Exhibit 10.3
NASDAQ
August 7, 2000
Mr. Mark J. Wright
Vice President of Finance
and Chief Financial Officer
Western Power & Equipment Corporation
4601 NE 77th Avenue
Suite 200
Vancouver, Washington 98662
Dear Mr. Wright:
Staff is reviewing Western Power & Equipment Corporation's ("Western" or the
"Company") press release, dated April 18, 2000. Western announced that it
entered into a letter of intent to merge with e-Mobile, Inc. ("EMI") and sell
Western's existing business to Western Management. The transaction is intended
to be a tax-free merger of Western into a newly formed holding company, which
would then acquire EMI as a wholly owned subsidiary. Under the terms of the
letter of intent, the holding company would issue 52 million shares of new stock
for the purchase of EMI. Existing Western shareholders would exchange Western
stock for an equivalent number of shares in the new holding company. Western
will seek shareholder approval to allow certain members of Western management,
officers and certain directors to purchase Western's assets and assume its
liabilities for $4.7 million. A new Board of Directors will be appointed at the
closing and the officers of EMI will become officers of Western. Closing of this
transaction is conditioned on approval by Western shareholders and certain other
regulatory approvals and contractual conditions.
In order to proceed with our review, please submit the following additional
information and/or documentation to our office, as set forth in Marketplace
Rules 4300(1), 4310(c)(25)(G)(2) and 4330(f)(3):
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(1) Marketplace Rule 4300 states in part: "Nasdaq, therefore, in addition to
applying the enumerated criteria set forth in the Rule 4300 and 4400 Series,
will exercise broad discretionary authority over the initial and continued
inclusion of securities in Nasdaq in order to maintain the quality of and public
confidence in its market."
(2) Marketplace Rule 4310(c)(25)(G)(i)(b) states in part: "Each issuer shall
require shareholder approval of a plan or arrangement ... prior to the issuance
of designated securities...when the issuance will result in a change of control
of the issuer". Marketplace Rule 4310(c)(25)(G)(i)(c)(2) states in part: "Each
issuer shall require shareholder approval of a plan or arrangement ... prior to
the Issuance of designated securities In connection with the acquisition of the
stock or assets of another company if: ...where, due to the present or potential
issuance of common stock, or securities convertible into exercisable for common
stock, other than a public offering for cash: A. the common stock has or will
have upon issuance voting power equal to or in excess of 20 percent of the
voting power outstanding before the issuance of stock or securities convertible
into or exercisable for common stock; or B. The number of shares of common stock
to be issued is or will be equal to or in excess of 20 percent of the number of
shares or common stack outstanding before the issuance of the stock or
securities."
<PAGE>
Mr. Mark J. Wright
August 7, 2000
Page 2
o Provide a detailed description of any previous or pending inquiry,
investigation, lawsuit or related disciplinary action in the United
States or any other Country against the Company or any officer,
director, principal, shareholder or affiliate of the Company;
o Provide a detailed description of all relationships between Western
and EMI or its respective officers and. directors;
o Provide a detailed timetable for the consummation of the merger,
including the filing date of Western's Proxy Statement and the
closing of a definitive merger agreement;
o If applicable, identify the individual or entity who will provide a
fairness of opinion on this transaction;
o Provide terms of the new common stock;
o Provide a detailed description of the surviving entity's business
objectives;
o Provide any plans for acquisitions/divestitures and capital raising
activities for the post transaction company;
o Full names and biographies of the post transaction Company's
executive offices, directors and members of the audit committee
(please identify all independent directors);
o A post recapitalization shareholder table which includes the
beneficial ownership of the Company's common stock by i) each
director and executive officer of the Company, ii) all directors and
executive officers as a group, and iii) each person or entity owning
more than five percent of the outstanding shares of common stock
(for each corporate entity, provide the full names of all executive
officers and directors and any persons with dispositive control);
o Provide the pro forma financial statements that are not older than
45 days consisting of a balance sheet and income statement of the
surviving entity;
o Provide audited financial statements for the must recent two fiscal
years of EMI;
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(3) Marketplace Rule 4330(f) states in part: "Nasdaq shall require a Nasdaq
SmallCap Market issuer to comply with all applicable requirements for initial
inclusion under this Rule 4300 Series...in the event that such issuer enters
into a merger, consolidation, or other type of acquisition with a non-Nasdaq
entity, which results in a change of control and either a change in business or
change in the financial structure of the Nasdaq SmallCap Market...issuer."
<PAGE>
Mr. Mark Wright
August 7, 2000
Page 3
o Provide the most recent quarterly financial statements of EMI;
o Provide a list of all Western directors and officers who are
interested in buying Western's assets and assuming its liabilities
for $4.7 million;
o Did the Company obtain a fairness of opinion in determining the $4.7
million sale price? If yes, please identify the individual(s) or
entity. If not, provide a summary detailing the reasons;
o Shareholder list from Western's transfer agent as of the date of
this letter or more recent; and
o Shareholder list from EMI's transfer agent as of the date of this
letter or more recent.
The Company is requested to submit the above documentation by the close of
business on August 21, 2000. The Company is also requested to keep Staff
apprised of all material event and/or changes in its financial situation.
Staff appreciates your assistance in this matter. If you have any questions,
please contact your Listing Analyst, Hannah Huynh, at (301) 978-8051 or myself
at (301) 978-8093.
Sincerely,
/s/ Timothy J. Larkin
Associate Director
Nasdaq Listing Qualifications
