FIRST AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BETWEEN AND AMONG
SMALL TOWN RADIO, INC.
WORLDWIDE PETROMOLY, INC.
PETRO MERGER, INC.
XXXXXXX XXXXXXX
AND
CERTAIN INDIVIDUAL SHAREHOLDERS OF
SMALL TOWN RADIO, INC.
AS OF APRIL __, 2001
TABLE OF CONTENTS
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PAGE
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ARTICLE 1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Surviving Corporation. . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Articles of Incorporation. . . . . . . . . . . . . . . . . . 2
SECTION 1.3 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.4 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.5 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.6 Effective Time . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.7 Termination. . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1 STR Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2 Fractional Shares. . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.3 Exchange of STR Stock. . . . . . . . . . . . . . . . . . . . 3
SECTION 2.4 Tax-Deferred Reorganization. . . . . . . . . . . . . . . . . 4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY,
MERGER SUB AND THE CONTROLLING SHAREHOLDER . . . . . . . . . . . 4
SECTION 3.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.3 Absence of Restrictions and Conflicts. . . . . . . . . . . . 5
SECTION 3.4 Capitalization; Ownership of Company Common Stock;
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.5 SEC Reports and Company Financial Statements . . . . . . . . 7
SECTION 3.6 Absence of Certain Changes . . . . . . . . . . . . . . . . . 7
SECTION 3.7 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.8 Compliance with Law. . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.9 Company Material Contracts . . . . . . . . . . . . . . . . . 9
SECTION 3.10 Tax Returns; Taxes . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.11 Officers, Directors and Employees. . . . . . . . . . . . . . 10
SECTION 3.12 Company Employee Benefit Plans . . . . . . . . . . . . . . . 10
SECTION 3.13 Labor Relations. . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.14 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.15 Environmental Matters. . . . . . . . . . . . . . . . . . . . 11
SECTION 3.16 Patents, Trademarks, Trade Names . . . . . . . . . . . . . . 12
SECTION 3.17 Transactions with Affiliates . . . . . . . . . . . . . . . . 12
SECTION 3.18 Brokers, Finders and Investment Bankers. . . . . . . . . . . 13
SECTION 3.19 No Assets or Liabilities.. . . . . . . . . . . . . . . . . . 13
SECTION 3.20 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF STR AND THE
SIGNING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.3 Absence of Restrictions and Conflicts. . . . . . . . . . . . 14
SECTION 4.4 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.5 Brokers, Finders and Investment Bankers. . . . . . . . . . . 15
SECTION 4.6 Qualification of the Shareholders. . . . . . . . . . . . . . 15
SECTION 4.7 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.8 Compliance with Law. . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.9 STR Material Contracts . . . . . . . . . . . . . . . . . . . 16
SECTION 4.10 Tax Returns; Taxes . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.11 Officers, Directors and Employees. . . . . . . . . . . . . . 17
SECTION 4.12 STR Employee Benefit Plans . . . . . . . . . . . . . . . . . 17
SECTION 4.13 Labor Relations. . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.14 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.15 Patents, Trademarks, Trade Names . . . . . . . . . . . . . . 18
SECTION 4.16 Transactions with Affiliates . . . . . . . . . . . . . . . . 18
SECTION 4.17 STR Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.18 STR Financial Statements.. . . . . . . . . . . . . . . . . . 19
SECTION 4.19 STR Capitalization.. . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 5 CERTAIN COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . 20
SECTION 5.1 Election to Board of Directors . . . . . . . . . . . . . . . 20
SECTION 5.2 Compliance with Rule 14f-1.. . . . . . . . . . . . . . . . . 20
SECTION 5.3 SEC Filings. . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.4 Transfer of Assets and Liabilites to WPC.. . . . . . . . . . 20
SECTION 5.5 Sale of WPC. . . . . . . . . . . . . . . . . . . . . . . . . 20
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SECTION 5.6 Certificate of Designation . . . . . . . . . . . . . . . . . 20
SECTION 5.7 Nonsolicitation. . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.8 Voting of Merger Sub Shares. . . . . . . . . . . . . . . . . 21
SECTION 5.9 Previous SEC Filings.. . . . . . . . . . . . . . . . . . . . 21
ARTICLE 6 CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6.1 Conditions of the Obligations of STR and the Signing
Shareholders. . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6.2 Conditions of the Obligations of the Company and Merger Sub. 22
ARTICLE 7 CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.2 Share Certificates . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.3 Deliveries by the Company, Surviving Corporation and the
Controlling Shareholder . . . . . . . . . . . . . . . . . . 23
SECTION 7.4 Other Deliveries . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 8 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8.2 Agreement of Controlling Shareholder Indemnitor to
Indemnify. . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 8.3 Agreement of STR Indemnitors to Indemnify. . . . . . . . . . 26
SECTION 8.4 Procedures for Indemnification . . . . . . . . . . . . . . . 27
SECTION 8.5 Third Party Claims . . . . . . . . . . . . . . . . . . . . . 27
SECTION 8.6 Other Rights and Remedies Not Affected . . . . . . . . . . . 29
SECTION 8.7 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 8.8 Time Limitations . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 8.9 Limitations as to Amount Payable by Indemnitors. . . . . . . 29
SECTION 8.10 Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 8.11 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 9 MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . 30
SECTION 9.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 9.2 Disclosure Letters and Exhibits. . . . . . . . . . . . . . . 32
SECTION 9.3 Assignment; Successors in Interest . . . . . . . . . . . . . 32
SECTION 9.4 Number; Gender . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 9.5 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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SECTION 9.6 Controlling Law; Jurisdiction; Integration; Amendment. . . . 32
SECTION 9.7 Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 9.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 9.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 9.10 Enforcement of Certain Rights. . . . . . . . . . . . . . . . 33
SECTION 9.11 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 9.12 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . 33
SECTION 9.13 Construction . . . . . . . . . . . . . . . . . . . . . . . . 34
LIST OF EXHIBITS
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Exhibit 1 -- Company Disclosure Letter
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Exhibit 2 -- List of Company Shareholders
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Exhibit 3 -- List of Outstanding Options
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Exhibit 4 -- STR Disclosure Letter
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FIRST AMENDED AND RESTATED
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AGREEMENT AND PLAN OF MERGER
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THIS FIRST AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of
April __, 2001 (the "Agreement"), by and among SMALL TOWN RADIO, INC., a Georgia
corporation ("STR"); WORLDWIDE PETROMOLY, INC., a Colorado corporation (the
"Company"), PETRO MERGER, INC., a Georgia corporation and wholly-owned
subsidiary of the Company ("Merger Sub"), XXXXXXX XXXXXXX, a resident of the
State of Texas ("Xxxxxxx" or the "Controlling Shareholder") and certain of the
shareholders of STR listed on the signature pages hereto, each of whom are
referred to herein individually as a "Signing Shareholder" and collectively the
"Signing Shareholders."
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the parties signed the Agreement and Plan of Merger as of March
26, 2001, and now desire to make certain amendments to same;
WHEREAS, the respective Boards of Directors of STR, the Company and Merger
Sub each have approved this Agreement and the merger of Merger Sub with and into
STR upon the terms and conditions contained herein (the "Merger") and in
accordance with the Business Corporation Code of the State of Georgia (the
"GBCC") and the Colorado Business Corporation Act (the "CBCA");
WHEREAS, the Company, as the sole shareholder of Merger Sub, has approved
this Agreement, the Merger and the transactions contemplated hereby pursuant to
action taken by written consent in accordance with the requirements of the GBCC,
the CBCA and the Articles of Incorporation and the Bylaws of Merger Sub;
WHEREAS, the Controlling Shareholder holds approximately 44.7% of the
voting stock of the Company (the "Controlling Stock");
WHEREAS, the STR Shareholders have approved this Agreement, the Merger and
the transactions contemplated hereby pursuant to action taken by unanimous
written consent in accordance with the requirements of the GBCC and the Articles
of Incorporation and the Bylaws of STR;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, the parties hereto hereby agree as
follows:
ARTICLE 1
THE MERGER
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SECTION 1.1 SURVIVING CORPORATION. Subject to the provisions of this
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Agreement and the GBCC, at the Effective Time (as hereinafter defined), Merger
Sub shall be merged with and into STR and the separate corporate existence of
Merger Sub shall cease. STR shall be the surviving corporation in the Merger
(hereinafter sometimes called the "Surviving Corporation") and shall continue
its corporate existence under the laws of the State of Georgia. The Merger shall
have the effects set forth in Section 14-2-1106 of the GBCC.
SECTION 1.2 ARTICLES OF INCORPORATION. The Articles of Incorporation
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of STR shall be the Articles of Incorporation of the Surviving Corporation until
thereafter duly amended in accordance with its terms and the GBCC.
SECTION 1.3 BYLAWS. The Bylaws of STR shall be the Bylaws the Surviving
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Corporation until thereafter duly amended in accordance with their terms and the
GBCC.
SECTION 1.4 DIRECTORS. The directors of the Surviving Corporation shall
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consist of the directors of STR immediately prior to the Effective Time and, as
of the Effective Time, all of such directors to hold office until their
respective successors are duly elected and qualified.
SECTION 1.5 OFFICERS. The officers of the Surviving Corporation shall
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consist of the officers of STR immediately prior to the Effective Time and,
effective as of the Effective Time, such officers to hold office until their
respective successors are duly elected and qualified.
SECTION 1.6 EFFECTIVE TIME. The parties hereto shall cause a certificate
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of merger meeting the requirements of the GBCC (the " Certificate of Merger") to
be properly executed and filed on the Closing Date (as hereinafter defined) with
the Secretary of State of the State of Georgia. The Merger shall become
effective as of the filing of a properly executed Certificate of Merger. The
date and time when the Merger becomes effective is herein referred to as the
effective time (the "Effective Time").
SECTION 1.7 TERMINATION. If the transactions contemplated in this
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Agreement have not become effective and the Closing has not occurred by May 31,
2001 then this Agreement, and all related and ancillary agreements, shall
terminate with no further action on the part of any party hereto, and this
Agreement, and any related and ancillary agreements, shall be of no force or
effect whatsoever, and no party shall have any liability to the other. This
Agreement may also be terminated by the mutual written consent of the parties
hereto.
ARTICLE 2
CONVERSION OF SHARES
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SECTION 2.1 STR STOCK. As of the Effective Time, by virtue of the Merger
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and without any action on the part of any holder of STR stock:
Subject to Section 2.2, (a) each share of the common stock, no par value per
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share, of STR ("STR Common Stock") issued and outstanding immediately prior to
the Effective Time shall be converted into the right to receive one (1) share of
the Company's common stock, no par value per share (the "Company Common Stock")
for an aggregate of 112,467,860 shares of Company Common Stock (there will also
be a warrant for 1,000,000 shares of STR Common Stock outstanding at the
Effective Time), and (b) each share of the Series A Preferred Stock, no par
2
value per share, of STR (the "STR Preferred Stock") shall be converted into the
right to receive one (1) share of the Company's Series A Preferred Stock, no par
value (the "Company Preferred Stock", the Company Common Stock and Company
Preferred Stock issuable in accordance herewith being hereinafter collectively
referred to as the "Merger Consideration") for an aggregate of 10,000,000 shares
of Company Preferred Stock, all of which shares will be issued as soon as is
practicable after the Effective Time and delivered to the STR Shareholders
within ten (10) business days following the Closing;
2.1.1 Each share of common stock, no par value per share, of Merger
Sub that is issued and outstanding immediately prior to the Effective Time shall
remain outstanding and shall be unchanged after the Merger, all of which shares
shall be issued to the Company and shall thereafter constitute the only
outstanding shares of capital stock of the Surviving Corporation.
2.1.2 Each share of the STR Common Stock and STR Preferred Stock
issued and outstanding immediately prior to the Effective Time that is then held
in the treasury of STR shall be cancelled and retired and all rights in respect
thereof shall cease to exist, without any conversion thereof or payment of any
consideration therefor.
2.1.3 Except as set forth in the STR Disclosure Letter (as hereinafter
defined), each warrant, stock option or other right, if any, to purchase shares
of STR Common Stock issued and outstanding immediately prior to the Effective
Time shall remain outstanding (whether or not such warrant, option or other
right is then exercisable), and the holder of any such warrant, option or right
shall, upon exercise thereof in accordance with the terms thereof, be entitled
to receive one (1) share of the Company Common Stock for each share of STR
Common Stock that such holder would otherwise be entitled to receive.
SECTION 2.2 FRACTIONAL SHARES. No scrip or fractional shares of Company
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Common Stock or Company Preferred Stock shall be issued pursuant to this
Agreement. If any STR Shareholder would otherwise have been entitled to a
fractional share of Company Common Stock hereunder, such STR Shareholder shall
be entitled, after the later of (a) the Effective Time or (b) the surrender of a
Certificate or Certificates (as hereinafter defined) that represent such shares
of STR Common Stock or STR Preferred Stock, to receive from the Company only the
number of whole shares of Company Common Stock or Company Preferred Stock, as
the case may be, into which such shares of STR Common Stock or STR Preferred
Stock are convertible, rounded up to the nearest whole share.
SECTION 2.3 EXCHANGE OF STR STOCK.
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2.3.1 From and after the Effective Time, upon surrender of a
certificate or certificates which immediately prior thereto represented
outstanding shares of STR Common Stock or STR Preferred Stock, as the case may
be, duly endorsed in blank (the "Certificate" or "Certificates"), the
Certificate or Certificates so surrendered shall forthwith be canceled, and the
STR Shareholders thereafter shall be entitled to receive the Merger
Consideration in accordance with Section 2.1 and Section 2.2 hereof. No portion
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of the Merger Consideration to be received pursuant to Section 2.1 and Section
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2.2 upon exchange of a Certificate may be issued to a person other than the
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person in whose name the Certificate surrendered in exchange therefor is
registered. From the Effective Time until surrender in accordance with the
provisions of this Section 2.3, each Certificate shall represent for all
purposes only the right to receive the Merger Consideration. Delivery of
certificates for the Merger Consideration in respect of shares of STR that are
made in accordance with the terms hereof shall be deemed to have been made in
full satisfaction of all rights pertaining to such securities.
2.3.2 In the case of any lost, mislaid, stolen or destroyed
Certificate, an STR Shareholder may be required, as a condition precedent to
delivery to the STR Shareholders of the Merger Consideration, to deliver to the
Company a bond in such reasonable sum or a satisfactory indemnity agreement as
the Company may direct as indemnity against any claim that may be made against
the Company or the Surviving Corporation with respect to the Certificate alleged
to have been lost, mislaid, stolen or destroyed.
2.3.3 After the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation of the shares of STR Common
Stock or STR Preferred Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for transfer, they shall be canceled and exchanged for the
Merger Consideration.
SECTION 2.4 TAX-DEFERRED REORGANIZATION. The parties hereto shall use
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their reasonable best efforts to cause the Merger to constitute a tax-deferred
reorganization under Code Sec.368(a). The Company represents that as of the date
hereof, it has no plan or intention to liquidate, merge or cause the Surviving
Corporation to sell or otherwise dispose of its assets, or do any other act that
would jeopardize the qualification of the Merger contemplated by this Agreement
as a tax-deferred reorganization within the meaning of Sec.368(a) of the Code.
All parties covenant to report on their applicable federal and state tax returns
the Merger and the consequences of the Merger consistently with the foregoing.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY, MERGER SUB
AND THE CONTROLLING SHAREHOLDER
With such exceptions as may be set forth in a letter (the "Company
Disclosure LetterCompany Disclosure Letter") delivered by the Company, Merger
Sub and the Controlling Shareholder to STR prior to the execution hereof and
attached hereto as Exhibit 1, the Company, Merger Sub and the Controlling
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Shareholder, jointly and severally, hereby represent and warrant to STR as
follows:
SECTION 3.1 ORGANIZATION. Each of the Company and Merger Sub is a
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corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Each of the Company and Merger Sub is duly qualified to
transact business, and is in good standing, as a foreign corporation or branch
of a foreign corporation in each jurisdiction where the character of its
4
activities requires such qualification, except where the failure to so qualify
would not have a material adverse effect on its assets, liabilities, results of
operations, financial condition, business or prospects taken as a whole. Each
of the Company and Merger Sub has made available to STR accurate and complete
copies of their respective Articles of Incorporation, Bylaws, minutes books and
stock records. The Company Disclosure Letter contains a true and correct list
of the jurisdictions in which each of the Company and Merger Sub is qualified to
do business as a foreign corporation or branch of a foreign corporation.
SECTION 3.2 AUTHORIZATION. Each of the Company and Merger Sub has full
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corporate power and authority, and the Controlling Shareholder has the power and
capacity to execute and deliver this Agreement and to perform its obligations
under this Agreement and to consummate the Merger and the other transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and Merger Sub and the performance by the Company and Merger Sub of
their respective obligations hereunder and the consummation of the Merger and
the other transactions provided for herein have been duly and validly authorized
by all necessary corporate action on their part. The Board of Directors of each
of the Company and Merger Sub has approved the execution, delivery and
performance of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company, Merger Sub and the Controlling Shareholder and
constitutes the valid and binding agreement of the Company, Merger Sub and the
Controlling Shareholder enforceable against each of them in accordance with its
terms, subject to applicable bankruptcy, insolvency and other similar laws
affecting the enforceability of creditors' rights generally, general equitable
principles and the discretion of courts in granting equitable remedies.
SECTION 3.3 ABSENCE OF RESTRICTIONS AND CONFLICTS. The execution,
-----------------------------------------
delivery and performance of this Agreement, the consummation of the Merger and
the other transactions contemplated by this Agreement and the fulfillment of and
compliance with the terms and conditions of this Agreement do not and will not,
with the passing of time or the giving of notice or both, violate or conflict
with, constitute a breach of or default under, result in the loss of any
material benefit under, or permit the acceleration of any obligation under, (i)
any term or provision of the Articles of Incorporation or Bylaws of the Company
or Merger Sub, (ii) any Company Material Contract (as hereinafter defined),
(iii) any judgment, decree or order of any court or governmental authority or
agency to which the Company, Merger Sub or the Controlling Shareholder is a
party or by which the Company, Merger Sub and the Controlling Shareholder or any
of their respective properties is bound, or (iv) any statute, law, regulation or
rule applicable to the Company, Merger Sub and the Controlling Shareholder so as
to have, in the case of subsections (ii) through (iv) above, a material adverse
effect on the assets, liabilities, results of operations, financial condition,
business or prospects of the Company taken as a whole. Except for the filing
and recordation of the Certificate of Merger, no consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
agency or public or regulatory unit, agency, body or authority with respect to
the Company, Merger Sub or the Controlling Shareholder is required in connection
with the execution, delivery or performance of this Agreement by the Company,
Merger Sub or the Controlling Shareholder or the consummation of the
transactions contemplated by this Agreement by the Company, Merger Sub and the
Controlling Shareholder, the failure to obtain which would have a material
adverse effect upon the assets, liabilities, results of operations, financial
condition, business or prospects of the Company taken as a whole. The Company
Disclosure Letter sets forth a list of all agreements requiring the consent of
any party thereto to any of the transactions contemplated hereby.
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SECTION 3.4 CAPITALIZATION; OWNERSHIP OF COMPANY COMMON STOCK;
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SUBSIDIARIES.
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3.4.1 CAPITALIZATION. The authorized capital stock of the Company
--------------
consists of 800,000,000 shares of Company Common Stock and 10,000,000 of
preferred stock, no par value, (the "Preferred Stock"), of which 25,623,815
shares of Company Common Stock and no shares of Preferred Stock are issued and
outstanding as of the date hereof. Attached as Exhibit 2 is a list of the
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shareholders of the Company, as of March 14, 2001. Each such share of Company
Common Stock that is outstanding as of the date hereof is duly authorized,
validly issued, fully paid and nonassessable and free of pre-emptive rights.
Except as disclosed in the Company Disclosure Letter, there are no
subscriptions, options, convertible securities, calls, rights, warrants or other
agreements, claims or commitments of any nature whatsoever obligating the
Company to issue, transfer, deliver or sell, or cause to be issued, transferred,
delivered or sold, additional shares of the capital stock or other securities of
the Company or obligating the Company to grant, extend or enter into any such
agreement or commitment; and, except as disclosed in the Company Disclosure
Letter no such options, convertible securities, calls, rights, warrants or other
agreements have any demand, piggyback or other registration rights of any sort.
Exhibit 3, which shall be completed within three (3) days of the execution of
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this Agreement, and when attached hereto shall be an integral part of the
Agreement, is a complete list of all outstanding options, indicating whether
such options are registered or unregistered, the exercise price, the grant date,
the vesting period and whether there is an option agreement between the Company
and the option holder. The number of outstanding options to be set forth on
Exhibit 3 shall, under no circumstances, exceed 1,393,000.
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3.4.2 OWNERSHIP. The Controlling Shareholder is the record and
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beneficial owner of 11,450,000 shares of Company Common Stock; and such
Controlling Shareholder owns all such shares free and clear of any liens,
claims, options, charges, encumbrances or rights of others.
3.4.3 COMPANY SUBSIDIARIES. The Company does not own, nor has it
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ever owned, any subsidiary other than Merger Sub and Worldwide PetroMoly
Corporation, a Texas corporation ("WPC"), and together with Merger Sub, (the
"Subsidiaries"). The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, no par value per share, of which 1,000 shares are issued
and outstanding. The authorized capital stock of WPC consists of 20,000,000
shares of common stock, $.001 par value, of which 14,507,500 shares are issued
and outstanding. All such issued and outstanding shares of the Subsidiaries are
duly authorized, validly issued, fully paid, nonassessable and free of
6
preemptive rights. The Company owns 100% of the issued and outstanding shares
of the Subsidiaries. Except with respect to the transactions contemplated by
this Agreement, there are no subscriptions, options, convertible securities,
calls, rights, warrants or other agreements, claims or commitments of any nature
whatsoever obligating the Subsidiaries to issue, transfer, deliver or sell, or
cause to be issued, transferred, delivered or sold, additional shares of the
capital stock or other securities of either of the Subsidiaries or obligating
either of the Subsidiaries to grant, extend or enter into any such agreement or
commitment.
SECTION 3.5 SEC REPORTS AND COMPANY FINANCIAL STATEMENTS. The Company
----------------------------------------------
has filed or will file with the Securities and Exchange Commission (the "SEC")
true and complete copies of all forms, reports, schedules, statements and other
documents required to be filed by it since October 11, 1996 and through the date
hereof, under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the Securities Act of 1933, as amended (the "Securities Act") (such
forms, reports, schedules, statements and other documents, to the extent filed
and publicly available prior to the date of this Agreement, other than
preliminary filings, are referred to as the "SEC Reports"). The SEC Reports, at
the time filed, (a) did not or will not contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading and (b) complied or will comply as to form
in all material respects with the applicable requirements of the Exchange Act
and the Securities Act. The financial statements of the Company (including the
related notes and schedules thereto) included or to be included in the SEC
Reports (the "Company Financial Statements") (i) comply or will comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto, (ii) have
been or will have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto, or, in the case of the
unaudited statements, as permitted by the Instructions to Form 10-QSB
promulgated by the SEC) and (iii) fairly present or will fairly present
(subject, in the case of the unaudited statements, to normal year-end
adjustments) (A) the financial position of the Company, (B) the results of its
operations and (C) cash flows, in each case, as of the dates thereof or for the
period indicated, as the case may be. The books and records of the Company are
maintained on an accrual basis and the Company Financial Statements have been
prepared from, and are in accordance with, the books and records of the Company.
The Company has no liability or obligation of any nature whatsoever, whether
accrued, absolute, contingent or otherwise, required by to be reflected in the
Company Financial Statements other than (x) current liabilities and obligations
which are recurring in nature and not overdue on their terms, (y) liabilities
and obligations reflected and adequately provided for on the Company Financial
Statements and (z) liabilities and obligations arising in the ordinary course of
business of the Company since December 31, 2000 (none of which is an uninsured
liability for breach of contract, breach of warranty, tort, infringement, claim
or lawsuit). The Company Disclosure Letter sets forth a true and complete list
of all loss contingencies (within the meaning of Statement of Financial
Accounting Standards No. 5) of the Company exceeding $5,000 in the case of any
single loss contingency or $50,000 in the case of all loss contingencies.
SECTION 3.6 ABSENCE OF CERTAIN CHANGES.
-----------------------------
7
3.6.1 CERTAIN FINANCIAL MATTERS; PROPERTY; DIVIDENDS. Since June 30,
----------------------------------------------
2000 there has not been (i) any material adverse change in the assets,
liabilities, results of operations, financial condition, business or prospects
of the Company, (ii) any damage, destruction, loss or casualty to property or
assets of the Company, whether or not covered by insurance, which property or
assets are material to its operations or business, (iii) any declaration,
setting aside or payment of any dividend or distribution (whether in cash, stock
or property) in respect of the capital stock of the Company or any redemption
or other acquisition by the Company of any of the capital stock of the Company
or any split, combination or reclassification of shares of capital stock
declared or made by the Company, or (iv) any agreement to do any of the
foregoing.
3.6.2 OTHER CHANGES. Except as set forth in the Company Disclosure
--------------
Letter, since June 30, 2000, there have not been (i) any losses suffered, (ii)
any assets mortgaged, pledged or made subject to any lien, charge or other
encumbrance, (iii) any liability or obligation (absolute, accrued or contingent)
incurred or any material bad debt, contingency or other reserve increase
suffered, except, in each such case, in the ordinary course of business and
consistent with past practice, (iv) any claims, liabilities or obligations
(absolute, accrued or contingent) paid, discharged or satisfied, other than the
payment, discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of claims, liabilities and obligations reflected
or reserved against in the Company Financial Statements or incurred in the
ordinary course of business and consistent with past practice since the date of
such financial statements, (v) any guarantees, checks, notes or accounts
receivable written off as uncollectible, except write-offs in the ordinary
course of business and consistent with past practice, (vi) any write down of the
value of any asset or investment on the Company's books or records, except for
depreciation and amortization taken in the ordinary course of business and
consistent with past practice, (vii) any cancellation of any debts or waiver of
any claims or rights of substantial value, or sale, transfer or other
disposition of any properties or assets (real, personal or mixed, tangible or
intangible) of substantial value, except, in each such case, in transactions in
the ordinary course of business and consistent with past practice and which in
any event do not exceed $5,000 in the aggregate, (viii) any single capital
expenditure or commitment in excess of $5,000 for additions to property or
equipment, or aggregate capital expenditures and commitments in excess of $5,000
for additions to property or equipment, (ix) any material transactions entered
into other than in the ordinary course of business, (x) any agreements to do any
of the foregoing, or (xi) any other events, developments or conditions of any
character that have had or are reasonably likely to have a material adverse
effect on the assets, liabilities, results of operations, financial condition
business or prospects of the Company.
SECTION 3.7 LEGAL PROCEEDINGS. Set forth in the Company Disclosure
------------------
Letter is a listing of all suits, claims, actions, proceedings or investigations
to which the Company is a party or otherwise involving the Company. There are
no suits, actions, claims, proceedings or investigations pending or, to the best
knowledge of the Company, threatened against, relating to or involving the
Company (or any of its officers or directors in their capacity as such) before
any court, arbitrator or administrative or governmental body. All pending or,
to the best knowledge of the Company, threatened suits, actions, claims,
proceedings or investigations relating to or involving the Company (or any of
its officers or directors in their capacity as such) before any court,
arbitrator or administrative or governmental body are adequately provided for in
the Company Financial Statements. The Company is not subject to any judgment,
decree, injunction, rule or order of any court nor, to the best knowledge of the
Company, any other governmental restriction.
8
SECTION 3.8 COMPLIANCE WITH LAW. The Company has all material
---------------------
authorizations, approvals, licenses and orders of and from all governmental and
regulatory officers and bodies necessary to carry on its business as it is
currently being conducted, to own or hold under lease the properties and assets
it owns or holds under lease and to perform all of its obligations under the
agreements to which it is a party, and the Company has been and is in material
compliance with all applicable laws, regulations and administrative orders of
any country, state or municipality or of any subdivision thereof to which its
business or its employment of labor or its use or occupancy of properties or any
part thereof are subject, the failure to obtain or the violation of which would
have a material adverse effect upon its assets, liabilities, results of
operations, financial condition, business or prospects.
SECTION 3.9 COMPANY MATERIAL CONTRACTS. The Company Disclosure Letter
----------------------------
contains a correct and complete list of the following (hereinafter referred to
as the "Company Material Contracts"):
(i) all bonds, debentures, notes, mortgages, indentures or
guarantees to which the Company is a party or by which any of its properties or
assets (real, personal or mixed, tangible or intangible) is bound;
(ii) all leases to which the Company is a party or by which
any of its properties or assets (real, personal or mixed, tangible or
intangible) is bound;
(iii) all loans and credit commitments to the Company which
are outstanding, together with a brief description of such commitments and the
name of each financial institution granting the same;
(iv) all contracts or agreements which limit or restrict the
Company from engaging in any business in any jurisdiction or limit or restrict
others from competing with the Company in any jurisdiction;
(v) all agreements and documentation evidencing currently
outstanding loans or advances made by the Company to or on behalf of its
customers other than trade credit extended in the ordinary course of the
Company's business; and
(vi) all existing contracts and commitments (other than
those described in subparagraphs (i), (ii), (iii), (iv) or (v) of this Section
-------
3.9, and the Company Benefit Plans (as hereinafter defined)) to which the
---
Company is a party or by which its respective properties or assets may be bound
involving an annual commitment or annual payment by any party thereto of more
than $5,000 individually, or which have a fixed term extending more than twelve
(12) months from the date hereof and which involve a total commitment or payment
by any party thereto of more than $10,000.
9
True and complete copies of all Company Material Contracts, including all
amendments thereto, have been or will be made available to STR. The Company
Material Contracts are valid and enforceable in accordance with their respective
terms with respect to the Company and, to the best knowledge of the Company, are
valid and enforceable in accordance with their respective terms with respect to
any other party thereto, in each case subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforceability of creditors'
rights generally, general equitable principles and the discretion of courts in
granting equitable remedies. There is not under any of the Company Material
Contracts any existing breach, default or event of default by the Company or
event that with notice or lapse of time or both would constitute a breach,
default or event of default by the Company nor does the Company know of, and the
Company has not received notice of, or made a claim with respect to, any breach
or default by any other party thereto.
SECTION 3.10 TAX RETURNS; TAXES. The Company has duly filed all federal,
------------------
state, local and foreign tax returns required to be filed by it and has duly
paid or made adequate provision for the payment of all taxes which are due and
payable pursuant to such returns or pursuant to any assessment with respect to
taxes in such jurisdictions, whether or not in connection with such returns,
except for incidental interest and penalties which may be due and payable, but
which are not material in amount. The liability for taxes reflected in the
Company Financial Statements is sufficient for the payment of all unpaid taxes,
whether or not disputed, that are accrued or applicable for the period ended
June 30, 2000, and for all years and periods ended prior thereto. All
deficiencies asserted as a result of any examinations by the Internal Revenue
Service ("IRSIRS") or any other taxing authority have been paid, fully settled
or adequately provided for in the Company Financial Statements. There are no
pending claims asserted for taxes of the Company or outstanding agreements or
waivers extending the statutory period of limitation applicable to any tax
return of the Company for any period. The Company has made all required
estimated income tax deposits and all other required tax payments or deposits
and has complied for all prior periods in all material respects with the tax
withholding provisions of all applicable federal, state, local, foreign and
other laws. The Company has made available to STR true, complete and correct
copies of its federal income tax returns filed for each taxable year since 1996
and made available such other tax returns requested by STR.
SECTION 3.11 OFFICERS, DIRECTORS AND EMPLOYEES. The Company Disclosure
----------------------------------
Letter contains a true and complete list of all of the officers and directors of
the Company, specifying their office and annual rate of compensation, and a true
and complete list of all of the employees of the Company as of the date hereof
(i) with whom the Company has a written employment agreement (other than
providing for at-will employment) or (ii) to whom the Company has made verbal or
oral commitments for employment on other than at-will basis which are binding on
the Company or (iii) who have an annual rate of compensation in excess of
$50,000.
SECTION 3.12 COMPANY EMPLOYEE BENEFIT PLANS. For purposes of this
---------------------------------
Section 3.12, the term "Company Benefit PlanCompany Benefit Plan" means any
-------------
plan, program, arrangement, fund, policy, practice or contract which, through
which or under which the Company provides benefits or compensation to or on
behalf of employees or former employees of the Company, whether formal or
informal, whether or not written, including, without limitation, the following:
10
(i) Arrangements - any bonus, incentive compensation, stock option, deferred
------------
compensation, commission, severance pay, golden parachute or other compensation
plan or rabbi trust; (ii) ERISA Plans - any "Employee benefit planemployee
------------
benefit plan" (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISAERISA")), including, but not limited to,
any multi-employer plan (as defined in Section 3(37) and Section 4001(a)(3) of
ERISA), defined benefit plan, profit sharing plan, money purchase pension plan,
401(k) plan, savings or thrift plan, stock bonus plan, employee stock ownership
plan, or any plan, fund, program, arrangement or practice providing for medical
(including post-retirement medical), hospitalization, accident, sickness,
disability, or life insurance benefits; and (iii) Other Employee Fringe
-----------------------
Benefits - any stock purchase, vacation, scholarship, day care, prepaid legal
services, dependent care, telephone, automobile, dependent travel or other
fringe benefit plans, programs, arrangements, contracts or practices. Except as
described in the Company Disclosure Letter, the Company does not maintain, nor
has it at any time established or maintained, nor has it at any time been
obligated to make, or otherwise made, contributions to or under or otherwise
participated in any Company Benefit Plan.
SECTION 3.13 LABOR RELATIONS. The Company is in compliance in all
----------------
material respects with all federal, state and foreign laws respecting employment
and employment practices, terms and conditions of employment, wages and hours,
and is not engaged in any unfair labor or unlawful employment practice. The
Company has received no notice that there is any unlawful employment practice
discrimination charge involving the Company pending before the Equal Employment
Opportunity Commission ("EEOC"), EEOC- recognized state "referral agency" or any
other governmental agency. There is no unfair labor practice charge or complaint
against the Company pending before the National Labor Relations Board ("NLRB").
There is no labor strike, dispute, slowdown or stoppage actually pending or, to
the best knowledge of the Company, threatened against or involving or affecting
the Company, and no NLRB representation question exists respecting any of its
employees. No grievance or arbitration proceeding is pending against the Company
and, to the best knowledge of the Company, no written claim therefor exists.
There is no collective bargaining agreement that is binding on the Company.
SECTION 3.14 INSURANCE. Set forth on the Company Disclosure Letter is a
---------
listing of all policies of insurance to which the Company or the Subsidiaries
are parties or are otherwise a named insured or the beneficiary of coverage at
any time since January 1, 2000. With respect to each such insurance policy, the
policy is legal, valid, binding, enforceable and in full force and effect and
will continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms after the Effective Time.
SECTION 3.15 ENVIRONMENTAL MATTERS. There has not been, during the
----------------------
period commencing on the date on which the Company first leased, operated,
managed or occupied any parcel of real property (the "Real Estate") through and
including the Effective Time (the "Ownership Period"), any Pollution in
violation of applicable laws at or from the Real Estate; and, to the best
knowledge of the Company, (i) there was no Pollution in violation of applicable
laws at or from any portion of the Real Estate prior to the date of commencement
of the Ownership Period, and (ii) there are no past or present actions,
activities, circumstances, conditions, events or incidents that could form the
11
basis of any claim against the Company under any law relating to the pollution
or protection of human health or the environment, and no such claims have been
made or threatened. During the Ownership Period, (w) the use, storage, disposal
and transportation of all Hazardous Materials by the Company directly or
indirectly, has been in material compliance with all applicable laws, (x) the
Company has not directly or indirectly disposed of any Hazardous Material at a
site which is not in compliance with any law related to the pollution or
protection of human health or the environment, (y) there has been no Pollution
at or from the Real Estate, and (z) the Company has not received any notice
alleging that any Pollution exists upon or has migrated from any portion of the
Real Estate. As used in this Section 3.15: (A) "Hazardous Materials" shall mean
------------
any substance, waste or material that is defined or classified as "toxic,"
"hazardous," "hazardous waste" or other words of similar import by any law,
regulation or order regulating or relating to the environment or regulating or
governing substances, wastes or materials that are deemed to pose a risk of
injury to health of persons or damage to property, including asbestos, petroleum
and petroleum-based products and including all substances, wastes and materials
defined or classified (i) as a "solid waste" or "hazardous waste" (as those
terms are defined under the Solid Waste Disposal Act, as amended (42 U.S.C. 6901
et seq.)), (ii) as a "pollutant" or "toxic pollutant" (as those terms are
-------
defined under the Clean Water Act, as amended (33 U.S.C. 1251 et seq.)), (iii)
------
as an "air pollutant" or "hazardous air pollutant" (as those terms are defined
under the Clean Air Act, as amended (42 U.S.C. 7401 et seq.)), (iv) as a
------
"hazardous substance" (as that term is defined under the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. 9601 et seq.)
------
and amendments thereto), or any other substance, waste or material regulated
under applicable federal, state or local laws relating to the prevention and
control of water, land, groundwater or air pollution and contamination; and (B)
"Pollution" shall mean the discharge, disposal, release or emission of any
Hazardous Materials in, upon, over, under, across or from any parcel of land.
SECTION 3.16 PATENTS, TRADEMARKS, TRADE NAMES. No claims are pending
-----------------------------------
against the Company by any person with respect to the use of any intellectual
property including, without limitation, any patents, trademarks, trade names,
copyrights and all technology and processes used by the Company in its business
which are material thereto, or challenging or questioning the validity or
effectiveness of any license or agreement relating to the same, and the current
use by the Company of the intellectual property does not infringe on the rights
of any third party. The Company Disclosure Letter sets forth a list of all
jurisdictions in which the Company is operating under a tradename, and each
jurisdiction in which any such tradename is registered.
SECTION 3.17 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
------------------------------
Company's Disclosure Letter, no shareholder who would be an "affiliate" as
defined in rules and regulations of the Securities Act of 1933 (an "Affiliate
Shareholder") or any director or officer of the Company, or any person with whom
any such Affiliate Shareholder or any director or officer has any direct or
indirect relation by blood, marriage or adoption, or any entity in which any
such person owns any beneficial interest (other than a publicly held corporation
whose stock is traded on a national securities exchange or in the
over-the-counter market and less than 1% of the stock of which is beneficially
owned by all such persons), has any interest in: (a) any contract, arrangement
12
or understanding with, or relating to, the business or operations of the
Company; (b) any loan, arrangement, understanding, agreement or contract for or
relating to indebtedness of the Company; or (c) any property (real, personal or
mixed, tangible or intangible), used, or currently intended to be used in, the
business or operations of the Company.
SECTION 3.18 BROKERS, FINDERS AND INVESTMENT BANKERS. Neither the
-------------------------------------------
Company nor any of its officers, directors or employees has employed any broker,
finder or investment banker or incurred any liability for any investment banking
fees, financial advisory fees, brokerage fees or finders' fees in connection
with the transactions contemplated herein.
SECTION 3.19 NO ASSETS OR LIABILITIES. Except as disclosed in the
---------------------------
Company Disclosure Letter, the Company has no assets other than the shares of
stock of WPC and the shares of stock of Merger Sub. Except as disclosed in the
Company Disclosure Letter, the Company in not a guarantor of any liability, and
has no liabilities, contingent or otherwise.
SECTION 3.20 DISCLOSURE. No representation, warranty or covenant made by
----------
the Company or the Controlling Shareholder in this Agreement, the Company
Disclosure Letter, any exhibit attached hereto and no certificate or affidavit
furnished or to be furnished by or on behalf of the Company or Merger Sub to STR
contains or will contain, at the time it is made, any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Except as set forth herein or in
the Company Disclosure Letter or in the Company's SEC Reports, neither the
Company nor the Controlling Shareholder know of any fact or circumstance which
is reasonably likely to have a material adverse effect on the assets,
liabilities, results of operations, financial condition, business or prospects
of the Company.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF STR AND THE SIGNING SHAREHOLDERS
With such exceptions as may be set forth in a letter (the " STR Disclosure
Letter") delivered by STR and the Signing Shareholders to the Company prior to
the execution hereof, and attached hereto as Xxxxxxx 0, XXX and the Signing
---------
Shareholders hereby jointly and severally represent and warrant to the Company
and the Controlling Shareholder as follows:
SECTION 4.1 ORGANIZATION. STR is a corporation duly organized, validly
------------
existing and in good standing under the laws of the jurisdiction of its
incorporation, and STR has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. STR is duly qualified to transact business, and is in good standing,
as a foreign corporation in each jurisdiction where the character of its
activities requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the assets, liabilities, results of
operations, financial condition, business or prospects of STR taken as a whole.
STR has made or will make available to the Company accurate and complete copies
of its Articles of Incorporation, Bylaws, minutes books and stock records. The
STR Disclosure Letter contains a true and correct list of the jurisdictions in
which STR is qualified to do business as a foreign corporation or branch of a
foreign corporation.
13
SECTION 4.2 AUTHORIZATION. STR and the Signing Shareholders have full
-------------
corporate power and authority to execute and deliver this Agreement and to
perform its respective obligations under this Agreement and to consummate the
Merger and the other transactions contemplated hereby. The execution and
delivery of this Agreement by STR and the Signing Shareholders and the
performance by them of their respective obligations hereunder and the
consummation of the Merger and the other transactions provided for herein have
been duly and validly authorized by all necessary corporate or other action on
the part of each of STR and the Signing Shareholders. The Board of Directors of
STR has approved the execution, delivery and performance of this Agreement, and
the consummation of the Merger and the other transactions contemplated hereby.
This Agreement has been duly executed and delivered by each of STR and the
Signing Shareholders and constitutes the valid and binding agreement of each of
them, enforceable against each of STR and the Signing Shareholders in accordance
with its terms, subject to applicable bankruptcy, insolvency and other similar
laws affecting the enforceability of creditors' rights generally, general
equitable principles and the discretion of courts in granting equitable
remedies.
SECTION 4.3 ABSENCE OF RESTRICTIONS AND CONFLICTS. The execution,
-----------------------------------------
delivery and performance of this Agreement, the consummation of the Merger and
the other transactions contemplated by this Agreement, and the fulfillment of
and compliance with the terms and conditions of this Agreement do not and will
not, with the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of any obligation under,
(i) any term or provision of the Articles of Incorporation or Bylaws of STR,
(ii) any contract material to the business and operations of STR, (iii) any
judgment, decree or order of any court or governmental authority or agency to
which STR is a party or by which STR or any of its properties is bound, or (iv)
any statute, law, regulation or rule applicable to STR, so as to have, in the
case of subsections (ii) through (iv) above, a material adverse effect on the
assets, liabilities, results of operations, financial condition, business or
prospects of STR taken as a whole. Except for filing and recordation of the
Certificate of Merger, no consent, approval, order or authorization of, or
registration, declaration or filing with, any government agency or public or
regulatory unit, agency, body or authority with respect to STR or any Signing
Shareholder is required in connection with the execution, delivery or
performance of this Agreement by STR or the Signing Shareholders or the
consummation of the transactions contemplated by this Agreement by STR or Merger
Sub, the failure to obtain which would have a material adverse effect upon the
assets, liabilities, results of operations, financial condition, business or
prospects of STR taken as a whole.
SECTION 4.4 DISCLOSURE. No representation, warranty or covenant made by
----------
STR or the Signing Shareholders in this Agreement, the STR Disclosure Letter,
any exhibit attached hereto and no certificate or affidavit furnished or to be
furnished by or on behalf of STR or the Signing Shareholders contains or will
contain, at the time it is made, any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
14
make the statements therein, in light of the circumstances under which they were
made, not misleading. Except as set forth herein or in the STR Disclosure
Letter, neither STR nor the Signing Shareholders know of any fact or
circumstance which is reasonably likely to have a material adverse effect on the
assets, liabilities, results of operations, financial condition, business or
prospects of STR.
SECTION 4.5 BROKERS, FINDERS AND INVESTMENT BANKERS. Except as disclosed
---------------------------------------
in the STR Disclosure Letter, neither STR, any of the Signing Shareholders, nor
any of their officers, directors or employees has employed any broker, finder or
investment banker or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees or finders' fees in connection with the
transactions contemplated herein.
SECTION 4.6 QUALIFICATION OF THE SHAREHOLDERS. Each of the Signing
------------------------------------
Shareholders represents, severally and not jointly, that it (i) is acquiring the
Merger Consideration to be issued in connection herewith for his own account and
not with a view to, or for resale in connection with, any distribution thereof;
(ii) understands and acknowledges that such Merger Consideration has not been
registered under the Securities Act or any state securities laws by reason of
certain exemptions from the registration provisions thereof which depend upon,
among other things, the bona fide nature of his investment intent as expressed
herein; (iii) is able to bear the economic risk of an investment in such Merger
Consideration and has such knowledge and experience in financial and business
matters that he is capable of evaluating the risks and merits of such Merger
Consideration; (iv) has been provided with all information or been given access
to all information with respect to the Company which he believes might affect
its decision whether to effect the Merger; and (v) understands and acknowledges
that such Merger Consideration will be "restricted securities" (as that term is
defined in Rule 144 under the Securities Act) and that the certificate
representing such Merger Consideration will bear a legend restricting transfer
unless (A) the transfer is exempt from the registration requirements under the
Securities Act and/or any applicable state securities law and an opinion of
counsel reasonably satisfactory to the Company that such transfer is exempt
therefrom is delivered the Company or (B) the transfer is made pursuant to an
effective registration statement under the Securities Act and any applicable
state securities law. In determining to proceed with the transactions
contemplated hereby, each of the Signing Shareholders has relied solely on the
results of his own independent investigation with respect to the Company and the
Merger Consideration, upon the representations and statements of the Company set
forth herein and upon the SEC Reports.
SECTION 4.7 LEGAL PROCEEDINGS. Set forth in the STR Disclosure Letter is
-----------------
a listing of all suits, claims, actions, proceedings or investigations to which
STR is a party or otherwise involving STR. There are no suits, actions, claims,
proceedings or investigations pending or, to the best knowledge of STR,
threatened against, relating to or involving STR (or any of its officers or
directors in their capacity as such) before any court, arbitrator or
administrative or governmental body. All pending or, to the best knowledge of
STR, threatened suits, actions, claims, proceedings or investigations relating
to or involving STR (or any of its officers or directors in their capacity as
such) before any court, arbitrator or administrative or governmental body are
adequately provided for in the STR Financial Statements. STR is not subject to
any judgment, decree, injunction, rule or order of any court nor, to the best
knowledge of STR, any other governmental restriction.
15
SECTION 4.8 COMPLIANCE WITH LAW. STR has all material authorizations,
---------------------
approvals, licenses and orders of and from all governmental and regulatory
officers and bodies necessary to carry on its business as it is currently being
conducted, to own or hold under lease the properties and assets it owns or holds
under lease and to perform all of its obligations under the agreements to which
it is a party, and STR has been and is in material compliance with all
applicable laws, regulations and administrative orders of any country, state or
municipality or of any subdivision thereof to which its business or its
employment of labor or its use or occupancy of properties or any part thereof
are subject, the failure to obtain or the violation of which would have a
material adverse effect upon its assets, liabilities, results of operations,
financial condition, business or prospects.
SECTION 4.9 STR MATERIAL CONTRACTS. The STR Disclosure Letter contains a
----------------------
correct and complete list of the following (hereinafter referred to as the
"Company Material Contracts"):
(i) all bonds, debentures, notes, mortgages, indentures or
guarantees to which STR is a party or by which any of its properties or assets
(real, personal or mixed, tangible or intangible) is bound;
(ii) all leases to which STR is a party or by which any of
its properties or assets (real, personal or mixed, tangible or intangible) is
bound;
(iii) all loans and credit commitments to STR which are
outstanding, together with a brief description of such commitments and the name
of each financial institution granting the same;
(iv) all contracts or agreements which limit or restrict STR
from engaging in any business in any jurisdiction or limit or restrict others
from competing with STR in any jurisdiction;
(v) all agreements and documentation evidencing currently
outstanding loans or advances made by STR to or on behalf of its customers other
than trade credit extended in the ordinary course of STR's business; and
(vi) all existing contracts and commitments (other than
those described in subparagraphs (i), (ii), (iii), (iv) or (v) of this Section
-------
4.9, and the STR Benefit Plans (as hereinafter defined)) to which STR is a party
---
or by which its respective properties or assets may be bound involving an annual
commitment or annual payment by any party thereto of more than $5,000
individually, or which have a fixed term extending more than twelve (12) months
from the date hereof and which involve a total commitment or payment by any
party thereto of more than $10,000.
16
True and complete copies of all STR Material Contracts, including all
amendments thereto, have been or will be made available to the Company. The STR
Material Contracts are valid and enforceable in accordance with their respective
terms with respect to STR and, to the best knowledge of STR, are valid and
enforceable in accordance with their respective terms with respect to any other
party thereto, in each case subject to applicable bankruptcy, insolvency and
other similar laws affecting the enforceability of creditors' rights generally,
general equitable principles and the discretion of courts in granting equitable
remedies. There is not under any of the STR Material Contracts any existing
breach, default or event of default by STR or event that with notice or lapse of
time or both would constitute a breach, default or event of default by STR nor
does STR know of, and STR has not received notice of, or made a claim with
respect to, any breach or default by any other party thereto.
SECTION 4.10 TAX RETURNS; TAXES. STR has duly filed all federal, state,
------------------
local and foreign tax returns required to be filed by it, or has filed a timely
and appropriate extension with respect thereto, and has duly paid or made
adequate provision for the payment of all taxes which are due and payable
pursuant to such returns or pursuant to any assessment with respect to taxes in
such jurisdictions, whether or not in connection with such returns, except for
incidental interest and penalties which may be due and payable, but which are
not material in amount. The liability for taxes reflected in the STR Financial
Statements is sufficient for the payment of all unpaid taxes, whether or not
disputed, that are accrued or applicable for the period ended June 30, 2000, and
for all years and periods ended prior thereto. All deficiencies asserted as a
result of any examinations by the Internal Revenue Service ("IRSIRS") or any
other taxing authority have been paid, fully settled or adequately provided for
in the STR Financial Statements. There are no pending claims asserted for taxes
of STR or outstanding agreements or waivers extending the statutory period of
limitation applicable to any tax return of STR for any period. STR has made all
required estimated income tax deposits and all other required tax payments or
deposits and has complied for all prior periods in all material respects with
the tax withholding provisions of all applicable federal, state, local, foreign
and other laws. STR has made available to STR true, complete and correct copies
of its federal income tax returns filed for each taxable year since 2000 and
made available such other tax returns requested by STR.
SECTION 4.11 OFFICERS, DIRECTORS AND EMPLOYEES. The STR Disclosure
------------------------------------
Letter contains a true and complete list of all of the officers and directors of
STR, specifying their office and annual rate of compensation, and a true and
complete list of all of the employees of STR as of the date hereof (i) with whom
STR has a written employment agreement (other than providing for at-will
employment) or (ii) to whom STR has made verbal or oral commitments for
employment on other than at-will basis which are binding on STR or (iii) who
have an annual rate of compensation in excess of $50,000.
SECTION 4.12 STR EMPLOYEE BENEFIT PLANS. For purposes of this Section
---------------------------- -------
3.12, the term "Company Benefit Plan" means any plan, program, arrangement,
----
fund, policy, practice or contract which, through which or under which STR
provides benefits or compensation to or on behalf of employees or former
employees of STR, whether formal or informal, whether or not written, including,
without limitation, the following: (i) Arrangements - any bonus, incentive
------------
compensation, stock option, deferred compensation, commission, severance pay,
golden parachute or other compensation plan or rabbi trust; (ii) ERISA Plans -
-----------
17
any "employee benefit plan" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), including, but
not limited to, any multi-employer plan (as defined in Section 3(37) and Section
4001(a)(3) of ERISA), defined benefit plan, profit sharing plan, money purchase
pension plan, 401(k) plan, savings or thrift plan, stock bonus plan, employee
stock ownership plan, or any plan, fund, program, arrangement or practice
providing for medical (including post-retirement medical), hospitalization,
accident, sickness, disability, or life insurance benefits; and (iii) Other
-----
Employee Fringe Benefits - any stock purchase, vacation, scholarship, day care,
-------------------------
prepaid legal services, dependent care, telephone, automobile, dependent travel
or other fringe benefit plans, programs, arrangements, contracts or practices.
Except as described in the STR Disclosure Letter, STR does not maintain, nor has
it at any time established or maintained, nor has it at any time been obligated
to make, or otherwise made, contributions to or under or otherwise participated
in any Company Benefit Plan.
SECTION 4.13 LABOR RELATIONS. STR is in compliance in all material
----------------
respects with all federal, state and foreign laws respecting employment and
employment practices, terms and conditions of employment, wages and hours, and
is not engaged in any unfair labor or unlawful employment practice. STR has
received no notice that there is any unlawful employment practice discrimination
charge involving STR pending before the Equal Employment Opportunity Commission
("EEOC"), EEOC- recognized state "referral agency" or any other governmental
agency. There is no unfair labor practice charge or complaint against STR
pending before the National Labor Relations Board ("NLRB"). There is no labor
strike, dispute, slowdown or stoppage actually pending or, to the best knowledge
of STR, threatened against or involving or affecting STR, and no NLRB
representation question exists respecting any of its employees. No grievance or
arbitration proceeding is pending against STR and, to the best knowledge of STR,
no written claim therefor exists. There is no collective bargaining agreement
that is binding on STR.
SECTION 4.14 INSURANCE. Set forth on the STR Disclosure Letter is a
---------
listing of all policies of insurance to which STR or the Subsidiaries are
parties or are otherwise a named insured or the beneficiary of coverage at any
time since January 1, 2000. With respect to each such insurance policy, the
policy is legal, valid, binding, enforceable and in full force and effect and
will continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms after the Effective Time.
SECTION 4.15 PATENTS, TRADEMARKS, TRADE NAMES. No claims are pending
-----------------------------------
against STR by any person with respect to the use of any intellectual property
including, without limitation, any patents, trademarks, trade names, copyrights
and all technology and processes used by STR in its business which are material
thereto, or challenging or questioning the validity or effectiveness of any
license or agreement relating to the same, and the current use by STR of the
intellectual property does not infringe on the rights of any third party. The
STR Disclosure Letter sets forth a list of all jurisdictions in which STR is
operating under a tradename, and each jurisdiction in which any such tradename
is registered.
18
SECTION 4.16 TRANSACTIONS WITH AFFILIATES. Except as set forth in STR's
----------------------------
Disclosure Letter, as of the Effective Time, no shareholder who would be an
"affiliate" as defined in rules and regulations of the Securities Act of 1933
(an "Affiliate Shareholder") or any director or officer of STR, or any person
with whom any such Affiliate Shareholder or any director or officer has any
direct or indirect relation by blood, marriage or adoption, or any entity in
which any such person owns any beneficial interest (other than a publicly held
corporation whose stock is traded on a national securities exchange or in the
over-the-counter market and less than 1% of the stock of which is beneficially
owned by all such persons), has any interest in: (a) any contract, arrangement
or understanding with, or relating to, the business or operations of STR; (b)
any loan, arrangement, understanding, agreement or contract for or relating to
indebtedness of STR; or (c) any property (real, personal or mixed, tangible or
intangible), used, or currently intended to be used in, the business or
operations of XXX.
XXXXXXX 0.00 XXX XXXXXXXXXXXX. XXX does not own, nor has it ever owned,
-----------------
any subsidiary.
SECTION 4.18 STR FINANCIAL STATEMENTS. The financial statements of STR
-------------------------
(the "STR Financial Statements"), fairly present or will fairly present (A) the
financial position of the Company, (B) the results of its operations and (C)
cash flows, in each case, as of the dates thereof or for the period indicated,
as the case may be. The Company has no liability or obligation of any nature
whatsoever, whether accrued, absolute, contingent or otherwise, required by to
be reflected in the STR Financial Statements other than (x) current liabilities
and obligations which are recurring in nature and not overdue on their terms,
(y) liabilities and obligations reflected and adequately provided for on STR
Financial Statements. The STR Disclosure Letter sets forth a true and complete
list of all loss contingencies (within the meaning of Statement of Financial
Accounting Standards No. 5) of the Company exceeding $5,000 in the case of any
single loss contingency or $50,000 in the case of all loss contingencies.
SECTION 4.19 STR CAPITALIZATION. The authorized capital stock of STR
------------------
consists of 250,000,000 shares of STR Common Stock and 50,000,000 shares of STR
Preferred Stock, of which 112,467,860 shares of STR Common Stock and 10,000,000
shares of STR Preferred Stock will be issued and outstanding as of the Effective
Date (there will also be a warrant for 1,000,000 shares of STR Common Stock
outstanding as of the Effective Date). Each such share of STR Common Stock that
is outstanding as of the date hereof is duly authorized, validly issued, fully
paid and nonassessable and free of pre-emptive rights. Except as disclosed in
the STR Disclosure Letter, there are no subscriptions, options, convertible
securities, calls, rights, warrants or other agreements, claims or commitments
of any nature whatsoever obligating STR to issue, transfer, deliver or sell, or
cause to be issued, transferred, delivered or sold, additional shares of the
capital stock or other securities of STR or obligating STR to grant, extend or
enter into any such agreement or commitment.
19
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS
--------------------------------
SECTION 5.1 ELECTION TO BOARD OF DIRECTORS. The Company shall obtain (a)
------------------------------
the written resignation of all directors and officers of the Company as STR or
the Signing Shareholders may specify to the Company immediately prior to the
Effective Time, effective as of the Effective Time, and (b) shall, in writing,
take all action necessary to cause the Board of Directors of the Company, at and
immediately after the Effective Time, to consist of those directors specified by
STR or the Signing Shareholders, such directors to include two existing
directors of the Company as are acceptable to all of STR, the Signing
Shareholders and the Company.
SECTION 5.2 COMPLIANCE WITH RULE 14F-1. The Controlling Shareholder
-----------------------------
shall cause the Company to comply on a timely basis with Rule 14f-1 promulgated
under the Exchange Act. STR shall cooperate in effecting such compliance and
shall supply the Company with all information concerning it and its designees to
the Board of Directors of the Company required to be presented in accordance
with such rule.
SECTION 5.3 SEC FILINGS. Prior to the Closing, the Company shall have
------------
filed with the SEC (a) an information statement pursuant to Section 14f-1 of the
Exchange Act, in form and substances satisfactory to STR, such information
statement to be filed not later than ten (10) days prior to the Closing Date,
and (b) any other filings, (including but not limited to any Form 8K) in form
and substance acceptable to STR and the Signing Shareholders, all which shall be
approved by STR and the Signing Shareholders prior to filing with the SEC.
SECTION 5.4 TRANSFER OF ASSETS AND LIABILITES TO WPC. To the extent that
----------------------------------------
any assets are identified in the Company Disclosure Letter pursuant to Section
-------
3.19 herein, and other than the shares of stock of WPC or the Merger Sub, all
----
such assets shall be transferred, in writing, to WPC prior to the Effective
Time. To the extent that any guaranties or liabilities are identified in the
Company Disclosure Letter pursuant to Section 3.19, all guarantees or
-------------
liabilities shall be transferred, in writing, to WPC prior to the Effective
Time.
SECTION 5.5 SALE OF WPC. Following the Closing, the Company and the
-------------
Controlling Shareholder will use their commercially reasonable efforts to enter
into a stock purchase agreement pursuant to which the Controlling Shareholder
will purchase all of the capital stock of WPC from the Company. The Company and
the Controlling Shareholder agree to negotiate such purchase agreement in good
faith, which agreement shall include customary representations, warranties,
covenants and indemnities for transactions of a similar size, type and nature.
SECTION 5.6 CERTIFICATE OF DESIGNATION. Prior to Closing, the Company
----------------------------
shall file with the Colorado Secretary of State a Certificate of Designation
with respect to the Company Preferred Stock, in form and substance acceptable
to STR.
20
SECTION 5.7 NONSOLICITATION. While this Agreement is effective, the
---------------
Company and the Controlling Shareholder shall not (i) solicit, initiate or
encourage any inquiries or proposals that constitute, or could reasonably be
expected to lead to, a merger, consolidation, business combination or similar
transaction involving the Company and its Subsidiaries (a "Competitive
Proposal"), other than the transactions contemplated by the Merger Agreement or
(ii) engage in negotiations or discussions concerning, or provide any non-public
information to any person or entity relating to a Competitive Proposal or (iii)
enter into a definitive agreement relating to a Competitive Proposal. The
Company shall immediately cease and cause to be terminated any existing
activities, including discussions or negotiations with any parties other than
STR, conducted heretofore with respect to any of the foregoing and will take
reasonable steps to inform its agents and representatives of the obligations
undertaken in this Section 5.7.
------------
SECTION 5.8 VOTING OF MERGER SUB SHARES. Assuming all closing conditions
---------------------------
set forth in Section 6.2 below are satisfied, as certified by an officer's
------------
certificate pursuant to Section 6.9 below, the Company shall vote all shares of
-----------
the Merger Sub in favor of the transactions contemplated in this Agreement.
SECTION 5.9 PREVIOUS SEC FILINGS. The Company shall have made any
----------------------
amendments to the SEC Reports previously filed with the SEC deemed necessary in
the good faith judgment of STR and agreed to by the Company, such amendments to
be in form and substance satisfactory to STR.
ARTICLE 6
CONDITIONS TO CLOSING
---------------------
SECTION 6.1 CONDITIONS OF THE OBLIGATIONS OF STR AND THE SIGNING
------------------------------------------------------------
SHAREHOLDERS. The obligation of STR and the Signing Shareholders to consummate
------------
the transactions contemplated by this Agreement are subject to satisfaction of
the following conditions:
6.1.1 OPINION OF COUNSEL REGARDING THE COMPANY. At the Closing STR
------------------------------------------
and the Signing Shareholders shall receive a legal opinion, dated the Closing
Date, in form and substance satisfactory to STR and the Signing Shareholders.
6.1.2 REPRESENTATIONS AND WARRANTIES. The representations and
--------------------------------
warranties set forth in Section 3 hereof shall be true and correct in all
----------
respect at and as of the Closing Date.
6.1.3 COVENANT COMPLIANCE. The Company and the Controlling
--------------------
Shareholder, as the case may be, shall have performed and complied with all of
its or his covenants hereunder in all material respect through the Closing Date.
6.1.4 CONSENTS. The Company shall have procured all necessary
--------
consents from governmental authorities and third parties with respect to the
consummation of the transactions contemplated hereby.
21
6.1.5 NO LITIGATION. No action, suit or proceeding shall be pending
--------------
or threatened before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling or charge would (a)
prevent the consummation of any of the transactions contemplated by this
Agreement, (b) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, (c) affect adversely the right of the STR
Shareholders to own and hold the Merger Consideration or (d) affect adversely
the right of the Company to own its assets and to operate its business.
6.1.6 DUE DILIGENCE; DISCLOSURE LETTER. STR and the Signing
-----------------------------------
Shareholders shall have received all reasonably requested due diligence
materials from the Company.
6.1.7 FAIRNESS OPINION. The Company shall have obtained a fairness
-----------------
opinion, acceptable in form and substance to STR and the Signing Shareholders,
with respect to both the Merger and all transactions associated therewith, and
the sale of WPC, as contemplated in Section 5.5 herein, and all transactions
-----------
associated therewith.
6.1.8 OFFICER'S CERTIFICATE. The Company and the Controlling
----------------------
Shareholder shall have delivered to STR a certificate to the effect that each of
the conditions specified in this Section 6.1.1 through Section 6.1.7 shall have
------------- -------------
been satisfied in all respects.
6.1.9 CLOSING OF STR PREFERRED STOCK PURCHASE AGREEMENT. STR shall
---------------------------------------------------
have completed the sale of at least $4 million in aggregate proceeds of the STR
Preferred Stock, such STR Preferred Stock to be converted on a one for one basis
to Company Preferred Stock Common Stock.
SECTION 6.2 CONDITIONS OF THE OBLIGATIONS OF THE COMPANY AND MERGER SUB.
-----------------------------------------------------------
The obligation of the Company and Merger Sub to consummate the transactions
contemplated by this Agreement is subject to satisfaction of the following
conditions:
6.2.1 REPRESENTATIONS AND WARRANTIES. The representations and
---------------------------------
warranties set forth in Section 4 hereof shall be true and correct in all
----------
respect at and as of the Closing Date.
6.2.2 COVENANT COMPLIANCE. STR and the Signing Stockholders, as the
--------------------
case may be, shall have performed and complied with all of its or their
covenants hereunder in all material respect through the Closing Date.
6.2.3 CONSENTS. STR shall have procured all necessary consents from
--------
governmental authorities and third parties with respect to the consummation of
the transactions contemplated hereby.
6.2.4 NO LITIGATION. No action, suit, or proceeding shall be
--------------
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling or
charge would (a) prevent the consummation of any of the transactions
contemplated by this Agreement, (b) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation or (c) affect adversely
the right of the Company to own its assets and to operate its business.
22
6.2.5 CLOSING OF STR PREFERRED STOCK PURCHASE AGREEMENT. STR shall
--------------------------------------------------
have completed the sale of at least $4 million in aggregate proceeds of the STR
Preferred Stock, such STR Preferred Stock to be converted on a one for one basis
to Company Preferred Stock.
6.2.6 DUE DILIGENCE; DISCLOSURE LETTER. The Company shall have
-----------------------------------
received all reasonably requested due diligence materials from STR.
6.2.7 FAIRNESS OPINION. The Company shall have obtained a fairness
-----------------
opinion, acceptable to it in form and substance, with respect to both the Merger
and all transactions associated therewith, and the sale of WPC, as contemplated
in Section 5.5 herein, and all transactions associated therewith.
------------
6.2.8 OPINION OF COUNSEL REGARDING STR. At the Closing, counsel for
--------------------------------
STR and the Signing Shareholders shall deliver its opinion, dated the Closing
Date, in form and substance satisfactory to the Company.
6.2.9 OFFICER'S CERTIFICATE. STR and the Signing Shareholders shall
---------------------
have delivered to the Company a certificate to the effect that each of the
conditions specified in this Section 6.2.1 through Section 6.2.8 shall have been
------------- -------------
satisfied in all respects.
ARTICLE 7
CLOSING
-------
SECTION 7.1 CLOSING DATE. The Closing shall take place at the offices of
------------
Paul, Hastings, Xxxxxxxx & Xxxxxx, LLP, 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000 at 10:00 a.m., local time, on the first business day
following the satisfaction of all conditions to the obligations of the parties
hereto, or at such other time or place or on such other date as the parties
hereto may agree to in writing (the "Closing Date"). The Closing shall be
effective as of 12:01 a.m., local time, on the Closing Date.
SECTION 7.2 SHARE CERTIFICATES. Ten days prior to the Closing Date, or
-------------------
as soon thereafter is as practicable, the Company shall cause a letter of
instruction to be sent to the transfer agent requesting that the certificate(s)
representing the Company Preferred Stock be delivered to Xxxxxx Xxxxxxx, counsel
for the Company, such Company Preferred Stock to be held by Xx. Xxxxxxx in
escrow until their delivery at Closing, in exchange for the certificate(s)
representing the STR Preferred Stock.
SECTION 7.3 DELIVERIES BY THE COMPANY, SURVIVING CORPORATION AND THE
------------------------------------------------------------
CONTROLLING SHAREHOLDER. At the Closing, the Company, Surviving Corporation
------------------------
and/or the Controlling Shareholder shall deliver the following:
23
(i) A letter of instruction to the transfer agent
instructing same to issue shares of the Company Stock in accordance with the
terms of this Agreement.
(ii) An executed counterpart of the Certificate of Merger to
the Secretary of State of the State of Georgia.
SECTION 7.4 OTHER DELIVERIES. At the Closing, the following additional
-----------------
deliveries shall be made:
(i) Counsel chosen by STR shall deliver to STR the opinion
specified in Section 6.1.1 hereof;
--------------
(ii) Counsel for STR and the Signing Shareholders shall
deliver to the Company the opinion specified in Section 6.2.8 hereof;
--------------
(iii) The officer's certificates required pursuant to
Section 6.1.8 and Section 6.2.9 herein;
-------------- --------------
(iv) The certificate(s) representing the STR Preferred Stock
to be exchanged for the certificate(s) representing the Company Preferred Stock;
(v) The payment of the remaining sum due pursuant to Section
-------
9.12 herein;
----
(vi) The parties hereto shall execute and deliver such other
certificates, documents and things as their respective counsel deem to be
appropriate.
ARTICLE 8
INDEMNIFICATION
---------------
SECTION 8.1 DEFINITIONS. For the purposes of this Article 8:
-----------
(i) "Controlling Shareholder Indemnitor" shall mean the
Controlling Shareholder.
(ii) "Controlling Shareholder Indemnitor's Representative"
shall mean Xxxxxxx, or such other person or entity as the Controlling
Shareholder may designate in writing to the STR Indemnitors' Representative.
(iii) "Controlling Shareholder Indemnitees" shall mean the
Controlling Shareholder.
(iv) "Indemnification Claim" shall mean a claim for
indemnification hereunder.
24
(v) "Indemnitee" or "Indemnitees" shall mean the STR
Indemnitees or the Controlling Shareholder Indemnitees, as the context requires.
(vi) "Indemnitor" or "Indemnitors" shall mean the STR
Indemnitors or the Controlling Shareholder Indemnitor, as the context requires.
(vii) "Indemnitors' Representative" shall mean the STR
Indemnitors' Representative or the Controlling Shareholder Indemnitor's
Representative, as the context requires.
(viii) "Losses" shall mean any and all demands, claims,
actions or causes of action, assessments, losses, damages (including special and
consequential damages), liabilities, costs and expenses, including interest,
penalties, cost of investigation and defense, and reasonable attorneys' and
other professional fees and expenses.
(ix) "STR Indemnitees" shall mean STR, the STR Shareholders,
the Surviving Corporation, the Company and their respective agents,
representatives, employees, officers, directors, shareholders, controlling
persons and affiliates.
(x) "STR Indemnitors" shall mean STR and the Surviving
Corporation, jointly and severally.
(xi) "STR Indemnitors' Representative" shall mean STR.
(xii) "Third Party Claim" shall mean any claim, suit or
proceeding (including a binding arbitration or an audit by any taxing authority)
that is instituted against an Indemnitee by a person or entity other than an
Indemnitor and which, if prosecuted successfully, would result in a Loss or
Losses for which such Indemnitee is entitled to indemnification hereunder.
SECTION 8.2 AGREEMENT OF CONTROLLING SHAREHOLDER INDEMNITOR TO INDEMNIFY.
------------------------------------------------------------
Subject to the terms and conditions of this Article 8, the Controlling
Shareholder Indemnitor, agrees to indemnify, defend and hold harmless STR
Indemnitees, and each of them, from, against, for and in respect of any and all
Losses asserted against, or paid, suffered or incurred by, a STR Indemnitee and
resulting from, based upon or arising out of:
(i) the material inaccuracy or untruth of any representation
or warranty of the Company or the Controlling Shareholder contained in or made
pursuant to this Agreement or the Company Disclosure Letter or in or made
pursuant to any exhibit furnished by the Company or the Controlling Shareholder
Indemnitor in connection herewith regardless of whether the same was deliberate,
reckless, negligent, innocent or unintentional;
(ii) a breach of or failure to perform any covenant,
undertaking, condition or agreement of the Company or the Controlling
Shareholder or the Controlling Shareholder Indemnitor made in this Agreement or
any Ancillary Agreement regardless of whether the same was deliberate, reckless,
negligent, innocent or unintentional;
25
(iii) the business or operations of the Company prior to the
Effective Time or the actions or omissions of the Company's officers, directors,
shareholders, employees or agents prior to the Effective Time (excluding claims
brought pursuant to (iv) below), irrespective of the date that any claim, suit
or other course of action related thereto is filed or otherwise instituted,
provided that the foregoing shall not apply to any liability of the Company
reflected in the Company Financial Statements or incurred thereafter in the
ordinary course of business prior to the Effective Time; or
(iv) any claim by any shareholder, option holder, or other
individual or entity claiming the right to shares or options of the Company
(excluding claims associated with the transactions contemplated hereby), or any
predecessor thereto, related to any prior transaction involving any shares of
capital stock of the Company, or rights to shares of capital stock of the
Company, including without limitation, subscriptions, options, convertible
securities, calls, rights, warrants or other agreements, claims or commitments
of any nature whatsoever obligating the Company to issue, transfer, deliver or
sell, or cause to be issued, transferred, delivered or sold, additional shares
of the capital stock or other securities of the Company or obligating the
Company to grant, extend or enter into any such agreement or commitment, except
as are set forth on Exhibit 3, which shall be completed within three (3) days of
---------
the execution of this Agreement, and when attached hereto shall be an integral
part of the Agreement
SECTION 8.3 AGREEMENT OF STR INDEMNITORS TO INDEMNIFY. Subject to the
-------------------------------------------
terms and conditions of this Article 8, the STR Indemnitors, jointly and
severally, agree to indemnify, defend and hold harmless the Controlling
Shareholder Indemnitees, and each of them, from, against, for and in respect of
any and all Losses asserted against, or paid, suffered or incurred by, each
Controlling Shareholder Indemnitee and resulting from, based upon, arising out
of or in connection with:
(i) the material inaccuracy or untruth of any representation
or warranty of any STR Indemnitor, contained in or made pursuant to this
Agreement or the STR Disclosure Letter or in or made pursuant to any exhibit
furnished by the STR Indemnitors, or either of them, in connection herewith
regardless of whether the same was deliberate, reckless, negligent, innocent or
unintentional;
(ii) a breach of or failure to perform any covenant,
undertaking, condition or agreement of the STR Indemnitors, or either of them,
made in this Agreement or in any Ancillary Agreement regardless of whether the
same was deliberate, reckless, negligent, innocent or unintentional;.
(iii) the business or operations of STR prior to the
Effective Time or the actions or omissions of STR's officers, directors,
shareholders, employees or agents prior to the Effective Time, irrespective of
the date that any claim, suit or other course of action related thereto is filed
or otherwise instituted, provided that the foregoing shall not apply to any
liability of STR reflected in its more recent financial statements or incurred
thereafter in the ordinary course of business; or
26
(iv) any claim by any former shareholder of STR, or any
predecessor thereto, involving the transactions contemplated hereby or any prior
transaction involving any shares of capital stock of STR.
SECTION 8.4 PROCEDURES FOR INDEMNIFICATION. The obligations and
--------------------------------
liabilities of the parties with respect to an Indemnification Claim shall be
subject to the following terms and conditions:
(i) an Indemnification Claim shall be made by a STR
Indemnitee by delivery of a written notice to the Controlling Shareholder
Indemnitor's Representative requesting indemnification from the Controlling
Shareholder Indemnitor and specifying the basis on which indemnification is
sought and the amount of asserted Losses and, in the case of a Third Party
Claim, containing (by attachment or otherwise) such other information as such
Indemnitee shall have concerning such Third Party Claim;
(ii) an Indemnification Claim shall be made by a Controlling
Shareholder Indemnitee by delivery of a written notice to the STR Indemnitors'
Representative requesting indemnification and specifying the basis on which
indemnification is sought and the amount of asserted Losses and, in the case of
a Third Party Claim, containing (by attachment or otherwise) such other
information as such Indemnitee shall have concerning such Third Party Claim.
(iii) if the Indemnification Claim involves a Third Party
Claim, the procedures set forth in Section 8.5 hereof shall also be observed by
-----------
the Indemnitee and the Indemnitors' Representative;
(iv) if the Indemnification Claim involves a matter other
than a Third Party Claim, the Indemnitors' Representative shall have thirty (30)
days to object to such Indemnification Claim by delivery of a written notice of
such objection to such Indemnitee specifying in reasonable detail the basis for
such objection. Failure to object in a timely manner shall constitute a final
and binding acceptance of the Indemnification Claim by the Indemnitors'
Representative on behalf of all the subject Indemnitors, and the Indemnification
Claim shall be paid in accordance with subsection (v) hereof; and
(v) upon determination of the amount of an Indemnification
Claim, whether by agreement between the Indemnitors' Representative and the
Indemnitee or otherwise, the Indemnitors shall pay the amount of such
Indemnification Claim within ten (10) days of the date such amount is
determined.
SECTION 8.5 THIRD PARTY CLAIMS. The obligations and liabilities of the
-------------------
parties hereunder with respect to a Third Party Claim shall be subject to the
following terms and conditions:
27
(i) the Indemnitee shall give the applicable Indemnitors'
Representative written notice of a Third Party Claim promptly after receipt by
the Indemnitee of notice thereof, and the Indemnitors Representative, on behalf
of the Indemnitors, may undertake the defense, compromise and settlement thereof
by representatives of its own choosing reasonably acceptable to the Indemnitee.
If the Indemnitee fails to notify the Indemnitors' Representative of such claim
within sixty (60) days of the Indemnitee's receipt of notice thereof, the
Indemnitors shall be relieved of any liability that they may have with respect
to such claim, unless the Indemnitees' Representative demonstrates that the
Indemnitors' defense of such claim is not prejudiced by such failure. The
assumption of the defense, compromise and settlement of any such Third Party
Claim by the Indemnitors' Representative shall be an acknowledgment of the
obligation of the Indemnitors to indemnify the Indemnitee with respect to such
claim hereunder. If the Indemnitee desires to participate in, but not control,
any such defense, compromise and settlement, it may do so at its sole cost and
expense. If, however, the Indemnitors' Representative fails or refuses to
undertake the defense of such Third Party Claim within ten (10) days after
written notice of such claim has been given to the Indemnitors' Representative
by the Indemnitee, the Indemnitee shall have the right to undertake the defense,
compromise and settlement of such claim with counsel of its own choosing. In the
circumstances described in the immediately preceding sentence, the Indemnitee
shall, promptly upon its assumption of the defense of such claim, make an
Indemnification Claim as specified in Section 8.3 which shall be deemed an
------------
Indemnification Claim that is not a Third Party Claim for the purposes of the
procedures set forth herein;
(ii) if, in the reasonable opinion of the Indemnitee, any
Third Party Claim or the litigation or resolution thereof involves an issue or
matter which could have a material adverse effect on the business, operations,
assets, properties or prospects of the Indemnitee (including the administration
of the tax returns and responsibilities under the tax laws of the Indemnitee),
the Indemnitor shall consult with the Indemnitee with respect to the defense of
such claim and shall obtain the consent of the Indemnitee, which consent shall
not be unreasonably withheld or delayed, prior to the compromise and settlement
of such Third Party Claim undertaken by the Indemnitors Representative, and the
reasonable costs and expenses of the Indemnitee in connection therewith shall be
included as part of the indemnification obligations of the Indemnitors
hereunder;
(iii) If the Indemnitors' Representative assumes the defense
of such a Third Party Claim, (A) no compromise or settlement thereof may be
effected by the Indemnitors' Representative without the Indemnitee's consent
unless (i) there is no finding or admission of any violation of law or any
violation of the rights of any person and no effect on any other claim that may
be made against the Indemnitee, (ii) the sole relief provided is monetary
damages that are paid in full by the Indemnitors, and (iii) the compromise or
settlement includes, as an unconditional term thereof, the giving by the
claimant or the plaintiff to the Indemnitee of a release, in form and substance
satisfactory to the Indemnitee, from all liability in respect of such Third
Party Claim, and (B) the Indemnitee shall have no liability with respect to any
compromise or settlement thereof effected without its consent; and
(iv) in connection with the defense, compromise or
settlement of any Third Party Claim, the parties to this Agreement shall execute
such powers of attorney as may reasonably be necessary or appropriate to permit
participation of counsel selected by any party hereto and, as may reasonably be
related to any such claim or action, shall provide access to the counsel,
accountants and other representatives of each party during normal business hours
to all properties, personnel, books, tax records, contracts, commitments and all
other business records of such other party and will furnish to such other party
copies of all such documents as may reasonably be requested (certified, if
requested).
28
SECTION 8.6 OTHER RIGHTS AND REMEDIES NOT AFFECTED. The rights of the
----------------------------------------
Indemnitees under this Article 8 are independent of and in addition to such
rights and remedies as the Indemnitees may have at law or in equity or otherwise
for any misrepresentation, breach of warranty or the failure to fulfill any
agreement or covenant hereunder on the part of any Indemnitor, including the
right to seek specific performance, recision or restitution, none of which
rights or remedies shall be affected or diminished hereby.
SECTION 8.7 SURVIVAL. Subject to Section 8.8 hereof, all
-------- ------------
representations, warranties and agreements contained in this Agreement or in any
certificate, schedule or exhibit attached to this Agreement, in each case as
supplemented or amended by the respective Indemnitors' Disclosure Letter, shall
survive the Closing notwithstanding any investigation conducted with respect
thereto or any knowledge acquired as to the accuracy or inaccuracy of any such
representation or warranty (but, with respect to the representations and
warranties, only as of the date of the Closing).
SECTION 8.8 TIME LIMITATIONS.
-----------------
8.8.1 The Controlling Shareholder Indemnitor shall have no liability
under Section 8.2, unless on or before the expiration of eighteen months
------------
following the Closing Date the Controlling Shareholder Indemnitor are given
notice asserting an Indemnification Claim with respect thereto; provided,
--------
however, that an Indemnification Claim based upon a breach of the
-------
representations and warranties of the Controlling Shareholder Indemnitor
contained in Sections 3.1, 3.2, 3.3, 3.4, 3.10, 3.15 and 3.16 may be made at any
- --------------------------------------- ----
time except as limited by law.
8.8.2 The STR Indemnitors shall have no liability under Section 8.3,
-----------
unless on or before the expiration of eighteen months following the Closing Date
the STR Indemnitors are given notice asserting an Indemnification Claim with
respect thereto; provided, however, that an Indemnification Claim based upon a
-------- -------
breach of the representations and warranties of the STR Indemnitors contained in
Sections 4.1, 4.2, 4.3 and 4.4 may be made at any time except as limited by law.
---------------------- ---
SECTION 8.9 LIMITATIONS AS TO AMOUNT PAYABLE BY INDEMNITORS. The
-----------------------------------------------------
Indemnitors shall have no liability with respect to the matters described in
Section 8.2 (other than Section 8.2(iv)) with respect to the Controlling
------------ ----------------
Shareholder Indemnitor and Section 8.3 with respect to the STR Indemnitors until
-----------
the amount of any Indemnification Claim shall exceed $15,000 (an "Eligible
Claim") and then only to the extent of any Losses with respect to such Eligible
Claim in excess of $15,000.00. At such time as the aggregate Losses with respect
to Eligible Claims exceed $75,000.00 (the "Threshold Amount"), the Indemnitors
shall be obligated to indemnify the Indemnitees for all Losses in excess of the
Threshold Amount, notwithstanding the amount of any Indemnification Claim.
Notwithstanding the foregoing, the limitations set forth in this Section 8.9
-----------
29
shall not apply to Losses related to any breach of the representations and
warranties contained in Section 3.4.1 herein, or any intentional
--------------
misrepresentation or breach of warranty by the Indemnitors or any intentional
failure to perform or comply with any covenant or agreement by the Indemnitors,
and the Indemnitors shall be liable for all Losses with respect thereto.
SECTION 8.10 SUBROGATION. Upon payment in full of any Indemnification
-----------
Claim, whether such payment is effected by set-off or otherwise, or the payment
of any judgment or settlement with respect to a Third Party Claim, the
Indemnitors shall be subrogated to the extent of such payment to the rights of
the Indemnitee against any person or entity with respect to the subject matter
of such Indemnification Claim or Third Party Claim.
SECTION 8.11 PAYMENT. In the event that the Indemnitors are required to
-------
make any payment under this Article 8, the Indemnitors shall promptly pay the
Indemnitee the amount so determined. If there should be a dispute as to the
amount or manner of determination of any indemnity obligation owed under this
Article 8, the Indemnitors shall nevertheless pay when due such portion, if any,
of the obligation as shall not be subject to dispute. The difference, if any,
between the amount of the obligation ultimately determined as properly payable
under this Article 8 and the portion, if any, theretofore paid shall bear
interest as provided below. If all or part of any indemnification obligation
under this Agreement is not paid when due, then the Indemnitors shall pay the
Indemnitee interest on the unpaid amount of the obligation for each day from the
date the amount became due until payment in full, payable on demand, at the
fluctuating rate per annum which at all times shall be the lowest rate of
interest generally charged from time to time by Bank of America, Atlanta,
Georgia, and publicly announced by such bank as its so-called "prime rate."
ARTICLE 9
MISCELLANEOUS PROVISIONS
------------------------
SECTION 9.1 NOTICES. All notices and other communications under this
-------
Agreement shall be in writing and may be given by any of the following methods:
(i) personal delivery; (ii) registered or certified mail, postage prepaid,
return receipt requested; or (iii) overnight delivery service requiring
acknowledgment of receipt. Any such notice or communication shall be sent to
the appropriate party at its address given below (or at such other address for
such party as shall be specified by notice given hereunder):
To STR, Merger Sub or the Surviving Corporation:
00000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
30
with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxxxxx, Esq.
To the Signing Shareholders:
At the address specified on the signature pages of this Agreement
with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxxxxx, Esq.
If to the Company:
0000 Xxxx Xxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxxx
with a copy to:
Xxxxxxx, Xxxxx & Xxxxxxxxx
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx Xxxxxxx, Esq.
If to the Controlling Shareholder:
0000 Xxxx Xxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxxx
with a copy to:
Xxxxxxx, Xxxxx & Xxxxxxxxx
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx Xxxxxxx, Esq.
31
All such notices and communications shall be deemed received upon (i)
actual receipt thereof by the addressee or (ii) actual delivery thereof to the
appropriate address as evidenced by an acknowledged receipt.
SECTION 9.2 DISCLOSURE LETTERS AND EXHIBITS. The Company Disclosure
----------------------------------
Letter attached hereto as Exhibit 1, the Company shareholder list, attached
----------
hereto as Exhibit 2, the list of all outstanding Company options, which shall be
---------
completed within three (3) days of the execution of this Agreement, and attached
hereto as Exhibit 3, and the STR Disclosure Letter, attached hereto as Exhibit
--------- -------
4, and all other exhibits to this Agreement, if any, are hereby incorporated
-
into this Agreement and are hereby made a part hereof as if set out in full in
this Agreement.
SECTION 9.3 ASSIGNMENT; SUCCESSORS IN INTEREST. No assignment or
-------------------------------------
transfer by STR, Merger Sub, the Controlling Shareholder or the Company of their
respective rights and obligations hereunder shall be made except with the prior
written consent of the other parties hereto. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their permitted
successors and assigns, and any reference to a party hereto shall also be a
reference to a permitted successor or assign.
SECTION 9.4 NUMBER; GENDER. Whenever the context so requires, the
---------------
singular number shall include the plural and the plural shall include the
singular, and the gender of any pronoun shall include the other genders.
SECTION 9.5 CAPTIONS. The titles, captions and table of contents
--------
contained in this Agreement are inserted herein only as a matter of convenience
and for reference and in no way define, limit, extend or describe the scope of
this Agreement or the intent of any provision hereof. Unless otherwise specified
to the contrary, all references to Articles and Sections are references to
Articles and Sections of this Agreement and all references to Exhibits are
references to Exhibits to this Agreement.
SECTION 9.6 CONTROLLING LAW; JURISDICTION; INTEGRATION; AMENDMENT. This
-----------------------------------------------------
Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York without reference to Texas's or Georgia's
choice of law rules. This Agreement and the documents executed pursuant hereto
supersede all negotiations, agreements and understandings among the parties with
respect to the subject matter hereof and constitutes the entire agreement among
the parties hereto, this Agreement may not be amended, modified or supplemented
except by written agreement of the parties hereto.
SECTION 9.7 KNOWLEDGE. As used in this Agreement, the terms "the best
---------
knowledge of the Company", "the best knowledge of STR", "the best knowledge of
STR", "the best knowledge of the STR Shareholders", "known to the Company",
"known to the Controlling Shareholder", "known to STR", "known to the STR
32
Shareholders", or words of similar import used herein with respect to the
Company, the Controlling Shareholder, STR and the STR Shareholders shall mean
the actual knowledge of each of the officers of the Company, the Controlling
Shareholder and STR, as the case may be, in each case, together with the
knowledge a reasonable business person would have obtained after making
reasonable inquiry and after exercising reasonable diligence with respect to the
matters at hand, and in the case of the STR Shareholders, the actual knowledge
of each such shareholder.
SECTION 9.8 SEVERABILITY. Any provision hereof which is prohibited or
------------
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive
any provision of law which renders any such provision prohibited or
unenforceable in any respect.
SECTION 9.9 COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or the terms hereof to produce or
account for more than one of such counterparts.
SECTION 9.10 ENFORCEMENT OF CERTAIN RIGHTS. Nothing expressed or implied
-----------------------------
in this Agreement is intended, or shall be construed, to confer upon or give any
person, firm or corporation other than the parties hereto, and their successors
or assigns, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, or result in such person, firm or corporation being deemed a
third party beneficiary of this Agreement.
SECTION 9.11 WAIVER. At any time prior to the Effective Time, the
------
parties hereto, by or pursuant to action taken by their respective Boards of
Directors in the case of STR, Merger Sub and the Company, may, to the extent
legally permitted: (i) extend the time for the performance of any of the
obligations or other acts of any other party; (ii) waive any inaccuracies in the
representations or warranties of any other party contained in this Agreement or
in any document or certificate delivered pursuant hereto; (iii) waive compliance
or performance by any other party with any of the covenants, agreements or
obligations of such party contained herein; and (iv) waive the satisfaction of
any condition that is precedent to the performance by the party so waiving of
any of its obligations hereunder. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. A waiver by one party of the
performance of any covenant, agreement, obligation, condition, representation or
warranty shall not be construed as a waiver of any other covenant, agreement,
obligation, condition, representation or warranty. A waiver by any party of the
performance of any act shall not constitute a waiver of the performance of any
other act or an identical act required to be performed at a later time.
SECTION 9.12 FEES AND EXPENSES. Each party hereto shall pay its own
-------------------
fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including the fees, costs and expenses of its
financial advisors, accountants and counsel (collectively, the "Expenses"),
except that STR will pay $50,000 of the Company's Expenses, $25,000 to be paid
to the Company within twenty-four hours of the execution of this Agreement, and
the remaining $25,000 to be paid at Closing.
33
SECTION 9.13 CONSTRUCTION. Any reference herein to any federal, state,
------------
local or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. As
used herein: (i) "including" shall mean including without limitation; (ii)
"person" shall mean any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, as well as any other
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Exchange Act; and (iii) "law" shall mean any federal, state or local law,
rule, regulation or governmental requirement of any kind, and the rules,
regulations, guidelines, directives and orders promulgated thereunder. Nothing
in the Company Disclosure Letter or the STR Disclosure Letter shall be deemed
adequate to disclose an exception to a representation or warranty made herein
unless the Company Disclosure Letter or the STR Disclosure Letter, as the case
may be, identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. The parties intend that each
representation, warranty and covenant contained herein shall have independent
significance. If any party has breached any warranty, representation or covenant
contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty or covenant.
34
IN WITNESS WHEREOF, STR, Merger Sub, the Controlling Shareholder, the
Signing Shareholders and the Company have each caused this Agreement to be duly
executed and delivered on its behalf by an officer or representative thereto
duly authorized, all as of the date first above written.
WORLDWIDE PETROMOLY INC.
By:
----------------------------------
Its: President
SMALL TOWN RADIO, INC.
By:
----------------------------------
Its: President
PETRO MERGER, INC.
By:
----------------------------------
Its: President
CONTROLLING SHAREHOLDER
By:
----------------------------------
Xxxxxxx Xxxxxxx
(Signatures continued on next page)
35
SIGNING SHAREHOLDERS:
XXXXXXX INVESTMENTS, LLC
By:
----------------------------------
Xxxxx Xxxxxxxxxx
Managing Member
000 Xxxxxxx Xxxx XX
Xxxxxxx, Xxxxxxx 00000
XXXXXX XXXX INVESTMENTS, INC.
By:
----------------------------------
Xxxxxx Xxxxxxxx
President
0000 Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx 00000
IRISH INVESTMENTS, LLC
By:
----------------------------------
Xxxxxx Xxxxxx
0000 Xxxxx Xxx
Xxxxx X-0
Xxxxxxxxxx Xxxxx, Xxx. 00000
36
EXHIBIT 1
---------
COMPANY DISCLOSURE LETTER
37
EXHIBIT 2
---------
LIST OF COMPANY SHAREHOLDERS
EXH 2
EXHIBIT 3
---------
LIST OF OUTSTANDING OPTIONS
EXH 3
EXHIBIT 4
---------
STR DISCLOSURE LETTER
EXH 4
