EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 24, 1998 ("Agreement"), among
Knightsbridge Corporation, a Nevada corporation ("Knightsbridge"), and Western
Oil and Tire Distributors, Inc., a State of Washington Corporation hereinafter
referred to as "Western" or "Company".
BACKGROUND
The respective Boards of Directors of Knightsbridge and Western have each
approved, upon the terms and subject to the conditions set forth in this
Agreement, the merger ("Merger") of Western with and into Knightsbridge whereby
each issued and outstanding share of common stock of Western not owned directly
or indirectly by Western will be converted into the common stock of
Knightsbridge ("Common Stock") as set forth in Article I.
In consideration of the respective representations, warranties, covenants
and agreements contained in this Agreement, Knightsbridge and Western hereby
agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. Upon the terms and subject to the conditions hereof, and in
accordance with the relevant provisions of the Nevada Corporation Act
("Nevada Statute"), Western shall be merged with and into Knightsbridge
subject to the conditions set forth in Article VI. Following the Merger,
Knightsbridge shall continue as the surviving corporation ("Surviving
Corporation") and shall continue its existence under the laws of the State
of Nevada, and the separate corporate existence of Western shall cease.
1.02 Effective Time. As soon as practicable following the satisfaction or
waiver, if permissible, of the conditions set forth in Article VI, the
Merger shall be consummated by filing with the Secretary of State of the
State of Nevada articles of merger, amended Certificate of Incorporation,
or other appropriate documents ("Articles of Merger") in accordance with
the Nevada Statute. The Merger shall become effective at such time as the
Articles of Merger are duly filed, or at such later time as Knightsbridge
and Western shall specify in the Articles of Merger (the time the Merger
becomes effective being the "Effective Time").
1.03 Effects of the Merger. The Merger shall have the effects specified in the
Nevada Statute. This Plan of Merger is intended to constitute "a plan of
reorganization" within the meaning of Section 354 of the Internal Revenue
Code, 1986 as amended. Further for federal income tax purposes it is
intended that the merger shall qualify as a reorganization as defined in
Section 368 (a) of the Internal Revenue Code.
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1.04 Amendments to Articles of Incorporation and Bylaws. At the Effective Time,
(i) the Articles of Incorporation of Knightsbridge as amended, and as in
effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation, except that Article "I" of the
"Certificate of Incorporation of Knightsbridge Corporation", the Surviving
Corporation shall be amended to read as follows: "The name of the
Corporation is Western Oil & Tire Distributors, Inc. and the original date
of incorporation is June 17, 1996" , and (ii) the Bylaws of Western as in
effect immediately prior to the Effective time shall be the Bylaws of the
Surviving Corporation, except that the Bylaws shall be amended such that
Section 1 of Article III thereof shall be amended and restated in its
entirety to read as follows until thereafter amended as provided by law:
Section 1. Effective upon the merger of Western Oil & Tire Distributors,
Inc. with and into the corporation, the number of directors shall be five
(5); thereafter, the number of directors shall consist of no fewer than
three (3) members and no more than fifteen (15) members as determined from
time to time in accordance with these bylaws by resolution of the board of
directors, but no decrease in the number of directors shall have the effect
of shortening the term of any incumbent director. In the event of a tie
(50% for, 50% against) in the voting by the Board members on any corporate
action brought before the Board, the Chairman shall have the right to break
the tie and approve or disapprove the action. The directors shall be
elected at the annual meeting of shareholders. Each director elected shall
hold office until such director's successor is elected and qualified, or
until such director's earlier resignation or removal. Directors need not be
shareholders.
1.05 Directors and Officers of the Surviving Corporation. From and after the
Effective Time, the directors and officers of the Surviving Corporation
shall be the persons set forth on Exhibit 1.05 hereto, until their
successors shall have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and by laws.
1.06 Shares. At or prior to the Effective Time, by virtue of the Merger the
following events shall occur:
(a) Each share of common stock or preferred stock held by Western as
treasury stock shall be cancelled and retired and shall cease to
exist, and no payment or consideration shall be made with respect
thereto;
(b) Knightsbridge shall take all necessary corporate action to
effectuate a reverse stock split so that the total issued and
outstanding Common Stock shall not exceed 5,054,350 shares
("Reverse Stock Split") immediately prior to the issuance of
Common Stock as set forth in Section 1.06(c).
(c) Knightsbridge shall arrange delivery of 423,000 post reverse
stock split common shares without any trading restrictions from
certain of Knightsbridge's existing shareholders to effectuate
closing of this agreement. These 423,000 shares plus an
additional 11,577,000 common shares to be issued from
Knightsbridge's treasury (total 12,000,000 shares) shall be
issued to each of Western's shareholders, as set forth on Exhibit
1.06(c) annexed hereto, in the number of Common Stock shares set
forth next to each name.
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0.00 Xxxxxxx Xxxxxxxxx.
(x) The Common Stock issued to Western's shareholders have not been
and will not be registered with the Securities and Exchange
Commission ("SEC") or the securities commission of any state,
including but not limited to Nevada and Washington state,
pursuant to an exemption from registration by virtue of
Knightsbridge's intended compliance with the provisions of
Sections 4(2) and 4(6) of the Securities Act of 1933, as amended
("Securities Act"), and the Common Stock will be made available
only to "accredited investors" or Company shareholders who have
used a "Purchaser representative", as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act. Such exemption
limits the number and types of investors to which the offering of
Common Stock may be made and restricts subsequent transfers of
the Common Stock so offered which also may be restricted by state
securities laws. The Common Stock may not be resold or otherwise
disposed of by Western's shareholders unless, in the opinion of
counsel to Knightsbridge, registration under federal and
applicable state securities laws is not required or compliance is
made with the registration requirements of such laws.
ARTICLE II
EXCHANGE OF SHARES
2.01 Issuance of Certificates. Promptly after the Effective Time, the
Surviving Corporation shall issue to each person set forth on Exhibit
1.06(c) a certificate representing the Common Stock to be issued to
each Western shareholder and simultaneously each Western shareholder
shall exchange and surrender the certificate representing all of such
Western shareholder's shares in the Company. At the close of business
on the day of the Effective Time, the stock ledger of Western shall be
closed.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
KNIGHTSBRIDGE
Knightsbridge represents and warrants to Western as of the date of this
Agreement and as of the Effective Time as follows:
3.01 Existence; Good Standing. Knightsbridge is a corporation duly
incorporated, validly existing and in good standing under the laws of
its jurisdiction of incorporation.
3.02 Capitalization. The authorized capital stock of Knightsbridge prior to
the Reverse Stock Split consists of 200,000,000 shares of Common
Stock, par value $0.001 ("Shares") and no other classes of stock,
common or preferred, or other securities. As of July 24, 1998, there
were 20,217,400 shares of Common Stock issued and outstanding
including 8,000,000 shares held in escrow pending completion and
outcome of Knightsbridge's claim and related lawsuit against Language
Force, Inc. All issued and outstanding shares of Common Stock are duly
authorized, validly issued, free of preemptive rights, non-assessable,
and, except for the 8,000,000 shares held in escrow, are fully paid.
Except as set forth in this Section 3.02, (i) Knightsbridge is not a
party to or bound by any written or oral contract or agreement which
grants to any person an option, warrant or right of first refusal or
other right of any character to acquire at any time, or upon the
happening of any stated events any shares of or interest in
Knightsbridge, whether or not presently authorized, issued or
outstanding, and (ii) there are outstanding (a) no shares of capital
stock or other voting securities of Knightsbridge, (b) no securities
of Knightsbridge or any of its subsidiaries convertible into or
exchangeable for shares of capital stock or voting securities of
Knightsbridge, (c) no options or other rights to acquire from
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Xxxxxxxxxxxxx or any of its subsidiaries, and no obligation of
Knightsbridge or any of its subsidiaries to issue, any capital stock,
voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Knightsbridge, and (d) no equity
equivalents, interests in the ownership or earnings of Knightsbridge
or any of its subsidiaries or other similar rights. Upon issuance of
the Common Stock to Western's shareholders, such shares of Common
Stock shall be duly authorized, validly issued, fully paid,
non-assessable, and free of preemptive rights.
3.03 Authorization: Validity and Effect of Agreements. Knightsbridge has
the requisite corporate power and authority to execute and deliver
this Agreement. The consummation by Knightsbridge of the transactions
contemplated hereby has been duly authorized by all requisite
corporate action and the issuance of the Common Stock to Western's
shareholders is required to be approved by the shareholders of
Knightsbridge and such approval was obtained by shareholder consent on
July 24, 1998. This Agreement constitutes the valid and legally
binding obligation of Knightsbridge, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general
principles of equity.
3.04 No Violation. To the best of Knightsbridge's knowledge neither the
execution and delivery by Knightsbridge of this Agreement, nor the
consummation by Knightsbridge of the transactions contemplated hereby
in accordance with the terms hereof, will: (i) conflict with or result
in a breach of any provisions of the Articles of Incorporation or
Bylaws of Knightsbridge (ii)violate, or conflict with, or result in a
breach of any provision of, or constitute a default (or an event which
with notice or lapse of time or both, would constitute a default)
under, or result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by, or result
in the triggering of any payment of compensation under, or result in
the creation of any lien, security interest, charge or
encumbrance("Lien")upon any of the material properties of
Knightsbridge or its subsidiaries under, or result in being declared
void, voidable, or without further binding effect, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed
of trust or any material license, franchise permit, lease, contract,
agreement or other instrument, commitment or obligation to which
Knightsbridge or any of Knightsbridge's subsidiaries if a party, or by
which Knightsbridge or any of Knightsbridge's subsidiaries or any of
their respective properties is bound or affected, except for any of
the foregoing matters which would not have a material adverse effect
on the business, results of operations financial condition or
prospects of Knightsbridge and its subsidiaries taken as a whole
("Knightsbridge Material Adverse Effect"); or (iii) other than the
filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1978 ("HSR Act"), the Securities Exchange Act of 1934,
("Exchange Act"), the Securities Act or applicable state securities
and "Blue Sky" laws or filings in connection with the maintenance of
its qualification to do business in other jurisdictions, and the
filings contemplated by Section 5.02 of this Agreement (collectively,
"Regulatory Filings"), require any material consent, approval or
authorization of, or declaration, filings or registration with, any
domestic governmental or regulatory authority, the failure to obtain
or make which would have a Knightsbridge Material Adverse Effect.
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3.05 Documents. Knightsbridge has delivered to Western the following
reports and/or statements: Audited financial statements for the year
ended October 31, 1997. Unaudited financial statements for the six (6)
month period ended April 30, 1998. Issuer Information and Disclosure
Statement Pursuant to Rule 15 c 2-11(a)(5)
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF WESTERN
Western represents and warrants to Knightsbridge as of the date of this
Agreement and as of the Effective Time as follows:
4.01 Existence; Good Standing; Corporate Authority; Compliance with Law
Western is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation.
The copies of Western's Articles of Incorporation and by laws
previously delivered to Knightsbridge are true and correct and have
not since been amended, modified or rescinded.
4.02 Authorization, Validity and Effect of Agreements. Western has the
requisite corporate power and authority to execute and deliver this
Agreement, subject to the approval of the Merger by the shareholders
of Western. The consummation by Western of all transactions
contemplated hereby has been duly authorized by all requisite
corporate action. This Agreement constitutes the valid and legally
binding obligation of Western, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general
principles of equity.
4.03 Capitalization. The authorized capital stock of Western consists of
10,000,000 shares of no par value common stock and no other classes of
stock, common or preferred, or other securities. There are 6,000,000
shares of common stock issued and outstanding as of July 24, 1998. All
issued and outstanding shares of common stock are duly authorized,
validly issued, fully paid, non-assessable and free of preemptive
rights. Except as set forth in Exhibit 4.03 Western is not a party to
or bound by any written or oral contract or agreement which grants to
any person an option, warrant or right of first refusal or other right
of any character to acquire at any time, or upon the happening of any
stated events, any shares of or interest in Western, whether or not
presently authorized, issued or outstanding. Except as set forth in
Exhibit 4.03, there are outstanding (i) no shares of capital stock or
other voting securities of Western, (ii) no securities of Western or
any of its subsidiaries convertible into or exchangeable for shares of
capital stock or voting securities of Western, (iii) no options or
other rights to acquire from Western or any of its subsidiaries, and
no obligations of Western or any of its subsidiaries to issue, any
capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Western, and
(iv) no equity equivalents, interest in the ownership or earnings of
Western or any of its subsidiaries or other similar rights. There are
no outstanding obligations of Western or any of its subsidiaries to
repurchase, redeem or otherwise acquire any securities of Western.
4.04 No Violation. Neither the execution and delivery by Western of this
Agreement nor the consummation by Western of the transactions
contemplated hereby in accordance with the terms hereof will: (i)
conflict with or result in a breach of any provisions of the Articles
of Incorporation or Bylaws of Western or its subsidiaries, (ii)
violate, or conflict with, or result in a breach of any provision of,
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or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
termination or in a right of termination or cancellation of, or
accelerate the performance required by, or result in the triggering of
any payment or compensation under, or result in the creation of any
Lien upon any of the properties of Western or its subsidiaries under,
or result in being declared void, voidable, or without further binding
effect, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust or any material license, franchise,
permit, lease, contract, agreement or other instrument, commitment or
obligation of which Western or its subsidiaries is a party, or by
which Western or its subsidiaries or any of their respective
properties or assets is bound or affected, except for any of the
foregoing matters which, singularly or in the aggregate, would not
have a Company Material Adverse Effect; (iii) other than the
Regulatory filings, require any material consent, approval or
authorization of, or declaration, filing or registration with, any
domestic governmental or regulatory authority, the failure to obtain
or make which would have a Company Material Adverse Effect, as defined
in Section 7.01(c) below, or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Western, any of its
subsidiaries or any of their assets, except for violations which in
the aggregate would not have a Company Material Adverse Effect or
materially adversely affect the ability of Western to consummate the
Merger.
4.05 Consulting Service Agreements. Western has entered into consulting
agreements with various consultants. The terms of such agreements are
no more than three months in duration except for Western's consulting
agreement with RMJ & Associates set forth on Exhibit 4.05 annexed
hereto.
4.06 Acquisition Agreement. Western has entered into an Agreement to
Purchase the Business Assets of Ed's Tire Service, Inc. a copy of
which is set forth on Exhibit 4.06 annexed hereto.
ARTICLE V
COVENANTS
5.01 Conduct of Business. From and after the date of this Agreement until
the Merger is affected or this Agreement is terminated, unless
Knightsbridge has consented in writing thereto, Western, and, with
respect to (e) and (f) below, Knightsbridge and Western:
(a) Shall, and shall cause its subsidiaries to, conduct its
operations according to its usual, regular and ordinary course in
substantially the same manner as heretofore conducted;
(b) Shall use reasonable efforts, and shall cause its subsidiaries to
use reasonable efforts, to preserve intact its business
organization and goodwill, keep available the services of its
officers and employees and maintain satisfactory relationships
with those persons having business relationships with it;
(c) Shall confer on a regular basis with one or more representatives
of Knightsbridge to report operational matters of materiality and
any proposals to engage in material transactions;
(d) Shall not amend its Articles of Incorporation or By Laws;
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(e) Shall promptly notify the other parties hereto of any material
emergency or other material change in the condition (financial or
otherwise), business, properties, assets, liabilities, prospects
or the normal course of its businesses or in the operation of its
properties, any material litigation or material governmental
complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the breach in
any material respect of any representation or warranty contained
herein;
(f) Shall promptly deliver to the other parties hereto true and
correct copies of any report, statement or schedule filed with or
delivered to the SEC, any other Governmental entity (other than
routine corporate tax and other filings in the ordinary course of
business) or any shareholder of Western or Knightsbridge, as the
case may be, subsequent to the date of this Agreement;
(g) Shall not (i) issue, sell or pledge, or agree to issue, sell or
pledge, any shares of its capital stock, effect any stock split
or otherwise change its capitalization as it existed on the date
hereof, (ii) grant, confer or award any option, warrant,
conversion, right or other right to acquire any shares of its
capital stock or grant any right to convert or exchange any
securities of Western for Common Stock, (iii) increase any
compensation or enter into or amend any employment agreement with
any of its present or future officers or directors, other than in
the ordinary course of Western's business, (iv) adopt any new
employee benefit plan, other than in the ordinary course of
Western's business (including any stock option, stock benefit or
stock purchase plan) or amend any existing employee benefit plan
in any material respect, other than in the ordinary course of
business, except, in each case, for changes which are less
favorable to participants in such plans or as may be required by
applicable law, or (v) amend any Officer Employment Agreement or
increase any compensation payable pursuant to such Officer
Employment Agreements;
(h) Shall not (i) except in the normal course of business as
consistent with prior practice, declare, set aside or pay any
dividend (whether in cash, stock or property) or make any other
distribution or payment with respect to any shares of its capital
stock or (ii) directly or indirectly redeem, purchase or
otherwise acquire any shares of its capital stock or make any
commitment for any such action;
(i) Shall not, and shall not permit its subsidiaries to (i) sell,
lease or otherwise dispose of any assets of Western or its
subsidiaries (including capital stock) which are of a material
amount, individually or in the aggregate, or (ii) make any
acquisition, by means of merger or otherwise, of any assets or
securities which are of a material amount, individually or in the
aggregate; and
(j) Shall not, and shall not permit its subsidiaries to, agree in
writing to take or otherwise take (i) any of the foregoing
actions or (ii) any action which would make any representation or
warranty of Western herein untrue or incorrect.
5.02 Filings; Other Action. Subject to the terms and conditions herein
provided, Western and Knightsbridge shall: (i) promptly make their
respective filings and thereafter make any other required submissions
under the HSR act with respect to the Merger if required; (ii) use all
reasonable efforts to cooperate with one another in (a) determining
which filings are required to be made prior to the Effective Time
with, and which consents, approvals, permits or authorizations are
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required to be obtained prior to the Effective Time from, governmental
or regulatory authorities of the United States, the several states,
and other jurisdictions in connection with the execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby and (b) timely making all such filings and timely
seeking all such consents, approvals, permits or authorizations; and
(iii) use best efforts to take, or cause to be taken, all other action
and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the transactions
contemplated by this Agreement. If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the
purpose of this Agreement, the proper officers and directors of
Knightsbridge and Western shall use best efforts to take all such
necessary action.
5.03 Inspection of Records. From the date hereof to the Effective Time,
each of Knightsbridge and Western shall allow all designated officers,
attorneys, accountants and other representatives of Knightsbridge and
Western, as the case may be, access at all reasonable times to the
records and files, correspondence, audits and properties, as well as
to all information relating to commitments, contracts, titles and
financial position, or otherwise pertaining to the business and
affairs of Knightsbridge, Western and their subsidiaries.
5.04 Indemnification.
(a) (i) After the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted, indemnify, defend
and hold harmless the present and former directors and
officers of Knightsbridge and Western and any subsidiaries
and their respective heirs, executors, administrators and
legal representatives (individually, an "Indemnified Party"
and, collectively, the "Indemnified Parties" ) against all
losses, expenses, claims, damages or liabilities arising out
of actions or omissions occurring on or prior to the
Effective Time (including, without limitation, acts or
omissions relating to the transactions contemplated by this
Agreement (collectively "Losses")). In connection with the
foregoing obligations from and after the Effective Time, the
Surviving Corporation, shall bear the cost of expenses
incurred in defending against any claim, action, suit,
proceeding or investigation arising out of any alleged acts
or omissions occurring on or prior to the Effective Time
(including, without limitation, acts or omissions relating
to the transactions contemplated by this Agreement), as
incurred to the fullest extent permitted under applicable
law. All rights to indemnification, including provisions
relating to advances, expenses and exculpation of director
liability, existing in favor of the Indemnified Parties as
provided in Knightsbridge's or Western's Articles of
Incorporation and Bylaws, as in effect as of the date of
this Agreement, with respect to matters occurring through
the Effective Time, will survive the Effective Time and will
continue in full force and effect.
(ii) Any Indemnified Party will promptly notify the Surviving
Corporation of any claim, action, suit, proceeding or
investigation for which such party may seek indemnification
under this Section (a "Third Party Claim"). In the event of
any such Third Party Claim, (x) within twenty (20) days of
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receipt of such notice, the Surviving Corporation will have
the right to assume the defense thereof, and the Surviving
Corporation will not be liable to such Indemnified Parties
for any legal expenses of other counsel or any other
expenses subsequently incurred thereafter by such
Indemnified Parties in connection with the defense thereof,
except that all Indemnified Parties (as a group) will have
the right to retain one separate counsel, acceptable to such
Indemnified Parties, as the expense of the Indemnifying
Party if the named parties to any such proceeding include
both the Indemnified Party and the Surviving Corporation and
the representation of such parties by the same counsel would
be inappropriate due to a conflict of interest between them,
and each Indemnified Party will have the right to retain a
separate counsel, acceptable to such Indemnified Party, at
the expense of the Indemnifying Party, if representation of
such Indemnified Party and the other Indemnified Parties as
a group would be inappropriate due to a conflict of interest
between them and (y) the Indemnified Parties will cooperate
in the defense of any such matter. If the Surviving
Corporation fails to take action within twenty (20) days as
set forth in (x) above, then the Indemnified Party shall
have the right to pay, compromise or defend any Third Party
Claim and to assert the amount of any payment on the Third
Party Claim plus the expense of defense or settlement as a
Loss. The Surviving Corporation will not be liable for any
settlement affected without its prior written consent,
unless it has failed to take action within the twenty (20)
day period after receipt of notice as set forth above.
Notwithstanding the foregoing, the Surviving Corporation
will not have any obligation under this Section 5.04 to
indemnify an Indemnified Party when and if a court of
competent jurisdiction ultimately determines and such
determination becomes final, that the indemnification of
such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
(b) The Surviving Corporation shall pay all reasonable expenses,
including reasonable attorneys' fees, that may be incurred by any
Indemnified Parties in enforcing the indemnity and other
obligations provided for in this Section 5.04.
(c) The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have
under the Articles of Incorporation or by laws of Knightsbridge,
under the Nevada Statute or otherwise. The provisions of this
Section shall survive the consummation of the Merger and
expressly are intended to benefit each of the Indemnified Parties
and will be binding on all successors and assigns of the
Surviving Corporation.
5.05 Further Action. Each party hereto shall, subject to the fulfillment at
or before the Effective Time of each of the conditions of performance
set forth herein or the waiver thereof, perform such further acts and
execute such documents as may be reasonably required to effect the
Merger.
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5.06 Expenses. Whether or not the Merger is consummated, except as provided
in Section 7.02 hereof or as provided otherwise herein, all costs and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring
such expenses.
5.07 Consent of Western's Shareholders. Western shall submit the Merger to
the shareholders of the Company for their consideration in accordance
with Chapter 23B.11 of the Washington State Business Corporation Act
and other provisions of applicable law, and obtain the consent of its
shareholders. Western shall notify Knightsbridge in writing that the
consent of the shareholders has been obtained, and shall set forth the
names of any dissenting shareholders at least one (1) day prior to the
Effective Time.
5.08 Publicity. The initial press release relating to this Agreement shall
be a joint press release and thereafter Western and Knightsbridge
shall, subject to their respective legal obligations (including
requirements of the Nasdaq National Market, stock exchanges and other
similar regulatory bodies), consult with each other, and use
reasonable efforts to agree upon the text of any press release, before
issuing any such press release or otherwise making public statements
with respect to the transactions contemplated hereby and in making any
filings with any federal or state governmental or regulatory agency or
with Nasdaq National Market, or any national securities exchange with
respect thereto.
5.09 Best Efforts to Close. The parties hereto agree to use their best
efforts to close the transactions contemplated hereby by July 24,
1998.
ARTICLE VI
CONDITIONS TO CONSUMMATION
OF THE MERGER
6.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger are subject
to the satisfaction or waiver, where permissible, prior to the
Effective Time, of the following conditions:
(a) This Agreement shall have been approved by the affirmative vote
of the shareholders of Knightsbridge and Western by the requisite
vote in accordance with applicable law;
(b) No statute, rule, regulation, executive order, decree, injunction
or other order (whether temporary, preliminary or permanent),
shall have been enacted, entered, promulgated or enforced by any
court or governmental authority which is in effect and has the
effect of prohibiting the consummation of the Merger; provided,
however, that each of the parties shall have used its best
efforts to prevent the entry of any injunction or other order and
to appeal as promptly as possible any injunction or other order
that may be entered;
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(c) The waiting period (and any extension thereof ) applicable to the
consummation of the Merger under the HSR Act if required shall
have expired or been terminated;
(d) Each of the consents listed on Schedule 6.01(d) hereto shall have
been obtained.
(e) A minimum of $50,000 of operating capital is required at closing
to be used by the Surviving Corporation to pay a shareholder loan
payable by Knightsbridge as set forth in Exhibit 6.01(e) annexed
hereto. Western shall be responsible for arranging this operating
capital financing for the Surviving Corporation. Knightsbridge
shall cooperate in approving documents and authorizing the
issuance of debt or equity securities of Knightsbridge on or
before closing as consideration for the financing. Such funds are
to be used to pay the expenses set forth above in this section.
Funds from financing in excess of $50,000 shall be placed in
accounts with signatory requirements as authorized by the Board
of Directors of the Surviving Corporation.
(f) Western shall deliver the legal opinion of its general counsel,
substantially in the form annexed hereto as Exhibit 6.01 (e) and
Knightsbridge shall deliver the legal opinion of its counsel,
substantially in the form annexed hereto as Exhibit 6.01(e)(1).
(g) A consulting agreement between Knightsbridge and CPT shall have
been executed, a copy of which is annexed to this Agreement as
Exhibit 6.01(g). This consulting agreement shall become an
obligation of the Surviving Corporation.
(h) 950,000 post reverse stock split Common Stock shares (restricted)
shall be issued as finder's fees as set forth on Exhibit 6.01(h)
annexed hereto.
(i) The parties hereto agree that any Language Force, Inc. ("LFI")
assets, including shares of LFI net of payment of expenses ("LFI
Assets") which remain following the conclusion of pending
Arbitration proceedings or other legal action concerning the
dispute between Knightsbridge and LFI shall be offered to
Knightsbridge shareholders of record immediately prior to the
issuance of common stock to Western as set forth in Article 1.06(
c) in an offer ("Share Purchase Offer") by the Surviving
Corporation to purchase shares from such Knightsbridge
shareholders. Consideration to purchase shares under the Share
Purchase Offer shall be subject to and limited to the amount of
LFI Assets available, if any.
(j) Within forty-five days of Closing Western shall arrange
additional financing to be used by the Surviving Corporation for
the following purposes:
(k) $50,000 to pay a loan payable by Knightsbridge as set forth in
Exhibit 6.01(e) annexed hereto, with a principal balance of
$50,000 plus $12,500 in loan discounts, finance fees and interest
("Interest"). In the event all or a portion of the Interest is
settled by a payment in cash the Surviving Corporation shall have
the right to recover such payments from the LFI Assets.
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(l) Up to $25,000 to pay legal costs directly incurred by the
Surviving Corporation in pursuing the Language Force Lawsuit.
Upon and subject to receipt of any proceeds from settlement of
the LFI claim and related lawsuit the surviving Corporation shall
be reimbursed, out of first proceeds received, its out-of-pocket
expenses which were paid out of the $25,000 of financing
established for such purpose.
(m) Lock-Up Agreement On or prior to closing Western shareholders and
certain Knightsbridge shareholders shall enter into an agreement
("Lock-up Agreement") which imposes voluntary restrictions and
other terms and conditions on the shares held and owned by such
shareholders upon closing this Agreement. The Lock-Up Agreement
is set forth on Exhibit 6.01(k) annexed hereto.
(n) 8,000,000 voting common shares (2,000,000 post reverse stock
split) issued by Knightsbridge are held in an escrow account in
connection with a project commonly referred to as Language Force,
Inc. ("LFI"). LFI and Knightsbridge are in dispute over their
agreement and arbitration proceedings have been scheduled to
resolve disagreements between the parties. Under the escrow
agreement 9,600,000 common shares of LFI issued in the name of
Knightsbridge are held pending outcome of the claim and related
lawsuit. The Merger is entered into by Western on Knightsbridge's
representation that Knightsbridge will prevail in its claim and
lawsuit against LFI and that the 8,000,000 Knightsbridge common
shares held in escrow will be returned to treasury and cancelled.
In the event any of such escrowed Knightsbridge shares are
released to any party other than Knightsbridge, additional
Knightsbridge shares shall be issued to Western shareholders on
the basis of four (4) Knightsbridge shares for each share so
released from escrow.
(o) Knightsbridge shall arrange delivery of 377,000 post reverse
stock split common shares without any trading restrictions from
certain of Knightsbridge's existing shareholders as follows:
RMJ Associates 350,000 shares
Portfolio Investment Strategies Corp. 27,000 shares
(p) Upon the close of this Agreement the executive offices of the
Surviving Corporation shall be relocated to 0000 - 000xx Xxxxxx
XX, Xxxxxxxx, Xxxxxxxxxx 00000.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
7.01 Closing and Termination. Except as otherwise set forth in this Section
7.01, this Agreement shall close by no later than 11:59 p.m. Seattle,
Washington, July 28, 1998, ("Closing Date") provided that either party
may extend this Agreement for an additional seven (7) day period by
written notice to the other party prior to the Closing Date. This
Agreement shall terminate if not closed by 11:59 p.m., Seattle,
Washington, August 4, 1998. Notwithstanding the foregoing and/or the
approval of this Agreement by the shareholders of Knightsbridge and
Western, this Agreement may be terminated and the Merger contemplated
hereby may be abandoned at any time prior to the Effective Time:
(a) By mutual written consent, duly authorized by their respective
Boards of Directors, by Knightsbridge and Western; (b) By either
Knightsbridge or Western
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(i) if any court of competent jurisdiction or any other
governmental body shall have issued an order, decree or
ruling or taken any other action permanently enjoining,
restraining or otherwise permanently prohibiting the Merger
and such order, decree, ruling or other action shall have
become final and non-appealable;
(ii) if, upon a vote at a duly held meeting or upon any
adjournment thereof, the shareholders of Knightsbridge and
Western shall have failed to give any required approvals; or
(c) By Knightsbridge if Western shall have breached any of its
representations and warranties or covenants contained herein and
if such breach or breaches, either individually or in the
aggregate, will have, or are reasonably likely to have, a
material adverse effect on the business, results of operations,
financial condition or prospects of Western (a "Western Material
Adverse Effect"), unless, in the case of a breach of covenant,
such failure to perform has been caused by a breach of this
Agreement by Knightsbridge.
(d) By Western if Knightsbridge shall have breached any of its
representations and warranties and such breach or breaches,
either individually or in the aggregate, will have, or are
reasonably likely to have, a Knightsbridge Material Adverse
Effect, or if a Knightsbridge shall have breached in any material
respect any of its covenants contained herein, unless, in the
case of a breach of any covenant, such failure to perform has
been caused by a breach of this Agreement by Western;
7.02 Effect of Termination. In the event of the termination and abandonment
of this Agreement pursuant to Section 7.01, this Agreement, except for
the obligations of the parties pursuant to this Section 7.02 and the
provisions of Section 5.06, shall forthwith become void and have no
effect, without any liability on the part of any party or its
directors, officers or shareholders; provided that nothing in this
Section 7.02 shall relieve any party to this Agreement of liability
for breach of this Agreement.
7.03 Amendment. To the extent permitted by applicable law, this Agreement
may be amended by the parties, at any time before or after approval of
this Agreement and the merger by the shareholders of Western but,
after any such shareholder approval, no amendment shall be made that
by law requires further approval of such shareholders without the
approval of such shareholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of all the
parties.
7.04 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto may (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive
any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate
or writing delivered pursuant hereto by any other applicable party, or
(iii) subject to the terms hereof, waive compliance with any of the
agreements or conditions of the other parties contained herein. Any
agreement on the part of any party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of a party to this Agreement to
assert any of its rights under this Agreement shall not constitute a
waiver of those rights.
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7.05 Procedure for Closing, Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.01, an amendment
of this Agreement pursuant to Section 7.03 or an extension or waiver
pursuant to Section 7.04 shall, in order to be effective, require (a)
in the case of Knightsbridge, action by its Board of Directors or the
duly authorized designee of its Board of Directors and (b) in the case
of Western, action by its Board of Directors.
ARTICLE VIII
MISCELLANEOUS
8.01 Nonsurvival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed to be
only conditions to the Merger and shall not survive the Merger,
provided, however, that the representations and warranties contained
in Section 1.07, and in this Article VIII shall survive the Merger.
8.02 Assignment, Binding Effect; Benefit; Entire Agreement. Neither this
Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this
Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto or their respective heirs, successors,
executors, administrators and assign any rights, remedies, obligations
or liabilities under or by reason of this Agreement. This Agreement
and any documents delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and
understandings (oral and written) among the parties with respect
thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in
writing and signed by all parties hereto.
8.03 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or otherwise affecting the validity or
enforceability of any of the terms or provisions of this Agreement in
any other jurisdiction. If any provision, clause, section or port of
this Agreement is so broad as to be unenforceable, the provision,
clause, section or part shall be interpreted to be only so broad as is
enforceable, and all other provisions, clauses, sections or parts of
this Agreement which can be effective without such unenforceable
provision, clause, section or part shall, nevertheless, remain in full
force and effect.
8.04 Notices. Any notice required to be given hereunder shall be sufficient
if in writing, and sent by facsimile transmission and by courier
service (with proofof service), hand delivery or certified or
registered mail (return receipt requested and first-class postage
prepaid), addressed as follows:
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If to Knightsbridge, to
Knightsbridge Corporation
Xxxxxx Xxxxx (Xxxx) Xxxxxxx,
President and CEO
XX Xxx 0 000 Xxxx Xxxxxx, Xxxxx #000
Xxxxxxxxx, XX Xxxxxx V6 C2T5
000-000-0000 Fax
With a copy to:
Xxx Xxxx
Barrister & Solicitor DuMoulin Black 10th Floor - 000 Xxxx Xxxxxx
Xxxxxxxxx, X.X. Xxxxxx X0X 0X0 Fax: 000-000-0000
If to Western, to
Western Oil and Tire Distributors, Inc.
0000 000xx Xxxxxx XX
Xxxxxxxx, XX 00000
Att'n: Xxx Xxxxxxx, President
Fax: 000-000-0000
With a copy to:
Xxxxxx X. Xxxxxxxxx
Attorney At Law
S.W. Fifth Avenue, Suite 1300
Xxxxxxxx, XX 00000-0000
Fax: 000-000-0000
or to such other address as any party shall specify by written notice
so given, and such notice shall be deemed to have been delivered as of
the date it is telecommunicated, personally delivered or mailed.
8.05 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada without regard to its
rules of conflict of laws.
8.06 Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled under the
Arbitration Rules of the State of Nevada.
8.07 Descriptive Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
8.08 Counterparts and Facsimile Signatures. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts
shall together constitute one and the same instrument. Each
counterpart may consist of a number of copies of this Agreement each
of which may be signed by less than all of the parities hereto, but
together all such copies shall constitute one and the same instrument.
Execution and delivery of this Agreement by exchange of facsimile
copies bearing the facsimile signature of a party hereto shall
constitute a valid and binding execution and delivery of this
Agreement by such party. Such facsimile copies shall constitute
enforceable original documents.
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8.09 Certain Definitions. For purposes of this Agreement, the following
terms shall have the meanings ascribed to them below:
(a) "Affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the
first-mentioned person.
(b) "Control" (including the terms "controlling", "controlled by" and
"under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through ownership of
voting securities, by contract, or otherwise.
(c) "Person" means a natural person, company, corporation,
partnership, joint venture, association, trust, unincorporated
organization or other entity.
(d) "Subsidiary" of any person means a person in which such first
referenced person owns directly or indirectly an amount of the
voting securities, other voting ownership or voting partnership
interest which is sufficient to elect at least a majority of its
Board of directors or other governing body (or, if there are no
such voting interest, owns directly or indirectly 50% or more of
the equity interest).
8.10 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained in
the Agreement. The waiver by any party hereto to a breach of any
provision hereunder shall not operate or be construed as a waiver of
any prior or subsequent breach of the same or any other provision
hereunder.
8.11 Incorporation of Exhibits. All Exhibits and annexes attached hereto
and referred to herein are hereby incorporated herein and made a part
hereof for all purposes as if fully set forth herein.
8.12 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the
plural and vice versa, words denoting any gender shall include all
genders and words denoting natural persons shall include corporations
and partnerships and vice versa.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officers thereunto duly authorized, all
as of the day and year first above written.
KNIGHTSBRIDGE CORPORATION
By: /s/ Xxxxxx Xxxxxxx
-------------------------
Xxxxxx Xxxxx (Xxxx) Xxxxxxx,
President and CEO
WESTERN OIL & TIRE DISTRIBUTORS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxx, President and CEO
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List of Exhibits
Agreement and Plan of Merger
Directors and Officers of the Surviving Corporation Exhibit "1.05"
Common Stock to be issued to Western shareholders Exhibit "1.06(c)"
Commitments to issue Shares, Warrants or Options Exhibit "4.03"
Western's Agreement with RMJ & Associates Exhibit "4.05"
Agreement For Sale and Purchase of Business Assets Exhibit "4.06"
Between Western Oil and Tire Distributors, Inc.
and Ed's Tire Service, Inc.
Knightsbridge and Western Shareholder Consents Schedule 6.01(d)
List of Knightsbridge accounts payable and expenses Exhibit "6.01(e)"
to be paid
Legal Opinion of Western's General Counsel Exhibit "6.01(f)"
Legal Opinion of Knightsbridge's General Counsel Exhibit "6.01(f)(1)"
Consulting Agreement with CPT Exhibit "6.01(g)"
Finder's Fee Agreement Exhibit "6.01(h)"
Lock Up Agreement Exhibit "6.01(k)"
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