0001142207-01-500037.txt : 20011009 0001142207-01-500037.hdr.sgml : 20011009 ACCESSION NUMBER: 0001142207-01-500037 CONFORMED SUBMISSION TYPE: SB-2 PUBLIC DOCUMENT COUNT: 30 FILED AS OF DATE: 20010926 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLDWIDE PETROMOLY INC CENTRAL INDEX KEY: 0000928375 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-CHEMICALS & ALLIED PRODUCTS [5160] IRS NUMBER: 841125214 STATE OF INCORPORATION: CO FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SB-2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-70176 FILM NUMBER: 1744843 BUSINESS ADDRESS: STREET 1: 12600 DEERFIELD PARKWAY STE 100 CITY: ALPARETETA STATE: GA ZIP: 77056 BUSINESS PHONE: 7138925823 MAIL ADDRESS: STREET 1: 12600 DEERIFELD PARKWAY STE 100 CITY: ALPHARETTA STATE: GA ZIP: 77056 FORMER COMPANY: FORMER CONFORMED NAME: OGDEN MCDONALD & CO DATE OF NAME CHANGE: 19940812 SB-2 1 sb2.txt SB-2 REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on September 26, 2001 Registration No. ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------------------------------------------------------- FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------------------------------------------------------------- Worldwide PetroMoly, Inc. (Exact name of registrant as specified in charter) Colorado 4832 84-1125214 (State or other (Primary Standard Industrial (IRS Employer jurisdiction of incorporation Classification Code Number) Identification or organization) Number) 12600 Deerfield Parkway, Suite 100 Alpharetta, Georgia 30004 (678) 762-3295 (Address, including zip code, and telephone number, including area code, of registrant's principal executive office) Robert S. Vail Chief Financial Officer 12600 Deerfield Parkway, Suite 100 Alpharetta, Georgia 30004 (678) 762-3295 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Melissa McMorries, Esq. James W. Maxson, Esq. Paul, Hastings, Janofsky & Walker LLP 600 Peachtree Street, NE Suite 2400 Atlanta, GA 30308 (404) 815-2400 Approximate date of proposed sale to the public: From time to time after the effective date of this Registration Statement as per the terms of the Equity Line of Credit Agreement If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. [X] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE ==================================== ====================== ================== ====================== ==================== Proposed Proposed Maximum Maximum Title of each Class of Amount to be Offering Price Aggregate Amount of Securities to be Registered Registered Per Share Offering Price Registration Fee ------------------------------------ ---------------------- ------------------ ---------------------- -------------------- Common Stock, 200,000,000(1) $0.10(1) $20,000,000(2) $5,000 no par value per share Common Stock, 175,000 $0.10(1) $ 17,500 $ 4.38 no par value per share, underlying warrants(3) ==================================== ====================== ================== ====================== ==================== ------------------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the amount of the registration fee pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based upon the average of the closing bid and asked priced for our common stock $0.10 as reported on the Over the Counter Bulletin Board on September 21, 2001. (2)This represents the maximum purchase price that Grenville Financial, Ltd. is obligated to pay us under the equity line of credit agreement. (3) These shares of Common Stock are issuable upon the exercise of warrants issued to Grenville Financial, Ltd. The exercise price will be 110% of the bid price on the trading day immediately preceding the execution of the equity line agreement. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. PROSPECTUS 200,175,000 Shares Worldwide PetroMoly, Inc. Common Stock This prospectus will be used in connection with the resale by Grenville Financial, Ltd., the selling shareholder, of up to 200,000,000 shares of our common stock that may be issued by us to the selling shareholder pursuant to an equity line of credit agreement. This prospectus is also registering the resale of 175,000 shares of our common stock issuable upon exercise of warrants issued to Grenville Financial, Ltd. The shares may be sold from time to time for the account of Grenville Financial, Ltd. We will receive no proceeds from the sale of the shares by Grenville. We will receive cash upon Grenville's purchase of the shares from us as described below and equal to the amount of the exercise price of the warrants issued to Grenville, if it chooses to exercise its warrants. The price at which the common stock will be sold by us to Grenville will be a percentage of the volume weighted average daily price of our common stock price for each trading day in the twenty-day valuation period provided for in the equity line agreement. The percentage of discount at which we sell our stock to Grenville will depend upon the amounts that we draw down under the equity line agreement: o for draw downs up to an aggregate of $2,000,000, we will sell our shares to Grenville at a price equal to 92% of our common stock's volume weighted average daily price; o for draw downs over $2,000,000 and up to an aggregate of $6,000,000, we will sell our shares to Grenville at a price equal to 93% of our common stock's volume weighted average daily price; and o for draw downs over $6,000,000 and up to an aggregate of $20,000,000, we will sell our shares to Grenville at a price equal to 94% of our common stock's volume weighted average daily price. When we sell our common stock to Grenville, we will receive the sale price, minus the fees paid to our placement agents, and finder's fee paid to Grenville's placement agent aggregating 7% of the gross proceeds. We are also required to issue warrants for our common stock to our placement agents as set forth in the "Equity Line Agreement" section of this prospectus beginning on page 10. Grenville Financial, Ltd. is an "underwriter" within the meaning of the Securities Act of 1933 in connection with their resale of our common stock. Our common stock is traded in the over-the-counter market on the NASD "Over the Counter Bulletin Board" under the symbol "MOLY." The closing bid price of our common stock on September 25, 2001 was $.09 per share. There is only a limited market for our common stock and, therefore, Grenville may have difficulty selling our shares. THE PURCHASE OF THE COMMON STOCK CARRIES WITH IT A HIGH DEGREE OF RISK, SUCH AS LOSS OF THE ENTIRE PURCHASE PRICE. SEE "RISK FACTORS" BEGINNING ON PAGE 5. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Prospectus dated September __, 2001. TABLE OF CONTENTS PROSPECTUS SUMMARY...........................................................1 SELECTED CONSOLIDATED FINANCIAL DATA.........................................3 RISK FACTORS.................................................................5 FORWARD LOOKING STATEMENTS...................................................9 EQUITY LINE AGREEMENT.......................................................10 USE OF PROCEEDS.............................................................12 DETERMINATION OF OFFERING PRICE.............................................12 DILUTION....................................................................12 CAPITALIZATION..............................................................13 SELLING SECURITY HOLDER.....................................................13 PLAN OF DISTRIBUTION........................................................14 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS............................................................15 SECURITY OWNERSHIP OF MANAGEMENT............................................16 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.............................17 EXECUTIVE COMPENSATION......................................................18 DESCRIPTION OF SECURITIES...................................................19 HISTORY.....................................................................20 DESCRIPTION OF BUSINESS.....................................................20 ADDITIONAL TRANSACTIONS.....................................................25 LEGAL PROCEEDINGS...........................................................25 MANAGEMENT'S DISCUSSION AND ANALYSIS........................................26 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............................29 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS....................30 DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITY...............................................30 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.....................................31 i PROSPECTUS SUMMARY The following summary may not contain all the information that is important to you. You should carefully review the information appearing elsewhere in this prospectus, in particular the "Risk Factors" section and the Consolidated Financial Statements and Notes thereto. The Summary Consolidated Financial Data is at the end of the prospectus summary. The Company Until the merger between its subsidiary PetroMerger, Inc. and Small Town Radio, Inc., Worldwide PetroMoly, Inc. was engaged in the business of manufacturing, marketing and distributing a line of engine oil additives designed to enhance and maintain engines. Worldwide PetroMoly Inc.'s lubricant business was operated entirely out of its wholly-owned subsidiary, Worldwide PetroMoly Corporation. Worldwide PetroMoly, Inc. was unable to create a sustained commercial market for its lubricant products, and Worldwide PetroMoly Corporation incurred significant and on-going losses. In March 2001, Small Town Radio, Inc. and Worldwide PetroMoly, Inc. entered into a merger agreement which became effective on June 1, 2001. In the merger, Small Town Radio, Inc. merged with PetroMerger, Inc., a wholly-owned subsidiary of Worldwide PetroMoly, Inc. The holders of Small Town Radio, Inc.'s common stock now own approximately 75% of the common stock of Worldwide PetroMoly, Inc. On June 7, 2001 Worldwide PetroMoly, Inc. completed the sale of Worldwide PetroMoly Corporation to Mr. Gilbert Gertner, the former Chairman of the Board of Directors of Worldwide PetroMoly, Inc., as contemplated in the merger agreement. For more information on the sale of Worldwide PetroMoly Corporation, see "Additional Transactions" on p. 25. Small Town Radio, Inc., now a wholly-owned subsidiary of Worldwide PetroMoly, Inc., was incorporated in the State of Georgia on March 13, 2000. From the date of its incorporation, Small Town Radio, Inc.'s founding shareholders have investigated and developed a plan of operation pursuant to which Small Town Radio will acquire and operate radio stations in geographically contiguous, small, non-rated markets, initially located in rural areas of Southeast. Until our regular annual shareholders' meeting, we will retain the name Worldwide PetroMoly, Inc. in our charter, but will conduct our business under the name of our wholly-owned subsidiary, Small Town Radio, Inc. Our address is 12600 Deerfield Parkway, Suite 100, Alpharetta, Georgia 30004, and our telephone number is (678) 762-3295. The Offering On September 25, 2001, we entered into a private equity line of credit agreement with Grenville Financial, Ltd. for the issuance and sale, from time to time, of shares of our common stock. This equity line of credit agreement establishes what is sometimes termed an equity line of credit or an equity draw down facility. Under this arrangement, we, at our sole discretion, may make up to 24 draw down requests over a two year period, pursuant to which Grenville Financial, Ltd. is obligated to purchase up to $20,000,000 of our common stock from us at prices that will vary based on the market price of our common stock, but will always be at a percentage below the market price of our common stock. We will receive no proceeds from Grenville Financial, Ltd.'s resales of our common stock under this prospectus. Shares of common stock offered pursuant up to 200,000,000 to the equity line agreement by Grenville Financial, Ltd., the selling shareholder Shares of common stock offered upon the 175,000 exercise of warrants by Grenville Financial, Ltd., the selling shareholder Offering price To be determined at the time of sale by Grenville Financial, Ltd. Common stock outstanding 160,800,859 1 Use of proceeds We will not receive any proceeds from the shares offered by Grenville Financial, Ltd. However, we will receive the proceeds from the sale of shares to Grenville under the equity line agreement. We expect to use all of the proceeds we receive from these sales pursuant to the equity line agreement for working capital and general corporate purposes. See "Use of Proceeds" on p. 12. Dividend policy We currently intend to retain any future earnings to fund the development and growth of our business. Therefore, we do not currently anticipate paying cash dividends. 2 SELECTED CONSOLIDATED FINANCIAL DATA The following selected consolidated financial data should be read in conjunction with the Consolidated Financial Statements and related Notes thereto, and "Management's Discussion and Analysis" beginning on p. 26. For financial reporting purposes, the transaction constitutes a reverse acquisition due to the former Small Town Radio stockholders owning approximately 75% of the outstanding stock of the combined entity immediately following the transaction. The purchase method of accounting was utilized to record the transaction resulting in marking the assets and liabilities of Worldwide PetroMoly, Inc., the acquired entity for reporting purposes, to their fair values through an allocation of the purchase price. Any excess of purchase price remaining after the allocation of the purchase price to the assets and liabilities is recorded as goodwill and amortized over a period of time. In addition, the purchase method of accounting requires that operations of the acquired entity for reporting purposes (PetroMoly) only be reflected in the statement of operations subsequent to the date of the acquisition. For this reason, the historical statement of operations only reflects Worldwide PetroMoly, Inc. d/b/a Small Town Radio, Inc.'s operations for the short period ended June 30, 2000. The year ended June 30, 2001 reflects the operations of only Worldwide PetroMoly, Inc. d/b/a Small Town Radio, Inc. to the date of acquisition and the consolidated company's operations thereafter. The comparability of our operating results has been materially impacted by the change in the reporting entity if the reader looks at previous filings by the registrant for the year ended June 30, 2000. The year ended June 30, 2001, reflects the operations of only Small Town Radio, Inc. to the date of acquisition and the consolidated operations thereafter. The statement of operations data for the periods ending June 30, 2001and 2000 have been audited by BKD, LLP, independent auditors, and are included at the end of this prospectus. See "Management's Discussion and Analysis" beginning on p. 26. Summary Consolidated Financial Data: Statement of Operations Period From Year ended Inception to June 30, June 30, 2001 2000 -------------------- --------------- REVENUES: $ - $ - EXPENSES: Operating Expenses Organization and start-up 899,415 49,971 All other 22,140 - Interest expense 1,269 - -------------------- --------------- Net Loss (922,824) (49,971) ==================== =============== 3 Net loss per share $ (0.01) $ - Weighted average number of shares 69,844,439 51,733,930 Balance Sheet ------------- Total Assets $ 17,263 $ - Total liabilities 974,571 49,971 Deficit accumulated during the development stage (972,795) (49,971) Stockholders' Deficit (957,308) (49,971) Total liabilities and stockholders' equity $ 17,263 $ - 4 RISK FACTORS A purchase of our common stock is subject to a number of risks. You should carefully consider the risk factors described below, together with the other information included in this prospectus and registration statement, before any shares of our common stock are purchased. Risks relating to Worldwide PetroMoly, Inc. and our business, -------------------------------------------------------------- operations and acquisition strategy. ------------------------------------ WE ARE A DEVELOPMENT STAGE COMPANY WITH VERY LIMITED OPERATING HISTORY AND HAVE RECENTLY EXPERIENCED A CHANGE OF CONTROL, WHICH MAY MAKE IT DIFFICULT FOR US TO OPERATE SUCCESSFULLY. Until the change in control of Worldwide PetroMoly, Inc. in June 2001, as described in this prospectus under the heading " Description of Business," we were, functionally, a holding company for our operating subsidiary, Worldwide PetroMoly Corporation. Subsequent to the change in control, we sold Worldwide PetroMoly Corporation and our sole remaining operating subsidiary is Small Town Radio, Inc. Small Town Radio, Inc. was incorporated on March 13, 2000; however, Small Town Radio, Inc. has had no significant operations to date, and has generated no revenue. As a practical matter, our operating history to date is so limited that it is not a useful basis for predicting our future performance. We cannot assure you that the operations of Small Town Radio, Inc., our only operating subsidiary and our sole business, will be successful. OUR ACQUISITION STRATEGY MAY FAIL FOR A NUMBER OF REASONS, INCLUDING THE UNAVAILABILITY OF SUITABLE ACQUISITION CANDIDATES OR OUR INABILITY TO OBTAIN ADEQUATE FINANCING. We intend to pursue growth through the acquisition of individual radio stations in small, generally non-rated markets. Currently, we only have a tentative agreement for the purchase of four radio stations in Southwest Georgia. This acquisition is contingent upon, among other things, sufficient financing to pay the purchase price, which we currently do not have. We cannot predict whether we will be successful in pursuing acquisition opportunities or what the consequences of these acquisitions will be. We are pursuing other acquisition opportunities; however, other than the four stations noted above, we currently have no commitments to acquire any specific station or material assets. Also, while we have had limited success thus far in identifying appropriate acquisition candidates, we cannot give assurances that we will be able to continue to do so. In order to meet our requirements as an appropriate acquisition candidate, a radio station must be in a small, non-rated market. We are focusing on stations that either have positive cash flow, or that we reasonably believe could have positive cash flow in the near term. There are only a limited number of radio stations in the Southeast that meet these requirements, and we may be unable to identify a sufficient number of acquisition candidates that will allow us to build the network contemplated by our business plan. Even if we are able to locate a sufficient number of radio stations that meet our requirements, we cannot guarantee that we will have sufficient financing to allow us to acquire the stations. We currently have no revenue, and no viable source of financing other than the equity line. If we are unable to locate financing, or if the equity line agreement does not yield sufficient funds, we may be unable to acquire any radio stations. Our acquisition strategy also involves numerous other risks, including negotiating definitive purchase agreements on satisfactory terms from small, and in many cases, family-owned, radio stations, and the retooling of stations from traditional delivery formats to a digital transmission environment. IN ORDER TO EXECUTE OUR ACQUISITION STRATEGY, AND TO CONVERT OUR STATIONS TO A DIGITAL AUDIO BROADCAST FORMAT, WE WILL NEED SIGNIFICANT AMOUNTS OF CAPITAL, BUT WE CURRENTLY HAVE NO RELIABLE SOURCE OF FINANCING. If consummated, the acquisition of the radio stations that we hope to acquire will require substantial capital. We estimate that we will have significant capital requirements for the remainder of 2001, including approximately $3-4 million to acquire a sufficient number of stations to begin to build our network. Additionally, we plan to convert all radio stations that we acquire from a traditional broadcast format to digital audio broadcast, which will require a significant additional capital investment. Currently, we have not been able to secure a reliable source of financing. There is no guarantee that we will be able to obtain the financing required to fund our capital requirements. The amount of our future capital requirements will depend upon many factors, including the volume of future acquisitions as well as regulatory, technological and competitive developments in the radio broadcasting industry, and may differ materially from our current estimates. 5 BECAUSE OF OUR LIMITED OPERATIONS AND THE FACT THAT WE ARE CURRENTLY GENERATING NO REVENUE, WE ARE UNABLE TO SERVICE OUR DEBT OBLIGATIONS. We currently have approximately $120,000 in debt pursuant to promissory notes issued by us. We are presently unable to meet our interest obligations under these notes. We are also trying to secure additional debt financing by borrowing money from a bank, but have not yet succeeded in doing so. Our ability to satisfy our current debt service obligations, and any additional obligations we might incur will depend upon our future financial and operating performance, which, in turn, are subject to prevailing economic conditions and financial, business, competitive, legislative and regulatory factors, many of which are beyond our control. If our cash flow and capital resources continue to be insufficient to fund our debt service obligations, we may be forced to reduce or delay planned acquisitions, expansion and capital expenditures, sell assets, obtain additional equity capital or restructure our debt. We cannot assure you that our operating results, cash flow and capital resources will be sufficient for payment of our debt service and other obligations in the future. THE BUSINESS OF OPERATING RADIO STATIONS IS SUBJECT TO MANY DIFFERENT VARIABLES OUTSIDE OF OUR CONTROL, ANY OF WHICH COULD HAVE AN ADVERSE IMPACT ON OUR ABILITY TO SUCCESSFULLY OPERATE OUR BUSINESS. As an owner and operator of radio stations, our operations are subject to numerous variables outside of our control, many of which could have a material adverse effect upon our financial performance. These variables include economic conditions, both generally and specific to the radio broadcasting industry, shifts in population and other demographics, shifts in audience tastes, the level of competition for advertising dollars with other radio stations, television stations and other entertainment and communications media, fluctuations in operating costs, technological changes and innovations, changes in labor conditions; and changes in laws and governmental regulations and policies and actions of federal regulatory bodies, including the Department of Justice, the Federal Trade Commission and the Federal Communications Commission. Although we believe that if we are able to complete the acquisition of the radio stations contemplated by our business plan, we will be positioned to compete effectively in those respective markets, but we cannot assure you that any individual station will be able to maintain or increase its current audience ratings and advertising revenues, and all of the factors above could potentially adversely impact our operations. COMPETITION IN THE RADIO BROADCASTING BUSINESS IS INTENSE, AND WE MAY BE UNABLE TO SUCCEED IF OUR COMPETITORS HAVE MORE FUNDING OR BETTER MARKETING. Radio broadcasting is a highly competitive business. The radio stations that we intend to acquire if we are able to successfully execute our business plan will compete for audiences and advertising revenues within their respective markets directly with other radio stations, as well as with other media such as newspapers, magazines, cable and broadcast television, outdoor advertising and direct mail. Market share is subject to change, and any adverse change in a particular market could have a material adverse effect on the revenue of stations located in that market. Currently, the radio market in the Southeastern United States, where we plan to make our acquisitions, is not marked by intense competition; however, this is subject to change. If another radio station in one of our markets were to convert its programming format to a format similar to one of our stations, or if a new station were to adopt a format competitive with our stations, or if an existing competitor were to strengthen its operations, our stations could suffer a reduction in our listening audience and/or advertising revenue and could require increased promotional and other expenses. Additionally, our business could be adversely affected if a large player in the radio industry were to decide to adopt an acquisition plan similar to ours. A large competitor could purchase a number of stations in the markets in which we wish to compete and, as a result, drive up the prices that we must pay for stations as well as force us to allocate significantly more of our resources to promotional activities than we have currently planned. BECAUSE MOST OF OUR REVENUES WILL COME FROM THE SALE OF ADVERTISING TIME ON OUR STATIONS, OUR BUSINESS IS PARTICULARLY SUSCEPTIBLE TO DOWNTURNS IN THE ECONOMY. We expect that approximately 98% of our revenue will initially come from the sale of advertising time on our radio stations. Our broadcasting revenue would likely be adversely affected by a national recession. In fact, the slowdown in the U.S. economy over the last twelve months has already caused a decrease in spending by businesses on advertising of over 20%. If this trend continues, and the economy slows further, this decrease in spending on advertising may have an adverse impact on our business and profitability. In addition, because a substantial portion of our revenue will be derived from local advertisers, our ability to generate advertising revenue in specific markets could be adversely affected by local or regional economic downturns. For example, in some of the markets in which we plan to operate there is a single dominant employer (such as a military base, a college, university or large manufacturing plant). If a downturn in the economy results in a dominant 6 employer in one of our markets initiating layoffs, or if the U.S. Congress decides to close a military base in one of our markets, this could result in local businesses in that market reducing their advertising budgets, which, in turn, would impact our broadcast cash flow and profitability. See "Management's Discussion and Analysis". IF WE LOSE EITHER OF OUR TWO KEY PERSONNEL, WE MAY BE UNABLE TO SUCCESSFULLY EXECUTE OUR BUSINESS PLAN; BECAUSE WE CURRENTLY ONLY HAVE TWO EMPLOYEES, THEY MAY BE UNABLE TO SUCCESSFULLY MANAGE THE BUSINESS. Our business is presently managed by two key employees, the Chief Executive Officer, Donald Boyd, and the Chief Financial Officer and Chairman of the Board of Directors, Robert Vail. If we lose either of Messrs. Boyd or Vail, it could have a material adverse effect on our operations, and our ability to execute our business plan might be negatively impacted. We have entered into employment agreements with both of Messrs. Boyd and Vail, which include provisions restricting their ability to use our confidential information should they leave the company. However, Messrs. Boyd and Vail may leave the company if they choose to do so, and we cannot guarantee that they will not choose to do so, or that we would be able to hire similarly qualified executives if either of them should choose to leave. Additionally, the acquisition of radio stations is critical to our success and management will need to devote the majority of its time to negotiating, closing and then operating these acquisitions. This will result in the diversion of management's attention from other business concerns and could affect our ability to manage other aspects of our business. We cannot assure you that our management will be able to manage effectively the resulting business or that such acquisitions will benefit the company. THERE MAY BE CHANGES IN THE LAWS GOVERNING THE ABILITY OF OWNERS AND OPERATORS OF RADIO STATIONS TO OWN LARGE NUMBERS OF STATIONS IN THE SAME OR CONTIGUOUS MARKETS. The Telecommunications Act of 1996 permits consolidated ownership of radio broadcasting stations in the markets in which we plan to operate. The changes in the law regarding ownership of radio stations contained in this act permitted us to create a business plan based on the ownership of several stations in the same and contiguous markets. There has recently been a change in the U.S. presidency, and there are some in Congress who would like to change the law to impose more limited ownership rules. We have no way to predict whether the administration or Congress will take such action, but should this occur, our business plan and operations could be severely impacted, and we may be required to divest ourselves of stations in certain markets. IT IS OUR POLICY NOT TO PAY DIVIDENDS. We have never declared or paid cash dividends on our common stock. We currently intend to retain all of our future earnings, if any, for use in our business and therefore do not anticipate paying any cash dividends on our common stock in the foreseeable future. Risks relating to approval by Federal Communications Commission of transfer of ------------------------------------------------------------------------------ broadcast licenses. ------------------- THE FEDERAL COMMUNICATIONS COMMISSION MAY NOT APPROVE OF A TRANSFER OF A LICENSE TO US, AND OTHERS MAY OBJECT TO THE TRANSFER OF LICENSES TO US. The Federal Communications Commission's rules and regulations prohibit the assignment or transfer of a broadcast license without their prior approval. In determining whether to grant approval, the Federal Communications Commission considers a number of factors pertaining to the licensee (and proposed licensee), including: o compliance with the various rules limiting common ownership of media properties in a given market; o the "character" of the licensee and those persons holding "attributable" interests in the licensee; o compliance with the regulations on alien ownership as well as compliance with other Federal Communications Commission regulations and policies. Whenever we purchase a radio station, we must obtain Federal Communications Commission consent to assign or transfer control of the broadcast license associated with that station. The application must be placed on public notice for not less than 30 days, during which time period petitions to deny or other objections to the application may be filed by interested parties, including members of the public. We cannot assure you that we will be able to comply with all Federal Communications Commission rules and regulations required to permit transfer of a license, or that it will approve the assignment or 7 transfer of a broadcast license, even if all requirements are met. Because we plan to purchase stations in small, non-rated markets where the stations may have been operating for many years in the local community with local ownership, individuals or businesses in that community may object to the assignment or transfer of the broadcast license to an entity outside of the community and file a petition or objection with the Federal Communications Commission to block assignment or transfer of a license to us. If such a petition or objection is filed, we cannot assure you that we will be able to successfully overcome the objection. EVEN IF THE FEDERAL COMMUNICATIONS COMMISSION APPROVES OF THE TRANSFER OF A LICENSE TO US, WE MAY NOT BE ABLE TO SATISFY THE ON-GOING REQUIREMENTS FOR MAINTAINING A LICENSE. Once the transfer of a broadcast license is granted, the Federal Communications Commission imposes various rules and regulations on a licensee, compliance with which is required if the business wishes to keep its broadcast license. These requirements include, indecency in broadcasting rules, requirements for public service announcements, not discriminating against certain points of view in granting air time to special interest groups or political parties and complying with foreign ownership rules. While we will try diligently to satisfy all such requirements, we cannot guarantee that we will always be able to do so, and that we will not have a license or licenses revoked. Risks relating to the equity line agreement ------------------------------------------- THE EQUITY LINE OF CREDIT AGREEMENT WILL HAVE A DILUTIVE IMPACT ON THE OWNERSHIP OF OUR COMMON STOCK, AND MAY HAVE AN ADVERSE IMPACT ON THE MARKET PRICE OF OUR COMMON STOCK. The resale of the common stock that we may issue under the equity line agreement would increase the number of our publicly traded shares, which could depress the market price of our common stock. Moreover, as all the shares we may issue under the equity line agreement would be available for immediate resale, the mere prospect of our sales under the equity line agreement could depress the market price of our common stock. Additionally, the shares of our common stock issuable under the equity line agreement will be sold to the purchaser at a discount from the then trading price immediately subsequent to our request. The issuance of shares under the equity line agreement will therefore dilute the equity interest of our existing shareholders and could have an adverse impact on the market price of our common stock. The dilution may cause our shareholders to sell their shares, which would contribute to a downward movement in the price of our common stock. WE MAY BE UNABLE TO ACCESS ALL OR PART OF OUR EQUITY LINE FACILITY UNDER THE EQUITY LINE AGREEMENT. If our stock price and trading volume fall below certain established levels, then we will not be able to draw down all $20,000,000 potentially available under the equity line agreement. The amounts that we are entitled to draw down under the equity line facility is tied to our common stock's trading volume and price. Since the change in control of our company, our trading volume has been very light and the price has traded mostly in the $0.10-0.15 range. If there is not an appropriate increase in the trading volume of our common stock, we will only be able to draw down small amounts under the equity line facility. In addition, even if there is a substantial increase in the trading volume of our common stock, business and economic conditions may not make it feasible for us to make a draw down pursuant to this facility. In addition, if we are unable to keep a registration statement effective for those shares of common stock subject to the equity line agreement, or if our common stock is removed from the Over the Counter Bulletin Board, or if we experience a material adverse change to our business that is not cured within 30 days of written notice, the equity line agreement may terminate, or we may not be able to draw down any funds. OUR COMMON STOCK MAY BE REMOVED FROM THE OVER THE COUNTER BULLETIN BOARD QUOTATION SYSTEM IF WE DO NOT KEEP OUR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION CURRENT. Our common stock is quoted on the Over the Counter Bulletin Board. In order to continue to be included in the Over the Counter Bulletin Board, we must maintain current filings with the Securities and Exchange Commission. We cannot assure you that we will be able to maintain current filings with the Securities and Exchange Commission, and our failure to maintain current filings may result in our stock being removed from the Over the Counter Bulletin Board quotation system. If our common stock were removed from the Over the Counter Bulletin Board, we would not be able to draw down any additional funds under the equity line facility. Also, if our common stock is removed from listing on the Over the Counter Bulletin Board, it will become more difficult for us to raise funds through the sale of our common stock or securities convertible into our common stock. 8 FORWARD LOOKING STATEMENTS Various statements, estimates, predictions and projections stated under "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," and elsewhere in this prospectus and registration statement, are "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements appear in a number of places in this offering prospectus and registration statement and include statements regarding the intent, belief or current expectations of Worldwide PetroMoly, Inc. or our officers with respect to, among other things, the use of proceeds from the equity line agreement, the ability to successfully implement our operating and acquisition strategies, including trends affecting our business, financial condition and results of operations. While these forward-looking statements and the related assumptions are made in good faith and reflect our current judgment regarding the direction of the related business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. These statements are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond our control and reflect future business decisions which are subject to change. Some of these assumptions inevitably will not materialize, and unanticipated events will occur which will affect our results. Some important factors (but not necessarily all factors) that could affect our revenues, growth strategies, future profitability and operating results, or that otherwise could cause actual results to differ materially from those expressed in or implied by any forward-looking statement, include the following: o our ability to successfully implement our acquisition and operating strategies; o our ability to manage rapid expansion; o the success or failure of acquisitions and other opportunities that we may pursue; o changes in the availability of debt or equity capital and increases in borrowing costs or interest rates; o changes in regional and national business and economic conditions, including the rate of inflation; o changing demographics; o changes in the laws and government regulations applicable to us; o increased competition; and o the other matters referred to below or elsewhere in this prospectus and registration statement. Prospective investors are urged to carefully consider these factors in connection with the forward-looking statements. We do not intend to publicly release any revisions to any forward-looking statements contained in this offering memorandum herein to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. 9 EQUITY LINE AGREEMENT We entered into an equity line agreement on September 25, 2001, with the selling shareholder, Grenville Financial, Ltd., a British Virgin Islands corporation, pursuant to which we may issue and sell, from time to time, shares of our common stock to Grenville Financial, Ltd. in return for cash, up to an aggregate of $20,000,000. Pursuant to the requirements of the equity line agreement, we have filed a registration statement, of which this prospectus forms a part, in order to permit Grenville to resell to the public any shares that we sell to it pursuant to the equity line agreement. Grenville has committed to provide us up to $20,000,000 over a 24 month period as we request it. We are not required to make any draws under the equity line, and there is no minimum amount that we are required to draw under the line. Once every 30 calendar days, we may request a draw on the equity line facility. The draw request acts as a put notice, pursuant to which Grenville is obligated to purchase a number of our shares equal to the amount of cash we request. For instance, if we request $150,000, Grenville will be obligated to purchase that number of our shares equal in value to $150,000. The minimum amount we can request for each draw must be at least $150,000. The maximum amount we can request for each draw is limited to 10% of the volume weighted average daily price of our common stock for the twenty trading days immediately preceding the delivery of a draw request. The maximum amount we can request is also limited if we cannot make a draw down request that, individually or in the aggregate, would cause Grenville Financial, Ltd. to own more than 4.99% of our outstanding common stock at any given time. The per share dollar amount that Grenville will pay us for our common stock for each draw request will include: o an 8% discount to our common stock's average daily market price for draw requests up to the aggregate of $2,000,000; o a 7% discount to our common stock's average daily market price for draw requests, in the aggregate, between $2,000,000 and $6,000,000; o a 6% discount to our common stock's average daily market price for draw requests, in the aggregate, between $6,000,000 up to $20,000,000. If any of the following events occur during the 20 days following a draw down request, the amount of cash that we receive will be reduced by 1/20: o the volume weighted average price of our common stock is less than the minimum floor price that our Board of Directors designates pursuant to the equity line agreement; o our common stock is suspended from trading for more than three hours, in the aggregate, or if any trading day is shortened because of a public holiday; or o for each trading day in which there has been: o the receipt of any requests for additional information by the SEC during the period of effectiveness of the registration statement for amendments or supplements to the registration statement or related prospectus; o the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose; o receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the registrable securities; o the occurrence of any event that makes any statement made in the registration statement or related prospectus untrue in any material respect or that requires the making of any changes in the registration statement; and o our reasonable determination that a post-effective amendment to the registration statement would be appropriate. 10 For each draw request that we make to Grenville, we will receive cash equal to the amount of the draw request. We will then be required to pay a placement fee equal to 2% of the gross proceeds of the draw request to Pacific Resources Group, Inc., a placement fee equal to 3% of the gross proceeds of the draw request to Atlas Capital Services, Inc., and a finders fee equal to 2% of the gross proceeds to Libra Finance, S.A. (for a total of 7% of the cash from each draw request paid to these placement agents) for their services in assisting us obtain the equity line. Necessary Conditions Before Grenville Financial, Ltd. Is Obligated to --------------------------------------------------------------------- Purchase Our Shares ------------------- The following conditions must be satisfied before Grenville is obligated to purchase any of our shares of common stock pursuant to a draw down request: o a registration statement for the shares must be declared effective by the Securities and Exchange Commission and must remain effective and available as of the draw down settlement date for making resales of the common shares purchased by Grenville; o trading in our common shares must not have been suspended by the Securities and Exchange Commission or the Over the Counter Bulletin Board quotation system; o we must not have merged or consolidated with or into another company or transferred all or substantially all of our assets to another company, unless the acquiring company has agreed to honor the equity line agreement; and o no statute, rule, regulation, executive order, decree, ruling or injunction may be in effect which prohibits consummation of the transactions contemplated by the equity line agreement. Issuance of Warrants In connection with the equity line agreement, we issued a warrant to purchase up to 175,000 shares of our common stock to Grenville at the initial closing for its services in facilitating the equity line agreement. The warrant has a term from its date of issuance of three years. The exercise price of the warrant is $.077, which is 110% of the closing bid price of our common stock on the trading day immediately prior to the execution of the equity line agreement. Grenville is under no obligation to exercise this warrant. We are also required to issue warrants to Pacific Resources Group, Inc. and Atlas Capital Services, Inc., our placement agents, equal to 2% and 3%, respectively, of the shares purchased by Grenville pursuant to each draw request. The warrants that we issue to Pacific Resources Group, Inc. and Atlas Capital Services, Inc. will exercisable for a period of five years with an exercise price equal to the per share price paid by Grenville pursuant to each draw request. The warrants issuable to our placement agents are not being registered for resale in this registration statement and prospectus. 11 USE OF PROCEEDS We will not receive any proceeds from Grenville's sale of our shares. However, we will receive the proceeds from any sale of our common stock by us to Grenville under the equity line agreement described in this prospectus. We expect to use substantially all the net proceeds that we receive from our sale of shares to Grenville for general corporate purposes, including working capital, for acquisition of our network of radio stations and to design and build a studio facility in Atlanta, Georgia. Initially, the majority of the proceeds will go toward the acquisition of the radio broadcast stations that will comprise our network. Many of the stations that we plan to acquire are "mom and pop" operations located in the Southeastern United States. The amounts we actually expend for working capital and other purposes after we complete our initial acquisitions may vary significantly and will depend on a number of factors including the actual net proceeds received, the amount of our future revenues and other factors described under "Risk Factors." Accordingly, we will retain broad discretion in the allocation of the net proceeds. DETERMINATION OF OFFERING PRICE Our common stock offered by this prospectus may be offered for sale by Grenville from time to time in transactions on the Over the Counter Bulletin Board quotation system, in negotiated transactions, or otherwise, or by a combination of these methods, at fixed prices, which may be changed, at market prices at the time of the sale, at prices related to market prices or at negotiated prices. As such, the offering price is indeterminate as of the date of this prospectus. DILUTION The deficit in tangible net book value of Worldwide PetroMoly, Inc. as of June 30, 2001 was approximately a negative $957,000 or ($.006) per share of Common Stock. The pro forma deficit in tangible book value per share represents our total tangible assets less our total liabilities at June 30, 2001, divided by, 160,800,859, the number of shares of our common stock outstanding at September 17, 2001. After giving effect to the issuance of 200,000,000 shares, the maximum number estimated to be issued, our pro forma tangible net book value as of June 30, 2001 would have been a positive $17,042,692 or $.058 per share. This represents an immediate increase in pro forma net tangible book value per share of approximately $.064 to existing stockholders, and an immediate dilution of about $.092 per share to new investors. Assumed public offering price per share $ 0.10 Pro forma net tangible book value per share as of June 30, 2001 $ (0.006) Increase in net book value per share attributable to new investors $ 0.051 Adjusted pro forma net tangible book value after the offering $ 0.045 Dilution per share to new investors $ (0.055) The following table summarizes, on a pro forma basis as of June 30, 2001, the number of shares of our common stock purchased from us, the total consideration paid to us, and the average price per share paid by existing shareholders and to be paid by Grenville Financial Ltd., assuming a constant price of $.10 per share.
TOTAL AVERAGE SHARES PURCHASED CONSIDERATION PAID PRICE NUMBER PERCENT AMOUNT PERCENT PER SHARE Existing shareholders (1) 160,800,859 54.67% $ (957,308) N/A $ (0.006) Grenville Financial Ltd. 133,333,333 45.33% $ 20,000,000 100.00% $ 0.150 -------------------------------------------------------------------------- 294,134,192 100.00% $ 19,042,692 100.00% $ 0.065 ==========================================================================
(1) Total consideration for the existing shareholders represents the total stockholders' equity at June 30, 2001. 12 CAPITALIZATION Our actual capitalization is presented in the financial statements located elsewhere in this prospectus. Adjusted capitalization reflects only the issuance of shares through this offering. Pro forma stockholders' equity at June 30, 2001, adjusted to reflect the sale of $20,000,000 of common stock would be approximately $16,363,000, regardless of the number of shares sold. The number of shares to be issued will vary depending upon the average price received for the shares. The number of shares to be issued, assuming various average prices over the 24 months during which the equity line is in place, is presented in the following table:
--------------------------------------------------------------------------------------------------------------- Average price per share $ 0.100 $ 0.125 $ 0.150 $ 0.175 $ 0.200 --------------------------------------------------------------------------------------------------------------- Number of shares issued to 200,000,000 160,000,000 133,333,333 14,285,714 100,000,000 raise $20,000,000 gross --------------------------------------------------------------------------------------------------------------- Shares outstanding at August 24, 2001 160,800,859 160,800,859 160,800,859 160,800,859 160,800,859 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Total shares issued and 360,800,859 320,800,859 294,134,192 275,086,573 260,800,859 outstanding --------------------------------------------------------------------------------------------------------------- Pro Forma stockholders' equity $16,362,692 $16,362,692 $16,362,692 $16,362,692 $16,362,692 at 6/30/01 ---------------------------------------------------------------------------------------------------------------
SELLING SECURITY HOLDER Grenville Financial, Ltd., the selling shareholder, is engaged in the business of investing in publicly traded equity securities for its own account. Grenville Financial, Ltd.'s principal offices are located at Trident Chambers, Road Town, Tortola, B.V.I. Grenville does not own any of our securities as of the date of this prospectus. Other than its obligation to purchase common shares under the equity line agreement, it has no other commitments or arrangements to purchase or sell any of our securities. There are no business relationships between Grenville and us other than as contemplated by the equity line agreement. Assuming we issued all 200,175,000 shares of our common stock to Grenville Financial, Ltd. on September 25, 2001, that would equal approximately 124% of our current issued and outstanding stock; or, 45% of our issued and outstanding stock on a fully diluted basis, assuming no other issuances were made. However, at no time may Grenville own more than 4.99% of our Common Stock. If Grenville's ownership of our Common Stock reaches 4.99%, we will be unable to make further draw requests on the equity line until it has sold a sufficient number of shares to bring it under the 4.99% ownership threshold. Neither Grenville, nor any officer, director or employee of Grenville have held any positions or offices or had material relationships with us or any of our affiliates within the past three years. If, in the future, the relationship of Grenville or any officer, director or employee of Grenville with us changes, we will amend or supplement this prospectus to update this disclosure. 13 PLAN OF DISTRIBUTION Grenville Financial, Ltd. is offering shares of our common stock for its account as statutory underwriter, and not for our account. We will not receive any proceeds from the sale of our common stock by Grenville. Grenville may be offering for sale up to 200,000,000 shares of our common shares which it may acquire pursuant to the terms of the equity line agreement more fully described under the section of this prospectus entitled "Equity Line Agreement." Grenville Financial, Ltd. may also offer for sale 175,000 shares of our common stock issuable to it upon the exercise of warrants we issued to it in connection with equity line agreement. Grenville is a statutory underwriter within the meaning of the Securities Act of 1933 in connection with such sales of common shares and will be acting as an underwriter in its resales of our common stock under this prospectus. Grenville has, prior to any sales, agreed not to effect any offers or sales of the common shares in any manner other than as specified in this prospectus and not to purchase or induce others to purchase common shares in violation of any applicable state and federal securities laws, rules and regulations and the rules and regulations of NASD. We will pay the costs of registering the shares under this prospectus, including legal fees. To permit Grenville to resell the common stock issued to it under the equity line agreement, we agreed to register those shares and to maintain that registration. To that end, we have agreed with Grenville that we will prepare and file such amendments and supplements to the registration statement and the prospectus as may be necessary in accordance with the Securities Act of 1933 and the rules and regulations promulgated thereunder, to keep it effective until the earliest of any of the following dates: o the date after which all of the shares held by Grenville or its transferees that are covered by the registration statement have been sold by Grenville or its transferees pursuant to such registration statement; o the date after which all of the shares held by Grenville or its transferees that are covered by the registration statement may be sold, in the opinion of our counsel, without restriction under the Securities Act of 1933; or o the date after which all of the shares held by Grenville or its transferees may be sold without any volume or manner limitations pursuant to Rule 144(k) under the Securities Act of 1933. Sales may be made on the Over the Counter Bulletin Board, on the over the counter market or otherwise at prices and at terms then prevailing or at prices related to the then current market price, or in negotiated private transactions, or in a combination of these methods. Grenville Financial, Ltd. will act independently of us in making decisions with respect to the form, timing, manner and size of each sale. We have been informed by Grenville that there are no existing arrangements between it and any other stockholder, broker, dealer, underwriter or agent relating to the distribution of this prospectus. Grenville Financial, Ltd. may resell shares of our common stock in one or more of the following manners: o a block trade in which the broker or dealer so engaged will attempt to sell the shares as agent, but may position and resell a portion of the block as a principal to facilitate the transaction; o purchases by a broker or dealer for its account under this prospectus; or o ordinary brokerage transactions and transactions in which the broker solicits purchases. Grenville will pay all commissions and its own expenses, if any, associated with the sale of our common stock that it acquires under the equity line agreement, other than the expenses associated with preparing this prospectus and the registration statement, and any amendments thereto, of which it is a part. 14 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The following table sets forth certain information with respect to our executive officers and directors. Officers and Directors Age Position ---------------------- --- -------- Donald Boyd 34 President Robert S. Vail 55 Chairman of Board of Directors, Chief Financial Officer William Fleming 55 Director Lauren Kahn 47 Director John McMullan 65 Director William L. Ross 55 Director Lance J. Rosmarin 39 Director Norton Cooper 68 Director ---------- Donald Boyd - Mr. Boyd is our President. Mr. Boyd is a radio station executive with 15 years experience in the radio broadcast industry. From June 1995 to June 1998, Mr. Boyd owned and operated a profitable radio station in Gainesville, Florida. From June 1998 to December 1999, Mr. Boyd was a manager with Dickey Brothers Broadcasting, Inc. Most recently, Mr. Boyd was Regional General Manager for Root Communication, where he had profit and operations responsibility for seven stations in three markets similar to the type targeted by Worldwide PetroMoly, Inc. Mr. Boyd joined the company on July 30, 2001. Robert S. Vail - Mr. Vail is our Chief Financial Officer and Chairman of the Board. Mr. Vail has been a member and Chairman of our Board of Directors since June 2001. From November 1999 to January 2001, Mr. Vail was an independent financial consultant, providing consulting services to public companies. From March 1998 to August 1999, Mr. Vail was the Chief Financial Officer of Integrated Spatial Information Solutions, Inc., a provider of consulting services in the geographical information systems industry. From December 1990 to March 1998, Mr. Vail was the Director of Administration of the Houston office of Price Waterhouse. William L. Ross, PhD - Dr. Ross has been a member of our Board of Directors since June, 2001. Dr. Ross has been in private practice as a clinical psychologist since 1978. From 1992 to the present, Dr. Ross has practiced in Fernandina Beach, Florida. In addition to his clinical experience, Dr. Ross has experience in providing management training services including executive development, recruitment evaluation and communication skills development William Fleming - Mr. Fleming is the principal at William Fleming & Associates, which has provided financial consulting services to radio stations, including emerging companies, for more than 18 years. In particular, Mr. Fleming has focused his work on smaller, emerging companies, radio entrepreneurs, and first time owners. Mr. Fleming is also a co-owner of 4 radio stations in Indiana. Mr. Fleming has been a member of our Board of Directors since June 2001. Lauren Kahn - Ms. Kahn is President, founder and owner of Media Staffing Network, which specializes in finding, placing and training candidates for the advertising, broadcast (including radio, cable, direct response, new media and outdoor and print industries). Ms. Kahn founded her business in 1993, then called Rep Temps and renamed Media Staffing Network in 1998. Ms. Kahn has over 25 years of hands-on management experience, including approximately 15 years in the radio industry. John McMullan, CPA - Since 1990, Mr. McMullan has been the CEO of Camden Real Estate Company, a family-owned real estate investment company. Mr. McMullan is a CPA in the State of Georgia, and, in addition to serving as CEO of Camden Real Estate Company, Mr. McMullan acts as a consultant to the long-term health care industry. Lance J. Rosmarin -- Mr. Rosmarin is a Member of our Board of Directors, and was our former Chief Financial and Accounting Officer, Secretary and President. From 1990 to 1993, Mr. Rosmarin was employed by Gertner, Aron, Ledet and Lewis Investments. Mr. Rosmarin served as Vice President and Secretary and was a Director of Citadel Computer Systems, Inc. (CITN) (1993-1996), as well as serving as an officer and director of several private companies. From 1993 to June 1, 2001, Mr. Rosmarin was Secretary, Treasurer and a Director of Worldwide PetroMoly Corporation, and from July 1996, Mr. Rosmarin was Chief Financial and Accounting Officer of Worldwide PetroMoly, Inc., and was its President from January 1998 to June 1, 2001. 15 Norton Cooper -- Mr. Cooper became a Director of the Company in January 1998. Since 1992, Mr. Cooper has been the Chief Executive Officer of Financial Entrepreneurs Incorporated of Las Vegas (FEI), a company engaged in strategic financial planning. Directors are elected to serve one year terms and until their earlier resignation or removal. SECURITY OWNERSHIP OF MANAGEMENT The following table sets forth, as of September 24, 2001, certain information with respect to beneficial share ownership by each of our executive officers and directors, and by all executive officers and directors as a group. Except as otherwise indicated, the shareholders listed have sole investment and voting power with respect to their shares. The amounts and percentages are based on 160,800,859 shares of common stock outstanding as of September 24, 2001.
Number of Common Shares Percent of Name and Address of Beneficial Owner Beneficially Owned Class --------------------------------------------------------------------------------------- Robert S. Vail 15,695,520 9.8% 12600 Deerfield Parkway, Suite 100 Alpharetta, Georgia 30004 --------------------------------------------------------------------------------------- Donald L. Boyd (1) 12600 Deerfield Parkway, Suite 100 Alpharetta, Georgia 30004 2,000,000 1.2% --------------------------------------------------------------------------------------- William Fleming 176 North Beacon St. Hartford, Connecticut 06105 3,899,840 2.4% --------------------------------------------------------------------------------------- John McMullan Suite 850, 100 Colony Square 1175 Peachtree St., N.E. Atlanta, Georgia 30361 4,399,840 2.7% --------------------------------------------------------------------------------------- Lauren Kahn Suite 825 150 East Huron Chicago, Illinois 60611 3,899,840 2.4% --------------------------------------------------------------------------------------- William L. Ross, PhD 28 South 10th St. Fernandina Beach, Florida 32034 3,899,840 2.4% --------------------------------------------------------------------------------------- Norton Cooper 7143 Almaden Lane Carlsbad, CA 92009 3,180,000 2.0% --------------------------------------------------------------------------------------- Lance J. Rosmarin 1300 Post Oak Blvd., Suite 1985 Houston, TX 77056 3,700,000 2.3% --------------------------------------------------------------------------------------- All officers and directors as a group 40,674,880 25.3% ---------------------------------------------------------------------------------------
(1) includes 2,000,000 shares issuable upon exercise of options. 16 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table sets forth, as of September 24, 2001, certain information with respect to beneficial share ownership by all person known to management to own more than 5% of our outstanding common stock. Except as otherwise indicated, the shareholders listed have sole investment and voting power with respect to their shares. The amounts and percentages are based on 160,800,859 shares of common stock outstanding as of September 24, 2001.
Number of Common Shares Percent Name and Address of Beneficial Owner Beneficially Owned Class --------------------------------------------------------------------------------------- Gilbert Gertner 1300 Post Oak Blvd., Suite 1985 Houston, TX 77056 24,450,000 15.2% --------------------------------------------------------------------------------------- Beachside Commons I, Inc. 401 Centre Street, 2nd Floor Fernandina Beach, Florida 32034 15,695,520 9.8% --------------------------------------------------------------------------------------- Porter Lane Investments, Inc. (1) 5255 Porter Lane Gainesville, Georgia 30506 15,109,200 9.4% --------------------------------------------------------------------------------------- Irish Investments, LLC 2413 First Avenue., Suite K-3 Fernandina Beach, Florida 32034 15,695,520 9.8% --------------------------------------------------------------------------------------- Bolling Investments, LLC (2) 15,662,600 9.7% 257 Bolling Road, N.E. Atlanta, Georgia 30305 ---------------------------------------------------------------------------------------
(1) Including personal holdings of Gerald Sullivan, sole shareholder of Porter Lane Investments. (2) Includes personal holdings (563,680 shares) of Wayne Shortridge, principal, and his pro rata share of stock held by other entities in which he has an ownership interest. 17 EXECUTIVE COMPENSATION Donald Boyd, our President, has an employment contract with Small Town Radio, Inc. for a term of two years pursuant to which he will receive annual compensation of $175,000 for his services as President. Mr. Boyd's employment contract was effective as of August 1, 2001. Pursuant to the terms of his employment contract, Mr. Boyd received options for 4,000,000 shares of our common stock, 2,000,000 of which are immediately exercisable and 2,000,000 of which will vest on July 30, 2004, but may become exercisable earlier pursuant to a schedule tied to the number of acquisitions that we make. Until we have provided medical insurance to Mr. Boyd, we will reimburse him for up to $600 a month for medical insurance expenses. Mr. Boyd will also receive a monthly automobile allowance in the amount of $600, and a one-time relocation allowance in the gross amount of $10,000. Robert S. Vail, Small Town Radio's Chief Financial Officer and Chairman of the Board, earned $15,000 per month for the period January 2001 through June 30, 2001 for consulting services provided to Small Town Radio, Inc., and following the merger, to Worldwide PetroMoly, Inc. Mr. Vail has an employment contract with Small Town Radio, Inc. for a term of two years that was effective as of August 1, 2001, pursuant to which he will receive $120,000 a year in compensation for his services as our Chief Financial Officer. Mr. Vail is entitled to receive reimbursement for reasonable temporary housing expenses for the six month period from August 1, 2001 to January 31, 2002. Mr. Vail will also receive a monthly automobile allowance in the amount of $500, and a one-time relocation allowance in the gross amount of $25,000. Summary Compensation Table --------------------------
----------------------------------------------------------------- -------------------------------------------------- Annual Compensation Long-Term Compensation ----------------------------------------------------------------- -------------------------------------------------- Awards Payouts ------------------------- -------- ---------- ------------------- --------------------------- ---------------------- Name and Principal Other Securities All Other Position Annual Restricted Underlying Comp- Compensation Stock Options/ LTIP ensation Year Salary Bonus ($) Awards SARs (Payout) ($) ($) ($) ($) (#) ($) ------------------------- -------- ---------- -------- ---------- ------------- ------------- ----------- ---------- Robert S. Vail (1) 2001 -- -- $90,000 -- -- -- -- ------------------------- -------- ---------- -------- ---------- ------------- ------------- ----------- ---------- Gilbert Gertner(2) 2001 -- -- -- -- -- -- -- ------------------------- -------- ---------- -------- ---------- ------------- ------------- ----------- ----------
(1) Mr. Vail was paid as a consultant from January 2001 through June 30, 2001. Mr. Vail did not have a written agreement for his services. (2) Mr. Gertner was the Chief Executive Officer and Chairman of the Board of Worldwide PetroMoly, Inc. prior to its acquisition of Small Town Radio, Inc. Although Mr. Gertner was entitled to $180,000 per year, and a $950 per month automobile allowance, he waived all compensation for the 2001 fiscal year. Compensation to Directors ------------------------- Messrs. Cooper and Rosmarin received 3,000,000 shares of Small Town Radio, Inc. common stock each in return for serving on our Board of Directors. These shares were converted to shares of Worldwide PetroMoly, Inc. in the merger. Messrs. McMullan, Ross and Fleming, and Ms. Kahn each received 3,899,840 shares of Small Town Radio, Inc. common stock for serving on our Board of Directors. Their shares were converted to shares of Worldwide PetroMoly, Inc. in the merger. Mr. Vail receives no additional compensation for serving on our Board of Directors, and no fees are paid to our directors for attendance at Board of Directors' meetings. We have agreed to reimburse our directors for any travel expenses incurred in connection with travel to Board of Directors' meetings. Our officers are appointed by our Board of Directors and serve at its discretion. Our bylaws provide for the indemnification of directors and officers to the fullest extent authorized, permitted or allowed by Colorado law, our state of incorporation. 18 DESCRIPTION OF SECURITIES Common Stock We are authorized to issue a total of 800,000,000 shares of no par value per share common stock. As of September 25, 2001, there were 160,800,859 shares of our common stock outstanding, held by approximately 2100 holders of record. Each holder of common stock is entitled to one vote per share in all matters to be voted on by the shareholders. Our Articles of Incorporation and bylaws do not provide for cumulative voting in elections of directors or any other matters brought before shareholder meetings. Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available for payment. See "Dividend Policy." In the event of a liquidation, dissolution or winding up of Worldwide PetroMoly, Inc., the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable. Preferred Stock Our Board of Directors is authorized by our Articles of Incorporation to issue up to 10,000,000 shares of one or more series of no par value preferred stock. No shares of preferred stock have been authorized for issuance by our Board of Directors, and we have no present plans to issue any shares. In the event that the Board of Directors issues shares of serial preferred stock, it may exercise its discretion in establishing the terms of such preferred stock. Our Board of Directors may determine the voting rights, if any, of the series of preferred stock being issued, including the right to: o vote separately or as a single class with the common stock and/or other series of preferred stock; have more or less voting power per share than that possessed by the common stock or other series of preferred stock; and o vote on specific matter presented to the shareholders or on all of such matters or upon the occurrence of any specified event or condition. If our company liquidates, dissolves or winds up, the holders of our preferred stock may be entitled to receive preferential cash distributions fixed by our Board of Directors when creating the particular preferred stock series before the holders of our common stock are entitled to receive anything. Preferred stock authorized by our Board of Directors could be redeemable or convertible into shares of any other class or series of our stock. The issuance of preferred stock by our Board of Directors could adversely affect the rights of holders of the common stock by, among other things, establishing preferential dividends, liquidation rights or voting powers. Stock Option Plans Prior to the merger, Worldwide Petromoly, Inc. had three stock option plans, the Ogden, McDonald & Company 1996 Stock Option Plan (Worldwide PetroMoly, Inc.'s predecessor), the 1999 Consulting Services Plan and Agreement, and the Year 2000 Employee and Consultant Stock and Stock Option Plan. All options have been granted under all three plans. Under the 1996 plan, there are outstanding options to purchase 393,000 shares of common stock at exercise prices ranging from $.13 per share to $1.00 per share. Under the 2000 plan, there are outstanding options to purchase 240,000 shares of common stock at exercise prices ranging from $.06 per share to $.13 per share. There is also an option for 100,000 shares for an exercise price of $1.00 that was granted outside of any of the three plans above to an employee of Worldwide Petromoly, Inc. All options granted under the 1999 plan have been exercised. In August 2001, we adopted our Stock Incentive Plan, under which 20,000,000 shares are available for award to eligible persons. As of September 18, 2001, we have awarded non-qualified options for 4,000,000 shares at $.14 per share (2,000,000 of which are vested) and has issued 1,924,183 shares as compensation to consultants. 19 HISTORY Worldwide PetroMoly, Inc., formerly known as Ogden, McDonald & Company, was incorporated under Colorado law on October 13, 1989. Ogden, McDonald & Company was originally formed for the purpose of seeking out acquisitions of properties, businesses, or merger candidates, without limitation as to the nature of the business operations or geographic location of the acquisition candidate. On July 22, 1996, Ogden, McDonald & Company completed a transaction pursuant to which the shareholders of Worldwide PetroMoly Corporation, a Texas corporation, acquired approximately 90.6% of the shares outstanding in Ogden, McDonald & Company, and Worldwide PetroMoly Corporation became a wholly owned subsidiary of Ogden, McDonald & Company. On October 11, 1996, Ogden, McDonald & Company changed its name to Worldwide PetroMoly, Inc. From July 22, 1996, until June 1, 2001, Worldwide PetroMoly, Inc., through Worldwide PetroMoly Corporation, engaged in the business of manufacturing, marketing and distributing a line of molybdenum fortified lubricant products called PetroMoly(TM), an engine oil additive designed to enhance and maintain engines. Worldwide PetroMoly, Inc.'s lubricant business was operated entirely out of Worldwide PetroMoly Corporation. Worldwide PetroMoly, Inc. was unable to create a sustained commercial market for its lubricant products, and Worldwide PetroMoly Corporation incurred significant and on-going losses. On June 1, 2001, Worldwide PetroMoly, Inc. consummated a transaction pursuant to which Small Town Radio, Inc., a Georgia corporation, was merged into a subsidiary of Worldwide PetroMoly, Inc., created for the purpose of this merger. Pursuant to this transaction, all of the outstanding shares of Small Town Radio, Inc. were exchanged for shares of Worldwide PetroMoly, Inc.'s common stock. As a result, the former shareholders of Small Town Radio, Inc. now beneficially own an aggregate of 118,467,860 shares approximately 75% of Worldwide PetroMoly, Inc.'s outstanding common stock as of the effective date of the merger. Also, and in connection with the acquisition of Small Town Radio, Inc. by Worldwide PetroMoly, Inc., on June 7, 2001 all of the share capital of Worldwide PetroMoly Corporation was sold to Mr. Gilbert Gertner, the former Chairman of the Board of Worldwide PetroMoly, Inc. See "Additional Transactions" on p. 25. Small Town Radio, Inc. is now the sole remaining subsidiary of Worldwide PetroMoly, Inc. and all of Worldwide PetroMoly, Inc.'s business is conducted through it operating subsidiary, Small Town Radio, Inc. The focus of Worldwide PetroMoly, Inc.'s business is now the acquisition and operation of radio stations, generally located in small, non-rated markets. DESCRIPTION OF BUSINESS Overview -------- Our business strategy is to secure through acquisition a significant number of radio stations in its target markets, generally smaller, less populated areas near, but not in, mid-sized and larger markets. We intend initially to acquire radio stations in rural sections of South Georgia, and then expand into additional, geographically contiguous markets in the Southeast. We believe that a network of stations in contiguous broadcast areas with two or three common programming formats will provide an advertising and listener base of significant size. We believe that acquiring radio stations in small, less populated markets represent attractive opportunities, because they are generally characterized by: o a small number of stations, few of which have professional sales staff which solicit advertising from the business community; o a greater need for radio advertising compared to the national average, especially by those businesses that need to recruit consumer transactions from nearby cities and towns; o opportunities for substantial growth in advertising revenues as national and regional retailers expand into smaller, less populated areas; o a weaker competitive environment, as compared to major metropolitan areas, comprised of small independent operators, many of whom lack the capital to produce locally-originated programming and/or to employ more sophisticated research, marketing, management and sales techniques; and o less direct format competition due to a smaller number of stations in any given market, and relative consistent listener interests such that two or three programming formats may reach a dominant share of the market. 20 These market characteristics, coupled with the opportunity to establish contiguous coverage across multiple radio station markets, create the potential for revenue growth and cost efficiencies. If we are able to obtain a reliable source of financing, we plan to acquire up to twenty stations meeting our acquisition profile by the end of 2002 and up to forty such stations by the end of 2003, however we can give no assurances that we will be able to complete these acquisitions. We plan to acquire stations which utilize both "frequency modulation" ("FM") and "amplitude modulation" ("AM"). Assuming that we are able to successfully execute our acquisition plan, we will continue to look to acquire additional geographically contiguous stations in small non-rated markets in order to build a group of stations that can be operated as a network, in order to achieve operating efficiencies and marketing leverage derived from a larger advertising customer and listener base. Currently, we only have one tentative agreement to acquire for the purchase of four radio stations in Southwest Georgia. This acquisition is contingent upon, among other things, sufficient financing to pay the purchase price, which we currently do not have. Operating Strategy. Our operating strategy is to maximize the geographical coverage of our network of radio stations, thereby increasing the number of available listeners and advertisers and, we believes consequently, broadcast revenue and cash flow. To achieve these goals, we intend to: o secure and maintain a leadership position by owning a network of stations with contiguous broadcast coverage to increase the overall size of the markets served; o coordinate programming, promotional and sales strategies among each group of local stations to enhance revenue opportunities and maximize cost efficiencies within each market; o implement a regional sales staff and marketing initiatives to maximize its share of local advertising revenue in each market, as well as across the broadcast network; o combine market research with an assessment of its competitors' vulnerabilities in order to identify significant and sustainable target audiences; o achieve a significant penetration of the listener market with the use of two or three programming formats within the network; and o centralize operating activities across the region, with programming that appeals to the collective market, while customizing local programming. Ownership of Geographically Contiguous Stations. We will attempt to secure and maintain a leadership position in the markets we serve by creating geographical signal coverage, not only in those markets in which we will own stations, but also in adjacent markets. By coordinating programming, promotional and sales strategies within each local station at the regional level, we will attempt to capture a wide demographic range of listeners, thus providing a broader appeal to advertisers. We will provide a mix of local inventory of available advertising time and spots on our network of stations. By offering both local advertising and access to adjacent markets through our network of stations, we believe that we will strengthen relationships with advertisers, and maximize the value of its advertising inventory. We also intend to develop regional programming and sales resources for our radio station network to enhance the growth potential of under-performing stations. Through consolidation into a common studio broadcasting facility, we believe that we can reduce the risks associated with the implementation of station performance improvements, such as new format launches and technical upgrades. We believe that this strategy will permit combined programming with regional appeal, while maintaining a level of localized input. We intend to achieve cost savings within a market by consolidating facilities, sales and administrative personnel, management and operating resources, such as on-air talent, programming and music research, and reducing other redundant expenses. Sales and Marketing Initiatives. We intend to maximize our share of local advertising revenue in each of our markets through sales and marketing initiatives. Because many of the radio stations that we may acquire have no dedicated or trained sales staff, we believe that we can derive significant benefits from creating or expanding the sales forces of acquired stations. We intend to maximize our revenue by utilizing sophisticated inventory management techniques to provide sales personnel with frequent price adjustments based on regional and local market conditions. We expect to strengthen relationships with some advertisers by offering on-site events staged at, and broadcast from, the advertiser's business location. 21 Targeted Programming and Promotion. To maintain or improve our position in each market, we will combine market research with an assessment of competitors' vulnerabilities in order to identify significant and sustainable target audiences. We will then tailor the programming, marketing and promotion of each radio station to maximize its appeal to the targeted audience. We will attempt to build strong markets by: o creating distinct, highly visible profiles with regional appeal for its on-air personalities, particularly those broadcasting during morning drive time, which traditionally airs between 6:00 a.m. and 10:00 a.m.; o utilizing multiple formats, which can reach a dominant portion of the population in these smaller markets; o formulating recognition for our network, in addition to the individual stations, to promote listenership and advertising leverage across the entire geographical area; and o actively participating in community events and charities. Combination of Centralized Operations and Local Presence. We believe that radio requires a local presence, both in its programming and by being active in the community. Accordingly, although much of our operations will be centralized, we will maintain a "Community Coordinator" within each market. Further, the sales staff will actively participate in the community and maintain valuable relationships within the area. From a broadcast standpoint, we intend to incorporate local news and information into our regional programming format, so that programming content will both appeal to the population within the entire region as well as provide localized content that is supportive of the station community. Source of Revenues ------------------ We expect that virtually all of our broadcast revenue will be generated from the sale of local and regional advertising for broadcast on our radio stations. We expect to receive additional revenue from the sale of national advertising, network compensation payments and other miscellaneous transactions. The major categories of advertisers include telephone companies, restaurants, fast food chains, automotive companies and grocery stores. We will use a centralized regional sales staff structure. Individual salespersons will be assigned to a listening area instead of a specific station. The sales staff will solicit advertising either directly from the local advertiser or indirectly through advertising agencies. We expect that most sales will be generated through direct solicitation of the local advertisers. We believe that we can better understand the advertiser's business needs and more effectively design advertising campaigns to sell the advertiser's products through these direct relationships. Where desired, we will produce commercials for the advertisers in our centralized studios to be located in the Atlanta area. We intend to make national sales through a firm specializing in radio advertising sales on the national level in exchange for a commission based on gross revenue. Regional sales, which we define as sales to advertisers located in regions surrounding our markets but not necessarily physically located within a market, will be handled by our regional sales staff. Depending on the programming format of a particular station, we will estimate the optimum number of advertising spots available. The number of advertisements that can be broadcast without jeopardizing listening levels is limited in part by the format of a particular station. We will strive to maximize station revenue by managing advertising inventory, and will adjust pricing based on local market conditions and the ability to provide advertisers with an effective means of reaching a targeted demographic group. Each station will have a general target level of on-air inventory. This target level may be different at different times of the day, but tends to remain stable over time. Selling activity is based on demand for the radio stations' on-air inventory and, in general, we intend to respond to this demand by varying prices rather than the target inventory level for a particular station. 22 Competition ----------- The radio broadcasting industry is highly competitive. The success of each station depends largely upon audience ratings and its share of the overall advertising revenue within its market. Stations compete for listeners and advertising revenue directly with other radio stations within their respective markets. Radio stations compete for listeners primarily on the basis of program content that appeals to a particular demographic group. Building a strong listener base consisting of a specific demographic group in a market enables an operator to attract advertisers seeking to reach those listeners. Companies that operate radio stations must be alert to the possibility of another station changing format to compete directly for listeners and advertisers. A station's decision to convert to a format similar to that of another radio station in the same geographic area may result in lower ratings and advertising revenue, increased promotion and other expenses and, consequently, lower broadcast cash flow. Factors that are material to a radio station's competitive position include management experience, the station's local audience rank in its market, transmitter power, assigned frequency, audience characteristics, local program acceptance and the number and characteristics of other radio stations in the market area. Recent changes in Federal Communications Commission policies and rules permit increased ownership and operation of multiple local radio stations. We believe that radio stations that elect to take advantage of joint arrangements such as local marketing agreements or joint sales agreements may in certain circumstances have lower operating costs and may be able to offer advertisers more attractive rates and services. Although the radio broadcasting industry is highly competitive, some barriers to entry exist. The operation of a radio broadcast station requires a license from the Federal Communications Commission, and the number of radio stations that can operate in a given market is limited by the availability of FM and AM radio frequencies allotted by the Federal Communications Commission to communities in that market, as well as by its multiple ownership rules regulating the number of stations that may be owned and controlled by a single entity. The Federal Communications Commission's multiple ownership rules have changed significantly as a result of the Telecommunications Act of 1996. Stations compete for advertising revenue with other media, including newspapers, broadcast television, cable television, magazines, direct mail, coupons and outdoor advertising. In addition, the radio broadcasting industry is subject to competition from new media technologies that are being developed or introduced, such as the delivery of audio programming by cable television systems, by satellite and by digital audio broadcasting. Digital audio broadcasting may deliver by satellite to nationwide and regional audiences, multi-channel, multi-format, digital radio services with sound quality equivalent to compact discs. The delivery of information through the Internet also could create a new form of competition. Properties and Facilities ------------------------- The types of properties required to support radio stations include offices, studios, transmitter sites and antenna sites. The transmitter and antenna sites are generally located to provide maximum market coverage. Most of our station acquisitions will include substantial land at the transmitter site, as well as facilities that have historically been used for local studio space and offices. While we expect to maintain a small office in each market for Community Coordinators and sales staff, these are expected to be modest facilities that can be maintained at nominal expense. Accordingly, we will likely sell, or lease the studio space that we acquire. With regard to the transmitter facilities, which are generally located at the tower location for each station, we intend to install the minimum studio equipment necessary to perform local broadcasting, on an emergency basis. This will give us significant flexibility while gaining operational cost advantages of consolidating studio operations at a centralized studio facility to be located in the Atlanta metropolitan area. We will own or lease substantially all of our operating equipment, consisting principally of transmitting antennae, transmitters, studio equipment and general office equipment. We currently lease approximately 500 feet of office space located at 12600 Deerfield Parkway, Suite 100, Alpharetta, Georgia 30004, which is our principal executive office. Additionally we plan to obtain or build studio space in the Atlanta, Georgia metropolitan area. Federal Regulation of Radio Broadcasting ---------------------------------------- The ownership, operation and sale of broadcast stations are subject to the jurisdiction of the FCC, which acts under authority derived from the Communications Act of 1934, as amended, and the Telecommunications Act 1996, which made changes in several broadcast laws. Among other things, the Federal Communications Commission. 23 o assigns frequency bands for broadcasting; o determines whether to approve changes in ownership or control of station licenses; o regulates equipment used by stations; o adopts and implements regulations and policies that directly or indirectly affect the ownership, operation and employment practices of stations; and o has the power to impose penalties for violations of its rules under the Communications Act. The following is a brief summary of certain provisions of the Communications Act and of specific Federal Communications Commissions regulations and policies. Failure to observe these or other rules and policies can result in the imposition of various sanctions, including fines, the grant of abbreviated license renewal terms or, for particularly egregious violations, the denial of a license renewal application, the revocation of a license or the denial of Federal Communications Commission consent to acquire additional broadcast properties. License Grant and Renewal. Radio stations operate under renewable broadcasting licenses that are ordinarily granted by the Federal Communications Commission for maximum terms of eight years. Licenses are renewed through an application to the Federal Communications Commission. Petitions to deny license renewals can be filed by interested parties, including members of the public. These petitions may raise various issues before the Federal Communications Commission. The Federal Communications Commission is required to hold hearings on renewal applications if it is unable to determine that renewal of a license would serve the public interest, convenience and necessity, or if a petition to deny raises a substantial and material question of fact as to whether the grant of the renewal application would be inconsistent with the public interest, convenience and necessity. If, as a result of an evidentiary hearing, the Federal Communications Commission determines that the licensee has failed to meet certain requirements and that no mitigating factors justify the imposition of a lesser sanction, then it may deny a license renewal application. We are not currently aware of any facts that would prevent the timely renewal of the licenses to operate the broadcast stations that we intend to acquire, although we cannot assure you that all of these licenses will be renewed. We are not currently aware of any facts that would prevent the timely transfer to us of the licenses held by the current owners of the radio stations that we intend to purchase. Multiple Ownership Rules. The Communications Act and Federal Communications Commission rules impose specific limits on the number of commercial radio stations an entity can own, or in which it can hold an attributable interest, in a single local market. These rules preclude us from acquiring certain stations that we might otherwise seek to acquire. The rules also effectively prevent us from selling stations in a market to a buyer that has reached its ownership limit in the market. The local radio ownership rules are as follows: o In markets with 45 or more commercial radio stations, ownership is limited to eight commercial stations, no more than five of which can be either AM or FM; o In markets with 30 to 44 commercial radio stations, ownership is limited to seven commercial stations, no more than four of which can be either AM or FM; o In markets with 15 to 29 commercial radio stations, ownership is limited to six commercial stations, no more than four of which can be either AM or FM; and o In markets with 14 or fewer commercial radio stations, ownership is limited to five commercial stations or no more than 50.0% of the market's total, whichever is lower, and no more than three of which can be either AM or FM. In addition, Federal Communications Commission rules restrict an entity's ability to own, or hold on attributable interest in, radio stations and television stations or newspapers in a single local market. An officer or director of, or the holder of 5% or more of the voting stock in, a broadcast license, generally is included among those deemed to hold an attributable interest in that license. Programming and Operation. The Communications Act requires broadcasters to serve the public interest. Since 1981, the Federal Communications Commission gradually has relaxed or eliminated many of the more formalized procedures it developed to promote the broadcast of types of programming responsive to the needs of a station's community of license. However, licensees continue to be 24 required to present programming that is responsive to community problems, needs and interests and to maintain records demonstrating such responsiveness. Complaints from listeners concerning a station's programming will be considered when it evaluates the licensee's renewal application, but such complaints may be filed and considered at any time. Stations also must pay regulatory and application fees and follow various Federal Communications Commission rules that regulate, among other things, political advertising, and the broadcast of obscene or indecent programming, sponsorship identification and technical operations, including limits on radio frequency radiation. Failure to observe these or other rules and policies can result in the imposition of various sanctions, including monetary fines, the grant of short (less than the maximum) renewal terms or, for particularly egregious violations, the denial of a license renewal application or the revocation of a license. In 1985, the Federal Communications Commission adopted rules regarding human exposures to levels of radio frequency radiation. These rules require applicants for new broadcast stations, renewals of broadcast licenses or modifications of existing licenses to inform the Federal Communications Commission at the time of filing such applications whether a new or existing broadcast facility would expose people to radio frequency radiation in excess of its guidelines. In August 1996, the Federal Communications Commission adopted more restrictive radiation limits. These limits became effective on September 1, 1997 and govern applications filed after that date. ADDITIONAL TRANSACTIONS Worldwide PetroMoly, Inc. entered into an agreement with Gilbert Gertner, the former Chairman of the Board of Worldwide PetroMoly, Inc., for the assumption by him of the assets and liabilities of Worldwide PetroMoly Corporation and the purchase of all of Worldwide PetroMoly Corporation's issued and outstanding shares held by Worldwide PetroMoly, Inc. Worldwide PetroMoly, Inc. determined that Worldwide PetroMoly Corporation's negative net worth, limited assets, ongoing losses and lack of reasonable prospects to improve its business, the assumption by Mr. Gertner of Worldwide PetroMoly Corporation's assets and liabilities, and the potential to receive profit (as discussed below), should there be any, from Mr. Gertner's continuing operations of Worldwide PetroMoly Corporation as a separate business entity, rendered the consideration for the purchase agreement appropriate for this arms-length negotiated transaction. In addition, and in consideration of the cancellation of approximately $1.5 million in indebtedness owed by Worldwide PetroMoly, Inc. to Mr. Gertner, we issued 13 million shares of our common stock to Mr. Gertner. The shares issued to Gertner are "restricted securities" (as defined in Rule 144 promulgated under the Act) and accordingly may not be sold or transferred by the holder thereof unless registered under the Act or transferred pursuant to an exemption therefrom. On June 7, 2001, as contemplated by the terms and conditions of the purchase agreement, we completed the sale of our automotive lubricant business conducted by Worldwide PetroMoly Corporation to Mr. Gertner. Pursuant to the terms of the purchase agreement, Mr. Gertner has agreed to pay us a percentage ranging from 5% to 10% of any profits generated by the sale of Worldwide PetroMoly Corporation's assets, in the event of a sale, or a percentage of the net profits, ranging from 5% to 10%, from its continuing business operations, should there be any, for a period of eighteen months following the closing of the merger between Petromerger, Inc. and Small Town Radio, Inc. LEGAL PROCEEDINGS We are not currently involved in any legal proceeding associated with the conduct of our business. 25 MANAGEMENT'S DISCUSSION AND ANALYSIS The following discussion should be read in conjunction with our Consolidated Financial Statements and Notes thereto included elsewhere in this prospectus. This discussion contains forward-looking statements based on current expectations which involve risks and uncertainties. Actual results and the timing of certain events may differ significantly from those projected in such forward-looking statements due to a number of factors, including those set forth in the section entitled "Risk Factors" and elsewhere in this prospectus. Going Concern ------------- In connection with their audit report on our consolidated financial statements as of June 30, 2001, BKD, LLP, our independent certified public accountants, expressed substantial doubt about our ability to continue as a going concern because such continuance is dependent upon our ability to raise capital. We have explored, and continue to explore all avenues possible to raise the funds required. We have no revenue producing activity and do not anticipate having any until we can purchase operating radio stations. We cannot close a transaction to acquire a radio station until we have raised sufficient capital to pay the purchase price. We also need capital to fund overhead and administrative costs as well as transaction expenses. At June 30, 2001, accounts payable to vendors totaled $576,000, with $493,000 owed to suppliers and vendors who are working with us and an additional $80,000 was settled in July 2001 in exchange for shares of restricted stock. Effective August 1, 2001, we began incurring payroll and related costs of approximately $30,000 per month. A loan from a director for $50,000 was obtained on August 3, 2001 to help fund operations in the short term. We estimate that the minimum level of funding that we will require to meet our operating requirements through December 31, 2001 is approximately $300,000. Ultimately, we must achieve profitable operations if we are to be a viable entity. We intend to purchase existing operations that are currently operating at breakeven or are individually profitable. Although we believe that there is a reasonable basis to believe that we will successfully raise the needed funds, we cannot assure you that we will be able to raise sufficient capital to sustain operations before we can purchase radio stations or that we will be able to achieve, or maintain, a level of profitability sufficient to meet the operating expenses of the corporate office. Cash Flow --------- We have a working capital deficit of $969,000 at June 30, 2001 compared to a deficit of $50,000 at June 30, 2000. This increase in working capital deficit resulted from the loss for the year. For the fiscal year ended June 30, 2001, operations used $71,000 of cash and investing activity used $2,000. Financing activities generated $76,000 during the period and consisted solely of stockholder contributions, $9,000, and stockholder loans, $67,500. We expect to continue to have operating cash flow deficiencies for the near term, and for the remainder of the 2002 fiscal year. Capital Resources ----------------- We currently have limited sources of capital, including the public and private placement of equity securities and the possibility of debt. With virtually no assets, the availability of funds from traditional sources of debt will be limited, and will almost certainly involve pledges of assets or guarantees by officers, directors and stockholders. Stockholders and directors have advanced funds to us in the past, but we cannot assure you that they will be a source of funds in the future. As of June 30, 2001, we had minimal cash. We estimate that, based upon our current business plan for acquisitions, operations and capital expenditures, we will require up to $13,900,000 over the next two years. After the first year, the cash generated from operations should be such that we will not need additional funds except to pay for the acquisition of stations, which could be postponed. The estimated funding required for the first year of our business plan is $7,700,000. We believe that the funding generated by the equity line, plus debt financing available to fund radio station acquisitions, will be sufficient to fund cash requirements for the next year of operations. 26 Operations Outlook ------------------ We are a development stage radio broadcasting company focused on acquiring, developing and operating groups of radio stations in small, generally non-rated markets, including areas not included in metropolitan markets. Our current activities are generally focused in the portion of the Southeast termed the "Sunbelt". The geographic area of interest is generally defined as eastern Mississippi to South Carolina, north of I-10 and south of I-20; however, we may acquire a station or stations outside this area if we are presented an attractive opportunity that does not dilute our ability to manage our overall network of stations. Our long-term goal is to build a geographically contiguous group of stations that can be operated as a network. We believe that we can achieve operating efficiencies and marketing leverage that come through the existence of a larger advertising customer and listener base. We have had discussions with companies and/or individuals that operate radio stations in Southern Georgia, Northern Florida and Southeastern South Carolina about purchasing these stations. We have executed letters of intent to acquire two stations, and asset purchase agreements for four stations in Southwest Georgia. The terms for the acquisition of four stations in Southwest Georgia, to be purchased from one seller, Merchant Broadcast Systems of Southwest Georgia, include WBBK-FM & AM, licensed to Blakely, Georgia, and WGMK-FM and WSEM-AM, licensed to Donalsonville, Georgia. The purchase agreement is subject to satisfactory due diligence, approval by our Board, and approval by the Federal Communications Commission. The purchase price for radio stations varies significantly depending upon the market served. In the very small, non-rated markets, the prices average about $350,000 per station, (AM's typically less, FM's typically higher). In a few instances, we have had discussions with stations in larger markets, some of which are rated markets. The stations in the larger markets that we have looked at typically have significantly higher purchase prices, but usually report much higher revenue and cash flow. Our principal source of revenue will be the sale of broadcasting time for advertising. As a result, our revenue will be determined primarily by the advertising rates our radio stations charge. Correspondingly, the rates will be based upon the individual station's ability to attract audiences in the demographic groups targeted by its advertisers. The traditional means of measuring this ability to attract audiences is the periodic Arbitron Radio Market Reports. As our targeted stations are in non-rated markets, this measure will generally not be available. We will have to rely on the ability of our sales staff to convince potential customers of the effectiveness of radio as an advertising medium and to creatively demonstrate the share of the market that advertising on our stations will reach. The number of advertisements that can be broadcast without jeopardizing listening levels (market share) are limited in part by the format of a particular station. Each of our stations will have a general pre-determined level of on-air inventory that it makes available for advertising. Available inventory may vary at different times of the day but tends to remain stable over time. Much of our selling activity will be based on demand for the stations' on-air inventory and, in general, we will respond to this demand by varying prices rather than by changing the available inventory. In the broadcasting industry, radio stations often utilize trade, or barter, agreements to exchange advertising time for goods or services, such as other media advertising, travel or lodging, in lieu of cash. In order to preserve the majority of on-air inventory for cash advertising, we intend to enter into trade agreements only if the goods or services bartered to us will be used in our business. We expect to minimize our use of trade agreements and anticipate that no more than 10% of our broadcast revenues will be paid for in trade. In addition, we generally do not expect to preempt advertising spots paid in cash with advertising spots paid in trade. Revenue in the radio broadcasting industry is typically seasonal, with the first calendar quarter producing the lowest revenue of the year and the fourth calendar quarter producing the highest revenue for the year. We expect that our revenue stream for any particular station will reflect similar seasonal variations. Our operating results in any period may be affected by marketing and promotion expenses that do not necessarily produce commensurate revenues until the resultant commercials are broadcast in future periods. The primary operating expenses incurred in the ownership and operation of radio stations include employee salaries and commissions, programming expenses and marketing and promotional expenses. We will strive to control these expenses with centralized studios and administrative functions and the use of regional marketing teams. We also will incur significant depreciation and amortization expense as a result of our acquisitions of stations. If our results become comparable to our typical target radio stations, we will derive approximately 83% of net broadcast revenues from local and regional advertising in the markets in which we operate, and the remainder will result principally from the sale of national advertising. Local and regional 27 advertising will be sold primarily by the sales staff deployed throughout the geographic area covered by our signal. To generate national advertising sales, we will engage national advertising representative firms. We believe that the volume of national advertising revenue tends to adjust to shifts in a station's audience share position more rapidly than does the volume of local and regional advertising revenue. Therefore, we will focus on sales of local and regional advertising. Our financial results are dependent on a number of factors, including the general strength of the local and national economies, population growth, the ability to provide popular programming, local market and regional competition, relative efficiency of radio broadcasting compared to other advertising media, signal strength and government regulation and policies. From time to time the markets in which we plan to operate will experience weak economic conditions that may negatively affect our revenue. We believe, however, that this impact will be somewhat mitigated by our diverse geographical presence. The performance of a radio station group such as ours is customarily measured by its ability to generate broadcast cash flow. Although broadcast cash flow is not a measure of performance calculated in accordance with generally accepted accounting principles, we believe that broadcast cash flow is accepted by the broadcasting industry as a generally recognized measure of performance and is used by analysts who report publicly on the performance of broadcasting companies. Nevertheless, this measure should not be considered in isolation or as a substitute for operating income, net income, net cash provided by operating activities or any other measure for determining our operating performance or liquidity that is calculated in accordance with generally accepted accounting principles. Results of Operations for the Year ended June 30, 2001 and for the Period from ------------------------------------------------------------------------------ Inception to June 30, 2000. --------------------------- The acquisition of Small Town Radio, Inc. by Worldwide Petromoly, Inc constituted a reverse acquisition for financial reporting purposes. The purchase method of accounting, used to record the transaction, requires that operations of the acquired entity may only be reflected in the statement of operations subsequent to the date of the acquisition. As a result of this, the historical statement of operations for Worldwide Petromoly, Inc. d/b/a Small Town Radio, Inc. only reflects Small Town Radio Inc.'s operations for the year ended June 30, 2001. We are, and continue to be, a development stage enterprise focused on entering the broadcasting industry by acquiring operating radio stations. During the entire year ended June 30, 2001, we focused our efforts on researching the industry, identifying stations within a selected geographical market that might be available for purchase, and trying to secure financing for the operation. The operating loss for the year ended June 30, 2001 was $922,000, an increase of $872,000 over the period from inception (April 2000) to June 30, 2000. There were no revenues during the year. Organizational and start-up expenses of $899,000 (consisting principally of legal fees of $524,000 and consulting fees of $372,000) made up most of the loss for the year. Interest expense of $1,000 brought the total loss for the year to $923,000. The operating loss and net loss for the period from inception to June 30, 2000 was $50,000 and consisted solely of organizational and start-up expenses. There was no revenue during the period and no interest expense. 28 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Agreement with Porter Lane Investments, Inc. - At the time of its founding, Small Town Radio, Inc. entered into a consulting agreement with Porter Lane Investments, Inc., under which Porter Lane Investments, Inc. was to provide certain consulting services to Small Town Radio, Inc. The agreement called for monthly payments of $16,000, additional payments to be made upon completion of acquisitions and financing arrangements, and had a term of five years. The agreement was amended on July 16, 2001 to delete the provision for additional payments and to provide for a termination date of May 31, 2002. Subsequently, Porter Lane Investments, Inc. and Small Town Radio, Inc. agreed to terminate the agreement effective July 31, 2001, with one additional month's payment of $16,000. From March 2000 through June 30, 2001, Small Town Radio had incurred expenses of $280,000 under this agreement. There had been no payments made under the agreement. In August, 2001 as part of the termination of our agreement with Porter Lane Investments Inc., it agreed to satisfy $240,000 of the $280,000 then owed to it by having us issue shares of our common stock directly to individual consultants who had performed consulting services for us through Porter Lane Investments Inc. Fees payable to Robert S. Vail - Robert S. Vail, the Chief Financial Officer and a director, has been involved since the inception of Small Town Radio, Inc. His services to Small Town Radio, Inc., through July 31, 2001 were on a consulting basis, and all compensation was accrued, and not paid. For the period from inception through July 31, 2001, an aggregate of $105,000 remains unpaid. Note payable to Bolling Investments, LLC - Bolling Investments, LLC, one of Small Town Radio's founding shareholders, and Wayne Shortridge, the sole principal of Bolling Investments, LLC, has made four separate loans to Small Town Radio, Inc., totaling $67,500. The loans are evidenced by four demand notes that bear interest at 12% per annum. Note payable to John McMullan - John McMullan, a director, provided a loan to us for $50,000. This loan is evidenced by a ninety (90) day demand note that bears interest in the amount of 8% per annum. Mr. McMullan was also issued 500,000 shares of restricted stock (valued at $30,000 at September 19, 2001) in connection with this loan. 29 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our shares of common stock are traded on Nasdaq's Over the Counter Bulletin Board under the symbol "MOLY." Our range of high and low sales prices per share as quoted (without retail markup or markdown and without commissions) on the Over the Counter Bulletin Board for each quarter within the last two fiscal years is provided below. The figures shown below reflect inter-dealer prices, without retail markup, markdown or commission, and may not necessarily represent actual transactions: -------------------- -------------------- ---------------------- QUARTER HIGH PRICE LOW PRICE -------------------- -------------------- ---------------------- 7/1/01(1) 0.1900 0.0600 -------------------- -------------------- ---------------------- 6/30/01 0.2700 0.0625 -------------------- -------------------- ---------------------- 3/31/01 0.4062 0.0781 -------------------- -------------------- ---------------------- 12/31/00 0.3125 0.0625 -------------------- -------------------- ---------------------- 9/30/00 0.4062 0.1875 -------------------- -------------------- ---------------------- 6/30/00 0.6875 0.2500 -------------------- -------------------- ---------------------- 3/31/00 1.0000 0.4688 -------------------- -------------------- ---------------------- 12/31/99 0.9375 0.4688 -------------------- -------------------- ---------------------- 9/30/99 1.2656 0.7188 -------------------- -------------------- ---------------------- (1) Through September 24, 2001. As of September 24, 2001 we have approximately 2100 current holders of record of our common stock. We have paid no dividends in the past two fiscal years, and are unlikely to do so in the foreseeable future. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITY Indemnification of Directors and Officers Sections 7-109-102 and 7-109-107 of the Colorado Business Corporation Law and Article 13 of our Amended and Restated Articles of Incorporation provide for indemnification of our Directors and officers in a variety of circumstances, which may include liabilities under the Act. Article 13 provides that unless otherwise determined by our Board of Directors that the actions in question violate the provisions of Article 13, we shall indemnify to the full extent permitted by the laws of Colorado as from time to time in effect, the persons described in Sections 7-109-102 and 7-109-107 of the Colorado law. Commission Position on Indemnification For Securities Act Liability Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to our directors, officers and controlling persons pursuant to the foregoing positions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. 30 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On July 9, 2001 the Board of Directors of the Registrant approved the engagement of BKD, LLP ("BKD") as the Registrant's principal accountant to replace Jackson & Rhodes P.C. ("Jackson & Rhodes"), the previous accountant. The Board approved the engagement of BKD because it had the resources needed to serve the Registrant as its business grows. Jackson & Rhodes' report on the Registrant's financial statements for each of the last two years did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles. During the Registrant's two most recent fiscal years and the subsequent interim periods preceding the replacement of Jackson & Rhodes, there were no disagreements with Jackson & Rhodes on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of Jackson & Rhodes, would have caused it to make a reference to the subject matter of the disagreement(s) in connection with its report. Jackson & Rhodes did not advise the Registrant during the Registrant's two most recent fiscal years or during the subsequent interim periods preceding Jackson & Rhodes replacement: (a) that the internal controls necessary for the Registrant to develop reliable financial statements did not exist; (b) that information had come to its attention that had led it to no longer be able to rely on management's representations, or that had made it unwilling to be associated with the financial statements prepared by management; (c) (i) of the need to expand significantly the scope of its audit, or that information had come to its attention during the two most recent fiscal years or any subsequent interim period that if further investigated might (A) materially have impacted the fairness or reliability of either: a previously issued audit report or the underlying financial statements, or the financial statements issued or to be issued covering the fiscal period(s) subsequent to the date of the most recent financial statements covered by an audit report or (B) have caused it to be unwilling to rely on management's representations or be associated with the Registrant's financial statements; or (ii) that due to its dismissal, or for any other reason, it did not so expand the scope of its audit or conduct such further investigation; or (d) (i) that information had come to its attention that it had concluded materially impacts the fairness or reliability of either (A) a previously issued audit report or the underlying financial statements, or (B) the financial statements issued or to be issued covering the fiscal period(s) subsequent to the date of the most recent financial statements covered by an audit report; or (ii) due to its dismissal, or for any other reason, the issue has not been resolved to its satisfaction prior to its dismissal. Jackson & Rhodes was authorized by the Registrant to respond fully to inquiries of BKD. 31 Except such advice as has been provided by BKD in connection with auditing services related to the preparation of historical financials for the Registrant's recently acquired subsidiary and accounting services related to the preparation of certain pro forma financial information, during the two most recent fiscal years and during the interim period prior to engaging BKD, neither the Registrant nor anyone on its behalf consulted BKD regarding either: (a) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Registrant's financial statements, and neither a written report nor oral advice was provided to the Registrant that BKD concluded was an important factor considered by the Registrant in reaching a decision as to an accounting, auditing or financial reporting issue; or (b) any matter that was the subject of either a disagreement or any other event described above. 32 Independent Accountants' Report The Board of Directors Worldwide PetroMoly, Inc. d/b/a Small Town Radio Alpharetta, Georgia We have audited the accompanying consolidated balance sheet of Worldwide PetroMoly, Inc. d/b/a Small Town Radio as of June 30, 2001 and 2000, and the related statements of operations, stockholders' deficit, and cash flows for the year ended June 30, 2001 and period from inception to June 30, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Worldwide PetroMoly, Inc. d/b/a Small Town Radio as of June 30, 2001 and 2000, and the results of their operations and their cash flows for the year ended June 30, 2001 and period from inception to June 30, 2000 in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the notes to the consolidated financial statements, the Company's continuance is dependent on its ability to raise capital. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. \s\ BKD, LLP Indianapolis, Indiana July 25, 2001 F-1 WORLDWIDE PETROMOLY, INC. D/B/A SMALL TOWN RADIO Consolidated Statement of Operations
Period From Year Ended Inception to June 30, June 30, 2001 2000 ------------------------------------------------------------------------------------------------- Net Sales $ 0 $ 0 --------------------------------------- Operating Expenses Organizational and start-up expenses 899,415 49,971 Professional fees 10,000 Rent 3,369 Director compensation 6,193 Depreciation 105 Other 2,473 --------------------------------------- 921,555 49,971 --------------------------------------- Operating Loss (921,555) (49,971) Other Expense--interest (1,269) --------------------------------------- Loss Before Income Taxes (922,824) (49,971) Income Tax Benefit 0 0 --------------------------------------- Net Loss $(922,824) $(49,971) ======================================= Basis Earnings Per Share $ (.01) $0 Weighted-Average Shares Outstanding 69,844,439 51,733,930
See notes to consolidated financial statements. F-2 WORLDWIDE PETROMOLY, INC. D/B/A SMALL TOWN RADIO Consolidated Balance Sheet
June 30 2001 2000 ------------------------------------------------------------------------------------------------------------- Assets Current Assets Cash $ 3,396 Deposit 2,076 ------------------------------------- Total current assets 5,472 Property and Equipment, net 1,791 Other 10,000 ------------------------------------- $17,263 $0 ===================================== Liabilities and Stockholders' Deficit Current Liabilities Notes payable--stockholders $ 67,500 Accounts payable 575,802 $49,971 Accounts payable--stockholders 330,000 Accrued expenses 1,269 ------------------------------------- Total current liabilities 974,571 49,971 ------------------------------------- Commitments and Contingencies Stockholders' Deficit Preferred stock, no stated value Authorized--10,000,000 shares Issued and outstanding--none Common stock, no par value Authorized--800,000,000 shares Issued and outstanding--157,726,675 and 51,733,930 shares 12,383,424 Additional paid-in capital (12,367,937) Deficit accumulated during the development stage (972,795) (49,971) ------------------------------------- (957,308) (49,971) ------------------------------------- $17,263 $ 0 =====================================
See notes to consolidated financial statements. F-3 WORLDWIDE PETROMOLY, INC. D/B/A SMALL TOWN RADIO Consolidated Statement of Stockholders' Deficit
Deficit Accumulated Number Additional During the of Common Paid-in Development Shares Stock Capital Stage Total ------------------------------------------------------------------------------------------------------------------------------ Balances, April 1, 2000 Net loss $ (49,971) $ (49,971) Issuance of common stock 51,733,930 ----------------------------------------------------------------------------------------- Balances, June 30, 2000 51,733,930 (49,971) (49,971) Net loss (922,824) (922,824) Issuance of common stock--no consideration 85,044,986 Issuance of common stock--non-cash consideration 20,397,760 $ 6,787 6,787 Equity adjustment resulting from reverse acquisition 12,376,637 $(12,376,637) Stockholder contribution 8,700 8,700 ----------------------------------------------------------------------------------------- Balances, June 30, 2001 157,176,676 $12,383,424 $(12,367,937) $(972,795) $(957,308) =========================================================================================
See notes to consolidated financial statements. F-4 WORLDWIDE PETROMOLY, INC. D/B/A SMALL TOWN RADIO Consolidated Statement of Cash Flows
Period From Year Ended Inception to June 30, June 30, 2001 2000 ---------------------------------------------------------------------------------------------------------------------------- Operating Activities Net loss $(922,824) $(49,971) Adjustments to reconcile net loss to net cash used by operating activities Depreciation 105 Stock issued for director and professional fees 6,787 Changes in assets and liabilities Deposit (2,076) Other asset (10,000) Accounts payable 525,831 49,971 Accounts payable--stockholders 330,000 Accrued expenses 1,269 -------------------------------------- Net cash used by operating activities (70,908) -------------------------------------- Investing Activity--purchase of property and equipment (1,896) -------------------------------------- Financing Activities Net increase in notes payable--stockholders 67,500 Stockholder contribution 8,700 -------------------------------------- Net cash provided by financing activities 76,200 -------------------------------------- Net Increase in Cash 3,396 Cash, Beginning of Period 0 0 -------------------------------------- Cash, End of Period $ 3,396 $ 0 ======================================
See notes to consolidated financial statements. F-5 WORLDWIDE PETROMOLY, INC. D/B/A SMALL TOWN RADIO Notes to Consolidated Financial Statements (1) Nature of Operations and Summary of Significant Accounting Policies NATURE OF OPERATIONS Worldwide PetroMoly, Inc. d/b/a Small Town Radio (Company) is a development stage enterprise. The Company is currently focused on securing financing to allow it to enter the broadcasting industry through a series of radio station acquisitions. The Company's target markets are generally smaller, less populated areas near, but not in, mid-sized and larger markets. The Company intends to initially acquire stations in rural sections of South Georgia, and then expand into additional, geographically contiguous markets in the Southeast. Acquisition of the target stations will be dependent upon approval of the Federal Communications Commission (FCC). The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. REVERSE ACQUISITION AND DISPOSITION On June 1, 2001, Worldwide PetroMoly, Inc. (PetroMoly) acquired Small Town Radio, Inc., a development stage enterprise, through the issuance of 118,467,860 unregistered shares of PetroMoly common stock to Small Town Radio's stockholders. For financial reporting purposes, the transaction constitutes a reverse acquisition due to the former Small Town Radio stockholders owning approximately 75% of the outstanding stock of the combined entity immediately following the transaction. The purchase method of accounting was utilized to record the transaction resulting in marking the assets and liabilities of PetroMoly, the acquired entity for reporting purposes, to their fair values through an allocation of the purchase price. Any excess of purchase price remaining after the allocation of the purchase price to the assets and liabilities is recorded as goodwill and amortized over a period of time. In addition, the purchase method of accounting requires that operations of the acquired entity for reporting purposes (PetroMoly) only be reflected in the statement of operations subsequent to the date of the acquisition. For this reason, the historical statement of operations only reflects Small Town Radio, Inc.'s operations for the short period ended June 30, 2000. The year ended June 30, 2001 reflects the operations of only Small Town Radio, Inc. to the date of acquisition and the consolidated Company's operations thereafter. On June 7, 2001, PetroMoly sold its interest in Worldwide PetroMoly, Corp., a wholly owned subsidiary to Gilbert Gertner, a stockholder and previous chairman of the board of PetroMoly. Prior to its disposition, Worldwide PetroMoly, Corp. was PetroMoly's only operating subsidiary and represented 100% of the assets, liabilities and operations of the consolidated entity. No gain or loss resulted from the sale of the subsidiary, as the sale price at June 7, 2001 was utilized in marking its assets and liabilities to fair value at June 1, 2001 under the purchase method of accounting. A provision in the sale agreement entitles PetroMoly to a portion of any operating profits and net proceeds from sale of Worldwide PetroMoly Corp. if either transpires prior to December 7, 2002. F-6 WORLDWIDE PETROMOLY, INC. D/B/A SMALL TOWN RADIO Notes to Consolidated Financial Statements PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the operations of Worldwide PetroMoly, Inc. d/b/a Small Town Radio and its wholly-owned subsidiary, Small Town Radio, Inc. They also include the accounts of Worldwide PetroMoly, Corp. for the period from June 1, 2001 to June 7, 2001. ORGANIZATIONAL AND START-UP EXPENSES The Company has expensed all organizational and start-up expenses. PROPERTY AND EQUIPMENT Property and equipment are carried at cost. Depreciation is computed using the straight-line method. Property and equipment at June 30, 2001 consists of computer equipment and is being depreciated over three years. EARNINGS PER SHARE Earnings per share have been computed based upon the weighted-average common shares outstanding during each year. Diluted earnings per share have not been presented due to the Company incurring a loss from continuing operations. NON-CASH CONSIDERATION The Company issued 20,397,760 shares of common stock to directors and third parties for services provided. The dollar amounts assigned these transactions were based on the fair value of the services rendered. (2) Property and Equipment Property and equipment consist of the following:
June 30 2001 ------------------------------------------------------------------------------------------------------- Equipment $1,896 Accumulated depreciation (105) --------------- $1,791 =============== (3) Income Tax Income tax expense consists of the following: Period From Year Ended Inception to June 30, June 30, 2001 2000 ------------------------------------------------------------------------------------------------------- Reconciliation of federal statutory to actual tax expense Federal statutory income tax at 34% $(313,760) $(16,990) Change in valuation allowance 313,760 16,990 -------------------------------------- Actual tax expense $ 0 $ 0 ======================================
F-7 WORLDWIDE PETROMOLY, INC. D/B/A SMALL TOWN RADIO Notes to Consolidated Financial Statements The components of the deferred tax asset is as follows:
June 30 2001 2000 ----------------------------------------------------------------------------------------------- Asset Organizational and start-up expenses $322,791 $16,990 Net operating loss carryforward 7,959 Valuation allowance (330,750) (16,990) ---------------------------------- $ 0 $ 0 ==================================
The valuation allowance at June 30, 2001 is $330,750 and was increased by $313,760. During the current year, the increase in the valuation allowance was due to additional losses incurred by a development stage enterprise. At June 30, 2001, the Company had a net operating loss carryforward for tax purposes of $23,409. This loss carryforward expires in the year 2016. (4) Stock Options The Company maintains an incentive stock option plan which is accounted for in accordance with Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees. No options were granted after the acquisition date (June 1, 2001) and therefore no compensation cost has been recognized in the accompanying financial statements. The following is a summary of the status of the Company's stock option plan.
Year Ended June 30 2001 ---------------------------------------------------------------------------------------------------------- Weighted- Average Options Shares Exercise Price ---------------------------------------------------------------------------------------------------------- Outstanding, beginning of year 0 Options transferred as a result of the reverse acquisition 733,000 $.37 ------------------- Outstanding, end of year 733,000 ===================
F-8 WORLDWIDE PETROMOLY, INC. D/B/A SMALL TOWN RADIO Notes to Consolidated Financial Statements At June 30, 2001, the 733,000 options outstanding have exercise prices ranging from $.06 to $1.00 and a weighted-average remaining contractual life of two years. The following summarizes the outstanding options at June 30, 2001.
Exercise Expiration Number of Options Price Date ------------------------------------------------------------------------------------------------------ 10,000 $.13 1/01/2002 110,000 .25 1/01/2002 15,000 .50 1/01/2002 60,000 1.00 1/01/2002 100,000 1.00 9/15/2002 20,000 .13 1/01/2003 160,000 .25 1/01/2003 5,000 .50 1/01/2003 13,000 1.00 1/01/2003 50,000 .09 12/06/2003 150,000 .06 1/02/2004 35,000 .09 1/02/2004 5,000 .13 1/03/2004
(5) Related Party Transactions At June 30, 2001, the Company had outstanding notes payable to certain stockholders of $67,500. These notes are unsecured, payable upon demand, and bear interest at 12%. At June 30, 2001, interest was current on these obligations. Management believes the fair value of this and all of the Company's financial instruments approximate book values at June 30, 2001. At June 30, 2001, the Company had outstanding accounts payable to stockholders of $330,000 for consulting services provided. This entire amount is included in organizational and start-up expenses for the year ended June 30, 2001. F-9 WORLDWIDE PETROMOLY, INC. D/B/A SMALL TOWN RADIO Notes to Consolidated Financial Statements (6) Financial Condition and Going Concern The Company's continuance is dependent on raising capital. The Company is confident that the necessary capital will be raised and has entered into discussions to do so with certain individuals. However, as of the date of these consolidated financial statements, no formal agreements exist. The accompanying consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to secure the necessary capital and continue as a going concern. (7) Subsequent Event At June 30, 2001, the Company had a consulting agreement with a third party that called for monthly payments of $40,000 until May 2002. In July 2001, the Company issued 1,200,000 restricted common shares as payment in full for services through September 2001, at which point the consulting agreement terminates. The Company also had a consulting agreement with a stockholder requiring monthly payments of $16,000 until June 2002. In July 2001, the parties amended the agreement to provide for a termination date of July 31, 2001 and a termination fee of $16,000. F-10 BACK COVER OF THE PROSPECTUS PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS Indemnification of Directors and Officers Sections 7-109-102 and 7-109-107 of the Colorado Law ("Colorado Law") and Article 13 of our Amended and Restated Articles of Incorporation provide for indemnification of our Directors and officers in a variety of circumstances, which may include liabilities under the Act. Article 13 provides that unless otherwise determined by our Board of Directors that the actions in question violate the provisions of the Article, we shall indemnify to the full extent permitted by the laws of Colorado as from time to time in effect, the persons described in Sections 7-109-of Colorado Law. The general effect of the provisions in our Amended and Restated Articles of Incorporation and Colorado Law is to provide that we shall indemnify our Directors and officers against all liabilities and expenses actually and reasonably incurred in connection with the defense or settlement of any judicial or administrative proceedings in which they have become involved by reason of their status as corporate Directors or officers, if they acted in good faith and in the reasonable belief that their conduct was neither unlawful (in the case of criminal proceedings) nor inconsistent with our best interests, nor derived any improper personal benefits. With respect to legal proceedings by or in the right of the company in which a director or officer is adjudged liable for improper performance of his duty to the company or another enterprise which such person served in a similar capacity at the request of the company, indemnification is limited by such provisions to that amount which is permitted by the court. We intend to maintain officers' and Directors' liability insurance which will insure against liabilities that our officers and Directors may incur in such capacities. Other Expenses of Issuance and Distribution The following table sets forth the costs and expenses, other than underwriting discounts and commissions, to be paid in connection with the sale of the Common Stock being registered, all of which will be paid by the Registrant. All amounts are estimates. Registration fee.......................................... $ 5,000 Legal fees and expenses................................... $100,000 Accounting fees and expenses.............................. 80,000 Transfer agent and registrar fees......................... 40,000 Printing and engraving expenses........................... 80,000 Miscellaneous expenses.................................... 10,000 --------- Total........................................... 315,000 Recent Sales of Unregistered Securities During the three years immediately preceding the date of the filing of this registration statement, we made the following sales of securities were made that were not registered under the Act: On January 12, 1999 the we issued 25,000 shares of our common stock to Elizabeth Barasch, valued at $.56 per share, in lieu of compensation for sales work. Such issuance was pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On January 21, 1999 we issued 100,000 shares of our common stock, at $.50 per share, to John W. Larkin, in a private placement of the shares for which we received $50,000. We also issued 100,000 shares to Benjamin Barnes, valued at $.63 per share, for consulting services. We also issued 10,000 shares to Barry Silverman, valued at $.63 per share, for services associated with an advertising campaign. Such issuances were pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On February 9, 1999 we issued 166,667 shares of our common stock, at $.50 per share, to Steve Wadley, in a private placement of the shares for which we received $83,333. We also issued 166,667 shares to Jeff Goldstein, in a II-1 private placement of the shares at $.50 per share, for which we received $83,333. We also issued 166,666 shares to Gregory Greenstein, in a private placement of the shares at $.50 per share, for which we received $83,333. Such issuances were pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On February 12, 1999 we issued 125,000 shares of our common stock to Jeffrey Newport, valued at $2.00 per share, for consulting services. Such issuance was pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On February 26, 1999 we issued 10,000 shares of our common stock to William Compton, in a private placement of the shares at $1.00 per share, for which we received $10,000. We also issued 10,000 shares to Dale F. Rabinowitz, in a private placement of the shares at $1.00 per share, for which we received $10,000. Such issuances were pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On March 1, 1999 we issued 850,000 shares of our common stock to Team Pelfrey, LLC valued at $1.94 per share, for a racing team sponsorship and advertising program. We also issued 150,000 shares to RPM Indy, LLC, valued at $1.94 per share, for brokering the Team Pelfrey sponsorship. Such issuances were pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On July 29, 1999 we issued 75,000 shares of our common stock to Barry Silverman, valued at $1.00 per share, in lieu of compensation for consulting services. Such issuance was pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On September 15, 1999 we issued 10,000 shares of our common stock to William Compton, in a private placement of the shares at $1.00 per share, for which we received $10,000. We also issued 10,000 shares to Dale F. Rabinowitz, in a private placement of the shares at $1.00 per share, for which we received $10,000. We also issued 30,000 shares to Tim Neff, valued at $1.01 per share, for services. Such issuances were pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On November 22, 1999 we issued 250,000 shares of our common stock to International Equities Group, valued at $.75 per share, for investor relations services. Such issuance was pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On January 6, 2000 we issued 200,000 shares of our common stock to Valerie Donnell, valued at $.53 per share, in lieu of compensation. We also issued 500,000 shares to Lance J. Rosmarin, valued at $.53 per share, in lieu of compensation. Such issuances were pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On May 14, 2000 we issued 20,000 shares of our common stock to Jacques Lazier, valued at $.43 per share, in lieu of compensation for advertising and promotional services. We also issued 33,235 shares to RPM Indy LLC, valued at $.43 per share, for services rendered. We also issued 75,000 shares to Pagan-Lewis Motors, Inc., valued at $.43 per share, for a racing team sponsorship and advertising. We also issued 110,000 shares to Stuart LLC, in a private placement of the shares at $.43 per share, for which we received $47,300. Such issuances were pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On June 8, 2000 we issued 100,000 shares of our common stock to Truscelli Racing Team, LLC, valued at $.35 per share, for a racing team sponsorship and advertising. We also issued 7,500 shares to Greg Paull, valued at $.35 per share, for services. We also issued 10,000 shares to RPM Indy LLC, valued at $.35 per share, for services rendered. We also issued 125,000 shares to Stuart LLC, in a private placement of the shares at $.35 per share, for which we received $43,750. Such issuances were pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. II-2 On August 22, 2000 we issued 85,000 shares of our common stock to Cahill Racing, valued at $.28 per share, for a racing team sponsorship and advertising. We also issued 15,000 shares to RPM Indy, LLC, valued at $.28 per share, for brokering the Cahill Racing relationship. We also issued 400,000 shares to Mid-America Motor Sports, valued at $.28 per share, for a racing team sponsorship and advertising. We also issued 60,000 shares to RPM Indy, LLC, valued at $.28 per share, for brokering the Mid-America Motor Sports relationship. Such issuances were pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On August 23, 2000 we issued 550,000 shares of our common stock to Stuart LLC, in a private placement of the shares at $.25 per share, for which we received $137,500. Such issuance was pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On August 24, 2000 we issued 200,000 shares of our common stock to Gilbert Gertner, valued at $.24 per share, for reimbursement of expenditures on our behalf. We also issued 200,000 shares to Lance J. Rosmarin, valued at $.24 per share, for reimbursement of expenditures made on our behalf. We also issued 200,000 shares to Richmond Securities Ltd., valued at $.24 per share, for reimbursement of expenditures made on our behalf. Such issuances were pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On September 26, 2000 we issued 125,000 shares of our common stock to Empire Multimedia Marketing, Inc., valued at $.25 per share, for services in producing an infomercial. We also issued 125,000 shares to International Energy Consultants, valued at $.25 per share, for services in producing an infomercial. Such issuances were pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On October 22, 2000 we issued 50,000 shares of our common stock to Jacques Lazier, valued at $.23 per share, for services rendered. We also issued 50,000 shares to Robby Unser, valued at $.23 per share, for services rendered. Such issuances were pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On June 1, 2001, in connection with the merger of Small Town Radio, Inc. into our subsidiary, PetroMerger, Inc., we issued 118,467,860 shares of our common stock to the holders of shares of Small Town Radio, Inc.'s common stock. Such issuance was pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On June 7, 2001 we issued 13,000,000 shares of our common stock to Gilbert Gertner, in consideration of the cancellation of a debt owed to Mr. Gertner in the amount of $1,560,000. Such issuance was pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On August 3, 2001 we issued 500,000 shares of our common stock to John F. McMullan, in consideration of a $50,000 loan made by Mr. McMullan to us. Such issuance was pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. On August 15, 2001 we issued 1,200,000 shares of our common stock to Numark Capital Corp., valued at $.12 per share, for investor relations services. Such issuance was pursuant to the exemption provided in Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. II-3 Exhibits EXHIBIT NO. EXHIBIT 1.1 Private Equity Line of Credit Agreement by and among Grenville Financial, Ltd. and Worldwide PetroMoly, Inc., dated as of September 25, 2001. 2.1 Agreement and Plan of Merger between and among Small Town Radio, Inc., Worldwide PetroMoly, Inc., Petro Merger, Inc., Gilbert Gertner and certain individual shareholders of Small Town Radio, Inc., as amended and restated, dated April 30, 2001 (originally filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated March 27, 2001, then filed, as amended and restated, as Exhibit 2.2 to the Company's Current Report on Form 8-K dated May 7, 2001, both of which are incorporated herein by reference). 3.1 Articles of Incorporation of the Company. 3.2 Bylaws of the Company. 4.1 The description of the Company's common stock is incorporated herein by reference to the description thereof contained in the Company's Registration Statement on Form 10-SB, filed on August 11, 1994 and amended on October 18, 1994, pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (File No. 0-24682). 4.2 Worldwide PetroMoly, Inc. Stock Incentive Plan, as adopted on August 8, 2001 (filed with the Company's Registration Statement on Form S-8 (File No. 333-67404) and incorporated herein by reference). 5.1 Legal Opinion of Krys, Boyle, Freedman & Sawyer, P.C. as to the validity of the securities being registered. 10.1.1 Consulting Agreement by and between the Company and Porter Lane Investments, Inc. ("Porter Lane"), dated as of March 13, 2000. 10.1.2 First Amended Consulting Agreement by and between the Company and Porter Lane, dated as of April 16, 2001. 10.1.3 First Amendment to First Amended Consulting Agreement with Porter Lane, dated July 31, 2001. 10.1.4 Letter Agreement relating to termination of Consulting Agreement with Porter Lane, dated August 10, 2001. 10.2 Agreement of Lease between the Company and HQ Global Workplaces, Inc. dated April 9, 2001. 10.3 Letter Agreement by and between the Company and Lgk Media Staffing Network, Inc., dated April 17, 2001. 10.4 Studio Design Agreement between the Company and Harris Corporation, dated April 20, 2001. 10.5 Consulting Agreement between the Company and NuMark Corporation, dated July 18, 2001. 10.6 Stock Purchase Agreement by and between the Company and Gilbert Gertner, dated June 7, 2001 (filed with the Company's Current Report on Form 8-K filed June 15, 2001 and incorporated herein by reference). 10.7 Letter Agreement between the Company and Atlas Capital Services, Inc. for business development services, dated June 20, 2001. 10.8 Letter Agreement between the Company and Pacific Resource Group, Inc. for business development services, dated June 21, 2001. 10.9 Agreement by and between the Company and ceoHeadlines, Inc., dated as of August 13, 2001. 10.10 Purchase and Sale Agreement by and between the Company and Merchants Broadcasting Systems of Southwest Georgia, dated as of August 16, 2001. II-4 10.11 Consulting Agreement by and between the Company and Richard P. Smyth, dated as of September 10, 2001. 10.12 Demand Note issued by Small Town Radio, Inc. to Bolling Investments, LLC with respect to a $5,000 loan, dated February 12, 2001. 10.13 Demand Note issued by Small Town Radio, Inc. to Wayne Shortridge with respect to a $25,000 loan, dated March 26, 2001. 10.14 Demand Note issued by the Company to Wayne Shortridge with respect to a $25,000 loan, dated June 4, 2001. 10.15 Demand Note issued by the Company to Bolling Investments, LLC with respect to a $12,500 loan, dated June 29, 2001. 10.17 Demand Note issued by the Company to John F. McMullan with respect to a $50,000 loan, dated August 3, 2001. 10.18 Letter of Intent between the Company and Media Services Group, Inc. to enter into an asset purchase agreement with Fall Line Media, Inc., dated August 7, 2001. 10.19 Letter of Intent between the Company and Greenwood Communications Corporation to purchase certain assets, dated August 13, 2001. 10.20 Letter Agreement between the Company and Kempff Communications Company for payment of brokerage commissions, dated August 13, 2001. 10.21 Employment Agreement by and between the Company and Donald L. Boyd, dated as of July 30, 2001. 10.22 Employment Agreement by and between the Company and Robert S. Vail, dated as of August 1, 2001. 16 Letter to Company from Jackson & Rhodes, P.C. dated July 10, 2001 (filed as Exhibit 16.1 to the Company's Current Report on Form 8-K dated July 13, 2001 and incorporated herein by reference). 21 List of Subsidiaries. 23.1 Consent of BKD, LLP. 23.2 Consent of Krys, Boyle, Freedman & Sawyer, P.C. (incorporated by reference to Exhibit 5.1 herein). Transfer Agent and Registrar The transfer agent and registrar for our common stock is Corporate Stock Transfer Corporation, 3200 Cherry Creek Dr. S., Suite 430, Denver, Colorado, 80209. Its telephone number for such purposes is (303) 282-4800. Additional Information In addition, we file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any documents we file at the Commission's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further information on the public reference rooms. Our filings are also available to the public from the Commission's website at http://www.sec.gov. Undertakings (a) We hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment hereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in this Registration Statement; and II-5 (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to our directors, officers and controlling persons pursuant to the foregoing positions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than by payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the mater has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue. II-6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Alpharetta, State of Georgia, on September 25, 2001. WORLDWIDE PETROMOLY, INC. By: /s/ Robert S. Vail ---------------------------------------- Robert S. Vail Chairman and Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated. Signature Title Date --------- ----- ---- /s/ Norton Cooper Director September 25, 2001 ------------------------- Norton Cooper /s/ William Fleming Director September 25, 2001 ------------------------- William Fleming /s/ Lauren Kahn Director September 25, 2001 ------------------------- Lauren Kahn /s/ John McMullan Director September 25, 2001 ------------------------- John McMullan /s/ Lance Rosmarin Director September 25, 2001 ------------------------- Lance Rosmarin /s/ William Ross Director September 25, 2001 ------------------------- William Ross /s/ Robert S. Vail Director September 25, 2001 ------------------------- Robert S. Vail II-7 EXHIBIT INDEX EXHIBIT NO. EXHIBIT 1.1 Private Equity Line of Credit Agreement by and among Grenville Financial, Ltd. and Worldwide PetroMoly, Inc., dated as of September 25, 2001. 3.1 Articles of Incorporation of the Company. 3.2 Bylaws of the Company. 5.1 Legal Opinion of Krys, Boyle, Freedman & Sawyer, P.C. as to the validity of the securities being registered. 10.1.1 Consulting Agreement by and between the Company and Porter Lane Investments, Inc. ("Porter Lane"), dated as of March 13, 2000. 10.1.2 First Amended Consulting Agreement by and between the Company and Porter Lane, dated as of April 16, 2001. 10.1.3 First Amendment to First Amended Consulting Agreement with Porter Lane, dated July 31, 2001. 10.1.4 Letter Agreement relating to termination of Consulting Agreement with Porter Lane, dated August 10, 2001. 10.2 Agreement of Lease between the Company and HQ Global Workplaces, Inc. dated April 9, 2001. 10.3 Letter Agreement by and between the Company and Lgk Media Staffing Network, Inc., dated April 17, 2001. 10.4 Studio Design Agreement between the Company and Harris Corporation, dated April 20, 2001. 10.5 Consulting Agreement between the Company and NuMark Corporation, dated July 18, 2001. 10.7 Letter Agreement between the Company and Atlas Capital Services, Inc. for business development services, dated June 20, 2001. 10.8 Letter Agreement between the Company and Pacific Resource Group, Inc. for business development services, dated June 21, 2001. 10.9 Agreement by and between the Company and ceoHeadlines, Inc., dated as of August 13, 2001. 10.10 Purchase and Sale Agreement by and between the Company and Merchants Broadcasting Systems of Southwest Georgia, dated as of August 16, 2001. 10.11 Consulting Agreement by and between the Company and Richard P. Smyth, dated as of September 10, 2001. 10.12 Demand Note issued by Small Town Radio, Inc. to Bolling Investments, LLC with respect to a $5,000 loan, dated February 12, 2001. 10.13 Demand Note issued by Small Town Radio, Inc. to Wayne Shortridge with respect to a $25,000 loan, dated March 26, 2001. 10.14 Demand Note issued by the Company to Wayne Shortridge with respect to a $25,000 loan, dated June 4, 2001. 10.15 Demand Note issued by the Company to Bolling Investments, LLC with respect to a $12,500 loan, dated June 29, 2001. 10.17 Demand Note issued by the Company to John F. McMullan with respect to a $50,000 loan, dated August 3, 2001. 10.18 Letter of Intent between the Company and Media Services Group, Inc. to enter into an asset purchase agreement with Fall Line Media, Inc., dated August 7, 2001. 10.19 Letter of Intent between the Company and Greenwood Communications Corporation to purchase certain assets, dated August 13, 2001. 10.20 Letter Agreement between the Company and Kempff Communications Company for payment of brokerage commissions, dated August 13, 2001. 10.21 Employment Agreement by and between the Company and Donald L. Boyd, dated as of July 30, 2001. 10.22 Employment Agreement by and between the Company and Robert S. Vail, dated as of August 1, 2001. 21 List of Subsidiaries. 23.1 Consent of BKD, LLP. EX-1.1 3 underwriting.txt EQUITY LINE OF CREDIT AGMT. EXHIBIT 1.1 PRIVATE EQUITY LINE OF CREDIT AGREEMENT BY AND BETWEEN GRENVILLE FINANCIAL LTD. AND WORLDWIDE PETROMOLY, INC. ---------------------------------------------------------------- DATED AS OF SEPTEMBER 25, 2001 ---------------------------------------------------------------- This PRIVATE EQUITY LINE OF CREDIT AGREEMENT is entered into as of the 25th day of September, 2001 (this "Agreement"), by and between the investor identified on Schedule A hereto ("Investor"), and Worldwide Petromoly, Inc., a corporation organized and existing under the laws of the State of Colorado (the "Company"). WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to each Investor, from time to time as provided herein, and each Investor shall purchase his Proportionate Share of up to $20,000,000 of the Common Stock (as defined below). NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I CERTAIN DEFINITIONS Section 1.1 "Average Daily Price" shall be the price based on the VWAP. Section 1.2 "Bid Price" shall mean the closing bid price (as reported by Bloomberg, L.P.) of the Common Stock on the Principal Market. Section 1.3 "Capital Shares" shall mean the Common Stock and any shares of any other class of common stock whether now or hereafter authorized, having the right to participate in the distribution of earnings and assets of the Company. Section 1.4 "Closing" shall mean one of the closings of a purchase and sale of the Common Stock pursuant to Section 2.1. Section 1.5 "Closing Date" shall mean, with respect to a Closing the twelfth (12th) Trading Day following the Optional Purchase Date related to such Closing and the first Trading Day following the Valuation Period, provided all conditions to such Closing have been satisfied on or before such Trading Days. Section 1.6 "Commitment Amount" shall mean the $20,000,000 up to which the Investor has agreed to provide to the Company in order to purchase Put Shares pursuant to the terms and conditions of this Agreement. Section 1.7 "Commitment Period" shall mean the period commencing on the earlier to occur of (i) the Effective Date or (ii) such earlier date as the Company and the Investor may mutually agree in writing, and expiring on the earliest to occur of (x) the date on which the Investor shall have purchased Put Shares pursuant to this Agreement for an aggregate Purchase Price of $20,000,000, (y) the date this Agreement is terminated pursuant to Section 2.5, or (z) the date occurring twenty-four (24) months from the date of commencement of the Commitment Period. Section 1.8 "Common Stock" shall mean the Company's common stock, no par value per share. 2 Section 1.9 "Common Stock Equivalents" shall mean any securities that are convertible into or exchangeable for Common Stock or any warrants, options or other rights to subscribe for or purchase Common Stock or any such convertible or exchangeable securities. Section 1.10 "Condition Satisfaction Date" See Section 7.2. Section 1.11 "Damages" shall mean any loss, claim, damage, liability, costs and expenses (including, without limitation, reasonable attorneys' fees and disbursements and costs and expenses of expert witnesses and investigation). Section 1.12 "Effective Date" shall mean the date on which the SEC first declares effective a Registration Statement registering resale of the Registrable Securities as set forth in Section 7.2(a). Section 1.13 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended and the regulations promulgated thereunder. Section 1.14 "Finder" See Section 13.4. Section 1.15 "Finder's Fee" See Section 13.4. Section 1.16 "Floor Price" shall mean the lowest price per share at which the Company will issue Put Shares, as may be determined from time to time by the Company and designated in an Optional Purchase Notice. Section 1.17 "Investment Amount" shall mean the dollar amount (within the range specified in Section 2.2) to be invested by the Investor to purchase Put Shares with respect to any Optional Purchase Date as notified by the Company to the Investor in accordance with Section 2.2 hereof. Section 1.18 "Legend" See Section 9.1. Section 1.19 "Material Adverse Effect" shall mean any effect on the business, operations, properties, prospects, or financial condition of the Company that is material and adverse to the Company and its subsidiaries and affiliates, taken as a whole, and/or any condition, circumstance, or situation that would prohibit or otherwise interfere with the ability of the Company to enter into and perform its obligations under any of (a) this Agreement and (b) the Registration Rights Agreement in any material respect. Section 1.20 "Maximum Put Amount" shall mean the lesser of (i) ten percent (10%) of the Average Daily Prices for the twenty-two Trading Days immediately preceding the Optional Purchase Date multiplied by the reported daily trading volume of the Common Stock on the Principal Market for the twenty-two Trading Days immediately preceding the Optional Purchase Date, or (ii) the amount specified in Section 7.2(j). Section 1.21 "Minimum Put Amount" shall mean $150,000 to the Investor for each Optional Purchase Notice. 3 Section 1.22 "NASD" shall mean the National Association of Securities Dealers, Inc. Section 1.23 "Optional Purchase Date" shall mean the Trading Day during the Commitment Period that an Optional Purchase Notice to sell Common Stock to the Investor is deemed delivered pursuant to Section 2.2(b) hereof. Section 1.24 "Optional Purchase Notice" shall mean a written notice to the Investor setting forth the Investment Amount that the Company intends to sell to the Investor. Section 1.25 "Outstanding" when used with reference to Common Shares or Capital Shares (collectively the "Shares"), shall mean, at any date as of which the number of such Shares is to be determined, all issued and outstanding Shares, and shall include all such Shares issuable in respect of outstanding scrip or any certificates representing fractional interests in such Shares; provided, however, that "Outstanding" shall not mean any such Shares then directly or indirectly owned or held by or for the account of the Company. Section 1.26 "Person" shall mean an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. Section 1.27 "Principal Market" shall mean the Nasdaq National Market, the Nasdaq Small-Cap Market, the OTC Bulletin Board, the American Stock Exchange or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock. As of the date of this Agreement, the OTC Bulletin Board is the Principal Market. Section 1.28 "Proportionate Share" shall mean the proportion of the Commitment Amount agreed to be purchased by the Investor as set forth on Schedule A. Section 1.29 "Purchase Price" as used in this Agreement shall mean the following: For each Trading Day during a Valuation Period (or such other date on which the Purchase Price is calculated in accordance with the terms and conditions of this Agreement) the Purchase Price shall be 92% of the VWAP for aggregate Investment Amounts up to $2,000,000; 93% of the VWAP for Investment Amount thereafter up to the aggregate of $6,000,000; and 94% of the VWAP for the balance of the Commitment Amount. Section 1.30 "Put" shall mean each occasion the Company elects to exercise its right to tender an Optional Purchase Notice requiring the Investor to purchase a discretionary amount as determined by the Company and as limited by this Agreement of the Company's Common Stock, subject to the terms of this Agreement, which tender must be given to each Investor for such Investor's Proportionate Share. Section 1.31 "Put Shares" shall mean all shares of Common Stock issued or issuable pursuant to a Put that has occurred or may occur in accordance with the terms and conditions of this Agreement. Section 1.32 "Registrable Securities" shall mean the Put Shares and Warrant Shares until the Registration Statement has been declared effective by the SEC and all Put Shares and Warrant Shares have been disposed of pursuant to the Registration Statement. 4 Section 1.33 "Registration Rights Agreement" shall mean the agreement regarding the filing of the Registration Statement for the resale of the Registrable Securities, entered into between the Company and the Investor as of the Subscription Date. Section 1.34 "Registration Statement" shall mean a registration statement on Form S-1 (if use of such form is then available to the Company pursuant to the rules of the SEC and, if not, on such other form promulgated by the SEC for which the Company then qualifies and which form shall be available for the resale of the Registrable Securities to be registered thereunder in accordance with the provisions of this Agreement and the Registration Rights Agreement, and in accordance with the intended method of distribution of such securities), for the registration of the resale by the Investor of the Registrable Securities under the Securities Act. Section 1.35 "Regulation D" shall mean Regulation D of the Securities Act. Section 1.36 "SEC" shall mean the Securities and Exchange Commission. Section 1.37 "Section 4(2)" shall mean Section 4(2) of the Securities Act. Section 1.38 "Securities Act" shall mean the United States Securities Act of 1933, as amended, and the regulations promulgated thereunder. Section 1.39 "SEC Documents" shall mean the Company's latest Form 10-K as of the time in question, all Forms 10-Q and 8-K filed thereafter, and the Proxy Statement for its latest fiscal year as of the time in question until such time the Company no longer has an obligation to maintain the effectiveness of a Registration Statement as set forth in the Registration Rights Agreement. Section 1.40 "Subscription Date" shall mean the date on which this Agreement is executed and delivered by the parties hereto. Section 1.41 "Trading Cushion" shall mean, at any time, the mandatory thirty (30) calendar days between Optional Purchase Dates and five (5) Trading Days after the most recent Closing Date. Section 1.42 "Trading Day" shall mean any day during which the New York Stock Exchange shall be open for business. Section 1.43 "Valuation Event" shall mean an event in which the Company at any time during a Valuation Period takes any of the following actions: (a) subdivides or combines its Common Stock; (b) pays a dividend in its Capital Stock or makes any other distribution of its Capital Shares; (c) issues any additional Capital Shares ("Additional Capital Shares"), otherwise than as provided in the foregoing Subsections (a) and (b) above, at a price per share less, or 5 for other consideration lower, than the Bid Price in effect on the Trading Day immediately prior to such issuance, or without consideration; (d) except for Awards (as defined in the Company's Stock Incentive Plan of 2001) issues any warrants, options or other rights to subscribe for or purchase any Additional Capital Shares and the price per share for which Additional Capital Shares may at any time thereafter be issuable pursuant to such warrants, options or other rights shall be less than the Bid Price in effect immediately prior to such issuance; (e) issues any securities convertible into or exchangeable for Capital Shares and the consideration per share for which Additional Capital Shares may at any time thereafter be issuable pursuant to the terms of such convertible or exchangeable securities shall be less than the Bid Price in effect immediately prior to such issuance; (f) makes a distribution of its assets or evidences of indebtedness to the holders of its Capital Shares as a dividend in liquidation or by way of return of capital or other than as a dividend payable out of earnings or surplus legally available for dividends under applicable law or any distribution to such holders made in respect of the sale of all or substantially all of the Company's assets (other than under the circumstances provided for in the foregoing subsections (a) through (e); or (g) takes any action affecting the number of Outstanding Capital Shares, other than an action described in any of the foregoing Subsections (a) through (f) hereof, inclusive, which in the opinion of the Company's Board of Directors, determined in good faith, would have a materially adverse effect upon the rights of the Investor at the time of a Put or Closing Date. Upon each occurrence of any one or more of the foregoing Valuation Events, the Purchase Price and number of Put Shares to be issued shall be adjusted to offset the dilutive effect of such one or more Valuation Events. Section 1.44 "Valuation Period" shall mean the period of twenty (20) Trading Days during which the Purchase Price of the Common Stock is determined, which period shall be with respect to the Purchase Prices on any Optional Purchase Date, the twenty (20) Trading Days following the day on which an Optional Purchase Notice is deemed to be delivered. Section 1.45 "VWAP" shall mean the daily volume weighted average price of the Common Stock on the Principal Market as reported by Bloomberg, L.P. using the AQR function. Section 1.46 "Warrants" shall mean the common stock purchase warrants of the Company described in Section 13.1, a form of which is annexed hereto as Exhibit E. Each Warrant shall evidence the right of the holder to purchase one Warrant Share. Section 1.47 "Warrant Recipient" See Section 13.1 and Schedule 13. Section 1.48 "Warrant Shares" shall mean the Common Stock issuable upon exercise of the Warrants. 6 ARTICLE II PURCHASE AND SALE OF COMMON STOCK Section 2.1 Puts. Upon the terms and conditions set forth herein (including, without limitation, the provisions of Article III hereof), on any Optional Purchase Date the Company may exercise a Put by the delivery of an Optional Purchase Notice. The number of Put Shares that the Investor shall receive pursuant to such Put shall be determined by dividing the relevant portions of the Investment Amount specified in the Optional Purchase Notice by the corresponding Purchase Prices for each Trading Day during the Valuation Period. Section 2.2 Mechanics. (a) Optional Purchase Notice. At any time during the Commitment Period, the Company may deliver an Optional Purchase Notice to the Investor, subject to the conditions set forth in Section 7.2; provided, however, the Investment Amount for each Put as designated by the Company in the applicable Optional Purchase Notices shall be neither less than the Minimum Put Amount to the Investor nor more than the Maximum Put Amount. The Optional Purchase Notice shall state the commencement date of the Valuation Period. (b) Date of Delivery of Optional Purchase Notice. An Optional Purchase Notice shall be deemed delivered on (i) the Trading Day it is received by facsimile or otherwise by the Investor if such notice is received prior to 12:00 noon New York time, or (ii) the immediately succeeding Trading Day if it is received by facsimile or otherwise after 12:00 noon New York time on a Trading Day or at any time on a day which is not a Trading Day. No Optional Purchase Notice may be deemed delivered on a day that is not a Trading Day. (c) Determination of Put Shares Issuable. The Purchase Price shall be based on the Average Daily Price on each separate Trading Day during the Valuation Period. The number of Put Shares to be purchased by each Investor with respect to such Investor's Proportionate Share shall be determined on a daily basis during each Valuation Period and settled on each Closing Date. The portion of Investment Amount for which Put Shares may be issued for each Trading Day during the Valuation Period may not exceed one-twentieth (1/20th) of the Investment Amount. (d) Maximum Optional Purchase Notices/Amount. There shall be a maximum of twenty-four (24) Optional Purchase Notices given during the term of this Agreement. Subject to the terms and conditions of this Agreement, the Company shall have the right to issue each Optional Purchase Notice for an Investment Amount up to the Maximum Put Amount. The Company may not issue an Optional Purchase Notice in connection with any amount of shares which would exceed the amount permitted to be issued without approval of the Company's shareholders, if such approval is required pursuant to the rules of the Principal Market. (e) Trading Halt Limitations and Blackouts. Unless the Investor elects in writing to the contrary, the Investor is not require to purchase Put Shares for any Trading Day during which trading of the Common Stock is suspended or halted for three or more hours or for any day during which any of the events described in Section 6.8 has occurred or is continuing. In such case, one-twentieth (1/20th) of the Investment Amount shall be withdrawn from 7 the Investment Amount for each such Trading Day. The Investor must notify the Company by facsimile or otherwise, no later than 6:15 P.M., New York time, on the tenth (10th) and twentieth (20th) Trading Days of the Valuation Period of the days for which the foregoing elections are made. (f) Floor Price. On each such date during the Valuation Period that the Purchase Price of the Common Stock is less than the Floor Price, (i) the Investment Amount specified in the applicable Put Notice shall be reduced by one-twentieth (1/20th), and (ii) the Company shall not sell and the Investor shall not purchase Put Shares equal to such reduction in the Investment Amount. The Investor, however, may elect in writing to purchase all such Put Shares at the Floor Price for one or more days for which the Purchase Price is less than the Floor Price. The Investor must notify the Company by facsimile or otherwise, no later than 6:30 P.M., New York time, on the tenth (10th) and twentieth (20th) Trading Days of the Valuation Period of the days for which the foregoing election is made. In any event, the Valuation Period may not be extended more than six Trading Days in relation to each Optional Purchase Notice. Section 2.3 Closings. On each Closing Date for a Put the Company shall deliver to the Investor or to escrow one or more certificates, at the Investor's option, representing the Put Shares to be purchased by the Investor pursuant to Section 2.1 herein, after the Optional Purchase Date and on or prior to such Closing Date, registered in the name of the Investor or, at the Investor's option, deposit such certificate(s) into such account or accounts previously designated by the Investor. If the Company is qualified to do so, delivery of Put Shares shall, at the Investor's election, be made by electronic transfer. The Investor shall deliver to escrow the Investment Amount specified in the Optional Purchase Notice by wire transfer of immediately available funds to an account designated by the Company on or before the Closing Date. In addition, on or prior to the Closing Date, each of the Company and the Investor shall deliver all documents, instruments and writings required to be delivered or reasonably requested by either of them pursuant to this Agreement in order to implement and effect the transactions contemplated herein. Payment of funds to the Company and delivery of the certificates to the Investor shall occur out of escrow in accordance with the escrow agreement referred to in Section 7.2(o) following (x) the Company's deposit into escrow of the certificates representing the Put Shares and (y) the Investor's deposit into escrow of the Investment Amount; provided, however, that to the extent the Company has not paid the fees, expenses and disbursements of the Investor's counsel in accordance with Section 13.1, the amount of such fees, expenses and disbursements shall be paid in immediately available funds drawn out of the deposited funds, at the direction of the Investor, to Investor's counsel with no reduction in the number of Put Shares issuable to the Investor on such Closing Date. Section 2.4 Liquidated Damages. In the event the Company issues an Optional Purchase Notice but fails or refuses to deliver Put Shares on a Closing Date, the Company will pay the Investor, as liquidated damages for such failure to deliver, and not as a penalty, five percent (5%) of the applicable Investment Amount for each seven (7) day period, or part thereof following such failure, in cash, until such Put Shares have been delivered. The Escrow Agent shall be directed to pay such liquidated damages to the Investor out of the Investment Amount delivered by the Investor to the Escrow Agent. Section 2.5 Termination of Investment Obligation. The obligation of the Investor to purchase shares of Common Stock shall terminate permanently (including with respect to a Closing Date that has not yet occurred) in the event that (i) there shall occur any stop trade order by the SEC or Principal Market or suspension by the SEC of the effectiveness of the Registration Statement for a consecutive five day calendar period or for an aggregate of twenty (20) Trading Days during the Commitment Period, for any reason, or (ii) the Company shall at any time fail to comply with the requirements of Article VI hereof, without regard to any cure period or written notice to cure which may be permitted or required. 8 ARTICLE III REPRESENTATIONS AND WARRANTIES OF INVESTOR The Investor represents and warrants to the Company that: Section 3.1 Intent. The Investor is entering into this Agreement for its own account and the Investor has no present arrangement (whether or not legally binding) at any time to sell the Common Stock to or through any person or entity; provided, however, that by making the representations herein, the Investor does not agree to hold the Common Stock for any minimum or other specific term and reserves the right to dispose of the Common Stock at any time in accordance with federal and state securities laws applicable to such disposition. Section 3.2 Sophisticated Investor. The Investor is a sophisticated investor (as described in Rule 506(b)(2)(ii) of Regulation D) or an accredited investor (as defined in Rule 501 of Regulation D), and Investor has such experience in business and financial matters that it is capable of evaluating the merits and risks of an investment in Common Stock. The Investor acknowledges that an investment in the Common Stock is speculative and involves a high degree of risk. Section 3.3 Authority. This Agreement has been duly authorized and validly executed and delivered by the Investor and is a valid and binding agreement of the Investor enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application. Section 3.4 Not an Affiliate. The Investor is not an officer, director or to Investor's good faith belief, an "affiliate" (as that term is defined in Rule 405 of the Securities Act) of the Company. Section 3.5 Absence of Conflicts. The execution and delivery of this Agreement and any other document or instrument executed in connection herewith, and the consummation of the transactions contemplated thereby, and compliance with the requirements thereof, will not violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on Investor, or, to the Investor's knowledge, (a) violate any provision of any indenture, instrument or agreement to which Investor is a party or is subject, or by which Investor or any of its assets is bound, (b) conflict with or constitute a material default thereunder, (c) result in the creation or imposition of any lien pursuant to the terms of any such indenture, instrument or agreement, or constitute a breach of any fiduciary duty owed by Investor to any third party, or (d) require the approval of any third-party (which has not been obtained) pursuant to any material contract, agreement, instrument, relationship or legal obligation to which Investor is subject or to which any of its assets, operations or management may be subject. Section 3.6 Disclosure; Access to Information. Investor has received all documents, records, books and other information pertaining to Investor's investment in the Company that have been requested by Investor. The Company is subject to the periodic reporting requirements of the Exchange Act, and Investor has had access to copies of any such reports that have been requested by it. 9 Section 3.7 Manner of Sale. At no time was Investor presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general solicitation or advertising. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to the Investor that: Section 4.1 Organization of the Company. The Company is a corporation duly organized and existing in good standing under the laws of the State of Colorado and has all requisite corporate authority to own its properties and to carry on its business as now being conducted. Except as set forth in the SEC Documents, the Company does not have any subsidiaries. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, other than those in which the failure so to qualify would not have a Material Adverse Effect. Section 4.2 Authority. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and the Registration Rights Agreement and to issue the Put Shares; (ii) the execution, issuance and delivery of this Agreement and the Registration Rights Agreement and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors or stockholders is required; and (iii) this Agreement and the Registration Rights Agreement have been duly executed and delivered by the Company and constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application. Section 4.3 Capitalization. The authorized and outstanding capital stock of the Company as of the Subscription Date is set forth on Schedule 4.3 hereto. Except as set forth in the SEC Documents or Schedule 4.3, as of the Subscription Date, there are no options, warrants or rights to subscribe for securities, rights or obligations convertible into or exchangeable for, or giving any rights to receive any Capital Shares. All of the outstanding shares of Common Stock of the Company have been duly and validly authorized and issued and are fully paid and nonassessable. Section 4.4 Common Stock. As of the commencement of and throughout the Commitment Period, the Company will have registered its Common Stock pursuant to Section 12(b) or 12(g) of the Exchange Act and be in full compliance with all reporting requirements of the Exchange Act, and the Company will have maintained all requirements for the continued listing or quotation of its Common Stock, and such Common Stock is then listed or quoted on the Principal Market. Section 4.5 SEC Documents. The Company has delivered or made available to the Investor true and complete copies of the SEC Documents (including, without limitation, proxy information and solicitation materials). The Company has not provided to the Investor any information that, according to applicable law, rule or regulation, should have been disclosed publicly prior to the date 10 hereof by the Company, but which has not been so disclosed. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and rules and regulations of the SEC promulgated thereunder and other federal, state and local laws, rules and regulations applicable to such SEC Documents, and none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company described above and/or included in the SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Section 4.6 Valid Issuances. If made in accordance with this Agreement, the sale by the Company of the Put Shares and Warrant will be properly accomplished pursuant to Section 4(2), Regulation D and/or any applicable state law. The sale by the Company of the Warrant Shares, if made in accordance with the terms of the Warrants, will be properly accomplished pursuant to Section 4(2), Regulation D and any applicable state law. When issued, the Put Shares shall be duly and validly issued, fully paid, and nonassessable. Neither the sales of the Put Shares and Warrant Shares pursuant to, nor the Company's performance of its obligations under, this Agreement or the Registration Rights Agreement will (i) result in the creation or imposition of any liens, charges, claims or other encumbrances upon the Put Shares or any of the assets of the Company, or (ii) entitle the holders of Outstanding Capital Shares to preemptive or other rights to subscribe to or acquire the Capital Shares or other securities of the Company. The Put Shares and Warrant Shares shall not subject the Investor or holder to personal liability by reason of the possession thereof. Section 4.7 No General Solicitation or Advertising in Regard to this Transaction. Neither the Company nor any of its affiliates nor any distributor or any person acting on its or their behalf, if any, (i) has conducted or will conduct any general solicitation (as that term is used in Rule 502(c) of Regulation D) or general advertising with respect to any of the Put Shares or Warrant Shares, or (ii) made any offers or sales of any security or solicited any offers to buy any security under any circumstances that would require registration of the sale of the Put Shares or the Warrant Shares under the Securities Act. Section 4.8 Corporate Documents. The Company has furnished or made available to the Investor true and correct copies of the Company's Articles of Incorporation, as amended and in effect on the date hereof (the "Certificate"), and the Company's By-Laws, as amended and in effect on the date hereof (the "By-Laws"). Section 4.9 No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby, including, without limitation, the issuance of Common Stock, Warrants and Warrant Shares do not and will not (i) result in a 11 violation of the Company's Articles of Incorporation or By-Laws or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture, instrument or any "lock-up" or similar provision of any underwriting or similar agreement to which the Company is a party, or (iii) result in a violation of any federal, state, local or foreign law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect) nor is the Company otherwise in violation of, conflict with or in default under any of the foregoing; provided that, for purposes of the Company's representations and warranties as to violations of foreign law, rule or regulation referenced in clause (iv), such representations and warranties are made only to the best of the Company's knowledge insofar as the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby are or may be affected by the status of the Investor under or pursuant to any such foreign law, rule or regulation. The business of the Company is not being conducted in violation of any law, ordinance or regulation of any governmental entity, except for possible violations that either singly or in the aggregate do not and will not have a Material Adverse Effect. The Company is not required under federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or issue and sell the Common Stock in accordance with the terms hereof other than any SEC, NASD, Principal Market or state securities filings that may be required to be made by the Company subsequent to any Closing, any registration statement that may be filed pursuant hereto, and any shareholder approval required by the rules applicable to companies whose common stock trades on the Principal Market. Section 4.10 No Material Adverse Change. Since the date of the most recent financial statements included in the SEC Documents, no Material Adverse Effect has occurred or exists with respect to the Company, except as disclosed in the SEC Documents. Section 4.11 No Undisclosed Liabilities. The Company has no liabilities or obligations which are material, individually or in the aggregate, and are not disclosed in the SEC Documents or otherwise publicly announced, other than those incurred in the ordinary course of the Company's businesses since the date of the most recent financial statements included in the SEC Documents and which, individually or in the aggregate, do not or would not have a Material Adverse Effect on the Company. Section 4.12 No Undisclosed Events or Circumstances. Since the date of the most recent financial statements included in the SEC Documents, no event or circumstance has occurred or exists with respect to the Company or its businesses, properties, prospects, operations or financial condition, that, under applicable law, rule or regulation, requires public disclosure or announcement prior to the date hereof by the Company but which has not been so publicly announced or disclosed in the SEC Documents. Section 4.13 No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, other than pursuant to this Agreement, under circumstances that would require registration of the Common Stock under the Securities Act. 12 Section 4.14 Litigation and Other Proceedings. Except as may be set forth in the SEC Documents, there are no lawsuits or proceedings pending or to the best knowledge of the current management and Board of Directors of the Company threatened, against the Company, nor has the Company received any written or oral notice of any such action, suit, proceeding or investigation, which might have a Material Adverse Effect. Except as set forth in the SEC Documents, no judgment, order, writ, injunction or decree or award has been issued by or, so far as is known by the Company, requested of any court, arbitrator or governmental agency which might result in a Material Adverse Effect. Section 4.15 No Misleading or Untrue Communication. The Company and any Person representing the Company, in connection with the transactions contemplated by this Agreement, have not made, at any time, any oral or written communication in connection with same, which contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading. Section 4.16 Material Non-Public Information. The Company is not in possession of, nor has the Company or its agents disclosed to the Investor, any material non-public information that (i) if disclosed, would, or could reasonably be expected to have, an effect on the price of the Common Stock or (ii) according to applicable law, rule or regulation, should have been disclosed publicly by the Company prior to the date hereof but which has not been so disclosed. ARTICLE V COVENANTS OF THE INVESTOR Section 5.1 Compliance with Law. The Investor's trading activities with respect to shares of the Company's Common Stock will be in compliance with all applicable state and federal securities laws, rules and regulations and the rules and regulations of the Principal Market on which the Company's Common Stock is listed. ARTICLE VI COVENANTS OF THE COMPANY Section 6.1 Registration Rights. The Company shall cause the Registration Rights Agreement to remain in full force and effect and the Company shall comply in all respects with the terms thereof. Section 6.2 Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, shares of Common Stock for the purpose of enabling the Company to satisfy any obligation to issue the Put Shares; such amount of shares of Common Stock to be reserved shall be calculated based upon the minimum Purchase Price therefor under the terms of this Agreement. Section 6.3 Listing of Common Stock. The Company shall maintain the listing of the Common Stock on a Principal Market, and as soon as practicable (but in any event prior to the commencement of the Commitment Period) to list the Put Shares and Warrant Shares on the Principal Market. The Company further shall, if the Company applies to have the Common Stock traded on any other Principal Market, include in such application the Put Shares, and shall take 13 such other action as is necessary or desirable in the opinion of the Investor to cause the Common Stock to be listed on such other Principal Market as promptly as possible. The Company shall take all action necessary to continue the listing and trading of its Common Stock on a Principal Market (including, without limitation, maintaining sufficient net tangible assets) and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of such Principal Market. Section 6.4 Exchange Act Registration. The Company shall cause its Common Stock to continue to be registered under Section 12(g) or 12(b) of the Exchange Act, will comply in all respects with its reporting and filing obligations under said Act, and will not take any action or file any document (whether or not permitted by said Act or the rules thereunder) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under said Act. The Company will take all action to continue the listing and trading of its Common Stock on the Principal Market and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of the Principal Market. Section 6.5 Legends. The certificates evidencing the Common Stock to be sold by the Investor pursuant to Section 9.1 shall be free of legends. Section 6.6 Corporate Existence. The Company will take all steps necessary to preserve and continue the corporate existence of the Company. Section 6.7 Additional SEC Documents. The Company will deliver to the Investor, as and when the originals thereof are submitted to the SEC for filing, copies of all SEC Documents so furnished or submitted to the SEC. Section 6.8 Blackout Period. Subject to the requirements of Regulation FD under the Exchange Act, the Company will immediately notify the Investor upon the occurrence of any of the following events in respect of a Registration Statement or related prospectus in respect of an offering of Registrable Securities; (i) receipt of any request for additional information by the SEC or any other federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or related prospectus; (ii) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (iv) the happening of any event that makes any statement made in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related prospectus, it will not contain any untrue statement of a material fact or omit to state any 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; and (v) the Company's reasonable determination that a post-effective amendment to the Registration Statement would be appropriate; and the Company will promptly make available to the Investor any such supplement or amendment to the related prospectus. The Company shall not deliver to the Investor any Optional Purchase Notice during the continuation of any of the foregoing events. 14 Section 6.9 Expectations Regarding Optional Purchase Notices. Within ten (10) days after the commencement of each calendar quarter occurring subsequent to the commencement of the Commitment Period, the Company undertakes to notify the Investor as to its reasonable expectations as to the dollar amount it intends to raise during such calendar quarter, if any, through the issuance of Optional Purchase Notices. Such notification shall constitute only the Company's good faith estimate and shall in no way obligate the Company to raise such amount, or any amount, or otherwise limit its ability to deliver Optional Purchase Notices. The failure by the Company to comply with this provision can be cured by the Company's notifying the Investor at any time as to its reasonable expectations with respect to the current calendar quarter. Section 6.10 Consolidation; Merger. The Company shall not, at any time after the date hereof, effect any merger or consolidation of the Company with or into, or a transfer of all or substantially all of the assets of the Company to, another entity (a "Consolidation Event") unless the resulting successor or acquiring entity (if not the Company) assumes by written instrument the obligation to deliver to the Investor such shares of stock and/or securities as the Investor is entitled to receive pursuant to this Agreement. Section 6.11 Issuance of Put Shares. The sale and issuance of the Put Shares and Warrant Shares shall be made in accordance with the provisions and requirements of applicable state law. ARTICLE VII CONDITIONS TO DELIVERY OF OPTIONAL PURCHASE NOTICES AND CONDITIONS TO CLOSING Section 7.1 Conditions Precedent to the Obligation of the Company to Issue and Sell Common Stock. The obligation hereunder of the Company to issue and sell the Put Shares to the Investor incident to each Closing is subject to the satisfaction, at or before each such Closing, of each of the conditions set forth below. (a) Accuracy of the Investor's Representation and Warranties. The representations and warranties of the Investor shall be true and correct in all material respects as of the date of this Agreement and as of the date of each such Closing as though made at each such time. (b) Performance by the Investor. The Investor shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Investor at or prior to such Closing. Section 7.2 Conditions Precedent to the Right of the Company to Deliver an Optional Purchase Notice and the Obligation of the Investor to Purchase Put Shares. The right of the Company to deliver an Optional Purchase Notice and the obligation of the Investor hereunder to acquire and pay for the Put Shares incident to a Closing is subject to the satisfaction, on (i) the date of delivery of such Optional Purchase Notice, (ii) for each day during the Valuation Period; and (iii) the applicable Closing Date (each a "Condition Satisfaction Date"), of each of the following conditions: 15 (a) Registration of the Common Stock with the SEC. As set forth in the Registration Rights Agreement, the Company shall have filed with the SEC a Registration Statement with respect to the resale of the Registrable Securities that shall have been declared effective by the SEC prior to the first Optional Purchase Date, but in no event later than the date set forth in the Registration Rights Agreement and shall have filed a prospectus supplement on the first trading day after each Closing Date. (b) Effective Registration Statement. As set forth in the Registration Rights Agreement, the Registration Statement shall have previously become effective and shall remain effective on each Condition Satisfaction Date and (i) neither the Company nor the Investor shall have received notice that the SEC has issued or intends to issue a stop order with respect to the Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened to do so, and (ii) no other suspension of the use or withdrawal of the effectiveness of the Registration Statement or related prospectus shall exist. (c) Accuracy of the Company's Representations and Warranties. The representations and warranties of the Company shall be true and correct in all material respects as of each Condition Satisfaction Date as though made at each such time (except for representations and warranties specifically made as of a particular date) with respect to all periods, and as to all events and circumstances occurring or existing to and including each Condition Satisfaction Date, except for any conditions which have temporarily caused any representations or warranties herein to be incorrect and which have been corrected with no continuing impairment to the Company or the Investor. (d) Performance by the Company. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement and the Registration Rights Agreement to be performed, satisfied or complied with by the Company at or prior to each Condition Satisfaction Date. (e) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or directly and adversely affects any of the transactions contemplated by this Agreement, and no proceeding shall have been commenced that may have the effect of prohibiting or adversely affecting any of the transactions contemplated by this Agreement. (f) Adverse Changes. Since the date of filing of the Company's most recent SEC Document, no event that had or is reasonably likely to have a Material Adverse Effect has occurred. (g) No Suspension of Trading In or Delisting of Common Stock. The trading of the Common Stock (including without limitation the Put Shares) shall not have been suspended by the SEC, the Principal Market or the NASD and the Common Stock (including without limitation the Put Shares) shall have been approved for listing or quotation on and shall not have been delisted from the Principal Market. The issuance of shares of Common Stock with respect to the applicable Closing, if any, shall not violate the shareholder approval requirements of the Principal Market. (h) Legal Opinions. The Company shall have caused to be delivered to the Investor, within five (5) Trading Days of the effective date of the Registration Statement, an opinion of the Company's independent counsel in the form of Exhibit B hereto, addressed to the Investor; provided, however, 16 that in the event that such an opinion cannot be delivered by the Company's independent counsel to the Investor, the Company shall promptly revise the Registration Statement and shall not deliver an Optional Purchase Notice. If an Optional Purchase Notice shall have been delivered in good faith without knowledge by the Company that an opinion of independent counsel can not be delivered as required, at the option of the Investor, either the applicable Closing Date shall automatically be postponed for a period of up to five (5) Trading Days until such an opinion is delivered to the Investor, or such Closing shall otherwise be canceled. Liquidated damages determined pursuant to Section 2.4 shall be calculated and payable on the Closing Date. The Company's independent counsel shall also deliver to the Investor upon execution of this Agreement an opinion in form and substance reasonably satisfactory to the Investor addressing, among other things, corporate matters and the exemption from registration under the Securities Act of the issuance of the Registrable Securities by the Company to the Investor under this Agreement. (i) Due Diligence. No dispute between the Company and the Investor shall exist pursuant to Section 8.2(c) as to the adequacy of the disclosure contained in the Registration Statement. (j) Beneficial Ownership Limitation. On each Closing Date, the number of Put Shares then to be purchased by the Investor shall not exceed the number of such shares that, when aggregated with all other shares of Common Stock then owned by the Investor beneficially or deemed beneficially owned by the Investor, would result in the Investor owning more than 4.99% of all of such Common Stock as would be outstanding on such Closing Date, as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder. For purposes of this Section 7.2(j), in the event that the amount of Common Stock outstanding as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder is greater on a Closing Date than on the date upon which the Optional Purchase Notice associated with such Closing Date is given, the amount of Common Stock outstanding on such Closing Date shall govern for purposes of determining whether the Investor, when aggregating all purchases of Common Stock made pursuant to this Agreement and, if any, Shares, would own more than 4.99% of the Common Stock following such Closing Date. (k) Cross Default. The Company shall not be in default of a material term, covenant, warranty or undertaking of any other agreement to which the Company and any Investor are parties, nor shall there have occurred an event of default under any such other agreement to which the Investor and Company are parties. (l) No Knowledge. The Company shall have no knowledge of any event more likely than not to have the effect of causing such Registration Statement to be suspended or otherwise ineffective (which event is more likely than not to occur within the fifteen Trading Days following the Trading Day on which such Notice is deemed delivered). (m) Trading Cushion. The Trading Cushion shall have elapsed since the immediately preceding Optional Purchase Date and Closing Date. (n) Shareholder Vote. The issuance of shares of Common Stock with respect to the applicable Closing, if any, shall not violate the shareholder approval requirements of the Principal Market or the laws of any jurisdiction to which the Company is subject. 17 (o) Escrow Agreement. If requested by the Company or any Investor, the parties hereto shall have entered into a mutually approved escrow agreement for the Purchase Price due hereunder and the Company shall have agreed to pay the fees and expenses of the Escrow Agent and not be in default of any such payments. (p) Voting Restrictions. The Investor shall not be subject to voting or other restrictions arising under any applicable "anti-takeover" laws, rules or regulations. (q) Other. On each Condition Satisfaction Date, the Investor shall have received and been reasonably satisfied with such other certificates and documents as shall have been reasonably requested by the Investor in order for the Investor to confirm the Company's satisfaction of the conditions set forth in this Section 7.2., including, without limitation, a certificate in substantially the form and substance of Exhibit C hereto, executed in either case by an executive officer of the Company and to the effect that all the conditions to such Closing shall have been satisfied as at the date of each such certificate. ARTICLE VIII DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION Section 8.1 Due Diligence Review. The Company shall make available for inspection and review by the Investor, advisors to and representatives of the Investor (who may or may not be affiliated with the Investor and who are reasonably acceptable to the Company), any underwriter participating in any disposition of the Registrable Securities on behalf of the Investor pursuant to the Registration Statement, any such registration statement or amendment or supplement thereto or any blue sky, NASD, Principal Market, or other filing, all financial and other records, all SEC Do cuments and other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably necessary for the purpose of such review, and cause the Company's officers, directors and employees to supply all such information reasonably requested by the Investor or any such representative, advisor or underwriter in connection with such Registration Statement (including, without limitation, in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of the Registration Statement for the sole purpose of enabling the Investor and such representatives, advisors and underwriters and their respective accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of the Registration Statement. Section 8.2 Non-Disclosure of Non-Public Information. ---------------------------------------- (a) The Company represents and warrants that the Company and its officers, directors, employees and agents have not disclosed any non-public information to the Investor or advisors to or representatives of the Investor. The Company covenants and agrees that it shall refrain from disclosing, and shall cause its officers, directors, employees and agents to refrain from disclosing, unless prior to disclosure of such information the Company identifies such information as being non-public information and provides the Investor, such advisors and representatives with the opportunity to accept or refuse to accept such non-public information for review. The Company may, as a condition to disclosing any non-public information hereunder, require the Investor's advisors and representatives to enter into a confidentiality agreement in form reasonably satisfactory to the Company and the Investor. 18 (b) The Company acknowledges and understands that the Investor is entering into this Agreement and the Registration Rights Agreement at the request of the Company and in good faith reliance on the Company's representation set forth in Section 4.16 that neither it nor its agents have disclosed to the Investor any material non-public information. (c) Nothing herein shall require the Company to disclose non-public information to the Investor or its advisors or representatives, and the Company represents that it does not disseminate non-public information to any Investor who purchase stock in the Company in a public offering, to money managers or to securities analysts, in violation of Regulation FD of the Exchange Act provided, subject to its compliance with Regulation FD of the Exchange Act, however, that notwithstanding anything herein to the contrary, the Company will, as hereinabove provided, immediately notify the advisors and representatives of the Investor and, if any, underwriters, of any event or the existence of any circumstance (without any obligation to disclose the specific event or circumstance) of which it becomes aware, constituting non-public information (whether or not requested of the Company specifically or generally during the course of due diligence by such persons or entities), which, if not disclosed in the prospectus included in the Registration Statement would cause such prospectus to include a material misstatement or to omit a material fact required to be stated therein in order to make the statements, therein, in light of the circumstances in which they were made, not misleading. Nothing contained in this Section 8.2 shall be construed to mean that such persons or entities other than the Investor (without the written consent of the Investor prior to disclosure of such information) may not obtain non-public information in the course of conducting due diligence in accordance with the terms of this Agreement and nothing herein shall prevent any such persons or entities from notifying the Company of their opinion that based on such due diligence by such persons or entities, that the Registration Statement contains an untrue statement of a material fact or omits a material fact required to be stated in the Registration Statement or necessary to make the statements contained therein, in light of the circumstances in which they were made, not misleading. Section 8.3 Confidentiality. The Company agrees that it will not publicly or privately disclose the identities of the Investor, Warrant Recipients, or Finders unless expressly agreed to in writing by the Investor or otherwise required by law. ARTICLE IX LEGENDS Section 9.1 Legends. Unless otherwise provided below, each certificate representing Registrable Securities will bear the following legend (the "Legend"): THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR 19 ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A PRIVATE EQUITY LINE OF CREDIT AGREEMENT AMONG WORLDWIDE PETROMOLY, INC. AND CERTAIN INVESTOR DATED SEPTEMBER ___, 2001. A COPY OF THE PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE OFFICES. Upon the execution and delivery hereof, the Company is issuing to the transfer agent for its Common Stock (and to any substitute or replacement transfer agent for its Common Stock upon the Company's appointment of any such substitute or replacement transfer agent) instructions in substantially the form of Exhibit D hereto. Such instructions shall be irrevocable by the Company from and after the date hereof or from and after the issuance thereof to any such substitute or replacement transfer agent, as the case may be, except as otherwise expressly provided in the Registration Rights Agreement. It is the intent and purpose of such instructions, as provided therein, to require the transfer agent for the Common Stock from time to time upon transfer of Registrable Securities by the Investor to issue certificates evidencing such Registrable Securities free of the Legend during the following periods and under the following circumstances and without consultation by the transfer agent with the Company or its counsel and without the need for any further advice or instruction or documentation to the transfer agent by or from the Company or its counsel or the Investor: (a) at any time after the Effective Date, upon surrender of one or more certificates evidencing Common Stock that bear the Legend, to the extent accompanied by a notice requesting the issuance of new certificates free of the Legend to replace those surrendered, or prior to issuance of a certificate; provided that (i) the Registration Statement shall then be effective; (ii) the Investor confirms to the transfer agent that it has sold, pledged or otherwise transferred or agreed to sell, pledge or otherwise transfer such Common Stock in a bona fide transaction to a third party that is not an affiliate of the Company; and (iii) the Investor or sales agent confirms to the transfer agent that the Investor or sales agent has complied with the prospectus delivery requirement; and (b) at any time upon any surrender of one or more certificates evidencing Registrable Securities that bear the Legend, to the extent accompanied by a notice requesting the issuance of new certificates free of the Legend to replace those surrendered and containing representations that (i) the Investor is permitted to dispose of such Registrable Securities without limitation as to amount or manner of sale pursuant to Rule 144(k) under the Securities Act or (ii) the Investor has sold, pledged or otherwise transferred or agreed to sell, pledge or otherwise transfer such Registrable Securities in a manner other than pursuant to an effective registration statement, to a transferee who will upon such transfer be entitled to freely tradeable securities. Any of the notices referred to above in this Section 9.1 may be sent by facsimile to the Company's transfer agent. 20 Section 9.2 No Other Legend or Stock Transfer Restrictions. No legend other than the one specified in Section 9.1 has been or shall be placed on the share certificates representing the Common Stock and no instructions or "stop transfers orders," so called, "stock transfer restrictions," or other restrictions have been or shall be given to the Company's transfer agent with respect thereto other than as expressly set forth in this Article IX. ARTICLE X CHOICE OF LAW/VENUE Section 10.1 Choice of Law/Venue. This Agreement and the Registration Rights Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement or the Registration Rights Agreement shall be brought only in the state courts of New York or in the federal courts located in the state of New York. Both parties and the individuals executing this Agreement and other agreements on behalf of the Company agree to submit to the jurisdiction of such courts and waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. ARTICLE XI ASSIGNMENT; ENTIRE AGREEMENT, AMENDMENT; TERMINATION Section 11.1 Assignment. Neither this Agreement nor any rights of the Investor or the Company hereunder may be assigned by either party to any other person. Notwithstanding the foregoing, (a) the provisions of this Agreement shall inure to the benefit of, and be enforceable by, and be binding upon, any transferee of any of the Common Stock or Warrants purchased or acquired by the Investor or Warrant Recipient hereunder with respect to the Common Stock held by such person unless such Common Stock is free from restrictions on further transfer of such Common Stock, and (b) the Investor's and Warrant Recipient's obligations and corresponding rights set forth in this Agreement may be assigned at any time, in whole or in part, to any other person or entity (including any affiliate of the Investor or Warrant Recipient) effective upon written notice to the Company. The Company shall have the right to require any transferee to execute a counterpart of this Agreement unless the Common Stock held by such transferee is free from further restrictions on transfer. Section 11.2 Termination. This Agreement shall terminate twenty-four (24) months after the commencement of the Commitment Period; provided, however, that the provisions of Articles VI, VIII, IX, X, XI, XII, XIII and XIV shall survive the termination of this Agreement. Section 11.3 Entire Agreement, Amendment. This Agreement and the Registration Rights Agreement constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth in this Agreement or therein. Except as expressly provided in this Agreement, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by both parties hereto. 21 ARTICLE XII NOTICES; INDEMNIFICATION Section 12.1 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: If to Worldwide Petromoly, Inc.: Worldwide Petromoly, Inc. 12600 Deerfield Parkway Suite 100 Alpharetta, Georgia 30004 Telecopier: (678) 762-3296 with a copy to (which communication shall not constitute notice): Paul, Hastings, Janofsky & Walker, LLP Suite 2400 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Attn: Melissa McMorries, Esq. Telecopier: (404) 815-2424 22 If to the Investor: To the address and telecopier number set forth on Schedule A hereto with a copy to (which communication shall not constitute notice): Barbara R. Mittman, Esq. c/o Grushko & Mittman, P.C. 551 Fifth Avenue, Suite 1601 New York, New York 10176 Telecopier: (212) 697-3575 Either party hereto may from time to time change its address or facsimile number for notices under this Section 12.1 by giving at least ten (10) days' prior written notice of such changed address or facsimile number to the other party hereto. Section 12.2 Indemnification. (a) The Company agrees to indemnify and hold harmless the Investor, its partners, Affiliates, officers, directors, employees, and duly authorized agents, and each Person or entity, if any, who controls the Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, together with the Controlling Persons (as defined in the Registration Rights Agreement) from and against any Damages, joint or several, and any action in respect thereof to which the Investor, its partners, Affiliates, officers, directors, employees, and duly authorized agents, and any such Controlling Person becomes subject to, resulting from, arising out of or relating to any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of Company contained in this Agreement in any event as such Damages are incurred. (b) The Investor agrees to indemnify and hold harmless the Company, its partners, Affiliates, officers, directors, employees, and duly authorized agents, and each Person or entity, if any, who controls the Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, together with the Controlling Persons (as defined in the Registration Rights Agreement) from and against any Damages, joint or several, and any action in respect thereof to which the Company, its partners, Affiliates, officers, directors, employees, and duly authorized agents, and any such Controlling Person becomes subject to, resulting from, arising out of or relating to any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of Investor contained in this Agreement in an aggregate amount not to exceed one-third of each such Investor's Proportionate Share. Section 12.3 Method of Asserting Indemnification Claims. All claims for indemnification by any Indemnified Party (as defined below) under Section 12.2 will be asserted and resolved as follows: (a) In the event any claim or demand in respect of which any person claiming indemnification under any provision of Section 12.2 (an "Indemnified Party") might seek indemnity under Section 12.2 is asserted against or sought to be collected from such Indemnified Party by a person other than the Company, the Investor or any affiliate of the Company (a "Third Party Claim"), the Indemnified Party shall deliver a written notification, enclosing a copy of all papers served, if any, and specifying the nature of and basis for such Third Party Claim and for the Indemnified Party's claim for indemnification 23 that is being asserted under any provision of Section 12.2 against any person (the "Indemnifying Party"), together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such Third Party Claim (a "Claim Notice") with reasonable promptness to the Indemnifying Party. If the Indemnified Party fails to provide the Claim Notice with reasonable promptness after the Indemnified Party receives notice of such Third Party Claim, the Indemnifying Party will not be obligated to indemnify the Indemnified Party with respect to such Third Party Claim to the extent that the Indemnifying Party's ability to defend has been irreparably prejudiced by such failure of the Indemnified Party. The Indemnifying Party will notify the Indemnified Party as soon as practicable within the period ending thirty (30) calendar days following receipt by the Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined below) (the "Dispute Period") whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party under Section 12.2 and whether the Indemnifying Party desires, at its sole cost and expense, to defend the Indemnified Party against such Third Party Claim. 1. If the Indemnifying Party notifies the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Indemnified Party with respect to the Third Party Claim pursuant to this Section 12.3(a), then the Indemnifying Party will have the right to defend, with counsel reasonably satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying Party, such Third Party Claim by all appropriate proceedings, which proceedings will be vigorously and diligently prosecuted by the Indemnifying Party to a final conclusion or will be settled at the discretion of the Indemnifying Party (but only with the consent of the Indemnified Party in the case of any settlement that provides for any relief which affects the Indemnified Party, other than the payment of monetary damages, or that provides for the payment of monetary damages as to which the Indemnified Party will not be indemnified in full pursuant to Section 12.2). The Indemnifying Party will have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that the Indemnified Party may, at the sole cost and expense of the Indemnified Party, at any time prior to the Indemnifying Party's delivery of the notice referred to in the first sentence of this clause 1, file any motion, answer or other pleadings or take any other action that the Indemnified Party reasonably believes to be necessary or appropriate to protect its interests; and provided further, that if requested by the Indemnifying Party, the Indemnified Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnifying Party in contesting any Third Party Claim that the Indemnifying Party elects to contest. The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim controlled by the Indemnifying Party pursuant to this clause 1, and except as provided in the preceding sentence, the Indemnified Party will bear its own costs and expenses with respect to such participation. Notwithstanding the foregoing, the Indemnified Party may take over the control of the defense or settlement of a Third Party Claim at any time if it irrevocably waives its right to indemnity under Section 12.2 with respect to such Third Party Claim. 2. If the Indemnifying Party fails to notify the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Third Party Claim pursuant to Section 12.3(a), or if the Indemnifying Party gives such notice but fails to prosecute vigorously and diligently or settle the Third Party Claim, or if the Indemnifying Party fails to give any notice whatsoever within the Dispute Period, then the Indemnified Party will have the right to defend, at the sole cost and expense of the Indemnifying Party, the Third Party Claim by all appropriate proceedings, which proceedings will be prosecuted by the Indemnified Party in a reasonable manner and in good faith or will be settled at the discretion of the Indemnified Party (with the consent of the Indemnifying Party, which consent will not be unreasonably withheld). The Indemnified Party will have full control of such 24 defense and proceedings, including any compromise or settlement thereof; provided, however, that if requested by the Indemnified Party, the Indemnifying Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnified Party and its counsel in contesting any Third Party Claim which the Indemnified Party is contesting. Notwithstanding the foregoing provisions of this clause 2, if the Indemnifying Party has notified the Indemnified Party within the Dispute Period that the Indemnifying Party disputes its liability or the amount of its liability hereunder to the Indemnified Party with respect to such Third Party Claim and if such dispute is resolved in favor of the Indemnifying Party in the manner provided in clause 3 below, the Indemnifying Party will not be required to bear the costs and expenses of the Indemnified Party's defense pursuant to this clause 2 or of the Indemnifying Party's participation therein at the Indemnified Party's request, and the Indemnified Party will reimburse the Indemnifying Party in full for all reasonable costs and expenses incurred by the Indemnifying Party in connection with such litigation. The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this clause 2, and the Indemnifying Party will bear its own costs and expenses with respect to such participation. 3. If the Indemnifying Party notifies the Indemnified Party that it does not dispute its liability or the amount of its liability to the Indemnified Party with respect to the Third Party Claim under Section 12.2 or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party with respect to such Third Party Claim, the loss in the amount specified in the Claim Notice will be conclusively deemed a liability of the Indemnifying Party under Section 12.2 and the Indemnifying Party shall pay the amount of such Loss to the Indemnified Party on demand. In the event any Indemnified Party should have a claim under Section 12.2 against the Indemnifying Party that does not involve a Third Party Claim, the Indemnified Party shall deliver a written notification of a claim for indemnity under Section 12.2 specifying the nature of and basis for such claim, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such claim (an "Indemnity Notice") with reasonable promptness to the Indemnifying Party. The failure by any Indemnified Party to give the Indemnity Notice shall not impair such party's rights hereunder except to the extent that the Indemnifying Party demonstrates that it has been irreparably prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party that it does not dispute the claim or the amount of the claim described in such Indemnity Notice or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes the claim or the amount of the claim described in such Indemnity Notice, the Loss in the amount specified in the Indemnity Notice will be conclusively deemed a liability of the Indemnifying Party under Section 12.2 and the Indemnifying Party shall pay the amount of such Loss to the Indemnified Party on demand. ARTICLE XIII FEES-EXPENSES-WARRANTS Section 13.1 Warrants. The party identified on Schedule 13 hereto ("Warrant Recipients") shall receive 175,000 Warrants. A form of Warrant is annexed hereto as Exhibit E. The Purchase Price (as defined in the Warrant) shall be 110% of the Bid Price on the Trading Day immediately preceding the Subscription Date. The Warrants will be exercisable for three years from the Issue Date (as defined in the Warrant). The Warrant Recipients are granted the 25 registration rights set forth in the Registration Rights Agreement with respect to the Warrant Shares. The Company's obligations to the Warrant Recipients is binding even if the Registration Rights Agreement is not signed by the Warrant Recipients. The Warrants must be delivered to the Warrant Recipients on the Subscription Date. All the representations, undertakings and covenants made by the Company to or for the benefit of the Investor relating to the Put Shares and to or for the benefit of the holder of Put Shares are also made by the Company to and for the benefit of the Warrant Recipients and in relation to the Warrant Shares. Section 13.2 Timely Delivery. In the event any Warrants are not timely delivered, the Investor shall have no obligation to purchase Put Shares pursuant to this Agreement. Section 13.3 Fees and Expenses. Each of the Company and the Investor agrees to pay its own expenses incident to the performance of its obligations hereunder, except that the Company shall pay the fees, and reasonable expenses and disbursements of the Investor's counsel in an amount of $20,000, one-half of which shall be payable on or before the Subscription Date and the other half of which shall be payable out of the proceeds of the first Closing on an Optional Purchase Notice. Section 13.4 Finders. Each of the parties hereto represents that it has had no dealings in connection with this transaction with any finder or broker who will demand payment of any fee or commission from the Company or Investor except as described on Schedule 13 ("Finder"). The Company agrees to pay to the Finder the fees described on Schedule 13 ("Finder's Fee"). The Finder's Fee shall be paid as described on Schedule 13. The Company on the one hand, and the Investor, on the other hand, agree to indemnify the other against and hold the other harmless from any and all liabilities to any other persons claiming brokerage commissions or finder's fees on account of services purported to have been rendered on behalf of the indemnifying party in connection with this Agreement or the transactions contemplated hereby and arising out of such party's actions. ARTICLE XIV MISCELLANEOUS Section 14.1 Counterparts. This Agreement may be executed in multiple counterparts, each of which may be executed by less than all of the parties and shall be deemed to be an original instrument which shall be enforceable against the parties actually executing such counterparts and all of which together shall constitute one and the same instrument. This Agreement may be delivered by telecopier transmission which such copy shall be deemed an original executed Agreement. Section 14.2 Entire Agreement. This Agreement, the Exhibits hereto, the documents delivered in connection herewith, and the Registration Rights Agreement set forth the entire agreement and understanding of the parties relating to the subject matter hereof and supersedes all prior and contemporaneous agreements, negotiations and understandings between the parties, both oral and written relating to the subject matter hereof. The terms and conditions of all Exhibits to this Agreement are incorporated herein by this reference and shall constitute part of this Agreement as if fully set forth herein. Section 14.3 Survival; Severability. The representations, warranties, covenants and agreements of the parties hereto shall survive each Closing hereunder. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that such severability shall be ineffective if it materially changes the economic benefit of this Agreement to any party. 26 Section 14.4 Title and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. Section 14.5 Reporting Entity for the Common Stock. The reporting entity relied upon for the determination of the Bid Price, VWAP, trading price or trading volume of the Common Stock on any given Trading Day for the purposes of this Agreement shall be Bloomberg, L.P. or any successor thereto. The written mutual consent of the Investor and the Company shall be required to employ any other reporting entity. Section 14.6 Remedies for Breach. The Company and each Investor acknowledges that the other party's remedy at law for the breach of the provisions provided in this Agreement is inadequate. Therefore, the Company and each Investor agrees that a breach or violation of this Agreement by the Company, on the one hand, and the Investor, on the other hand, will entitle the other party, as a matter of right, to an injunction or other equitable relief, issued by any court or arbitration panel of competent jurisdiction, restraining any further or continued breach or violation of this Agreement. Such right to an injunction will be cumulative and in addition to, and not in lieu of, any other remedies to which the Company and the Investor may show themselves justly entitled. Section 14.7 Publicity. Except as required by applicable law, neither the Company nor the Investor shall issue any press release or otherwise make any public statement or announcement with respect to this Agreement or the transactions contemplated hereby or the existence of this Agreement without the prior consent of the other party, which consent shall not be unreasonably withheld or delayed. Section 14.8 Confidentiality. Investor agrees to maintain the confidentiality of all information about the Company received from any officer, employee or agent of the Company, until such time as that confidential information is released to the public generally as contemplated by Regulation FD of the Exchange Act other than as a result of any disclosure by Investor. [THIS SPACE INTENTIONALLY LEFT BLANK] 27 IN WITNESS WHEREOF, the parties hereto have caused this Private Equity Line of Credit Agreement to be executed by the undersigned, thereunto duly authorized, as of the date first set forth above. WORLDWIDE PETROMOLY, INC. By: /s/ Robin S. Vail --------------------------- /s/ Francois Morax ----------------------------------------- GRENVILLE FINANCIAL LTD. - Investor 28 SCHEDULE A ------------------------ -------------------------------- ---------------------- INVESTOR SHARE OF COMMITMENT AMOUNT PROPORTIONATE SHARE OF COMMITMENT AMOUNT ------------------------ -------------------------------- ---------------------- GREENVILLE FINANCIAL LTD. $20,000,000.00 100% Trident Chambers P.O. Box 146 Road Town, Tortola, B.V.I. Fax: 011-411-201-4800 ------------------------ -------------------------------- ---------------------- TOTAL $20,000,000.00 100% ------------------------ -------------------------------- ---------------------- PRIVATE EQUITY LINE OF CREDIT AGREEMENT EXHIBIT B-1 FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL WITHIN 5 TRADING DAYS FOLLOWING EFFECTIVE DATE OF REGISTRATION STATEMENT TO: We have acted as counsel to Worldwide PetroMoly, Inc., a Colorado corporation (the "Company"), in connection with the Private Equity Line of Credit Agreement between the Company and you, dated as of ______________, 2001 (the "Line of Credit Agreement"), pursuant to which the Company will issue to you from time to time shares of Common Stock, no par value (the "Put Shares") and the Registration Rights Agreement between you and the Company, dated __________, 2001 (the "Registration Rights Agreement," and together with the Line of Credit Agreement, the "Agreements"). This opinion is rendered to you pursuant to Section 7.2(h) of the Line of Credit Agreement. Capitalized terms used without definition in this opinion have the meanings given to them in the Line of Credit Agreement. In our examination of the above documents, we have assumed, without independent investigation, the genuineness of all signatures, other than signatures of representatives of the Company, the enforceability of the Agreements against all parties other than the Company, the legal capacity of all individuals who have executed the Agreements and the other documents examined by us, the authenticity of all documents submitted to us as originals, and the conformity to the original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies of documents, and the authenticity of all such documents. In expressing the opinions set forth herein, we have also relied on the factual matters contained in the representations and warranties made by the Investor. We have based our opinion upon our review of the following records, documents and instruments: (a) ______ The Articles of Incorporation of the Company, as amended to date (the "Articles"), certified by the Secretary of State of Colorado as of ____________, 2001 and certified to us by an officer of the Company as being complete and in full force and effect as of the date of this opinion; (b) The Bylaws of the Company certified to us by an officer of the Company as being complete and in full force and effect as of the date of this opinion (the "Bylaws"); (c) Records certified to us by an officer of the Company as constituting all records of proceedings and actions of the Board of Directors and the shareholders of the Company relating to the transactions contemplated by the Agreement; (d) The Agreements; (e) A certificate related to the good standing of the Company issued by the Secretary of State of the State of Colorado dated __________, 2001; (f) A Certificate of the Chief Executive Officer of the Company as to certain factual matters (the "Officer's Certificate"); (g) The SEC Documents. With your consent, we have based our opinion expressed in paragraph 1 below as to the good standing of the Company solely upon the documents enumerated in (e) and (f) above. In addition, we have examined and relied upon the Agreements, including the representations and warranties of the Company included therein, and we have considered such matters of law and of fact, including the examination of originals or copies, certified or otherwise identified to our satisfaction, of such records and documents of the Company, certificates of public officials and such other documents as we have deemed appropriate as a basis for the opinions hereinafter set forth. We have also reviewed the opinion given to you by the law firm of ____________________________for all matters relating to Colorado law, a copy of which opinion is attached as Exhibit A hereto. This opinion as to factual matters is limited to our actual knowledge as of the date hereof, and such knowledge does not include constructive knowledge or any information that we might have gained had we performed further investigations. Statements "to our knowledge" are based solely upon the actual knowledge (i.e., conscious awareness of facts or other information), with no further investigation, of ____________________________ the lawyers of the firm who have given substantive legal attention to representing the Company in connection with the Agreements. With your consent, we have not examined any records of any court, administrative tribunal or other similar entity in connection with our opinion expressed in paragraph 2 of Part III below. We have assumed for purposes of our opinion that the Put Shares are fully paid and that the consideration for such Put Shares will be received by the Company in accordance with the Line of Credit Agreement. We express no opinion as to any anti-fraud provisions of applicable federal or state securities laws, any tax, anti-trust, land use, export, safety, environmental or hazardous materials laws, rules or regulations. This opinion is limited to the federal laws of the United States of America and the laws of the State of New York. We disclaim any opinion as to the laws of any other jurisdiction and we further disclaim any opinion as to any statute, rule, regulation, ordinance, order or other promulgation of any regional or local governmental body. 2 Based upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion, and subject to the limitations and qualifications expressed below, it is our opinion that: 1. To our knowledge, except as described in the SEC Documents, there are no claims, actions, suits, proceedings or investigations that are pending against the Company or its properties, or to our knowledge, any officer or director of the Company in his or her capacity as such, nor to our knowledge has the Company received any written threat of any such claims, actions, suits, proceedings or investigations. 2. To our knowledge, except as described in the Company's representations and warranties contained in Article IV of the Line of Credit Agreement, there are no outstanding options, warrants, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understanding, or arrangements by which the Company is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. 3. Subject to the accuracy of your representations in Article III of the Line of Credit Agreement on the date hereof and on the date of issuance of any Put Shares and Warrant Shares, and the statement in the Officer's Certificate that the Company has not offered or sold, and will not offer or sell, any Put Shares by means of advertising or public solicitation, the issuance of the Put Shares and Warrant Shares in conformity with the terms of the Line of Credit Agreement constitutes transactions exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended. The Put Shares and the Warrant Shares, when issued in compliance with the Line of Credit Agreement and Registration Rights Agreement, will be duly authorized, validly issued, fully paid, and non-assessable and free of preemptive rights set forth in the Articles, Bylaws and any agreement filed as an exhibit to the SEC Documents, provided, however, that the Put Shares and Warrant Shares may be subject to restrictions on transfer under state and federal securities laws, but only to the extent set forth in the Line of Credit Agreement. 4. The Company has the requisite corporate power and authority to enter into and perform its obligations under the Agreements and to issue the Put Shares. Each of the Agreements has been duly authorized, executed and delivered by the Company and the consummation by it of the transactions contemplated thereby has been duly authorized by all necessary corporate action and no further consent or authorization of the Company's board of directors or shareholders is required. Each of the Agreements has been duly executed and delivered on the part of the Company and is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject, as to enforcement, (i) to bankruptcy, insolvency, reorganization, arrangement, moratorium, and other laws of general applicability relating to or affecting creditors' rights, (ii) to general principles of equity, whether such enforcement is considered in a proceeding in equity or at law, and (iii) to limitations imposed by applicable law or public policy on the enforceability of the indemnification provisions contained in the Agreements. 5. The execution, delivery and performance of and compliance with the respective terms of each of the Agreements, and issuance of the Put Shares in 3 accordance with the Line of Credit Agreement, will not violate the any provision of the Articles or Bylaws or the law of any jurisdiction in which the Company is qualified to do business. In addition, we have participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants of the Company and representatives of the Investor at which the contents of the Registration Statement and Prospectus were discussed and, although we are not passing upon and do not assume responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or Prospectus, on the basis of the foregoing nothing has come to our attention that causes us to believe that (i) the Registration Statement (other than the financial statements and related statements and schedules, as to which we express no belief) as of its Effective Date contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading, or (ii) the Prospectus (other than the financial statements and related statements and schedules, as to which we express no belief) as of the Effective Date of the Registration Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process are such, however, that except as set forth in this opinion letter we do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus. Our opinions expressed above are specifically subject to the following limitations, exceptions, qualifications and assumptions: A. The effect of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting the relief of debtors or the rights and remedies of creditors generally, including without limitation the effect of statutory or other law regarding fraudulent conveyances and preferential transfers. B. Limitations imposed by state law, federal law or general equitable principles upon the specific enforceability of any of the remedies, covenants or other provisions of any applicable agreement and upon the availability of injunctive relief or other equitable remedies, regardless of whether enforcement of any such agreement is considered in a proceeding in equity or at law. C. This opinion letter is governed by, and shall be interpreted in accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law (1991). As a consequence, it is subject to a number of qualifications, exceptions, definitions, limitations on coverage and other limitations, all as more particularly described in the Accord, including the General Qualifications and the Equitable Principles Limitation, and this opinion letter should be read in conjunction therewith. This opinion is rendered as of the date first written above, is solely for your benefit in connection with the Agreement and may not be relief upon or used by, circulated, quoted, or referred to nor may any copies hereof by delivered to any other person without our prior written consent. We disclaim any obligation to update this opinion letter or to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinions expressed herein. Very truly yours, 4 PRIVATE EQUITY LINE OF CREDIT AGREEMENT EXHIBIT B-2 FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL WITHIN 5 TRADING DAYS FOLLOWING EFFECTIVE DATE OF REGISTRATION STATEMENT TO: We have acted as counsel to Worldwide PetroMoly, Inc., a Colorado corporation (the "Company"), in connection with the Private Equity Line of Credit Agreement between the Company and you, dated as of ______________, 2001 (the "Line of Credit Agreement"), pursuant to which the Company will issue to you from time to time shares of Common Stock, no par value (the "Put Shares") and the Registration Rights Agreement between you and the Company, dated __________, 2001 (the "Registration Rights Agreement," and together with the Line of Credit Agreement, the "Agreements"). This opinion is rendered to you pursuant to Section 7.2(h) of the Line of Credit Agreement. Capitalized terms used without definition in this opinion have the meanings given to them in the Line of Credit Agreement. In our examination of the above documents, we have assumed, without independent investigation, the genuineness of all signatures, other than signatures of representatives of the Company, the enforceability of the Agreements against all parties other than the Company, the legal capacity of all individuals who have executed the Agreements and the other documents examined by us, the authenticity of all documents submitted to us as originals, and the conformity to the original documents of all documents submitted to us as certified, photostatic, reproduced or conformed copies of documents, and the authenticity of all such documents. In expressing the opinions set forth herein, we have also relied on the factual matters contained in the representations and warranties made by the Investor. We have based our opinion upon our review of the following records, documents and instruments: (a) The Articles of Incorporation of the Company, as amended to date (the "Articles"), certified by the Secretary of State Colorado as of ____________, 2001 and certified to us by an officer of the Company as being complete and in full force and effect as of the date of this opinion; (b) The Bylaws of the Company certified to us by an officer of the Company as being complete and in full force and effect as of the date of this opinion (the "Bylaws"); (c) Records certified to us by an officer of the Company as constituting all records of proceedings and actions of the Board of Directors and the shareholders of the Company relating to the transactions contemplated by the Agreement; (d) The Agreements; (e) A certificate related to the good standing of the Company issued by the Secretary of State of the State of Colorado dated __________, 2001; (f) A Certificate of the Chief Executive Officer of the Company as to certain factual matters (the "Officer's Certificate"); (g) The SEC Documents. With your consent, we have based our opinion expressed in paragraph 1 below as to the good standing of the Company solely upon the documents enumerated in (e) and (f) above. In addition, we have examined and relied upon the Agreements, including the representations and warranties of the Company included therein, and we have considered such matters of law and of fact, including the examination of originals or copies, certified or otherwise identified to our satisfaction, of such records and documents of the Company, certificates of public officials and such other documents as we have deemed appropriate as a basis for the opinions hereinafter set forth. This opinion as to factual matters is limited to our actual knowledge as of the date hereof, and such knowledge does not include constructive knowledge or any information that we might have gained had we performed further investigations. Statements "to our knowledge" are based solely upon the actual knowledge (i.e., conscious awareness of facts or other information), with no further investigation, of _________________________the lawyers of the firm who have given substantive legal attention to representing the Company in connection with the Agreements. With your consent, we have not examined any records of any court, administrative tribunal or other similar entity in connection with our opinion expressed in paragraph 2 of Part III below. We have assumed for purposes of our opinion that the Put Shares are fully paid and that the consideration for such Put Shares will be received by the Company in accordance with the Line of Credit Agreement. We express no opinion as to any anti-fraud provisions of applicable federal or state securities laws, any tax, anti-trust, land use, export, safety, environmental or hazardous materials laws, rules or regulations. This opinion is limited to the federal laws of the United States of America and the laws of the States of Colorado. We disclaim any opinion as to the laws of any other jurisdiction and we further disclaim any opinion as to any statute, rule, regulation, ordinance, order or other promulgation of any regional or local governmental body. 2 Based upon the foregoing and our examination of such questions of law as we have deemed necessary or appropriate for the purpose of this opinion, and subject to the limitations and qualifications expressed below, it is our opinion that: 1. The Company has been duly incorporated and is validly existing and in good standing under the laws of the State of Colorado and has all requisite power and authority to carry on its business and to own, lease and operate its properties and assets as described in the SEC Documents. To our knowledge the Company does not have any subsidiaries other than as set forth in the SEC Documents. 2. The Company has the requisite corporate power and authority to enter into and perform its obligations under the Agreements and to issue the Put Shares. Each of the Agreements has been duly authorized, executed and delivered by the Company and the consummation by it of the transactions contemplated thereby has been duly authorized by all necessary corporate action and no further consent or authorization of the Company's board of directors or shareholders is required. Each of the Agreements has been duly executed and delivered on the part of the Company and is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject, as to enforcement, (i) to bankruptcy, insolvency, reorganization, arrangement, moratorium, and other laws of general applicability relating to or affecting creditors' rights, (ii) to general principles of equity, whether such enforcement is considered in a proceeding in equity or at law, and (iii) to limitations imposed by applicable law or public policy on the enforceability of the indemnification provisions contained in the Agreements. 3. The execution, delivery and performance of and compliance with the respective terms of each of the Agreements, and issuance of the Put Shares in accordance with the Line of Credit Agreement, will not, to our knowledge, violate any provision of the Articles or Bylaws or the law of Colorado. 4. The holders of the Common Stock will not be subject to the provisions of the State of Colorado's anti-takeover statutes. In addition, we have participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants of the Company and representatives of the Investor at which the contents of the Registration Statement and Prospectus were discussed and, although we are not passing upon and do not assume responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or Prospectus, on the basis of the foregoing nothing has come to our attention that causes us to believe that (i) the Registration Statement (other than the financial statements and related statements and schedules, as to which we express no belief) as of its Effective Date contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading, or (ii) the Prospectus (other than the financial statements and related statements and schedules, as to which we express no belief) as of the Effective Date of the Registration Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process are such, however, that except as set forth in this opinion letter we do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus. 3 Our opinions expressed above are specifically subject to the following limitations, exceptions, qualifications and assumptions: A. The effect of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting the relief of debtors or the rights and remedies of creditors generally, including without limitation the effect of statutory or other law regarding fraudulent conveyances and preferential transfers. B. Limitations imposed by state law, federal law or general equitable principles upon the specific enforceability of any of the remedies, covenants or other provisions of any applicable agreement and upon the availability of injunctive relief or other equitable remedies, regardless of whether enforcement of any such agreement is considered in a proceeding in equity or at law. C. This opinion letter is governed by, and shall be interpreted in accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law (1991). As a consequence, it is subject to a number of qualifications, exceptions, definitions, limitations on coverage and other limitations, all as more particularly described in the Accord, including the General Qualifications and the Equitable Principles Limitation, and this opinion letter should be read in conjunction therewith. This opinion is rendered as of the date first written above, is solely for your benefit in connection with the Agreement and may not be relief upon or used by, circulated, quoted, or referred to nor may any copies hereof by delivered to any other person without our prior written consent. We disclaim any obligation to update this opinion letter or to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinions expressed herein. Very truly yours, 4 EXHIBIT C COMPLIANCE CERTIFICATE ---------------------------------- The undersigned, _______________, hereby certifies, with respect to the shares of Common Stock of _____________________ (the "Company") issuable in connection with the Optional Purchase Notice, dated (the "Notice"), delivered pursuant to Article II of the Private Equity Line of Credit Agreement, dated _____________, 2001, by and among the Company and certain Investor (the "Agreement"), as follows: 1. The undersigned is the duly elected ____________________ of the Company. 2. The representations and warranties of the Company set forth in the Agreement are true and correct in all material respects as though made on and as of the date hereof. 3. The Company has performed in all material respects all covenants and agreements to be performed by the Company on or prior to the Closing Date related to the Notice and has complied in all material respects with all obligations and conditions contained in the Agreement. 4. The amount of Common Stock remaining registered in an effective registration statement on behalf of each Investor as of this date is set forth on the schedule hereto. 5. The purchase price of the Common Stock previously issued to each of the Investor is set forth on the schedule hereto. The undersigned has executed this Certificate this ____ day of ________, 2001. ------------------------------------ By:_____________________________________ Name: Title: EXHIBIT D INSTRUCTIONS TO TRANSFER AGENT ------------------------------------- [TRANSFER AGENT] Dear Sirs: Reference is made to the Private Equity Line of Credit Agreement (the "Agreement"), dated as of ________________, 2001 among certain Investor (the "Investor") and _____________________ (the "Company"). Pursuant to the Agreement, subject to the terms and conditions set forth in the Agreement the Investor has agreed to purchase from the Company and the Company has agreed to sell to the Investor from time to time during the term of the Agreement shares of Common Stock of the Company, $____ par value (the "Common Stock"). As a condition to the effectiveness of the Agreement, the Company has agreed to issue to you, as the transfer agent for the Common Stock (the "Transfer Agent"), these instructions relating to the Common Stock to be issued to the Investor (or a permitted assignee) pursuant to the Agreement. All terms used herein and not otherwise defined shall have the meaning set forth in the Agreement. 1. ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND Pursuant to the Agreement, the Company is required to prepare and file with the Commission, and maintain the effectiveness of, a registration statement or registration statements registering the resale of the Common Stock to be acquired by the Investor under the Agreement. The Company will advise the Transfer Agent in writing of the effectiveness of any such registration statement promptly upon its being declared effective. The Transfer Agent shall be entitled to rely on such advice and shall assume that the effectiveness of such registration statement remains in effect unless the Transfer Agent is otherwise advised in writing by the Company and shall not be required to independently confirm the continued effectiveness of such registration statement. In the circumstances set forth in the following two paragraphs, the Transfer Agent shall deliver to the Investor certificates representing Common Stock not bearing the Legend without requiring further advice or instruction or additional documentation from the Company or its counsel or the Investor or its counsel or any other party (other than as described in such paragraphs). At any time after the effective date of the applicable registration statement (provided that the Company has not informed the Transfer Agent in writing that such registration statement is not effective) upon any surrender of one or more certificates evidencing Common Stock which bear the Legend, to the extent accompanied by a notice requesting the issuance of new certificates free of the Legend to replace those surrendered, the Transfer Agent shall deliver to the Investor the certificates representing the Common Stock not bearing the Legend, in such names and denominations as the Investor shall request, provided that: (a) in connection with such event, the Investor (or its permitted assignee) shall confirm in writing to the Transfer Agent that (i) the Investor confirms to the transfer agent that it has sold, pledged or otherwise transferred or agreed to sell, pledge or otherwise transfer such Common Stock in a bona fide transaction to a transferee that is not an affiliate of the Company; and (ii) the Investor confirms to the transfer agent that the Investor has complied with the prospectus delivery requirement; (b) the Investor (or its permitted assignee) shall represent that it is permitted to dispose thereof with limitation as to amount of manner of sale pursuant to Rule 144(k) under the Securities Act; or (c) the Investor, its permitted assignee, or either of their brokers confirms to the transfer agent that (i) the Investor has held the shares of Common Stock for at least one year, (ii) counting the shares surrendered as being sold upon the date the unlegended Certificates would be delivered to the Investor (or the Trading Day immediately following if such date is not a Trading Day), the Investor will not have sold more than the greater of (a) one percent (1%) of the total number of outstanding shares of Common Stock or (b) the average weekly trading volume of the Common Stock for the preceding four weeks during the three months ending upon such delivery date (or the Trading Day immediately following if such date is not a Trading Day), and (iii) the Investor has complied with the manner of sale and notice requirements of Rule 144 under the Securities Act. Any advice, notice or instructions to the Transfer Agent required or permitted to be given hereunder may be transmitted via facsimile to the Transfer Agent's facsimile number of __________. 2. MECHANICS OF DELIVERY OF CERTIFICATES REPRESENTING COMMON STOCK In connection with any Closing pursuant to which the Investor acquires Common Stock under the Agreement, the Transfer Agent shall deliver certificates representing Common Stock (with or without the Legend, as appropriate) as promptly as practicable, but in no event later than three business days, after such Closing. 3. FEES OF TRANSFER AGENT; INDEMNIFICATION The Company agrees to pay the Transfer Agent for all fees incurred in connection with these Irrevocable Instructions. The Company agrees to indemnify the Transfer Agent and its officers, employees and agents, against any losses, claims, damages or liabilities, joint or several, to which it or they become subject based upon the performance by the Transfer Agent of its duties in accordance with the Irrevocable Instructions. 4. THIRD PARTY BENEFICIARY The Company and the Transfer Agent acknowledge and agree that the Investor is an express third party beneficiary of these Irrevocable Instructions and shall be entitled to rely upon, and enforce, the provisions hereof. [THE COMPANY] By:______________________________________ Name: Title: AGREED: [TRANSFER AGENT] By:_______________________________ SCHEDULE 13 ---------------------------------- -------------------------------------------- FINDERS CASH FINDERS FEE LIBRA FINANCE, S.A. 2% of each Investment Amount, to be paid P.O. Box 4603 by the Company at the same time as Zurich, Switzerland Investment Amount proceeds are released to Fax: 011-411-201-6262 the Company. Description of Finder's Fee and Payment Terms TOTAL ---------------------------------- -------------------------------------------- ---------------------------------- -------------------------------------------- WARRANT RECIPIENTS NUMBER OF WARRANTS ---------------------------------- -------------------------------------------- GRENVILLE FINANCIAL LTD. 175,000 Warrants Trident Chambers P.O. Box 146 Road Town, Tortola, B.V.I. Fax: 011-411-201-4800 ---------------------------------- -------------------------------------------- TOTAL 175,000 Warrants ---------------------------------- -------------------------------------------- The Company has had dealings with Pacific Resources Group, Inc. and Capital Services, Inc. The foregoing may receive fees, if any, only from the Company and not the Investor. EX-3.1 4 articles.txt ARTICLES OF INCORPORATION EXHIBIT 3.1 ARTICLES OF INCORPORATION OF OGDEN, MCDONALD & COMPANY KNOWN ALL MEN BY THESE PRESENTS: That the undersigned incorporator being a natural person of the age of eighteen years or more and desiring to form a body corporate under the laws of the State of Colorado does hereby sign, verify and deliver in duplicate to the Secretary of State of the State of Colorado, these Articles of Incorporation: FIRST: The name of the Corporation shall be: Ogden, McDonald & Company. SECOND: The Corporation shall exist in perpetuity, from and after the date of filing these Articles of Incorporation with the Secretary of State of the State of Colorado unless dissolved according to law. THIRD: 1) Purposes. Except as restricted by these Articles of Incorporation, the Corporation is organized for the purpose of transacting all lawful business for which corporations may be incorporated pursuant to the Colorado Corporation Code. 2) General Powers. Except as restricted by these Articles of Incorporation, the Corporation shall have and may exercise all powers and rights which a corporation may exercise legally pursuant to the Colorado Corporation Code. 3) Issuance of Shares. The board of directors of the Corporation may divide and issue any class of stock of the Corporation in series pursuant to a resolution properly filed with the Secretary of State of the State of Colorado. FOURTH: 1) Shares. The aggregate number of hares which this Corporation shall have authority to issue is Eight Hundred Million, (800,000,000) shares of no par value each, which shares shall be designated "Common Stock"; and Ten Million (10,000,000) shares of no par value each, which shared shall be designated "Preferred Stock" and which may be issued in one or more series at the discretion of the Board of Directors. In establishing a series of Board of Directions shall give to it a distinctive designation so as to distinguish it from the shares of all other series and classes, shall fix the number of shares in such series, and the preferences, rights and restrictions thereof. All shares of any one series shall be alike in every particular except as otherwise provided by these Articles of Incorporation of the Colorado Corporation Code. 2) Dividends. Dividends in cash, property or shares shall be paid upon the Preferred Stock for any year on a cumulative or noncumulative basis as determined by a resolution of the Board of Directors prior to the issuance of such Preferred Stock, to the extend earned surplus for each year is available, in an amount as determined by a resolution of the Board of Directors. Such Preferred Stock dividends shall be paid pro rate to holders of Preferred Stock in any amount not less than nor more than the rate as determined by a resolution of the Board of Directors prior to the issuance of such Preferred Stock. No other dividend shall be paid on the Preferred Stock. Dividends in cash, property or shares of the Corporation may be paid upon the Common Stock, as and when declared by the Board of Directors, out of funds of the Corporation to the extent and in the manner permitted by law, except that no Common Stock dividend shall be paid for any year unless the holders of Preferred Stock, if any, shall receive the maximum allowable Preferred Stock dividend for such year. 3) Distribution in Liquidation. Upon any liquidation, dissolution or winding up of the Corporation, and after paying or adequately providing for the payment of all its obligations, the remainder of the assets of the Corporation shall be distributed, either in cash or in kind, first pro rate to the holders of the Preferred Stock until an amount to be determined by a resolution of the Board of Directors prior to issuance of such Preferred Stock, has been distributed per share, and, then, the remainder pro rata to the holders of the Common Stock. 4) Redemption. The Preferred Stock may be redeemed in whole or in part as determined by a resolution of the Board of Directors prior to the issuance of such Preferred Stock, upon prior notice to the holders of record of the Preferred Stock, published, mailed and given in such manner and form and on such other terms and conditions as may be prescribed by the Bylaws or by resolution of the Board of Directors, by payment in cash or Common Stock for such share of the Preferred Stock to be redeemed, as determined by a resolution of the Board of Directors prior to the issuance of such Preferred Stock. Common Stock used to redeem Preferred Stock shall be valued as determined by a resolution of the Board of Directors prior to the issuance of such Preferred Stock. Any rights to or arising from one share. No such purchase or retirement shall be made if the capital of the Corporation would be impaired thereby. If less than all the outstanding shares are to be redeemed, such redemption may be made by lot or pro rata may be prescribed by resolution of the Board of Directors; provided, however, that the Board of Directors may alternatively invite from shareholders offers to the Corporation of Preferred Stock at less than an amount to be determined by a resolution of the Board of Directors prior to issuance of such Preferred Stock, and when such offers are invited, the Board of Directors shall then be required to buy at the lowest price or prices offered, up to the amount to be purchased. From and after the date fixed in any such notice as the date of redemption (unless default shall be made by the Corporation in the payment of redemption price), all dividends on the Preferred Stock thereby called for redemption shall cease to accrue and all rights of the holders thereof as stockholders of the Corporation, except the right to receive the redemption price, shall cease and terminate. Any purchase buy the Corporation of the shares of its Preferred Stock shall not be made at prices in excess of said redemption price. 5) Voting Rights; Cumulative Voting. Each outstanding share of Common Stock shall be entitled to one vote and each fractional share of Common Stock shall be entitled to a corresponding fractional vote on each matter submitted to a vote of shareholders. A majority of the shares of Common Stock entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. Except as otherwise provided by these Articles of Incorporation or the Colorado Corporation Code, if a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders. When with respect to any action to be taken by shareholders of this Corporation, the laws of Colorado require the vote or concurrence of the holders of two-thirds of the outstanding shares, of the shares entitled to vote thereon, or of any class or series, such action may be taken by the vote or concurrence of a majority of such shares or class or series thereof. Cumulative voting shall not be allowed in the election of directors of this Corporation. Shares of Preferred Stock shall only be entitled to such vote as is determined by the Board of Directors prior to the issuance of such stock, except as required by law, in which case each share of Preferred Stock shall be entitled to one vote. 6) Denial of Preemptive Rights. No holder of any shares of the Corporation, whether now or hereafter authorized, shall have any preemptive or preferential right to acquire any shares or securities of the Corporation, including shares or securities held in the treasury of the Corporation. 7) Conversion Rights. Holders of shares of Preferred Stock may be granted the right to convert such Preferred Stock to Common Stock of the Corporation on such terms as may be determined by the Board of Directors prior to issuance of such Preferred Stock. FIFTH: No contract or other transaction between the Corporation and one or more of its directors or any other corporation, firm, association, or entity in which one or more of its directors or officers or are financially interested shall be either void or voidable solely because of such relationship or interest or solely because such directors are present at the meeting of the board of directors or a committee thereof which authorizes, approves, or ratifies such contract or transaction or solely because their votes are counted for such purpose if: (a) The fact of such relationship or interest is disclosed or known to the board directors or committee which authorizes, approves, or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the vote or consents of such interested directors; and (b) The fact of such relationship or interest is disclosed or known to the shareholders entitled to vote and they authorize, approve, or ratify such contract or transaction by vote or written consent; or (c) The contract or transaction is fair and reasonable to the corporation. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or a committee thereof which authorizes, approves, or ratifies such contract or transaction. SIXTH: The officers, directors and other members of management of this Corporation shall be subject to the doctrine of "corporate opportunities" only insofar as it applies to business opportunities in which this Corporation has expressed at interest as determined from time to time by this Corporation's board of directors as evidenced by resolutions appearing in the Corporation's minutes. Once such areas of interest are delineated, all such business opportunities within such areas of interest which come to the attention of the officers, directors, and other members of management of this Corporation shall be disclosed promptly to this Corporation and made available to it. The board of directors may reject any business opportunity presented to it and thereafter any officer, director or other member of management may avail himself of such opportunity. Until such time as this Corporation, through its board of directors, has designated an area of interest, the officers, directors and other members of management of this Corporation shall be free to engage in such areas of interest on their own and this doctrine shall not limit the rights of any officer, director or other member of management of this Corporation to continue a business existing prior to the time that such area of interest is designated by the Corporation. This provision shall not be construed to release any employee of this Corporation (other than an officer, director or member of management) from any duties which he may have to this Corporation. SEVENTH: The Corporation may indemnify any director, officer, employee, fiduciary, or agent of the Corporation to the full extent permitted by the Colorado Corporation Code as in effect at the time of the conduct by such person. EIGHTH: The Corporation reserves the right to amend its Articles of Incorporation from time to time in accordance with the Colorado Corporation Code. NINTH: The initial Bylaws of the Corporation shall be adopted by its board of directors. Subject to repeal or change by action of the shareholders, the power to alter, amend or repeal the Bylaws or adopt new Bylaws shall be vested in the board of directors. The Bylaws may contain any provisions for the regulation and management of the affairs of the Corporation not inconsistent with law or these Articles of Incorporation. TENTH: The address of the initial registered office of the Corporation is: 8055 E. Tufts Avenue Parkway, #320 Denver Colorado, 80237 The name of its initial registered agent at such address is: Jon C. Olsen ELEVENTH: The number of directors of this corporation shall not be less than three, provided however, in the event there are fewer than three stockholders, the number of directors shall be the same as the number of shareholders. The name and address of the original director shall be: Jon C. Olsen 8055 E. Tufts Avenue Parkway, #320 Denver, Colorado 80237 TWELFTH: Then name and address of the incorporator is Jon C. Olsen 8055 E. Tufts Avenue Parkway, #320 Denver, Colorado 80237 Date /s/ Jon C. Olsen ----------------------------------- Jon C. Olsen VERIFICATION STATE OF COLORADO ) ) ss. CITY AND COUNTY OF DENVER ) I, Diane E. Sullivan, a notary public, hereby certify that on _____________________________________ (date, personally before me, Jon C. Olsen, whom, being by me first duly sworn, did declare he was the person who signed the foregoing document as incorporator and that the statements therein contained are true. WITNESS my hand and official seal /s/ Diane Sullivan Notary Public My commission expires: 11-12-90 ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF OGDEN MCDONALD & COMPANY CHANGING ITS NAME TO WORLDWIDE PETROMOLY, INC. Pursuant to the provisions of the Colorado Business Corporation Act, the undersigned Corporation adopts the following Articles of Amendment to its Articles of Incorporation: FIRST: The name of the Corporation is OGDEN MCDONALD & COMPANY. SECOND: The following amendments were adopted on September 16, 1996 by the Board of Directors, and on October 11, 1996 by a vote of the Shareholders of the Corporation, in the manner prescribed by the Colorado Business Corporation Act. The number of shares voted for the amendments was sufficient for approval. ARTICLE I - NAME shall be amended to read as follows: "ARTICLE I - NAME The name of the Corporation is WORLDWIDE PETROMOLY, INC." ARTICLE XIII - LIMITATION OF LIABILITY OF DIRECTORS TO CORPORATION AND SHAREHOLDERS shall be added as follows: "ARTICLE XIII - LIMITATION OF LIABILITY OF DIRECTORS TO CORPORATION AND SHAREHOLDERS No Director shall be liable to the Corporation or any shareholder for monetary damages for breach of fiduciary duty as a director, except for any matter in respect of which such director (a) shall be liable under C.R.S. Section 7-108-403 or any amendment thereto or successor provision thereto; (b) shall have breached the director's duty of loyalty to the Corporation or its shareholders; (c) shall have not acted in good faith or, in failing to act, shall not have acted in good faith; (d) shall have acted or failed to act in a manner involving intentional misconduct or a knowing violation of law; or (e) shall have derived an improper personal benefit. Neither the amendment nor repeal of this Article, nor the adoption of any provision in the Articles of Incorporation inconsistent with this Article, shall eliminate or reduce the effect of this Article in respect of any matter occurring prior to such amendment, repeal or adoption of an inconsistent provision. This Article shall apply to the full extent now permitted by Colorado law or as may be permitted in the future by changes or enactments in Colorado law, including without limitation C.R.S. Section 7-102-102 and/or C.R.S. Section 7-108-402." THIRD: The manner, if not set forth in such amendments, in which any exchange, reclassification, or cancellation of issued shares provided for in the amendments shall be effected, is as follows: Not applicable. DATED: October 11, 1996 OGDEN MCDONALD & COMPANY (Changing its name to WORLDWIDE PETROMOLY, INC.) By /s/ Gilbert Gertner Gilbert Gertner Chairman of the Board of Directors EX-3.2 5 bylaws.txt BYLAWS EXHIBIT 3.2 BYLAWS OF OGDEN, MCDONALD & COMPANY Article 1. OFFICES SECTION 1.1 PRINCIPAL OFFICE. The principal office of the corporation in the state of Colorado shall be located in the County of Arapahoe. The corporation may have such other offices, either within or outside of the State of Colorado as the board of directors may designate, or as the business of the corporation may require from time to time. SECTION 1.2 REGISTERED OFFICE. The registered office of the corporation, required by the Colorado Corporation Code to be maintained in the state of Colorado, may be, but need not be, identical with the principal office in the state of Colorado, and the address of the registered office may be changed from time to time by the board of directors. Article 2. SHAREHOLDERS SECTION 2.1 ANNUAL MEETING. The annual meeting of the shareholders shall be held on the first day of June of each year, commencing with the year 1990, at the hour of 10:00 a.m., or at such other time on such other day as shall be fixed by the board of directors for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the state of Colorado, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein for any annual meeting of the shareholders, or at any adjournment thereof, the board of directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as may be convenient. SECTION 2.2 SPECIAL MEETING. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the president or by the board of directors, and shall be called by the president at the request of the holders of not less than one-tenth of all outstanding shares of the corporation entitled to vote at the meeting. SECTION 2.3 PLACE OF MEETINGS. The Board of directors may designate any place, either within or outside of the state of Colorado, as the place of meeting for any annual meeting or for any special meeting called by the board of directors. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal office of the corporation in the state of Colorado. SECTION 2.4 NOTICE OF MEETING. Written notice stating the place, day and hour of the meeting of shareholders and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall, unless otherwise prescribed by statute, be delivered not less than ten nor more than fifty days before the date of the president, or the secretary, or the officer or other persons calling the meeting, to each shareholder of record entitled to vote at such meeting; provided, however, that if the authorized shares of the corporation are to be increased, at least thirty days' notice shall be given, and if sale of all or substantially all assets are to be voted upon, at least twenty days' notice shall be given. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his or her address as it appears on the stock transfer books of the corporation, with postage thereon prepaid. SECTION 2.5 MEETING OF ALL SHAREHOLDERS If the shareholders shall meet at any time and place, either within or outside of the state of Colorado, and consent to the holding of a meeting at such time and place, such meeting shall be valid without call or notice, and at such meeting any corporate action may be taken. SECTION 2.6 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other purpose, the board of directors of the corporation may provide that the share transfer books shall be closed for a stated period but not to exceed, in any case, fifty days. If the share transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the share transfer books, the board of directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the share transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the board of directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof. SECTION 2.7 VOTING RECORD. The officer or agent having charge of the stock transfer books for shares of the corporation shall make, at least ten days before ouch meeting of shareholders, a complete record of the shareholders entitled to vote at each meeting of shareholders or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each. The record, for a period of ten days prior to such meeting, shall be kept on file at the principal office of the corporation, whether within or outside of the state of Colorado, and shall be subject to inspection by any shareholder for any purpose germane to the meeting at any time during usual business hours. Such record shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for the purposes thereof. The original stock transfer books shall be the prima facie evidence as to who are the shareholders entitled to examine the record or transfer books or to vote at any meeting of shareholders. SECTION 2.8 QUORUM. A majority of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders, except as otherwise provided by the Colorado Corporation Code and the Articles of Incorporation. In the absence of a quorum at any such meeting, a majority of the shares so represented may adjourn the meeting from time to time for a period not to exceed sixty days without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal during such meeting of that number of shareholders whose absence would cause there to be less than a quorum. SECTION 2.9 MANNER OF ACTING. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless the vote of a greater proportion or number or voting by classes is otherwise required by statute or by the Articles of Incorporation or these bylaws. SECTION 2.10 PROXIES. At all meetings of shareholders a shareholder may vote in person or by proxy executed in writing by the shareholder or by a duly authorized attorney-in-fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. SECTION 2.11 VOTING OF SHARES. Unless otherwise provided by these bylaws or the Articles of Incorporation, each outstanding share entitled to vote shall be entitled to one vote upon each matter submitted to vote at a meeting of shareholders, and each fractional share shall be entitled to a corresponding fractional vote on each such matter. SECTION 2.12 VOTING OF SHARES BY CERTAIN SHAREHOLDERS Shares standing in the name of another corporation may be voted by such officer, agent or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such other corporation may determine. Shares standing in the name of a deceased person, a minor ward or an incompetent person, may be voted by an administrator, executor, court appointed guardian or conservator, either in person or by proxy without, a transfer of such shares into the name of such administrator, executor, court appointed guardian or conservator. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him or her without a transfer of such shares into his or her name. Shares standing in the name of a receiver may be voted by such receiver and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into the trustee name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledges, and thereafter the pledgee shall be entitled to vote the shares so transferred. Neither shares of its own stock belonging to this corporation, nor shares of its own stock held by it in a fiduciary capacity, nor shares of its own stock held by another corporation if the majority of shares entitled to vote for the election of directors of such corporation is held by this corporation may be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding shares at any given time. Redeemable shares which have been called for redemption shall not be entitled to vote on any matter and shall not be deemed outstanding shares on and after the date on which written notice of redemption has been mailed to shareholders and a sum sufficient to redeem such shares has been deposited with a bank or trust company with irrevocable instruction and authority to pay the redemption price to the holders of the shares upon surrender of certificates therefor. SECTION 2.13 INFORMAL ACTION BY SHAREHOLDERS. Any action required or permitted to he taken at a meeting of the shareholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. SECTION 2.14 VOTING. BY BALLOT Voting on any question or in any election may be by voice vote unless the presiding officer shall order or any shareholder shall demand that voting be by ballot. SECTION 2.15 CUMULATIVE VOTING. Cumulative voting shall not be permitted in the election of officers or directors, or in any other matter. Article 3. BOARD OF DIRECTORS SECTION 3.1 CUMULATIVE POWERS. The business and affairs of the corporation shall be managed by its board of directors. SECTION 3.2 PERFORMANCE OF DUTIES. A director of the corporation shall perform his or her duties as a director, including his or her duties as a member of any committee of the board upon which he or she may serve, in good faith, in a manner he or she reasonably believes to be in the best interests of the corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances. In performing his or her duties as a director shall be entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by persons and groups listed in paragraphs (a), (b), and (c) of this Section 3.2; but he or she shall not be considered to be acting in good faith if he or she has knowledge concerning the matter in question that would cause such reliance to be unwarranted. A person who so performs his or her duties shall not have any liability by reason of being or having been a director of the corporation. Those persons and groups on whose information, opinions, reports, and statements a director is entitled to rely upon are: A. One or more officers or employees of the corporation whom the director reasonably believes to be reliable competent in the matter presented; B. Counsel, public accountants, ox other persons as to matters which the director reasonably believes to be within such persons' professional or expert competence; or C. A committee of the board upon which he or she does not serve, duly designated in accordance with the provision of the articles of incorporation or the bylaws, as to matters within its designated authority, which committee the director reasonably believes to merit confidence. SECTION 3.3 NUMBER, TENURE AND QUALIFICATIONS. The number of directors of the corporation shall be three. The number of directors of the corporation shall be fixed from time to time by resolution of the board of directors, but in no instance shall, there be less than one director or that number otherwise required by law. Each director shall hold office until the next annual meeting of shareholders or until his or her successor shall have been elected and qualified. Directors need not be residents of the state of Colorado or shareholders of the corporation. When shares of the corporation shall become owned beneficially or of record by one shareholder, the corporation shall elect at least one director. When the shares of the corporation shall become owned beneficially or of record by two shareholders, the corporation shall elect at least two directors. When the shares of the corporation, shall become owned beneficially or of record by three or more shareholders, the corporation shall elect at least three directors. There shall be a chairman of the board, who has been elected from among the directors. He or she shall preside at all meetings of the stockholders and of the board of directors. He or she shall have such other powers and duties as may be prescribed by the board of directors. SECTION 3.4 REGULAR MEETINGS. A regular meeting of the board of directors shall be held without other notice than this bylaw immediately after, and at the same place as, the annual meeting of shareholders. The board of directors may provide, by resolution, the time and place, either within or without the state of Colorado, for the holding of additional regular meetings without other notice than such resolution. SECTION 3.5 SPECIAL MEETINGS. Special meetings of the board of directors may be called by or at the request of the president or any two directors. The person or persons authorized to call special meetings of the board of directors may fix any place, either within or without the state of Colorado, as the place for holding any special meeting of the board of director called by them. SECTION 3.6 NOTICE. Written notice of any special meeting of directors shall be given as follows: By mail to each director at his or her business address at least three days prior to the meeting; or By personal delivery or telegram at least twenty-four hours prior to the meeting to the business address of each director, or in the event such notice is given on a Saturday, Sunday or holiday, to the residence address of each director. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any director may waive notice of any meeting. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting. SECTION 3.7 QUORUM. A majority of the number of directors fixed by or pursuant to Section 3.2 of this Article 3 shall constitute a quorum for the transaction of business at any meeting of the board of directors, but if leas than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. SECTION 3.8 MANNER OF ACTING. Except as otherwise required by law or by the Articles of Incorporation, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. SECTION 3.9 INFORMAL ACTION BY DIRECTORS. Any actions required or permitted to be taken by the board of directors or by a committee thereof at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors or all of the committee members entitled to vote with respect to the subject matter thereof. SECTION 3.10 PARTICIPATION BY ELECTRONIC MEANS. Any members of the board of directors or any committee designated by such board may participate in a meeting of the board of directors or committee by means of telephone conference or similar communications equipment by which all persons participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at the meeting. SECTION 3.11 VACANCIES. Any vacancy occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the board of directors. A director elected to fill a vacancy shall be elected for the unexplored term of his or her predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by election by the board of directors for a term of office continuing only until the next election of directors by the shareholders. SECTION 3.12 RESIGNATION. Any director of the corporation may resign at any time by giving written notice to the president or the secretary of the corporation. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as sha11 be specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. When one or more directors shall resign from the board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective. SECTION 3.13 REMOVAL Any director or directors of the corporation may be removed at any time, with or without cause, in the manner provided in .the Colorado Corporation Code. SECTION 3.14 COMMITTEES. By resolution adopted by a majority of the board of directors, the directors may designate two or more directors to constitute a committee, any of which shall have such authority in the management of the corporation as the board of directors shall designate and as shall be prescribed by the Colorado Corporation Code. SECTION 3.15 COMPENSATION. By resolution of the board of directors and irrespective of any personal interest of any of the members, each director may be paid his or her expenses, if any, of attendance at each meeting of the board of directors, and may be paid a stated salary as director or a fixed sum for attendance at each meeting of the board of directors or both. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. SECTION 3.16 PRESUMPTION OF ASSENT. A director of the corporation who is present at a meeting of the board of directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his or her dissent shall be entered in the minutes of the meeting or unless he or she shall file his or her written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. Article 4. OFFICERS SECTION 4.1 NUMBER. The officers of the corporation shall be a president and secretary, each of whom shall be elected by the board of directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the board of directors. Any two or more offices may be hold by the same person, except the offices of president and secretary. SECTION 4.2 ELECTION AND TERM OF OFFICE. The officers of the corporation to be elected by the board of directors shall be elected annually by the board of directors at the first meeting of the board of directors held after the annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as practicable. Each officer shall hold office until his or her successor shall have been duly elected and shall, have qualified or until his or her death or until he or she shall resign or shall have been removed in the manner hereinafter provided. SECTION 4.3 REMOVAL. Any officer or agent may be removed by the board of directors whenever in its judgment the best interests of the corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. SECTION 4.4 VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors for the unexpired portion of the term. SECTION 4.5 PRESIDENT. The president shall be the chief executive officer of the corporation and, subject to the control of the board of directors, shall in general supervise and control all of the business and affairs of the corporation. He or she shall, when present, and in the absence of a chairman of the board, preside at a11 meetings of the shareholders and of the board of directors. He or she may sign, with the secretary or any other proper officer of the corporation thereunto authorized by the board of directors, certificates for shares of the corporation and deeds, mortgages, bonds, contracts, or other instruments which the board of directors has authorized to be executed, excepted in cases where the signing and execution thereof shall be, expressly delegated by the board of directors or by these bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the board of directors from time to time. SECTION 4.6 VICE PRESIDENT. If elected or appointed by the board of directors, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated at the time of their election, or in the absence of any designation, then in the order of their election) shall, in the absence of the president or in the event of his or her death, inability or refusal to act, perform all duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. Any vice president may sign, with the treasurer or an assistant treasurer or the secretary or an assistant secretary, certificates for shares of the corporation; and shall perform such other duties as from time to time may be assigned to him or her by the president or by the board of directors. SECTION 4.7 SECRETARY. The secretary shall: (a) keep the minutes of the proceedings of the shareholders and of the board of directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents the execution of which on behalf of the corporation under its seal is duly authorized; (d) keep a register of the past office address of each shareholder which shall be furnished to the secretary by such shareholder; (e) sign with the chairman or vice chairman of the board of directors, or the president, or a vice president, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the board of directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him or her by the president or by the board of directors. SECTION 4.8 TREASURER. The treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositories as shall be at selected in accordance with the provisions of Article 5 of these bylaws; and (c) in general perform all of the duties incident to the office of treasurer and such other duties as from time to time may be assigned to him or her by the president or by the board of directors. SECTION 4.9 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretaries, when authorized by the board of directors, may sign with the chairman or vice chairman of the board of directors or the president or a vice president certificates for shares of the corporation the issuance of which shall have been authorized by a resolution of the board of directors. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or the treasurer, respectively, or by the president or the board of directors. SECTION 4.10 BONDS. If the board of directors by resolution shall so require, any officer or agent of the corporation shall give bond to the corporation in such amount and with such surety as the board of directors may deem sufficient, conditioned upon the faithful performance of their respective duties and offices. SECTION 4.11 SALARIES. The salaries of the officers shall be fixed from time to time by the board of directors and no officer shall be prevented from receiving such salary by reason of the fact that he or she is also a director of the corporation. Article 5. CONTRACTS, LOANS, CHECKS AND DEPOSITS SECTION 5.1 CONTRACTS. The board of directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. SECTION 5.2 LOANS. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in it's name unless authorized by a resolution of the board of directors. Such authority may be general or confined to specific instances. SECTION 5.3 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the board of directors. SECTION 5.4 DEPOSITS. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the board of directors may select. Article 6. SHARES, CERTIFICATES FOR SHARES AND TRANSFER OF SHARES SECTION 6.1 REGULATION. The board of directors may make such rules and regulations as it may deem appropriate concerning the issuance, transfer and registration of certificates for shares of the corporation, including the appointment of transfer agents and registrars. SECTION 6.2 CERTIFICATES FOR SHARES. Certificates representing shares of the corporation shall be respectively numbered serially for each class of shares, or series thereof, as they are issued, shall be impressed with the corporate seal or a facsimile thereof, and shall be signed by the chairman or vice-chairman of the board of directors or by the president or a vice president and by the treasurer or an assistant treasurer or by the secretary or an assistant secretary; provided that such signatures may be facsimile if the certificate is counter-signed by a transfer agent, or registered by a registrar other than the corporation itself or its employee. Each certificate shall state the name of the corporation, the fact that the corporation is organized or incorporated under the laws of the state of Colorado, the name of the person to whom issued, the date of issue, the class (or series of any class), the number of shares represented thereby and the par value of the shares represented thereby or a statement that such shares are without par value. A statement of the designations, preferences, qualifications, limitations, restrictions and special or relative rights of the shares of each class shall be set forth in full or summarized on the face or back of the certificates which the corporation shall issue, or in lieu thereof, the certificate may set forth that such a statement or summary will be furnished to any shareholder upon request without charge. Each certificate shall be otherwise in such form as may be prescribed by the board of directors and as shall conform to the rules of any stock exchange on which the shares many be listed. The corporation shall not issue certificates representing fractional shares and shall not be obligated to make any transfers creating a fractional interest in a share of stock. The corporation may, but shall not be obligated to, issue scrip in lieu of any fractional shares, such scrip to have terms and conditions specified by the board of directors. SECTION 6.3 CANCELLATION OF CERTIFICATES. All certificates surrendered to the corporation for transfer shall be canceled and no new certificates shall be issued in lieu thereof until the former certificate for a like number of shares shall have been surrendered and canceled, except as herein provided with respect to lost, stolen or destroyed certificates. SECTION 6.4 LOST, STOLEN OR DESTROYED CERTIFICATES. Any shareholder claiming that his or her certificate for shares is lost, stolen or destroyed may make an affidavit or affirmation of that fact and lodge the same with the secretary of the corporation, accompanied by a signed application for a new certificate. Thereupon, and upon the giving of a satisfactory bond of indemnity to the corporation not exceeding an amount double the value of the shares as represented by such certificate (the necessity for such bond and the amount required to be determined by the president and treasurer of the corporation), a new certificate may be issued of the same tenor and representing the same number, class and series of shares as were represented by the certificate alleged to be last, stolen or destroyed. SECTION 6.5 TRANSFER OF SHARES. Subject to the terms of any shareholder agreement relating to the transfer of shares or other transfer restrictions contained in the Articles of Incorporation or authorized herein, shares of the corporation shall be transferable on the books of the corporation by the holder thereof in person or by his or her duly authorized attorney, upon the surrender and cancellation of a certificate or certificates for a like number of shares. Upon presentation and surrender of a certificate for shares properly endorsed and payment of all taxes therefor, the transferee shall be entitled to a new certificate or certificates in lieu hereof. As against the corporation, a transfer of shares can be made only on the books of the corporation and in the manner hereinabove provided, and the corporation shall be entitled to treat the holder of record of any share as the owner thereof and shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the statutes of the state of Colorado. Article 7. FISCAL YEAR The fiscal year of the corporation shall end on the last day of December in each calendar year. Article 8. DIVIDENDS The board of directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its Articles of Incorporation. Article 9. CORPORATE SEAL The board of directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation and the state of incorporation and the words "CORPORATE SEAL." Article 10. WAIVER OF NOTICE Whenever any notice is required to be given under the provisions of these bylaws or under the provisions of the Articles of Incorporation or under the provisions of the Colorado Corporation Code, or otherwise, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the event or other circumstance requiring such notice, shall be deemed equivalent to the giving of such notice. Article 11. AMENDMENTS These bylaws may be altered, amended or repealed and new bylaws may be adopted by a majority of the directors present at any meeting of the board of directors of the corporation at which a quorum is present. Article 12. EXECUTIVE COMMITTEE SECTION 12.1 APPOINTMENT. The board of directors by resolution adopted by a majority of the full board, may designate two or more of its members to constitute an executive committee. The designation of such committee and the delegation thereto of authority shall not operate to relieve the board of directors, or any member thereof, of any responsibility imposed by law. SECTION 12.2 AUTHORITY. The executive committee, when the board of directors is not in session, shall have and may exercise all of the authority of the board of directors except to the extent, if any, that such authority shall be limited by the resolution appointing the executive committee and except also that the executive committee shall not have the authority of the board of directors in reference to amending the Articles of Incorporation, adopting a plan of merger or consolidation, recommending to the shareholders the sale, lease or other disposition of all or substantially all of the property and assets of the corporation otherwise than in the usual and regular course of its business, recommending to the shareholders a voluntary dissolution of the corporation or a revocation thereof, or amending the bylaws of the corporation. SECTION 12.3 TENURE AND QUALIFICATIONS. Each member of the executive committee shall hold office until the next regular annual meeting of the board of directors following his or her designation and until his or her successor is designated as a member of the executive committee , and is elected and qualified. SECTION 12.4 MEETINGS. Regular meetings of the executive committee may be held without notice at such time and places as the executive committee may fix from time to time by resolution. Special meetings of the executive committee may be called by any member thereof upon not less than one day's notice stating the place, date and hour of the meeting, which notice may be written or oral, and if mailed, shall be deemed to be delivered when deposited in the United States mail addressed to the member of the executive committee at his or her business address. Any member of the executive committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends in person. The notice of a meeting of the executive committee need not state the business proposed to be transacted at the meeting. SECTION 12.5 QUORUM. A majority of the members of the executive committee shall constitute a quorum for the transaction of business at any meeting thereof, and action of the executive committee must be authorized by the affirmative vote of a majority of the members present at a meeting at which a quorum is present. SECTION 12.6 INFORMAL, ACTION BY EXECUTIVE COMMITTEE. Any action required or permitted to be taken by the executive committee at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors entitled to vote with respect to the subject matter thereof. SECTION 12.7 VACANCIES. Any vacancy in the executive committee may be filled by a resolution adopted by a majority of the full board of directors. SECTION 12.8 RESIGNATIONS AND REMOVAL. Any member of the executive committee may be removed at any time with or without cause by resolution adopted by a majority of the full board of directors. Any member of the executive committee may resign from the executive committee at any time by giving written notice to the president or secretary of the corporation, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 12.9 PROCEDURE. The executive committee shall elect a presiding officer from its members and may fix its own rules of procedure which shall not be inconsistent, with these bylaws. It shall keep regular minutes of its proceedings and report the same to the board of directors for its information at the meeting thereof held next after the proceedings shall have been taken. Article 13. EMERGENCY BYLAWS The emergency bylaws provided in this Article 13 shall be operative during any emergency in the conduct of the business of the corporation resulting from an attack on the United States or any nuclear or atomic disaster, notwithstanding any different provision in the preceding articles of the bylaws or in the Articles of Incorporation of the corporation or in the Colorado Corporation Code. To the extent not inconsistent with the provisions of this Article, the bylaws provided in the preceding articles shall remain in effect during such emergency and upon its termination the emergency bylaws shall cease to be operative. During any such emergency: A. A meeting of the board of directors may be called by any officer or director of the corporation. Notice of the time and place of the meeting shall be given by the person calling the meeting to such of the directors as it may be feasible to reach by any available means of communication. Such notice shall be given at such time in advance of the meeting as circumstances permit in the judgment of the person calling the meeting. B. At any such meeting of the board of directors, a quorum shall consist of the number of directors in attendance at such meeting. C. The board of directors, either before or during any such emergency, may, effective in the emergency, change the principal office or designate several alternative principal offices or regional offices, or authorize the officers so to do. D. The board of directors, either before or during any such emergency, may provide, and from time to time modify, lines of succession in the event that during such an emergency any or all officers or agents of the corporation shall for any reason be rendered incapable of discharging their duties. E. No officer, director or employee acting in accordance with these emergency bylaws shall be liable except for willful misconduct. F. These emergency bylaws shall be subject to repeal or change by further action of the board of directors or by action of the shareholders, but no such repeal or change shall modify the provisions of the next preceding paragraph with regard to action taken prior to the time of such repeal or change. Any amendment of these emergency bylaws may make any further or different provision that may be practical and necessary for the circumstances of the emergency. EX-5.1 6 opinion.txt LEGAL OPINION LETTER EXHIBIT 5.1 Krys Boyle Freedman & Sawyer, P.C. Attorneys at Law Suite 2700 South Tower 600 Seventeenth Street Denver, Colorado 80202-5427 Telephone Facsimile (303) 893-2300 (303) 893-2882 September 24, 2001 Worldwide PetroMoly, Inc. 12600 Deerfield Parkway, Suite 100 Alpharetta, Geogia 30004 Gentlemen: We have acted as special counsel to Worldwide PetroMoly, Inc., a Colorado corporation (the "Company"), in connection with the preparation and filing with the Securities and Exchange Commission of a Registration Statement on Form SB-2 (the "Registration Statement"), pursuant to which the Company is registering under the Securities Act of 1933, as amended, a total of 200,175,000 shares (the "Shares") of its common stock, no par value (the "Common Stock") for resale to the public. The Shares are to be sold by the selling shareholder identified in the Registration Statement (the "Selling Shareholder"). This opinion is being rendered in connection with the filing of the Registration Statement. All capitalized terms used herein and not otherwise defined shall have the respective meanings given to them in the Registration Statement. In connection with this opinion, we have examined the Company's Articles of Incorporation and Bylaws, both as currently in effect; such other records of the corporate proceedings of the Company and certificates of the Company's officers as we have deemed relevant; and the Registration Statement and the exhibits thereto. In our examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such copies. Based upon the foregoing, and subject to the limitations set forth below, we are of the opinion that the Shares that are issuable (a) upon the exercise of the applicable warrants as set forth in the Registration Statement, and (b) pursuant to the Company's Private Equity Line of Credit Agreement with Greenville Financial Ltd., when issued in accordance with the terms of the warrants and equity line agreement, as the case may be, will be validly issued, fully paid and non-assessable. Our opinion is limited to the laws of the State of Colorado, and we express no opinion with respect to the laws of any other jurisdiction. No opinion is expressed herein with respect to the qualification of the Shares under the securities or blue sky laws of any state or any foreign jurisdiction. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. We hereby further consent to the reference to us under the caption "Legal Matters" in the prospectus included in the Registration Statement. Very truly yours, KRYS BOYLE FREEDMAN & SAWYER, P.C. By: /s/ Jon D. Sawyer Jon D. Sawyer EX-10.1.1 7 porterconsult.txt PORTER LANE CONSULTING AGMT. EXHIBIT 10.1.1 CONSULTING AGREEMENT THIS CONSULTING AGREEMENT is made and entered into as of the 13th day of March, 2000, by and between Small Town Radio, Inc., a Georgia corporation (hereinafter referred to as the "Company"), its principals and affiliates and Porter Lane Investments, Inc, a Georgia Corporation, its principals and affiliates (hereinafter referred to as "Consultant"). WITNESSETH: WHEREAS, Consultant possesses significant knowledge and experience in the management of private and public corporations and has been engaged by the Company to provide certain consulting services to it; and WHEREAS, the Company desires to enter into this Agreement with Consultant to set forth in detail the consulting services to be provided to the Company and to provide for the payment for such services by the Company, and Consultant wishes to provide such consulting services, all upon the terms and subject to the conditions contained rein; WHEREFORE, for and in consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Engagement and Term. Subject to the terms and conditions of this Agreement, the Company hereby retains Consultant to provide the consulting services described in Section 2 below, and Consultant hereby accepts such engagement. The term of this Agreement shall commence on the date hereof and shall continue for a period of five (5) years (the "Term"), provided that this Agreement may be terminated prior to the expiration of the Term upon ninety (90) days written notice to Consultant to the Company, except that the payment of fees under this agreement shall continue for a period equal to that of the original Term of the engagement of the Consultant by the Company. 2. Description of Services. During the term of this Agreement, as requested from time to time by the Company, Consultant shall provide to the Company advice regarding certain matters for the Company. The consulting activities which the Consultant may provide to the Company may include advice relating to mergers, acquisitions, strategic planning, marketing communications and public relations ("Communication Services") and, at the request of the Company, shall also provide (i) advice regarding the management of the Company, (ii) financial advice regarding the Company's operations, (iii) advice relating to corporate governance issues and (iv) strategic planning advice (the "Management Consulting Services,") together with Communication Services, the "Services"). 3. Non-Exclusivity of Services. The Company acknowledges that Consultant shall not be engaged by the Company on full-time basis and shall provide Consulting services to other companies from time to time, including those in the same industry. The Company further acknowledges that Consultant may not be available at all times to respond promptly to requests for the provision of Services due to other business commitments; however, Consultant shall use reasonable efforts to respond within a reasonable time to requests for Services by the Company. Consultant shall have the right to retain, engage or employ, other persons and or entities to supply all or any portion of the service or services to be provided by Consultant under the terms of this Agreement. 4. Place of Engagement. The Services to be performed by Consultant pursuant to this Agreement shall be rendered primarily from the offices of the Consultant or at one or more suitable locations designated by the Company. In any case, the Company shall provide to the Consultant office space and support services at no charge to the Consultant. 5. Compensation. In consideration of Consultant's Services hereunder, for and during the Term of this Agreement, the Company shall pay Consultant a consulting fee equal to sixteen thousand dollars ($16,000) per month, payable one month in advance, and supplemental compensation which shall be paid as a fee equal to two and one half percent (2.5%) of the value of any merger, acquisition, sale or purchase of any business, including but not limited to asset purchase transactions which are intended to add to, or remove from, the Company's operations. Such fees shall include all compensation, including but not limited to cash compensation, equity, warrants, options, consulting fees or long term incentive options. Additionally, the company shall pay a fee equal to two and one half percent (2.5%) of all monies raised with the assistance of Consultant or any persons or entities engaged by Consultant. The Company shall pay to the Consultant its portion of the fees within forty-eight (48) hours of completion of the transaction by the Company. The Company shall reimburse the Consultant, or any person or entity engaged by consultant, for all real and actual expenses incurred as a result of its activities under this Agreement. The Consultant shall be reimbursed for such expenses within ten (10) days of the submission. For the equity, options, warrants and other equity related items referenced in Section 5 above, such items shall be listed by the name, either personal or company, provided to the Company by the Consultant and shall be registered, transferred an available for sale under terms not less than those provided to the Company by the entity from which the equity, options, warrants or other equity item is provided. 6. Entire Agreement. This agreement supercedes all prior agreements between the parties concerning its subject matter, including nay prior subject matter or dealings between the parties, and constitutes the entire agreement between the parties with respect to matter contained herein. 7. Taxes. Any and all sales, service, income and other taxes applicable to any payments made by the Company to Consultant under this Agreement shall be the sole responsibility and liability of Consultant. Consultant shall indemnify and hold harmless the Company for any liability or damages imposed upon the Company for taxes payable by or with respect to Consultant. 8. Confidential Information. Except as permitted pursuant to this Section 8, during Consultant's engagement with the Company and for a period of two years thereafter, Consultant will hold in strict confidence and not disclose to any person or entity without the express written authorization of the Company, any confidential or secret information, financial, marketing data, including, without limitation financial statements of the Company, technique, process, formula, developmental or experimental work, work in progress, business methods, trade secrets including, without limitation any customer lists, marketing techniques or plans, or any other secret or confidential information relating to the Company (collectively referred to herein as "Confidential Information"), including, without any limitation any information relating to inquiries made by the Company or negotiations with respect to any acquisition of or by the Company; provided, however, that Confidential Information shall not include any of the foregoing which (i) is available to the public generally, or (ii) has been developed by Consultant without use of any Confidential Information, or in connection with Consultant's engagement with the Company and not in violation of any other terms of this Agreement, or (iii) is or has been learned by Consultant through an independent third party who is not, and has not been, affiliated with or employed by the Company or bound by an agreement of confidentiality or fiduciary duty to the Company. Consultant agrees that it will not make any use, outside the Scope of Consultant's engagement, of any Confidential Information, and will not make any use of any Confidential Information at any time for two years after termination of such engagement. Nothing in this Agreement shall prevent Consultant from disclosing any Confidential Information to the extent that disclosure is required by law or any order of a court or government authority with jurisdiction over Consultant. 9. Independent Contractor. Consultant's relationship to the Company hereunder shall be that of an independent Contractor. Consultant shall not be the agent of the Company and shall have no authority to act on behalf of the Company in any manner except in the manner and to the extent that the Company may expressly agree in writing. 10. Indemnification. (a) Liability - Consultant. So long as Consultant shall act in good faith in performing, discharging and observing its duties hereunder, neither Consultant nor its employees shall be liable or accountable to the Company, in damages or otherwise, for any error of judgment, any mistake of fact of law, or any other act or thing which it or its employees may do or refrain from doing in connection with its duties and obligations hereunder, except in the case of its or its employees' gross negligence or intentional misconduct. (b) Liability - Company. So long as the Company shall act in good faith in performing, discharging and observing its duties hereunder, neither Company nor its employees shall be liable or accountable to the Consultant, in damages or otherwise, for any error of judgment, any mistake of fact of law, or any other act or thing which it or its employees may do or refrain from doing in connection with its duties and obligations hereunder, except in the case of its or its employees' gross negligence or intentional misconduct (c) Indemnification - Consultant. The Company shall indemnify and hold harmless Consultant with respect to any demands, judgments, settlements, damages, payments or claims of any nature whatsoever arising from or out of the Consultant's performance of its duties hereunder (other than Consultant's acts of gross negligence or intentional misconduct), at law or in equity, in connection with the Consultant's or the Company's activities, actions, operations, or decisions, including, but not limited to, any errors, omissions, incidents or accidents occurring in connection with such activities, actions, operations or decisions, or otherwise in the course or conduct of its business, which Indemnity shall continue notwithstanding the termination at this Agreement. (d) Indemnification - Company. The Consultant shall indemnify and hold harmless Company with respect to any demands, judgments, settlements, damages, payments or claims of any nature whatsoever arising from or out of the Company's performance of its duties hereunder (other than Company's acts of gross negligence or intentional misconduct), at law or in equity, in connection with the Company's or the Consultant's activities, actions, operations, or decisions, including, but not limited to, any errors, omissions, incidents or accidents occurring in connection with such activities, actions, operations or decisions, or otherwise in the course or conduct of its business, which Indemnity shall continue notwithstanding the termination at this Agreement. 11. Waiver. No failure on the part of either party hereto to exercise and no delay by either Party hereto in exercising any right, power or remedy hereunder shall Operate as a waiver thereof, nor shall any single or partial exercise of any right, power or remedy by either party hereto preclude any other or further exercise thereof or the exercise by such party of any other right, power or remedy. No express waiver or assent by either party hereto of any breach of or default in any term or condition of this Agreement by the other party shall constitute a waiver of or an assent to any succeeding breach of or default in the same or any other term or condition hereof. 12. Severability. All rights and restrictions contained in this Agreement may be exercised and shall be applicable and binding only to the extent that they do not violate any applicable laws and are intended to be limited to the extent necessary so that they will not render this Agreement illegal, invalid or unenforceable. If any term of this Agreement, or part not essential to the commercial purpose of this Agreement shall be held illegal, invalid or unenforceable by a court of competent jurisdiction, it is the intention of the parties that the remaining terms hereof, or part thereof shall constitute their agreement with respect to the subject manner hereof and all such remaining terms, or parts thereof, shall remain in full force and effect. To the extent legally permissible, any illegal, invalid or unenforceable provision of this Agreement shall be replaced by a valid provision which will implement the commercial purpose of the illegal, invalid or unenforceable provision. 13. Notices. All notices, requests, demands and other communications hereunder must be in writing and shall be deemed to have been duly given if delivered by hand or mailed within the continental United States by first class, registered mail, to the applicable party and addressed as follows: COMPANY: Small Town Radio, Inc. 2900 Atlantic Ave. Suite 100 Fernandina Beach, Florida 32034 Attn: Robin Vail, Chairman CONSULTANT: Porter Lane Investments, Inc. 5255 Porter Lane Gainesville, Georgia 30506 Attn: Gerald Sullivan, President Any party may change the address or facsimile number to which notices, requests, demands or other communications to each party shall be delivered or mailed by giving notice thereof to the other parties hereto in the manner provided herein. 14. Governing Law. Regardless of the place of execution, place of performance or otherwise, this Agreement and all amendments, modifications or supplements thereto, and the rights of the parties hereunder, shall be governed by and constituted and enforced in accordance with the laws of the State of Georgia. 15. Agreement Non-assignable. The parties acknowledge that this Agreement has been entered into as a result of, among other things, the special skills of Consultant, and agree that this Agreement may not be assigned or transferred Consultant, in whole or in part, without the prior written consent of the Company. Further, the parties agree that this Agreement may not be assigned or transferred by the Company, or Consultant, without the prior written consent of the other party. 16. Headings. The headings as to the contents of particular sections are inserted only for convenience and shall not be construed as a part of this Agreement or as a limitation on or enlargement of the scope of any of the terms or provisions this Agreement. 17. Entire Agreement. This Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement between the parties with respect to the matters averred hereby. This Agreement shall not be modified or amended except by an instrument in writing signed by or on behalf of the parties hereto. WITNESS WHEREOF the Company and Consultant have caused this Agreement to be executed as of the date first written above. THE COMPANY: CONSULTANT: SMALL TOWN RADIO, INC. PORTER LANE INVESTMENTS, INC. By: /s/ Robert S. Vail By: /s/ Gerald Sullivan -------------------------------- ------------------------------- Its: Chairman Its: President ------------------------------- ------------------------------ EX-10.1.2 8 porteramend.txt AMENDED PORTER LANE AGMT. EXHIBIT 10.1.2 FIRST AMENDED PORTER LANE CONSULTING AGREEMENT THIS FIRST AMENDED CONSULTING AGREEMENT (the "Agreement") is made and entered into as of the 16th day of April, 2001, by and between Small Town Radio, Inc., a Georgia corporation (hereinafter referred to as the "Company"), its principals and affiliates and Porter Lane Investments, Inc, a Georgia Corporation, its principals and affiliates (hereinafter referred to as "Consultant"), and replaces and supersedes the prior consulting agreement, dated March 13, 2000, between the parties. WHEREAS, Consultant possesses significant knowledge and experience in the management of private and public corporations and has been engaged by the Company to provide . certain consulting services to it; and WHEREAS, the Company desires to enter into this Agreement with Consultant to set forth in detail the consulting services to be provided to the Company and to provide for the payment for such services by the Company, and Consultant wishes to provide such consulting services, all upon the terms and subject to the conditions contained herein; THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Engagement and Term. Subject to the terms and conditions of this Agreement, the Company hereby retains Consultant to provide the consulting services described in Section 2 below, and Consultant hereby accepts such engagement. The term of this Agreement shall commence on June 1, 2001 and shall continue for a period of one (1) year (the "Term"), provided that this Agreement may be terminated prior to the expiration of the Term upon ninety (90) days written notice to Consultant to the Company, except that the payment of fees under this agreement shall continue for a period equal to that of the original Term of the engagement of the Consultant by the Company. 2. Description of Services. During the term of this Agreement, as requested from time to time by the Company, Consultant shall provide to the Company advice regarding certain matters for the Company. The consulting activities which the Consultant may provide to the Company may include advice relating to mergers, acquisitions, strategic planning, marketing communications and public relations ("Communication Services") and, at the request of the Company, shall also provide (1) advice regarding the management of the Company, (ii) financial advice regarding the Company's operations, (iii) advice relating to corporate governance issues and (iv) strategic planning advice (the "Management Consulting Services"), together with Communication Services, the "Services"). 3. Non-Exclusivity of Services. The Company acknowledges that Consultant shall not be engaged by the Company on a full-time basis and shall provide Consulting services to other companies from time to time, including those in the same industry. The Company further acknowledges that Consultant may not be available at all times to respond promptly to requests for the provision of Services due to other business commitments; however, Consultant shall use reasonable efforts to respond within a reasonable time to requests for Services by the Company. Consultant shall have the right to retain, engage or employ, other persons and or entities to supply all or any portion of the service or services to be provided by Consultant under the terms of this Agreement. 4. Place of Engagement. The Services to be performed by Consultant pursuant to this Agreement shall be rendered primarily from the offices of the Consultant or at one or more suitable locations designated by the Company. In any case the Company shall provide to the Consultant office space and support services at no charge to the Consultant. 5. Compensation. In consideration of Consultant's Services hereunder, for and during the Term of this Agreement, the Company shall pay Consultant a consulting fee equal to sixteen thousand dollars ($16,000) per month, payable one month in advance. The Company shall reimburse the Consultant, or any person or entity engaged by consultant, for all real and actual expenses incurred as a result of its activities under this Agreement. The Consultant shall be reimbursed for such expenses within ten (10) days of the submission. 6. Entire Agreement. This agreement supercedes all prior agreements between the parties concerning its subject matter, including any prior subject matter or dealings between the parties, and constitutes the entire agreement between the parties with respect to matter contained herein. 7. Taxes. Any and all sales, service, income and other taxes applicable to any payments made by the Company to Consultant under this Agreement shall be the sole responsibility and liability of Consultant. Consultant shall indemnify and hold harmless the Company for any liability or damages imposed upon the Company for taxes payable by or with respect to Consultant. 8. Confidential Information. Except as permitted pursuant to this Section 8, during Consultant's engagement with the Company and for a period of two years thereafter, Consultant will hold in strict confidence and not disclose to any person or entity without the express written authorization of the Company, any confidential or secret information, financial, marketing data, including, without limitation financial statements of the Company, technique, process, formula, developmental or experimental work, work in progress, business methods, trade secrets including, without limitation any customer lists, marketing techniques or plans, or any other secret or confidential information relating to the Company (collectively referred to herein as "Confidential Information"), including, without any limitation any information relating to inquiries made by the Company or negotiations with respect to any acquisition of or by the Company; provided, however, that Confidential Information shall not include any of the foregoing which (i) is available to the public generally, or (ii) has been developed by Consultant without use of any Confidential Information, or in connection with Consultant's engagement with the Company and not in violation of any other terms of this Agreement, or (iii) is or has been learned by Consultant through an independent third party who is not, and has not been, affiliated with or employed by the Company or bound by an agreement of confidentiality or fiduciary duty to the Company. Consultant agrees that it will not make any use, outside the Scope of Consultant's engagement, of any Confidential Information, and will not make any use of any Confidential Information at any time for two years after termination of such engagement. Nothing in this Agreement shall prevent Consultant from disclosing any Confidential Information to the extent that disclosure is required by law or any order of a court or government authority with jurisdiction over Consultant. 9. Independent Contractor. Consultant's relationship to the Company hereunder shall be that of an independent contractor. Consultant shall not be the agent of the Company and shall have no authority to act on behalf of the Company in any manner except in the manner and to the extent that the Company may expressly agree in writing. 10. Indemnification (a) Liability - Consultant. So long as Consultant shall act in good faith in performing, discharging and observing its duties hereunder, neither Consultant nor its employees shall be liable or accountable to the Company, in damages or otherwise, for any error of judgment, any mistake of fact of law, or any other act or thing which it or its employees may do or refrain from doing in connection with its duties and obligations hereunder, except in the case of its or its employees' gross negligence or intentional misconduct. (b) Liability - Company. So long as the Company shall act in good faith in performing, discharging and observing its duties hereunder, neither Company nor its employees shall be liable or accountable to the Consultant, in damages or otherwise, for any error of judgment, any mistake of fact of law, or any other act or thing which it or its employees may do or refrain from doing in connection with its duties and obligations hereunder, except in the case of its or its employees' gross negligence or intentional misconduct. (c) Indemnification - Consultant. The Company shall indemnify and hold harmless Consultant with respect to any demands, judgments, settlements, damages, payments or claims of any nature whatsoever arising from or out of the Consultant's performance of its duties hereunder (other than Consultant's acts of gross negligence or intentional misconduct), at law or in equity, in connection with the Consultant's or the Company's activities, actions, operations, or decisions, including, but not limited to, any errors, omissions, incidents or accidents occurring in connection with such activities, actions, operations or decisions, or otherwise in the course or conduct of its business, which Indemnity shall continue notwithstanding the termination at this Agreement. (d) Indemnification - Company. The Consultant shall indemnify and hold harmless Company with respect to any demands, judgments, settlements, damages, payments or claims of any nature whatsoever arising from or out of the Company's performance of its duties hereunder (other than Company's acts of gross negligence or intentional misconduct), at law or in equity, in connection with the Company's or the Consultant's activities, actions, operations, or decisions, including, but not limited to, any errors, omissions, incidents or accidents occurring in connection with such activities, actions, operations or decisions, or otherwise in the course or conduct of its business, which Indemnity shall continue notwithstanding the termination at this Agreement. 11. Waiver. No failure on the part of either party hereto to exercise and no delay by either Party hereto in exercising any right, power or remedy hereunder shall Operate as a waiver thereof, nor shall any single or partial exercise of any right, power or remedy by either party hereto preclude any other or further exercise thereof or the exercise by such party of any other right, power or remedy. No express waiver or assent by either party hereto of any breach of or default in any term or condition of this Agreement by the other party shall constitute a waiver of or an assent to any succeeding breach of or default in the same or any other term or condition hereof. 12. Severability. All rights and restrictions contained in this Agreement may be exercised and shall be applicable and binding only to the extent that they do not violate any applicable laws and are intended to be limited to the extent necessary so that they will not render this Agreement illegal, invalid or unenforceable. If any term of this Agreement, or part not essential to the commercial purpose of this Agreement shall be held illegal, invalid or unenforceable by a court of competent jurisdiction, it is the intention of the parties that the remaining terms hereof, or part thereof shall constitute their agreement with respect to the subject manner hereof and all such remaining terms, or parts thereof, shall remain in full force and effect. To the extent legally permissible, any illegal, invalid or unenforceable provision of this Agreement shall be replaced by a valid provision which will implement the commercial purpose of the illegal, invalid or unenforceable provision. 13. Notices. All notices, requests, demands and other communications hereunder must be in writing and shall be deemed to have been duly given if delivered by hand or mailed within the continental United States by first class, registered mail, to the applicable party and addressed as follows: COMPANY: Small Town Radio, Inc. 12600 Deerfield Parkway, Suite 100 Alpharetta, Georgia 30004 Attn: Robin Vail, Chairman CONSULTANT: Porter Lane Investments, Inc. 5255 Porter Lane Gainesville, Georgia 30506 Attn: Gerald Sullivan, President Any party may change the address or facsimile number to which notices, requests, demands or other communications to such party shall be delivered or mailed by giving notice thereof to the other parties hereto in the manner provided herein. 14. Governing Law. Regardless of the place of execution, place of performance or otherwise, this Agreement and all amendments, modifications or supplements thereto, and the rights of the parties hereunder, shall be governed by and constituted and enforced in accordance with the laws of the State of Georgia. 15. Agreement Non-assignable. The parties acknowledge that this Agreement has been entered into as a result of, among other things. the special skills of Consultant, and agree that this Agreement may not be assigned or transferred by Consultant, in whole or in part, without the prior , written consent of the Company. Further, the parties agree, that this Agreement may not be assigned or transferred by the Company, or Consultant, without the prior written consent of the other party. 16. Headings. The headings as to the contents of particular sections are inserted only for convenience and shall not be construed as a part of this Agreement or as a limitation on or enlargement of the scope of any of the terms or provisions of this Agreement. 17. Entire Agreement. This Agreement supersedes all prior discussions and agreements between the parties with respect to the subject manor hereof and contains the sole and entire agreement between the parties with respect to the matters covered hereby. This Agreement shall not be modified or amended except by an instrument in writing signed by or on behalf of the parties hereto. IN WITNESS WHEREOF the Company and Consultant have caused this Agreement to be executed as of the date first written above. THE COMPANY: CONSULTANT: SMALL TOWN RADIO, INC. PORTER LANE INVESTMENTS, INC. By: /s/ Robert S. Vail By: /s/ Gerald F. Sullivan -------------------------- ---------------------------- Its: President Its: President ------------------------- --------------------------- EX-10.1.3 9 porterterm.txt AMENDMENT TO AMENDED PORTER LANE AGMT. EXHIBIT 10.1.3 FIRST AMENDMENT TO FIRST AMENDED PORTER LANE INVESTMENTS, INC. CONSULTING AGREEMENT THIS FIRST AMENDMENT ("Amendment") is made and entered into as of this the 31st day of July, 2001, by and between Small Town Radio, Inc., a Georgia corporation (hereinafter referred to as the "Company"), its principals and affiliates and Porter Lane Investments, Inc., a Georgia corporation, its principals and affiliates (hereinafter referred to as "Consultant"), and amends the First Amended Consulting Agreement dated the 16th day of April, 2001. WHEREAS, Company has requested that Consultant consider termination of the above noted Consulting Agreement as of this date; and WHEREAS, Consultant is agreeable to such request under the terms herein noted; THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties here to agree as follows: 1. Engagement Term: The term of the Agreement shall terminate as of July 31, 2001. 2. Termination Fee: Company agrees to pay a one time Termination Fee equal to one month's fee under the original agreement, which Termination Fee shall equal Sixteen Thousand Dollars ($16,000). 3. Payment of Monies Due: Company agrees to pay the Termination Fee and all unpaid fees, said unpaid fees approximating Two Hundred and Sixty Four Thousand Dollars ($264,000), due to Consultant not later than the 15th Day of August, 2001. 4. Other: All conditions contained in the prior Consulting Agreement, as amended, between Company and Consultant, such as Confidentiality and Indemnification and Notices, remain in force and effect. IN WITNESS WHEREOF the Company and Consultant have caused this Amendment to be executed as the date first written above. THE COMPANY: CONSULTANT: By: /s/ Robert S. Vail By: /s/ Gerald Sullivan --------------------------- ---------------------------------- Its: CFO Its: President -------------------------- --------------------------------- EX-10.1.4 10 porterletter.txt LTR. AGMT. RE PORTER LANE TERMINATION EXHIBIT 10.1.4 PORTER LANE INVESTMENTS, INC. 6625 Highway 53 East Suite 410-172 Dawsonville, GA 30534 770-654-5692 August 10, 2001 Mr. Robert S. Vail Small Town Radio, Inc. 12600 Deerfield Parkway, Suite 100 Alpharetta, Georgia 30004 Dear Mr. Vail: Porter Lane Investments, Inc. (Company) and Small Town Radio, Inc. (STRI) have executed the First Amendment to the First Amended Porter Lane Investments, Inc. Consulting Agreement that terminated the consulting agreement. At this time, STRI owes the Company a total of $280,000, some of which dates back well over a year. STRI has offered to pay a portion ($240,000) of this balance in common stock of Worldwide Petromoly, Inc. (MOLY). Porter Lane Investments, Inc. hereby agrees that upon delivery of a total of 1,690,141 shares of MOLY to Gerald Sullivan, Wayne Shortridge and Richard Smyth, $240,000 of the outstanding balance will have been paid in full and STRI's remaining liability to the Company as of August 10, 2001 will be $40,000. Porter Lane Investments, Inc. /s/ Gerald Sullivan Gerald Sullivan President EX-10.2 11 officelease.txt HQ DEERFIELD LEASE AGMT. EXHIBIT 10.2 AGREEMENT
------------------------------------------------------------------- ---------------------------------------------------------------- Client: Small Town Radio Center: HQ Deerfield ------------------------------------------------------------------- ---------------------------------------------------------------- ------------------------------------------------------------------- ---------------------------------------------------------------- Address: 12600 Deerfield Parkway, Suite 100 Address: 12600 Deerfield Parkway, Suite 100 ------------------------------------------------------------------- ---------------------------------------------------------------- ------------------------------------------------------------------- ---------------------------------------------------------------- City, State and Zip: Alpharetta, GA 30004 City, State and Zip: Alpharetta, Georgia 30004 ------------------------------------------------------------------- ---------------------------------------------------------------- ------------------------------------------------------------------- ---------------------------------------------------------------- Email Address: Email Address: yvonne.hill@hq.com ------------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------- -------------------------------- -------------------------------- ------------------------------- Phone: 770-654-5692 Robert S. Vail Phone: 678-566-3550 Yvonne Hill ---------------------------------- -------------------------------- ---------------------------------- -------------------------------- Fax: Contact Name Fax: 678-566-3551 Contact Name ------------------------------------------------------------------------------------------------------------------------------------ Billiing Address (if different from above): As above ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ Type of Business or Service: Radio Stations ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ Persons Authorized to charge to account: Robert S. Vail, Gerald F. Sullivan ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------- ---------------------------------------------------------------- What do I get? Full Office Program Number of offices: 2 ------------------------------------------------------------------- ---------------------------------------------------------------- How long? 6 months --------------------------------------------------------- -------------------------------------------------------------------------- How much? Fixed Fee(s): Phone + lines $224.22 + $224.22 T-1 - $75.00 Rent $1,873.50 Analog line $50.00 + $50.00 Fixed costs Phone answering $100.00 --------------------------------------------------------- -------------------------------------------------------------------------- --------------------------------------------- ------------------------------------------- ------------------------------------------ Refundable Retainer: 1,776.33 Fixed Fee Payment Date: 1st of Month Service Fee Payment Date: 1st of month --------------------------------------------- ------------------------------------------- ------------------------------------------ --------------------------------------------- ------------------------------------------- ------------------------------------------ When do I start? September 1, 2001 --------------------------------------------- ------------------------------------------- ------------------------------------------
I want my agreement to renew automatically at the then current rates for my office and/or services: (select one) |_| Same Term |_| Shorter Term: |_| Monthly I will give sixty (60) days written notice if I want to cancel my renewal. I have read and understand the terms and conditions on the reverse side and I agree to be bound by those terms and conditions. ATL/810501.1 TERMS AND CONDITIONS 1. OFFICE ACCESS. As a client you have a license to use the offices) assigned to you. You also have shared use of common areas in the center. Your office comes with standard office furniture. You have access to your office(s) twenty-four (24) hours a day, seven (7) days a week. Our building provides office cleaning, maintenance services, electric heating and air conditioning to the center during normal business hours as determined by the landlord for the building. We reserve the right to relocate you to another office in the center from time to time. If we exercise this right it will only be to an office of equal or larger size and configuration. This relocation is at our expense. We reserve the right to show the office(s) to prospective clients and will use reasonable efforts not to disrupt your business. 2. SERVICES. In addition to your office, we provide you with certain services on an as requested basis. The fee schedule for these services Is available upon request. The fees are charged to your account and are payable on the service fee payment date listed on the reverse side of this agreement. You agree to pay all charges authorized by you or your employees. The fee schedule is updated from time to time. HQ Global Workplaces (HQ) and vendors designated by HQ are the only service providers authorized to provide services in the center. You agree that neither you nor your employees will solicit other clients of the center to provide any service provided by HQ or its designated vendors, or otherwise. In the event you default on your obligations under this agreement, you agree that HQ may cease to provide any and all services including telephone services without resort to legal process. 3. PAYMENTS. You agree to pay the fixed and additional service fees and all applicable sales or use taxes on the payment dates listed on the reverse side of this agreement. If you dispute any portion of the charges on your bill, you agree to pay the undisputed portion on the designated payment date. You agree that charges must be disputed within ninety (90) days or you waive your right to dispute such charges. You may be charged a late fee for any late payments. When you sign this agreement you are required to pay your fixed fee, set up fees and a refundable retainer. The refundable retainer will not be kept in a separate account from other funds of HQ and no interest will be paid to you on this amount. The refundable retainer may be applied to outstanding charges at any time at our discretion. We have the right to require that you replace retainer funds that we apply to your charges. At the end of the term of this agreement, if you have satisfied all of your payment obligations, we will refund you this retainer within forty-five (45) days. 4. OUR LIMITATION OF LIABILITY. You acknowledge that due to the imperfect nature of verbal, written and electronic communications, neither HQ nor HQ's landlord or any of their respective officers, directors, employees, shareholders, partners, agents or representatives shall be responsible for damages, direct or consequential, that may result from the failure of HQ to furnish any service, including but not limited to the service of conveying messages, communications and other utility or services. Your sole remedy and HQ's sole obligation for any failure to render any service, any error or omission, or any delay or interruption of any service, is limited to an adjustment to your bill in an amount equal to the charge for such service for the period during which the failure, delay or interruption continues. WITH THE SOLE EXCEPTION OF THE REMEDY DESCRIBED ABOVE, CLIENT EXPRESSLY AND SPECIFICALLY AGREES TO WAIVE, AND AGREES NOT TO MAKE, ANY CLAIM FOR DAMAGES, DIRECT OR CONSEQUENTIAL, INCLUDING WITH RESPECT TO LOST BUSINESS OR PROFITS, ARISING OUT OF ANY FAILURE TO FURNISH ANY SERVICE, ANY ERROR OR OMISSION WITH RESPECT THERETO, OR ANY DELAY OR INTERRUPTION OF SERVICES. HQ DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. 5. LICENSE AGREEMENT. THIS AGREEMENT IS NOT A LEASE OR ANY OTHER INTEREST IN REAL PROPERTY IT IS A CONTRACTUAL ARRANGEMENT THAT CREATES A REVOCABLE LICENSE. We retain legal possession and control of the center and the office assigned to you. Our obligation to provide you space and services Is subject to the terms of our lease with the building. This agreement terminates simultaneously with the termination of our lease or the termination of the operation of our center for any reason. As our client you do not have any rights under our lease with our landlord. When this agreement is terminated because the term has expired or otherwise, your license to occupy the center is revoked. You agree to remove your personal property and leave the office as of the date of termination. We are not responsible for property left in the office after termination. 6. DAMAGES AND INSURANCE. You are responsible for any damage you cause to the center or your office(s) beyond normal wear and tear. We have the right to inspect the condition of the office from time to .time and make any necessary repairs. You are responsible for insuring your personal property against all risks. You have the risk of loss with respect to any of your personal property. You agree to waive any right of recovery against HQ, its directors, officers and employees for any damage or loss to your property under your control. All property in your office(s) is understood to be under your control. 7. DEFAULT. You are in default under this agreement if; 1) you fail to abide by the rules and regulations of the center, a copy of which has been provided to you; 2) you do not pay your fees on the designated payment date and after written notice of this failure to pay you do not pay within five (5) days; and 3) you do not comply with the terms of this agreement. If the default is unrelated to payment you will be given written notice of the default and you will have ten (10) days to correct the default. 8. TERMINATION. You have the right to terminate this agreement early; 1) if your mail or telecommunications service or access to the of8ce(s) is cut for a period of ten (10) concurrent business days; 2) in accordance with a negotiated buy out agreement; or 3) in connection with a transfer to another center in the HQ network. HD has the right to terminate this agreement early; 1) if you fail to correct a default or the default cannot be corrected; 2) without opportunity to cure if you repeatedly default under the agreement; or 3) if you use the center for any illegal operations or purposes. 9. RESTRICTION ON HIRING. Our employees are an essential part of our ability to deliver our services. You acknowledge this and agree that, during the term of your agreement and for six (6) months afterward, you will not hire any of our employees. If you do hire one of our employees, you agree that actual damages would be difficult to determine and therefore you agree to pay liquidated damages in the amount of one-half of the annual base salary of the employee you hire. You agree that this liquidated damage amount is fair and reasonable. 10. MISCELLANEOUS. A All notices are to be in writing and may be given by registered or certified mail, postage prepaid, overnight mail service or hand delivered with proof of delivery, addressed to HQ or client at the address listed on the reverse side of this agreement. B. You acknowledge that HQ will comply with the U.S. Postal Service regulations regarding client mail. Upon termination of this agreement, you must notify all parties with whom you do business of your change of address. You agree not to file a change of address form with the postal service. Filing of a change of address form may forward all mail addressed to the center to your new address. In addition, all telephone and facsimile numbers and IP addresses are the property of HQ. These numbers will not be transferred to you at the end of the term. For a period of thirty (30) days after the expiration of this agreement, HQ will provide your new telephone number and address to all incoming callers and will hold or forward your mall, packages, and facsimiles at no cost to you. After thirty days (30) you may request the continuation of this service at your cost. Business Access clients must pay for the additional five (5) months of mail forwarding required by the USPS regulations. C. In the event a dispute arises under this agreement you agree to submit the dispute to mediation. If mediation does not resolve the dispute, you agree that the matter will be submitted to arbitration pursuant to the procedure established by the American Arbitration Association in the metropolitan area in which the center is located. The decision of the arbitrator will be binding on the parties. The non-prevailing party as determined by the arbitrator shall pay the prevailing party's attorney's fees and costs of the arbitration. Furthermore, if a court decision prevents or HQ elects not to submit this matter to arbitration, then the non-prevailing party as determined by the court shall pay the prevailing party's reasonable attorney's fees and costs. Nothing in this paragraph will prohibit HQ from seeking equitable relief including without limitation any action for removal of the client from the center after the license has been terminated or revoked. D. This agreement is governed by the laws of the state in which the center is located. E. Client may not assign this agreement without HD's prior written consent, which will not be unreasonably withheld. F. This agreement is the entire agreement between you and HQ. It supersedes all prior agreements. HQ Global Workplaces, Inc. By: /S/ Yvonne Hill Authorized Signature Yvonne Hill 4/9/01 Print Name Date Its: General Manager CLIENT:Small Town Radio, Inc. By: /s/ Robert S. Vail Authorized Signature Robert S. Vail 4/9/01 Print Name Date Its: President EX-10.3 12 lgkmedia.txt AGMT. WITH LGK MEDIA STAFFING EXHIBIT 10.3 April 17, 2001 Mr. Robert S. Vail Small Town Radio, Inc. 12600 Deerfield Parkway, Suite 100 Alpharetta, GA 30004 Re: Search Agreement/Level II with Small Town Radio ("Client") for President/GM(position) Dear Robin: Thank you for choosing Igk Media Staffing Network, Inc. ("Igk MSN") for your executive placement needs. The following will set forth our agreement and understanding with respect to the placement of full time Igk MSN Level II employee (the "Candidate"). Any pre-agreed upon changes will be reflected in the attached Schedule "A". 1. Igk MSN agrees to provide Client with qualified candidates for placement with Client Services to include screening, qualifying and reference checks. For additional fees, Igk MSN will do required testing, training, profiling and background checks as the law allows. 2. In consideration of such services by Igk MSN, Client shall pay Igk MSN a placement fee equal to 33% of any referred Candidate's first year's estimated gross compensation payable as follows: The placement fee for a Igk MSN Level II Candidate will be payable by Client should Client or any affiliate of the Client employ, or otherwise engage a referred Candidate on a temporary, permanent or contract basis, for any position, directly, or indirectly, within one (1) year after Igk MSN's last communication to Client regarding such Candidate. 2A) A non-refundable retainer fee of 1/3 of the expected fee will be due upon contract signing. Search will not begin until retainer is received by Igk MSN. The remaining 2/3 will be due upon first day that new hire begins. 2B) Client agrees not to refer or otherwise identify any Candidate to any other entity, which might hire the Candidate. In such event, the Client will be responsible for the payment to Igk MSN of a placement fee. 2C) Any applicable candidate previously interviewed personally by Client in the 12 preceding months will not be considered as a Candidate. Any applicant in Client's files that has not been interviewed by client in the preceding 12 months will be considered a Candidate and be subject to compensation. 3. For purposes of this Agreement, gross compensation of the Candidate for which Igk MSN shall be entitled to a fee shall include: earnings, salary, commissions, guarantees, draws and bonuses. Gras compensation shall not include business expenses, car/entertaining allowances, and any profit sharing, pension and health benefits. Igk MSN shall have the right to inspect all books and records of the client relating to the terms and conditions of employment of the Candidate. Igk MSN will use its best efforts to estimate the expected 12 month gross compensation for the Candidate in order to compute its placement fee. 4. Igk MSN will replace, at no additional charge, any Candidate who leaves Clients employ or is discharged by Client within 30 days from the date of placement. In order for replacement to occur, Client must contact Igk MSN within five (5) working days from the date of Candidate's termination, and Client must have paid in full all outstanding invoices to Igk MSN including the placement fee for the Candidate. Failure of Client to pay placement fee in full prior to the Candidate's termination date will nullify and void any replacement or guarantee period. 5. The placement fee shall be payable in full on the first day of full time hire of the Candidate. Any amount not paid within fourteen (14) days will be subject to a late charge at a rate of 1.5% per month. Igk MSN shall be entitled to all costs incurred in collecting the placement fee from Client including reasonable attorney's fees and court costs. Failure of Client to pay placement fee in full within fourteen (14) days will nullify and void any replacement or guarantee period. 6. All candidates will be contacted and screened by Igk MSN prior to submission for Client consideration. Both parties agree that the submission of Candidates by Igk MSN and their review by Client will be conducted confidentially and will not disclosed to third parties without the written consent of the other party. 7. Once the client hires a candidate, it is clients' responsibility to follow up on internal paperwork, which will include company application, I-9, tax forms, etc. Igk MSN will not be held responsible for any actions resulting from the failure of client to do so. 8. Above rates are held for one (1) year from date of agreement. Either party may cancel agreement with 30 days written notice. If the foregoing terms and conditions are satisfactory, please sign and return a copy of this letter whereupon it will became a binding agreement enforceable in accordance with its terms. Acceptance of candidates for interviewing will serve as acceptance of contract terms. We look forward to a long and mutually beneficial relationship with you and hope we can address all of your temporary and regular employee reeds. Very truly yours, Lgk MEDIA STAFFING NETWORK, INC. By: /s/ ------------------------------------- Accepted and agreed as of April 19, 2001 ----------- By: /s/ Robert S. Vail ----------------------------------------- Authorized Agent SCHEDULE A Position Master Agreement for Executive Search Services between Igk Media Staffing Network, Inc. and Small Town Radio Inc. 1. Type/Classification of Igk MEDIA STAFFING NETWORK Personnel: President/GM, Chief Engineer, Field Sales Manager, Chief Programmer 2. Total number of Personnel Requested: 4 3. Start Date Requested for New Hire: TBD 4. Market: Atlanta 5. Rate Structure: Base salary: TBD Total Projected annual income: TBD Fee (%): 25% for placements 1 & 2 23% for each placement thereafter Guarantee: 90 days 6. Other/Misc. $10,000 retainer towards the first placement. Each placement thereafter will be on contingency. Any additional expenses such as advertising or travel will be billed separately. Additional expenses will only be valid with advance client approval. In exchange for a reduction in fees, this is an exclusive arrangement. All potential candidates will be presented via MSN. Exclusivity can be withdrawn with 14 days written notice by client. If exclusivity is withdrawn, MSN fees will revert to 33% for any date hired through MSN. By: /s/ ----------------------------------------- Igk Media Staffing Network Accepted and agreed as of April 19, 2001. ----------- Small Town Radio, Inc. By: /s/ Robert S. Vail ----------------------------------------- Authorized Agent Above rates are valid for 1 year from date of agreement EX-10.4 13 harriscorp.txt AGMT. WITH HARRIS CORP. EXHIBIT 10.4 Client: Small Town Radio Inc. Proposal #: 6357 Proposal Date: April 20, 2001 Small Town Radio Inc. 12600 Deerfield Parkway, Suite 100 Alpharetta, GA 30004 Attn: Robert S. Vail Phone: 678-762-3295 Fax: 678-762-3296 e-mail: ------------------------------------------------------------------ Design for Small Town Radio ------------------------------------------------------------------ Qty Description Price Each Extension Harris custom concepts, design, engineering $10,000.00 and documentation for Small Town Radio The project scope is to construct an Internet Network for direct over-the-air broadcasting through existing FM radio stations to be purchased by Small Town Radio, Inc. The project includes studio design, delivery system design to the Internet provider and delivery of the audio and data signal in the FM transmitters of the various radio stations. The project includes these design areas: Basic Studio Design Basic floorplan for submittal to Small Town Radio's architects for generation of construction drawings Studio room count, functions, proximities, and minimum sizes. Minimum acoustic architectural specifications Simple studio lighting and power requirements and locations Orientation and sight line determination Speaker bracket placement TV Monitor placement Furniture Design Documentation based on the determination and definition of the following: Equipment requirements and recommendations Rack space requirements Equipment rack placement Microphone arm, riser and control panel placement Client: Small Town Radio Inc. Proposal #: 6357 Proposal Date: April 20, 2001 Small Town Radio Inc. 12600 Deerfield Parkway, Suite 100 Headphone jack panel placement Monitor and monitor arm requirements and placement Keyboard and mouse requirements and placement TV Monitor placement Speaker bracket placement Nearfield monitor placement Control turret requirements and placement Orientation and sight line determination Audio Design for Individual Studios & Terminal Room The design and generation of documentation for the audio signal flow of consoles, source equipment, and airchains Documentation based on the determination and definition of the following: Placement of audio source equipment with-in the furniture Audio block placement Specified or customer supplied equipment list Logic Wiring Design The design and generation of documentation of console to source equipment logic signals Documentation based on the determination and definition of the following: Placement of logic controlled equipment with-in the furniture On-Air warning light placement and cabling Inter-Room Wiring The design and generation of documentation for layout and lengths of Audio and Logic Inter Documentation based on the determination and definition of the following: Cable lengths and requirements from Terminal Room to all Studios Cable lengths and requirements from Studio to Studio Client: Small Town Radio Inc. Proposal #: 6357 Proposal Date: April 20, 2001 Small Town Radio Inc. 12600 Deerfield Parkway, Suite 100 Console Configuration Review The design and generation of documentation suitable for the console configuration, including: Input assignment verification, module designation, Telos control panel placement, and routing switcher control panel placement Control Turret Review The design and generation of documentation suitable for the configuration of the control turrets, including: Panel placement, lens designation, Telos control panel placement, routing switcher control panel placement Audio Delivery System The design and generation of documentation for the following: Digital delivery of the studio audio signals to the Qwest POP in Atlanta. Digital delivery of audio and data from the last mile T1 into the existing FM transmitters. Transmitter Equipment The recommendation of proper FM exciters and transmitters as needed The recommendation of proper IBOC digital transmission equipment as it becomes available Final Proposal Preparation of initial buget recommendations Preparation of final turnkey systems proposal Subtotal, Design for Small Town Radio $10,000.00 SUMMARY: Subtotal, Design for Small Town Radio $10,000.00 ---------- Total $10,000.00 ========== Client: Small Town Radio Inc. Proposal #: 6357 Proposal Date: April 20, 2001 Small Town Radio Inc. 12600 Deerfield Parkway, Suite 100 TERMS: Payment due on or before June 18, 2001 PRICE FIRM: This proposal is valid for 30 days from date Client: Small Town Radio Inc. Proposal #: 6357 Proposal Date: April 20, 2001 Small Town Radio Inc. 12600 Deerfield Parkway, Suite 100 All orders are subject to final confirmation and acceptance by the Seller at its home office. All prices are Net, F.O.B. Manufacturing shipping point(s), and are subject to adjustments as herein provided. ** State and local sales tax, in effect at time of shipment, will be added to all invoices as applicable. If tax exempt, provide exemption number for the state to which equipment is to be shipped. EXEMPTION NUMBER: _________________________ NOTICE: This equipment list is intended to be responsive to your requirements as described by your organization to the Harris representative. You should review the equipment list carefully with your technical consultant to assure the list meets your needs. ACKNOWLEDGEMENT OF TERMS: by signing this proposal in the space below, you represent and acknowledge that you have fully read, understand, and accept the terms of this proposal, including the "General Terms and Conditions of Sale for Broadcast Equipment and service", attached herein; that this proposal contains the complete agreement between purchaser and Harris with respect to the articles described herein; that any other agreements, representation, and warranties, whether oral or in writing, made prior to or at the time of signing this proposal, are excluded and replaced by the terms herein; and that no change or addition to this proposal shall be valid or enforceable unless made in writing and accepted by Harris. ACCEPTANCE OF PROPOSAL: When this proposal is signed by purchaser, returned to Harris Broadcast Division and accepted by Harris at its office in Mason, Ohio, the proposal shall become a binding agreement for the purchase from Harris of the articles described herein, upon the terms specified, including Harris' "General Terms and conditions of Sale for Broadcast Equipment and Service". SELLER: Harris Corporation By: Chris Karb -------------------------------------------------- Signature: /s/ ________________________________________________ Title: Territory Manager - Radio Systems ----------------------------------------------------- Date: _________________________________________________ PURCHASER: Small Town Radio, Inc. By: Robert S. Vail ---------------------------------------------------- Signature: /s/ Robert S. Vail _________________________________________________ Title: President ---------------------------------------------------- Date: 5-15-01 __________________________________________________ EX-10.5 14 numark.txt AGMT. WITH NUMARK CORP. EXHIBIT 10.5 NUMARK CAPITAL c o r p o r a t i o n CONSULTING AGREEMENT This Consulting Agreement ("Agreement") is entered into between NuMark Corporation ("Consultant") and the Client identified on the signature page to this Agreement ("Client"). The Consultant is in the business of providing management consulting services, business advisory services, shareholder information services and public relations services. The Client deems it to be in its best interest to retain the Consultant to render to the Client such services as may be agreed to by the parties from time to time; and the Consultant desires to render such services to the Client as set forth hereunder. Now therefore, in consideration of the mutual promises and covenants set forth in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Consulting Services. The Client hereby retains the Consultant as an independent contractor, and the Consultant hereby accepts and agrees to such retention. It is acknowledged and agreed by the Client that the Consultant carries neither professional licenses nor memberships in any self-regulatory organizations. It is further acknowledged and agreed by the Client that the Consultant is not rendering legal advice or performing accounting services and is not acting and shall not act as an investment advisor or broker/dealer within the meaning of any applicable state or federal securities laws. The services of the Consultant shall not be exclusive nor shall the Consultant be required to render any specific number of hours or assign specific personnel to the Client or its projects. 2. Independent Contractor. The Consultant agrees to perform its consulting duties hereto as an independent contractor. Nothing contained herein shall be considered to create an employer-employee relationship between the parties to this Agreement. The Client shall not make social security, workers' compensation or unemployment insurance payments on behalf of Consultant. The parties hereto acknowledge and agree that the Consultant cannot guarantee the results or effectiveness of any of the services rendered or to be rendered by the Consultant. Rather, Consultant shall conduct its operations and provide its services in a professional manner and in accordance with good industry practice. The Consultant will use its reasonable business efforts in providing services to Client. 3. Time, Place and Manner of Performance. The Consultant shall be available to the officers and directors of the Client at such reasonable and convenient times and places as may be mutually agreed upon. Except as aforesaid, the time, place and manner of performance of the services hereunder, including the amount of time to be allocated by the Consultant to any specific service, shall be determined in the sole discretion of the Consultant. 4. Term of Agreement. The term of this Agreement shall be 90 days (the "Term"), commencing on the date of this Agreement, subject to prior termination as hereinafter provided. 5. Compensation. The Client shall provide to the Consultant compensation for its services hereunder in the amounts and at the times as set forth as follows. Prior to the signing of this Agreement, Consultant will be issued a certificate for one million two hundred thousand (1,200,000) shares of restricted Common Stock (the "Shares") of Worldwide Petromoly, Inc. (OTC BB:MOLY). Consultant understands, acknowledges and agrees that such shares will be fully-paid and non-assessable upon completion of the initial thirty (30) days of the Term. 6. Termination. Either the Consultant or the Client may terminate this Agreement at the end of any month during the term of this Agreement on thirty (30) days prior written notice. This Agreement shall automatically terminate upon expiration of the Term or the dissolution, bankruptcy or insolvency of the Client or the Consultant. The Consultant and the Client shall have the right and the discretion to terminate this Agreement should the other party, in performing its duties hereunder, violate any law, ordinance, permit or regulation of any governmental entity or self-regulatory organization, accept for violations that either singularly or in the aggregate do not have or will not have a materially adverse effect on the party desiring termination. In the event of any termination hereunder, following the initial thirty (30) days of the Term all consideration paid to the Consultant through the date of termination shall be fully earned and non-refundable, and the parties shall have no further duties or responsibilities to each other, except that the Client shall be responsible to make any and all other payments, if any, due to the Consultant through the date of termination, and the parties shall continue to be bound by the confidentiality provisions contained in Section 8 of this Agreement. 7. Work Product. It is agreed that all information and materials produced for the Client shall be the property of the Client, free and clear of all claims thereto by the Consultant, and the Consultant has no claim of authorship therein or ownership rights thereto. 8. Confidentiality. The Client and the Consultant each agree to provide reasonable security measures to keep information belonging to the other party confidential where release of the same would be detrimental to such party's business interests ("Confidential Information"). Each party agrees that Confidential Information shall be subject to this Agreement if provided to the other party and marked "Confidential" in a conspicuous manner or otherwise by its nature is known, or should have been known, by its nature to the receiving party as being of a Confidential nature. Consultant and Client shall each require their employees, agents, affiliates, sub-contractors, other licensees, and others who have access to Confidential Information through Consultant or Client, as the case may be, to enter into appropriate non-disclosure agreements requiring the level and degree of confidentiality contemplated by this Agreement. Consultant and Client each agree that it will not, either during the term of this Agreement or at any time thereafter, disclose, use or make known for its own or another's benefit, any Confidential Information acquired or used by it hereunder. The term "Confidential Information" excludes information that: (a) becomes generally available to the public, other than as a result of disclosure by Consultant or Client or another party in violation of any obligation of confidentiality, or (b) Client or Consultant obtains from a third party who is not otherwise bound by any confidentiality obligation. 9. Conflict of Interest. The Consultant shall be free to perform services for other entities or persons. The Consultant will notify the Client of its performance of consulting services for any other entity or person that the Consultant reasonably believes could materially conflict with its obligations to the Client under this Agreement. 10. Disclaimer of Responsibility for Acts of the Client: Limitation on Liability. In no event shall the Consultant be authorized or required by this Agreement to represent or make management decisions for the Client. The Consultant shall, under no circumstances, be made liable for any expense incurred or loss suffered by the Client as a consequence of such decisions by the Client or any affiliates or subsidiaries of the Client as a result of services performed by the Consultant hereunder. CONSULTANT DISCLAIMS ANY AND ALL WARRANTIES RESPECTING THE SERVICES, INCLUDING ALL IMPLIED WARRANTIES OF, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL CONSULTANT BE LIABLE FOR ANY INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO THE SERVICES TO BE PROVIDED UNDER THIS AGREEMENT, HOWEVER CAUSED, EVEN IF CONSULTANT HAS BEEN ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF SUCH DAMAGES. IN NO EVENT SHALL CONSULTANT'S LIABILITY FOR DAMAGES UNDER OR RELATING TO THIS AGREEMENT, REGARDLESS OF HOW ARISING, EXCEED THE AMOUNT OF CASH COMPENSATION PAID TO CONSULTANT HEREUNDER. 11. Indemnification. Each party agrees to indemnify and hold harmless the other party, as well as each of its officers, directors, employees, agents and each person, if any, who controls that party, against any and all liability, loss, costs, expenses or damages, including, but not limited to, any and all expenses reasonably incurred in investigating, preparing or defending against any litigation or arbitration, commenced or threatened, directly resulting by reason of any act, neglect, default or omission, or any untrue or allegedly untrue statement of a material fact, or any misrepresentation of any material fact, or any breach of any material warranty or covenant, by that party or any of its agents, employees, or other representatives, arising out of, or in relation to, this Agreement. 12. Notices. Any notices required or permitted to be given under this Agreement shall be sufficient if in writing and delivered or sent by fax, registered or certified mail, or by Federal Express or other nationally recognized overnight couriers to the principal office of each party and addressed to its principal executive officer at the address set forth on the signature page to this Agreement. Faxes should be marked for the attention of the principal executive officer and sent to the fax number set forth on the signature page to this Agreement. 13. Waiver of Breach. Any waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach by such party. 14. Assignment. Neither party may assign this Agreement without the written consent of the other party. 15. Applicable Law. It is the intention of the parties hereto that this Agreement and the performance hereunder and all suits and special proceedings hereunder be construed in accordance with and pursuant to the laws of the State of New York and that in any action, special proceeding or other proceeding that may be brought arising out of, in connection with, or by reason of this Agreement, the laws of the State of New York, without regard to conflicts of law principles, shall be applicable. The parties agree to submit all litigation arising hereunder to the state or federal courts located in Monroe County, New York, and consent to the jurisdiction and venue of such courts, and further waive any objection that such courts are an inconvenient forum. 16. Severability. All agreements and covenants contained herein are severable, and in the event any of them shall be held to be invalid by any competent court, the Agreement shall be interpreted as if such invalid agreements or covenants were not contained herein. 17. Entire Agreement. Client and Consultant had entered into a Consulting Agreement dated 5/21/2001 for similar services. By signing this Agreement, the previous Agreement between NuMark Capital Corporation and Small Town Radio (OTC: MOLY) becomes unenforceable and null and void and no fees are due under any prior agreement or understanding. This Agreement constitutes and embodies the entire understanding and agreement of the parties and supercedes and replaces all prior understandings, agreements and negotiations between the parties. 18. Waiver and Modification. Any waiver, alteration, or modification of any of the provisions of this Agreement shall be valid only if made in writing and signed by the parties hereto. 19. Counterparts and Facsimile Signature. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original but all of which, taken together, shall constitute one and the same instrument. Execution and delivery of this Agreement by exchange of facsimile copies bearing the facsimile signature of a party hereto shall constitute a valid and binding execution and delivery of this Agreement by such party. [The signatures of the parties appear on the next page.] By signing below, the parties agree to the terms of this Agreement and further certify that their respective signatories are duly authorized to execute this Agreement. --------------------------------------------- Date NuMark Capital Corporation Worldwide Petromoly, Inc. ----------------------------------------- (Client) /s/ Mark McKelvie /s/ Robert S. Vail --------------------------------- ----------------------------------------- By By Mark McKelvie Robert S. Vail --------------------------------- ----------------------------------------- Name Name Managing Director Chairman of the Board --------------------------------- ----------------------------------------- Title Title Address for notices: Address for notices: 14 Franklin Street Small Town Radio, Inc. --------------------------------- ----------------------------------------- Suite 1221 12600 Deerfield Parkway, #100 --------------------------------- ----------------------------------------- Rochester, New York 14604 Alpharetta, GA 30004 --------------------------------- ----------------------------------------- 716-454-6975 678-762-3296 --------------------------------- ----------------------------------------- Fax Number Fax Number 716-454-6955 678-762-3295 --------------------------------- ----------------------------------------- Telephone Number Telephone Number EX-10.7 15 atlas.txt AGMT. WITH ATLAS CAPITAL EXHIBIT 10.7 [LETTERHEAD OF ATLAS CAPITAL SERVICES, INC.] June 20, 2001 By Facsimile (678) 762-3296 Mr. Robert S. Vail Chief Financial Officer Small Town Radio 12600 Deerfield Pkwy., Suite 100 Alpharetta, GA 30004 Re: Finder Agreement Dear Mr. Vail: This letter confirms the agreement ("Agreement") between Worldwide PetroMoly Inc. (OTCBB:MOLY) d/b/a Small Town Radio Inc. (STRI), Inc. and its affiliated companies (the "Company") to retail Atlas Capital Services, Inc. ("Atlas"), a registered broker-dealer and member of the NASD to provide the services described below. 1. Services 1.1 Atlas shall use its reasonable best efforts to introduce the Company to corporations, partnerships mutual funds, hedge funds, accredited investors, investment partnerships, securities firms, lending and other institutions and entities (collectively "Entities") which may engage in or provide a Transaction" (as defined below) to the Company. As used herein, the term "Entities" also means and includes any party, which is directly or indirectly connected with or related to one of the Entities described above including, without limitation, all affiliates as well as any referral from any of the Entities, any client or customer or any of the Entities, and any investor in any of the Entities. 1.2 Except as set forth below, all services provided by Atlas under this Agreement shall be at Atlas's cost and risk. Atlas's sole compensation, if any, shall be a "Transaction Fee" (as set forth in Section 4 below) upon consummation of a Transaction in any form with any Entity. 1.3 The Company acknowledges that Atlas's responsibilities shall be limited to the foregoing, and that Atlas (i) shall not have authority to offer or sell the Securities to any potential Entity, (ii) shall have no responsibility to participate or assist in any negotiations between any potential Entity and the Company, and (iv) shall have no responsibility for fulfilling any reporting or filing requirements of the Company pursuant to applicable federal and state securities laws. In addition, the Company expressly acknowledges and agrees that Atlas's obligations hereunder are on a reasonable best effort basis only and that the execution of this Agreement does not constitute a commitment by Atlas to purchase the Securities or any other securities of the Company and does not ensure the successful placement of the Securities or any portion thereof. 1.4 Notwithstanding anything in this Agreement to the contrary, the Company shall have the sole and absolute discretion to accept or not accept the terms of any Transaction. Neither the Company nor any of its affiliates shall have any liability whatsoever to Atlas or any other person or entity resulting from its decision not to enter into a proposed Transaction, regardless of the terms of the proposed Transaction. 2. Term This Agreement shall take effect immediately and shall continue for a minimum term of six (6) months. Thereafter, the Agreement will remain in effect until terminated by either party upon 30 days prior written notice to the other. 3. Information In connection with Atlas's engagement hereunder, the Company will furnish Atlas and any prospective Entity with any information concerning the Company that Atlas reasonably deems appropriate and will provide Atlas and prospective Entities with reasonable access to the Company's officers, directors, accountants, counsel and other advisors, subject to the Company's non-disclosure agreement. In addition, Atlas shall be kept fully informed of any events that are reasonably likely to have a material effect on the financial condition of the Company. The Company represents and warrants to Atlas that all such information concerning the Company and all private placement materials, whether in the form of a letter, circulated, memorandum, notice or otherwise to be used in placing the securities, to the extent that the Securities are placed in a private placement, or an appropriate subscription agreement, to the extent that the securities to be placed have been publicly registered ("Materials") will be true and accurate in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances under which such statements are made. The Company acknowledges and agrees that Atlas will not undertake any "due diligence" investigation and will be using and relying upon the information supplied by the Company and its officers, agents and others, the Materials, and any other publicly available information concerning the Company. 4. Transaction Fee In consideration of Atlas's services, Atlas shall be entitled to receive, and the Company hereby agrees to pay to Atlas, the following: 4.1 Atlas shall receive a Transaction Fee payable by certified check or wire transfer equal to 10% of the principal amount of the Transaction Amount (as defined below, and shall be paid as proceeds are received by the Company from each Transaction; provided however, if the Transaction is in the form of an equity line of credit, Atlas shall receive a Transaction Fee equal to 3% of the amount of the money the Company draws down on the equity line. Any portion of Atlas's Transaction Fee that is attributable to proceeds to be received by the Company upon the occurrence of a future event, or the satisfaction of a contingency shall be paid when the event occurs or the contingency is satisfied. 4.2 In addition to the foregoing, upon consummation of a Transaction, the Company will issue to Atlas and/or its designee(s) warrants (the "Warrants") to purchase such number of shares of the Company's common stock as shall be equal to 3% of the aggregate number of fully diluted and/or exercised or converted shares of common stock of the Company as are purchased by the Entities. The Warrants shall be exercisable for a period of five years from the date of closing with an exercise price equal to the effective per share or unit price paid by the Entities engaging in the Transaction. The terms of the Warrants shall be set forth in one or more agreements (the "Warrant Agreements") in form and substance reasonable satisfactory to Atlas and the Company. The Warrant Agreements shall contain customary terms, including without limitation, provisions for change of control, weighted-average price based anti-dilution, and customary demand and piggyback registration rights consistent with the registration rights granted to the Entities. 4.3 Atlas's Transaction Fee shall have been earned and shall be payable to Atlas upon consummation of any Transaction which occurs as a result of this Agreement with any Entity in which a Transaction was made in whole or in part (1) during the term of this Agreement (hereafter "Phase I"); or, (2) within 24 months following the termination date of this Agreement (hereafter "Phase II") with regard to an Entity which Atlas or the Company has had any communications during Phase I. 4.4 As used herein, the term "Transaction Amount" shall mean the gross amount of all consideration, including without limitation to, all cash, cash equivalents, stock, warrants, and/or assets that is exchanged or provided to or by the Company or its shareholders, affiliates, or subsidiaries in a Transaction, or any entities formed in or which results from a Transaction. The Transaction amount shall be cumulative (e.g., if the Company receives initial consideration and then subsequently received royalty an/or licensing fees, warrant exercise funds, etc.), such that the Transaction Amount shall include all such consideration. 5. Transaction 5.1 As used herein, the term "Transaction" means any business agreement, arrangement or transaction or series or combinations thereof which may include sales or exchanges of stock, warrants, or assets, or the making of loans, leases and other arrangements of every type and description, by which, directly or indirectly, an interest in the Company, its affiliates, or any business with common management with the Company, or any of their respective assets, capital stock or other securities is transferred to another Entity, including, without limitation, by way of or in the form of, a merger, acquisition, sale or exchange of stock or assets, lease of assets, with or without purchase option, joint venture, licensing arrangements, minority investment or partnership. 5.2 As used herein, the term "Transaction" also means any business agreement, arrangement or transaction or series or combinations thereof which may include sales or exchanges of stock, warrants, or assets, or the making of loans, leases and other arrangements of every type and description by which, directly or indirectly, an interest in any Entity is transferred to the Company, its affiliates, or any business with common management with the Company, or any business with common management with the Company, or any of their respective assets, capital stock or other securities, including, without limitation, by way of and in the form of a merger, acquisition, sale or exchange of stock or assets, lease of assets, with or without purchase option, joint venture, licensing arrangements, minority investment or partnership. 6. Non-Circumvent In order to prevent the Company from circumventing Atlas's position with an Entity, the Company agrees that whether or not any Transaction concerning the Company is completed, for a two-year period commencing from the date of this Agreement, without the prior express written consent of Atlas, neither the Company nor any of its officers, employees, or agents will (a) contact directly or indirectly any person or Entity introduced to the Company by Atlas during the term of this Agreement; or (b) circumvent Atlas's position with respect to the Company or Entity in any manner whatsoever. 7. Non-Exclusive Each party acknowledges and agrees that the rights granted to the other in this Agreement are non-exclusive, and that, without limiting the generality of the foregoing, nothing in this Agreement shall be deemed or construed to prohibit either party herein from participating in similar business arrangements as those described herein. 8. Indemnification The Company shall indemnify Atlas under its standard indemnification provisions attached hereto as Schedule A and made a part hereof. 9. General Provisions 9.1 Any and all claims, disputes, or controversies arising out of this Agreement will be resolved by arbitration before the American Arbitration Association ("AAA") and that with respect to the Agreement, a party may seek injunctive relief and ancillary damages before the AAA. Each party irrevocably consents to subject matter jurisdiction before the AAA. The parties shall restrict themselves to claims for compensatory damages and no claims shall be made by any party for punitive or similar damages. The parties agree that any award or decision by the AAA shall be final and binding upon the parties and a judgment may be entered in a court of competent jurisdiction upon such award or decision. The parties agree that the situs of any arbitration or legal proceedings hereunder shall be the City of New York. 9.2 This Agreement may not be amended or modified except in writing signed by both parties to the Agreement. 9.3 All notices and other communications hereunder shall be deemed given upon (a) the sender's confirmation of receipt of a facsimile transmission to the recipient's facsimile number set forth below, (b) confirmed delivery by a standard overnight carrier to the recipient's address set forth below, or (c) delivery by hand to the recipient's address set forth below (or, in each case, to or at such other facsimile number or address for a party as such party may specify by notice given in accordance with this Section 9.3): (a) If to the Company, to: Robert S. Vail Chief Financial Officer Small Town Radio 12600 Deerfield Pkwy., Suite 100 Alpharetta, GA 30004 Fax: (678) 762-3296 (b) If to Atlas, to: Steven Pollan Managing Director Atlas Capital Services, Inc. 225 Broadway, Suite 910 New York, New York 10007 Fax: (212) 267-3501 9.4 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. 9.5 Atlas shall perform its services hereunder as an independent contractor and not as an employee of the Company or an affiliate thereof. It is expressly understood and agreed to by the parties hereto that Atlas shall have no authority to act for, represent or bind the Company or any affiliate thereof in any manner, except as may be agreed to expressly by the Company in writing from time to time. 9.6 The Company hereby represents that it is a sophisticated business enterprise that has retained Atlas for the limited purposes set forth in this letter, and the parties acknowledge and agree that their respective rights and obligations are contractual in nature. Each party disclaims an intention to impose fiduciary obligations on the other by virtue of the engagement contemplated by this letter. If the foregoing is acceptable to you, please sign and return the enclosed copy of this letter to my attention. Very truly yours, ATLAS CAPITAL SERVICES, INC. By: /S/ Steven Pollan ______________________________ Name: Steven Pollan Title: Managing Director AGREED AND ACCEPTED: WORLDWIDE PETROMOLY, INC. & SMALL TOWN RADIO, INC. By: /s/ Robert S. Vail ___________________________ Name: Robert S. Vail Title: Chief Financial Officer Date: 6-22-01 _________________________ Schedule A Atlas Capital Services, Inc. 225 Broadway, Suite 910 New York, NY 10007 Ladies and Gentlemen: In connection with our engagement of Atlas Capital Services, Inc. ("Atlas") as a Finder, we hereby agree to indemnify and hold harmless Atlas and its affiliates, and the respective directors, officers, shareholders, agents and employees of Atlas (collectively the "Indemnified Persons"), from and against any and all claims, actions, suits, proceedings (including those of shareholders), damages, liabilities and expenses as incurred by any of them (including the reasonable fees and expenses of counsel) which (A) relate to or arise out of (i) any actions taken or omitted to be taken (including any untrue statements made to any Indemnified Person in connection with our engagement of Atlas, or (B) otherwise relate to or arise out of Atlas's activities on our behalf under Atlas's engagement, including any action by Atlas to collect amounts owed to it in connection therewith, and we shall reimburse any Indemnified Person for all expenses (including the reasonable fees and expenses of counsel) as incurred by such Indemnified Person in connection with investigating, preparing or defending any such claim, action, suit or proceeding (collectively, a "Claim"), in connection with pending or threatened litigation in which any Indemnified Person is a party. We will not, however, be responsible for any Claim which is finally judicially determined to have resulted exclusively from the gross negligence or willful misconduct of any person seeking indemnification hereunder. We further agree that no Indemnified Person shall have any liability to us for or in connection with our engagement of Atlas except for any Claim incurred by us solely as a direct result of any Indemnified Person's gross negligence or willful misconduct. We further agree that we will not, without the prior written consent of Atlas, settle, compromise or consent to the entry of any judgment in any pending or threatened Claim in respect of which indemnification may be reasonably sought hereunder (whether or not any Indemnified Person is an actual or potential party to such Claim), unless such settlement, compromise or consent includes an unconditional, irrevocable release of each Indemnified Person against whom such claim may be brought hereunder from any and all liability arising out of such claim. Promptly upon receipt by an Indemnified Person of notice of any complaint or the assertion or institution of any Claim with respect to which indemnification is being sought hereunder, such Indemnified Person shall notify us in writing of such complaint or of such assertion or institution but failure to do so notify us shall not relieve us from any obligations we may have hereunder, unless and only to the extent such failure results in the forfeiture by us of substantial rights and defenses, and will not in any event relieve us from any other obligation or liability we may have to any Indemnified Person and, we will assume the defense of such Claim, including the employment of counsel reasonably satisfactory to such Indemnified Person and the payment of reasonable fees and expenses of such counsel. In the event, however, that such Indemnified Person reasonably determines that having common counsel with the Company and/or another Indemnified Person would present such counsel with a conflict of interest or if the defendant in, or target of, any such Claim, includes an Indemnified Person and us, and such Indemnified reasonably concludes that there may be legal defenses available to it or other Indemnified Persons different from or in addition to those available to us, then such Indemnified Person may employ its own separate counsel to represent or defend it in any such Claim and we shall pay the reasonable fees and expenses of such counsel. Notwithstanding anything herein to the contrary, if we fail timely or diligently to defend, contest, or otherwise protect against any Claim, the relevant Indemnified Person shall have the right, but not the obligation, to defend contest, compromise, settle, assert crossclaims, or counterclaims or otherwise protect against the same, and shall be fully indemnified by us therefore, including without limitation, for the reasonable fees and expenses of its counsel and all amounts paid as a result of such Claim or the compromise or settlement thereof. In any Claim in which we assume the defense, the Indemnified Person shall have the right to participate in such Claim and to retain its own counsel therefore at its own expense. We agree that if any indemnity sought by an Indemnified Person hereunder is held by a court to be unavailable for any reason, then (whether or not Atlas is the Indemnified Person), we and Atlas shall contribute to the Claim for which such indemnity is held unavailable in such proportion as is appropriate to reflect the relative benefits to us, on the one hand, and Atlas on the other, in connection with Atlas's engagement referred to above, and the relative fault, as between us and the Indemnified Person in respect of the Claim, subject to the limitation that in no event shall the amount of Atlas's contribution to such Claim exceed the amount of fees actually received by Atlas from us pursuant to Atlas's engagement. We hereby agree that the relative benefits to us, on the one hand, and Atlas on the other, with respect to Atlas's engagement shall be deemed to be in the same proportion as (a) the total value paid or proposed to be paid or received by us or our stockholders as the case may be, pursuant to the transaction (whether or not consummated) for which you are engaged to render services bears to (b) the fee actually paid to Atlas in connection with such engagement; provided, however, that under no circumstances whatsoever shall Atlas be required to contribute to any such claim any amount in excess of the fee actually paid in connection with such engagement. Our indemnity, reimbursement and contribution obligations under this Agreement shall be in addition to, and shall in no way limit or otherwise adversely affect, any rights that any Indemnified Party may have at law or at equity. Should Atlas or its personnel be required or requested by us to provide documentary evidence or testimony in connection with any proceeding arising form or relating to Atlas's engagement, we agree to pay all reasonable expenses (including fees incurred for legal counsel) in complying therewith. Any and all claims, disputes, or controversies arising out of this Agreement will be resolved by arbitration before the American Arbitration Association ("AAA") and that with respect to this Agreement, a party may seek injunctive relief and ancillary damages before the AAA. Each party irrevocably consents to subject matter jurisdiction before the AAA. The parties shall restrict themselves to claims for compensatory damages and no claims shall be made by any party for punitive or similar damages. The parties agree that any award or decision by the AAA shall be final and binding upon the parties and a judgement may be entered in a court of competent jurisdiction upon such award or decision. The parties agree that the situs of any arbitration or legal proceedings hereunder shall be the City of New York. It is understood that, in connection with Atlas's engagement, Atlas may be engaged to act in one or more additional capacities and that the terms of the original engagement or any such additional engagement may be embodied in one or more separate written agreements. The provisions of this Agreement shall apply to the original engagement, any such additional engagement any and modifications of the original engagement or such additional engagement and shall remain in full force and effect following the completion or termination of Atlas's engagement(s). Very truly yours, WORLDWIDE PETROMOLY, INC. & SMALL TOWN RADIO, INC. By: /s/ Robert S. Vail ___________________________ Name: Robert S. Vail Title: Chief Financial Officer Confirmed and agreed to: ATLAS CAPITAL SERVICES, INC. By: /s/ Steven Pollan ______________________________ Name: Steven Pollan Title: Managing Director EX-10.8 16 pacificresource.txt AGMT. WITH PACIFIC RESOURCES EXHIBIT 10.8 Pacific Resource Group, Inc. (Dba Global Stock Exchange) 2311 Bear Hills Ct. Draper, UT 84020 Tel: 801-553-215- Fax: 801-553-1545 Email:jojjr@prginc.net Web: www.prginc.net June 21, 2001 By Facsimile (678)762-3296 Mr. Robert S. Vail Chief Financial Officer Small Town Radio 12600 Deerfield Pkwy., Suite 100 Alpharetta, GA 30004 Re: Finder Agreement Dear Mr. Vail: This letter confirms the agreement ("Agreement") between Worldwide PetroMoly Inc. (OTCBB:MOLY) d/b/a Small Town Radio Inc. (STRI), Inc. and its affiliated companies (the "Company") to retain Pacific Resource Group, Inc. ("PRG") to provide the services described below. 1. Services 1.1 No representation or promises are made by PRG other than as expressly set forth herein. It is imperative that all parties understand and acknowledge that PRG does not negotiate transactions involving securities, engage in other activities to consummate transactions in securities, advise whether to enter into securities transactions, or participate in the sale of securities, nor does PRG hold itself out as a broker or dealer. PRO is acting strictly as a "finder", simply introducing the parties and collecting a fee based on that introduction. PRG will not be engaged in any further involvement with any party beyond that extent. 1.2 PRG shall use its reasonable best efforts to introduce the Company to corporations, partnerships, mutual funds, hedge funds, accredited investors, investment partnerships, securities firms, lending and other institutions and entities (collectively "Entities") which may engage in or provide a "Transaction" (as defined below) to the Company. As used herein, the term "Entities" also means and includes any party, which is directly or indirectly connected with or related to one of the Entities described above including, without limitation, all affiliates as well as any referral from any of the Entities, any client or customer of any of the Entities, and any investor in any of the Entities. 1.3 Except as set forth below, all services provided by PRG under this Agreement shall be at PRG's cost and risk. PRG's sole compensation, if any, shall be a "Finder's Fee" (as set forth in Section 4 below) upon consummation of a Transaction in any form with any Entity. 1.4 The Company acknowledges that PRG's responsibilities shall be limited to the foregoing, and that PRG (i) shall not have authority to offer or sell the Securities to any potential Entity, (ii) shall have no responsibility to participate or assist in any negotiations between any potential Entity and the Company, and (iii) shall have no responsibility for fulfilling any reporting or filing requirements of the Company pursuant to applicable federal and state securities laws. In addition, the Company expressly acknowledges and agrees that PRG's obligations hereunder are on a reasonable best effort basis only and that the execution of this Agreement does not constitute a commitment by PRG to purchase the Securities or any other securities of the Company and does not ensure the successful placement of the Securities or any portion thereof. 1.5 Notwithstanding anything in this Agreement to the contrary, the Company shall have the sole and absolute discretion to accept or not accept the terms of any Transaction. Neither the Company nor any of its affiliates shall have any liability whatsoever to PRG or any other person or entity resulting from its decision not to enter into a proposed Transaction, regardless of the terms of the proposed Transaction. 2. Term This Agreement shall take effect immediately and shall continue for a minimum term of six (6) months. Thereafter, the Agreement will remain in effect until terminated by either party upon 30 days prior written notice to the other. 3. Information In connection with PRG's engagement hereunder, the Company will furnish PRG and any prospective Entity with any information concerning the Company that PRG reasonably deems appropriate and will provide PRG and prospective Entities with reasonable access to the Company's officers, directors, accountants, counsel and other advisors, subject to the Company's non-disclosure agreement. In addition, PRG shall be kept fully informed of any events that are reasonably likely to have a material effect on the financial condition of the Company. The Company represents and warrants to PRG that all such information concerning the Company and all private placement materials, whether in the form of a letter, circular, memorandum, notice or otherwise to be used in placing the securities, to the extent that the Securities are placed in a private placement, or an appropriate subscription agreement, to the extent that the securities to be placed have been publicly registered ("Materials") will be true and accurate in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances under which such statements are made. The Company acknowledges and agrees that PRG will not undertake any "due diligence" investigation and will be using and relying upon the information supplied by the Company and its officers, agents and others, the Materials, and any other publicly available information concerning the Company. 4. Finder's Fee. ------------ In consideration of PRG's services, PRG shall be entitled to receive, and the Company hereby agrees to pay to PRG, the following: 4.1 PRG shall receive a Finder's Fee payable by certified check or wire transfer equal to 5% of the principal amount of the Transaction Amount (as defined below, and shall be paid as proceeds are received by the Company from each Transaction; provided however, if the Transaction is in the form of an equity line of credit; PRG shall receive a Finder's Fee equal to 2% of the amount of money the Company draws down on the equity line. Any portion of PRG's Finder's Fee that is attributable to proceeds to be received by the Company upon the occurrence of a future event, or the satisfaction of a contingency shall be paid when the event occurs or the contingency is satisfied. 4.2 In addition to the foregoing, upon consummation of a Transaction, the Company will issue to PRG and/or its designee(s) warrants (the "Warrants") to purchase such number of shares of the Company's common stock as shall be equal to 2% of the aggregate number of fully diluted and/or exercised or converted shares of common stock of the Company as are purchased by the Entities. The Warrants shall be exercisable for a period of five years from the date of closing with an exercise price equal to the effective per share or unit price paid by the Entities engaging in the Transaction. The terms of the Warrants shall be set forth in one or more agreements (the "Warrant Agreements") in form and substance reasonably satisfactory to PRG and the Company. The Warrant Agreements shall contain customary terms, including without limitation, provisions for change of control, weighted-average price based anti-dilution, and customary demand and piggyback registration rights consistent with the registration rights granted to the Entities. 4.3 PRG's Finder's Fee shall have been earned and shall be payable to PRG upon consummation of any Transaction which occurs as a result of this Agreement with any Entity in which a Transaction was made in whole or in part (1) during the term of this Agreement (hereafter "Phase I"); or, (2) within 24 months following the termination date of this Agreement (hereafter "Phase II") with regard to an Entity which PRG or the Company has had any communications during Phase I. 4.4 As used herein, the term "Transaction Amount" shall mean the gross amount of all consideration, including without limitation to, all cash, cash equivalents, stock, warrants, and/or assets that is exchanged or provided to or by the Company or its shareholders, affiliates, or subsidiaries in a Transaction, or any entities formed in or which results from a Transaction. The Transaction amount shall be cumulative (e.g., if the Company receives initial consideration and then subsequently received royalty and/or licensing fees, warrant exercise funds; etc,.) such that the Transaction Amount shall include all such consideration. 4.5 For the purposes of the transactions contemplated herein, this Agreement supercedes any other Finder's Fee Agreements that have previously been agreed to by the parties. 5. Transaction. ----------- 5.1 As used herein, the term "Transaction" means any business agreement, arrangement or transaction or series or combinations thereof which may include sales or exchanges of stock, warrants, or assets, or the making of loans, leases and other arrangements of every type and description, by which, directly or indirectly, an interest in the Company, its affiliates, or any business with common management with the Company, or any of their respective assets, capital stock or other securities is transferred to another Entity, including, without limitation, by way of or in the form of, a merger, acquisition, sale or exchange of stock or assets, lease of assets, with or without purchase option, joint venture, licensing arrangements, minority investment or partnership. 5.2 As used herein, the term "Transaction" also means any business agreement, arrangement or transaction or series or combinations thereof which may include sales or exchanges of stock, warrants, or assets, or the making of loans, leases and other arrangements of every type and description by which, directly or indirectly, an interest in any Entity is transferred to the Company, its affiliates, or any business with common management with the Company, or any of their respective assets, capital stock or other securities, including, without limitation, by way of and in the form of a merger, acquisition, sale or exchange of stock or assets, lease of assets, with or without purchase option, joint venture, licensing arrangements, minority investment or partnership. 6. Non-Circumvent In order to prevent the Company from circumventing PRG's position with an Entity, the Company agrees that whether or not any Transaction concerning the Company is completed, for a two-year period commencing from the date of this Agreement, without the prior express written consent of PRG, neither the Company nor any of its officers, employees, or agents will (a) contact directly or indirectly any person or Entity introduced to the Company by PRG during the term of this Agreement; or (b) circumvent PRG's position with respect to the Company or Entity in any manner whatsoever. 7. Non-Exclusive. ------------- Each party acknowledges and agrees that the rights granted to the other in this Agreement are non-exclusive, and that, without limiting the generality of the foregoing, nothing in this Agreement shall be deemed or construed to prohibit either party herein from participating in similar business arrangements as those described herein. 8. Indemnification. --------------- The Company shall indemnify PRG under its standard indemnification provisions attached hereto as Schedule A and made a part hereof. 9. General Provisions. ------------------ 9.1 Any and all claims, disputes, or controversies arising out of this Agreement will be resolved by arbitration before the American Arbitration Association ("AAA") and that with respect to this Agreement, a party may seek injunctive relief and ancillary damages before the AAA. Each party irrevocably consents to subject matter jurisdiction before the AAA. The parties shall restrict themselves to claims for compensatory damages and no claims shall be made by any party for punitive or similar damages. The parties agree that any award or decision by the AAA shall be final and binding upon the parties and a judgment may be entered in a court of competent jurisdiction upon such award or decision. The parties agree that the sites of any arbitration or legal proceedings hereunder shall be the City of New York. 9.2 This Agreement may not be amended or modified except in writing signed by both parties to the Agreement. 9.3 All notices and other communications hereunder shall be deemed given upon (a) the sender's confirmation of receipt of a facsimile transmission to the recipient's facsimile number set forth below, (b) confirmed delivery by a standard overnight carrier to the recipient's address set forth below, or (c) delivery by hand to the recipient's address set forth below (or, in each case, to or at such other facsimile number or address for a party as such party may specify by notice given in accordance with this Section 9.3): (a) If to the Company, to: Robert S. Vail Chief Financial Officer Small Town Radio 12600 Deerfield Pkwy., Suite 100 Alpharetta, GA 30004 Fax: (678)762-3296 (b) If to PRG, to: John Jones President Pacific Resource Group, Inc. 2311 Bear Hills Court Draper, Utah 84020 Fax: (801) 553-1545 9.4 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. 9.5 PRG shall perform its services hereunder as an independent contractor and not as an employee of the Company or an affiliate thereof. It is expressly understood and agreed to by the parties hereto that PRG shall have no authority to act for, represent or bind the Company or any affiliate thereof in any manner, except as may be agreed to expressly by the Company in writing from time to time. 9.6 The Company hereby represents that it is a sophisticated business enterprise that has retained PRG for the limited purposes set forth in this letter, and the parties acknowledge and agree that their respective rights and obligations are contractual in nature. Each party disclaims an intention to impose fiduciary obligations on the other by virtue of the engagement contemplated by this letter. If the foregoing is acceptable to you, please sign and return the enclosed copy of this letter to my attention. Very truly yours. Pacific Resource Group, Inc. By: /s/ John Jones --------------------------------- Name: John Jones Title: President AGREED AND ACCEPTED: WORLDWIDE PETROMOLY, INC. By: /S/ Robert S. Vail ------------------------------- Name: Robert S. Vail ------------------------------ Title: Chief Financial Officer ---------------------------- 6-22-01 -------------------- Schedule A Pacific Resource Group, Inc. 2311 Bear Hills Court Draper, Utah 84020 Ladies and Gentlemen: In connection with our engagement of Pacific Resource Group, Inc, ("PRG") as a Finder, we hereby agree to indemnify and hold harmless PRG and its affiliates, and the respective directors, officers, shareholders, agents and employees of PRG (collectively the "Indemnified Persons"), from and against any and all claims, actions, suits, proceedings (including those of shareholders), damages, liabilities and expenses as incurred by any of them (including the reasonable fees and expenses of counsel) which (A) relate to or arise out of (i) any actions taken or omitted to be taken (including any untrue statements made to any Indemnified Person in connection with our engagement of PRG, or (B) otherwise relate to or arise out of PRG's activities on our behalf under PRG's engagement, including any action by PRG to collect amounts owed to it in connection therewith, and we shall reimburse any Indemnified Person for all expenses (including the reasonable fees and expenses of counsel) as incurred by such Indemnified Person in connection with investigating, preparing or defending any such claim, action , suit or proceeding (collectively a "Claim", in connection with pending or threatened litigation in which any Indemnified Person is a party. We will not, however, be responsible for any Claim which is finally judicially determined to have resulted exclusively from the gross negligence or willful misconduct of any person seeking indemnification hereunder. We further agree that no Indemnified Person shall have any liability to us for or in connection with our engagement of PRG except for any Claim incurred by us solely as a direct result of any Indemnified Person's gross negligence or willful misconduct. We further agree that we will not, without the prior written consent of PRG, settle, compromise or consent to the entry of any judgment in any pending or threatened Claim in respect of which indemnification may be reasonably sought hereunder (whether or not any Indemnified Person is an actual or potential party to such Claim), unless such settlement, compromise or consent includes an unconditional, irrevocable release of each Indemnified Person against whom such claim may be brought hereunder from any and all liability arising out of such claim. Promptly upon receipt by an Indemnified Person of notice of any complaint or the assertion or institution of any Claim with respect to which indemnification is being sought hereunder, such Indemnified Person shall notify us in writing of such complaint or of such assertion or institution but failure to do so notify us shall not relieve us from any obligations we may have hereunder, unless and only to the extent such failure results in the forfeiture by us of substantial rights and defenses, and will not in any event relieve us from any other obligation or liability we may have to any Indemnified Person, we will assume the defense of such Claim, including the employment of counsel reasonably satisfactory to such Indemnified Person and the payment of reasonable fees and expenses of such counsel. In the event, however, that such Indemnified Person reasonably determines that having common counsel with the Company and/or another Indemnified Person would present such counsel with a conflict of interest or if the defendant in, or target of, any such Claim, includes an Indemnified Person and us, and such Indemnified reasonably concludes that there may be legal defenses available to it or other Indemnified Persons different from or in addition to those available to us, then such Indemnified Person may employ its own separate counsel to represent or defend it in any such Claim and we shall pay the reasonable fees and expenses of such counsel. Notwithstanding anything herein to the contrary, if we fail timely or diligently to defend, contest, or otherwise protect against any Claim, the relevant Indemnified Person shall have the right, but not the obligation, to defend, contest, compromise, settle, assert crossclaims, or counterclaims or otherwise protect against the same, and shall be fully indemnified by us therefore, including without limitation, for the reasonable fees and expenses of its counsel and all amounts paid as a result of such Claim or the compromise or settlement thereof. In any Claim in which we assume the defense, the Indemnified Person shall have the right to participate in such Claim and to retain its own counsel therefore at its own expense. We agree that if any indemnity sought by an Indemnified Person hereunder is held by a court to be unavailable for any reason, then (whether or not PRG is the Indemnified Person), we and PRG shall contribute to the Claim for which such indemnify is held unavailable in such proportion as is appropriate to reflect the relative benefits to us, on the one hand, and PRG on the other, in connection with PRG's engagement referred to above, and the relative fault, as between us and the Indemnified Person in respect of the Claim, subject to the limitation that in no event shall the amount of PRG's contribution to such Claim exceed the amount of fees actually received by PRG from us pursuant to PRG's engagement. We hereby agree that the relative benefits to us, on the one hand, and PRG on the other, with respect to PRG's engagement shall be deemed to be in the same proportion as (a) the total value paid or proposed to be paid or received by us or our stockholders as the case may be, pursuant to the transaction (whether or not consummated) for which you are engaged to render services bears to (b) the fee actually paid to PRG in connection with such engagement; provided, however, that under no circumstances whatsoever shall PRG be required to contribute to any such claim any amount in excess of the fee actually paid in connection with such engagement. Our indemnity, reimbursement and contribution obligations under this Agreement shall be in addition to, and shall in no way limit or otherwise adversely affect, any rights that any Indemnified Party may have at law or at equity. Should PRG or its personnel be required or requested by us to provide documentary evidence or testimony in connection with any proceeding arising form or relating to PRG's engagement, we agree to pay all reasonable expenses (including fees incurred for legal counsel) in complying therewith. Any and all claims, disputes, or controversies arising out of this Agreement will be resolved by arbitration before the American Arbitration Association ("AAA") and that with respect to this Agreement, a party may seek injunctive relief and ancillary damages before the AAA. Each party irrevocably consents to subject matter jurisdiction before the AAA. The parties shall restrict themselves to claims for compensatory damages and no claims shall be made by any party for punitive or similar damages. The parties agree that any award or decision by the AAA shall be final and binding upon the parties and a judgement may be entered in a court of competent jurisdiction upon such award or decision. The parties agree that the situs of any arbitration or legal proceedings hereunder shall be the City of New York. It is understood that, in connection with PRG's engagement, PRG may be engaged to act in one or more additional capacities and that the terms of the original engagement or any such additional engagement may be embodied in one or more separate written agreements. The provisions of this Agreement shall apply to the original engagement, any such additional engagement and any modifications of the original engagement or such additional engagement and shall remain in full force and effect following the completion or termination of PRG's engagement(s). Very truly yours, WORLDWIDE PETROMOLY, INC. By: /S/ Robert S. Vail ------------------------------- Name: Robert S. Vail ------------------------------ Title: Chief Financial Officer ---------------------------- Confirmed and agreed to: Pacific Resource Group, Inc. By: /s/ John Jones -------------------------------- Name: John Jones Title: President EX-10.9 17 ceoheadlines.txt AGMT. WITH CEOHEADLINES EXHIBIT 10.9 AGREEMENT This agreement is made as of this 13th day of August 2001, by and between Small Town Radio, Inc. ("The Company"), with principal offices at 12600 Deerfield Parkway, Suite 100, Alpharetta, GA 30004, and ceoHeadlines, Inc. with principal offices at 3601 Hempstead Turnpike, Levittown, New York 11756. Whereas, The Company desires to retain ceoHeadlines, Inc. to perform services for it and ceoHeadlines, Inc. is willing to undertake and provide such services as hereinafter fully set forth. The parties agree as follows: The Company's profile will be posted on ceoHeadlines.com for a three month period ("Initial Three Month Period") commencing on September 1, 2001 and concluding on November 30, 2001. The terms and conditions are as follows: The Company shall pay $900.00 to ceoHeadlines, Inc. representing the first three months and $15,400.00 worth of the Company's common stock based on the current price of the stock, which is $.11 (Eleven Cents) per share as of August 13, 2001. Therefore, the company shall irrevocably issue to ceoHeadlines, Inc. a total of 140,000 (One Hundred Forty Thousand) shares of the Company's common stock. It is understood that all shares are restricted and will be dated as of September 1, 2001. The Company shall immediately notify its transfer agent to issue said shares to ceoHeadlines, Inc. The Company shall have three options to extend this agreement past the Initial Three Month Period (for a maximum total of twelve months including the Initial Three Month Period) for the same terms and conditions as set forth in this agreement. The Company shall have until seven calendar days prior to the conclusion of each three month period to sign an addendum with ceoHeadlines, Inc. to extend this contract for an additional three month period. For each additional three month period, the Company shall pay $900.00 (nine hundred) and $15,000 (fifteen thousand) worth of the Company's common stock. The number of shares issued at the time will be based on the market price of the stock at the that time using the following calculation: the Price of the stock will be defined as "the five day trading average of the price of the Company's common stock preceding the 10 day of the new three month period." The number of shares issued to ceoHeadlines, Inc. will be determined by dividing $15,000.00 by said Price. In the event the Company is profiled for the entire twelve month period, they will then have the right to profile for an additional three months for no charge whatsoever. The Company represents that all restricted shares issued to ceoHeadlines, Inc. will have a one (1) year hold from the date of issuance. The Company shall be responsible for obtaining opinion letters from counsel regarding the sale of said shares and agree to pay any costs associated with opinion letters. Services to be Provided by ceoHeadlines. Inc. -------------------------------------------- ceoHeadlines, Inc. will provide an email campaign of a minimum of 50,000 emails per month for The Company. The Company will be mentioned on the emails and there will be a direct link to ceoHeadlines.com. In addition, ceoHeadlines, Inc. will actively market the site through various means including but not limited to affiliate programs, indexing of search engines and doorway pages. ceoHeadlines, Inc. has an affiliation with PR.com and as a result the Company and its designated officer will be listed on PR.com for the entire period that they are profiled on ceoHeadlines.com. Obligations of The Company -------------------------- All information to be disseminated in any way by ceoHeadlines, Inc. on the Company's behalf or included in the ceoHeadlines, Inc. websites, shall be provided to ceoHeadlines, Inc. by the Company. The Company hereby acknowledges that it shall be solely and exclusively responsible for the content of all information to be disseminated, and that all information provided to ceoHeadlines, Inc. for distribution shall contain no material misrepresentation of fact, or material omissions of fact, and shall comply in all manners with all applicable federal and state securities laws as well as all other laws. Relationship of the Parties --------------------------- It is understood and agreed by the parties hereto that this Agreement does not create a fiduciary relationship between them and that ceoHeadlines, Inc.'s relationship to the Company shall be as an independent contractor. Nothing in this Agreement is intended to make either party a general or special agent, legal representative, subsidiary, joint venture, partner, employee or servant of the other for any purpose or to confer upon either party the right of a third party beneficiary. ceoHeadlines, Inc. makes no representation or warranty as to the accuracy or completeness of any of the information on its web sites. Indemnity --------- A. The Company hereby promises and guarantees to defend, indemnify and hold harmless ceoHeadlines, Inc. and any and all of its past, present and future officers, employees, stockholders, parent corporations, subsidiaries, directors and agents from and against any and all loss, liability, charge, claim, cost, demand damage, expense and obligation, including counsel and attorney's fees, which may arise by reason of, or as a consequence of the breach of any of the terms, covenants, conditions, representation or warranties contained in this Agreement, including the failure by The Company to provide full, complete and accurate information. B. ceoHeadlines, Inc. hereby promises and guarantees to defend, indemnify and hold harmless the Company and any and all of its past, present and future officers, employees, stockholders, parent corporations, subsidiaries, directors and agents from and against any and all loss, liability, charge, claim, cost, demand damage, expense and obligation, including counsel and attorney's fees, which may arise by reason of, or as a consequence of the breach by ceoHeadlines, Inc. of any of the terms, covenants, conditions, representations or warranties contained in this Agreement, provided, however, that the indemnification provided for in this paragraph shall not apply if a third party claim or suit is based on information provided to ceoHeadlines, Inc. by the Company or any agent or affiliate thereof, or any omission of information by the Company or any agent or affiliate thereof. Other activities of ceoHeadlines, Inc. -------------------------------------- The Company recognizes that ceoHeadlines, Inc. renders its services to other companies and that ceoHeadlines, Inc. shall not be required to devote its full time and attention to the performance of its duties under this agreement but shall devote only so much of its time and attention as it deems necessary. Governing Law ------------- This Agreement has been made in the State of New York and shall be construed and governed in accordance with the laws thereof without regard to conflict of law. Binding Effects: Assignment --------------------------- This Agreement shall be binding upon the parties hereto and their respective heirs, administrators, successors, and assignees. In addition, this agreement will survive a change in the Board of Directors. The undersigned party signing on behalf of The Company represents and warrants that they have the authority to enter this contract on behalf of The Company. In Witness Whereof, the parties hereto have executed this Agreement the day and year above written. By: /s/ Donald Boyd Date: 8-15-01 By: /s/ Howard Schwartz Date:8-17-01 Small Town Radio, Inc. ceoHeadlines, Inc. Donald Boyd Howard Schwartz President President EX-10.10 18 merchants.txt AGMT. WITH MERCHANTS BROADCASTING EXHIBIT 10.10 PURCHASE AND SALE AGREEMENT This PURCHASE AND SALE AGREEMENT (this "Agreement") is dated as of August 16, 2001, by and between Merchants Broadcasting Systems of Southwest Georgia, a Georgia Corporation ("Seller") and Worldwide PetroMoly, Inc. d/b/a Small Town Radio, a Georgia corporation, and any subsidiary thereof as designated by Worldwide PetroMoly ("Buyer"). WITNESSETH WHEREAS, Seller owns and operates radio station WBBK-FM & AM licensed to Blakely, GA and WGMK-FM, WSEM AM licensed to Donalsonville, GA (the "Station"), and holds the licenses and authorizations issued by the FCC for the operation of the Station (the "Licenses"). WHEREAS, Buyer desires to acquire certain assets of the Station set forth in Schedule 1, attached hereto, including the Licenses (collectively, the "Assets") and Seller is willing to convey the Assets to Buyer. WHEREAS, the acquisition of the Assets is subject to prior approval of the FCC. NOW, THEREFORE, in consideration of the mutual covenants and premises made herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Sale and Purchase of Assets. On and subject to the terms and conditions set forth herein, at the Closing (as hereinafter defined) Seller will sell, transfer, convey, assign and deliver to Buyer, and Buyer will purchase and acquire from Seller all of Seller's right, title and interest in, to, and under, the Assets. 2. Limited Assumption of Liabilities. Seller acknowledges and agrees that, except as provided below, Buyer will not assume any leases, contracts, customer claims or any other liability of Seller. However, on and subject to the terms and conditions set forth herein, at the Closing Buyer will assume the liabilities set forth in Schedule 2 hereto (the "Liabilities"). The omission of any obligation or liability from Schedule 2 shall be deemed an affirmative agreement by the parties hereto that such obligation or liability shall not be assumed by Buyer. 3. Purchase Price. The purchase price for the Assets to be paid by Buyer to Seller shall be the assumption of the Liabilities and the payment set forth on Exhibit A. 4. Closing. Subject to the satisfaction of the conditions contained in this Agreement, the consummation of the transactions described herein shall take place at the closing (the "Closing") to be held at the offices of Paul Hastings Janofsky and Walker LLP in Atlanta, GA, December 15, 2001, 10:00 am, or as soon as practicable after all Closing Conditions set forth in Sections 5 and 6 hereof have been either fulfilled or waived, but in no event later than January 31, 2002. 5. Buyer's Closing Conditions. Buyer's obligations to consummate the transactions contemplated herein are subject to the fulfillment on or prior to the Closing of all of the conditions set forth below, any of which may be waived in whole or part by Buyer: (a) Representations and Warranties Correct. The representations and warranties made by Seller in Section 7 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the date of Closing. (b) Covenants. All covenants, agreements and conditions contained in this Agreement to be performed by Seller on or prior to the Closing shall have been performed or complied with in all material respects. (c) Closing Deliveries. Seller shall have delivered to Buyer those items listed in Section 8(a). (d) FCC Approval: The FCC shall have given its consent in writing to the assignment of the Licenses by Seller to Buyer, as contemplated by this Agreement and such consent shall have become a final order, free of any special conditions adverse to Buyer. (e) Other Governmental Approval. The approval of such other federal or state agencies, including taxing authorities, as are desirable to consummate the purchase of the Assets shall have been obtained in writing. (f) Due Diligence. Buyer shall have completed its due diligence review of the assets to Buyer's complete satisfaction. (g) Approval of Buyer's Board of Directors. The Board of Directors of Buyer shall have approved of and consented to the consummation of the transactions contemplated by this Agreement. 6. Seller's Closing Conditions. Seller's obligations to consummate the transactions contemplated herein are subject to the fulfillment on or prior to the Closing of all of the conditions set forth below, any of which may be waived in whole or part by Seller: (a) Closing Deliveries. Buyer shall have delivered to Seller those items listed in Section 8(b). (b) No Objections. No federal or state agency or self-regulatory organization shall have objected in writing to the consummation of the transactions hereunder. 7. Representations, Warranties and Covenants of Seller. Seller hereby represents, warrants to and covenants with Buyer that: (a) this Agreement has been duly and validly executed by Seller and constitutes a legal, valid and binding obligation of Seller enforceable in accordance with its terms; (b) neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate or conflict with any statute, law, ordinance or regulation, or any judgment, order, writ or decree of any court or agency applicable to Seller or any of its assets; (c) except for FCC consent needed for the transfer of the Licenses, no waiver, permit, consent, authorization or approval of, or form, and no registration, filing or notice with or to any third party, including any governmental authority, regulatory body of the United States or of any state or self regulatory organization, is required to be obtained or made by Seller to consummate the transactions contemplated hereby; (d) Seller has good, marketable and valid title to all of the Assets free and clear of all liens, including liens for taxes, and including the right to transfer same. (e) Seller shall inform Buyer immediately if any representation, warranty, covenant, or agreement contained in this section is no longer accurate or has been breached, as the case may be. 8. Closing Deliveries. (a) At the Closing, Seller shall deliver to Buyer an executed Bill of Sale in the form attached hereto as Exhibit B and a certificate stating that the warranties and representations made herein are true and complete as of the Closing. (b) At the Closing, Buyer shall deliver to Seller a cashier check or wire transfer made payable to Seller in the amount set forth on Exhibit A. 9. Further Assurances. The parties agree to execute such further instruments and to cooperate with each other and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement. 10. Books and Records. Prior to the Closing Sellers shall provide Buyer and its professional representatives free and full access to or copies of the records and other documents of or relating to the Assets as Buyer shall reasonably request, and shall have their representatives provide such additional information pertaining thereto as reasonably requested by Buyer. 11. Governing Law; Severability. This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia, without giving effect to its conflict of law principles. 12. Schedules and Exhibits. Each party hereto agrees that each Schedule and Exhibit attached hereto is incorporated by reference herein and made a part hereof hereby. 13. Confidentiality. Except such disclosure as may be required of Buyer as a publicly-traded company, the parties agree that the existence of this Agreement, and the information contained in this Agreement, is confidential and that each party shall exercise no less than the same degree of care to safeguard the confidentiality of the information in this Agreement as it would exercise to safeguard the confidentiality of its other confidential data and information and shall not to use the confidential information for any purpose other than the implementation and enforcement of this Agreement. 14. Miscellaneous. This Agreement constitutes the entire understanding of the parties concerning the matters set forth herein and cancels and supersedes all previous agreements and understandings, whether written or oral. [Signature page follows] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written. SMALL TOWN RADIO, INC. [SELLER] By: /s/ Don Boyd By: /s/ ------------------------------ ------------------------- Name: Don Boyd Name: Title: President Title: WITNESS WITNESS SCHEDULE 1 Assets [If these Assets include real estate, a warranty deed will be delivered at Closing.] SCHEDULE 2 Assumed Liabilities EXHIBIT A Terms of Purchase and Sale PURCHASE PRICE: $800,000 cash at closing. A 6-year note of $550,000 at 7% interest. Total purchase price of $1,350,000. The aforesaid note of $550,000 bearing interest of 7% per annum shall be payable at the rate of $9,376.95 per month beginning on the 1st of the month after closing and continuing on the first of each month thereafter until debt is paid in full. This note shall be secured by a first lien on all assets transferred to Buyer by Seller and shall be perfected by appropriate security deeds financing statements and other documents. A five-year Employment Agreement with Gil Kelley, Jr. as Community Coordinator at a rate of $36,000 per year effective date of closing. LIQUIDATED DAMAGES: A) Buyer shall deliver $70,000 in cash or by delivery of a non-recourse note secured by a pledge of 500,000 restricted shares of Worldwide PetroMoly (MOLY) held by CFO Robert S. Vail including an executed stock transfer power from Robert S. Vail enabling transfer to the seller in escrow with an agent mutually agreeable to both parties no later than the day of filing for transfer of license with the FCC or by September 15, 2001. B) The parties intending to be bound and pursuant to O.C.G.A. Section 13-6-7. Hereto recognize that if Buyer defaults in its obligation hereunder determining Seller's damages could be difficult; therefore, all stock held in escrow shall be retained by Seller as liquidated damages with Seller having full rights to sell the stock per SEC restrictions and regulations. Buyer shall then be released from all liability or obligation hereunder and no other remedy shall be available to any Party for Buyer's breach of this Contract. C) In those cases where Buyer is permitted herein to rescind this Contract, notice of such rescission shall be in writing. And on giving such notice, Buyer shall receive an immediate refund of all stock held in escrow, and thereafter the Parties shall have no further liability or obligation to, or remedy against each other. This contract expires unless signed and received by 5:00pm EST Friday August 17, 2001. EXHIBIT B [Form of Bill of Sale and Assignment] THIS BILL OF SALE AND ASSIGNMENT (the "Assignment"), dated as of July 31, 2001, is made by Merchants Broadcasting Systems of Southwest Georgia, a Georgia Corporation ("Seller"), in favor of Small Town Radio, Inc. ("Buyer"). W I T N E S S E T H: WHEREAS, Buyer and Seller have entered into a Purchase and Sale Agreement, dated as of August 1 2001 (the "Agreement"), pursuant to which Seller has agreed to sell, transfer and assign to Buyer, and Buyer has agreed to purchase from Seller, all right, title and interest in and to the Assets owned by Seller, as set forth in Schedule 1 to the Agreement and this Assignment (capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Agreement); WHEREAS, Seller owns and controls one hundred percent (100%) of the Assets, without restriction or limitation other than those governmental restrictions or limitations generally applicable to assets of the same type. NOW, THEREFORE, in consideration of the mutual covenants and promises contained in the Agreement and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Seller, intending to be legally bound hereby, agrees and covenants as follows: Section 1. Assignment. Seller does hereby irrevocably and unconditionally grant, sell, convey, assign, transfer, set over to, vest in and deliver to Buyer all right, title and interest, legal and equitable, of Seller in and to the Assets, free and clear of all liens and subject to the other terms and conditions set forth herein. Seller hereby constitutes and appoints Buyer, its successors and assigns, as Seller's true and lawful attorney and attorneys, with full power of substitution in Seller's name and stead, but on behalf and for the benefit of Buyer, its successors and assigns, to demand and receive the Assets, and to give receipts and releases for and in respect of the same, and any part thereof, and from time to time institute and prosecute in Seller's name, or otherwise, at the expense to the extent provided in the Agreement and for the benefit of Buyer, its successors and assigns, any and all proceedings at law, in equity or otherwise, or before any governmental body or regulatory authority that Buyer, its successors and assigns may deem proper for the collection or reduction to possession of the Assets or the enforcement of any claim or right of any kind hereby granted, sold, conveyed, assigned, transferred, set over or vested, or intended so to be, and to do all acts and things in relation to the Assets which Buyer, its successors or assigns shall deem reasonably desirable. Section 2. Further Assurances. Seller owns and controls one hundred percent (100%) of the Assets without restriction or limitation other than those governmental restrictions or limitations generally applicable to assets of the same type. Seller hereby covenants and agrees that, at any time and from time to time after the delivery of this Assignment, Seller, its successors and assigns will do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, any and all such further acts, conveyances, transfers, assignments, powers of attorney, assurances and documents which Buyer may reasonably require to more effectively grant, sell, convey, assign, transfer, set over to or vest in Buyer the License or to carry into effect the intent and purposes of this Assignment and the transactions contemplated hereby. Section 3. Amendment and Modification; Waiver. This Assignment may be amended, modified and supplemented by written instrument authorized and executed by Buyer and Seller at any time with respect to any of the terms contained herein. No waiver by Buyer of any of the provisions hereof shall be effective unless explicitly set forth in writing and executed by Buyer. The waiver by Buyer of a breach of any provisions of this Assignment shall not operate or be construed as a waiver of any other or subsequent breach. Section 4. No Third-Party Beneficiaries. This Assignment is for the sole and exclusive benefit of Buyer and its respective successors and assigns and nothing herein, express or implied, is intended or shall be construed to confer upon or give to any person, firm or corporation other than Buyer and its respective successors and assigns any rights, remedies or claims under, or by any reason of, this Assignment or any terms, covenants or conditions hereof. Section 5. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA WITHOUT GIVING EFFECT TO SUCH STATE'S LAWS AND PRINCIPLES REGARDING THE CONFLICT OF LAWS. Section 6. Construction. This Assignment is subject to the provisions of the Agreement. Neither the making nor the acceptance of this Assignment nor any provision hereof shall restrict or otherwise modify the provisions of the Agreement or the rights and obligations of the parties thereunder or constitute a waiver or release by any of the parties to the Agreement of any liabilities, duties or obligations imposed upon any party by the provisions of the Agreement. If any conflict exists between the terms of this Assignment and the terms of the Agreement, the terms of the Agreement shall govern and control. Section 7. Headings. The headings of this Assignment are for reference purposes only and shall not affect in any way the meaning or interpretation of this Assignment. This Assignment is being executed by the Seller and shall be binding upon the Seller, its successors and assigns, for the uses and purposes set forth and referred to above, and shall be effective as of the date and year first above-stated. Merchants Broadcasting Systems of Southwest Georgia By: /s/ -------------------------------------------- Name: Title: EX-10.11 19 smyth.txt CONSULTING AGMT. WITH R. SMYTH EXHIBIT 10.11 CONSULTING AGREEMENT THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into as of the 10th day of September, 2001, by and between Small Town Radio, Inc. a Georgia corporation (the "Company") and Richard P. Smyth (the "Consultant"). RECITALS WHEREAS, Consultant has represented that he has the experience and ability to obtain a bank line of credit on behalf of the Company; WHEREAS, the Company desires to engage Consultant to obtain a bank line of credit for funds for use as working capital; WHEREAS, the Company desires to enter into this Agreement with Consultant to set forth in detail the terms and conditions governing the relationship between the Company and the Consultant; THEREFORE, and in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Engagement and Term. ------------------- Subject to the terms and conditions of this Agreement, the Company hereby retains Consultant to provide his services to obtain a bank line of credit in the amounts set forth below on behalf of the Company and for the use of the Company. This Agreement shall be for an initial period of sixty (60) days, and may be extended for two thirty (30) periods, at the Company's discretion. Upon termination of this Agreement, all provisions herein will become null and void, except for the provisions set forth in Sections 6, 10 and 11 of this Agreement, which shall survive the termination of this Agreement. 2. Description of Services. ----------------------- During the term of this Agreement, Consultant shall devote appropriate resources to the task of obtaining a bank line of credit for the benefit of the Company. Unless otherwise specifically agreed by the Consultant and the Company in writing, the Consultant shall perform no services for the Company other than as set forth herein. 3. Amount of Line of Credit. ------------------------ The line of credit to be obtained by the Consultant for use by the Company shall be for an amount no less than $200,000. 4. Compensation of Consultant. -------------------------- (a) The Consultant shall be compensated as follows: for each dollar of a bank line of credit made available to the Company up to $250,000, Consultant shall receive eight (8) shares of the Company's stock under the Company's Stock Incentive Plan, registered under the Company's Form S-8. If the Consultant is successful in obtaining a bank line of credit in the amount of $200,000, the Consultant shall receive 1.6 million shares of the Company's stock. If the Consultant obtains a bank line of credit for $250,000, then the Consultant shall receive 2 million shares of the Company's stock. For amounts over $250,000, the Consultant shall receive four (4) shares of the Company's stock under the Company's Stock Incentive Plan, registered under the Company's Form S-8, for each dollar increase in the bank line of credit. For example, if the Consultant obtains a bank line of credit in the amount of $300,000, the Consultant will be entitled to receive 2.2 million shares. If the Consultant obtains a bank line in the amount of $500,000, then the Consultant shall be entitled to receive 3 million shares of the Company's stock. (b) Any shares issued to Consultant under this Agreement shall be valued as of the date this Agreement, regardless of when actually issued. (c) An initial closing shall occur upon the Consultant fulfilling his duties set forth above. Within forty-eight (48) hours of the initial closing, the Company will issue the appropriate number shares to the Consultant, as set for in 4(a) above. If the line of credit is increased, a subsequent closing shall occur, and the Company will issue the additional shares to which he is entitled, as set forth in 4(a) above. For example, if the Consultant obtains a line of 200,000, he will receive 1.6 million shares of the Company's stock within forty-eight (48) hours. If the line is subsequently increased to $300,000, the Consultant will receive an additional 600,000 shares of the Company's stock. 5. Terms Acceptable to the Company. ------------------------------- The terms and conditions of the bank line of credit shall be acceptable to the Company in its sole discretion. Should any term or condition of the bank line of credit at closing differ in any material way from such terms and conditions as presented to the Company prior to closing, the Company shall have the right, in its sole discretion, to reject the bank line of credit, and this Agreement shall become null and void. 6. Representations and Warranties of the Consultant. ------------------------------------------------ (a) At all times, the Consultant will observe and shall not knowingly violate any law, regulation, rule or ordinance of any state, including but not limited to, Georgia and Florida, or any federal law, rule, regulation or ordinance governing the transfer, sale, registration, pledge or offering of any security under the Securities Act of 1933 or the Securities Exchange Act of 1934, or any other rule, regulation, or policy of the Securities and Exchange Commission. (b) The Consultant hereby covenants and agrees that he will not utilize the shares of the Company's stock to be awarded to the Consultant, as compensation for his services pursuant to this Agreement, either directly or indirectly, to pledge, collateralize, secure or otherwise to assist the Consultant in acquiring the bank line of credit to be obtained by Consultant contemplated by this Agreement. 2 7. Release of Shares. ----------------- The shares to be paid to the Consultant in compensation for his services hereunder will be issued to the Consultant within forty-eight (48) hours of the closing by the Company on an acceptable bank line of credit. 8. Entire Agreement. ---------------- This Agreement supersedes all prior agreements, if any, between the parties concerning its subject matter, and constitutes the entire Agreement between the parties with respect to the matters contained herein. 9. Taxes. ----- Any and all income and other taxes applicable to any payments made by the Company to the Consultant under this Agreement shall be the sole responsibility and liability of Consultant. Consultant shall indemnify and hold harmless the Company for any liability or damages imposed upon the Company for taxes payable by or with respect to Consultant. 10. Indemnification. --------------- (a) The Consultant shall indemnify and hold harmless the Company with respect to any demands, judgments, settlements, damages, payments or claims of any nature whatsoever arising from or out of the Consultant's performance of its duties hereunder, or any breach of the representations and warranties made by the Consultant herein, at law or in equity in connection with the Consultant's activities, actions, operations or decisions, including but not limited to any errors, omissions, incidents or accidents occurring in connection with such activities, actions, operations or decisions, or otherwise in the course of conduct of Consultant's activities, which indemnity shall continue for a period of three (3) years notwithstanding the termination of this Agreement. (b) The Company shall indemnify and hold harmless the Consultant with respect to any demands, judgments, settlements, damages, payments or claims of any nature whatsoever arising from or out of the breach of any representations and warranties made by the Company herein, at law or in equity in connection with this Agreement, which indemnity shall continue for a period of three (3) years notwithstanding the termination of this Agreement. 11. Confidential Information. ------------------------ During Consultant's engagement with the Company and for a period of one year thereafter, Consultant and Company will hold in strict confidence and not disclose to any person or entity without the express written authorization of the other party, any confidential or secret information, financial marketing data, including, without limitation, financial statements of the other party, business methods, customer lists or any other secret or confidential information relating to the other party; provided, however, that confidential information shall not include any of the foregoing which (i) is available to the public generally, or (ii) has been obtained by Consultant or Company without the use of any confidential information or in connection with 3 the Consultant's engagement with the Company and not in violation of any of the terms of this Agreement, or (iii) is or has been learned by the Consultant or Company through an independent third party who is not and has not been affiliated with or employed by the Company or Consultant, or bound by an agreement of confidentiality or fiduciary duty to the Company or Consultant. Consultant and Company agree that neither will make any use, outside the scope of this engagement, of any confidential information and will not make any use of any confidential information at any time for one (1) year after termination of this Agreement. 12. Independent Contractor. ---------------------- Consultant's relationship to the Company hereunder shall be that of an Independent Contractor. Consultant shall not be the agent of the Company and shall have no authority to act on behalf of the Company in any manner whatsoever except in the manner and to the extent that the Company may expressly agree in writing in furtherance of the Consultant's obligations under this Agreement. 13. Governing Law. ------------- Regardless of the place of execution or performance, this Agreements and all amendments, modifications or supplements thereto and the rights of the parties hereunder shall be governed by and enforced in accordance with the laws of the State of Georgia. 14. Agreement Non-Assignable. ------------------------ The parties acknowledge that this Agreement has been entered into as a result of, among other things, representations by the Consultant that it is able to perform its duties hereunder and this Agreement may not be assigned or transferred by the Consultant in whole or in part without the prior written consent of the Company. 4 IN WITNESS WHEREOF, the Company and the Consultant have caused this Agreement to be executed as of the date first written above. The Company, SMALL TOWN RADIO, INC. By: /s/ Donald Boyd Its: President /s/ Robert S. Vail Chief Financial Officer The Consultant, RICHARD P. SMYTH, By: /s/ Richard P. Smyth Its: Sole Principal 5 EX-10.12 20 bolling5k.txt 2/12/01 BOLLING DEMAND NOTE EXHIBIT 10.12 DEMAND NOTE $5,000.00 Atlanta, Georgia February 12, 2001 Small Town Radio, Inc., a Georgia corporation (the "Maker"), for value received hereby promises to pay to the order of Bolling Investments, LLC ("Holder"), without any abatement, reduction, diminution, setoff, defense, counterclaim or recoupment whatsoever, including without limitation, any abatement, reduction, diminution, setoff, defense, counterclaim or recoupment due or alleged to be due to or by reason of, any past, present or future claims which Maker may have against Holder, the sum of Five Thousand dollars ($5,000.00) and any unpaid accrued interest hereon, as set forth below, upon demand, (the date on which such demand is made "Maturity Date"). Payment for all amounts due hereunder shall be made by mail to the registered address of the Holder, or if requested in writing by the Holder, by wire transfer in accordance with the Holder's instructions. The following is a statement of the rights of the Holder and the conditions to which this Note is subject. 1. Principal and Interest. Unless this Note is sooner paid, the principal of and all accrued and unpaid interest on this Note shall be paid in full on the Maturity Date. This Note may be prepaid at any time. Maker agrees to pay interest on the unpaid principal amount of this Note from the Borrowing Date until the earlier of the Maturity Date or the date an Event of Default occurs, at a rate of Twelve percent (12 %) per annum accrued and compounded quarterly. 2. Events of Default. (a) Event of Default. It shall be an event of default (an "Event of Default") if Borrower shall default in the payment upon demand of the principal or interest on this Note or any other amounts owing hereunder and such default shall not have been cured within ten (10) days after written notice. (b) Default Rate of Interest. Upon the occurrence of an Event of Default, the Maker shall pay the a default rate of interest of 18 percent (18 %) per annum, compounding quarterly, on the total amount owed. 3. Remedies Cumulative. The remedies of Holder as provided herein and in any other documents governing or securing repayment hereof shall be cumulative and concurrent and may be pursued singly, successively, or together, at the sole discretion of Holder, may be exercised as often as occasion therefore shall arise. No act or omission of the Holder, including specifically, but without limitation, any failure to exercise any right, remedy or recourse, shall be effective as a waiver of any right of the Holder hereunder, unless set forth in a written document executed by the Holder, and then only to the extent specifically recited therein. A waiver or release with reference to one event shall not be construed as continuing, as a bar to, or as a wavier or release of any subsequent right, remedy or recourse as to any subsequent event. If this Note is collected with the assistance of an attorney, or if it is collected through any legal proceedings at law or in equity or in bankruptcy, receivership or other court proceedings, the Maker agrees to pay all reasonable costs and expenses of collection including, but not limited to, court costs and the reasonable fees and expenses of any attorney employed by the Holder hereof. 4. Notices. All notices and other communications hereunder shall be in writing and shall be deemed sufficiently given and served for all purposes when personally delivered or given by telex or machine-confirmed facsimile or three Business Days after a writing is deposited in the United States mail, first class postage or other charges prepaid and certified, return receipt requested, addressed to the address listed above each party's signature line (or at such other address for a party as shall be specified by like notice). 5. Governing Law; Venue. This Note shall be governed by and construed in accordance with the laws of the State of Georgia, and venue for any action taken in connection herewith or related hereto shall exclusively reside in Fulton County, Georgia. Small Town Radio, Inc. Address: 6625 Highway 53 East Suite 410-172 Dawsonville, GA 30534 By: /s/ Robert S. Vail ______________________ Its: President EX-10.13 21 wayne25k2.txt 3/26/01 SHORTRIDGE DEMAND NOTE EXHIBIT 10.13 DEMAND NOTE $25,000.00 Atlanta, Georgia March 26, 2001 Small Town Radio, Inc., a Georgia corporation (the "Maker"), for value received hereby promises to pay to the order of Wayne Shortridge ("Holder"), without any abatement, reduction, diminution, setoff, defense, counterclaim or recoupment whatsoever, including without limitation, any abatement, reduction, diminution, setoff, defense, counterclaim or recoupment due or alleged to be due to or by reason of, any past, present or future claims which Maker may have against Holder, the sum of Twenty Five Thousand dollars ($25,000.00) and any unpaid accrued interest hereon, as set forth below, upon demand, (the date on which such demand is made "Maturity Date"). Payment for all amounts due hereunder shall be made by mail to the registered address of the Holder, or if requested in writing by the Holder, by wire transfer in accordance with the Holder's instructions. The following is a statement of the rights of the Holder and the conditions to which this Note is subject. 1. Principal and Interest. Unless this Note is sooner paid, the principal of and all accrued and unpaid interest on this Note shall be paid in full on the Maturity Date. This Note may be prepaid at any time. Maker agrees to pay interest on the unpaid principal amount of this Note from the Borrowing Date until the earlier of the Maturity Date or the date an Event of Default occurs, at a rate of Twelve percent (12 %) per annum accrued and compounded quarterly. 2. Events of Default. (a) Event of Default. It shall be an event of default (an "Event of Default") if Borrower shall default in the payment upon demand of the principal or interest on this Note or any other amounts owing hereunder and such default shall not have been cured within ten (10) days after written notice. (b) Default Rate of Interest. Upon the occurrence of an Event of Default, the Maker shall pay the a default rate of interest of 18 percent (18 %) per annum, compounding quarterly, on the total amount owed. 3. Remedies Cumulative. The remedies of Holder as provided herein and in any other documents governing or securing repayment hereof shall be cumulative and concurrent and may be pursued singly, successively, or together, at the sole discretion of Holder, may be exercised as often as occasion therefore shall arise. No act or omission of the Holder, including specifically, but without limitation, any failure to exercise any right, remedy or recourse, shall be effective as a waiver of any right of the Holder hereunder, unless set forth in a written document executed by the Holder, and then only to the extent specifically recited therein. A waiver or release with reference to one event shall not be construed as continuing, as a bar to, or as a wavier or release of any subsequent right, remedy or recourse as to any subsequent event. If this Note is collected with the assistance of an attorney, or if it is collected through any legal proceedings at law or in equity or in bankruptcy, receivership or other court proceedings, the Maker agrees to pay all reasonable costs and expenses of collection including, but not limited to, court costs and the reasonable fees and expenses of any attorney employed by the Holder hereof. 4. Notices. All notices and other communications hereunder shall be in writing and shall be deemed sufficiently given and served for all purposes when personally delivered or given by telex or machine-confirmed facsimile or three Business Days after a writing is deposited in the United States mail, first class postage or other charges prepaid and certified, return receipt requested, addressed to the address listed above each party's signature line (or at such other address for a party as shall be specified by like notice). 5. Governing Law; Venue. This Note shall be governed by and construed in accordance with the laws of the State of Georgia, and venue for any action taken in connection herewith or related hereto shall exclusively reside in Fulton County, Georgia. Small Town Radio, Inc. Address: 6625 Highway 53 East Suite 410-172 Dawsonville, GA 30534 By /s/ Robert S. Vail ______________________________ Its: President EX-10.14 22 wayne25k.txt 6/4/01 SHORTRIDGE DEMAND NOTE EXHIBIT 10.14 DEMAND NOTE $25,000.00 Atlanta, Georgia June 4, 2001 Small Town Radio, Inc., a Georgia corporation (the "Maker"), for value received hereby promises to pay to the order of Wayne Shortridge ("Holder"), without any abatement, reduction, diminution, setoff, defense, counterclaim or recoupment whatsoever, including without limitation, any abatement, reduction, diminution, setoff, defense, counterclaim or recoupment due or alleged to be due to or by reason of, any past, present or future claims which Maker may have against Holder, the sum of Twenty Five Thousand dollars ($25,000.00) and any unpaid accrued interest hereon, as set forth below, upon demand, (the date on which such demand is made "Maturity Date"). Payment for all amounts due hereunder shall be made by mail to the registered address of the Holder, or if requested in writing by the Holder, by wire transfer in accordance with the Holder's instructions. The following is a statement of the rights of the Holder and the conditions to which this Note is subject. 1. Principal and Interest. Unless this Note is sooner paid, the principal of and all accrued and unpaid interest on this Note shall be paid in full on the Maturity Date. This Note may be prepaid at any time. Maker agrees to pay interest on the unpaid principal amount of this Note from the Borrowing Date until the earlier of the Maturity Date or the date an Event of Default occurs, at a rate of Twelve percent (12 %) per annum accrued and compounded quarterly. 2. Events of Default. (a) Event of Default. It shall be an event of default (an "Event of Default") if Borrower shall default in the payment upon demand of the principal or interest on this Note or any other amounts owing hereunder and such default shall not have been cured within ten (10) days after written notice. (b) Default Rate of Interest. Upon the occurrence of an Event of Default, the Maker shall pay the a default rate of interest of 18 percent (18 %) per annum, compounding quarterly, on the total amount owed. 3. Remedies Cumulative. The remedies of Holder as provided herein and in any other documents governing or securing repayment hereof shall be cumulative and concurrent and may be pursued singly, successively, or together, at the sole discretion of Holder, may be exercised as often as occasion therefore shall arise. No act or omission of the Holder, including specifically, but without limitation, any failure to exercise any right, remedy or recourse, shall be effective as a waiver of any right of the Holder hereunder, unless set forth in a written document executed by the Holder, and then only to the extent specifically recited therein. A waiver or release with reference to one event shall not be construed as continuing, as a bar to, or as a wavier or release of any subsequent right, remedy or recourse as to any subsequent event. If this Note is collected with the assistance of an attorney, or if it is collected through any legal proceedings at law or in equity or in bankruptcy, receivership or other court proceedings, the Maker agrees to pay all reasonable costs and expenses of collection including, but not limited to, court costs and the reasonable fees and expenses of any attorney employed by the Holder hereof. 4. Notices. All notices and other communications hereunder shall be in writing and shall be deemed sufficiently given and served for all purposes when personally delivered or given by telex or machine-confirmed facsimile or three Business Days after a writing is deposited in the United States mail, first class postage or other charges prepaid and certified, return receipt requested, addressed to the address listed above each party's signature line (or at such other address for a party as shall be specified by like notice). 5. Governing Law; Venue. This Note shall be governed by and construed in accordance with the laws of the State of Georgia, and venue for any action taken in connection herewith or related hereto shall exclusively reside in Fulton County, Georgia. Small Town Radio, Inc. Address: 12600 Deerfield Parkway # 100 Alpharetta, GA 30004 By: /s/ Robert S. Vail __________________________________ Its: President EX-10.15 23 bolling12k.txt 6/29/01 BOLLING DEMAND NOTE EXHIBIT 10.15 DEMAND NOTE $12,500.00 Atlanta, Georgia June 29, 2001 Small Town Radio, Inc., a Georgia corporation (the "Maker"), for value received hereby promises to pay to the order of Bolling Investments, LLC ("Holder"), without any abatement, reduction, diminution, setoff, defense, counterclaim or recoupment whatsoever, including without limitation, any abatement, reduction, diminution, setoff, defense, counterclaim or recoupment due or alleged to be due to or by reason of, any past, present or future claims which Maker may have against Holder, the sum of Twelve Thousand Five Hundred dollars ($12,500.00) and any unpaid accrued interest hereon, as set forth below, upon demand, (the date on which such demand is made "Maturity Date"). Payment for all amounts due hereunder shall be made by mail to the registered address of the Holder, or if requested in writing by the Holder, by wire transfer in accordance with the Holder's instructions. The following is a statement of the rights of the Holder and the conditions to which this Note is subject. 1. Principal and Interest. Unless this Note is sooner paid, the principal of and all accrued and unpaid interest on this Note shall be paid in full on the Maturity Date. This Note may be prepaid at any time. Maker agrees to pay interest on the unpaid principal amount of this Note from the Borrowing Date until the earlier of the Maturity Date or the date an Event of Default occurs, at a rate of Twelve percent (12 %) per annum accrued and compounded quarterly. 2. Events of Default. (a) Event of Default. It shall be an event of default (an "Event of Default") if Borrower shall default in the payment upon demand of the principal or interest on this Note or any other amounts owing hereunder and such default shall not have been cured within ten (10) days after written notice. (b) Default Rate of Interest. Upon the occurrence of an Event of Default, the Maker shall pay the a default rate of interest of 18 percent (18 %) per annum, compounding quarterly, on the total amount owed. 3. Remedies Cumulative. The remedies of Holder as provided herein and in any other documents governing or securing repayment hereof shall be cumulative and concurrent and may be pursued singly, successively, or together, at the sole discretion of Holder, may be exercised as often as occasion therefore shall arise. No act or omission of the Holder, including specifically, but without limitation, any failure to exercise any right, remedy or recourse, shall be effective as a waiver of any right of the Holder hereunder, unless set forth in a written document executed by the Holder, and then only to the extent specifically recited therein. A waiver or release with reference to one event shall not be construed as continuing, as a bar to, or as a wavier or release of any subsequent right, remedy or recourse as to any subsequent event. If this Note is collected with the assistance of an attorney, or if it is collected through any legal proceedings at law or in equity or in bankruptcy, receivership or other court proceedings, the Maker agrees to pay all reasonable costs and expenses of collection including, but not limited to, court costs and the reasonable fees and expenses of any attorney employed by the Holder hereof. 4. Notices. All notices and other communications hereunder shall be in writing and shall be deemed sufficiently given and served for all purposes when personally delivered or given by telex or machine-confirmed facsimile or three Business Days after a writing is deposited in the United States mail, first class postage or other charges prepaid and certified, return receipt requested, addressed to the address listed above each party's signature line (or at such other address for a party as shall be specified by like notice). 5. Governing Law; Venue. This Note shall be governed by and construed in accordance with the laws of the State of Georgia, and venue for any action taken in connection herewith or related hereto shall exclusively reside in Fulton County, Georgia. Small Town Radio, Inc. Address: 12600 Deerfield Parkway # 100 Alpharetta, GA 30004 By: /s/ Robert S. Vail ___________________________________ Its: President EX-10.16 24 mcmullan50k.txt 8/3/01 MCMULLAN DEMAND NOTE EXHIBIT 10.16 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER SUCH LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") AS DEFINED BY SECTION 1273(A)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. DEMAND NOTE $50,000.00 Atlanta, Georgia August 3, 2001 Worldwide PetroMoly, Inc., d/b/a Small Town Radio, Inc., a Colorado corporation (the "Maker"), for value received hereby promises to pay to the order of John F. McMullan ("Holder"), without any abatement, reduction, diminution, setoff, defense, counterclaim or recoupment whatsoever, including without limitation, any abatement, reduction, diminution, setoff, defense, counterclaim or recoupment due or alleged to be due to or by reason of, any past, present or future claims which Maker may have against Holder, the sum of U.S.$50,000.00 and any unpaid accrued interest hereon, as set forth below, upon demand, but no sooner than ninety (90) days after the date set forth above (the date on which such demand is made, the "Maturity Date"). Payment for all amounts due hereunder shall be made by mail to the registered address of the Holder, or if requested in writing by the Holder, by wire transfer in accordance with the Holder's instructions. The following is a statement of the rights of the Holder and the conditions to which this Note is subject. 1. Principal, Interest and Grant of Shares. Unless this Note is sooner paid, the principal of and all accrued and unpaid interest on this Note shall be paid in full on the Maturity Date. This Note may be prepaid at any time. Maker agrees to pay interest on the unpaid principal amount of this Note from the Borrowing Date until the earlier of the Maturity Date or the date an Event of Default occurs, at a rate of eight (8%) per annum accrued and compounded quarterly. Maker agrees to issue 500,000 shares of its restricted common stock, subject to Rule 144, to John F. McMullan. 2. Events of Default. It shall be an event of default (an "Event of Default") if Borrower shall default in the payment upon demand of the principal or interest on this Note or any other amounts owing hereunder and such default shall not have been cured within ten (10) days after written notice. 3. Remedies Cumulative. The remedies of Holder as provided herein and in any other documents governing or securing repayment hereof shall be cumulative and concurrent and may be pursued singly, successively, or together, at the sole discretion of Holder, may be exercised as often as occasion therefore shall arise. No act or omission of the Holder, including specifically, but without limitation, any failure to exercise any right, remedy or recourse, shall be effective as a waiver of any right of the Holder hereunder, unless set forth in a written document executed by the Holder, and then only to the extent specifically recited therein. A waiver or release with reference to one event shall not be construed as continuing, as a bar to, or as a wavier or release of any subsequent right, remedy or recourse as to any subsequent event. If this Note is collected with the assistance of an attorney, or if it is collected through any legal proceedings at law or in equity or in bankruptcy, receivership or other court proceedings, the Maker agrees to pay all reasonable costs and expenses of collection including, but not limited to, court costs and the reasonable fees and expenses of any attorney employed by the Holder hereof. 4. Notices. All notices and other communications hereunder shall be in writing and shall be deemed sufficiently given and served for all purposes when personally delivered or given by telex or machine-confirmed facsimile or three Business Days after a writing is deposited in the United States mail, first class postage or other charges prepaid and certified, return receipt requested, addressed to the address listed above each party's signature line (or at such other address for a party as shall be specified by like notice). 5. Governing Law; Venue. This Note shall be governed by and construed in accordance with the laws of the State of Georgia, and venue for any action taken in connection herewith or related hereto shall exclusively reside in Fulton County, Georgia. Worldwide PetroMoly, Inc (d/b/a Small Town Radio, Inc.) Address: 12600 Deerfield Parkway, Suite 100 Alpharetta, GA 30004 By: /s/ Robert S. Vail _________________________ Robert S. Vail Its Chairman and Chief Financial Officer EX-10.17 25 mediaservices.txt MEDIA SERVICES LTR. OF INTENT EXHIBIT 10.17 August 7, 2001 Mr. Eddie Esserman Media Services Group, Inc. 507 Ocean Boulevard Suite 201-5 St. Simons Island, Georgia 31522 Dear Mr. Esserman: Pursuant to preliminary discussions and our personal Due Diligence, Worldwide PetroMoly, Inc. d/b/a Small Town Radio, Inc., a Georgia Corporation and any subsidiary thereof as designated by Worldwide PetroMoly, hereinafter referred to as "Buyer," is prepared to enter into an Asset Purchase Agreement with Fall Line Media, Inc. as Owner of WJFL-FM Tennille, and hereinafter referred to as "Seller" for the above named FM radio stations. 1. The Seller will deliver 100% of the assets of WJFL-FM, excluding accounts receivable, but excluding cash on hand. (/s/ KHC 8-16-01) 2. In consideration therefore, Buyer will pay Seller $330,000 as follows: $330,000 cash at closing. (/s/ KHC 8-16-01) 3. Buyer will place $16,500 to be held in escrow upon filing of the Asset Purchase Agreement with the FCC. (/s/ KHC 8-16-01) 4. Seller will continue to operate WJFL-FM in the same manner as has been the practice in the past from the date of this letter to closing date, and will make no significant changes, other than normal course of business. 5. Seller warrants that the information furnished Buyer during these negotiations is correct in all material respect and that the Seller has not failed to make known to the Buyer any material fact which might influence the Buyer's decision to make this offer under these conditions. 6. Seller further agrees that upon acceptance of this letter/agreement further Due Diligence will be required on the part of the Buyer and that Seller will give access to Buyer and/or his certified representative - all financial and other records deemed necessary to complete due diligence. 7. Both Buyer and Seller recognize that any sale or transfer of the license of WJFL-FM are subject to the approval by the Federal Communications Commission (FCC). Buyer believes he is a qualified licensee and will be approved by the FCC to control Radio Stations WFJL-FM. Seller knows of no reason why its transfer application would not be approved and has no reason to suspect a challenge to the transfer will be made. 8. Both parties will expeditiously file an application for the transfer of control with the FCC and actively pursue the approval thereof. Buyer will be responsible for all FCC fees in connection with the filing of the application. 9. Both Buyer and Seller agree to cooperate in the drafting of the Asset Purchase Contract and will recognize the spirit and intent of this letter as the basis for such an agreement. 10. This letter is NOT a contract. It is an expression of our intent to purchase Radio Stations WJFL-FM on the terms set forth herein and is further subject to the execution of a mutually agreeable definitive Asset Purchase Contract. 11. Seller agrees to withdraw Radio Stations WJFL-FM from the market and discontinue any discussions with other potential buyers based on the terms of this agreement for a period of 30 days. 12. This offer is made and is good if accepted by 5:00 p.m. (EDT) Friday, August 17, 2001. (/s/ KHC 8-16-01) 13. Buyer and Seller will each be responsible for their personal legal fees. Buyer is making this offer through the Media Brokerage firm of Media Services Group, Inc. Seller will be fully responsible to pay the brokerage fee at closing to Media Services Group, Inc. Sincerely, /s/ Don Boyd Don Boyd, President Small Town Radio, Inc. AGREED: /s/ K. Cumming DATE: 8-10-01 EX-10.18 26 greenwood.txt GREENWOOD COMM. LTR. OF INTENT EXHIBIT 10.18 August 13, 2001 Doug Roy and Lee Ann Roy Greenwood Communications Corporation c/o Force Communications and Consultants LETTER OF INTENT Dear Doug and Lee Ann Roy: This Offer will set forth the agreement in principle for the purchase from Greenwood Communications Corporation (GCC) "Seller" by Small Town Radio, Inc. (STRI) "Buyer," the business and certain assets used or useful is the operation of Radio Station WDGR AM upon the following terms and conditions: 1. Assets to be Purchased. Buyer shall purchase all assets, including but not limited to: all real and personal property of Seller, (except land) used or held for use in connection with the operation of the Station; all audio and transmitter equipment; tower, furniture and fixtures; the call letters and other trade names used in connection with the Station; the permits issued by the Federal Communications Commission (the "Commission") for the Station; all leases, contracts and agreements approved by the Buyer. 2. Liabilities to be Assumed by Buyer. Buyer will not assume any liabilities of Seller but will assume the obligations to be performed by Seller on and after the date of closing under the leases, contracts, notes and agreements acquired and accepted by Buyer from Seller. 3. Purchase Price. As payment for the assets to be acquired by Buyer from Seller, Buyer will pay to Seller a total of One Hundred and Seventy Five Thousand Dollars ($175,000.00) cash at close. 4. Closing. The closing of the transaction shall take place within ten (10) business days (i) after the date the Commission gives initial Grant consenting the assignment of permits from Seller to Buyer, or (ii) after the date Grant becomes final, shall be the option of the Buyer. 5. Conditions. The purchase by Buyer of the assets related to the Station is conditioned upon the following: (a) Within fifteen (15) days of signing this Offer, Buyer shall have completed all due diligence and inspections and found satisfactory to the Buyer: Station's business books, sales inventory, payroll, leases, Station's signal plus audio and transmitter equipment, contracts and other assets used and useful in the operation of the Station. (b) Within thirty (30) days of signing this Offer, Buyer and Seller shall enter into the definitive Asset Purchase Agreement in form and substance initially satisfactory to Seller and Buyer and containing usual representations, warranties, covenants and conditions. The Buyer shall deposit ten (10) percent of purchase price in escrow upon signing the Asset Purchase Agreement. The Asset Purchase Agreement and application for transfer of control shall be placed before the Federal Communications Commission for required approval. In the event such conditions are not satisfied, this Offer shall be null and void and neither Seller nor Buyer shall have any further liability whatsoever to the other. 6. Exclusivity. Unless and until this Offer is terminated, Seller will not solicit or entertain offers for the Station from third parties. 7. Broker Fee. Seller agrees to pay broker fee to Force Communications & Consultants. 8. Confidentiality. Seller and Buyer shall keep confidential the execution of this Offer and sale of the Station until the Asset Purchase Agreement has been executed and submitted to the Commission in a request for transfer of control and will become public information. If the foregoing correctly sets forth our agreement in principle, please sign this signature page. SIGNATURE PAGE Agreed to: BUYER /s/ Don Boyd ---------------------- Small Town Radio, Inc. Date: August 13, 2001 SELLER /s/ Doug Roy, Vice President ------------------------------------- Greenwood Communications Corporation Date: August 19, 2001 EX-10.19 27 kempff.txt KEMPFF LETTER AGMT. EXHIBIT 10.19 Kempff Communications Company 3301 Bayshore Boulevard, Suite 1407 Tampa, FL 33629 (813) 258-3433 Fax (813) 902-1360 August 13, 2001 Memo to: Don Boyd Small Town Radio, Inc. From: Ron Kempff KCC Subject: WDGR Radio Broker Commission This Memo will confirm the Agreement between Small Town Radio, Inc. and Kempff Communications Company, whereby Small Town Radio, Inc. agrees to pay Kempff Communications Company a broker commission of $25,000.00 upon the closing of the Small Town Radio, Inc. purchase of WDGR Radio. Kempff Communications Company has acted as the broker for the Buyer, Small Town Radio, Inc. Agreed: /s/ Ron Kempff /s/ Don Boyd ------------------------------------ ------------------------ Ron Kempff, KCC, Broker Don Boyd, STRI, Buyer August 13, 2001 August 13, 2001 EX-10.20 28 boyd.txt BOYD EMPLOYMENT AGMT. EXHIBIT 10.20 EMPLOYMENT AGREEMENT THIS AGREEMENT entered into as of the 30th day of July, 2001 (the "Effective Date"), by and between Small Town Radio, Inc. (the "Company"), a Georgia corporation, and Donald L. Boyd, an individual (the "Executive") (hereinafter collectively referred to as "the parties"). WHEREAS, the Company and the Executive desire to establish an employment relationship on the terms set forth herein; NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows: 1. Employment Term. Subject to the terms and provisions of this Agreement, the Company hereby agrees to employ the Executive and the Executive hereby agrees to be employed by the Company for a period of two (2) years commencing on the date hereof, unless terminated sooner as hereinafter provided (the "Employment Term"). This Agreement may be renewed upon terms and conditions to be agreed upon by the parties in writing (the "Renewal Term"). 2. Duties. (a) The Executive's Duties and Responsibilities. During the Employment Term the Executive shall serve as President and General Manager of the Company. The Executive shall perform such services and duties as are incident to such position and such other duties as determined from time to time by the Board of Directors of the Company (the "Board") which are consistent with such position. The Executive's duties shall include, without additional compensation, the performance of similar services for any Affiliates (as defined below) of the Company as may be reasonably requested by the Board from time to time. (b) Other Business Activities. The Executive shall devote his full business time, attention and skills to the performance of such duties, services and responsibilities, and will use his best efforts to promote the interests of the Company. The Executive will not, without the prior written approval of the Board, engage in any other business activity which would interfere with the performance of his duties, services and responsibilities hereunder or which is in violation of policies established from time to time by the Company and provided to the Executive. Without the written consent of the Company, the Executive shall not serve as an officer, director, manager, consultant or advisor to any other business, and shall not engage in any other business activities other than the permitted activities, as herein defined. The Executive may: (i) make and manage personal business investments of his choice, provided, however, that the Executive shall hold no investment in any entity which competes in any way with the Company, other than an investment representing less than 1% interest in any publicly held entity; and (ii) participate in civic, educational and charitable activities (collectively the "permitted activities") without seeking or obtaining approval by the Board provided that the permitted activities do not materially interfere or conflict with the Executive's ability to perform his duties as an officer of the Company or cause any conflict of interest with such duties. An "Affiliate" of the Company shall mean any entity, whether a corporation, firm, partnership or other legal entity or business unit or division that directly or indirectly controls, is controlled by, or is under common control with the Company. 3. Compensation. To induce the Executive to continue in the capacity designated in Section 2(a) for the Company and in consideration of the performance by the Executive of the Executive's obligations during and after the Employment Term (including any services as an officer, director, employee, member of any committee of the Company, or otherwise), the Company will compensate the Executive in the following manner: (a) Base Salary. During the Employment Term the Company will pay the Executive a salary (the "Base Salary") at an annual rate of not less than $175,000, payable in monthly payments of $14,583.33, all of which will be paid in accordance with the normal payroll practices of the Company then in effect for other officers of the Company. The Board shall have the authority, in its sole discretion, to adjust such Base Salary and will review it in conjunction with a significant change in the scale and scope of the Executive's duties. (b) Initial Management Performance Incentives. On the Effective Date, the Company shall grant the Executive 4,000,000 non-qualified stock options to purchase the Company's common stock (the "Options"). The Options shall vest as follows: (i) 2,000,000 upon the Effective Date; (ii) 2,000,000 on the date on which the Executive completes his third year of continuous employment after the Effective Date; provided that the Executive shall be entitled to accelerated vesting (1) with respect to 1,000,000 Options, immediately upon the closing (including, final FCC approval) of the transaction, which results in the Company and its Affiliates owning a total of 26 radio stations; (2) with respect to the other 1,000,000 Options, immediately upon the closing (including, final FCC approval) of the transaction, which results in the Company and its Affiliates owning a total of 38 radio stations. (c) Additional Management Performance Incentives. The Executive may receive additional management performance bonuses in the form of stock options or by other means authorized pursuant to any stock incentive plan then in effect or otherwise at the discretion of the Board and any Compensation Committee appointed thereby. 2 4. Reimbursement for Medical Insurance Expenses. Until the Executive is provided medical insurance coverage by the Company, the Company shall reimburse the Executive up to $600 per month for medical insurance expenses. The Executive shall submit for reimbursement proof of payment pursuant to a process to be established between the Executive and the Company. 5. Benefits. During the Employment Term, the Executive shall be entitled to participate in any employee benefit plans (including, but not limited to, any life insurance, disability, medical, dental, hospitalization, savings, retirement and other benefit plans of the Company) then in effect for executive officers and receive any other fringe benefits that the Company then provides to executive officers of the Company to the extent the Executive meets the eligibility requirements for any such plan or benefit. 6. Reimbursements for Business Expenses. Subject to compliance by the Executive with such policies regarding expenses and expense reimbursement as may be adopted from time to time by the Company, during the Employment Term, the Executive is authorized to incur reasonable expenses in the performance of his duties hereunder in the furtherance of the business of the Company and the Company shall reimburse the Executive for all such reasonable expenses upon submission of proper substantiation. The Executive shall receive a monthly automobile allowance in the gross amount of $600 and a one-time relocation allowance in the gross amount of $10,000. Any taxes due on the one-time relocation allowance shall be paid by the Executive. 7. Temporary Housing Expenses. For up to six months from the Effective Date, the Company shall reimburse the Executive for reasonable temporary housing expenses (the "Temporary Housing Expenses"). The Temporary Housing Expenses shall be pre-approved, in writing, by the Company prior to the Executive incurring such Temporary Housing Expenses. The Executive shall submit for reimbursement proof of payment pursuant to a process to be established between the Executive and the Company. 8. Vacations. During the Employment Term, the Executive shall be entitled to accrue paid vacation time in accordance with the policies of the Company in effect from time to time that concern executives of the Company in comparable positions. 9. Termination. Anything in this Agreement to the contrary notwithstanding, this Agreement and the employment of the Executive pursuant hereto shall terminate upon the first to occur of the following events: (a) The death of the Executive. 3 (b) Immediately for "Cause." For purposes of this Agreement, "Cause" means (i) a material breach of this Agreement; (ii) an act or acts of theft, fraud, or other criminal or intentional tortious misconduct, regardless of whether criminal or civil proceedings are initiated or a verdict or judgment against the Executive is entered; (iii) any improper or unethical business activity, including but not limited to, the Executive's fraud, misappropriation, embezzlement, dishonesty, unlawful harassment or gross negligence; (iv) the Executive's failure to perform his assigned duties or comply with the Company's stated policies or procedures; or (v) an inability to perform the essential functions of the job, even with reasonable accommodations by the Company, for thirty (30) days or more. (c) The lapse of ten (10) days following written notice by the Company to the Executive of termination for any reason or no reason. (d) the lapse of thirty (30) days following written notice by the Executive to the Company of his resignation from the Company; provided, however, that the Company, in its discretion, may cause such termination to be effective at any time during such thirty (30) day period. 10. Notice of Termination. Any termination by the Company shall be communicated in writing to the Executive in accordance with Section 20 of this Agreement and if the termination date is other than the date of receipt, the notice shall specify the termination date. 11. Obligations of the Company Upon Termination. The following provisions apply only in the event the Executive is terminated during the Employment Term or any Renewal Term: (a) Death. If the Executive's employment is terminated by reason of the Executive's death, this Agreement shall terminate without further obligation to the Executive's legal representatives under this Agreement other than those payment amounts accrued and payable hereunder at the date of the Executive's death. Anything in this Agreement to the contrary notwithstanding, the Executive's family shall be entitled to receive benefits at least equal to those provided by the Company to surviving families of executives of the Company in comparable positions under such plans, programs and policies relating to family death benefits, if any. (b) Disability. If the Executive's employment is terminated by reason of the Executive's disability pursuant to Section 9(b)(v), the Executive may be eligible to receive disability and other benefits at least equal to those provided by the Company to disabled employees and/or their families in accordance with such plans, programs and policies relating to disability, if any. In the event of the Executive's disability, the Company shall have no further obligation to the Executive under this Agreement and the Executive will no longer be required to perform his duties hereunder and will relinquish such duties to a successor selected by the Board. 4 (c) Cause. If the Executive's employment is terminated for Cause, the Company shall pay the Executive his Base Salary through the date of termination at the rate in effect at the time notice of termination is given, and the Company shall have no further obligation to the Executive under this Agreement. (d) Termination Without Cause. Expressly conditioned on and in consideration of the Executive's full compliance with Sections 13 and 14 of this Agreement, if the Company shall terminate the Executive's employment with the Company without cause, the Company shall pay to the Executive (i) promptly, upon submission by the Executive of supporting documentation, any business related costs and expenses (including already accrued moving and relocation expenses) paid or incurred by the Executive on or before the date of termination which would have been payable under Section 6 if the Executive's employment had not terminated; (ii) promptly, upon submission by the Executive of supporting documentation, any temporary housing expenses paid or incurred by the Executive on or before the date of termination which would have been payable under Section 7 if the Executive's employment had not terminated; and (iii) his then Base Salary for a period of one (1) year from the date of termination in twelve (12) substantially equal monthly installments, and in the case of vested compensation previously deferred by the Executive, all amounts of such compensation previously deferred and not yet paid by the Company. 12. Termination by the Executive. The Executive may terminate his employment under this Agreement at any time upon thirty (30) days notice to the Company. In such event, the Executive, if requested by the Company, shall continue to render his services and shall be paid his regular salary and receive his normal benefits up to the date of termination. 13. Nondisclosure of Trade Secrets and Confidential Information. (a) As used in this Agreement, the term "Trade Secrets" shall mean information which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Such information shall include, but not be limited to, technical or non-technical data, formulas, patterns, programs, methods, techniques, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers. This definition shall not limit any definition of "trade secrets" under state or federal law. (b) Throughout the term of this Agreement and for as long as the applicable Trade Secrets remain secret, the Executive shall not directly or indirectly use, transmit, misappropriate, or disclose any such Trade Secret of the Company or of any client or customer of the Company for any purpose, whether directly or indirectly, for himself or for or on behalf of others, without the prior written consent of the Company. 5 (c) As used in this Agreement, the term "Confidential Information" shall mean all information regarding the Company, the Company's activities, the Company's business or the Company's clients that is not generally known to persons not employed by the Company but does not rise to the level of a Trade Secret and that is not generally disclosed by the Company practice or authority to persons not employed by the Company. "Confidential Information" shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of the Company. (d) Throughout the term of this Agreement and for a period of two (2) years after the date this Agreement terminates for any reason, the Executive shall not directly or indirectly use, transmit, misappropriate or disclose any Confidential Information of the Company or any confidential information of any client or customer of the Company to any person, concern or entity, for any purpose, whether directly or indirectly, for himself or for others, without the prior written consent of the Company. 14. Proprietary Rights in Developments. In the course of rendering his services to the Company, the Executive may conceive, create or develop ideas, concepts, methods of operation, processes, programs or other matter or material, whether or not constituting an advance to, or an improvement of, or pertaining to existing Company proprietary matter (all of which are hereinafter referred to as "Developments"). All Developments shall constitute Confidential Information (and may constitute Trade Secrets) and shall be subject to all of the restrictions imposed on the Executive pursuant to this Agreement. In addition, all Developments and all rights therein throughout the world constitute works made for hire and in all circumstances shall be and remain the sole and exclusive property of the Company whether or not protected under any laws now known or hereafter applicable, including but not limited to patent, copyright, trademark or trade secret laws. (a) The Executive hereby assigns to the Company all rights throughout the world, however denominated (whether under patent, copyright, trademark, trade secret or like or different laws), in all media, now known or hereafter recognized, in and to each such Development. This assignment is not intended to derogate any rights the Company has as an author of a work made for hire. In order to fully effectuate these provisions, the Executive hereby represents and warrants that, with respect to each such Development: (i) to the extent of the Executive's contribution, all such matter is original and does not and will not infringe or violate the rights of any other person or entity; and (ii) that neither the Executive nor anyone on his behalf have granted or will grant or purport to grant to any other person or entity any rights, in whole or in part, in and to such Developments. (b) Cooperation. The Executive shall, during and after termination of the Executive's employment, cooperate with the Company in the prosecution or defense of any claims, litigation, or other proceedings involving the Developments and provide such information and execute such documents as the Company may reasonably request to confirm, implement or enforce its rights in such Developments. The Company shall be responsible for the expenses associated with the filing of any patent, copyright, trademark or like applications. 6 15. Violation of Sections 13 or 14. If at any time the Board determines in good faith that the Executive has violated or has attempted to violate Section 13 or 14 hereof, and if the Executive is receiving severance payments pursuant to Section 11(d) hereof, the Company shall cease making and shall no longer be obligated to make the severance payments described in Section 11(d). This remedy shall be in addition to, and not in lieu of, any other remedies (including injunctive relief) available to the Company for a violation of Section 13 or 14. 16. Books and Records. All books, records and accounts relating in any manner to the Company's clients and the Company's business, whether prepared by the Executive or otherwise coming into the Executive's possession, and all copies thereof in the Executive's possession, shall be the exclusive property of the Company and shall be returned immediately to the Company upon termination of the Executive's employment hereunder or upon the Company's request at any time. 17. Injunction. The Executive acknowledges that if he were to breach or attempt to breach any of the provisions of Sections 13 or 14, it may result in immediate and irreparable injury to the Company which cannot be adequately or reasonably compensated at law. Therefore, the Executive agrees that the Company shall be entitled, if any such breach shall occur or be threatened or attempted, if it so elects, to seek a decree of specific performance and/or to a temporary and permanent injunction, without being required to post a bond, enjoining and restraining such breach by the Executive, his associates, partners or agents, either directly or indirectly, and that such right to seek an injunction shall be cumulative to whatever remedies or actual damages the Company may possess. 18. Arbitration. Except as provided in Section 17 of this Agreement, Company and the Executive hereby consent to the resolution by binding arbitration of all claims or controversies for which a court otherwise would be authorized by law to grant relief, in any way arising out of, relating to or associated with the Executive's employment with the Company or its termination, that the Company may have against the Executive or that the Executive may have against the Company or against its officers, directors, employees or agents in their capacity as such or otherwise. 19. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company the benefits accrued and payable hereunder shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. 7 (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors. (c) In the event that another corporation or unincorporated entity becomes a Successor (as such term is defined below) of the Company, then the Successor shall, by an agreement in form and substance reasonably satisfactory to the Executive, expressly assume and agree to perform this Agreement in the same manner and to the same extent as the Company be required to perform if there had been no Successor. As used herein the term "Successor" means another corporation or unincorporated entity or group of corporations or unincorporated entities which (i) acquires all or substantially all of the assets of the Company, or (ii) is the surviving entity as a result of the merger of the Company into such entity. 20. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: ------------------- Donald L. Boyd 4041 Lauren Court Destin, Florida 32541 If to the Company: ----------------- Small Town Radio, Inc. 12600 Deerfield Parkway Alpharetta, Georgia 30004 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) If any term or provision of the Agreement or the application hereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term 8 or provision to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. Moreover, if a court of competent jurisdiction deems any provision hereof to be too broad in time, scope or area, it is expressly agreed that such provision shall be enforced to a less degree which the court of competent jurisdiction would find enforceable. (d) The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) This Agreement contains the entire understanding of the Company and the Executive with respect to the subject matter hereof. (f) Any waiver of any breach of this Agreement shall not be construed to be a continuing waiver of consent to any subsequent breach by either party hereto. (g) The Executive shall not delegate the employment obligations pursuant to this Agreement to any other person. IN WITNESS WHEREOF, the Executive has hereunto set his hand, and the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. SMALL TOWN RADIO, INC. /s/ Donald L. Boyd By: /s/ Robert S. Vail ------------------------- ------------------------- Donald L. Boyd Name: Robert S. Vail ------------------------- Title: President ---------------------- 9 Addendum `A' to Employment Agreement for Donald L. Boyd The purpose of this agreement between Small Town Radio, Inc. (the "Company"), a Georgia corporation, and Donald L. Boyd, and individual (the "Executive") (hereinafter collectively referred to as "the parties") is to set forth the terms of a pledge of the common stock of Worldwide PetroMoly, Inc. to the obligations of the Employer to the Employee for a period of six (6) months from the date of employment. The terms of this agreement are as follows: o The number of shares under this pledge shall be not less than 1,000,000 shares of common stock; o The shares shall be held in escrow with PHJW. In the case that the Company should fail to timely fulfill its financial obligations under the employment agreement for payment of salary, relocation expense, expense reimbursement or other monetary obligation, such shares shall be sold in order to meet any of the monetary deficiencies in an amount equal to the deficiencies, less any costs associated with the transaction; o To the extent all parties shall agree, such shares may be sold in advance of any deficiencies, so as to create a cash reserve for payment of any monetary obligations of the employment contract; o The Employer shall bear any costs, legal, professional or sales related, in conjunction with any sale of securities under this agreement; o To the extent shares are sold under this agreement, Employer agrees to reimburse the Seller with a like number of shares within ten (10) days of such sale. Signed this 30th day of July, 2001. Employer: Small Town Radio, Inc. Employee: /s/ Donald L. Boyd ------------------------- ------------------------- By: /s/ Robert S. Vail ------------------------- EX-10.21 29 vail.txt VAIL EMPLOYMENT AGMT. EXHIBIT 10.21 EMPLOYMENT AGREEMENT THIS AGREEMENT entered into as of the 1st day of August, 2001 (the "Effective Date"), by and between Small Town Radio, Inc. (the "Company"), a Georgia corporation, and Robert S. Vail, an individual (the "Executive") (hereinafter collectively referred to as "the parties"). WHEREAS, the Company and the Executive desire to establish an employment relationship on the terms set forth herein; NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows: 1. Employment Term. Subject to the terms and provisions of this Agreement, the Company hereby agrees to employ the Executive and the Executive hereby agrees to be employed by the Company for a period of two (2) years commencing on the date hereof, unless terminated sooner as hereinafter provided (the "Employment Term"). This Agreement may be renewed upon terms and conditions to be agreed upon by the parties in writing. 2. Duties. (a) The Executive's Duties and Responsibilities. During the Employment Term the Executive shall serve as Chief Financial Officer of the Company. The Executive shall perform such services and duties as are incident to such position and such other duties as determined from time to time by the Board of Directors of the Company (the "Board") which are consistent with such position. The Executive's duties shall include, without additional compensation, the performance of similar services for any Affiliates (as defined below) of the Company as may be reasonably requested by the Board from time to time. (b) Other Business Activities. The Executive shall devote his full business time, attention and skills to the performance of such duties, services and responsibilities, and will use his best efforts to promote the interests of the Company. The Executive will not, without the prior written approval of the Board, engage in any other business activity which would interfere with the performance of his duties, services and responsibilities hereunder or which is in violation of policies established from time to time by the Company and provided to the Executive. Without the written consent of the Company, the Executive shall not serve as an officer, director, manager, consultant or advisor to any other business, and shall not engage in any other business activities other than the permitted activities, as herein defined. The Executive may: (i) make and manage personal business investments of his choice, provided, however, that the Executive shall hold no investment in any entity which competes in any way with the Company, other than an investment representing less than 1% interest in any publicly held entity; and (ii) participate in civic, educational and charitable activities (collectively the "permitted activities") without seeking or obtaining approval by the Board provided that the permitted activities do not materially interfere or conflict with the Executive's ability to perform his duties as an officer of the Company or cause any conflict of interest with such duties. An "Affiliate" of the Company shall mean any entity, whether a corporation, firm, partnership or other legal entity or business unit or division that directly or indirectly controls, is controlled by, or is under common control with the Company. 3. Compensation. To induce the Executive to continue in the capacity designated in Section 2(a) for the Company and in consideration of the performance by the Executive of the Executive's obligations during and after the Employment Term (including any services as an officer, director, employee, member of any committee of the Company, or otherwise), the Company will compensate the Executive in the following manner: (a) Base Salary. During the Employment Term the Company will pay the Executive a salary (the "Base Salary") at an annual rate of not less than $120,000, payable in monthly payments of ten thousand dollars ($10,000), all of which will be paid in accordance with the normal payroll practices of the Company then in effect for other officers of the Company. The Board shall have the authority, in its sole discretion, to adjust such Base Salary and will review it in conjunction with a significant change in the scale and scope of the Executive's duties. (b) Management Performance Incentives. The Executive may receive additional management performance bonuses in the form of stock options or by other means authorized pursuant to any stock incentive plan then in effect or otherwise at the discretion of the Board and any Compensation Committee appointed thereby. 4. Benefits. During the Employment Term, the Executive shall be entitled to participate in any employee benefit plans (including, but not limited to, any life insurance, disability, medical, dental, hospitalization, savings, retirement and other benefit plans of the Company) then in effect for executive officers and receive any other fringe benefits that the Company then provides to executive officers of the Company to the extent the Executive meets the eligibility requirements for any such plan or benefit. 5. Reimbursement for Medical Insurance Expenses. The Company shall reimburse the Executive for the ordinary and reasonable costs for medial insurance expenses for the Executive's own person. The Executive shall submit for reimbursement proof of payment pursuant to a process to be established between the Executive and the Company. 6. Reimbursements for Business Expenses. Subject to compliance by the Executive with such policies regarding expenses and expense reimbursement as may be adopted from time to time by the Company, during the Employment Term, the Executive is authorized to incur reasonable expenses in the performance of his 2 duties hereunder in the furtherance of the business of the Company and the Company shall reimburse the Executive for all such reasonable expenses upon submission of proper substantiation. The Executive shall receive a monthly automobile allowance in the gross amount of $500 and a one-time relocation allowance in the gross amount of $25,000. Any taxes due on the one-time relocation allowance shall be paid by the Executive. 7. Temporary Housing Expenses. For up to six months from the Effective Date, the Company shall reimburse the Executive for reasonable temporary housing expenses (the "Temporary Housing Expenses"). The Temporary Housing Expenses shall be pre-approved, in writing, by the Company prior to the Executive incurring such Temporary Housing Expenses. The Executive shall submit for reimbursement proof of payment pursuant to a process to be established between the Executive and the Company. 8. Vacations. During the Employment Term, the Executive shall be entitled to accrue paid vacation time in accordance with the policies of the Company in effect from time to time that concern executives of the Company in comparable positions. 9. Termination. Anything in this Agreement to the contrary notwithstanding, this Agreement and the employment of the Executive pursuant hereto shall terminate upon the first to occur of the following events: (a) The death of the Executive. (b) Immediately for "Cause." For purposes of this Agreement, "Cause" means (i) a material breach of this Agreement; (ii) an act or acts of theft, fraud, or other criminal or intentional tortious misconduct, regardless of whether criminal or civil proceedings are initiated or a verdict or judgment against the Executive is entered; (iii) any improper or unethical business activity, including but not limited to, the Executive's fraud, misappropriation, embezzlement, dishonesty, unlawful harassment or gross negligence; (iv) the Executive's failure to perform his assigned duties or comply with the Company's stated policies or procedures; or (v) an inability to perform the essential functions of the job, even with reasonable accommodations by the Company, for thirty (30) days or more. (c) The lapse of ten (10) days following written notice by the Company to the Executive of termination for any reason or no reason. (d) The lapse of thirty (30) days following written notice by the Executive to the Company of his resignation from the Company; provided, however, that the Company, in its discretion, may cause such termination to be effective at any time during such thirty (30) day period. 10. Notice of Termination. Any termination by the Company shall be communicated in writing to the Executive in accordance with Section 20(b) of this Agreement and if the termination date is other than the date of receipt, the notice shall specify the termination date. 3 11. Obligations of the Company Upon Termination. The following provisions apply only in the event the Executive is terminated during the Employment Term or any Renewal Term: (a) Death. If the Executive's employment is terminated by reason of the Executive's death, this Agreement shall terminate without further obligation to the Executive's legal representatives under this Agreement other than those payment amounts accrued and payable hereunder at the date of the Executive's death. Anything in this Agreement to the contrary notwithstanding, the Executive's family shall be entitled to receive benefits at least equal to those provided by the Company to surviving families of executives of the Company in comparable positions under such plans, programs and policies relating to family death benefits, if any. (b) Disability. If the Executive's employment is terminated by reason of the Executive's disability pursuant to Section 9(b)(v), the Executive may be eligible to receive disability and other benefits at least equal to those provided by the Company to disabled employees and/or their families in accordance with such plans, programs and policies relating to disability, if any. In the event of the Executive's disability, the Company shall have no further obligation to the Executive under this Agreement and the Executive will no longer be required to perform his duties hereunder and will relinquish such duties to a successor selected by the Board. (c) Cause. If the Executive's employment is terminated for Cause, the Company shall pay the Executive his Base Salary through the date of termination at the rate in effect at the time notice of termination is given, and the Company shall have no further obligation to the Executive under this Agreement. (d) Termination Without Cause. Expressly conditioned on and in consideration of the Executive's full compliance with Sections 13 and 14 of this Agreement, if the Company shall terminate the Executive's employment with the Company without cause, the Company shall pay to the Executive (i) promptly, upon submission by the Executive of supporting documentation, any business related costs and expenses (including already accrued moving and relocation expenses) paid or incurred by the Executive on or before the date of termination which would have been payable under Section 6 if the Executive's employment had not terminated; and (ii) his then Base Salary for a period of one (1) year from the date of termination in twelve (12) substantially equal monthly installments, and in the case of vested compensation previously deferred by the Executive, all amounts of such compensation previously deferred and not yet paid by the Company. 4 12. Termination by the Executive. The Executive may terminate his employment under this Agreement at any time upon thirty (30) days notice to the Company. In such event, the Executive, if requested by the Company, shall continue to render his services and shall be paid his regular salary and receive his normal benefits up to the date of termination. 13. Nondisclosure of Trade Secrets and Confidential Information. (a) As used in this Agreement, the term "Trade Secrets" shall mean information which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Such information shall include, but not be limited to, technical or non-technical data, formulas, patterns, programs, methods, techniques, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers. This definition shall not limit any definition of "trade secrets" under state or federal law. (b) Throughout the term of this Agreement and for as long as the applicable Trade Secrets remain secret, the Executive shall not directly or indirectly use, transmit, misappropriate, or disclose any such Trade Secret of the Company or of any client or customer of the Company for any purpose, whether directly or indirectly, for himself or for or on behalf of others, without the prior written consent of the Company. (c) As used in this Agreement, the term "Confidential Information" shall mean all information regarding the Company, the Company's activities, the Company's business or the Company's clients that is not generally known to persons not employed by the Company but does not rise to the level of a Trade Secret and that is not generally disclosed by the Company practice or authority to persons not employed by the Company. "Confidential Information" shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of the Company. (d) Throughout the term of this Agreement and for a period of two (2) years after the date this Agreement terminates for any reason, the Executive shall not directly or indirectly use, transmit, misappropriate or disclose any Confidential Information of the Company or any confidential information of any client or customer of the Company to any person, concern or entity, for any purpose, whether directly or indirectly, for himself or for others, without the prior written consent of the Company. 14. Proprietary Rights in Developments. In the course of rendering his services to the Company, the Executive may conceive, create or develop ideas, concepts, methods of operation, processes, programs or other matter or material, whether or not constituting an advance to, or an improvement of, or pertaining to existing Company proprietary matter (all of which are hereinafter referred to as "Developments"). All Developments shall constitute Confidential Information 5 (and may constitute Trade Secrets) and shall be subject to all of the restrictions imposed on the Executive pursuant to this Agreement. In addition, all Developments and all rights therein throughout the world constitute works made for hire and in all circumstances shall be and remain the sole and exclusive property of the Company whether or not protected under any laws now known or hereafter applicable, including but not limited to patent, copyright, trademark or trade secret laws. (a) The Executive hereby assigns to the Company all rights throughout the world, however denominated (whether under patent, copyright, trademark, trade secret or like or different laws), in all media, now known or hereafter recognized, in and to each such Development. This assignment is not intended to derogate any rights the Company has as an author of a work made for hire. In order to fully effectuate these provisions, the Executive hereby represents and warrants that, with respect to each such Development: (i) to the extent of the Executive's contribution, all such matter is original and does not and will not infringe or violate the rights of any other person or entity; and (ii) that neither the Executive nor anyone on his behalf have granted or will grant or purport to grant to any other person or entity any rights, in whole or in part, in and to such Developments. (b) Cooperation. The Executive shall, during and after termination of the Executive's employment, cooperate with the Company in the prosecution or defense of any claims, litigation, or other proceedings involving the Developments and provide such information and execute such documents as the Company may reasonably request to confirm, implement or enforce its rights in such Developments. The Company shall be responsible for the expenses associated with the filing of any patent, copyright, trademark or like applications. 15. Violation of Sections 13 or 14. If at any time the Board determines in good faith that the Executive has violated or has attempted to violate Section 13 or 14 hereof, and if the Executive is receiving severance payments pursuant to Section 11(d) hereof, the Company shall cease making and shall no longer be obligated to make the severance payments described in Section 11(d). This remedy shall be in addition to, and not in lieu of, any other remedies (including injunctive relief) available to the Company for a violation of Section 13 or 14. 16. Books and Records. All books, records and accounts relating in any manner to the Company's clients and the Company's business, whether prepared by the Executive or otherwise coming into the Executive's possession, and all copies thereof in the Executive's possession, shall be the exclusive property of the Company and shall be returned immediately to the Company upon termination of the Executive's employment hereunder or upon the Company's request at any time. 17. Injunction. The Executive acknowledges that if he were to breach or attempt to breach any of the provisions of Sections 13 or 14, it may result in immediate and irreparable injury to the Company which cannot be adequately or reasonably compensated at law. Therefore, the Executive agrees that the Company 6 shall be entitled, if any such breach shall occur or be threatened or attempted, if it so elects, to seek a decree of specific performance and/or to a temporary and permanent injunction, without being required to post a bond, enjoining and restraining such breach by the Executive, his associates, partners or agents, either directly or indirectly, and that such right to seek an injunction shall be cumulative to whatever remedies or actual damages the Company may possess. 18. Arbitration. Except as provided in Section 17 of this Agreement, Company and the Executive hereby consent to the resolution by binding arbitration of all claims or controversies for which a court otherwise would be authorized by law to grant relief, in any way arising out of, relating to or associated with the Executive's employment with the Company or its termination, that the Company may have against the Executive or that the Executive may have against the Company or against its officers, directors, employees or agents in their capacity as such or otherwise. 19. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company the benefits accrued and payable hereunder shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors. (c) In the event that another corporation or unincorporated entity becomes a Successor (as such term is defined below) of the Company, then the Successor shall, by an agreement in form and substance reasonably satisfactory to the Executive, expressly assume and agree to perform this Agreement in the same manner and to the same extent as the Company be required to perform if there had been no Successor. As used herein the term "Successor" means another corporation or unincorporated entity or group of corporations or unincorporated entities which (i) acquires all or substantially all of the assets of the Company, or (ii) is the surviving entity as a result of the merger of the Company into such entity. 20. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. 7 (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: ------------------- Robert S. Vail 2134 Sound Overlook Drive Jacksonville, FL 32224 If to the Company: ----------------- Small Town Radio, Inc. 12600 Deerfield Parkway Alpharetta, Georgia 30004 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) If any term or provision of the Agreement or the application hereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. Moreover, if a court of competent jurisdiction deems any provision hereof to be too broad in time, scope or area, it is expressly agreed that such provision shall be enforced to a less degree which the court of competent jurisdiction would find enforceable. (d) The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) This Agreement contains the entire understanding of the Company and the Executive with respect to the subject matter hereof. (f) Any waiver of any breach of this Agreement shall not be construed to be a continuing waiver of consent to any subsequent breach by either party hereto. (g) The Executive shall not delegate the employment obligations pursuant to this Agreement to any other person. 8 IN WITNESS WHEREOF, the Executive has hereunto set his hand, and the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. SMALL TOWN RADIO, INC. /s/ Robert S. Vail By: /s/ Donald Boyd ------------------------------- ----------------------------------- Robert S. Vail Name: Donald Boyd --------------------------------- Title: President -------------------------------- 9 EX-21 30 subsidiaries.txt LIST OF SUBSIDIARIES EXHIBIT 21 LIST OF SUBSIDIARIES 1. Small Town Radio, Inc., a Georgia corporation EX-23.1 31 consent.txt CONSENT OF ACCOUNTANTS EXHIBIT 23.1 Consent of Independent Accountants We consent to the use in this Form SB-2 of Worldwide PetroMoly, Inc. of our report on the financial statements of Worldwide PetroMoly, Inc. for the year ended June 30, 2001 and the period from inception to June 30, 2000 dated July 25, 2001. BKD, LLP /s/BKD, LLP Indianapolis, Indiana September 24, 2001