authorized by Buyer's Board of Directors. This Agreement will not violate, with
or without the giving of notice and/or the passage of time, the Articles of
Incorporation or the Bylaws of Buyer, any mortgage, contract or other agreement
or instrument to which Buyer may be a party, and will be valid, binding and
enforceable against Buyer in accordance with its terms.
c. Consents. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have already been obtained or made), or review or exemption by, any
governmental or public body or authority, or any subdivision thereof, or any
bank is required in connection with, (i) the execution, delivery or performance
of this Agreement by Buyer or (ii) the authorization, legality, validity,
binding effect or enforceability of this Agreement against Buyer, except where
the failure to obtain any such consent or approval would not have a material
adverse effect on Buyer and its subsidiaries, taken as a whole.
d. Compliance With Laws. At the Closing, Buyer will be in
compliance with all applicable laws, regulations and administrative orders of
any country, state, municipality or any subdivision thereof to which it or its
business and its employment of labor or use or occupancy of properties or any
part thereof may be subject. Buyer has, or will obtain, all permits, licenses
and franchises from governmental agencies required to conduct its business as is
now being conducted. Buyer has not failed to comply with any statute, law,
ordinance, regulation, rule or order of any federal, state, local or other
governmental agency, or any judgment, decree, or order of any court, relating to
or materially affecting its business or its assets which would have a material
adverse effect on Buyer.
e. Execution and Performance of Agreement. The execution and
performance by Buyer of this Agreement and the transactions contemplated hereby
will not violate any provision of, or result in the breach of, or constitute a
default under any law or any order, writ, injunction or decree of any court,
governmental agency or arbitration tribunal, or any contract, agreement or
instrument by which Buyer is or will at the Closing be bound.
f. Litigation. Buyer is not presently engaged in or threatened
with any litigation (including appeals of lower court decisions, arbitration,
claim or other legal proceedings or governmental or any other investigation
which (i) is material and adverse to Buyer and its subsidiaries taken as a whole
or (ii) questions the validity or enforceability of this Agreement.
g. Accuracy of Information. No representation or warranty in
this Agreement, nor any of the material heretofore furnished or to be furnished
to Seller by
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Buyer or the employees, agents or representatives of Buyer contains or will
contain any untrue or misleading statement of a material fact, or omits or will
omit to state any material fact required to make the statements herein or
therein contained not misleading.
h. No Liabilities. Neither Brian Scott Breckley ("Breckley")
nor Larry Lee Sparks ("Sparks") has any personal knowledge of liabilities of
Seller or Electricar not disclosed by Seller or Electricar in this Agreement.
i. No Environmental. To the best knowledge of Breckley and
Sparks, Seller and Electricar are in compliance with the following Superfund
requirements of CERCLA (Comprehensive Environmental Response Compensation and
Liability Act):
(a) Neither Seller nor Electricar has caused or allowed, nor
has the Seller or Electricar contracted with any party for, the generation, use,
transportation, treatment, storage or disposal of any Hazardous Substances (as
defined below) in connection with the operations of its business or otherwise,
in violation of any law or regulation (local, State or Federal) with the
exception of the Ninety (90) Day Storage law for hazardous waste.
(b) Seller and Electricar, the operations of its business, and
any real property that the Seller and Electricar own, lease, or otherwise occupy
or use (the "Premises") are in compliance with all applicable Environmental Laws
(as defined below) and orders or directives of any governmental authorities
having jurisdiction under such Environmental Laws including, without limitation,
any Environmental Laws or orders or directives with respect to any cleanup or
remediation of any release or threat of release of Hazardous Substances.
(c) Neither Seller nor Electricar has received any citation,
directive, letter or other communication, written or oral, or any notice of any
proceedings, claims or lawsuits, from any person, entity or governmental
authority arising out of the ownership or occupation of the Premises, or the
conduct of its operations, nor is either aware of any basis therefor.
(d) Seller and Electricar have obtained and are maintaining in
full force and effect all necessary permits, licenses and approvals required by
any Environmental Laws applicable to the Premises and the business operations
conducted thereon and are in compliance with all such permits, licenses and
approvals.
(e) The Seller and Electricar have not caused or allowed a
release, or a threat of release (to the extent the same is under the Seller's or
Electricar's control), of any Hazardous Substance unto, at or near the Premises.
The term "Environmental Laws" shall mean any federal, state or
local law, ordinance or regulation pertaining to the protection of the
environment
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including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601, et. seq., Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11001, et. seq.,
and the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et.
seq.
The term "Hazardous Substance" includes oil and
petroleum products, asbestos, polychlorinated biphenyls and urea formaldehyde,
and any other materials classified as hazardous or toxic under any Environmental
Laws.
5. The Seller's Obligations Before Closing. The Seller covenants
that from the date of this Agreement until the Closing:
a. Access to Premises and Information. Buyer and its counsel,
accountants, and other representatives shall have full access during normal
business hours to all properties, books, accounts, records, contracts, and
documents of or relating to the Seller. The Seller shall furnish or cause to be
furnished to Buyer and its representatives all data and information concerning
the business, finances, and properties of the Seller that may reasonably be
requested. To the extent feasible and without extra expense to Buyer, the
inspection may occur on the weekends or outside of the Seller's principal place
of business.
b. Preservation of Business and Relationships. The Seller will
use its reasonable efforts to preserve its business organizations intact, to
keep available the services of present employees and to preserve its present
relationships with suppliers, customers, and others having business
relationships with it, including preserving all goodwill associated therewith.
c. Maintenance of Insurance. The Seller will continue to carry
its existing insurance, subject to variations in amounts required by the
ordinary operations of its business.
d. Employees and Compensation. The Seller will not do, or
agree to do, any of the following acts: (1) make any increase in compensation
payable or to become payable by it, to any officer, or director, or any increase
greater than the increase in the last year to any employee, sales agent, or
representative; (2) make any increase in benefits payable to any officer,
employee, sales agent, or representative under any bonus or pension plan or
other contract or commitment; or (3) modify any collective bargaining agreement
to which it is a party or by which it may be bound.
e. New Transactions. The Seller shall not, without Buyer's
written consent, do or agree to do any of the following acts:
i) Unusual Contracts. Enter into any contract,
commitment, or transaction not in the usual and ordinary course of its business;
or
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ii) Excessive Contracts. Enter into any contract,
commitment, or transaction in the usual and ordinary course of business
involving an amount exceeding Ten Thousand Dollars ($10,000), individually, or
in the aggregate; or
iii) Capital Expenditures. Make any capital
expenditures in excess of Ten Thousand Dollars ($10,000) for any single item or
One Hundred Thousand Dollars ($100,000) in the aggregate, or enter into any
leases of capital equipment or property under which the annual lease charge is
in excess of Ten Thousand Dollars ($10,000); or
iv) Sale or Disposal. Sell or dispose of any capital
Assets.
f. Payment of Liabilities and Waiver of Claims. The Seller
shall not do, or agree to do, any of the following acts: (1) waive or compromise
any right or claim; or (2) cancel, without full payment, any note, loan, or
other obligation owing to the Seller.
g. Existing Agreements. The Seller shall not modify, amend,
cancel, or terminate any of its existing contracts or agreements, or agree to do
any of those acts without Buyer's prior written consent.
h. Representations and Warranties True at Closing. All
representations and warranties of the Seller set forth in this Agreement and in
any written statements delivered to Buyer by the Seller under this Agreement
will also be true and correct as of the Closing Date as if made on that date.
i. Reporting Requirements and Compliance with Law. Seller
shall duly and timely file all reports required to be filed with governmental
authorities and will duly observe and conform to all laws, rules, regulations,
ordinanaces, codes, orders, licenses and permits relating to the Business.
6. Buyer's Obligations Before Closing.
a. Cooperation in Securing Third-Party Consents. Buyer will
use its best efforts to assist the Seller in obtaining the consent of all
necessary persons and agencies to the assignment and transfer to Buyer of any
and all properties, Assets, and agreements, including agreements with the United
States government or any of its agencies, to be assigned and transferred under
the terms of this Agreement.
7. Conditions Precedent to Buyer's Performance. The obligations
of Buyer to purchase the Assets under this Agreement are subject to the
satisfaction, at or before the Closing, of all the conditions set out below in
this Section. Buyer may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by Buyer of any of its other
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rights or remedies, at law or in equity, if the Seller shall be in default of
any of its representations, warranties, or covenants under this Agreement.
a. Accuracy of Representations and Warranties. Except as
otherwise permitted by this Agreement, all representations and warranties by the
Seller in this Agreement, or in any written statement that shall be delivered to
Buyer by it under this Agreement, shall be true on and as of the Closing Date as
though made at that time.
b. Performance. The Seller shall have performed, satisfied,
and complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by them, or any of them, on or before
the Closing Date.
c. Certification. Buyer shall have received a certificate,
dated the Closing Date, signed and verified by the Seller's president and
treasurer, certifying, in such detail as Buyer and its counsel may reasonably
request, that the conditions specified in paragraphs 7a-c (above) have been
fulfilled.
d. Absence of Litigation. No action, suit, or proceeding
before any court or any governmental body or authority, pertaining to the
transaction contemplated by this Agreement or to its consummation, shall have
been instituted or threatened on or before the Closing Date.
e. Corporate Approval. The execution and delivery of this
Agreement by the Seller, and the performance of its covenants and obligations
under it, shall have been duly authorized by all necessary corporate and
shareholder action, and Buyer shall have received copies of all resolutions
pertaining to that authorization, certified respectively by the Secretary of the
Seller.
f. Sales and Use Tax on Prior Sales. The Seller agrees (i) to
furnish to Buyer, upon Buyer's request and within 30 days, a clearance
certificate from all applicable jurisdictions regulating the payment of sales
taxes and any related certificates that Buyer may reasonably request as evidence
that all sales and use tax liabilities of the Seller accruing before the Closing
Date have been fully provided for or otherwise satisfied.
g. Consents. All necessary agreements and consents of any
parties to the consummation of the transactions contemplated by this Agreement,
or otherwise pertaining to the matters covered by it, shall have been obtained
by the Buyer and the Seller and delivered to Buyer.
h. Approval of Documentation. The form and substance of all
certificates, instruments, opinions, and other documents delivered to Buyer
under this Agreement shall be satisfactory in all reasonable respects to Buyer
and its counsel.
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8. Conditions Precedent to Seller's Performance. The obligations
of the Seller to sell and transfer the Assets under this Agreement are subject
to the satisfaction, at or before the Closing, of all the following conditions.
The Seller may waive any or all of these conditions in whole or in part without
prior notice; provided, however, that no such waiver of a condition shall
constitute a waiver by the Seller of any of its other rights or remedies, at law
or in equity, if Buyer should be in default of any of its representations,
warranties, or covenants under this Agreement.
a. Accuracy of Representations and Warranties. All
representations and warranties by Buyer contained in this Agreement or in any
written statement delivered by Buyer under this Agreement shall be true on and
as of the Closing Date as though such representations and warranties were made
on and as of that date.
b. Performance. Buyer shall have performed and complied with
all covenants and agreements and satisfied all conditions that it is required by
this Agreement to perform, comply with, or satisfy, before or at the Closing.
c. Corporate Approval. All corporate action necessary or
proper to fulfill the Buyer's obligations to be performed under this Agreement
on or before the Closing Date shall have been obtained.
d. Consents. All necessary agreements and consents of any
parties to the consummation of the transactions contemplated by this Agreement,
or otherwise pertaining to the matters covered by it, shall have been obtained
by the Buyer and the Seller and delivered to Buyer.
9. Obligations After Closing of the Parties.
a. Buyer Non-Compete. In consideration of the transactions set
forth in this Agreement and to forestall the unauthorized use of the Seller's
and Electricar's "Seller Proprietary Information" (as defined below), which
proof of such unauthorized use would be extremely difficult, for a period
commencing from the date hereof and ending on the second anniversary thereof
(hereinafter the "Covenant Period"), Buyer, Breckley and Sparks (each a
"Non-Compete Party") agree jointly and severally that none of them shall,
directly or indirectly, either as an entity, employee, employer, consultant,
agent, principal, partner, stockholder, corporate officer, director or in any
other individual or representative capacity, (hereinafter collectively a
"Prohibited Position") engage or participate in activities within the United
States of America or any foreign country (herinafter the "Covenant Territory")
which are the same as, or competitive with, the activities the Seller or
Electricar or any of its affiliates, including its parent corporation, presently
performs or intends to enter into involving the following vehicles or
derivatives thereof and any application involving said vehicles, including but
not limited to the sale, manufacture, distribution, leasing or any other
commercialization of said vehicles:
1) On-road full passenger and shuttle bus,
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2) On-road sedan and truck conversion,
3) Electrolite and World Delivery Vehicle,
4) Model 535 with Federal Express,
5) Model 541,
6) Amtrak vehicle designed for narrow aisle
application,
7) Ground Support Vehicles: specifically
tractors, belt conveyor vehicles, lavatory
vehicles, and pushback vehicles.
Each Non-Compete Party also hereby acknowledges that the pursuit of the
activities forbidden by this Section would necessarily involve the misuse and/or
unauthorized disclosure of the Seller's and its parent's proprietary and/or
trade secret information, including but not limited to (a) information related
to construction or manufacturing techniques, processes, trade secrets,
electronic codes, proprietary techniques, inventions, improvements and research
projects; (b) information about costs, profits, markets, sales, and lists of
customers; (c) plans for future development and new product concepts; and (d)
all documents, books, papers, drawings, models, sketches and other data of any
kind and description, including electronic data recorded or retrieved by any
means, that have been accessible to or in such Non-Compete Party's possession as
well as written or verbal instructions or comments related thereto (the "Seller
Proprietary Information"). Each Non-Compete Party hereby agrees to keep such
Seller Proprietary Information confidential.
Remedies. Each Non-Compete Party acknowledges that it
may be difficult to measure in monetary terms the damages which may result to
the Seller or its parent if it or he breaches this covenant. Each Non-Compete
Party therefor agrees that in addition to all other remedies, legal or
equitable, to which the Seller may be entitled, it shall be entitled to enforce
this covenant through injunctive relief for specific performance if the Seller
reasonably believes such Non-Compete Party has breached its or his covenant.
Severability. The Seller and each Non-Compete Party
agree that the above covenant shall be deemed a series of separate covenants,
one for each county and/or country in the Covenant Territory. Each covenant
shall be deemed independent and severable. The invalidity or partial invalidity
or unenforceability of any one covenant shall not effect the validity or
unenforceability of any other covenant provided in this Section.
b. Seller and Electricar Non-Compete. Seller and
Electricar agree for a period of two (2) years, that it shall not, directly or
indirectly, engage in or participate in activities within the United States of
America which are the same as, or competitive with, the activities which Buyer
presently performs or intends to enter into involving any of the current
Industrial Electric Vehicle product lines which are not specified in Paragraph
9a. above or derivatives thereof and any application involving said vehicles,
including but not limited to the sale, manufacturer, distribution, leasing or
any other commercialization of said vehicles.
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Seller and Electricar also hereby acknowledge that the pursuit of the activities
forbidden by this Section would necessarily involve the misuse and/or
unauthorized disclosure of the Buyer's proprietary and/or trade secret
information, including but not limited to (a) information related to
construction or manufacturing techniques, processes, trade secrets, electronic
codes, proprietary techniques, inventions, improvements and research projects;
(b) information about costs, profits, markets, sales, and lists of customers;
(c) plans for future development and new product concepts; and (d) all
documents, books, papers, drawings, models, sketches and other data of any kind
and description, including electronic data recorded or retrieved by any means,
that have been accessible to or in Seller's or Electricar's possession as well
as written or verbal instructions or comments related thereto (the "Buyer
Proprietary Information"). Seller and Electricar hereby agree to keep such Buyer
Proprietary Information confidential.
Buyer further agrees that Seller and Electricar retain rights to market,
manufacture and otherwise distribute, all current Industrial Electric Vehicles
product lines outside of the United States and access to existing technical
drawings and data packages associated with such rights. Seller and Electricar
agree that any vehicles manufactured through the retention of such rights under
any type of agreement will not be imported into the United States or markets in
which Buyer has existing representation as of the Closing Date.
Notwithstanding the foregoing, Buyer may continue to sell the current product
lines to existing customers with whom the company has conducted business over
the past three (3) years, and may accept orders from new customers, until such
time as Seller or Electricar commences marketing, manufacturing or distribution
directly, or indirectly through subcontract or license arrangements, outside the
United States. It is currently anticipated that Seller and Electricar will seek
to contract with Buyer to provide assistance to Seller and Electricar, for a fee
or other arrangement to be negotiated, in assisting Seller and Electricar in
said marketing, manufacturing or distribution.
c. Indemnification. Each party shall indemnify, defend, and
hold harmless the other party against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages, recoveries,
and deficiencies, including interest, penalties, and reasonable attorneys' fees,
that the other party shall incur or suffer, that arise, result from, or relate
to any breach of, or failure by a party to perform any of the representations,
warranties, covenants, or agreements in this Agreement or in any schedule,
certificate, Exhibit, or other instrument furnished or to be furnished by it
under this Agreement; provided, however, the parties' obligations under this
Paragraph 9.c. shall expire on December 31, 1998.
d. Use of Name. Seller and Electricar agree that after the
Closing Date they shall not use or employ in any manner directly or indirectly
the names that Buyer has purchased pursuant to this Agreement or any name that
would be similar to such names, and that they will take and cause to be taken
all necessary action by their Boards of Directors, stockholders, and any other
persons in order to make this change in the Seller's name on or before the
Closing Date.
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e. Name Change. The Seller and Electricar agree that
immediately after the Closing Date they will take all action required to change
their name to a name that does not employ in any manner directly or indirectly
the names that Buyer has purchased pursuant to this Agreement or any name that
would be similar to such names.
10. Miscellaneous.
a. Brokers and Finders. Except as set forth in the Disclosure
Schedule, each party represents that it has not dealt with any broker or finder
in connection with any transaction contemplated by this Agreement.
b. Costs and Expenses. Except as specifically provided in this
Agreement, each party shall pay all costs and expenses incurred or to be
incurred by it in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement.
c. Form of Agreement. The subject headings of the paragraphs
and subparagraphs of this Agreement are included for convenience only and shall
not affect the construction or interpretation of any of its provisions.
d. Entire Agreement. This Agreement and the Exhibits and
Schedules attached hereto, all of which are incorporated by this reference
herein, constitute the entire agreement between the parties pertaining to the
subject matter contained in it and supersede all prior and contemporaneous
agreements, representations, and understandings of the parties. No supplement,
modification, or amendment of this Agreement shall be binding unless executed in
writing by all the parties. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party making the waiver.
e. Counterparts. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
f. Parties in Interest. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation or action over against any party to this Agreement.
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g. Assignment. This Agreement shall not be assignable by
either party without the prior written consent of the other party. No such
assignment shall release the assigning party from its obligations under this
Agreement. Subject to the foregoing, this Agreement shall inure to the benefit
of and be binding upon Buyer, its successors and assigns and upon Seller and
Electricar, its successors and assigns. Nothing in this Agreement, expressed or
implied, is intended to confer upon any other person any rights or remedies
under or by reason of this Agreement.
h. Attorneys' Fees and Costs. In the event of any litigation
or other dispute arising as a result of or by reason of this Agreement, the
prevailing party in any such litigation or other dispute shall be entitled to,
in addition to any other damages assessed, its reasonable attorneys' fees, and
all other costs and expenses incurred in connection with settling or resolving
such dispute. The attorneys' fees which the prevailing party is entitled to
recover shall include fees for prosecuting or defending any appeal and shall be
awarded for any supplemental proceedings until the final judgment is satisfied
in full. In addition to the foregoing award of attorneys' fees to the prevailing
party, the prevailing party in any lawsuit on this Agreement shall be entitled
to its reasonable attorneys' fees incurred in any post judgment proceedings to
collect or enforce the judgment. This attorneys' fees provision is separate and
several and shall survive the merger of this Agreement into any judgment.
i. Representations and Warranties. All representations,
warranties, covenants, and agreements of the parties contained in this
Agreement, or in any instrument, certificate, opinion, or other writing provided
for in it, shall survive the Closing.
j. Notices. All notices, requests, demands, instructions or
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given upon delivery,
if delivered personally or by one-day courier, or by facsimile transmission with
hard copy to follow via U.S. Mail where receipt is acknowledged by the receiving
machine or if given by prepaid telegram, or mailed first-class airmail, postage
prepaid, registered or certified mail, return receipt requested, shall be deemed
to have been given 72 hours after such delivery, to the applicable party's
address set forth on the signature page herein. Either party hereto may change
the address to which such communications are to be directed by giving written
notice to the other party hereto of such change in the manner provided above.
k. Governing Law. This Agreement shall be construed in
accordance with, and governed by, the laws of the State of California, County of
San Bernardino, as applied to contracts that are executed and performed entirely
therein.
l. Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of final jurisdiction, it is the intent of
the parties that all other provisions of this Agreement be construed to remain
fully valid, enforceable, and binding on the parties.
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m. Number and Gender. All terms in this Agreement shall be
construed to mean either the singular or the plural, masculine, feminine or
neuter, as the situation may demand. When the term Seller or Electricar is used
herein, it shall refer to each entity within that definition.
n. Ambiguities. This Agreement has been negotiated at
arms-length and between persons sophisticated and knowledgeable in the matters
dealt with in this Agreement. In addition, each party has had the benefit of
legal advice from experienced and knowledgeable legal counsel. Accordingly, any
rule of law (including California Civil Code ss.1654), or legal decision that
would require interpretation of any ambiguities in this Agreement against the
party that has drafted it, is not applicable and is waived. The provisions of
this Agreement shall be interpreted in a reasonable manner to effect the purpose
of the parties.
o. Bulk Sales Law. Buyer and Seller agree to waive compliance
with the provisions of the California law commonly known as the "Bulk Sales Law"
(Section 6101 eg seg. of the California Commercial Code). Any failure to comply
with the Bulk Sales Law, and any liabilities which may exist as a result of said
failure, shall be the responsibility of Seller, which shall indemnify and hold
Buyer harmless therefrom.
p. Further Assurances. Seller and Electricar will, when
reasonably requested so to do by Buyer, and Buyer will when reasonably requested
so to do by Seller or Electricar execute, acknowledge and deliver, or cause to
be executed, acknowledged, or delivered any and all such further conveyances,
assignment, confirmations, satisfactions, releases, powers of attorney,
instruments of further assurance, approvals, consents, and any and all such
further instruments and documents as may be necessary, expedient or proper, in
order to complete any and all conveyances, transfers, sales and assignments
herein provided, and to do any and all other acts and to execute, acknowledge
and deliver any and all documents as so requested in order to carry out the
intent and purpose of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
SELLER: BUYER:
INDUSTRIAL ELECTRIC VEHICLES, INC. LEGEND ELECTRIC VEHICLES
By: /s/ John J. Micelo By: /s/ Scott Breckley
------------------------- -----------------------
- ------------------------------ ----------------------------
(Signature) (Signature)
John J. Micelo III Scott Breckley
- ------------------------------ ----------------------------
V.P. President
- ------------------------------ ----------------------------
(Print Name & Title) (Print Name & Title)
1981 W. Redlands Blvd.
Redlands, CA 92373
With copy to: With copy to:
Donald C. Reinke, Esq. Betty S.N. Auton, Esq.
Pezzola & Reinke, APC Redlands Federal Bank Bldg.
1999 Harrison Street, Suite 1300 300 East State Street, Suite 420
Oakland, CA 94612 Redlands, CA 92373
U.S. ELECTRICAR, INC.
By: /s/ John J. Micelo /s/ Brian S Breckley
-------------------------- ------------------------------
Brian Scott Breckley, as
an individual
John J. Micelo IV V.P. Larry Lee Sparks
-------------------------- ---------------------------------
(Signature) Larry Lee Sparks, as an individual
5 Thomas Mellon Circle, Suite 305
San Francisco, CA 94134
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The Exhibits to this Agreement are deemed not to be material in nature, and
would be prohibitively expensive to submit. The exhibits are available for
review from the Company upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
U.S. Electricar, Inc.
(Registrant)
Date: September 19, 1996, By: /s/ John J. Micek III
-----------------------------
John J. Micek III
General Counsel