EXHIBIT 2.2
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXXXXXX LOGISTICS, INC.,
STATE PETROLEUM ACQUISITION CORP.
AND
STATE PETROLEUM DISTRIBUTORS, INC.
DATED AS OF NOVEMBER __, 2007
TABLE OF CONTENTS
Page No.
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ARTICLE I THE MERGER.............................................................................................1
1.1. The Merger.....................................................................................1
1.2. Closing; Effective Time........................................................................2
1.3. Effects of Merger..............................................................................2
1.4. Certificate of Incorporation...................................................................2
1.5. Bylaws.........................................................................................2
1.6. Directors and Officers of the Surviving Corporation............................................2
ARTICLE II EFFECT OF THE MERGER ON CAPITAL STOCK.................................................................3
2.1. Conversion of Capital Stock....................................................................3
2.2. Exchange of Certificates.......................................................................4
2.3. Certain Adjustments............................................................................5
2.4. Warrants.......................................................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF STATE PETROLEUM....................................................6
3.1. Organization and Qualification.................................................................6
3.2. Subsidiaries; Equity Investments...............................................................6
3.3. Authority to Execute and Perform Agreement.....................................................6
3.4. Binding Effect.................................................................................6
3.5. Capitalization.................................................................................7
3.6. Vote Required; Board and Stockholder Approval..................................................7
3.7. Litigation.....................................................................................7
3.8. Title to Properties; Absence of Liens..........................................................7
3.9. Compliance with Laws...........................................................................8
3.10. Consents and Approvals.........................................................................8
3.11. Non-contravention..............................................................................8
3.12. Material Contracts.............................................................................8
3.13. Taxes..........................................................................................9
3.14. Financial Statements..........................................................................10
3.15. Books and Records.............................................................................11
3.16. Intellectual Property.........................................................................11
3.17. Environmental Matters.........................................................................11
3.18. Real Property.................................................................................11
3.19. Broker's Fees.................................................................................11
3.20. Labor Matters; Employee Benefit Plans.........................................................11
3.21. Absence of Liabilities........................................................................12
3.22. Absence of Certain Changes or Events..........................................................12
3.23. No Material Adverse Change....................................................................12
3.24. Articles of Incorporation, Bylaws, and Minute Books...........................................12
3.25. Full Disclosure...............................................................................13
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MERGER SUB.........................................13
4.1. Organization and Qualification................................................................13
4.2. Subsidiaries..................................................................................13
4.3. Equity Investment.............................................................................14
4.4. Authority to Execute and Perform Agreement....................................................14
4.5. Binding Effect................................................................................14
4.6. Capitalization................................................................................14
4.7. Board Approval................................................................................15
4.8. SEC Reports and Financial Statements..........................................................15
4.9. No Material Adverse Change....................................................................16
4.10. Books and Records.............................................................................16
4.11. Litigation....................................................................................16
4.12. Absence of Liabilities........................................................................16
4.13. Title to Properties; Absence of Liens.........................................................17
4.14. Compliance with Laws..........................................................................17
4.15. Intellectual Property.........................................................................17
4.16. Non-Contravention.............................................................................17
4.17. Consents and Approvals........................................................................17
4.18. Material Contracts............................................................................17
4.19. Taxes.........................................................................................17
4.20. Environmental Matters.........................................................................19
4.21. Real Property.................................................................................20
4.22. Broker's Fees.................................................................................20
4.23. Labor Matters; Employee Benefit Plans.........................................................20
4.24. Articles of Incorporation, Bylaws, and Minute Books...........................................20
4.25. Full Disclosure...............................................................................20
ARTICLE V ADDITIONAL AGREEMENTS OF THE PARTIES..................................................................20
5.1. Actions Pending Closing.......................................................................20
5.2. Merger Sub Approvals; Information Statement...................................................22
5.3. State Petroleum Stockholders' Approval........................................................23
5.4. Efforts; Consents.............................................................................23
5.5. Filing of Tax Returns; Payment of Taxes.......................................................23
5.6. Access to Information.........................................................................23
5.7. Confidentiality...............................................................................24
5.8. Notification of Certain Matters...............................................................25
5.9. Non-Solicitation..............................................................................25
5.10. Further Assurances............................................................................26
5.11. Public Disclosure.............................................................................26
5.12. Officers and Board of Directors of the Company................................................26
5.13. Existing Company Liabilities..................................................................26
5.14. Existing State Petroleum Liabilities..........................................................27
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5.15. Rentar Joint Venture..........................................................................27
5.16. Reverse Stock Split...........................................................................27
5.17. State Petroleum Registration Rights...........................................................27
ARTICLE VI CONDITIONS TO CLOSING................................................................................27
6.1. Conditions to Each Party's Obligations to Consummate the Transactions.........................27
6.2. Conditions to Obligations of the Company and Merger Sub to Consummate the Transactions........28
6.3. Conditions to Obligations of State Petroleum to Consummate the Transactions...................29
ARTICLE VII TERMINATION.........................................................................................31
7.1. Termination...................................................................................31
7.2. Effect of Termination.........................................................................32
7.3. Expenses; Termination Fees....................................................................32
ARTICLE VIII MISCELLANEOUS......................................................................................32
8.1. Certain Definitions; Rules of Construction....................................................32
8.2. Waivers and Amendments........................................................................40
8.3. Governing Law.................................................................................40
8.4. Notices.......................................................................................40
8.5. Section Headings..............................................................................41
8.6. Counterparts..................................................................................41
8.7. Assignments...................................................................................41
8.8. Entire Agreement; Enforceability..............................................................41
8.9. Severability..................................................................................41
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Exhibits
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Exhibit A.........Form of Escrow Agreement
Exhibit B.........Form of Investment Letter
Exhibit C.........Form of Employment Agreement
Exhibit D.........Form of Consulting Agreement
Exhibit E.........Form of Gas Station Agreement
Schedules
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Schedule 2.1(a) Exchange Ratio Calculation
Schedule 3.5(b) State Petroleum Options, Warrants, etc.
Schedule 3.5(c) State Petroleum Other Obligations
Schedule 3.8 State Petroleum Title to Properties; Absence of Liens
Schedule 3.10 State Petroleum Consents and Approvals
Schedule 3.18 State Petroleum Real Property
Schedule 4.2 Company Subsidiaries
Schedule 4.3 Company Equity Investments
Schedule 4.6(b) Company Options, Warrants, etc.
Schedule 4.13 Company Title to Properties; Absence of Liens
Schedule 4.15 Company Intellectual Property
Schedule 4.17 Company Consents and Approvals
Schedule 4.19 Company Taxes
Schedule 4.22 Broker's Fees
Schedule 5.1(f) Certain Company Debt
Schedule 5.12 Officers and Directors of the Company
Schedule 6.1(d) Employment and Consulting Agreement Parties
Schedule 6.1(e) Fuel Distributorship Agreement Parties
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
________ __, 2007, is entered into by and among XXXXXXXXXX LOGISTICS, INC., a
Nevada corporation (the "Company"), STATE PETROLEUM ACQUISITION CORP., a Florida
corporation and wholly owned subsidiary of the Company ("Merger Sub"), and STATE
PETROLEUM DISTRIBUTORS, INC., a Delaware corporation ("State Petroleum").
W I T N E S S E T H :
WHEREAS, the respective boards of directors of the Company, Merger Sub
and State Petroleum have each approved the merger of Merger Sub with and into
State Petroleum, with State Petroleum surviving as a wholly-owned subsidiary of
the Company (the "Merger"), on the terms and conditions contained herein and in
accordance with the Delaware General Corporation Law (the "DGCL"), the Florida
Business Corporation Action (the "FBCA") and the Nevada Revised Statues (the
"NRS"), and have determined that the Merger and the transactions contemplated
herein are advisable and in the best interest of their respective corporations
and stockholders;
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and to
prescribe various conditions to the Merger; and
WHEREAS, for U.S. federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of Section 368(a) and
Section 351 of the Code, and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 and Section 351 of the Code.
NOW THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined below), Merger Sub shall be merged
with and into State Petroleum in accordance with the applicable provisions of
the FBCA and the DGCL and in accordance with this Agreement, and the separate
existence of Merger Sub shall cease. State Petroleum shall be the surviving
corporation in the Merger (hereinafter sometimes referred to as the "Surviving
Corporation"), and shall continue under the laws of Delaware. As a result of the
Merger, State Petroleum shall become a direct, wholly-owned subsidiary of the
Company.
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1.2. Closing; Effective Time. Subject to the satisfaction or waiver of
all of the Conditions to Closing contained in Article VI, the closing of the
Merger (the "Closing"), shall take place at the offices of Blank Rome LLP, 0000
X. Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxx Xxxxx, XX 00000, as soon as practicable (but
not later than 5 Business Days) after the satisfaction or waiver of the
Conditions to Closing contained in Article VI (other than those conditions that
by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions), unless another date or place is
agreed to in writing by the parties hereto. The date on which the Closing
actually occurs is hereinafter referred to as the "Closing Date." As soon as is
practicable after the Closing, the parties hereto shall cause the Merger to be
consummated by (i) delivering to the Florida Department of State, a certificate
of merger (the "Florida Certificate of Merger"), in such form as required by,
and executed and acknowledged in accordance with, the relevant provisions of the
FBCA and (ii) delivering to the Secretary of State of the State of Delaware, a
certificate of merger (the "Delaware Certificate of Merger"), in such form as
required by, and executed and acknowledged in accordance with, the relevant
provisions of the DGCL. The Merger shall become effective as of the date and at
such time (the "Effective Time") as the Delaware Certificate of Merger is filed
with the Secretary of State of the State of Delaware with respect to the Merger.
1.3. Effects of Merger. The Merger shall have the effects set forth in
the applicable provisions of the FBCA and the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of State Petroleum and
Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities
and duties of State Petroleum and Merger Sub shall become the debts, liabilities
and duties of the Surviving Corporation.
1.4. Certificate of Incorporation. The Certificate of Incorporation of
State Petroleum in effect immediately prior to the Effective Time shall become,
from and after the Effective Time, the Certificate of Incorporation of the
Surviving Corporation, until amended or repealed in accordance with the terms
thereof and with Applicable Law.
1.5. Bylaws. The Bylaws of State Petroleum in effect immediately prior
to the Effective Time shall become, from and after the Effective Time, the
Bylaws of the Surviving Corporation, until thereafter amended or repealed in
accordance with the terms thereof and with Applicable Law.
1.6. Directors and Officers of the Surviving Corporation. The directors
and officers of State Petroleum immediately prior to the Effective Time shall
become, from and after the Effective Time, the directors and officers of the
Surviving Corporation, each to hold office from the Effective Time in accordance
with the Certificate of Incorporation and Bylaws of the Surviving Corporation
until their respective successors are duly elected or appointed and qualify, or
they resign or are removed.
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ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK
2.1. Conversion of Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the parties or the
registered holders of any shares of capital stock of State Petroleum (each a
"State Petroleum Stockholder" and collectively the "State Petroleum
Stockholders"):
(a) Each issued and outstanding share of common stock of State
Petroleum (the "State Petroleum Common Stock") shall be converted into the right
to receive that number of fully paid and non-assessable shares of common stock,
par value $0.001 per share, of the Company (the "Company Common Stock") and that
number of fully paid and non-assessable shares of Series J Convertible Preferred
(as defined below), both the Company Common Stock and the Series J Convertible
Preferred to be distributed pro rata to the State Petroleum Stockholders, so
that the State Petroleum Stockholders shall own shares of the Company Common
Stock representing fifty-five percent (55%) of the outstanding ownership of the
Company (the "State Petroleum Ownership Percentage") and the registered holders
of shares of the Company Common Stock (each a "Company Shareholder", and
collectively, the "Company Shareholders") shall own shares representing
forty-five percent (45%) of the outstanding ownership of the Company (the
"Company Ownership Percentage"), calculated on a fully diluted basis as of the
Closing Date assuming the conversion and exercise of all options, warrants and
other convertible securities of the Company and State Petroleum (the "Derivative
Securities") as set forth on Schedule 2.1(a), which shall be updated at the
Closing; provided that Seventy Five Million (75,000,000) of such shares (the
"Escrow Shares") shall be held in escrow by Blank Rome LLP, as escrow agent (the
"Escrow Agent"), pursuant to and in accordance with the terms of an escrow
agreement substantially in the form attached as Exhibit A hereto (the "Escrow
Agreement"). The Escrow Agreement shall remain in effect until the first
anniversary of the Closing Date (the "Escrow Period"). The number of shares of
Company Common Stock and Series J Convertible Preferred issued to each State
Petroleum Stockholder in accordance with this Section 2.1(a) shall hereafter be
referred to as the "Merger Shares" and shall be payable to the registered
holders of State Petroleum Common Stock upon satisfaction of the exchange
procedures set forth in this Article II. At the Effective Time, all such shares
of State Petroleum Common Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
registered holder of shares of State Petroleum Common Stock shall cease to have
any rights with respect thereto, except the right to receive the Merger Shares.
(b) During the Escrow Period, the Merger Shares received by the State
Petroleum Stockholders shall be subject to quarterly adjustments on a calendar
basis (each such quarterly date, an "Adjustment Date") to account for any
Derivative Securities that are exercised, expire and/or are cancelled on or
prior to each Adjustment Date, such that on each Adjustment Date any exercises,
cancellations and/or expirations of Company Derivative Securities shall be
accounted for while the State Petroleum Ownership Percentage and the Company
Ownership Percentage, each calculated on a fully diluted basis as of such
Adjustment Date, shall be maintained; provided further, however that any
issuance(s) or cancellations resulting from such adjustments shall be made from
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the Escrow Shares by the Escrow Agent in accordance with the terms of the Escrow
Agreement on a pro rata basis to all Company Shareholders who were holders of
Company Common Stock as of the Closing Date or State Petroleum Stockholders, as
the case may be.
(c) No fraction of a share of Company Common Stock will be issued, but
in lieu of such issuance, each State Petroleum Stockholder who would otherwise
be entitled to a fraction of a share of Company Common Stock as a result of the
conversion and exchange of shares contemplated by this Article II shall receive
from the Company one (1) additional share of Company Common Stock. The
fractional share interest of State Petroleum Stockholders shall be aggregated
such that no State Petroleum Stockholder shall receive more than the one (1)
share of Company Common Stock with respect to any interest in fractional shares.
2.2. Exchange of Certificates.
(a) Immediately prior to the Closing, the Company shall deposit, or
shall cause to be deposited, with Blank Rome LLP (the "Exchange Agent"), for the
benefit of the State Petroleum Stockholders certificates in the names of each
such State Petroleum Stockholder evidencing the number of Merger Shares to be
issued to such State Petroleum Stockholder in accordance with this Article II.
As soon as reasonably practicable after the Effective Time, the Company will
instruct the Exchange Agent to deliver to each holder of record of a certificate
or certificates which, immediately prior to the Effective Time evidenced shares
of outstanding State Petroleum Common Stock (collectively, the "State Petroleum
Certificates") a letter of transmittal containing instructions for use in
effecting the surrender of such of State Petroleum Certificates to the Exchange
Agent in exchange for certificates evidencing the relevant number of Merger
Shares. Upon due surrender of such State Petroleum Certificates, each such State
Petroleum Stockholder will be entitled to receive certificates evidencing the
number of Merger Shares to be issued to such State Petroleum Stockholder in
accordance with Section 2.1, and the State Petroleum Certificate so surrendered
shall be forthwith cancelled. Until surrendered as contemplated by this Section
2.2, each State Petroleum Certificate evidencing shares of State Petroleum
Common Stock shall be deemed at any time after the Effective Time to evidence
only the right to receive, upon such surrender, the Merger Shares. No interest
shall be paid on the Merger Shares. All Merger Shares issued upon exchange of
the State Petroleum Common Stock in accordance with the terms hereof shall be
deemed to have been issued or paid in full satisfaction of all rights pertaining
to such shares of Company Common Stock.
(b) It is understood that the certificates evidencing the Merger Shares
will bear the legends set forth below:
(i) The Securities represented hereby have not been registered
under the Securities Act of 1933, as amended (the "Act"), or
under the securities laws of any other jurisdictions. These
securities are subject to restrictions on transferability and
resale and may not be transferred or resold except as
permitted under the Act and the applicable state securities
laws, pursuant to registration or exemption therefrom.
Investors should be aware that they may be required to bear
the financial risks of this investment for an indefinite
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period of time. The issuer of these securities may require an
opinion of counsel in form and substance satisfactory to the
issuer to the effect that any proposed transfer or resale is
in compliance with the Act and any applicable state securities
laws;
(ii) Any additional legend required by Applicable Law.
The legend set forth in (i) above shall be removed from any certificate
evidencing such Merger Shares upon delivery to the Company of an opinion by
counsel, reasonably satisfactory to the Company, that such security can be
freely transferred without such a registration statement being in effect and
that such transfer will not jeopardize the exemption or exemptions from
registration pursuant to which the Company issued such Merger Shares.
2.3. Certain Adjustments. If after the date hereof and prior to the
Effective Time and to the extent permitted by this Agreement, the outstanding
shares of State Petroleum Common Stock or the Company Common Stock shall be
changed into a different number, class or series of shares by reason of any
reclassification, recapitalization or combination, forward stock split, reverse
stock split, stock dividend or rights issued in respect of such stock, or any
similar event shall occur (any such action, an "Adjustment Event"), the number
of Merger Shares issued in exchange for each share of State Petroleum Common
Stock shall be adjusted correspondingly to provide to the State Petroleum
Stockholders the right to receive the same economic effect as contemplated by
this Agreement immediately prior to such Adjustment Event.
2.4. Warrants. At the Effective Time, to the extent not exercised prior
to the Effective Time, each outstanding warrant to purchase shares of State
Petroleum Common Stock (a "State Petroleum Warrant") set forth on Schedule 3.5
of the disclosure schedules shall be automatically converted into a warrant to
acquire such number of shares of Company Common Stock (a "Company Warrant") as
the holder of such State Petroleum Warrants would have been entitled to receive
as Merger Shares had such holder exercised such State Petroleum Warrant in full
immediately prior to the Effective Time at an exercise price per share of
Company Common Stock appropriately adjusted such that the aggregate exercise
price for such Company Warrant shall be the same as it was prior to the
Effective Time. At the Effective Time, State Petroleum shall expressly assume
the due and punctual observance and performance of each and every covenant
contained in, and condition of, the State Petroleum Warrants to be performed and
observed by State Petroleum and all the obligations and liabilities thereunder.
(a) As promptly as practicable after the Effective Time, the Company
shall deliver to each holder of a State Petroleum Warrant a notice that contains
a calculation in reasonable detail and accurately reflects the number of shares
of Company Common Stock that each such holder is entitled to receive upon the
exercise of such holder's State Petroleum Warrant and the applicable adjusted
exercise price. Together with such notice, or as part of such notice, Company
shall deliver a duly executed confirmation that Company has expressly assumed
the due and punctual observance and performance of each and every covenant
contained in, and condition of, the applicable State Petroleum Warrant to be
performed and observed by State Petroleum and all the obligations and
liabilities thereunder.
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(b) The number of shares of Company Common Stock issuable upon exercise
of the Company Warrants shall be reserved by Company out of authorized but
unissued Company Common Stock for issuance upon exercise in full of all Company
Warrants after the Effective Time. Notwithstanding the foregoing, upon the
expiration of the Company Warrants, such Company Common Stock reserved for
issuance upon the exercise of the Company Warrants shall no longer be reserved.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STATE PETROLEUM
Except as set forth on the disclosure schedules, State Petroleum hereby
represents and warrants to the Company as follows:
3.1. Organization and Qualification. State Petroleum is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has requisite corporate power and authority and
governmental approvals to own, lease and operate its properties and to carry on
its business as currently conducted. State Petroleum is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the ownership or leasing of its property or the conduct of its business requires
such qualification or licensing, except where the failure to be so qualified or
licensed or in good standing would not, individually or in the aggregate, have a
Material Adverse Effect on State Petroleum.
3.2. Subsidiaries; Equity Investments.
(a) Subsidiaries. State Petroleum has no subsidiaries and does not own
any Equity Interest in any other corporation or in any partnership, limited
liability company or other form of business entity.
(b) Equity Investments. State Petroleum does not own any equity
interest in any other corporation or in any partnership, limited liability
company or other form of business entity.
3.3. Authority to Execute and Perform Agreement. State Petroleum has
the requisite power and all authority required to enter into, execute and
deliver this Agreement and the Transaction Documents to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby (collectively, the "Transactions").
The execution, delivery and performance by State Petroleum of this Agreement and
the consummation by State Petroleum of the Transactions have been duly
authorized and approved by all necessary corporate action.
3.4. Binding Effect. This Agreement has been validly executed and
delivered by State Petroleum and, assuming the due execution and delivery hereof
by the Company, constitutes a valid and binding obligation of State Petroleum,
enforceable against State Petroleum in accordance with its terms, except to the
extent such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general applicability
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affecting or relating to enforcement of creditors' rights generally, and (ii)
general equitable principles (regardless of whether such enforceability is
considered in equity or at law).
3.5. Capitalization.
(a) General. As of the date hereof, the authorized capital stock of
State Petroleum consists of (i) Twenty Five Million (25,000,000) shares of
common stock, par value $0.001 per share, of which Eight Million Two Hundred
Sixteen Thousand Four Hundred Fifty (8,216,450) shares of common stock are
issued and outstanding, all of which are validly issued, fully paid and
non-assessable and (ii) Ten Million (10,000,000) shares of preferred stock, par
value $0.001 per share, of which Five Million (5,000,000) shares are designated
Series A Preferred and Six Hundred Sixty Six Thousand Six Hundred Sixty Seven
(666,667) shares are designated Series B Preferred and of which Three Million
One Hundred Eleven Thousand One Hundred Twelve (3,111,112) shares of the Series
A Preferred are issued and outstanding and Three Hundred Thousand (300,000)
shares of the Series B Preferred are issued and outstanding. The Series A
Preferred are convertible into Three Million One Hundred Eleven Thousand One
Hundred Twelve (3,111,112) shares of common stock.
(b) Options, Warrants, etc. Except as set forth in Schedule 3.5(b),
there are no existing options, rights, subscriptions, warrants, unsatisfied
preemptive rights, calls, commitments or agreements relating to (i) the
authorized and unissued shares of State Petroleum, or (ii) any securities or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire from State Petroleum, any shares of State Petroleum
and no such convertible or exchangeable securities or obligations are
outstanding.
(c) Other Obligations. Except as set forth in Schedule 3.5(c), there
are no obligations, contingent or otherwise, of the Company to repurchase,
redeem or acquire shares of the Company.
3.6. Vote Required; Board and Stockholder Approval. The only vote
necessary to approve the Merger is the affirmative vote of the holders of a
majority of the outstanding State Petroleum Stock. The board of directors of
State Petroleum, by resolutions duly adopted at a meeting duly called and held
at which a quorum was present or by the unanimous written consent in lieu of
such a meeting, has approved this Agreement, the Merger and the Transactions in
accordance with the requirements of the DGCL.
3.7. Litigation. There are no judicial, governmental, administrative or
arbitral actions, claims, suits or proceedings or investigations (collectively,
"Legal Proceedings") pending or, to the Knowledge of State Petroleum, threatened
against or involving State Petroleum or any of its respective property or
assets. There are no outstanding orders, judgments, injunctions, awards or
decrees of any court, governmental or regulatory body or arbitration tribunal
against or involving State Petroleum.
3.8. Title to Properties; Absence of Liens. State Petroleum has (i)
good and marketable title free and clear of any and all liens and encumbrances
of any kind in and to all of its assets and properties, excluding immaterial
matters and (ii) sufficient rights to all of their respective assets and
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properties to permit them to carry on their business as currently contemplated,
whether real, personal or fixed, free and clear of all Liens, in each case,
except (a) for Liens set forth on Schedule 3.8, (b) for Liens for Taxes not yet
due and payable or which State Petroleum is contesting in good faith and for
which adequate reserves have been established, (c) for such properties and
assets as may have been sold since the date hereof in the ordinary course of
business, and (d) for Liens not securing debt that do not materially detract
from the value or materially interfere with the use of the property subject
thereto (collectively, "Permitted Liens").
3.9. Compliance with Laws. State Petroleum is not in violation of,
default under, or conflict with, any applicable order, consent, approval,
authorization, registration, declaration, filing, judgment, injunction, award,
decree or writ of any Governmental Body or court of competent jurisdiction
(collectively, "Orders") or any Applicable Law, except for any such violations
that would not, individually or in the aggregate, have a Material Adverse Effect
on the Company.
3.10. Consents and Approvals. Except for (i) those consents, approvals,
orders, authorizations, filings or notices set forth on Schedule 3.10, (ii)
applicable requirements of the Securities Act, the Exchange Act or state
securities or "blue sky" laws ("Blue Sky Laws"), (iii) the Florida Certificate
of Merger and (iv) the Delaware Certificate of Merger, no consent, approval or
authorization of, filing with, or notice to, any Governmental Body is required
by State Petroleum in connection with the execution, delivery and performance by
State Petroleum of this Agreement, each and every agreement contemplated hereby,
and the consummation by State Petroleum of the Transactions.
3.11. Non-contravention. The execution and delivery of this Agreement
and the Transaction Documents by State Petroleum, the performance by State
Petroleum of its obligations hereunder and thereunder, and the consummation of
the Transactions contemplated hereby and thereby by State Petroleum (A) do not
and will not conflict with, or result in a breach or violation of (i) any
provision of State Petroleum's charter or bylaws, (ii) any applicable laws,
(iii) any material agreement, contract, lease, license or instrument to which
State Petroleum is a party or by which it or any of its properties or assets are
bound and (B) will not result in the creation or imposition of any Lien upon any
of the property or assets of State Petroleum pursuant to any provision of any
contract or Lien.
3.12. Material Contracts. State Petroleum is not in default under any
Material Contract of State Petroleum, nor to the Knowledge of State Petroleum
does any condition exist that, with notice or lapse of time or both, would
constitute a default thereunder. To the Knowledge of State Petroleum, no other
party to any such Material Contract of State Petroleum is in default thereunder,
nor does any condition exist that with notice or lapse of time or both would
constitute a default thereunder. No approval or consent of any person is needed
in order that the Material Contracts of State Petroleum continue in full force
and effect following the consummation of the transactions contemplated by this
Agreement.
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3.13. Taxes.
(a) Filing of Tax Returns. State Petroleum has timely filed, or has had
timely filed on its behalf, with the appropriate Taxing authorities all Tax
Returns in respect of Taxes it is required to file. The Tax Returns filed
(including any amendments thereof) are complete and accurate in all material
respects. State Petroleum has not requested any extension of time within which
to file any Tax Return in respect of any Taxes, which Tax Return has not since
been filed in a timely manner. To the Knowledge of State Petroleum, no claim has
ever been made by any Taxing authority in a jurisdiction where State Petroleum
does not file Tax Returns, or has Tax Returns filed on its behalf, that State
Petroleum is or may be subject to taxation by that jurisdiction, or liable for
Taxes owing to that jurisdiction.
(b) Payment of Taxes. All Taxes, including state and federal fuel
taxes, owed by State Petroleum (whether or not shown as due on any Tax Returns)
have been paid in full or adequate reserves on State Petroleum's books and/or
records have been established. State Petroleum has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or other third
party. State Petroleum has made all required estimated Tax payments sufficient
to avoid any underpayment penalties. The unpaid Taxes of State Petroleum (A) do
not, as of the Closing Date, exceed the reserve for Tax liability (rather than
any reserve for deferred Taxes established to reflect the timing differences
between book and Tax income) set forth on the face of State Petroleum's most
recent balance sheets (rather than any notes thereto) and (B) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of State Petroleum in filing, or
having filed on its behalf, its Tax Returns. The charges, accruals and reserves
on the books of State Petroleum in respect of any liability for Taxes (x) based
on or measured by net income for any years not finally determined, (y) with
respect to which the applicable statute of limitations has not expired or (z)
that has been previously deferred, are adequate to satisfy any assessment for
such Taxes for any such years.
(c) Audits, Investigations or Claims. There is no dispute or claim
which has not been resolved concerning any Tax liability of State Petroleum
either (A) claimed or raised by any Taxing authority in writing or (B) as to
which any of the directors and officers (and employees responsible for Tax
matters) of State Petroleum has Knowledge. There is no currently pending audit
of any Tax Return of State Petroleum by any Taxing authority, and State
Petroleum has not been notified in writing that any Taxing authority intends to
audit any Tax Return of State Petroleum. State Petroleum has not executed any
outstanding waivers or consents regarding the application of the statute of
limitations with respect to any Taxes or Tax Returns.
(d) Lien. There are no encumbrances for Taxes (other than for current
Taxes not yet due and payable) on any assets of State Petroleum.
(e) Tax Elections. State Petroleum (i) has not agreed, or is required,
to make any adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise; (ii) have not made an election pursuant to Code
Sections 338 or 336(e) or the regulations thereunder or any comparable
provisions of any foreign or state or local income tax law; (iii) is not subject
to any constructive elections under Code Section 338 or the regulations
9
thereunder; (iv) has not made any payments, are obligated to make any payments,
or are a party to any agreement that under certain circumstances could obligate
it to make any payments that will not be deductible under Section 280G and
Section 162(m) of the Code; and (v) has not made any of the foregoing elections
or are required to apply any of the foregoing rules under any comparable state
or local income Tax provision.
(f) Prior Affiliated Groups. State Petroleum (A) has never been a
member of an affiliated group of corporations within the meaning of Section 1504
of the Code and (B) does not have any liability for the Taxes of any person
under Treas. Reg. Section 1502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract or otherwise. State
Petroleum is not a successor to any other person by way of merger,
reorganization or similar transaction.
(g) Tax Sharing Agreements. State Petroleum is not a party to any Tax
allocation, indemnity or sharing or similar agreement.
(h) Section 355. State Petroleum has not distributed the stock of a
"controlled corporation" (within the meaning of that term as used in Section
355(a) of the Code) in a transaction subject to Section 355 of the Code within
the past two years.
(i) Partnerships. State Petroleum does not own an interest in a
partnership for Tax purposes.
3.14. Financial Statements.
(a) State Petroleum has delivered to the Company copies of its audited
balance sheets as of December 31, 2005 and 2006 and statements of income for the
fiscal years ended December 31, 2005 and 2006 and its unaudited balance sheet
and statement of income for the nine-month period ended September 30, 2007 (the
"State Petroleum Financial Statements"). State Petroleum Financial Statements
present fairly the financial condition and results of operations of State
Petroleum at the dates and for the periods covered by the State Petroleum
Financial Statements. State Petroleum represents and warrants that there has
been no material adverse change in the financial condition of State Petroleum
from that stated in State Petroleum Financial Statements.
(b) The State Petroleum Financial Statements and any notes related
thereto comply as to form in all material respects with applicable accounting
requirements, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and
fairly present in all material respects (subject, in the case of the unaudited
interim financial statements, to normal, recurring year end adjustments none of
which are or will be material in amount, individually or in the aggregate) the
financial position of State Petroleum as at the dates thereof and the results of
their operations and cash flows for the periods then ended.
10
(c) State Petroleum does not have any direct or indirect liabilities
that were not fully and adequately reflected or reserved against on the balance
sheet or described in the notes to the audited financial statements of State
Petroleum. State Petroleum has no Knowledge of any circumstance, condition,
event or arrangement that has taken place at any time that may hereafter give
rise to any liabilities.
3.15. Books and Records. The books and records, financial and
otherwise, of State Petroleum are in all material respects complete and correct
and have been maintained in accordance with sound business and bookkeeping
practices so as to accurately and fairly reflect, in reasonable detail, the
transactions and dispositions of the assets and liabilities of State Petroleum.
3.16. Intellectual Property. State Petroleum has no Intellectual
Property for its business as now conducted and as proposed to be conducted. To
the Knowledge of State Petroleum, the business as conducted and as proposed to
be conducted by State Petroleum does not and will not cause State Petroleum to
infringe or violate any of the Intellectual Property of any other Person.
3.17. Environmental Matters. (i) State Petroleum is in compliance in
all material respects with applicable Environmental Laws; (ii) State Petroleum
has all Permits required pursuant to Environmental Laws and are in compliance in
all material respects with the terms thereof; (iii) there are no past or present
events, activities, practices, incidents, actions or plans in connection with
the operations of State Petroleum which have given rise to or are reasonably
likely to give rise to any material liability on the part of State Petroleum
under any Environmental Law; (iv) State Petroleum has not generated, used,
transported, treated, stored, released or disposed of, or has suffered or
permitted anyone else to generate, use, transport, treat, store, release or
dispose of any Hazardous Substance in violation of any Environmental Laws; and
(v) there has not been any generation, use, transportation, treatment, storage,
release or disposal of any Hazardous Substance in connection with the conduct of
the business of State Petroleum or the use of any property or facility by State
Petroleum, or to the Knowledge of State Petroleum, any nearby or adjacent
properties, in each case, which has created or might reasonably be expected to
create any material liability under any Environmental Law or which would require
reporting to or notification of any Governmental Body.
3.18. Real Property. Except as set forth on Schedule 3.18, State
Petroleum does not own, and has not owned, any real property or any interest in
any real property.
3.19. Broker's Fees. No broker, finder, agent or similar intermediary
has acted on behalf of State Petroleum in connection with this Agreement or the
Transactions, and there are no brokerage commissions, finders' fees or similar
fees or commissions payable in connection therewith based on any agreement,
arrangement or understanding with State Petroleum.
3.20. Labor Matters; Employee Benefit Plans. State Petroleum is not
now, and has not been in the last five years, bound by or party to any
collective bargaining agreement and, to the Knowledge of State Petroleum, no
application for certification of a collective bargaining agent is pending. State
11
Petroleum is in compliance with all Applicable Laws applicable to State
Petroleum affecting employment practices and terms and conditions of employment.
Other than its 401(k) Profit Sharing Plan and Trust, State Petroleum has not at
any time sponsored, maintained or contributed to any Benefit Plan.
3.21. Absence of Liabilities. State Petroleum does not have any debts,
liabilities or obligations of any kind, whether known or contingent, accrued,
absolute, contingent or otherwise, and whether due or to become due that are not
disclosed or reported on the State Petroleum Financial Statements, which shall
be updated as of the Closing Date.
3.22. Absence of Certain Changes or Events. Since September 30, 2007,
State Petroleum has not:
(a) declared or made any payment of dividends or other distributions to
its stockholders or upon or in respect of any shares of its capital stock or
purchased, or obligated itself to purchase, retire or redeem, any shares of its
capital stock or other securities;
(b) amended its articles of incorporation or bylaws;
(c) except in the ordinary course of business, borrowed or agreed to
borrow any funds; incurred or agreed to incur or become subject to any debts,
liabilities or obligations of any kind whatsoever except (i) in conjunction with
the negotiation and execution of this Agreement, (ii) legal, accounting,
advisory and board of director fees and expenses, or (iii) obligations incurred
in the ordinary course of business;
(d) subjected or agreed to subject any of the assets or properties of
State Petroleum to any lien, security interest, charge, interest or other
encumbrance or suffered such to be imposed; or guaranteed or agreed to guarantee
the debts or obligations of others.
3.23. No Material Adverse Change. Since December 31, 2006, State
Petroleum has not conducted any business or engaged in any activities other than
activities related to the negotiation and execution of this Agreement or
activities in the ordinary course, consistent with past practice, and there has
been no change in the business, properties, assets, operations or condition
(financial or otherwise) which has resulted or reasonably could be expected to
result in or which State Petroleum has reason to believe could reasonably be
expected to result in a Material Adverse Effect on it, and State Petroleum has
no Knowledge of any such change that is threatened, nor has there been any
damage, destruction or loss affecting the assets, properties, business,
operations or condition (financial or otherwise), whether or not covered by
insurance which has resulted or reasonably could be expected to result in or
which State Petroleum has reason to believe could reasonably be expected to
result in a Material Adverse Effect on State Petroleum.
3.24. Articles of Incorporation, Bylaws, and Minute Books. The copies
of the Articles of Incorporation and of the Bylaws of State Petroleum which have
been delivered to the Company are true, correct and complete copies thereof. The
corporate minutes of State Petroleum, which have been delivered to the Company,
12
are complete and accurate minutes of all meetings and accurate consents in lieu
of meetings of the board of directors (and any committee thereof) and of the
stockholders of State Petroleum since the date of incorporation and accurately
reflects all transactions referred to in such minutes and consents in lieu of
meetings. State Petroleum has delivered to Company all books, records,
agreements and other material information of State Petroleum relating to the
business of State Petroleum. All documents furnished or caused to be furnished
to the Company by State Petroleum are true and correct copies, and there are no
amendments or modifications thereto except as set forth in such documents.
3.25. Full Disclosure. This Agreement (including the information
contained in the disclosure schedules) does not (i) contain any representation,
warranty or information that is false or misleading with respect to any material
fact, or (ii) omit to state any material fact necessary in order to make the
representations, warranties and information contained herein, in the context in
which made or provided, not false or misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND MERGER SUB
Except as set forth on the disclosure schedules, the Company and Merger
Sub hereby represent and warrant to State Petroleum as follows:
4.1. Organization and Qualification. The Company is a corporation, duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has requisite power and
authority and governmental approvals to own, lease and operate its properties
and to carry on its business as currently conducted. The Company is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the ownership or leasing of its property or the conduct of
its business requires such qualification or licensing, except where the failure
to be so qualified or licensed or in good standing would not, individually or in
the aggregate, have a Material Adverse Effect on the Company. The Company has
not engaged in any business activities of any type or kind whatsoever.
4.2. Subsidiaries. Schedule 4.2 sets forth, as of the date of this
Agreement and as of the Closing Date, a complete and accurate list of all
Subsidiaries of the Company, the jurisdiction of formation of each such
Subsidiary, the number of authorized shares of each class of Equity Interests of
each such Subsidiary, the number of outstanding shares of each class of Equity
Interests, the number and percentage of outstanding shares of each class of
Equity Interests of each such Subsidiary owned (directly or indirectly) by any
Person and the number and effect, if exercised, of all Equity Equivalents with
respect to Capital Stock of each such Subsidiary. All the outstanding Equity
Interests of each Subsidiary of the Company are validly issued, fully paid and
non-assessable and were not issued in violation of the preemptive rights of any
shareholder or member, as the case may be, and, as of the Closing Date, are
owned by the Company, directly or indirectly, free and clear of all Liens. Other
than as set forth on Schedule 4.2, as of the Closing Date, no such Subsidiary
has outstanding any Equity Equivalents nor does any such Person have outstanding
any rights to subscribe for or to purchase or any options for the purchase of,
13
or any agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, its Equity
Interests.
4.3. Equity Investment. Except as set forth on Schedule 4.3, the
Company does not own any equity interest in any other corporation or in any
partnership, limited liability company or other form of business entity.
4.4. Authority to Execute and Perform Agreement. Each of the Company
and Merger Sub has the requisite power and all authority required to enter into,
execute and deliver this Agreement and the Transaction Documents to which it is
a party, to perform its obligations hereunder and thereunder and to consummate
the Transactions. The execution, delivery and performance by each of the Company
and Merger Sub of this Agreement and the consummation by the Company and Merger
Sub of the Transactions have been duly authorized by all necessary corporate
action.
4.5. Binding Effect. This Agreement has been validly executed and
delivered by the Company and Merger Sub, and, assuming the due execution and
delivery hereof by State Petroleum, constitutes a valid and binding obligation
of the Company and Merger Sub, enforceable against the Company and Merger Sub in
accordance with its terms, except to the extent such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws of general applicability affecting or relating to enforcement of
creditors' rights generally, and (ii) general equitable principles (regardless
of whether such enforceability is considered in equity or at law).
4.6. Capitalization.
(a) General. As of the date hereof, the authorized capital stock of the
Company consists of (i) Two Hundred Fifty Million (250,000,000) shares of common
stock, par value $0.01 per share, of which Two Hundred Nine Thousand Five
Hundred Fifty Eight Nine Hundred Twenty (209,558,922) shares of common stock are
issued and outstanding, all of which are validly issued, fully paid and
non-assessable and (ii) One Million (1,000,000) shares of preferred stock, par
value $0.01 per share, of which Three Hundred Thirty Seven Thousand Six Hundred
Ninety Six (337,696) shares of preferred Stock are issued and outstanding.
(b) Merger Sub. Each issued and outstanding share of capital stock of
Merger Sub is validly issued, fully paid and non-assessable and each such share
is owned by the Company free and clear of Liens.
(c) Options, Warrants, etc. Except as set forth on Schedule 4.6(c),
there are no existing options, rights, subscriptions, warrants, unsatisfied
preemptive rights, calls or commitments relating to (i) the authorized and
unissued capital stock of the Company or Merger Sub, or (ii) any securities or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire from the Company or Merger Sub any shares of capital
stock of the Company or Merger Sub and no such convertible or exchangeable
securities or obligations are outstanding.
14
(d) Liens; Obligations. Immediately after giving effect to the Merger,
the Company will own free and clear of any Liens all of the outstanding capital
stock of the Surviving Corporation. There are no obligations, contingent or
otherwise, of the Company or Merger Sub to repurchase, redeem or acquire shares
of the Company or Merger Sub.
(e) Registration. The outstanding shares of the capital stock of the
Company and Merger Sub have been issued in full compliance with the registration
and prospectus delivery requirements of the Securities Act or in compliance with
applicable exemptions therefrom, and the registration and qualification
requirements of all applicable securities laws of states of the United States.
(f) Merger Shares. The Merger Shares, when paid for and then issued as
provided in this Agreement, will be duly authorized and validly issued, fully
paid and nonassessable, and will be free of any Liens or encumbrances and of
restrictions on transfer, other than restrictions on transfer under applicable
state and federal securities laws or the Transaction Documents.
4.7. Board Approval. The board of directors of each of the Company and
Merger Sub, by resolutions duly adopted at a meeting duly called and held at
which a quorum was present or by the unanimous written consent in lieu of such a
meeting, has approved this Agreement, the Merger and the Transactions, as
applicable in accordance with the requirements of the NRS and the FBCA, as
applicable.
4.8. SEC Reports and Financial Statements.
(a) Each form, report, schedule, registration statement, proxy
statement, information statement, exhibit and any other document, to the extent
required to be filed in accordance with Applicable Law by the Company with the
Securities and Exchange Commission (the "SEC") (as such documents have been
amended prior to the date hereof, the "SEC Reports"), as of its respective date,
has complied in all material respects with the applicable requirements of the
Securities Act and Exchange Act and was timely filed (except where a valid
extension of the filing date was filed and the applicable SEC Report was filed
within the period permitted by such extension). None of the SEC Reports, as of
their respective dates, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except for such statements, if any, as have been
modified or superseded by subsequent filings prior to the date hereof.
(b) The consolidated financial statements of the Company included in
such SEC Reports and any notes related thereto 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, have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of the
unaudited interim financial statements, as permitted by Form 10-QSB of the SEC)
and fairly present in all material respects (subject, in the case of the
unaudited interim financial statements, to normal, recurring year end
15
adjustments none of which are or will be material in amount, individually or in
the aggregate) the consolidated financial position of the Company and its
Subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
(c) Neither the Company nor any of its Subsidiaries have any direct or
indirect liabilities that were not fully and adequately reflected or reserved
against on the balance sheet or described in the notes to the audited financial
statements of the Company. Neither the Company nor any of its Subsidiaries has
Knowledge of any circumstance, condition, event or arrangement that has taken
place at any time that may hereafter give rise to any liabilities.
4.9. No Material Adverse Change. Except as set forth in SEC Reports
filed since October 15, 2007 (the "Recent Reports"), since October 15, 2007,
neither the Company nor any of its Subsidiaries have conducted any business or
engaged in any activities other than activities related to the negotiation and
execution of this Agreement or activities in the ordinary course, consistent
with past practice, and there has been no change in the business, properties,
assets, operations or condition (financial or otherwise) of the Company or any
of its Subsidiaries which has resulted or reasonably could be expected to result
in or which the Company or any of its Subsidiaries has reason to believe could
reasonably be expected to result in a Material Adverse Effect on it, and neither
the Company nor any of its Subsidiaries has Knowledge of any such change that is
threatened, nor has there been any damage, destruction or loss affecting the
assets, properties, business, operations or condition (financial or otherwise)
of the Company or any of its Subsidiaries, whether or not covered by insurance
which has resulted or reasonably could be expected to result in or which the
Company or any of its Subsidiaries has reason to believe could reasonably be
expected to result in a Material Adverse Effect on the Company. Since the date
of its Annual Report, neither the Company nor any of its Subsidiaries has taken,
directly or indirectly, any of the actions identified in Section 5.1, except as
set forth in the Recent Reports.
4.10. Books and Records. The books and records, financial and
otherwise, of the Company and each of its Subsidiaries are in all material
respects complete and correct and have been maintained in accordance with sound
business and bookkeeping practices so as to accurately and fairly reflect, in
reasonable detail, the transactions and dispositions of the assets and
liabilities of the Company and each of its Subsidiaries.
4.11. Litigation. There are no Legal Proceedings pending or, to the
Knowledge of the Company or any of its Subsidiaries, threatened against or
involving the Company, any of its Subsidiaries, or any of their respective
property or assets. There are no outstanding orders, judgments, injunctions,
awards or decrees of any court, governmental or regulatory body or arbitration
tribunal against or involving the Company or any of its Subsidiaries.
4.12. Absence of Liabilities. As of the date of the Company's most
recent annual report on Form 10-KSB filed with the SEC on October 15, 2007 (the
"Annual Report"), other than in connection with the Bridge Financing, neither
the Company nor any of its Subsidiaries has any debts, liabilities or
obligations of any kind, whether accrued, absolute, contingent or otherwise, and
whether due or to become due, that are not otherwise set forth in Section 4.12
of the disclosure schedules, which shall be updated as of the Closing Date.
16
4.13. Title to Properties; Absence of Liens. Except as set forth on
Schedule 4.13, the Company and each of its Subsidiaries has good and marketable
title to all of their respective assets and properties, whether real, personal
or fixed, free and clear of all Liens, except for Liens for Taxes not yet due
and payable or which the Company or any of its Subsidiaries is contesting in
good faith and for which adequate reserves have been established.
4.14. Compliance with Laws. Neither the Company nor any of its
Subsidiaries is in violation of, default under, or conflict with, any applicable
Order or any Applicable Law, except for any such violations that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
4.15. Intellectual Property. Except as set forth on Schedule 4.15,
neither the Company nor any of its Subsidiaries owns, licenses or otherwise has
any rights in or to any Intellectual Property.
4.16. Non-Contravention. The execution and delivery of this Agreement
and the Transaction Documents by the Company and Merger Sub, the performance by
each of the Company and Merger Sub of its obligations hereunder and thereunder,
and the consummation of the Transactions contemplated hereby and thereby by such
entities (A) do not and will not conflict with, or result in a breach or
violation of (i) any provision of the charter or bylaws of any of the Company or
Merger Sub, (ii) any applicable laws, (iii) any material agreement, contract,
lease, license or instrument to which the Company or Merger Sub is a party or by
which the Company, Merger Sub or any of each of their properties or assets are
bound and (B) will not result in the creation or imposition of any Lien upon any
of the property or assets of the Company or Merger Sub pursuant to any provision
of any contract or Lien.
4.17. Consents and Approvals. Except for (i) those consents, approvals,
authorizations, filings or notices set forth on Schedule 4.17, (ii) applicable
requirements of the Securities Act, the Exchange Act or Blue Sky Laws, (iii) the
Florida Certificate of Merger and (iv) the Delaware Certificate of Merger, no
consent, approval or authorization of, filing with, or notice to, any
Governmental Body is required by the Company or Merger Sub in connection with
the execution, delivery and performance by the Company of this Agreement, each
and every agreement contemplated hereby, and the consummation by the Company and
Merger Sub of the Transactions.
4.18. Material Contracts. Neither the Company nor any of its
Subsidiaries is in default under any Material Contract, nor to the Knowledge of
the Company and its Subsidiaries, does any condition exist that, with notice or
lapse of time or both, would constitute a default thereunder. To the Knowledge
of the Company and its Subsidiaries, no other party to any such Material
Contract of the Company or any of its Subsidiaries is in default thereunder, nor
does any condition exist that with notice or lapse of time or both would
constitute a default thereunder. No approval or consent of any person is needed
in order that the Material Contracts of the Company or any of its Subsidiaries
shall continue in full force and effect following the consummation of the
transactions contemplated by this Agreement.
4.19. Taxes. Except as set forth on Schedule 4.19:
17
(a) Filing of Tax Returns. The Company and each of its Subsidiaries
have timely filed, or have had timely filed on their behalf, with the
appropriate Taxing authorities all Tax Returns in respect of Taxes required to
be filed by them. The Tax Returns filed (including any amendments thereof) are
complete and accurate in all material respects. The Company and each of its
Subsidiaries has not requested any extension of time within which to file any
Tax Return in respect of any Taxes, which Tax Return has not since been filed in
a timely manner. To the Knowledge of the Company, no claim has ever been made by
any Taxing authority in a jurisdiction where the Company or any of its
Subsidiaries does not file Tax Returns, or has Tax Returns filed on their
behalf, that they are or may be subject to taxation by that jurisdiction, or
liable for Taxes owing to that jurisdiction.
(b) Payment of Taxes. All Taxes owed by the Company and each of its
Subsidiaries (whether or not shown as due on any Tax Returns) have been paid in
full or adequate reserves on their respective books and/or records have been
established. The Company and each of its Subsidiaries have withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
third party. The Company has made all required estimated Tax payments sufficient
to avoid any underpayment penalties. The unpaid Taxes of the Company and each of
its Subsidiaries (A) do not, as of the Closing Date, exceed the reserve for Tax
liability (rather than any reserve for deferred Taxes established to reflect the
timing differences between book and Tax income) set forth on the face of the
Company's and each of its Subsidiaries' most recent balance sheets (rather than
any notes thereto) and (B) do not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Company and each of its Subsidiaries in filing, or having filed
on their behalf, their Tax Returns. The charges, accruals and reserves on the
books of the Company and each of its Subsidiaries in respect of any liability
for Taxes (x) based on or measured by net income for any years not finally
determined, (y) with respect to which the applicable statute of limitations has
not expired or (z) that has been previously deferred, are adequate to satisfy
any assessment for such Taxes for any such years.
(c) Audits, Investigations or Claims. There is no dispute or claim
which has not been resolved concerning any Tax liability of the Company or any
of its Subsidiaries either (A) claimed or raised by any Taxing authority in
writing or (B) as to which any of the directors and officers (and employees
responsible for Tax matters) of the Company or any of its Subsidiaries has
Knowledge. There is no currently pending audit of any Tax Return of the Company
or any of its Subsidiaries by any Taxing authority, and neither the Company nor
any of its Subsidiaries has ever been notified in writing that any Taxing
authority intends to audit any Tax Return of the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries has executed any
outstanding waivers or consents regarding the application of the statute of
limitations with respect to any Taxes or Tax Returns.
(d) Lien. There are no encumbrances for Taxes (other than for current
Taxes not yet due and payable) on any assets of the Company or any of its
Subsidiaries.
(e) Tax Elections. The Company and each of its Subsidiaries (i) have
not agreed, or are required, to make any adjustment under Section 481(a) of the
Code by reason of a change in accounting method or otherwise; (ii) have not made
18
an election pursuant to Code Sections 338 or 336(e) or the regulations
thereunder or any comparable provisions of any foreign or state or local income
tax law; (iii) are not subject to any constructive elections under Code Section
338 or the regulations thereunder; (iv) have not made any payments, are
obligated to make any payments, or are a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under ss.280G and ss.162(m) of the Code; and (v) have not made any of
the foregoing elections or are required to apply any of the foregoing rules
under any comparable state or local income Tax provision.
(f) Prior Affiliated Groups. The Company and each of its Subsidiaries
(A) have never been a member of an affiliated group of corporations within the
meaning of Section 1504 of the Code (other than a group the common parent of
which was the Company) and (B) do not have any liability for the Taxes of any
person (other than any of the Company and its Subsidiaries) under Treas. Reg.
ss.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract or otherwise. Neither the Company nor any
of its Subsidiaries is a successor to any other person by way of merger,
reorganization or similar transaction.
(g) Tax Sharing Agreements. Neither the Company nor any of its
Subsidiaries is a party to any Tax allocation, indemnity or sharing or similar
agreement.
(h) Section 355. Neither the Company nor any of its Subsidiaries has
distributed the stock of a "controlled corporation" (within the meaning of that
term as used in Section 355(a) of the Code) in a transaction subject to Section
355 of the Code within the past two years.
(i) Partnerships. Neither the Company nor any of its Subsidiaries owns
an interest in a partnership for Tax purposes.
4.20. Environmental Matters. (i) The Company and each of its
Subsidiaries are in compliance in all material respects with applicable
Environmental Laws; (ii) the Company and each of its Subsidiaries have all
Permits required pursuant to Environmental Laws and are in compliance in all
material respects with the terms thereof; (iii) there are no past or present
events, activities, practices, incidents, actions or plans in connection with
the operations of the Company or any of its Subsidiaries which have given rise
to or are reasonably likely to give rise to any liability on the part of the
Company or any of its Subsidiaries under any Environmental Law; (iv) neither the
Company nor any of its Subsidiaries has generated, used, transported, treated,
stored, released or disposed of, or has suffered or permitted anyone else to
generate, use, transport, treat, store, release or dispose of any Hazardous
Substance in violation of any Environmental Laws; and (v) there has not been any
generation, use, transportation, treatment, storage, release or disposal of any
Hazardous Substance in connection with the conduct of the business of the
Company or any of its Subsidiaries or the use of any property or facility by the
Company or any of its Subsidiaries, or to the Knowledge of the Company and all
of its Subsidiaries, any nearby or adjacent properties, in each case, which has
created or might reasonably be expected to create any material liability under
any Environmental Law or which would require reporting to or notification of any
Governmental Body.
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4.21. Real Property. Neither the Company nor any of its Subsidiaries
owns or has owned, any real property or any interest in any real property.
4.22. Broker's Fees. Except for compensation due Xxxxxxx Xxxxx Group,
Inc. ("SLG") or its assigns upon consummation of the Transactions in the form of
a warrant to purchase shares of Company Common Stock or actual shares of Company
Common Stock as set forth on Schedule 4.22, no broker, finder, agent or similar
intermediary has acted on behalf of the Company in connection with this
Agreement or the Transactions, and there are no brokerage commissions, finders'
fees or similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with the Company or any of its
Subsidiaries. Xxxxxx Xxxxxxxxx, a principal of SLG, is also an affiliate of
State Petroleum.
4.23. Labor Matters; Employee Benefit Plans. The Company and each of
its Subsidiaries is not now, and has not been in the last five years, bound by
or party to any collective bargaining agreement and, to the Knowledge of the
Company and its Subsidiaries, no application for certification of a collective
bargaining agent is pending. The Company and each of its Subsidiaries is in
compliance with all Applicable Laws applicable to the Company and each of its
Subsidiaries affecting employment practices and terms and conditions of
employment. Neither the Company nor any of its Subsidiaries has at any time
sponsored, maintained or contributed to any Benefit Plan.
4.24. Articles of Incorporation, Bylaws, and Minute Books. The copies
of the Articles of Incorporation and of the Bylaws of the Company which have
been delivered to State Petroleum are true, correct and complete copies thereof.
The corporate minutes of the Company, which have been delivered to State
Petroleum, are complete and accurate minutes of all meetings and accurate
consents in lieu of meetings of the board of directors (and any committee
thereof) and of the stockholders of the Company since the date of incorporation
and accurately reflects all transactions referred to in such minutes and
consents in lieu of meetings. The Company has delivered to State Petroleum all
books, records, agreements and other material information of the Company
relating to the business of the Company. All documents furnished or caused to be
furnished to State Petroleum by the Company are true and correct copies, and
there are no amendments or modifications thereto except as set forth in such
documents.
4.25. Full Disclosure. This Agreement (including the information
contained in the disclosure schedules) and the SEC Reports, do not (i) with
respect to the Company or any of its Subsidiaries, contain any representation,
warranty or information that is false or misleading with respect to any material
fact, or (ii) with respect to the Company or any of its Subsidiaries, omit to
state any material fact necessary in order to make the representations,
warranties and information contained herein (including the information contained
in the disclosure schedules) and the SEC Reports, in the context in which made
or provided, not false or misleading.
ARTICLE V
ADDITIONAL AGREEMENTS OF THE PARTIES
5.1. Actions Pending Closing. From the date hereof until the Effective
Time, unless otherwise agreed to in writing, each of the parties to this
Agreement agree to conduct its business and operations only in the ordinary
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course and in substantially the same manner as heretofore conducted and the
Company shall continue to make timely filings (except pursuant to valid
extensions) as required by the SEC pursuant to the Securities Act and the
Exchange Act and shall not take any action that will adversely affect the
ability of the Company to qualify for quotation of its common stock on the over
the counter bulletin board. Without limiting the generality of the foregoing,
prior to the Effective Time, none of the parties to this Agreement shall, except
as contemplated by this Agreement (including without limitation, the
transactions contemplated in connection with the Bridge Financing), without the
prior written consent of the other parties to this Agreement, directly or
indirectly, do any of the following:
(a) except to the extent required by Applicable Law, as contemplated by
this Agreement, amend or otherwise change the articles of incorporation, Bylaws,
operating agreement or other similar organizational document;
(b) issue or authorize or propose the issuance of, sell, pledge or
dispose of, grant or otherwise create, or agree to issue or authorize or propose
the issuance, sale, pledge, disposition, grant or creation of any additional
shares of, or any options, warrants, convertible securities or other rights of
any kind to acquire any shares of, its capital stock or any debt or equity
securities convertible into or exchangeable for such capital stock;
(c) purchase, redeem or otherwise acquire or retire, or offer to
purchase, redeem or otherwise acquire or retire, any shares of its capital stock
(including any security convertible or exchangeable into its capital stock);
(d) enter into any Material Contract, except in the ordinary course of
business;
(e) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock, reclassify, recapitalize, split, combine or exchange any of its
shares of capital stock;
(f) incur or become contingently liable with respect to any
indebtedness for borrowed money or guarantee any such indebtedness or issue any
debt securities, except, in the case of the Company only, in connection with any
of the debt listed on Schedule 5.1(f);
(g) (i) increase the compensation payable or to become payable to, or
enter into any employment agreement with, any of its directors, executive
officers or employees, (ii) grant any severance or termination pay to any
director, officer or employee, (iii) enter into any severance agreement with any
director, officer or employee, (iv) establish, adopt, enter into, terminate,
withdraw from or amend in any material respect or take action to accelerate any
rights or benefits under any collective bargaining agreement, any stock option
plan or any employee Benefit Plan or policy, or (v) hire any employee or
consultant;
21
(h) take any action, other than reasonable actions in the ordinary
course of business and consistent with past practice, with respect to accounting
policies or procedures, except as may be required by GAAP;
(i) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other means, any business or any corporation, partnership,
association or other business entity;
(j) mortgage or otherwise encumber, subject to any Lien, or sell,
transfer or otherwise dispose of, any of its properties or assets that are
material, individually or in the aggregate;
(k) adopt a plan of complete or partial liquidation, dissolution,
restructuring, recapitalization or other reorganization;
(l) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
its financial statements or incurred in the ordinary course of business and
consistent with past practice;
(m) take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.1(a) through (l) above, or any action which would make
any of the representations or warranties contained in this Agreement untrue or
incorrect in any material respect or prevent the parties to this Agreement from
performing or cause the parties to this Agreement not to perform their
respective covenants under this Agreement in any material respect;
(n) waive, release, assign, settle or compromise any material rights,
claims or litigation (including any confidentiality agreement); or
(o) make or change any Tax election, settle any audit, claim or
examination of Taxes, adopt or apply to change any method of accounting or
accounting practice for Tax purposes, file any amended Tax Return, enter into
any closing agreement or request a Tax ruling from a Tax authority, settle any
claims for Taxes, surrender any right to claim a refund of Taxes, consent to any
extension or waiver of the limitation period applicable to any Taxes, Tax Return
or claim for Taxes, or take any action or fail to take any action that would
have a material adverse effect on the Tax liability of any of the parties to
this Agreement.
5.2. Merger Sub Approvals; Information Statement. The Company hereby
agrees to approve by written consent the Merger and this Agreement on behalf of
Merger Sub as Merger Sub's sole stockholder in accordance with the FBCA (the
"Merger Sub Consent"). As soon as practicable, but no later than thirty (30)
calendar days after the date of this Agreement, the Company shall file with the
SEC a preliminary information statement on Schedule 14C with respect to the
Merger in accordance with Regulation 14C under the Exchange Act (the
"Information Statement"). The Information Statement shall be made available to
22
the Company Shareholders in accordance with the requirements of Regulation 14C.
State Petroleum shall cooperate with the Company in the preparation of the
Information Statement.
5.3. State Petroleum Stockholders' Approval. As soon as practicable
after the date hereof, State Petroleum will take all steps necessary to solicit
the approval of the requisite number of its stockholders approving the Merger
and this Agreement in accordance with the provisions of the DGCL and its bylaws
(the "State Petroleum Consent"). Except as otherwise contemplated by this
Agreement and subject to the exercise of the fiduciary duties of the board of
directors of State Petroleum, the board of directors of State Petroleum (i)
shall recommend to the State Petroleum Stockholders that they approve the
Merger, and (ii) shall use its reasonable best efforts to obtain the State
Petroleum Consent.
5.4. Efforts; Consents. Each of the parties to this Agreement agrees
to, and to cause its respective Subsidiaries to, use reasonable best efforts to
take or cause to be taken all actions necessary, proper or advisable to
consummate the Merger and the Transactions. Without limiting the generality of
the foregoing, each of the parties hereto shall use, and shall cause its
respective Subsidiaries to use, reasonable best efforts to obtain all
authorizations, consents, orders and approvals of Federal, state, and local
regulatory bodies, that are or may become necessary for the performance of its
respective obligations pursuant to this Agreement, the Transactions Documents
and the consummation of the Transactions, and shall cooperate fully in promptly
seeking to obtain such authorizations, consents, orders and approvals as may be
necessary for the performance of its respective obligations pursuant to this
Agreement, the Transaction Documents and the Transactions. The parties shall not
take, and shall cause their respective Subsidiaries not to take, any action
which would have the effect of delaying, impairing or impeding the receipt of
any required regulatory approvals, and the parties shall use, and shall cause
their respective Subsidiaries to use, reasonable best efforts to secure such
approvals as promptly as possible. The parties shall use, and shall cause their
respective Subsidiaries to use, reasonable best efforts not to take any action
or enter into any transaction which would result in a breach of any covenant
made by such party in this Agreement.
5.5. Filing of Tax Returns; Payment of Taxes. Each of the parties to
this Agreement will prepare in a manner consistent with its past practice and
timely file all Tax Returns it is required to file, the due date of which
(without extensions) occurs on or before the Closing Date and shall pay all
Taxes due with respect to any such Tax Returns.
5.6. Access to Information.
(a) The Company shall afford State Petroleum and shall cause its
independent accountants to afford to State Petroleum, and its accountants,
counsel and other representatives, reasonable access during normal business
hours during the period prior to the Closing to all information concerning the
Company as State Petroleum may reasonably request, provided that the Company
shall not be required to disclose any information which it is legally required
to keep confidential. State Petroleum will not use such information for purposes
other than this Agreement and will otherwise hold such information in confidence
(and State Petroleum will cause its consultants and advisors also to hold such
information in confidence) until such time as such information otherwise becomes
publicly available without any violation of this Agreement by State Petroleum,
23
and in the event of termination of this Agreement for any reason the Company
shall promptly return, or cause to be returned, to State Petroleum all documents
obtained from State Petroleum, and any copies made of such documents, extracts
and copies thereof.
(b) State Petroleum shall afford the Company and the Company
Shareholders and shall cause its independent accountants to afford to the
Company and the Company Shareholders, and their accountants, counsel and other
representatives, reasonable access during normal business hours during the
period prior to the Closing to all of State Petroleum's properties, books,
contracts, commitments and records and to the audit work papers and other
records of State Petroleum's independent accountants. During such period, State
Petroleum shall use reasonable efforts to furnish promptly to the Company and
the Company Shareholders such information concerning State Petroleum as the
Company and the Company Shareholders may reasonably request, provided that State
Petroleum shall not be required to disclose any information which it is legally
required to keep confidential. The Company and the Company Shareholders will not
use such information for purposes other than this Agreement and will otherwise
hold such information in confidence (and the Company and the Company
Shareholders will cause their respective consultants and advisors also to hold
such information in confidence) until such time as such information otherwise
becomes publicly available without any violation of this Agreement by the
Company, and in the event of termination of this Agreement for any reason the
Company and the Company Shareholders shall promptly return, or cause to be
returned, to the disclosing party all documents obtained from State Petroleum,
and any copies made of such documents, extracts and copies thereof.
5.7. Confidentiality. Unless (i) otherwise expressly provided in this
Agreement, (ii) required by Applicable Law, (iii) necessary to secure any
required consents as to which the other party has been advised, or (iv)
consented to in writing by State Petroleum and the Company, this Agreement and
any information or documents furnished in connection herewith shall be kept
strictly confidential by the Company, State Petroleum and each of their
Subsidiaries, and their respective officers, directors, employees and agents.
Prior to any disclosure pursuant to the preceding sentence, the party intending
to make such disclosure shall consult with the other party to the extent
practicable regarding the nature and extent of the disclosure. Subject to the
preceding sentence, nothing contained herein shall preclude disclosures to the
extent necessary to comply with accounting, SEC and other disclosure obligations
imposed by Applicable Law. In the event the Merger is not consummated, State
Petroleum and the Company shall return to the other all documents furnished by
the other and all copies thereof made by such party and will hold in absolute
confidence all information obtained from the other party except to the extent
(i) such party is required to disclose such information by Law or such
disclosure is necessary in connection with the pursuit or defense of a claim,
(ii) such information was known by such party prior to such disclosure or was
thereafter developed or obtained by such party independent of such disclosure,
(iii) such party received such information on a non-confidential basis from a
source, other than the other party, which is not known by such party to be bound
by a confidentiality obligation with respect thereto or (iv) such information
becomes generally available to the public or is otherwise no longer
confidential. Prior to any disclosure of information pursuant to the exception
in clause (i) of the preceding sentence, the party intending to disclose the
same shall so notify the party which provided the same to the extent practicable
24
in order that such party may seek a protective order or other appropriate remedy
should it choose to do so.
5.8. Notification of Certain Matters. Each party shall give prompt
notice to the other party if any of the following occurs after the date of this
Agreement: (i) receipt of any notice or other communication in writing from any
person alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement; (ii) receipt of
any notice or other communication from any Governmental Authority (including,
but not limited to, the NASD, the SEC or any securities exchange) in connection
with the transactions contemplated by this Agreement; (iii) the occurrence or
non-occurrence of any fact or event which could reasonably be expected to cause
any covenant, condition or agreement hereunder not to be complied with or
satisfied in any material respect; (iv) the commencement or threat of any
litigation involving or affecting the Company or any of its Subsidiaries, or any
of their respective properties or assets; (v) the occurrence or non-occurrence
of any fact or event that causes or is reasonably likely to cause a breach by
the Company or Merger Sub of any provision of this Agreement, and (vi) the
occurrence of any event that, had it occurred prior to the date of this
Agreement without any additional disclosure hereunder, would have constituted a
Material Adverse Effect on the Company.
5.9. Non-Solicitation.
(a) No party to this Agreement, nor any of their respective officers,
directors, employees, agents, affiliates, accountants, counsel, investment
bankers, financial advisors or other representatives (collectively,
"Representatives"), shall (i) directly or indirectly, initiate, solicit or
encourage, or take any action to facilitate the making of, any Acquisition
Proposal, (ii) enter into any agreement or take any other action that by its
terms could reasonably be expected to adversely affect the ability of the
parties hereto to consummate the Merger, or (iii) directly or indirectly engage
or otherwise participate in any discussions or negotiations with, or provide any
information or data to, or afford any access to their properties, books or
records to, or otherwise assist, facilitate or encourage, any person (other than
State Petroleum or any affiliate or associate thereof) relating to any
Acquisition Proposal.
(b) Each of the parties to this Agreement and each of their
Representatives shall immediately cease and cause to be terminated all existing
discussions and negotiations, if any, with any other persons conducted
heretofore with respect to any Acquisition Proposal.
(c) For purposes of this Agreement, an "Acquisition Proposal" means any
inquiry, proposal or offer from any person relating to (i) any direct or
indirect acquisition or purchase of a business that constitutes 50% or more of
the net revenues, net income or assets of any party to this Agreement, taken as
a whole, or 50% or more of the common stock or voting power (or of securities or
rights convertible into or exercisable for such common stock or voting power) of
the Company or State Petroleum, (ii) any tender offer or exchange offer that if
consummated would result in any person beneficially owning 50% or more of the
common stock or voting power (or of securities or rights convertible into or
exercisable for such common stock or voting power) of the Company or State
Petroleum, or (iii) any merger, consolidation, business combination,
25
recapitalization, liquidation, dissolution or similar transaction involving the
Company, State Petroleum or any of their Subsidiaries that constitutes 50% or
more of the net revenues, net income or assets of the Company and its
Subsidiaries or State Petroleum and its Subsidiaries, as the case may be, taken
as a whole, or that results in the stockholders of the Company or the State
Petroleum Stockholders, as the case may be, immediately prior to such
transaction owning less than 50% of the outstanding voting securities of the
Company or State Petroleum, as the case may be, immediately after such
transaction, in each case other than the transactions contemplated by this
Agreement. Each of the transactions referred to in clauses (i) - (iii) of the
foregoing definition of Acquisition Proposal, other than the Merger proposed by
this Agreement, is referred to herein as an "Acquisition Transaction."
5.10. Further Assurances. At any time and from time to time after the
Closing, each party to this Agreement agrees to cooperate with each other party
and to execute and deliver such other documents, instruments of transfer or
assignment, files, books and records and do all such further acts as may be
reasonably required to consummate the Transactions.
5.11. Public Disclosure. Prior to the Closing, each party to this
Agreement shall consult with the other parties before issuing any press release
or otherwise making any public statements, announcements or communications with
respect to this Agreement or any of the Transactions and shall not issue any
such press release or make any such public statement, announcement or
communication without the prior written consent of the other parties, which
consent shall not be unreasonably withheld, except as may be required by
Applicable Law.
5.12. Officers and Board of Directors of the Company. Prior to the
Closing, the board of directors of the Company, in accordance with applicable
law, shall take all necessary action (including the resignation of existing
officers) to cause the officers of the Company to be as set forth on Schedule
5.12 as of the Effective Time. Prior to the Closing, the board of directors of
the Company, in accordance with applicable law, shall take all necessary action
to cause its board of directors, as of the Effective Time, to consist of a total
of five seats. At the Closing, each of Xxxxxxx Xxxxx and Xxxxx Xxxxxx, the two
directors comprising the current board of directors of the Company (the "Company
Directors"), shall continue to hold office until his respective successor is
duly elected or appointed and qualify, or he resigns or is removed and State
Petroleum shall have the right to designate in writing two additional directors,
each to hold office from the Effective Time until their respective successors
are duly elected or appointed and qualify, or they resign or are removed (the
"State Petroleum Designees"). The Company Directors shall take all necessary
action to cause the State Petroleum Designees to be appointed to the board of
directors of the Company as of the Effective Time. At such time as the Company
receives a minimum of Five Million Dollars ($5,000,000) in debt or equity
financing subsequent to the Closing (excluding proceeds received from
refinancing Company debt existing on the Closing Date), the four members of the
board of directors shall designate in writing the fifth director who shall hold
office until his/her/its respective successor is duly elected or appointed and
qualify, or he/she/it resigns or is removed. The names of the officers and
directors of the Company as of the Effective Time are set forth on Schedule
5.12.
5.13. Existing Company Liabilities. From the date of this Agreement
until the Closing Date, the Company shall continue to pay or otherwise satisfy
or discharge all of its debts, obligations and liabilities of any kind
26
whatsoever consistent with the operation of its business in the ordinary course
and past practice, including, without limitation, all of the debts, obligations
and liabilities set forth on its Annual Report, incurred between the date
thereof and the Closing Date.
5.14. Existing State Petroleum Liabilities. From the date of this
Agreement until the Closing Date, State Petroleum shall pay or otherwise satisfy
or discharge all of its debts, obligations and liabilities of any kind
whatsoever consistent with the operation of its business in the ordinary course
and past practice, including, without limitation, all of the debts, obligations
and liabilities set forth on the September 30, 2007 balance sheet, incurred
between the date thereof and the Closing Date.
5.15. Rentar Joint Venture. The Company is in negotiations with Rentar
Environmental Solutions Inc. ("Rentar") to form a joint venture pursuant to
which the Company will grant the joint venture entity an exclusive license to
use the Company's software relating to the validation of the emissions and fuel
savings of Rentar's catalytic device. As currently contemplated, the Company
will have a forty-nine percent (49%) interest and Rentar will have a fifty-one
percent (51%) interest in the new joint venture entity. Rentar will have the
capacity to control the board of directors or managing group of the new joint
venture entity. The State Petroleum Designees shall vote in favor of the
transaction with Rentar as long as (i) the terms and conditions of the
definitive agreement conform in all material respects to the description
contained in this Section 5.15 and (ii) the Company Directors vote in favor of
the transaction.
5.16. Reverse Stock Split. As soon as practicable following the date of
this Agreement, the Company shall take any and all actions necessary to obtain
the Reverse Stock Split Consent (as defined below). The covenant contained in
this Section 5.16 shall survive the Closing.
5.17. State Petroleum Registration Rights. The Company hereby agrees to
grant holders of the State Petroleum Warrants registration rights identical to
those that exist at the Effective Time. The covenant contained in this Section
5.17 shall survive the Closing.
ARTICLE VI
CONDITIONS TO CLOSING
6.1. Conditions to Each Party's Obligations to Consummate the
Transactions. The respective obligations of each party to this Agreement to
consummate the Transactions shall be subject to the following conditions, unless
waived in writing prior to the Closing Date by such party:
(a) Consents and Approvals. All consents, approvals, authorizations,
orders and action of any Governmental Body required to permit the consummation
of the Transactions shall have been obtained or made and shall be in full force
and effect.
(b) No Restraints. No action shall have been taken, and no statute,
rule, regulation, executive order, judgment, decree, or injunction shall have
been enacted, entered, promulgated or enforced (and not repealed, superseded,
27
lifted or otherwise made inapplicable), by any court or governmental or
regulatory agency of competent jurisdiction which restrains, enjoins or
otherwise prohibits the consummation of the Transactions (each party agreeing to
use its reasonable best efforts to avoid the effect of any such statute, rule,
regulation or order or to have any such order, judgment, decree or injunction
lifted).
(c) Investment Letter. Each State Petroleum Stockholder shall have
delivered to the Company and State Petroleum a completed investment
representation letter in the form attached hereto as Exhibit B (each, an
"Investment Letter").
(d) Employment Agreement and Consulting Agreement. An Employment
Agreement, substantially in the form attached hereto as Exhibit C, and a
Consulting Agreement, substantially in the form attached hereto as Exhibit D,
shall be entered into on the Closing Date by State Petroleum and each of the
Persons as set forth on Schedule 6.1(d).
(e) Fuel Distributorship Agreement. A Fuel Distributorship Agreement,
substantially in the form attached hereto as Exhibit E, relating to the sale of
fuel to the mini-mart/gas stations affiliated with State Petroleum, shall be
entered into on the Closing Date by State Petroleum and each of the
mini-mart/gas stations set forth in Schedule 6.1(e).
(f) Escrow Agreement. The relevant parties shall have executed and
delivered the Escrow Agreement subject only to the Closing of the transactions
contemplated by this Agreement.
(g) Side Letter. The Company, Xxxxxx U., LLC, Adirondack Investments,
Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxxxxx shall enter into a side letter agreement
pursuant to which each shall use its reasonable best efforts to effectuate the
sale of BB&O Management Company, Inc., Lake Street Acquisition Corp., Tiger
Realty, Ltd., RJM Realty Development, LP and RJM Group, LLC to the Company or a
Subsidiary of the Company.
6.2. Conditions to Obligations of the Company and Merger Sub to
Consummate the Transactions.
The obligation of the Company and Merger Sub to consummate the
Transactions shall be subject to the satisfaction of the following conditions,
unless waived in writing prior to the Closing Date by the Company or Merger Sub:
(a) Representations and Warranties. The representations and warranties
of State Petroleum contained herein that are qualified as to materiality or a
Material Adverse Effect (or similar concept) shall be true and correct, and
those not so qualified shall be true and correct in all material respects, in
each case at and as of the Effective Time with the same force and effect as
though made at and as of the Effective Time (except to the extent a
representation or warranty speaks specifically as of an earlier date, in which
case as of such date).
(b) Performance of Obligations. State Petroleum shall have performed,
in all material respects, all obligations and complied with all covenants
28
required by this Agreement to be performed or complied with, in all material
respects, by each of them prior to the Effective Time.
(c) Due Diligence. The Company shall have completed its financial,
business and legal due diligence investigation of State Petroleum, including an
evaluation of its financial position and cash flow, to the Company's and its
counsel's satisfaction which shall be determined at the sole and absolute
discretion of the Company and its counsel.
(d) Officer's Certificate. State Petroleum shall have executed and
delivered to the Company a certificate, dated the date of Closing and signed by
an officer of State Petroleum, evidencing compliance with Sections 6.2(a) and
6.2(b) hereof.
(e) Approval. Holders of at least a majority of the Company's
outstanding capital stock shall have approved the Merger and this Agreement in
accordance with the NRS. The approvals of the board of directors as set forth in
Section 4.17 and the Merger Sub Consent shall have been obtained.
(f) Legal Opinion. State Petroleum Stockholders shall have received the
legal opinion of counsel to the Company, in agreed upon form addressed to such
State Petroleum Stockholders.
(g) Material Adverse Effect. There shall not have occurred after the
date hereof any event or events that, individually or in the aggregate,
constitute a Material Adverse Effect on State Petroleum.
(h) Updated Debt Information. The Company shall have received the
updated debt information with respect to State Petroleum as required by Section
3.21.
6.3. Conditions to Obligations of State Petroleum to Consummate the
Transactions. The obligation of State Petroleum to consummate the Transactions
shall be subject to the satisfaction of the following conditions, unless waived
in writing prior to the Closing Date by State Petroleum:
(a) Representations and Warranties. The representations and warranties
of the Company and Merger Sub contained herein that are qualified as to
materiality or a Material Adverse Effect (or similar concept) shall be true and
correct, and those not so qualified shall be true and correct in all material
respects, in each case at and as of the Effective Time with the same force and
effect as though made at and as of the Effective Time (except to the extent a
representation or warranty speaks specifically as of an earlier date, in which
case as of such date).
(b) Performance of Obligations. The Company and Merger Sub shall have
performed, in all material respects, all obligations and complied with all
covenants required by this Agreement to be performed or complied with, in all
material respects, by it prior to the Effective Time.
29
(c) Reverse Stock Split. The board of directors of the Company shall
have executed a unanimous written consent authorizing the Reverse Stock Split
(the "Reverse Stock Split Consent"); provided that the Reverse Stock Split
Consent shall provide that the resolutions contained therein may not be
rescinded, revoked or otherwise amended by any future board of directors of the
Company unless approved by the consent of a supermajority of the then current
members of the board of directors of the Company.
(d) Due Diligence. State Petroleum shall have completed its financial,
business and legal due diligence investigation of the Company, including an
evaluation of its financial position and cash flow, to State Petroleum's and its
counsel's satisfaction which shall be determined at the sole and absolute
discretion of State Petroleum and its counsel.
(e) Officer's Certificate. The Company and Merger Sub shall have
executed and delivered to State Petroleum a certificate, dated the date of
Closing and signed by an officer of the Company and Merger Sub, evidencing
compliance with Sections 6.3(a) through 6.3(d) hereof, including attaching a
copy of the executed Revere Stock Split Consent thereto.
(f) Stock Certificates. Certificates evidencing the number of Merger
Shares to be issued to each State Petroleum Stockholder in the names of such
State Petroleum Stockholders shall have been delivered by the Company's agent to
counsel to State Petroleum in accordance with Section 2.2.
(g) Certificate of Designations. The Company shall have filed with the
Secretary of State of the State of Nevada a certificate of designations setting
forth the rights and preferences of a new series of its convertible preferred
stock, which shall be designated "Series J Convertible Preferred Stock" (the
"Series J Convertible Preferred"). There shall be Five Hundred Thousand
(500,000) shares of Series J Convertible Preferred authorized, par value $0.01
per share, which shall convert into shares of Company Common Stock at the rate
set forth on Schedule 2.1(a), which shall be updated at the Closing; provided
that such conversion rate shall be calculated on a fully diluted basis as of the
Closing Date assuming the conversion and exercise of all Derivative Securities
and provided that the State Petroleum Ownership Percentage and the Xxxxxxxxxx
Ownership Percentage shall at all times be maintained.
(h) Approval. The State Petroleum Consent and the approvals of the
board of directors as set forth in Section 3.16 shall have been obtained.
(i) Legal Opinion. The Company Shareholders shall have received the
legal opinion of counsel to State Petroleum, in agreed upon form addressed to
such Company Shareholders.
(j) Board of Directors. The State Petroleum Designees shall have been
appointed to the board of directors of the Company.
(k) Officers. The officers of the Company shall be as set forth on
Schedule 5.12.
30
(l) Material Adverse Effect. There shall not have occurred after the
date hereof any event or events that, individually or in the aggregate,
constitute a Material Adverse Effect on the Company.
(m) Updated Information. State Petroleum shall have received an updated
Schedule 4.2 regarding the Company's Subsidiaries as required by Section 4.2 and
the updated debt information with respect to the Company and its Subsidiaries as
required by Section 4.12.
ARTICLE VII
TERMINATION
7.1. Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of this Agreement and the
Merger by the board of directors or shareholders of the Company or the board of
directors or stockholders of State Petroleum:
(a) by the mutual written consent of the parties to this Agreement;
(b) by either the Company or State Petroleum, by written notice to the
other if, for any reason, the Closing has not occurred prior to the close of
business on or before December 31, 2007; provided, however, that (i) the right
to terminate this Agreement pursuant to this Section 7.1(b) shall not be
available to the Company or State Petroleum, as applicable, if the party seeking
to terminate the Agreement is responsible for the delay;
(c) by either the Company or State Petroleum, by written notice to the
other, if any court of competent jurisdiction shall have issued an order,
judgment or decree (other than a temporary restraining order) restraining,
enjoining or otherwise prohibiting the Merger and such order, judgment or decree
shall have become final and nonappealable;
(d) at the election of the Company, if (i) State Petroleum has
materially breached any representation, warranty, covenant or agreement
contained in this Agreement, which breach has not been cured on or before thirty
(30) Business Days following delivery of written notice of such breach by the
Company to State Petroleum; provided, however, that the right to terminate this
Agreement pursuant to this Section 7.1(d) shall not be available to the Company
if (A) the Company at such time, is in material breach of any representation,
warranty, covenant or agreement set forth in this Agreement, or (B) the Company
or its counsel is not satisfied with the financial, business or legal due
diligence investigation of State Petroleum or any item or issue that is
discovered in the course of such investigation as determined by the Company or
its counsel in its sole and absolute discretion; and
(e) at the election of State Petroleum, if the Company or Merger Sub
has materially breached any representation, warranty, covenant or agreement
contained in this Agreement, which breach has not been cured on or before thirty
(30) Business Days following delivery of written notice to the Company or Merger
Sub of such breach by State Petroleum; provided, however, that the right to
terminate this Agreement pursuant to this Section 7.1(e) shall not be available
31
to State Petroleum if (A) State Petroleum, at such time, is in material breach
of any representation, warranty, covenant or agreement set forth in this
Agreement or (B) State Petroleum or its counsel is not satisfied with the
financial, business or legal due diligence investigation of the Company or any
item or issue that is discovered in the course of such investigation as
determined by State Petroleum or its counsel in its sole and absolute
discretion.
7.2. Effect of Termination. In the event of the termination of this
Agreement by either the Company or State Petroleum pursuant to Section 7.1, (i)
this Agreement shall forthwith become void and have no further force or effect,
and (ii) there shall be no further liability under this Agreement on the part of
State Petroleum or the Company, other than pursuant to the provisions of Section
5.6, Section 5.7, this Section 7.2 and Section 7.3.
7.3. Expenses; Termination Fees.
(a) Except as set forth in this Section 7.3, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such costs and expenses, whether or not the Merger is
consummated.
(b) All payments under this Section 7.3 shall be made by wire transfer
of immediately available funds to an account designated by the party to whom
such payment will be made.
(c) The parties acknowledge that the agreements contained in this
Section 7.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, neither State Petroleum nor the
Company nor Merger Sub would enter into this Agreement. Accordingly, if either
party fails to promptly pay any amounts owing pursuant to this Section 7.3 when
due, then the party from whom such payment is due shall in addition thereto pay
to the other party all costs and expenses (including fees and disbursements of
counsel) incurred in collecting such amounts, together with interest on such
amounts (or any unpaid portion thereof) from the date such payment was required
to be made until the date such payment is received by the party entitled to such
payment hereunder at the prime rate of Chase Manhattan as in effect from time to
time during such period.
ARTICLE VIII
MISCELLANEOUS
8.1. Certain Definitions; Rules of Construction. Definitions shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed to be references to Articles
and Sections of, and Exhibits and Schedules to, this Agreement unless the
context shall otherwise require. All Exhibits and Schedules attached hereto
shall be deemed incorporated herein as if set forth in full herein and, unless
otherwise defined therein, all terms used in any Exhibit or Schedule shall have
the meaning ascribed to such term in this Agreement. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." The words "hereof," "herein" and "hereunder" and words of similar
32
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise expressly
provided herein, any agreement, plan, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, plan, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and instruments
incorporated therein. For the purposes of this Agreement, the following terms
shall have the following meanings:
"Acquisition Proposal" has the meaning set forth in Section 5.9.
"Acquisition Transaction" has the meaning set forth in Section 5.9.
"Act" has the meaning set forth in Section 2.2(b)(i).
"Adjustment Date" has the meaning set forth in Section 2.1(b).
"Adjustment Event" has the meaning set forth in Section 2.3.
"Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly controls, is controlled by, or is under common
control with, such first Person. The term "control" means possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" has the meaning set forth in the preamble.
"Annual Report" has the meaning set forth in Section 4.12.
"Applicable Law" means any Federal, state or local law, regulation,
code, ordinance, statute, rule, Order, judgment, decree or other requirement of
a Governmental Body applicable to the business of the Company, Merger Sub or
State Petroleum, as the context may require.
"Benefit Plan" means each deferred compensation, executive
compensation, incentive compensation, stock purchase or other stock-based
compensation plan, severance or termination pay, holiday, vacation or other
bonus plan or practice, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit sharing, pension, or
retirement plan, program, agreement, commitment or arrangement, and each other
employee Benefit Plan, program, agreement or arrangement, including, without
limitation, each "employee Benefit Plan" as such term is defined under Section
3(3) of ERISA.
"Blue Sky Laws" has the meaning set forth in Section 3.10.
"Bridge Financing" means the bridge financing pursuant to which State
Petroleum provided financing for the Company in the form of an 8% secured
convertible promissory note of the Company, in aggregate face principal amount
of $100,000 (the "Note") which may be prepaid by the Company at any time without
penalty on five business days notice, pursuant to which, among other things,
33
State Petroleum has a right of first refusal to purchase Commodity Express
Transportation, Inc., a Delaware corporation and wholly-owned subsidiary of the
Company ("CXT") on the same terms and conditions as may be offered by any other
party and an option to purchase CXT if a merger or acquisition between the
Company and State Petroleum and funding transaction does not occur on or prior
to December 31, 2007.
"Business Day" means any day other than Saturday or Sunday or any other
day on which banks in the State of New York are permitted or obligated to be
closed for business.
"Claim" means any action, suit, claim, complaint, demand, litigation or
similar proceeding.
"Closing" has the meaning set forth in Section 1.2.
"Closing Date" has the meaning set forth in Section 1.2.
"Company" has the meaning set forth in the preamble.
"Company Common Stock" has the meaning set forth in Section 2.1(a).
"Company Director" has the meaning set forth in Section 5.12.
"Company Ownership Percentage" has the meaning set forth in Section
2.1(a).
"Company Shareholder" and "Company Shareholders" have the meaning set
forth in Section 2.1(a).
"Company Warrant" has the meaning set forth in Section 2.4.
"DGCL" has the meaning set forth in the recitals.
"Delaware Certificate of Merger" has the meaning set forth in Section
1.2.
"Derivative Securities" has the meaning set forth in Section 2.1(a).
"Effective Time" has the meaning set forth in Section 1.2.
"Environmental Laws" means all applicable statutes, rules, regulations,
ordinances, orders, decrees, judgments, permits, licenses, consents, approvals,
authorizations, and governmental requirements or directives or other obligations
lawfully imposed by Governmental Body under federal, state, local or common law,
indemnity agreements or other contractual obligations, in each case, pertaining
to the protection of the environment, protection of public health, protection of
worker health and safety, the treatment, emission and/or discharge of gaseous,
particulate and/or effluent pollutants, and/or the handling of hazardous
materials, including, without limitation, the Clean Air Act, 42 U.S.C. Section
7401, et seq., the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), 42 U.S.C. Section 9601, et seq., the Federal
Water Pollution Control Act, 33 U.S.C. Section 1321, et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
34
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq. ("RCRA"), and the
Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq.
"Equity Equivalents" means with respect to any Person any rights,
warrants, options, convertible securities, exchangeable securities, indebtedness
or other rights, in each case exercisable for or convertible or exchangeable
into, directly or indirectly, Equity Interests of such Person or securities
exercisable for or convertible or exchangeable into Equity Interests of such
Person, whether at the time of issuance or upon the passage of time or the
occurrence of some future event.
"Equity Interests" means all shares of capital stock, partnership
interests (whether general or limited), limited liability company membership
interests, beneficial interests in a trust and any other interest or
participation that confers on a Person the right to receive a share of profits
or losses, or distributions of assets, of an issuing Person, but excluding any
debt securities convertible into such Equity Interests.
"Escrow Agent" has the meaning set forth in Section 2.1(a).
"Escrow Agreement" has the meaning set forth in Section 2.1(a).
"Escrow Period" has the meaning set forth in Section 2.1(a).
"Escrow Shares" has the meaning set forth in Section 2.1(a).
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Agent" has the meaning set forth in Section 2.2(a).
"FBCA" has the meaning set forth in the recitals.
"Florida Certificate of Merger" has the meaning set forth in Section
1.2.
"Fully Diluted Basis" shall mean that the amount of common stock of an
entity outstanding shall be determined on the basis that all outstanding
options, warrants and other convertible securities shall be deemed to be fully
exercised or converted (as the case may be) into common stock.
"GAAP" has the meaning set forth in Section 2.14(b).
"Governmental Body" means any court, administrative or regulatory
agency or commission or other governmental authority of competent jurisdiction.
"Government Agency" means (i) the United States Government, including
all departments and agencies of any branch of the United States Government, all
independent agencies or instrumentalities and all non-appropriated fund
activities within the United States Government and United States Government
35
corporations, and (ii) any state or local government, including all departments,
agents, agencies, branches, independent agencies or instrumentalities,
activities, and non-appropriated fund activities of or within a state or local
government and all state or local government corporations.
"Hazardous Substances" means any pollutants, contaminants, toxic or
hazardous or extremely hazardous substances, materials, wastes, constituents,
compounds, chemicals (including, without limitation, petroleum or any
by-products or fractions thereof, any form of natural gas, Xxxxxx Amendment
materials, lead, asbestos and asbestos-containing materials, building
construction materials and debris, polychlorinated biphenyls ("PCBs") and
PCB-containing equipment, radon and other radioactive elements, ionizing
radiation, electromagnetic field radiation and other non-ionizing radiation,
sonic forces and other natural forces, infectious, carcinogenic, mutagenic, or
etiologic agents, pesticides, defoliants, explosives, flammables, corrosives and
urea formaldehyde foam insulation) that are regulated by any Environmental Laws.
"Information Statement" has the meaning set forth in Section 5.2.
"Intellectual Property" means all of the following as they are used in
connection with the business of a Person as presently conducted and as they
exist in all jurisdictions throughout the world, in each case, to the extent
owned by such Person:
(a) patents, patent applications and inventions, designs and
improvements described and claimed therein, patentable inventions and other
patent rights (including any divisions, continuations, continuations-in-part,
substitutions, or reissues thereof, whether or not patents are issued on any
such applications and whether or not any such applications are modified,
withdrawn, or resubmitted);
(b) trademarks, service marks, trade dress, trade names, brand names,
designs, logos, or corporate names, whether registered or unregistered, and all
registrations and applications for registration thereof;
(c) copyrights and mask works, including all renewals and extensions
thereof, copyright registrations and applications for registration thereof;
(d) trade secrets, confidential business information and other
proprietary information, concepts, ideas, designs, research or development
information, processes, procedures, techniques, technical information,
specifications, operating and maintenance manuals, engineering drawings,
methods, know-how, technical data and databases, discoveries, inventions,
modifications, extensions, improvements, and other proprietary rights (whether
or not patentable or subject to copyright, mask work, or trade secret
protection);
(e) computer software programs, including, without limitation, all
source code, object code, and documentation related thereto; and
(f) Internet addresses, domain names, web sites, web pages and similar
rights and items.
36
"Investment Letter" has the meaning set forth in Section 6.1(c).
"Knowledge" with respect to any Person, means the actual knowledge of
any of the officers or directors of such Person after diligent inquiry.
"Legal Proceedings" has the meaning set forth in Section 3.7.
"Lien" means any mortgage, pledge, lien, charge, easement, restrictive
covenant, encumbrance, voting or transfer restriction, or security interest.
"Material Adverse Effect" means any change, effect, event or occurrence
that is materially adverse to the condition (financial or otherwise), assets,
properties, business or operations of a Person and its Subsidiaries, taken as a
whole.
"Material Contract" means all of the following contracts, agreements,
understandings or arrangements, whether or not in writing, to which a Person is
a party or by or to which any of them or any of their assets or properties are
bound or subject, with respect to: (i) any current or former officer, director,
stockholder, employee, consultant, agent or other representative or with an
entity in which any of the foregoing is a contracting person; (ii) any labor
union or association representing any employee; (iii) the purchase or sale of
materials, supplies, equipment, merchandise or services that contain an
escalation, renegotiation or redetermination clause calling for an aggregate
purchase or sale price or payments of more than $50,000 in any one case (or in
the aggregate, in the case of any related series of contracts and other
agreements); (iv) the sale of any of its assets or properties other than in the
ordinary course of business or for the grant to any person of any preferential
rights to purchase any of its assets or properties; (v) joint ventures,
strategic alliances or partnerships; (vi) an indemnity or sharing of any tax
liability of any third party; (vii) the purchase or sale price or payments of
more than $50,000 in any one case (or in the aggregate, in the case of any
related series of contracts and other agreements) that cannot be canceled by
such Person with less than ninety days' notice without incurring liability,
premium or penalty; (viii) the sharing of fees, the rebating of charges or other
similar arrangements; (ix) obligations or liabilities of any kind to holders of
such Person securities as such; (x) covenants of such Person not to compete in
any line of business or with any person in any geographical area or covenants of
any other person not to compete with the such Person in any line of business or
in any geographical area; (xi) the acquisition by the such Person of any
operating business, including the assets or the capital stock of any other
person; (xii) options for the purchase of any asset, tangible or intangible,
requiring the payment to any person of a commission or fee; (xiii) the payment
of fees or other consideration on behalf of any officer or director of such
Person or to any other entity in which any of the foregoing has an interest;
(xiv) the borrowing of money; (xv) any purchase price or sale price or payments
of more than $50,000 in any one case (or in the aggregate, in the case of any
related series of contracts and other agreements) whether or not made in the
ordinary course of business; (xvi) the purchase or sale of material, supplies,
equipment, merchandise, intellectual property, real property, assets (whether
tangible or intangible) or services where the purchase or sale price, the
estimated purchase or sale price, the maximum order price, the maximum contract
price, or the ceiling price (whether in one case or in the aggregate, in the
case of a related series of contracts or other agreements) is more than $50,000,
37
and a party to the contract or the known end or ultimate user, seller, or
purchaser is any Government Agency; (xvii) any schedule contracts with the
United States General Services Administration or any multiple award schedule
contracts, basic agreements, basic ordering agreements, or blanket purchase
agreements with any Government Agency; and (xviii) any other contract, agreement
or arrangement that is material to the business of a Person.
"Merger" has the meaning set forth in the recitals.
"Merger Sub" has the meaning set forth in the preamble.
"Merger Sub Consent" has the meaning set forth in Section 5.2.
"Merger Shares" has the meaning set forth in Section 2.1(a).
"Non-Exercised Issuances" has the meaning set forth in Section 5.18.
"Non-Exercised Securities" has the meaning set forth in Section 2.1(a).
"NRS" has the meaning set forth in the recitals.
"Orders" has the meaning set forth in Section 3.9.
"Permitted Liens" has the meaning set forth in Section 3.8.
"Person" means any individual, corporation, partnership, limited
liability company or partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government (including any agency
or political subdivision thereof).
"Recent Reports" has the meaning set forth in Section 4.9.
"Rentar" has the meaning set forth in Section 5.15.
"Representatives" has the meaning set forth in Section 5.9.
"Reverse Stock Split" shall mean a one (1) for one hundred (100)
reverse stock split to be effected by the Company as soon as possible following
the Closing of the Merger, pursuant to which each one hundred (100) shares of
Company Common Stock issued and outstanding prior to such reverse stock split
shall be converted and exchanged into one (1) share of Company Common Stock
following such reverse stock split, with any fractional shares being rounded up
to the next whole share.
"Reverse Stock Split Consent" has the meaning set forth in Section
6.3(c).
"SEC" has the meaning set forth in Section 4.8(a).
"SEC Reports" has the meaning set forth in Section 4.8(a).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
38
"Series J Convertible Preferred" has the meaning set forth in Section
6.3(h).
"State Petroleum" has the meaning set forth in the preamble.
"State Petroleum Certificates" has the meaning set forth in Section
2.2(a).
"State Petroleum Common Stock" has the meaning set forth in Section
2.1(a).
"State Petroleum Designees" has the meaning set forth in Section 5.12.
"State Petroleum Financial Statements" has the meaning set forth in
Section 3.14.
"State Petroleum Ownership Percentage" has the meaning set forth in
Section 2.1(a).
"State Petroleum Stockholder" and "State Petroleum Stockholders" have
the meanings set forth in Section 2.1.
"State Petroleum Warrant" has the meaning set forth in Section 2.4.
"Subsidiary" of any Person means any corporation, partnership, joint
venture or other legal entity of which such Person (either directly or through
or together with any other Subsidiary of such Person), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or similar governing body of such corporation, partnership, joint venture or
other legal entity.
"Surviving Corporation" has the meaning set forth in Section 1.1.
"Tax" or "Taxes" means any taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, franchise,
profits, gross receipts, capital, sales, use, ad valorem, value added, transfer,
transfer gains, inventory, capital stock, license, withholding, payroll,
employment, social security (or similar), unemployment, excise, severance,
stamp, occupation, real or personal property, premium, windfall profits,
environmental (including taxes under Section 59A of the Code), customs duties,
registration, alternative or add-on minimum, and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, together with any
interest and any penalties, fines, additions to tax or additional amounts
thereon whether disputed or not, imposed by any taxing authority (Federal,
state, local or foreign) and shall include any transferee liability in respect
of Taxes.
"Tax Return" means any returns, declarations, reports, estimates,
information returns or statements relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Transaction Documents" means this Agreement and each of the agreements
and instruments contemplated hereby or thereby, including, without limitation,
Florida Certificate of Merger and the Delaware Certificate of Merger, the
officer's certificate to be delivered by State Petroleum pursuant to Section
6.2(c) and the Company and Merger Sub pursuant to Section 6.3(c), the disclosure
39
schedules, the Escrow Agreement, the Employment and Consulting Agreement, the
Fuel Distributorship Agreement and documents, instruments or agreements attached
to or contemplated by any of the foregoing.
"Transactions" has the meaning set forth in Section 3.3.
8.2. Waivers and Amendments. Subject to Applicable Law, this Agreement
may be amended, superseded, canceled, renewed or extended, and the terms hereof
may be waived, only by a written instrument signed by the parties hereto or, in
the case of a waiver, by or on behalf of the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege.
8.3. Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE, APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
8.4. Notices. Any notices or other communications required under this
Agreement shall be in writing and be effective upon delivery if given by hand
delivery or facsimile transmission or on the next day after given if delivered
by overnight courier, and shall be given at the addresses or facsimile numbers
set forth below, with copies provided as follows:
(a) if to the Company or Merger Sub:
000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxxxxxx & Beilly, LLP
0000 X.X. Xxxxxxxxx Xxxx., Xxxxx 000
Xxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
40
(b) if to State Petroleum or the Surviving
Corporation:
0000 Xxxx Xxxxxxxxxx Xxx..
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
with copies to:
Blank Rome LLP
0000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
or at such other place or places or to such other person or persons as shall be
designated in writing by the parties to this Agreement in the manner herein
proved.
8.5. Section Headings. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
8.6. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which,
together, shall constitute one and the same instrument. This Agreement may be
executed by facsimile or other electronic image transmission technology. Copies
of signature pages delivered by facsimile or other means of electronic image
transmission shall have the same force and effect as originals thereof.
8.7. Assignments. This Agreement, by operation of law or otherwise,
shall be binding upon and inure to the benefit of successors and legal
representatives of the parties hereto.
8.8. Entire Agreement; Enforceability. This Agreement and the
Transaction Documents, including the Exhibits and Schedules attached hereto and
thereto: (i) constitute the entire agreement among the parties with respect to
the Transactions and supersedes all prior agreements and understandings, both
written and oral, among the parties, with respect to the subject matter hereof
and thereof; and (ii) shall be binding upon, and are solely for the benefit of
each party hereto and nothing in this Agreement is intended to confer upon any
other Person any rights or remedy of any nature whatsoever hereunder or by
reason of this Agreement or any of the Transaction Documents.
8.9. Severability. Any term or provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without rendering invalid, illegal or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
41
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
8.10 Third Party Beneficiary. The parties intend that there are no
third party beneficiaries to this Agreement.
[Signature page follows.]
42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger to be duly executed as of the date first above written.
XXXXXXXXXX LOGISTICS, INC.
By:_________________________________
Name:
Title:
STATE PETROLEUM ACQUISITION CORP.
By:_________________________________
Name:
Title:
STATE PETROLEUM DISTRIBUTORS, INC.
By:_________________________________
Name:
Title:
43
EXHIBIT A
FORM OF ESCROW AGREEMENT
EXHIBIT B
FORM OF INVESTMENT LETTER
EXHIBIT C
FORM OF EMPLOYMENT AGREEMENT
EXHIBIT D
FORM OF CONSULTING AGREEMENT
EXHIBIT E
FORM OF FUEL DISTRIBUTORSHIP AGREEMENT
DISCLOSURE SCHEDULES
TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXXXXXX LOGISTICS, INC.,
STATE PETROLEUM ACQUISITION CORP.
AND
STATE PETROLEUM DISTRIBUTORS, INC.
Dated as of November 8, 2007
INDEX OF SCHEDULES
------------------
Schedule 3.5(b) State Petroleum Options, Warrants, etc.
Schedule 3.5(c) State Petroleum Other Obligations
Schedule 3.8 State Petroleum Title to Properties; Absence of Liens
Schedule 3.10 State Petroleum Consents and Approvals
Schedule 3.18 State Petroleum Real Property
Schedule 4.2 Company Subsidiaries
Schedule 4.3 Company Equity Investments
Schedule 4.6(b) Company Options, Warrants, etc.
Schedule 4.13 Company Title to Properties; Absence of Liens
Schedule 4.15 Company Intellectual Property
Schedule 4.17 Company Consents and Approvals
Schedule 4.19 Company Taxes
Schedule 4.22 Broker Fees
Schedule 5.1(f) Certain Company Debt
Schedule 5.12 Officers and Directors of the Company
Schedule 6.1(d) Employment Agreement and Consulting Agreement Parties
Schedule 6.1(e) Fuel Distributorship Agreement Parties
Schedule 3.5(b)
---------------
State Petroleum Options, Warrants, etc.
---------------------------------------
1. Warrant No. 1, dated December 29, 2006, issued to Stanford Venture
Capital Holdings to purchase 388,890 shares of State Petroleum common
stock, par value, $0.001 per share.
2. Warrant No. 2, dated December 29, 2006, issued to Xxxxxx X. Xxxxx to
purchase 89,931 shares of State Petroleum common stock, par value,
$0.001 per share.
3. Warrant No. 3, dated December 29, 2006, issued to Xxxxxxx X. Xxxxxxxxxx
to purchase 89,931 shares of State Petroleum common stock, par value,
$0.001 per share.
4. Warrant No. 4, dated December 29, 2006, issued to Xxxxxxx Pi and Xxxxxx
Pi Living Trust, u/a/d February 13, 2007 to purchase 89,931 shares of
State Petroleum common stock, par value, $0.001 per share.
5. Warrant No. 5, dated December 29, 2006, issued to Xxxxx X. Xxxxx to
purchase 89,931 shares of State Petroleum common stock, par value,
$0.001 per share.
6. Warrant No. 6, dated December 29, 2006, issued to Xxxxxxx X. Xxxxxx to
purchase 14,582 shares of State Petroleum common stock, par value,
$0.001 per share.
7. Warrant No. 7, dated December 29, 2006, issued to Xxx Xxxxxx to
purchase 14,582 shares of State Petroleum common stock, par value,
$0.001 per share.
8. Warrant No. 1, dated May 30, 2007, issued to Stanford Venture Capital
Holdings to purchase 388,890 shares of State Petroleum common stock,
par value, $0.001 per share.
9. Warrant No. 2, dated May 30, 2007, issued to Xxxxxx X. Xxxxx to
purchase 89,931 shares of State Petroleum common stock, par value,
$0.001 per share.
10. Warrant No. 3, dated May 30, 2007, issued to Xxxxxxx X. Xxxxxxxxxx to
purchase 89,931 shares of State Petroleum common stock, par value,
$0.001 per share.
11. Warrant No. 4, dated May 30, 2007, issued to Xxxxxxx Pi and Xxxxxx Pi
Living Trust, u/a/d February 13, 2007 to purchase 89,931 shares of
State Petroleum common stock, par value, $0.001 per share.
12. Warrant No. 5, dated May 30, 2007, issued to Xxxxx X. Xxxxx to purchase
89,931 shares of State Petroleum common stock, par value, $0.001 per
share.
13. Warrant No. 6, dated May 30, 2007, issued to Xxxxxxx X. Xxxxxx to
purchase 14,582 shares of State Petroleum common stock, par value,
$0.001 per share.
14. Warrant No. 7, dated May 30, 2007, issued to Xxx Xxxxxx to purchase
14,582 shares of State Petroleum common stock, par value, $0.001 per
share.
15. Series A Convertible Preferred Stock
Schedule 3.5(c)
---------------
State Petroleum Other Obligations
---------------------------------
1. Mandatory redemption right of holders of State Petroleum's Series A
Convertible Preferred Stock
2. Optional redemption right of State Petroleum with respect to its Series
B Convertible Preferred Stock
3. Mandatory redemption right of holders of State Petroleum's Series B
Convertible Preferred Stock
Schedule 3.8
------------
State Petroleum Title to Properties; Absence of Liens
-----------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING ORIGINATION MATURITY
NOTE HOLDER TYPE PRINCIPAL AS OF 9/30/07 INTEREST DATE DATE COLLATERAL
---------------------------------------------------------------------------------------------------------------------------------
1. Comerica Bank Revolving Line $5,500,000.00 $4,497,524.15 8.75% 1.11.06 12.1.07 All personal property,
including A/R, inventory,
equipment and fixtures,
software, and investment
property.
---------------------------------------------------------------------------------------------------------------------------------
2. Comerica Bank Revolving Line $550,000.00 $540,000.00 8.75% 1.11.06 12.1.07 Certificates of deposit
now at Comerica
---------------------------------------------------------------------------------------------------------------------------------
3. First National
Community Bank Note $125,000.00 $31,250.00 9.00% 6.22.04 6.22.08 All cash accounts
held at FNCB
---------------------------------------------------------------------------------------------------------------------------------
4. Citizens LC $100,000.00 $99,668.39 8.75% 2.12.03 Open Personal assets of
Xxxxxx X. Xxxxxxx
---------------------------------------------------------------------------------------------------------------------------------
5. Key Finance Leasing Agreement $39,624.96 $5,508.54 0.00% 3.10.06 3.10.08 MAS 90 software
---------------------------------------------------------------------------------------------------------------------------------
6. Gold Group, LLC Master Note $138,000.00 $108,181.40 17.19% 4.5.06 1.5.11 Tankers
---------------------------------------------------------------------------------------------------------------------------------
7. Community
Bank and Trust Line of Credit $750,000.00 $750,000.00 7.07% 4.2.07 4.2.08 Certificates of
deposit at CB&T
---------------------------------------------------------------------------------------------------------------------------------
8. First Liberty Bank Note $80,750.00 $79,299.28 7.40% 8.22.07 8.22.11 Tankers
---------------------------------------------------------------------------------------------------------------------------------
9. Penstar Bank Mortgage $64,000.00 $37,304.07 8.25% 12.4.06 12.4.08 Xxxxx property
---------------------------------------------------------------------------------------------------------------------------------
10. Allied Capital Mortgage $300,000.00 $263,840.40 10.50% 12.4.06 3.31.24 Xxxxx property
---------------------------------------------------------------------------------------------------------------------------------
11. Xxxx Xxxx Mortgage Mortgage $41,759.00 $35,419.83 5.50% 12.4.06 12.8.10 Xxxxx property
---------------------------------------------------------------------------------------------------------------------------------
TOTALS $7,689,133.96 $6,447,996.06
---------------------------------------------------------------------------------------------------------------------------------
Schedule 3.10
-------------
State Petroleum Consents and Approvals
--------------------------------------
Consent of Comerica Bank
Consent of Stanford Venture Capital Holdings
Schedule 3.18
-------------
State Petroleum Real Property
-----------------------------
Xxxxx property located at Xxxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx, XX 00000.
Schedule 4.2
------------
Company Subsidiaries
--------------------
-------------------------------------------------------------------------------------------------------------------------------
STATE OF # OF AUTHORIZED # OF SHARES # OF SHARES OWNED # OF EQUITY
NAME INCORPORATION SHARES OUTSTANDING BY ANY PERSON EQUIVALENTS
-------------------------------------------------------------------------------------------------------------------------------
1. Freight Rate, Inc. Delaware 1,000 Common Stock 1,000 All issued and None.
outstanding
shares owned by
the Company
-------------------------------------------------------------------------------------------------------------------------------
2. Emmo Logic, Inc. ("Tech Sub") Delaware 10,000,000 Common Stock 1,000 All issued and 10% of all
1,000,000 Preferred Stock outstanding issued and
shares owned by outstanding
the Company shares of common
stock reserved
for management
options
-------------------------------------------------------------------------------------------------------------------------------
3. Xxxxxxxxxx Carriers, Inc. Florida 50,000,000 Common Stock 1,000 All issued and None.
10,000,000 Preferred Stock outstanding
shares owned by
the Company
-------------------------------------------------------------------------------------------------------------------------------
4. Commodity Express
Transportation, Inc. Delaware 1,000 Common Stock 1,000 All issued and None.
1000 Preferred Stock outstanding
shares owned by
the Company
-------------------------------------------------------------------------------------------------------------------------------
5. Power2ship Intermodal, Inc. Delaware 1,000 Common Stock 1,000 All issued and None.
1000 Preferred Stock outstanding
shares owned by
the Company
-------------------------------------------------------------------------------------------------------------------------------
6. Commodity Express Brokerage, Inc. Florida 50,000,000 Common Stock 1,000 All issued and None.
10,000,000 Preferred Stock outstanding
shares owned by
the Company
-------------------------------------------------------------------------------------------------------------------------------
Schedule 4.3
------------
Company Equity Investments
--------------------------
None.
Schedule 4.6(b)
---------------
Company Options, Warrants, etc.
-------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Granted Board Option
Number in Approved Can- Options Date VESTED Strike Price Option Exp.
Name of Options Sep '06 in Oct '07 celled Expired Total Issued DATE (Post-Merger) Date
----------------------------------------------------------------------------------------------------------------------------------
F Xxxxxx 6,000,000 6,000,000 11/16/2006 11/16/2006 0.025 11/16/2011
----------------------------------------------------------------------------------------------------------------------------------
F Xxxxxx 5,000,000 5,000,000 11/5/2007 11/5/2007 0.025 11/5/2011
----------------------------------------------------------------------------------------------------------------------------------
O Neiman 6,000,000 6,000,000 12/4/2006 12/4/2006 0.025 12/4/2011
----------------------------------------------------------------------------------------------------------------------------------
X. Xxxxxxxxxx 5,000,000 5,000,000 9/25/06 9/25/06 0.025 9/25/2011
----------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxxx 2,000,000 2,000,000 10/23/2006 ovr 2 yrs 0.025 10/23/2011
----------------------------------------------------------------------------------------------------------------------------------
Xxx Xxxxxxxx 1,500,000 1,500,000 10/23/2006 ovr 2 yrs 0.025 10/23/2011
----------------------------------------------------------------------------------------------------------------------------------
Xx Xxxxxx 1,000,000 1,000,000 10/23/2006 ovr 2 yrs 0.025 10/23/2011
----------------------------------------------------------------------------------------------------------------------------------
Xxxx Walk, Jr. 1,000,000 1,000,000 10/23/2006 ovr 2 yrs 0.025 10/23/2011
----------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxx 1,000,000 1,000,000 10/23/2006 ovr 2 yrs 0.025 10/23/2011
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxx 350,000 350,000 10/23/2006 ovr 2 yrs 0.025 10/23/2011
----------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxx 350,000 350,000 10/23/2006 ovr 2 yrs 0.025 10/23/2011
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxx 350,000 350,000 10/23/2006 ovr 2 yrs 0.025 10/23/2011
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx 250,000 250,000 10/23/2006 ovr 2 yrs 0.025 10/23/2011
----------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxx 250,000 250,000 10/23/2006 ovr 2 yrs 0.025 10/23/2011
----------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxx 200,000 200,000 10/23/2006 ovr 2 yrs 0.025 10/23/2011
----------------------------------------------------------------------------------------------------------------------------------
Xxxxx New 200,000 200,000 10/23/2006 ovr 2 yrs 0.025 10/23/2011
==================================================================================================================================
Xxxxx Xxxxxx 132,417 132,417 5/2/2005 5/2/2005 $0.25 5/2/2008
----------------------------------------------------------------------------------------------------------------------------------
X. Xxxxxxx 50,000 50,000 10/4/2004 2/3/2005 $0.38 2/3/2008
----------------------------------------------------------------------------------------------------------------------------------
Xxx Xxxxxxxx 50,000 50,000 3/1/2005 3/1/2005 $0.38 2/28/2008
----------------------------------------------------------------------------------------------------------------------------------
Various Employees 54,000 (25,000) 29,000 12/23/2005 12/23/2005 $0.15 12/23/2007
----------------------------------------------------------------------------------------------------------------------------------
Xxx Xxxxx 13,242 13,242 3/1/2005 12/1/2005 $0.38 12/1/2007
----------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxxxxxxx 12,500 12,500 1/13/2005 1/13/2005 $0.38 1/13/2008
----------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxxxxxxx 12,500 12,500 1/13/2005 1/13/2006 $0.38 1/13/2008
----------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxx 12,500 12,500 1/13/2005 1/13/2005 $0.38 1/13/2008
----------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxx 12,500 12,500 1/13/2005 1/13/2006 $0.38 1/13/2008
----------------------------------------------------------------------------------------------------------------------------------
Total 349,659 25,450,000 5,000,000 (25,000) - 30,774,659
----------------------------------------------------------------------------------------------------------------------------------
Schedule 4.13
-------------
Company Title to Properties; Absence of Liens
---------------------------------------------
The following obligations are secured by liens on certain assets of the Company:
Outstanding Balance Maturity Interest Conversion Liens/
Description Lender as of 10/31/2007 Date Rate Price Collateral
--------------------------------------------------------------------------------------------------------------------------------
Secured
convertible
debentures: Various individuals 537,000.00 12/31/2006 & 14.25% $ 0.2673 First lien on all
6/30/07 Company assets
excluding assets
required as
collateral for
CXT line of credit
and for CXT equipment
financing for which
lender has a
secondary lien
Nutmeg/Mercury Fund, 200,000.00 6/30/2007 (1) 14.25% $ 0.0250 First lien on all
L.L.L.P. Company assets
excluding assets
required as
collateral for
CXT line of credit
and for CXT equipment
financing for which
lender has a
secondary lien
Xxxx Xxxxxxx 60,000.00 6/30/2007 14.25% $ 0.0250 First lien on all
Company assets
excluding assets
required as
collateral for
CXT line of
credit and for
CXT equipment
financing for
which lender has a
secondary lien
--------------------------------------------------------------------------------------------------------------------------------
Convertible
Promissory
Note Xxxxxxx X. Xxxxxxx 350,000.00 1/15/2008 16.00% $0.0307175 Primary or
secondary lien
on all the
Company's assets
excluding the assets
owned by Xxxxxxxxxx
Carriers, Inc.
and its subsidiaries
--------------------------------------------------------------------------------------------------------------------------------
Outstanding Balance Maturity Interest Conversion Liens/
Description Lender as of 10/31/2007 Date Rate Price Collateral
--------------------------------------------------------------------------------------------------------------------------------
Secured convertible
debentures (assigned
by Cornell Capital
Partners, LP): The Amber Capital Fund, Ltd. 100,000.00 1/15/2008 16.00% $ 0.0250 First lien on
all Company assets
excluding assets
required as
collateral for
CXT line of credit
and for CXT
equipment financing
for which
lender has a
secondary lien
Xxxxxx Xxx-Nun Xxxxxx 102,000 1/15/2008 16.00% $ 0.0250 First lien on
all Company assets
excluding assets
required as
collateral for
CXT line of credit
and for CXT equipment
financing for which
lender has a
secondary lien
Xxxxxx X. Xxxxxx 101,397 1/15/2008 16.00% $ 0.0250 First lien on
all Company assets
excluding assets
required as
collateral for
CXT line of
credit and for
CXT equipment
financing for
which lender has a
secondary lien
--------------------------------------------------------------------------------------------------------------------------------
Secured
Promissory
Notes: The Black Diamond Fund, LLLP 1,250,000.00 2/8/2008 16.00% n/a 100,000 Shares of
Series I Preferred
Stock and a
Primary or secondary
lien on all the
Company's assets
excluding the assets
owned by Xxxxxxxxxx
Carriers, Inc. and
its subsidiaries
RAHFCO Funds LP 200,000.00 1/15/2008 16.00% n/a Primary or secondary
lien on all the
Company's assets
excluding the assets
owned by Xxxxxxxxxx
Carriers, Inc.
and its subsidiaries
Xxxx Xxxxxx 100,000.00 1/15/2008 16.00% n/a Primary or secondary
lien on all
the Company's
assets excluding
the assets
owned by Xxxxxxxxxx
Carriers, Inc.
and its subsidiaries
Outstanding Balance Maturity Interest Conversion Liens/
Description Lender as of 10/31/2007 Date Rate Price Collateral
--------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxxxx 100,000.00 1/15/2008 16.00% n/a Primary or secondary
lien on all
the Company's
assets excluding
the assets
owned by Xxxxxxxxxx
Carriers, Inc.
and its subsidiaries
Xxxxxxx Xxxxxxxxx 45,000.00 (2)
--------------------------------------------------------------------------------------------------------------------------------
Equipment
Financing
for CXT Commercial Credit Group, Inc. 108,661.24 8/5/2010 10.90% n/a (4) 2002 Freightliner
Trucks
Equipment
Financing
for CXT Commercial Credit Group, Inc. 95,578.23 10/1/2010 11.00% n/a (3) 2003 Freightliner
Trucks
Equipment
Financing Branch Banking & Trust
for CXT (BB&T) 36,615.76 12/5/2008 Prime + 1% n/a (5) 2000 International
Trucks
(1) Upon notice of default, conversion price becomes 25% of market price.
(2) Waiting on documents from investor
Schedule 4.15
-------------
Company Intellectual Property
-----------------------------
The Company owns the entire right, title and interest, for all countries in and
to certain inventions relating to:
"Dynamic and Predictive Information System and Method for Shipping
Assets and Transport" described in an application for Letters Patent of
the United States, Application Serial No. 11/151,963 identified as
Attorney Docket No. 6974-01, which is a patent application filed on
June 14, 2005, by Fleit, Kain, Gibbons, Xxxxxx & Bongini P.L, and the
invention(s) and improvement(s) set forth therein, and any and all
continuations, continuations-in-part, divisional, and renewals of and
substitutes for said application for said Letters Patent, and all the
rights and privileges under any and all letters patent that may be
granted therefore in any country, and any reissues, or reexaminations,
or extensions of said Letters Patent.
Trademark Report by Xxxx Printed: 11/6/2007 Page 1
COUNTRY REFERENCE# FILED APPL# REGDT REG# STATUS CLASSES
------- ---------- ----- ----- ----- ---- ------ -------
Next Action Due (Current)
-------------------------
MOBILEMARKET
CANADA 5036.T006 12/14/2004 1,241,634 PENDING
12/14/2007 ALLOW DT STATUS CHK
UNITED STATES 5036.T003 76/598,272 10/25/2005 3,008,355 REGISTERED 39,35
10/25/2010 0/00 XXXXXX XXXXXXXX
X0X
XXXXXX XXXXXX 0000.X000 12/15/2005 78/774,554 ABANDONED 035
P2S and Design
CANADA 5036.T005 12/14/2004 1,241,632 PENDING 35
12/14/2007 ALLOW DT STATUS CHK
UNITED STATES 5036.T002 6/15/2004 76/597,353 7/19/2005 2,969,658 REGISTERED 35
7/19/2011 AFFIDAVIT OF USE
POWER2SHIP
UNITED STATES 5036.T008 12/15/2005 78/774,514 11/7/2006 3,168,429 REGISTERED 035
11/7/2011 8/15 PERIOD COMMENCE
POWER2SHIP and Design
CANADA 5036.T004 12/14/2004 1,241,633 PENDING 35
12/14/2007 ALLOW DT STATUS CHK
UNITED STATES 5036.T001 6/15/2004 76/597,346 7/19/2005 2,969,657 REGISTERED 35
7/19/2011 AFFIDAVIT OF USE
END OF REPORT TOTAL ITEMS SELECTED = 8
Schedule 4.17
-------------
Company Consents and Approvals
------------------------------
None.
Schedule 4.19
-------------
Company Taxes
-------------
The Company and Subsidiaries has not filed its June 2006 consolidated Federal
income tax return or its combined Florida income tax return.
All entities are on extension for filing their respective June 2007 Federal and
state income tax returns until March 15, 2008.
There are no other exceptions to the representations and warranties in Section
4.19.
Schedule 4.22
Broker Fees
-----------
As provided for in a Corporation Advisory Agreement by and between the Company
and SLG dated September 17, 2007, SLG shall be entitled to a Transaction Fee
equal to 5% of the Consideration paid to the shareholders of State Petroleum.
The Transaction Fee shall be paid to SLG in common shares of the Company or
warrants of $0.001 per share with cashless exercise rights, at the sole option
of SLG.
Schedule 5.1(f)
---------------
Company Debt
------------
The following obligations are past due and may need to be re-financed at any
time:
Outstanding
Balance Maturity Interest Conversion Liens/
Description Lender as of 10/31/2007 Date Rate Price Collateral
--------------------------------------------------------------------------------------------------------------------------------
Secured convertible
debentures: Various individuals 537,000.00 12/31/2006 & 14.25% $ 0.2673 First lien on all
6/30/07 Company assets
excluding
assets required
as collateral for
CXT line of credit
and for CXT equipment
financing for which
lender has a
secondary lien
Nutmeg/Mercury
Fund, L.L.L.P. 200,000.00 6/30/2007(1) 14.25% $ 0.0250 First lien on all
Company assets
excluding assets
required
as collateral for
CXT line of credit
and for CXT equipment
financing for which
lender has a
secondary lien
Xxxx Xxxxxxx 60,000.00 6/30/2007 14.25% $ 0.0250 First lien on all
Company assets
excluding assets
required
as collateral for
CXT line of credit
and for CXT equipment
financing for which
lender has a
secondary lien
--------------------------------------------------------------------------------------------------------------------------------
Convertible
Promissory Note Lone Star Holdings
Partnership, LP 175,000.00 6/30/2006 8.00% $ 0.2500 None
--------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxxxx 45,000.00 (2)
(1) Upon notice of default, conversion price becomes 25% of market price.
(2) Waiting on documents from investor
Schedule 5.12
-------------
Officers and Directors of the Company
-------------------------------------
Officers
--------
President/Chief Executive Officer....................................... Xxxxxx X. Xxxxxxx
Executive Vice President, Chief Financial Officer,
and Treasurer and Assistant Secretary................................. Xxxxxx Xxx Earyes, CPA
Executive Vice President/Secretary ..................................... Xxxxx Xxxxxx
Directors
---------
1 Xxxxxx X. Xxxxxxx
2. X. Xxxx Xxxxxxxx
3. Xxxxx Xxxxxx
4. Xxxxxxx Xxxxx
Schedule 6.1(d)
---------------
Employment Agreement and Consulting Agreement Parties
-----------------------------------------------------
Employment Agreement Parties
----------------------------
1. Xxxxxx X. Xxxxxxx
2. Xxx Xxxxxxxxxx, Xx.
3. Xxxxx Xxxxxx
4. Xxxxxx Xxx Xxxxxx
5. Others as may be determined
Consulting Agreement Parties
----------------------------
1. Xxxxxx Xxxxxxxxx
2. Others as may be determined
Schedule 6.1(e)
---------------
Fuel Distributorship Agreement Parties
--------------------------------------
1. BB&O Management Company for the premise located at Route 6 Business,
Xxxxx, Pennsylvania
2. BB&O Management Company for the premise located at 00 Xxxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx
3. BB&O Management Company for the premise located at 000 Xxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxx Xxx., Xxxxxxxxxxxx
