AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is made and entered into as of October 11, 1996, and is by and
between Fountain Powerboat Industries, Inc. ("Industries"), a
Nevada corporation, Fountain Powerboats, Inc. ("Powerboats", a
North Carolina corporation and a wholly owned subsidiary of
Industries, Fountain Power, Inc. ("Power"), a North Carolina
corporation and a wholly owned subsidiary of Powerboats, and Mach
Performance, Inc. ("Mach"), a Florida corporation.
R E C I T A L S
WHEREAS, the Boards of Directors of Industries, Powerboats,
Power and Mach deem it advisable and in the best interests of
Industries, Powerboats, Power and Mach and their respective
shareholders that Power and Mach combine; and
WHEREAS, Industries is a public company; and
WHEREAS, Industries is the owner of all the outstanding
shares Powerboats, which, in turn, is the owner of all of the
outstanding shares of Power; and
WHEREAS, the Boards of Directors of Industries, Powerboats,
Power and Mach deem it advisable that the acquisition by
Industries of Mach be effected through the merger of Power and
Mach (the "Merger") pursuant to this Agreement and an Agreement
of Merger; and
WHEREAS, Industries desires to acquire all of the
outstanding Mach shares for Eighty-five Thousand (85,000) shares
of voting Common Stock of Industries, which common shares shall
be restricted from sale, transfer, or hypothecation, as follows:
Twenty-eight Thousand Three Hundred and Thirty-three
(28,333) shares shall be restricted until October 11,
1998, and
Twenty-eight Thousand Three Hundred and Thirty-three
(28,333) shares shall be restricted until October 11,
1999, and
Twenty-eight Thousand Three Hundred and Thirty-four
(28,334) shares shall be restricted until October 11,
2000.
The foregoing shares shall bear appropriate legends on the
share certificates restricting that shares from sale, transfer,
or hypothecation, in a transaction that qualifies under Section
368(a)(2)(D) of Internal Revenue Code of 1986, as amended (the
"Code"); and
In the event of any merger, consolidation, reorganization or
liquidation of Industries with one or more corporations in which
Industries is not the surviving corporation, or the transfer of
substantially all of Industries assets, or the transfer of more
than fifty percent (50%) of the then outstanding shares of Common
Stock of Industries to any person, persons, or corporations
("change of control"), then in that event Industries Board of
Directors shall authorize the termination of the foregoing common
stock restrictions, and
WHEREAS, the Board of Directors of Industries, Powerboats,
Power and Mach intend that the Merger constitute a
"reorganization" under Sections 268 (a)(2)(D) and 368 (a)(2)(E)
of the Internal Revenue Code of 1986, as amended (the "Code"),
and the rules and regulations of the Internal Revenue Service
(the "IRS") promulgated thereunder, have approved and adopted
this Agreement as a "plan of reorganization" within the meaning
of Section 368 of the Code, and the rules and regulations of the
IRS promulgated thereunder, and intend that the Merger be treated
as a tax free merger under the Code and the rules and regulations
of the IRS promulgated thereunder.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, the parties hereto, intending to be
legally bound, hereby agree as follows:
I. MERGER
1.01 Merger. Power and Mach shall merger pursuant to the
North Carolina General Corporation Law (the "Merger") and in
accordance with the Agreement of merger among Industries,
Powerboats, Power and Mach (the "Agreement of Merger"), a copy of
which is attached hereto as Exhibit 1.01. The Merger shall be
effective on the date on which the Agreement of Merger, or a
conformed copy thereof, in substantially the form annexed hereto
as Exhibit 1.01, is filed with the Secretary of the State of
North Carolina, which filing shall take place upon Closing.
1.02 Closing. The Closing of the transaction contemplated
by this Agreement (the "Closing") shall take place as soon as
practicable, but is expected to take place prior to December 31,
1996. At Closing, and pursuant to the Agreement of Merger, all
outstanding shares of Common Stock of Mach shall be cancelled and
in lieu thereof shareholders of Mach common stock shall receive
an aggregate of Eighty-five Thousand (85,000) shares of
Industries Common Stock, which stock will be restricted from
sale, transfer, or hypothecation as provided above. At Closing,
Industries, Powerboats, Power and Mach shall deliver the
following documents:
1.02(a). Each of Industries, Powerboats, Power and
Mach shall deliver an officer's certificate signed by its
president or chief financial officer, certifying that the
representations and warranties given by Industries, Powerboats,
Power and Mach, respectively, are true and correct as of the
Closing.
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1.02(b). Mach shall deliver to Industries certified
copies of resolutions of the Company's Board of Directors,
electing the following persons as members of Mach's Board of
Directors and the following persons as directors and officers of
Mach:
Xxxxxxxx X Xxxxxxxx, Xx. - Chairman of the Board
Xxxx X. Xxxxxxxxx - Director
Xxxx X. Xxxxx, III - Director
Xxxxxxxx Xxxxxxxxxx - Director
Xxxx X. Xxxxxxx - Director
Xxxxxxxx X. Xxxxxxxx, Xx. - Chief Executive Officer
Xxxx X. Xxxxxxxxx - President
Xxxxx X. Xxxxxxxx - Vice President and Chief
Financial Officer
Xxxxxxx X. Xxxxxxxx - Secretary & Treasurer
Xxxxx X. Xxxxx - Assistant Secretary
1.02(c). Industries, Powerboats, and Power shall
deliver to Mach certified resolutions of their respective Boards
of Directors authorizing the Merger and the transactions
contemplated by this Agreement.
1.02(d). Mach shall deliver to Industries,
Powerboats, and Power certified resolutions of its board of
Directors and shareholders authorizing the Merger and the
transactions contemplated by this Agreement.
1.02(e). Industries' subsidiary, Powerboats, and Xxxx
X. Xxxxxxxxx shall enter into an Employment Agreement in the form
attached hereto as Exhibit 1.02.
II. REPRESENTATIONS AND WARRANTIES OF MACH
Mach represents and warrants to Industries, Powerboats, and
Power as follows, as of the date of this Agreement and as of the
Closing:
2.01. Organization.
2.01(a). Mach is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Florida; Mach has the corporate poser and authority to carry on
its business as presently conducted; and Mach is qualified to do
business in all jurisdictions where the failure to be so
qualified would have a material adverse effect on its business.
2.01(b). The copies of the Articles of Incorporation
and all amendments thereto of Mach as certified by the Secretary
of State of Florida, and the copy of the Bylaws as certified by
the Secretary of Mach, which have heretofore been delivered to
Industries, are complete and correct copies of such Articles of
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Incorporation as amended and in effect on the date hereof. All
minutes and actions in writing without a meeting of the Board of
Directors and shareholders of Mach are contained in the minute
book of Mach heretofore delivered to Industries for examination,
and no minutes or actions in writing have been included in such
minute book since delivery to Industries that have not also been
delivered to Industries.
2.02. Capitalization.
2.02(a). The authorized capital stock and the issued
and outstanding shares of Mach are as set forth on Exhibit
2.02(a). All of the issued and outstanding shares of Mach are
duly authorized, validly issued, fully paid and nonassessable.
2.02(b). Except as set forth in Exhibit 2.02(b) there
are no outstanding options, warrants, or rights to purchase any
securities of Mach.
2.03. Subsidiaries and Investments. Mach does not own any
capital stock or have any interest in any corporation,
partnership or other form of business organization, except as
described in Exhibit 2.03 hereto.
2.04. Financial Statements. The unaudited financial
statements of Mach as of June 30, 1996 and for the two years
ended December 31, 1995 and 1994, including unaudited balance
sheets and the related unaudited statements of operations,
retained earnings, and cash flows for the periods then ended and
the audited financial statements of Mach as of August 31, 1996
and for the eight months ended August 31, 1996 (the "Financial
Statements") present fairly the financial positions and results
of operations of Mach, on a consistent basis.
2.05. No Undisclosed Liabilities. Other than as described
in Exhibit 2.05 hereto, Mach is not subject to any material
liability or obligation of any nature, whether absolute, accrued,
contingent, or otherwise and whether due or to become due, which
is not reflected or reserved against in the Financial Statements,
except those incurred in the normal course of business.
2.06. Absence of Material Changes. Since June 30, 1996,
except as described in any Exhibit hereto or as required or
permitted under this Agreement, there has not been:
2.06(a). any material change in the condition
(financial or otherwise) of the properties, assets, liabilities
or business of Mach, except changes in the ordinary course of
business which, individually and in the aggregate, have not been
materially adverse:
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2.06(b). any redemption, purchase or other acquisition
of any shares of the capital stock of Mach, or any issuance of
any shares of capital stock or the granting, issuance or exercise
of any rights, warrants, options or commitments by Mach relating
to their authorized or issued capital stock; or
2.06(c). any change or amendment to the Articles of
Incorporation of Mach.
2.07. Litigation. Except as set forth in Exhibit 2.07
attached hereto, there is no litigation, proceeding or
investigation pending or threatened against Mach affecting any of
its properties or assets against any officer, director, or
stockholder of Mach that might result, either in any case or in
the aggregate, in any material adverse change in the business,
operations, affairs or condition of Mach or its properties or
assets, or that might call into question the validity of this
Agreement, or any action taken or to be taken pursuant hereto.
2.08. Title To Assets. Mach has good and marketable title
to all of its assets and properties now carried on its books
including those reflected in the balance sheets contained in the
Financial Statements, free and clear f all liens, claims,
charges, security interests or other encumbrances, except as
described in Exhibit 2.08 attached hereto or any other Exhibit.
2.09. Real Estate. There is set forth on Exhibit 2.09
attached hereto a brief description of all real estate (including
building and improvements) owned and held by Mach, together with
a legal description of such real estate. Mach has good and
marketable title to such real estate in fee simple and clear of
any encumbrances whatsoever except as shown on Exhibit 2.09
hereto.
2.10. Contracts and Undertakings. Mach is not in material
default, or alleged to be in material default, under any contact,
agreement, lease, license commitment, instrument or obligation
and no other party to any contract, agreement, lease, license,
commitment, instrument or obligation to which Mach is a party is
in default thereunder nor does there exist any condition or event
which, after notice or lapse of time or both, would constitute a
default by any party to any such contract, agreement, lease,
license, commitment, instrument or obligation. These contracts
and undertakings shall be delivered at Closing.
2.11. Underlying Documents. Copies of all documents
described in any exhibit attached hereto (or a summary of any
such contract, agreement or commitment, if oral) have been made
available to Industries and are complete and correct and include
al amendments, supplements or modifications thereto.
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2.12. Transactions with Affiliates, Directors and
Shareholders. Except as set forth in Exhibit 2.12 hereto, there
are and have been no contracts, agreements, arrangements or other
transactions between Mach on the one hand, and any officer,
director, or shareholder of Mach, or any corporation or other
entity controlled by them.
2.13. No Conflict. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby will not conflict with or result in a breach of any term
or provision of, or constitute a default under, the Articles of
Incorporation or Bylaws of Mach, or any agreement, contract or
instrument to which Mach is a party or by which it or any of its
assets are bound.
2.14. Ownership of Intellectual Property Rights. Mach owns
or has valid right or license to xxx on all patents, patent
rights, trade secrets, trademarks, trademark rights, trade names,
trade name rights, copyrights and other intellectual property
rights (collectively referred to as "Intellectual property
Rights") which are necessary to operate its business as now
proposed to be operated. Mach does not have any obligation to
compensate any person, firm, corporation, or other entity for the
use of any such Intellectual Property Rights, nor has Mach
granted to any person, firm, corporation or other entity any
license or other rights to use in any manner, or waived its
rights with respect to any Intellectual Property Rights of Mach.
2.15. Disclosure. To the actual knowledge of Mach, neither
this Agreement, the Financial Statements nor any other agreement,
document, certificate or written or oral statement furnished to
Industries by or on behalf of Mach in connection with the
transactions contemplated hereby, contains any untrue statement
of a material fact which when taken as a whole omits to state a
material fact necessary in order to make the statements contained
herein or therein not misleading.
2.16. Authority. Mach has full Power and authority to
enter into this Agreement and to carry out the transactions
contemplated herein. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby, have been duly authorized and approved by the Board of
Directors of Mach and no other corporate proceedings on the part
of Mach are necessary to authorize this Agreement and the
transactions contemplated hereby.
III. REPRESENTATIONS AND WARRANTIES OF INDUSTRIES, POWERBOATS,
AND POWER
Each of Industries, Powerboats and Power hereby represents
and warrants to Mach as follows, as of the date of this Agreement
and as of the Closing:
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3.01. Organization.
3.01(a). Each of Industries, Powerboats, and Power is
a corporation duly organized, validly existing, and in good
standing under the laws of its state of incorporation; has the
corporate Power and authority to carry on its business as
presently conducted; and is qualified to do business in all
jurisdictions were the failure to be so qualified would have a
material adverse effect on the business of Industries,
Powerboats, or Power.
3.01(b). The copies of the charter documents, of
Industries, Powerboats, and Power, as certified by the Secretary
of Industries, Powerboats, and Power are complete and correct
copies of such documents as amended and in effect on the date
hereof. All minutes of meetings and actions in writing without a
meeting of the Boards of Directors and shareholders of
Industries, Powerboats and Power are contained in their
respective minute books and no minutes or actions in writing
without a meeting have been included in such minute book since
such delivery to Mach that have not also been delivered to Mach.
3.02. Capitalization. The authorized capital stock of
Industries consists of 200,000 000 shares of common stock, par
value $.01 per share, of which 3,044,072 shares are outstanding
including 10,000 shares owned by Fountain Powerboats, Inc. the
outstanding capital stock of Power consists of 10,000 shares of
common stock, par value of $1.00, all of which are outstanding.
All outstanding shares are duly authorized, validly issued, fully
paid and non-assessable.
3.03. Reporting Documents. Industries has delivered to
Mach copies of its Annual Report on Form 10-K for the year ended
June 30, 1996 (the "10-K") and its quarterly report on Form 10-Q
for the quarter ended September 30, 1996 (the "10-Q"). The 10-K
and 10-Q comply in all material respects with the requirements of
the Securities Exchange Act of 1934 (the "Exchange Act').
3.04. Authority. Each of Industries, Powerboats, and Power
has full power and authority to enter into this Agreement and to
carry out the transactions contemplated herein. The execution
and delivery of this Agreement and the Agreement of merger and
the consummation of the transactions contemplated hereby, have
been duly authorized and approved by the respective Boards of
Directors of Industries, Powerboats, and Power.
3.05. No Conflict. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby will not conflict with or result in a breach of any term
or provision of, or constitute a default under, the charter
documents or Bylaws of Industries, Powerboats, or Power, or any
agreement, contract or instrument to which Industries,
Powerboats, or Power is a party or by which it or any of its
assets are bound.
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3.06. Disclosure. To the actual knowledge of Industries,
Powerboats, or Power, neither this Agreement, the 10-K or the 10-
Q nor any other agreement, document, certificate or written or
oral statement furnished to Mach by or on behalf of Industries,
Powerboats, or Power in connection with the transactions
contemplated hereby, contains any untrue statement of a material
fact or when taken as a whole omits to state a material fact
necessary in order to make the statements contained herein or
therein not misleading.
3.07. Absence of Material Changes. Since September 30,
1996, except as described in any Exhibit hereto or as required or
permitted under this Agreement, there has not been:
3.07(a) any material change in the condition
(financial or otherwise) of the properties, assets, liabilities
or business of Industries, Powerboats, or Power, except changes
in the ordinary course of business which, individually and in the
aggregate, have not been materially adverse.
3.07(b) any redemption, purchase or other acquisition
of any shares of the capital stock of Industries, Powerboats, or
Power, or any issuance of any shares of capital stock or the
granting, issuance or exercise of any rights, warrants, options
or commitments by Industries, Powerboats, or Power relating to
their authorized or issued capital stock.
3.07(c) any amendment to the Certificate of
Incorporation of Industries or Articles of Incorporation of
Powerboats or power.
IV. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
4.01. All representations, warranties and covenants of
Industries, Powerboats, Power and Mach contained herein shall
survive the consummation of the transactions contemplated herein
and remain in full force and effect.
V. CERTAIN UNDERSTANDINGS AND AGREEMENTS
5.01 Audit and Appraisal. Upon execution of this
Agreement, Mach shall cooperate fully with the accounting firm of
Xxxxxxxxx, Xxxxx & Xxxxx to perform an audit of Mach's financial
statements as of and for the period ending August 31, 1996 (the
"Audit"). Mach shall also cooperate fully with an appraiser to
be selected by industries for the purpose of appraising Mach's
assets as of August 31, 1996 (the "Appraisal"). the cost of the
Audit and the Appraisal shall be borne by Industries.
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VI. CONDITIONS TO CLOSING
6.01 Conditions to Obligations of Mach. The obligations of
Mach under this Agreement shall be subject to each of the
following conditions:
6.01(a) Representations and Warranties of Industries,
Powerboats, and Power to be True. The representations and
warranties of Industries, Powerboats, and Power herein contained
shall be true in all material respects at the Closing with the
same effect as though made at such time. Industries, Powerboats
and Power shall have performed in all material respects all
obligations and complied in all material respects, to their
actual knowledge, with all covenants and conditions required by
this Agreement to be performed or complied with by them at or
prior to the Closing.
6.01(b) No legal Proceedings. No injunction or
restraining order shall be in effect, and no action or proceeding
shall have been instituted and, at what would otherwise have been
the Closing, remain pending before a court to restrain or
prohibit the transactions contemplated by this Agreement.
6.01(c) Statutory Requirements. All statutory
requirements for the valid consummation by Industries,
Powerboats, and Power of the transactions contemplated by this
Agreement shall have been fulfilled. All authorizations,
consents and approvals of all governments and other persons
required to be obtained in order to permit consummation by
Industries, Powerboats, and Power of the transactions
contemplated by this Agreement and to continue unimpaired in all
material respects immediately following the Closing shall have
been obtained.
6.01(d) Closing Documents. Industries, Powerboats,
and Power shall have executed and delivered all documents
required to be executed and delivered by Industries, Powerboats,
and Power pursuant to this Agreement.
6.02 Conditions to Obligations of Industries, Powerboats,
and Power. The obligations of Industries, Powerboats, and Power
under this Agreement shall be subject to the following
conditions:
6.02(a) Representations and Warranties of Mach to be
True. The representations and warranties of Mach herein
contained shall be true in all material respects as of the
Closing, and shall have the same effect as though made at the
Closing; Mach shall have performed in all material respects all
obligations and complied in all material respects, to its actual
knowledge, with all covenants and conditions required by this
Agreement to be performed or complied with by it prior to the
Closing.
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6.02(b) No Legal Proceedings. No injunction or
restraining order shall be in effect prohibiting this Agreement,
and no action or proceeding shall have been instituted and, at
what would otherwise have been the Closing, remain pending before
a court to restrain or prohibit the transactions contemplated by
this Agreement.
6.02(c) Statutory and Other Requirements. All
statutory requirements for the valid consummation by Mach of the
transactions contemplated by this Agreement shall have been
fulfilled; all authorizations, consents and approvals of all
Governmental agencies and authorities to be obtained in order to
permit consummation by Mach of the transactions contemplated by
this Agreement shall have been obtained.
6.02(d) The audited Balance Sheet of Mach as of August
31, 1996 shall reflect net worth (total assets less total
liabilities) of Mach to be no less than Six Hundred Thirty-
Thousand and Forty Dollars ($630,040) after adjustment for the
appraised value of the machinery and equipment and after the
reclassification of Ninety-four Thousand and Ninety-four Dollars
($94,094) and Three Hundred and Thirty-one Thousand Seven Hundred
and Sixty-three Dollars ($331,763) from debt owing to Mach
shareholders to equity of Mach shareholders. It is expressly
understood that Industries, Powerboats, and Power shall not
assume the aforementioned indebtednesses to Mach shareholders,
but rather, that these indebtednesses will be treated as part of
the equity of Mach in this transaction.
VII. TERMINATION OF OBLIGATIONS AND WAIVERS OF CONDITIONS;
PAYMENT OF EXPENSES
7.01 Termination of Agreement. Anything herein to the
contrary notwithstanding, this Agreement may be terminated at any
time before the Closing as follows and in no other manner;
7.01(a) Mutual Consent. By mutual consent of
Industries, Powerboats, Power and Mach.
7.01(b) Expiration Date. By either Industries,
Powerboats, Power and Mach if the Closing shall not have taken
place by December 31, 1996, which date may be extended by mutual
agreement of Industries, Powerboats, Power and Mach.
7.02. Payment of Expenses; Waiver of Conditions. In the
event that this Agreement shall be terminated pursuant to Section
7.01 all obligations of the parties under this Agreement shall
terminate and there shall be no liability of any party to the
other. Each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and
performance of and compliance with all agreements and conditions
contained herein or therein on its part to be performed or
complied with, including the fees, expenses and disbursements of
counsel.
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If any of the conditions specified in Section 6.01 hereof has not
been satisfied, Mach may nevertheless a the election of Mach
proceed with the transactions contemplated hereby and if any of
the conditions specified in Section 6.02 hereof has not been
satisfied, Industries, Powerboats, and Power may nevertheless at
their joint election proceed with the transactions contemplated
hereby. In the event that the Closing shall be consummated, each
party hereto will pay all of its costs and expenses in connection
therewith.
XIII. MISCELLANEOUS
8.01 Finder's Fees, Investment Banking Fees. Neither
Industries, Powerboats, Power nor Mach have retained or used the
services of any person, firm or corporation in such manner as to
require the payment of any compensation as a finder or a broker
in connection with the transactions contemplated herein.
8.02 Tax Treatment. The transaction contemplated hereby is
intended to qualify as a so-called "tax-free" reorganization
under the provisions of Section 368 of the Internal Revenue Code.
Industries, Powerboats, Power and Mach acknowledge, however, that
they each have been represented by their own tax advisors in
connection with this transaction; that they have not made any
representations or warranties to the others with respect to the
tax treatment of such transaction or the effect thereof under
applicable tax laws, regulations, or interpretations; and that no
attorney's opinion or private revenue ruling has been obtained
with respect to the effects thereof under the Internal Revenue
Code of 1986, as amended.
8.03 Further Assurances. From time to time, at the other
party's request and without further consideration, each of the
parties will execute and deliver to the others such documents and
take such action as the other party may reasonably request in
order to consummate more effectively the transactions
contemplated hereby.
8.04 Parties in Interest. Except as otherwise expressly
provided herein, all the terms and provisions of this Agreement
shall be binding upon, shall inure to the benefit of and shall be
enforceable by the respective heirs, beneficiaries, personal and
legal representatives, successors and assigns of the parties
hereto.
8.05 Entire Agreement; Amendments. This Agreement,
including the schedules, Exhibits and other documents and
writings referred to herein or delivered pursuant hereto, which
form a part hereof, contains the entire understanding of the
parties with respect to this subject matter. There are no
restrictions, agreements, promises, warranties, covenants or
undertakings other than those
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expressly set forth herein or therein. This Agreement supersedes
all prior agreements and understandings between the parties with
respect to this subject matter. This Agreement may be amended
only by a written instrument duly executed by the parties or
their respective successors or assigns.
8.06 Headings, Etc. The section and paragraph headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretations of
this Agreement.
8.07 Pronouns. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the person, persons,
entity or entities may require.
8.08 Counterparts. this Agreement may be executed in
several counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same
instrument.
8.09 Governing Law. This Agreement shall be governed by
the laws of the State of North Carolina applicable to contracts
to be performed in the State of North Carolina.
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by the parties hereto as the date first above
written.
FOUNTAIN POWERBOAT MACH PERFORMANCE, INC.
INDUSTRIES, INC.
FOUNTAIN POWERBOATS, INC.
/S/XXXXXXXX X. XXXXXXXX, XX. /S/XXXX X. XXXXXXXXX
Xxxxxxxx X. Xxxxxxxx, Xx. Xxxx X. Xxxxxxxxx
Chairman, President Chairman, President, and
Chief Executive officer, Chief Executive Officer
and Chief Operating Officer
FOUNTAIN POWER, INC.
/S/XXXX X. XXXXXXXXX
Xxxx X. Xxxxxxxxx
President and Chief
Operating Officer
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I HEREBY CERTIFY that I am the duly elected and qualified
secretary of MACH PERFORMANCE, INC., a Florida corporation and
the keeper of the records and corporate seal of said corporation;
that the following is a resolution duly adopted at a meeting of
the Board of Directors thereof held in accordance with its by-
laws at its offices at Lake Xxxxxxxx, Florida on the _____ day of
________, 1996, and that the same are now in full force.
Resolution
"BE IT RESOLVED, That the President and Vice
President/Secretary/Treasurer of this corporation, as well as
Xxxx Xxxxxxxxx, individually and Xxxxxx Xxxxxxxxx, individually
the owners of all the shares of the corporation, hereby agree to
the merger of this corporation with Fountain Powerboat
Industries, Inc.
I HEREBY CERTIFY that the following named persons have been
duly elected to the offices set opposite their respective names,
that they continue to hold these offices at the present time, and
that the signatures appearing hereon are the genuine, original
signatures of each respectively:
XXXX XXXXXXXXX
President/ /S/XXXX X. XXXXXXXXX
Shareholder (signature)
XXXXXX XXXXXXXXX
Vice President
Secretary/Treasurer/ /S/XXXXXX XXXXXXXXX
Shareholder (signature)
IN WITNESS WHEREOF, I have hereunto affixed by name as
secretary and have caused the corporate seal of said corporation
to be hereto affixed this 19th day of March, 1997.
/S/XXXXXX XXXXXXXXX
XXXXXX XXXXXXXXX
Secretary
fountain\xxxxxxxxxxx.xx
CORPORATE RESOLUTION
I HEREBY CERTIFY that I am the duly elected and qualified
secretary of MACH PERFORMANCE, INC., A Florida corporation and
the keeper of the records and corporate seal of said corporation;
that the following is a resolution duly adopted at a meeting of
the Board of Directors thereof held in accordance with its by-
laws at its offices at Lake Xxxxxxxx, Florida on the ____ day of
_____, 1996, and that the same are now in full force.
Resolution
"BE IT RESOLVED, That the Board of Directors of Mach
Performance, Inc. and its shareholders have duly elected as
members of Mach Performance, Inc.'s Board of Directors the
following person as directors and officers:
Xxxxxxxx X Xxxxxxxx, Xx. - Chairman of the Board
Xxxx X. Xxxxxxxxx - Director
Xxxx X. Xxxxx, III - Director
Xxxxxxxx Xxxxxxxxxx - Director
Xxxx X. Xxxxxxx - Director
Xxxxxxxx X. Xxxxxxxx, Xx. - Chief Executive Officer
Xxxx X. Xxxxxxxxx - President
Xxxxx X. Xxxxxxxx - Vice President and Chief
Financial Officer
Xxxxxxx X. Xxxxxxxx - Secretary & Treasurer
Xxxxx X. Xxxxx - Assistant Secretary
I HEREBY CERTIFY that the following named persons have been
duly elected to the offices set opposite their respective names,
that they continue to hold these offices at the present time, and
that the signatures appearing hereon are the genuine original
signatures of each respectively:
XXXX XXXXXXXXX
President /S/XXXX XXXXXXXXX
(signature)
XXXXXX XXXXXXXXX
Vice President
Secretary/Treasurer /S/XXXXXX XXXXXXXXX
(signature)
IN WITNESS WHEREOF, I have hereunto affixed by name as
secretary and have caused the corporate seal of said corporation
to be hereto affixed this 19th day of March, 1997.
/S/XXXXXX XXXXXXXXX
XXXXXX XXXXXXXXX
Secretary
fountain\cooperative.cr2
EXHIBIT 1.01
ARTICLES OF MERGER
THESE ARTICLES OF MERGER, dated as of October 11, 1996, are
entered into by and between Mach Performance, Inc. ("Mach"), a
Florida corporation, Fountain Power, Inc. ("Power"), a North
Carolina corporation, Fountain Powerboats, Inc. ("Powerboats"), a
North Carolina corporation, and Fountain Powerboat Industries,
Inc. ("Industries"), a Nevada Corporation, such corporations
being hereinafter collectively referred to as the "Constituent
Corporations." Power is sometimes hereinafter referred to as the
"Surviving Corporation." These Articles of Merger set forth the
Plan of Merger described in Section 55-11-01 of the North
Carolina Business Corporation act.
RECITALS
A. Industries is a Nevada corporation authorized to issue
200,000,000 shares of common stock $.01 par value (the
"Industries Common Stock"), of which 3,044,072 shares are issued
and outstanding at the date hereof.
X. Xxxx is a Florida corporation authorized to issue 10,000
shares of common stock, $1.00 par value (the "Mach Common
Stock"), of which 5,465 shares are issued and outstanding as of
the date hereof.
C. Industries owns all of the capital stock of Powerboats,
which, in turn, owns all of the capital stock of Power.
D. The respective Boards of Directors of each of the
Constituent Corporation deem it advisable and in the best
interests of the respective corporations and their respective
shareholders that Mach be merged with and into Power on the terms
and conditions hereinafter set forth in accordance with the
provisions of Sections 55-11-01 and 55-11-03 to 55-11-05
inclusive of the North Carolina Business Corporation Act.
E. On October 11, 1996, the Board of Directors of Power
adopted the following resolution, which resolution has not been
amended or revoked and is in full force and effect as of the date
hereof, and which resolution constitutes all approval required
for the merger of Mach with and into Power under Sections 55-11-
01 and 55-11-03 to 55-11-05 inclusive of the North Carolina
Business Corporation Act:
RESOLVED, That Power merge with and into Mach with Power
being the surviving corporation, pursuant to Articles of Merger
to be executed and acknowledged by Power.
F. The merger of Mach into Power was approved by Industries
and Powerboats, and Powerboats holds all of the 10,000
outstanding shares of Power common stock, which is the only class
of stock outstanding, acting by consent action in accordance with
Section 55-7-04 of the North Carolina Business Corporation Act.
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G. By execution these Articles of merger, then merger of
Mach with and into Power has been approved, in accordance with
Section 55-11-03(b0(2) of the North Carolina Business Corporation
Act.
H. On October 11, 1996, the Board of Directors of Mach
adopted the following resolution, which resolution has not been
amended or revoked and is in full force and effect as of the date
hereof.
RESOLVED, that Mach merge with and into Power, with Power
being the surviving corporation, pursuant to Articles of Merger
to be executed and acknowledged by Mach.
I. The merger of Mach into Power was approved by
shareholders holding all of the outstanding shares of Mach common
stock, which is the only class of stock outstanding, acting by
consent action in accordance with Section 55-7-04 of the North
Carolina business Corporation Act.
J. By execution and acknowledgment of these Articles of
Merger, the merger of Mach with and into Power has been approved
in accordance with the North Carolina Business Corporation Act.
NOW, THEREFORE, in order to prescribe (a) the terms and
conditions of the Merger; (b) to method of carrying the same into
effect; (c) the manner and basis of converting and exchanging the
shares of Mach's Common Stock into shares of Common Stock of
Industries; and (d) such other details and provisions as are
deemed necessary or desirable; and in consideration of the
foregoing recitals and the agreements, provisions and covenants
herein contained, Industries, Powerboats, Power and Mach hereby
agree as follows:
1. Effective Date. The Merger shall become effective upon
the filing of a copy of these Articles of Merger with the
Secretary of State of North Carolina, as required by Section 55-
11-05 of the North Carolina Business Corporation Act. The date
and time on which the Merger becomes effective is hereinafter
referred to as the "Effective Date."
2. Merger. At the Effective Date, Mach shall merger with
and into Power with Power being the Surviving Corporation and
the separate corporate existence of Mach shall cease. The
corporate identity, existence, purposes, franchises, powers,
rights and immunities of Mach at the Effective Date shall be
merged into Power which shall be fully vested therewith. Power
shall be subject to all of the debts and liabilities of Mach as
if power had itself incurred them and all rights of creditors and
all liens upon the property of each of Mach and Power shall e
preserved unimpaired, provided that such liens, if any, upon the
property of Power shall be limited to the property affected
thereby immediately prior to the Effective Date.
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3. Articles of Incorporation. At the Effective Date, the
Articles of Incorporation of Power shall be the Articles of
Incorporation of the Surviving Corporation.
4. Effect of Merger on Outstanding Shares.
(a) Surviving Corporation. Each share of Power Common
Stock issued and outstanding immediately prior to the Effective
Date of the Merger shall continue to be outstanding.
(b) Disappearing Corporation. At the Effective Date,
each issued and outstanding share of Mach Common Stock shall be
cancelled.
5. Surrender of Share Certificates. After the Effective
Date, each holder of an outstanding certificate which prior to
the Effective Date evidenced Mach Common Stock shall surrender
the same, duly endorsed as Power may require, to Industries or
its designated agent for cancellation. Thereupon the
shareholders of Mach shall receive in exchange therefor 85,000
restricted common shares of Industries as provided in the
Agreement and Plan of Reorganization of October 11, 1996.
6. Status of Power Common Stock After the Effective Date.
(a) After the Effective Date, until surrendered in
accordance with Section 5 hereof, each outstanding certificate
which prior to the Effective Date represented shares of Mach
Common Stock, shall be deemed for all corporate purposes (subject
to the further provision of this Section 6(a) to evidence Power
Common Stock in accordance with the terms of this Agreement of
merger. After the Effective Date, there shall be no further
registry of transfers on the records of Mach common Stock
outstanding immediately prior to the Effective Date, and, if
certificates representing such shares are presented to Power or
Industries, as the successor of Mach, they shall be cancelled,
and the holder thereof shall be entitled to receive Industries
Common Stock in accordance with the terms of the Agreement and
plan of Reorganization of October 11, 1996. No dividends or
distributions will be paid to persons entitled to receive
certificates for shares of Industries Common Stock until such
persons shall have surrendered their Mach Common Stock
certificates in accordance with Section 5 hereof; provided,
however, that when such certificates shall have been so
surrendered in exchange for shares of Industries Common Stock,
there shall be paid to the holders thereof, but without interest
thereon all dividends and other distributions payable subsequent
to and in respect of a record date after the Effective Date on
the shares of Industries Common Stock for which such certificates
shall have been so exchanged. Holders of certificates for shares
of Mach Common Stock shall not be entitled, as such, to receive
any dividends unless and until they have exchanged those
certificates representing shares of Industries Common Stock as
provided herein.
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(b) If any certificates of Industries Common Stock is
to be issued in a name other than that in which the certificate
for the Mach Common Stock surrendered in exchange is registered,
it shall be a condition of such exchange that the certificate so
surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange
shall (i) pay any transfer or other taxes required by reason of
the issuance of such Industries Common Stock in any name other
than that of the registered holder of the certificate surrendered
or (ii) establish to the satisfaction of Power or Industries that
such tax has been paid or is not applicable.
7. Other Provisions.
(a) Governing Law; Entire Agreement. These Articles
of Merger shall be governed by and construed in accordance with
the laws of the State of North Carolina. These Articles of
Merger contain the entire agreement of the parties hereto, and
supersede any prior written or oral agreements between them
concerning the subject matter contained herein.
(b) Counterparts. These Articles of merger may be
executed in any number of counter parts and each such counterpart
shall be deemed to be an original instrument, but all of such
counterparts together shall constitute but one agreement.
(c) Further Assurances. Each Constituent Corporation
shall from time to time upon the request of the other Constituent
Corporation, execute and deliver and file and record all such
documents and instruments and take all such other actions as such
corporation may request in order to vest or evidence the vesting
in Power of title to and possession of all rights, properties,
assets and business of Power to the extent provided herein, or
otherwise to carry out the full intent and purpose of these
Articles of Merger.
IN WITNESS WHEREOF, the parties hereto have caused
these Articles of merger to be executed on behalf of the
Constituent Corporations as of the date and year first above
written.
MACH PERFORMANCE, INC. FOUNTAIN POWER, INC.
/S/XXXX X. XXXXXXXXX /S/XXXX X. XXXXXXXXX
Xxxx X. Xxxxxxxxx Xxxx X. Xxxxxxxxx
President President
FOUNTAIN POWERBOAT INDUSTRIES, INC.
FOUNTAIN POWERBOATS, INC.
/S/XXXXXXXX X. XXXXXXXX, XX.
Xxxxxxxx X. Xxxxxxxx, Xx.
President
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Exhibit 1.02
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as
of October 11, 1996, between Fountain Powerboats, Inc., a North
Carolina corporation ("Company") and Xxxx X. Xxxxxxxxx
("Employee").
W I T N E S S E T H:
WHEREAS, Employee possess unique talents of unusual value to
Company; and
WHEREAS, concurrently with the execution of this Agreement,
Fountain Powerboat Industries, Inc., Company's parent, is
acquiring all of the capital stock of Mach Performance, Inc.
("Mach") by merger of Mach into Company's subsidiary, Fountain
Power, Inc.; and
WHEREAS, Company recognizes that Employee's services are
peculiarly valuable to Company and therefore is willing to
provide Employee with the rights, benefits and compensation
provided for herein so as to secure the services of Employee for
the duration of this Agreement on the terms provided herein;
NOW THEREFORE, the parties hereto agree as follows:
1. Employment. Company hereby hires Employee to perform
the duties and render the services hereinafter set forth for a
period of four (4) years from the date of this Agreement, subject
to earlier termination as herein provided, and Employee hereby
accepts such employment and agrees faithfully to perform such
services during the term of this Agreement.
2. Duties. Employee agrees as President and Chief
Operating Officer of Company's subsidiary, Fountain Power, Inc.,
and to perform such duties as may be reasonably required of him
in such capacity with Company.
3. Exclusive Service. Employee agrees that he will devote
all of his time and efforts to this employment and apply all of
his skill and experience to the performance of his duties, and
that during the term of this Agreement, except with the written
approval of Company, Employee will not engage in, or be employed
in, any other business except as a passive investor, and Employee
will otherwise do nothing inconsistent with his duties hereunder.
4. Compensation. In consideration of the foregoing and for
all the services to be rendered by Employee pursuant thereto,
Employee shall receive a salary of Ten Thousand Dollars ($10,000)
per month, payable weekly in accordance with the payroll
practices
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of Company which may be in effect from time to time, and subject
to such withholding as is required by law. In addition, Company
shall reimburse Employee for all reasonable and documented
business expenses. As an employee of Company, Employee will be
entitled to participate in all benefit plans as they may be
offered from time to time by company to its other executive
employees. Employee shall be entitled to all other compensation
increases, perquisites, and benefits as may be determined from
time to time by the Board of Directors. Employee shall receive
an annual bonus equal to one percent (1%) of the consolidated
pretax net income of Fountain Powerboats, Inc. payable within
ninety days after the fiscal year-end. Employee shall also
receive a Seven Hundred Dollars ($700) per month automobile
allowance after the auto lease assumed in the Mach acquisition
expires. A monthly housing allowance incident to Employee's
relocation to North Carolina will be paid for up to one year from
the date of this Agreement or until the Employee's Florida
residence is sold, whichever come sooner, equivalent to the
Employee's current monthly home mortgage payment amount, or
$4,030.72. Employee shall also be granted the following stock
options under the Employee Incentive Stock Option Plan of 1986:
October 11, 1997 - 5,000 shares at $12.25 per share, and
October 11, 1998 - 5,000 shares at $12.25 per share, and
October 11, 1999 - 5,000 shares at $12.25 per share, and
October 11, 2000 - 5,000 shares at $12.25 per share,
The foregoing options shall be exercisable in whole or in part
for a period of ten years from the date of grant and be
immediately vested to the Employee and exercisable b him whether
or not he is an employee at the time of the exercise of the
option.
5. Termination. This Agreement shall terminate immediately
upon termination for cause or the death or disability of
Employee. For purpose of this Agreement, the term "disability"
shall mean the inability of Employee, due to mental or physical
illness or injury, to perform his duty as an employee of Company,
and the term "termination for cause" shall mean termination of
Employee by the Board of Directors on account of his refusal to
perform duties assigned to him, or breach by Employee of the
covenant contained in Section 6 hereof. This Agreement shall
also terminate immediately upon any voluntary resignation of
Employee.
6. Non-Competition. During the term of this Agreement, and
for one year after termination of this Agreement, Employee shall
not, either directly or indirectly, either as an employee,
employer, consultant, agent, principal, partner, stockholder,
officer or director, engage or participate in any business in
competition with that of Company.
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7. Disclosure of Information. Employee agrees not at any
time (during or after the term of this Agreement) to disclose or
use, except in pursuit of the business of Company or of any
affiliate of Company, an Proprietary Information of Company, or
of any affiliate of Company, acquired during the term of this
Agreement. For purposes of this Agreement the phrase
(Proprietary Information: means all information which is known or
intended to be known only to Employee or employees of Company,
except in pursuit of the business of Company any document, record
or other information of company, or others in a confidential
relationship with Company, and relates to specific business
matters such as patents, patent applications, trade secrets,
secret processes, proprietary know-how, information relating the
Company's business, and identity of suppliers or customers or
accounting procedures of Company, or relates to other business of
Company, Employee agrees not to remove from the premises of
Company, except in pursuit of the business of company, or of any
affiliate of Company, any document, record or other information
of Company. Employee recognizes that all such documents, records
or other information, whether developed by Employee or by someone
else for company, are the exclusive property of company.
8. Proprietary Information of Others. Employee
acknowledges that from time to time Company may do business with
suppliers or customers who will supply Company with information
of a confidential nature, and that Company may have a contractual
obligation to preserve the confidential nature of any such
information. Employee agrees to treat any information received
from suppliers or customers as confidential, and as if it were
the Proprietary Information of Company, unless advised otherwise
by the Chief Executive Officer of Company.
9. Remedies. In addition to any other remedies which
Company may have by virtue of this Agreement, Employee agrees
that in the event a breach of the obligations of confidence under
this Agreement are threatened, Company shall be entitled to
obtain a temporary restraining order and preliminary injunction
against Employee to restrain any breach of confidence or covenant
not to compete under this Agreement.
10. Term; Renewal. This Agreement shall automatically be
renewed for successive terms of one (1) year at the expiration of
the term set forth in Section 1 hereof, unless either the Board
of Directors or Employee shall give written notice to the other
of its or his intention not to renew this Agreement at least
ninety (90) days prior to the expiration of such term or renewed
term.
11. Assignment. This Agreement shall inure to the benefit
of and shall be binding upon the successors and the assigns of
Company. since this Agreement is based upon the unique abilities
and personal confidence in Employee, he shall have no right to
assign this Agreement or any of the rights hereunder.
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12. Prior Contracts. Any prior contract or agreement
between Company and Employee regarding employment is hereby
cancelled and shall be of no further force and effect.
13. Severability. If any provision of this Agreement shall
be found invalid by any court of competent jurisdiction, such
findings shall not affect the validity of the other provisions
hereof and the invalid provisions shall be deemed to have been
severed herefrom.
14. Waiver of Breach. The waiver by company or Employee of
the breach of any provision of this Agreement by the other party
or the failure to exercise by company or Employee of any right
granted hereunder shall not operate or be construed as the waiver
of any subsequent breach by the other party not the waiver of the
right to exercise any such right.
15. Entire Agreement. This instrument contains the entire
agreement of the parties, and may be amended only by an agreement
in writing signed by the parties.
16. Notice. Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing and if
sent by certified mail to his residence, in the case of the
Employee, or to its principal office, in the case of the Company.
17. Governing Law. This Agreement is entered into and
executed in the State of North Carolina and shall be governed by
the laws of such state. In the event of any proceeding brought
to enforce the provisions of this Agreement, the prevailing party
shall be entitled to costs of suit and attorneys' fees, in
addition to other remedies available.
IN WITNESS WHEREOF, the parties hereto have hereunto set
their hands as of the day and year first above written.
FOUNTAIN POWERBOATS, INC. EMPLOYEE
/S/X.X. XXXXXXXX, XX. /S/XXXX X. XXXXXXXXX
X.X. Xxxxxxxx, Xx. Xxxx X. Xxxxxxxxx
Chairman, President, Chief
Executive Officer, and Chief
Operating Officer
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Mach Exhibit 2.03
Subsidiaries and Investments
None
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Mach Exhibit 2.02(a)
Capitalization
Class Authorized Outstanding
Common 10,000 shares 5,465 shares
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Mach Exhibit 2.02(b)
Options and Warrants
None
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Mach Exhibit 2.05
Undisclosed Liabilities
None
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Mach Exhibit 2.07
Litigation
None
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Mach Exhibit 2.08
Title to Assets
None
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Mach Exhibit 2.09
Real Estate
None
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Mach Exhibit 2.12
Interested Transactions
None
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