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AGREEMENT AND PLAN OF REORGANIZATION
among
WHEELS SPORTS GROUP, INC.,
HIGH PERFORMANCE ACQUISITION COMPANY,
HIGH PERFORMANCE SPORTS MARKETING, INC.,
XXXXX X. XXXXX
and
XXXXX X. XXXXXX
Dated as of October 3, 1997
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AGREEMENT AND PLAN OF REORGANIZATION
TABLE OF CONTENTS
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RECITALS 2
ARTICLE I 2
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II 6
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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2.2 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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2.3 Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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2.4 Articles of Incorporation: By-Laws: Directors and Officers . . . . . . . . . . . . . . . . 7
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2.5 Conversion of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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2.6 Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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ARTICLE III 8
REPRESENTATIONS AND WARRANTIES OF
HIGH PERFORMANCE AND SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Organization and Qualification Of Shareholders . . . . . . . . . . . . . . . . . . . . . . 8
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3.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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3.3 No Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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3.4 Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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3.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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3.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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3.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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3.8 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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3.10 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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3.11 License Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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3.12 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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3.13 Significant Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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3.14 Compliance With Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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3.15 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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3.16 Absence of Undisclosed or Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . 14
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3.17 No Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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3.18 Absence of Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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3.19 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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3.20 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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3.21 Tax Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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3.22 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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3.23 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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3.24 Employee Health and Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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3.25 Representations Concerning Acquisition Stock . . . . . . . . . . . . . . . . . . . . . . . 20
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3.26 Representations as to Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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ARTICLE IV 22
REPRESENTATIONS AND WARRANTIES OF ACQUIRORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.1 Organization and Qualification Of . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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4.3 No Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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4.4 Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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4.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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4.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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4.8 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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4.9 Financial Statements and Periodic Reports . . . . . . . . . . . . . . . . . . . . . . . . . 24
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4.10 Absence of Undisclosed or Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . 25
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4.11 No Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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4.12 Absence of Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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4.13 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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4.14 Tax Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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4.15 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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4.16 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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4.17 Employee Health and Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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4.18 Representations as to Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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ARTICLE V 31
PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.1 Inspection of Properties and Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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5.2 Other Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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5.3 Ongoing Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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5.4 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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5.5 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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5.6 Articles of Incorporation; Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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5.7 Distributions or Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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5.8 Notice of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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5.9 Nondisclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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5.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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5.11 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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5.12 No Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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5.13 Assignment of Contracts, Leases and Other Agreements . . . . . . . . . . . . . . . . . . . 35
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5.14 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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5.15 Additional Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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ARTICLE VI 36
POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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ARTICLE VII 36
CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.1 Conditions Precedent to Obligations of High Performance and Shareholders . . . . . . . . . 36
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7.2 Conditions Precedent to Obligations of Acquirors . . . . . . . . . . . . . . . . . . . . . 40
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ARTICLE VIII 44
SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE IX 44
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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9.2 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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9.3 Method of Asserting Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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9.4 Payment of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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9.5 Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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ARTICLE X 47
AMENDMENT, TERMINATION AND BREACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.1 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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10.2 Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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ARTICLE XI 48
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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11.2 Shareholders' Deliveries at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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11.3 Acquirors' Deliveries at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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11.4 Acquirors' Deliveries on November 28, 1997 . . . . . . . . . . . . . . . . . . . . . . . . 51
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11.5 Acquirors' Breach of November 28, 1997 Deliveries . . . . . . . . . . . . . . . . . . . . . 51
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MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.1 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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12.2 Entire and Sole Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
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12.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
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12.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
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12.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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12.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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12.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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12.8 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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12.9 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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12.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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12.11 Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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12.12 Delivery of Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT is made and entered into effective this 3rd day of
October, 1997, by and between WHEELS SPORTS GROUP, INC., a North Carolina
corporation ("Parent"), HIGH PERFORMANCE ACQUISITION COMPANY, a North Carolina
corporation ("HPAC"), HIGH PERFORMANCE SPORTS MARKETING, INC., a North Carolina
corporation ("High Performance") and XXXXX X. XXXXX and XXXXX X. XXXXXX in
their capacities as the record and beneficial owners of all of the issued and
outstanding capital stock of High Performance (together, the "Shareholders").
RECITALS
WHEREAS, on or about September 8, 1997, Parent entered into a
Confidential Term Sheet with High Performance ("Term Sheet") pursuant to which
Parent and High Performance indicated their desire to proceed with a
transaction involving Parent and High Performance ; and
WHEREAS, the parties desire to merge High Performance with and into
HPAC, a wholly-owned subsidiary of Parent formed solely for the purpose of
completing such merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and in reliance upon the representations and
warranties contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall, unless the context
requires otherwise, have the meanings designated below:
Acquirors means Parent and HPAC.
Additional Cash Consideration has the meaning given it in Article
2.6(d).
Acquisition Stock means the shares of Parent's Common Stock issued to
Shareholders pursuant to Article 2.6
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Xxxxx Agreement means the Employment Agreement to be entered into by
and between the Parent and Xxxxx X. Xxxxx in the form attached hereto as
Exhibit 11.2(e)(i).
Cash Payment has the meaning given it in Article 2.6.
Claim Notice has the meaning given to it in Article 9.3(a).
Closing has the meaning given to it in Article 11.1.
Closing Date has the meaning given to it in Article 11.1.
Code means the Internal Revenue Code of 1986, as amended.
Common Shares means Parent's Common Stock, $.01 par value.
Communication means collectively any publicity release, public notice,
filing or any other communication.
Consulting Agreement means the Consulting Agreement to be entered into
by and between Parent and Xxxxx Xxxxx in the form attached hereto as Exhibit
11.2(e)(iii).
Damagesmeans any and all damages, claims, deficiencies, losses and
expenses, as further defined in Article 9.1.
Xxxxxx Agreement means the Employment Agreement to be entered into by
and between Parent and Xxxxx X. Xxxxxx in the form attached hereto as Exhibit
11.2(e)(ii).
Effective Time shall have the meaning given to it in Article 2.3.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and any regulations, rules or orders promulgated thereunder.
Evaluation Material means the documents, financial statements,
information and materials which shall be delivered by High Performance and
Shareholders to Parent, or by Parent to High Performance and Shareholders, in
connection with the due diligence review conducted by the respective parties.
HPAC has the meaning given it in the recitals.
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High Performance Financial Statements has the meaning given to it in
Article 3.15.
High Performance Stock means all of the issued and outstanding capital
stock of High Performance, which consists of 975 shares of Common Stock owned
by Xxxxx X. Xxxxx and 172 shares of Common Stock owned by Xxxxx X. Xxxxxx.
Indemnified Party means the party claiming indemnification under
Article IX.
Indemnifying Party means the party against whom indemnification claims
are asserted under Article IX.
Intellectual Property means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto
and all patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (b) all trademarks, services marks, trade dress, logos,
trade names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connections
therewith, (c) all copyrightable works, all copyrights and all applications,
registrations and renewals in connection therewith, (d) all mask works and all
applications, registration and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software designed, written or
used by Shareholders, including but not limited to the source code for such
software and all related documentation and (g) all other proprietary rights
owned by High Performance.
License Agreements means those agreements by and between High
Performance and various NASCAR drivers, NASCAR team owners, and other persons
pursuant to which High Performance has
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the right to produce and sell various types of merchandise bearing the name,
picture, likeness and/or autograph of such persons.
Loss means Damages for which any claim may be asserted under Article
IX.
Merger has the meaning given to it in Article 2.1.
Merger Consideration has the meaning given it in Article 2.6
Notes shall have the meaning given it in Article 2.2(c).
Notice means the thirty day period which the Indemnifying Party shall
have from the personal delivery or mailing of the Claim Notice.
OSHA means the Occupational Safety and Health Act of 1970, as amended,
and any regulations, rules or orders promulgated thereunder.
Parent means Wheels Sports Group, Inc., a North Carolina corporation.
Parent Financial Statements has the meaning given to it in Article
4.9.
Pledge Agreement means the Pledge Agreement to be entered into among
Parent and Shareholders at Closing pursuant to which Parent shall pledge the
stock of HPAC as security for performance of the obligations of Parent under
Article 11.5.
Pro Rata means an allocation which is made 85% to Xxxxx X. Xxxxx and
15% to Xxxxx X. Xxxxxx.
Registration Rights Agreement means the Registration Rights Agreement
to be entered into as of the Closing in the form attached hereto as Exhibit
11.3(b).
Shareholders means Xxxxx X. Xxxxx and Xxxxx X. Xxxxxx.
Tax or Taxes means any federal, state, local or foreign income, gross
receipt, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), custom duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property,
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sales, use, transfer, registration, value added, alternative or add-on minimum,
estimating or other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not.
Tax Return means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ARTICLE II
THE MERGER
Subject to the terms and conditions set forth in this Agreement:
2.1 THE MERGER. At the Effective time, in accordance with, and
subject to the conditions set forth in this Agreement, High Performance shall
be merged with and into HPAC (the "Merger"), the separate existence of High
Performance shall cease, and HPAC shall continue as the surviving corporation
(sometimes referred to as the "Surviving Corporation").
2.2 EFFECT OF THE MERGER. When the Merger has been effected,
the separate existence of High Performance shall cease and the Surviving
Corporation shall succeed, without other transfer, to all of the rights,
privileges, powers, immunities, purposes, franchises (both public and private)
and property of High Performance and shall be subject to all of the obligations
and liabilities of High Performance in the same manner as if the Surviving
Corporation had itself incurred them. Any claim existing or action or
proceeding pending by or against High Performance may be enforced as if the
Merger had not taken place. All rights of creditors and all liens upon the
property of High Performance shall be unimpaired by the Merger.
2.3 CONSUMMATION OF THE MERGER. On the Closing Date, the
parties will cause the Merger to be consummated by delivering to the office of
the Secretary of State of the State of North Carolina Articles of Merger and
any other documents in such form as may be required by, and executed,
acknowledged and accompanied by an officer's certificate of each of High
Performance
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and the Surviving Corporation in accordance with, the relevant provisions of
North Carolina law (the time of the filing of the Articles of Merger is the
"Effective Time").
2.4 ARTICLES OF INCORPORATION: BY-LAWS: DIRECTORS AND OFFICERS.
The Articles of Incorporation and the By-Laws of HPAC, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation and Bylaws
of the Surviving Corporation until thereafter amended as provided therein. The
officers and directors of HPAC immediately prior to the Effective Time will be
the officers and directors of the Surviving Corporation until their successors
are elected and qualified.
2.5 CONVERSION OF SECURITIES. At the Effective Time, by virtue
of the Merger and without any action on the part of High Performance, the
Surviving Corporation, the Parent or any shareholder of the foregoing,
securities of High Performance outstanding immediately prior to the Effective
Time shall be canceled and extinguished and be converted into and become a
right to receive from the Parent, the Cash Payment, the Additional Cash
Consideration, the Acquisition Stock and the Note, all as described in Section
2.6 herein (the "Merger Consideration").
2.6 MERGER CONSIDERATION. The aggregate consideration to be
paid to Shareholders in the Merger shall be $10.25 million (the "Merger
Consideration"), which shall be delivered Pro Rata to Shareholders upon the
terms and conditions hereof, in the following manner:
(a) At the Closing, Acquirors shall deliver to
Shareholders certificates representing $4.0 million worth of restricted Common
Shares of Parent rounded to the nearest whole share (the "Acquisition Stock").
The Acquisition Stock shall be valued based on the average of the closing bid
and ask prices of Parent's Common Shares during the 20 trading days preceding
the Closing Date; however, in no event shall the Acquisition Stock be valued
for purposes of this Article 2. 6(a) at a price in excess of $9.00 per share.
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(b) On November 28, 1997 (the "Cash Payment Date"),
Acquirors shall pay cash consideration of $3.25 million cash (the "Cash
Payment") to the Shareholders, which shall be paid in the form of cashier's
checks or a wire transfer of immediately available funds to a financial
institution designated by the Shareholders.
(c) Acquirors shall deliver to Shareholders promissory
notes of Parent in the aggregate principal amount of $1 million in the form
attached hereto as Exhibit 2.6(c)(i) (the "Notes").
(d) In addition to the cash consideration described in
Article 2.6(b) above, Acquirors will pay cash consideration of $2 million to
the Shareholders (the "Additional Cash Consideration"). The Additional Cash
Consideration shall be paid by Acquirors in the form of a wire transfer of
cashier's check at the time of Closing using funds obtained through a credit
arrangement to be obtained by Acquirors, which loan may be secured by the
assets of HPAC and other assets of Acquirors (the "Additional Cash Loan").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
HIGH PERFORMANCE AND SHAREHOLDERS
High Performance and Shareholders represent and warrant to Acquirors
that the statements contained in this Article III are true, correct and
complete as of the date of this Agreement and will, except as otherwise
expressly provided in this Agreement, be true, correct and complete on the
Closing Date. High Performance and Shareholders represent and warrant as
follows:
3.1 ORGANIZATION AND QUALIFICATION OF SHAREHOLDERS. High
Performance is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina, and is duly qualified
and authorized to do business and is in good standing in each jurisdiction, if
any, in which the nature of the business conducted by it or the properties
owned, leased or operated by it makes such qualification necessary. High
Performance has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
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Copies of Articles of Incorporation and Bylaws of High Performance, which have
been delivered to Acquirors and attached hereto as Exhibits 3.1(a) and 3.1(b),
are complete and correct, and High Performance is not in default under or in
violation of any provision of the Articles of Incorporation or Bylaws. High
Performance's minute book (containing the records of all meetings of the Board
of Directors, Shareholders and any management committees of High Performance),
a copy of which was provided to Acquirors, is correct and complete in all
material reports.
3.2 AUTHORIZATION. This Agreement and the consummation of the
transactions contemplated hereby have been duly and validly executed and
delivered by High Performance and Shareholders and the agreements,
representations and warranties contained herein constitute valid and binding
obligations, representations and warranties of High Performance and
Shareholders enforceable in accordance with their terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally and by principles of equity
regarding the availability of remedies. Attached hereto as Exhibit 3.2 is a
Certificate which shall evidence the approval and authorization of this
Agreement by High Performance.
3.3 NO CONFLICTING AGREEMENTS. The execution and delivery of this
Agreement by High Performance and Shareholders does not, and consummation of
the transactions contemplated hereby will not, (i) violate any existing term or
provision of any law, regulation, order, writ, judgment, injunction or decree
applicable to High Performance or Shareholders or the High Performance Stock,
(ii) except as set forth on Exhibit 3.3, conflict with or result in a breach of
any of the terms, conditions or provisions of the Articles of Incorporation or
Bylaws of High Performance or of any agreement or instrument to which High
Performance or Shareholders are a party, or (iii) except as set forth on
Exhibit 3.3 or otherwise arising under the Pledge Agreement, result in the
creation or
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imposition of any lien, charge, security interest, encumbrance, restriction or
claim upon the High Performance Stock.
3.4 COMPLIANCE WITH APPLICABLE LAW. Except as set forth in
Exhibit 3.4, neither Shareholders nor High Performance have received any
written notice of any violation, probable violation or default by High
Performance or Shareholders under any applicable law, regulation or order of
any governmental department, commission, board or agency or instrumentality,
domestic or foreign, having jurisdiction over Shareholders or High Performance
which could materially adversely affect the business, operations, financial
condition, properties or assets of High Performance, or the ability to
consummate the transaction contemplated hereby.
3.5 CONSENTS AND APPROVALS. Except as set forth on Exhibit 3.3,
the execution and delivery by High Performance or Shareholders of this
Agreement, and the performance by High Performance or Shareholders of their
obligations hereunder, does not require High Performance or Shareholders to
obtain any consent, approval, agreement, or action of, or make any filing with
or give any notice to, any corporation, person, entity, or firm or any public,
governmental or judicial authority except (i) such as have been duly obtained
or made, as the case may be, and will be in full force and effect as of the
Closing, or (ii) those as to which the failure to obtain would have no material
adverse effect on the financial condition or future business operations of High
Performance or the transactions contemplated hereby.
3.6 SUBSIDIARIES. High Performance does not own, have an
ownership interest in, or control any corporation, partnership, proprietorship
or other entity.
3.7 LITIGATION. Except as described in Exhibit 3.7 attached
hereto, there are no actions, proceedings or investigations pending or, to the
knowledge of Shareholders, threatened against Shareholders or High Performance
before any court or administrative agency which if resolved
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adversely to Shareholders or High Performance would result in a material
adverse change in the financial condition or business operations of High
Performance.
3.8 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by High Performance and
Shareholders directly with representatives of Acquirors, without the
intervention of any person in such manner as to give rise to any valid claim by
any person against Acquirors for a finder's fee, brokerage commission, or
similar payment.
3.9 TAXES. Subject to Article 12.4, Shareholders shall pay all
Taxes which they may incur in connection with the transactions provided for
herein.
3.10 OWNERSHIP. High Performance is the owner, beneficially and of
record, of all of the assets listed or referred to in the High Performance
Financial Statements and in any monthly financial statements delivered pursuant
to Article 3.15, free and clear of all liens, encumbrances, security
agreements, options, claims, charges and restrictions, except as otherwise
described on Exhibit 3.10 hereto or resulting from the transactions
contemplated by this Agreement.
3.11 LICENSE AGREEMENTS. Attached hereto as Exhibit 3.11 is a
complete and accurate list of all persons with whom High Performance has a
License Agreement as of the date of this Agreement. Also stated on Exhibit
3.11 is the expiration date of each License Agreement. Except as described on
Exhibit 3.11, all such License Agreements are valid and enforceable contracts
or agreements and are not currently, and will not be at Closing, in material
default or materially impaired in any manner. To the extent the transfer of
any License Agreement hereunder requires the consent of any third party, High
Performance and Sellers shall use their best efforts, but shall not be
obligated, to obtain such consents. High Performance and Sellers make no
representation concerning assignability of the License Agreements or the
ability to obtain any consents which might be requested by Acquirors. High
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Performance has not received any written notices of default, claims, or any
other type of written notice with respect to any License Agreement or, if such
written notice has been received, a copy of any such notice has been provided
in writing to Acquirors.
3.12 INTELLECTUAL PROPERTY. Attached hereto as Exhibit 3.12 to
this Agreement is a schedule of all trade names, trademarks, service marks,
copyrights, computer software, source code and their registrations, owned by
Shareholders or in which Shareholders have any right or license, or for which
Shareholders has made application, together with a brief description of each
(hereinafter collectively the "Intellectual Property"). To Shareholders'
knowledge, High Performance has not infringed, and by its use of its
Intellectual Property, is not now infringing on any United States or foreign
trade name, trademark, service xxxx or copyright belonging to any other person,
firm or corporation, to Shareholders' knowledge, and the use of the
Intellectual Property by Acquirors will not conflict with, infringe on or
otherwise violate the rights of others.
3.13 SIGNIFICANT CUSTOMERS. Exhibit 3.13 to this Agreement sets
forth a complete and accurate list of the ten largest customers of High
Performance as of the date of this Agreement with a statement of total sales
attributable to each Customer which individually accounted for 5% or more of
High Performance's total revenues during (i) the year ended December 31, 1996
or (ii) the six months ended June 30, 1997. Except as may be disclosed on
Exhibit 3.13, High Performance and Shareholders are not presently aware of any
facts indicating that any of these customers presently intend to cease doing
business with High Performance, or materially alter the amount of the business
that they are presently doing with High Performance.
3.14 COMPLIANCE WITH ENVIRONMENTAL LAWS. High Performance has
obtained all permits, licenses and other authorizations that are required, to
the extent required, under all applicable environmental laws, including but not
limited to the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.), Resource Conservation & Recovery Act (42 U.S.C. Section 6901 et seq.),
Safe Drinking
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Water Act (21 U.S.C. Section 349, 42 U.S.C. Sections 201, 300f), Toxic
Substances Control Act (15 U.S.C. 2601 et seq.), Clean Air Act (42 U.S.C.
Section 7401 et seq.), Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.), other laws applicable to High
Performance including those relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or industrial, toxic
or hazardous substances or wastes under any regulation, code, plan, order,
decree judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder (collectively, the "Environmental Laws"),
other than any permits, licenses or other authorizations which, if not
obtained, would not have a material adverse effect on the business or
properties of High Performance. High Performance is in compliance in all
material respects with all terms and conditions of any required permits,
licenses and authorizations, and is in material compliance with all other known
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables contained in the Environmental Laws and
applicable to High Performance.
3.15 FINANCIAL STATEMENTS. High Performance and Shareholders have
delivered to Acquirors copies of High Performance's (or its predecessor's)
unaudited balance sheet at December 31, 1996, 1995 and 1994 and the unaudited
income statements for the years then ended, and High Performance's unaudited
balance sheet dated August 31, 1997 and the unaudited income statements for the
eight months then ended (collectively, the "High Performance Financial
Statements"). The High Performance Financial Statements are based upon the
information contained in the books and records of High Performance and in all
material respects, fairly and accurately present the financial condition of
High Performance as of the dates thereof and results of operations for the
periods referred to therein. The monthly financial statements generated by
High Performance from and after August 31, 1997 will be prepared on a basis
consistent with the methods and procedures used to prepare the High Performance
Financial Statements. If requested by Acquirors, High Performance
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and Shareholders will deliver such monthly financial statements to Acquirors
from and after the period ended August 31, 1997 within 15 days after the end of
each month from the date hereof to Closing.
3.16 ABSENCE OF UNDISCLOSED OR CONTINGENT LIABILITIES. Other than
as reflected on the High Performance Financial Statements, any monthly
statements delivered pursuant to Section 3.15 or on Exhibit 3.16 attached
hereto, High Performance has no liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due, whether
known or unknown, and regardless of when asserted) which would be disclosed on
such statements as prepared in accordance with the past practice of High
Performance.
3.17 NO MATERIAL ADVERSE CHANGES. Since August 31, 1997, other
than ordinary course distributions by High Performances to Shareholders in the
aggregate amount of $114,000 and a bonus paid to Xxxxx X. Xxxxxx in the amount
of $58,000, (i) High Performance has not made any distribution or payment of
cash or other assets to its shareholders and (ii) there has been no change
materially adverse to the assets, financial condition, gross profit, operating
results, customer, employee or supplier relations, business condition or
prospects of High Performance other than any resulting from the transactions
contemplated by this Agreement.
3.18 ABSENCE OF DEVELOPMENTS. From the date of the Term Sheet by
and between High Performance and Parent and until Closing, High Performance has
and will:
(a) Conduct its business and operations only in the
regular and ordinary course; maintain reasonable business insurance; commit no
waste of its assets; not dispose or otherwise change in any material respect
the nature of its assets except to the extent that cash or accounts receivable
are increased; not create or suffer to exist any material lien, charge or
encumbrance on any asset or incur any indebtedness for borrowed money (other
than in the ordinary course) which
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is secured by one or more of the assets; and will use its reasonable efforts to
maintain and preserve its business organization intact and maintain its
relationships with suppliers, employees, customers and others;
(b) Refrain from making capital expenditures or
commitments for additions to the property, plant or equipment in an amount in
excess of $10,000, except as otherwise have been approved in writing by
Acquirors;
(c) Refrain from paying any form of compensation to its
employees or consultants except for (i) non-bonus compensation in accordance
with compensation levels and practices which are in effect as of the date of
this Agreement and (ii) a $58,000 bonus to be paid to Xxxxx Xxxxxx;
(d) Refrain from making any distribution or payment of
cash or other assets to any shareholders; provided, however, that High
Performance may make an ordinary course distribution to Shareholders in the
amount of $114,000; and
(e) Maintain title to, and refrain from making or
permitting, any transfer, sale, pledge, lien or encumbrance on, or other
disposition of any material portion of its assets.
3.19 TITLE TO PROPERTIES. High Performance owns no real property.
Attached hereto as Exhibit 3.19(a) is a true and complete copy of each real
property lease to which High Performance is a party (the "Property Leases").
Each Property Lease is in full force and effect, and High Performance holds a
valid and existing leasehold interest in each Property Lease for the terms set
forth therein. If required by the terms of the Property Leases, High
Performance shall obtain an assignment and the lessor's consent to assignment
of the Property Leases at or before the Closing. High Performance is not in
default, and no circumstances have occurred which, if unremedied would, either
with or without notice or the passage of time or both, result in a material
default under any Property Lease. The tenant improvements and fixed assets
which are necessary for the conduct
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of High Performance's businesses as of the date of this Agreement are in good
condition and repair, ordinary wear and tear excepted, and are usable in the
ordinary course of business. There are no defects in such assets or other
conditions relating thereto which, in the aggregate, materially adversely
affect the operation or value of such assets for the operation of High
Performance's business. High Performance owns, or leases under valid leases,
all equipment and other tangible assets necessary for the conduct of its
business.
3.20 TAX MATTERS.
(a) High Performance has filed all Tax Returns that it
has been required to file. All such Tax Returns were correct and complete in
all material respects. All Taxes owed by High Performance (whether or not
shown on any Tax Return) have been paid. High Performance is not currently the
beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where the High
Performance does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction. There are no encumbrances on any assets of High
Performance that arose in connection with any failure of High Performance (or
alleged failure) to pay any Taxes.
(b) High Performance has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor or other third party.
(c) To the knowledge of Shareholders and High
Performance, there is no basis for any authority to assess any additional Taxes
for any period for which Tax Returns have been filed by High Performance.
There is no dispute or claim concerning any liability for Taxes of High
Performance (i) claimed or raised by any authority in writing or orally with
any executive officer or director of High Performance, or (ii) as to which any
such person has knowledge based upon personal contact with any agent of such
authority. High Performance has delivered to the Acquirors
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correct and complete copies of all federal Tax Returns, examination reports,
and statements of deficiencies filed, assessed against or agreed to by the High
Performance since its inception.
3.21 TAX NOTICES. Except as set forth on Exhibit 3.21 hereto, no
deficiency for any Taxes has been proposed, asserted or assessed against High
Performance that has not been resolved and paid in full. No waiver, extension
or comparable consent has been given by High Performance regarding the
application of the statute of limitations with respect to any Taxes
outstanding, nor is any request for any such waiver or consent pending. Except
as described in Exhibit 3.21 hereto, there has been no tax audit or other
administrative proceeding or court proceeding with respect to any Taxes, nor is
any such Tax audit or other proceeding pending, nor has there been any written
notice to High Performance by any taxing authority regarding any such Tax,
audit or other proceeding or, to the best knowledge of High Performance, is any
such Tax audit or other proceeding threatened with regard to any Taxes. High
Performance is not aware of any unresolved questions, claims or disputes
concerning the liability for Taxes which would exceed the estimated reserves
established for on its books and records. For the purposes hereof, the term
"Taxes" means all taxes, charges, fees, levies or other assessments, including
without limitation, all net income, gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, profits, license, withholding, payroll,
employment, workmen's compensation, social security, unemployment, excise,
estimated, severance, stamp, occupation, property or other taxes, customs,
duties, fees, assessments or charges of any kind whatsoever including, without
limitation, all interest and penalties thereon, and additions to tax or
additional amounts imposed by any taxing authority, domestic or foreign, upon
High Performance.
3.22 EMPLOYEES. Except as described on Exhibit 3.22, (i) to the
knowledge of High Performance and Shareholders (but without their independent
investigation or inquiry), no executive employee of High Performance and no
group of High Performance's employees has any plan or
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intention to terminate his, her or its employment following the Closing; (ii)
High Performance has complied in all material respects with all laws relating
to the employment of labor, including provisions thereof relating to wages,
hours, equal opportunity, collective bargaining and the payment of social
security and other taxes; (iii) High Performance has no material labor
relations problem pending; (iv) there are no workmen's compensation, sexual
harassment, discrimination or claims pending against High Performance nor is
High Performance aware of any facts that would give rise to such claims; (v) to
the knowledge of High Performance and Shareholders, no employee of High
Performance is subject to any secrecy or non-competition agreement or any other
agreement or restriction of any kind that would impede in any way the ability
of such employee to carry out fully all activities of such employee in
furtherance of the business of High Performance; and (vi) to the knowledge of
High Performance and Shareholders, no employee or former employee of High
Performance has any claim with respect to any intellectual property rights of
High Performance.
3.23 EMPLOYEE BENEFIT PLANS.
(a) Except as provided in writing to Acquirors, with
respect to all employees and former employees of High Performance and all
dependents and beneficiaries of such employees and former employees, (i) High
Performance does not maintain or contribute to any non-qualified deferred
compensation or retirement plans, contracts or arrangements, (ii) High
Performance does not maintain or contribute to any qualified defined
contribution plans as defined in Section 3(34) of ERISA or Section 414(i) of
the Code, (iii) High Performance does not maintain or contribute to any
qualified defined benefit plans as defined in Section 3(35) of ERISA or Section
414(j) of the Code, and (iv) High Performance does not maintain or contribute
to any employee welfare benefit plans as defined in Section 3(1) of ERISA.
(b) To the extent required (either as a matter of law or
to obtain the intended tax treatment and tax benefits), all employee benefit
plans, as defined in Section 3(3) of ERISA, which
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High Performance does maintain or to which it does contribute (collectively,
the "Plans") comply in all material respects with the requirements of ERISA and
the Code. With respect to the Plans, (i) all required contributions which are
due have been made and a proper accrual has been made for all contributions due
in the current fiscal year, (ii) there are no actions, suits or claims pending,
other than routine uncontested claims for benefits, and (iii) there have been
no prohibited transactions as defined in Section 406 of ERISA or Section 4975
of the Code.
(c) High Performance does not contribute (and has not
ever contributed) to any multi-employer plan, as defined in Section 3(37) of
ERISA. High Performance has no actual or potential liabilities under Section
4201 of ERISA for any complete or partial withdrawal from a multi-employer
plan. High Performance has no actual or potential liability for death or
medical benefits after separation from employment, other than health care
continuation benefits described in Section 4980B of the Code.
3.24 EMPLOYEE HEALTH AND SAFETY. High Performance has not violated
in any material respect and has no material liability, and has not received any
written notice or charge asserting any violation of or liability under, OSHA or
any other federal or state acts (including rules and regulations thereunder)
regulating or otherwise affecting employee health and safety.
3.25 REPRESENTATIONS CONCERNING ACQUISITION STOCK. The
Shareholders make the following representations and warranties with respect to
the Acquisition Stock:
(a) Shareholders are acquiring the Acquisition Stock for
investment purposes only, not for the account of any other person and not with
a view to distribution, assignment or resale to any person. The Shareholders
will not sell, hypothecate or otherwise transfer the Acquisition Stock unless
(i) the Acquisition Stock is registered under the Securities Act of 1933, as
amended ("Act"), and registered or qualified for sale under applicable state
securities laws, or (ii) the Acquirors has received a written opinion of
counsel (which opinion and counsel are satisfactory to the Acquirors)
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that an exemption from the registration or qualification requirements of the
Act and such state laws is available.
(b) The Shareholders understand and agree that
certificates representing the Acquisition Stock will contain the following
restrictive legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE
SECURITIES ACT OF 1933, APPLICABLE STATE SECURITIES LAWS AND
THE APPLICABLE RULES AND REGULATIONS THEREUNDER.
(c) The Shareholders have received and have carefully
reviewed the representations made by Acquirors in this Agreement and all
Exhibits and documents delivered by Acquirors to High Performance and
Shareholders hereunder. All documents and information which High Performance
or the Shareholders have requested has been delivered by Acquirors. The
Shareholders have been afforded the opportunity to discuss the current and
proposed future business operations of the Acquirors with the officers and
other representatives of the Acquirors. In evaluating the suitability of an
investment in the Acquisition Stock, the Shareholders have not relied upon any
representations or other information from the Acquirors or any person acting on
its behalf other than as set forth in this Agreement or delivered to High
Performance and Shareholders in accordance with the terms of this Agreement or
in connection with the transactions contemplated hereby. The Shareholders have
carefully considered and have, to the extent they believe appropriate, obtained
the advice of their legal, tax, accounting and financial advisors concerning
the suitability of an investment in the Acquisition Stock and have determined
that the Acquisition Stock is a suitable investment.
3.26 REPRESENTATIONS AS TO KNOWLEDGE. The representations and
warranties contained in this Article III which are made to the "best
knowledge", "best of knowledge" or "knowledge" of a
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specified person are required to be made in good faith after reasonable
investigation. All references to the "knowledge of High Performance" or "best
knowledge of High Performance" shall mean to the "knowledge" or "best
knowledge" of the executive officers of High Performance holding such offices
as of the date of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIRORS
Acquirors represent and warrant to High Performance and Shareholders
that the statements contained in this Article IV are true, correct and complete
as of the date of this Agreement and will, except as otherwise expressly
provided in this Agreement, be true, correct and complete on the Closing Date.
Acquirors represent and warrant as follows:
4.1 ORGANIZATION AND QUALIFICATION OF ACQUIRORS. Each Acquiror is
a corporation duly organized, validly existing and in good standing under the
laws of the State of North Carolina, and is duly qualified and authorized to do
business and is in good standing in each jurisdiction, if any, in which the
nature of the business conducted by it or the properties owned, leased or
operated by it makes such qualification necessary. Each Acquiror has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Copies of the Articles of
Incorporation and Bylaws of the Acquirors, which have been delivered to
Shareholders and attached hereto as Exhibits 4.1(a) and 4.1(b), are complete
and correct, and Acquirors are not in default under or in violation of any
provision of their Articles of Incorporation or Bylaws. The minute book of
each Acquiror (containing the records of all meetings of the shareholders,
Board of Directors and any management committees of the Acquirors), as
delivered to High Performance and Shareholders, is correct and complete.
4.2 AUTHORIZATION. This Agreement, the Note, Xxxxxx Agreement,
Xxxxx Agreement, Consulting Agreement, Registration Rights Agreement and Pledge
Agreement (collectively, the
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"Purchaser Documents") and the consummation of the transactions contemplated
thereby have been (or, with respect to Purchaser Documents delivered at
Closing, shall be at Closing) duly and validly executed and delivered by
Acquirors and the agreements, representations and warranties contained therein
constitute valid and binding obligations, representations and warranties of
Acquirors enforceable in accordance with their terms. Attached hereto as
Exhibit 4.2 is a Certificate which shall evidence the approval and
authorization of the Purchaser Documents by the Board of Directors of
Acquirors.
4.3 NO CONFLICTING AGREEMENTS. The execution and delivery of the
Purchaser Documents by Acquirors do not, and consummation by Acquirors of the
transactions contemplated thereby will not, (i) violate any existing term or
provision of any law, regulation, order, writ, judgment, injunction or decree
applicable to them, (ii) conflict with or result in a breach of any of the
terms, conditions or provisions of their Articles of Incorporation or Bylaws or
of any agreement or instrument to which they are a party, or (iii) result in
the creation or imposition of any lien, charge, security interest, encumbrance,
restriction or claim upon their assets.
4.4 COMPLIANCE WITH APPLICABLE LAW. Except as set forth in
Exhibit 4.4, Acquirors have not received any written notice of any violation,
probable violation or default by them under any applicable law, regulation or
order of any governmental department, commission, board or agency or
instrumentality, domestic or foreign, having jurisdiction over their operations
which could materially adversely affect the business, operations, financial
condition, properties or assets of Acquirors, or the ability to consummate the
transaction contemplated hereby.
4.5 CONSENTS AND APPROVALS. The execution and delivery by
Acquirors of the Purchaser Documents, and the performance by Acquirors of their
obligations thereunder, do not require Acquirors to obtain any consent,
approval, agreement, or action of, or make any filing with or give any notice
to, any corporation, person, entity, or firm or any public, governmental or
judicial
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authority except (i) such as have been duly obtained or made, as the case may
be, and or will be duly obtained and made and in full force and effect as of
the Closing, (ii) those as to which the failure to obtain would have no
material adverse effect on the future business performance of Acquirors or the
transactions contemplated hereby.
4.6 SUBSIDIARIES. Except as set forth in Exhibit 4.6 attached
hereto, Acquirors do not own, have an ownership interest in, or control any
corporation, partnership, proprietorship or other entity.
4.7 LITIGATION. Except as described in Exhibit 4.7 attached
hereto, there are no actions, proceedings or investigations pending or, to the
knowledge of Acquirors, threatened against Acquirors before any court or
administrative agency which if resolved adversely to Acquirors would result in
any material adverse change in the operations or financial condition of
Acquirors other than as identified therein.
4.8 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Acquirors directly
with representatives of High Performance and Shareholders, without the
intervention of any person in such manner as to give rise to any valid claim by
any person against High Performance or Shareholders for a finder's fee,
brokerage commission, or similar payment.
4.9 FINANCIAL STATEMENTS AND PERIODIC REPORTS. Acquirors have
delivered to High Performance and Shareholders copies of the following
documents relating to the Parent: definitive Prospectus dated April 16, 1997;
Quarterly Reports on Form 10-QSB for each of the quarters ended March 31, 1997
and June 30, 1997; and Current Report on Form 8-K filed with the Securities and
Exchange Commission on or about July 14, 1997 (collectively, the "SEC Reports;"
collectively, the financial statements of the Parent contained in the SEC
Reports are referred to herein as the "Parent Financial Statements"). The
Parent Financial Statements are based upon the information contained in the
books and records of Parent and fairly and accurately present the financial
condition of Parent
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as of the dates thereof and results of operations for the periods referred to
therein. The monthly financial statements generated by Parent from and after
June 30, 1997 will be prepared on a basis consistent with the methods and
procedures used to prepare the Financial Statements. If requested by
Shareholders, Parent will deliver such monthly financial statements to
Shareholders from and after the period ended June 30, 1997 within 15 days after
the end of each month from the date hereof to Closing.
4.10 ABSENCE OF UNDISCLOSED OR CONTINGENT LIABILITIES. Acquirors
have no liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise, whether due or to become due, whether known or unknown, and
regardless of when asserted) except as otherwise set forth the Parent Financial
Statements, the monthly financial statements which may be delivered pursuant to
Article 4.9 or on Exhibit 4.10 attached hereto.
4.11 NO MATERIAL ADVERSE CHANGES. Since June 30, 1997, there has
been no change materially adverse to Acquirors in their assets, financial
condition, gross profit operating results, customer, employee or supplier
relations, business condition or prospects, except as otherwise disclosed on
Exhibit 4.11 hereto.
4.12 ABSENCE OF DEVELOPMENTS. Since the date of the Term Sheet by
and between High Performance and Parent and until Closing, and except as
otherwise required or contemplated by the proposed transactions of Parent set
forth on Exhibit 5.3 attached hereto, Acquirors have and will conduct their
businesses and operations only in the regular and ordinary course; maintain
reasonable business insurance; commit no waste of assets; not dispose or
otherwise change in any material respect the nature of any assets except to the
extent that cash or accounts receivable are increased; not create or suffer to
exist any material lien, charge or encumbrance on any asset or incur any
indebtedness for borrowed money (other than in the ordinary course) which is
secured by their
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assets; and will use their reasonable efforts to maintain and preserve its
business organization intact and maintain its relationships with suppliers,
employees, customers and others.
4.13 TAX MATTERS.
(a) The Acquirors have filed all Tax Returns that they
have been required to file. All such Tax Returns were correct and complete in
all material respects. All Taxes owed by the Acquirors (whether or not shown
on any Tax Return) have been paid. The Acquirors are not currently the
beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where the Acquirors
do not file Tax Returns that they are or may be subject to taxation by that
jurisdiction. There are no encumbrances on any of the assets of the Acquirors
that arose in connection with any failure (or alleged failure) to pay any
Taxes.
(b) The Acquirors have withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor or other third party.
(c) To the knowledge of Acquirors, there is no basis for
any authority to assess any additional Taxes for any period for which Tax
Returns have been filed by the Acquirors. There is no dispute or claim
concerning any liability for Taxes of the Acquirors (i) claimed or raised by
any authority in writing or orally with any executive officer or director of
the Acquirors, or (ii) as to which any such person has knowledge based upon
personal contact with any agent of such authority.
(d) No stock of HPAC will be issued in the Merger.
(e) Parent is and will be, through the time of the
Merger, in control of HPAC within the meaning of Section 368(c) of the Code.
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(f) Parent has no plan or intention to cause HPAC after
the Merger to issue additional shares of the stock of HPAC that would result in
Parent losing control of HPAC within the meaning of Section 368(c) of the Code.
(g) Parent has no plan or intention to reacquire any of
its stock issued in the Merger.
(h) HPAC was formed solely for the purpose of engaging in
the transactions contemplated by this Agreement. Parent is the direct owner of
all of the outstanding stock of HPAC. Parent has no plan or intention after
the Merger to liquidate; to merge either HPAC into another corporation; to make
any extraordinary distribution in respect of its stock in HPAC; to sell or
otherwise dispose of the stock of HPAC; to cause HPAC to sell or otherwise
dispose of any of the assets of High Performance acquired in the Merger, except
for dispositions made in the ordinary course of business or transfers described
in section 368(a)(2)(c) of the Code.
(i) As of the Effective Date, there will be no options,
warrants, or other rights, agreements, arrangements, or commitments to which
HPAC is a party or any character relating to the issued or unissued capital
stock of, or other equity interests in, HPAC or obligating HPAC to grant,
issue, or sell any shares of the capital stock of, or other equity interests
in, HPAC, by sale, lease, license or otherwise. There are no obligations,
contingent or otherwise, of HPAC to repurchase, redeem or otherwise acquire any
shares of the capital stock of HPAC.
(j) As of the date hereof and the Effective Date, except
for obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement, HPAC has not
and will not have incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any business activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any person.
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(k) Immediately after the Merger, Parent intends to cause
HPAC to continue the historic business of High Performance or use a significant
portion of the historic business assets of High Performance in a business.
(l) Neither HPAC nor Parent is an investment company as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
4.14 TAX NOTICES. Except as set forth on Exhibit 4.14 attached
hereto, no deficiency for any Taxes has been proposed, asserted or assessed
against Acquirors that has not been resolved and paid in full. No waiver,
extension or comparable consent has been given by Acquirors regarding the
application of the statute of limitations with respect to any Taxes
outstanding, nor is any request for any such waiver or consent pending. Except
as described in Exhibit 4.14 hereto, there has been no tax audit or other
administrative proceeding or court proceeding with respect to any Taxes, nor is
any such Tax audit or other proceeding pending, nor has there been any written
notice to Acquirors by any taxing authority regarding any such Tax, audit or
other proceeding or, to the best knowledge of Acquirors, is any such Tax audit
or other proceeding threatened with regard to any Taxes. Acquirors are not
aware of any unresolved questions, claims or disputes concerning the liability
for Taxes which would exceed the estimated reserves established for on its
books and records. For the purposes hereof, the term "Taxes" means all taxes,
charges, fees, levies or other assessments, including without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, workmen's
compensation, social security, unemployment, excise, estimated, severance,
stamp, occupation, property or other taxes, customs, duties, fees, assessments
or charges of any kind whatsoever including, without limitation, all interest
and penalties thereon, and additions to tax or additional amounts imposed by
any taxing authority, domestic or foreign, upon Acquirors.
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4.15 EMPLOYEES. Except as described on Exhibit 4.15 attached
hereto, (i) to the knowledge of Acquirors (but without their independent
investigation or inquiry), no executive employee of Acquirors and no group of
Acquirors' employees has any plan or intention to terminate his, her or its
employment following the Closing; (ii) Acquirors have complied in all material
respects with all laws relating to the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining and the payment of social security and other taxes; (iii) Acquirors
have no material labor relations problem pending; (iv) there are no workmen's
compensation, sexual harassment, discrimination or claims pending against
Acquirors nor are Acquirors aware of any facts that would give rise to such
claims; (v) to the knowledge of Acquirors, no employee of Acquirors is subject
to any secrecy or non-competition agreement or any other agreement or
restriction of any kind that would impede in any way the ability of such
employee to carry out fully all activities of such employee in furtherance of
the business of Acquirors; and (vi) to the knowledge of Acquirors, no employee
or former employee of Acquirors has any claim with respect to any intellectual
property rights of Acquirors.
4.16 EMPLOYEE BENEFIT PLANS.
(a) Except as provided in writing to High Performance and
Shareholders, with respect to all employees and former employees of Acquirors
and all dependents and beneficiaries of such employees and former employees,
(i) Acquirors do not maintain or contribute to any non-qualified deferred
compensation or retirement plans, contracts or arrangements, (ii) Acquirors do
not maintain or contribute to any qualified defined contribution plans as
defined in Section 3(34) of ERISA or Section 414(i) of the Code, (iii)
Acquirors do not maintain or contribute to any qualified defined benefit plans
as defined in Section 3(35) of ERISA or Section 414(j) of the Code, and (iv)
Acquirors do not maintain or contribute to any employee welfare benefit plans
as defined in Section 3(1) of ERISA.
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(b) To the extent required (either as a matter of law or
to obtain the intended tax treatment and tax benefits), all employee benefit
plans, as defined in Section 3(3) of ERISA, which Acquirors do maintain or to
which they do contribute (collectively, the "Plans") comply in all material
respects with the requirements of ERISA and the Code. With respect to the
Plans, (i) all required contributions which are due have been made and a proper
accrual has been made for all contributions due in the current fiscal year,
(ii) there are no actions, suits or claims pending, other than routine
uncontested claims for benefits, and (iii) there have been no prohibited
transactions as defined in Section 406 of ERISA or Section 4975 of the Code.
(c) Acquirors do not contribute (and have not ever
contributed) to any multi-employer plan, as defined in Section 3(37) of ERISA.
Acquirors have no actual or potential liabilities under Section 4201 of ERISA
for any complete or partial withdrawal from a multi-employer plan. Acquirors
have no actual or potential liability for death or medical benefits after
separation from employment, other than health care continuation benefits
described in Section 4980B of the Code.
4.17 EMPLOYEE HEALTH AND SAFETY. Acquirors have not violated and
have no liability, and have not received a notice or charge asserting any
violation of or liability under, OSHA or any other federal or state acts
(including rules and regulations thereunder) regulating or otherwise affecting
employee health and safety.
4.18 REPRESENTATIONS AS TO KNOWLEDGE. The representations and
warranties contained in this Article IV which are made to the "best knowledge",
"best of knowledge" or "knowledge" of a specified person are required to be
made in good faith after reasonable investigation. All references to the
"knowledge of Acquirors" or the "best knowledge of Acquirors" shall mean to the
"knowledge" or "best knowledge" of the executive officers as of the date of
this Agreement.
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ARTICLE V
PRE-CLOSING COVENANTS
Each party hereby covenants and agrees that, between the date hereof
and the Closing, it will comply with the provisions of this Article V, except
to the extent the other parties may otherwise consent in writing.
5.1 INSPECTION OF PROPERTIES AND BOOKS. Each party shall assist
any individual or individuals designated by the other parties with reasonable
prior notice to visit or inspect any property, at reasonable times acceptable
to both parties, including books of accounts and records, to make extracts or
copies of such books and records and to discuss its affairs, finances and
accounts, and shall use its best efforts to obtain access to its accountants'
work papers. The parties acknowledge and agree that each party shall furnish
to the other Evaluation Material which shall be used in connection with a due
diligence review. The parties agree that they shall treat the Evaluation
Material confidentially, and shall not disclose to any party, except as
otherwise set forth herein, the Evaluation Material or any information set
forth therein; provided, however, that each party is authorized to disclose the
Evaluation Material to its investment banker, lawyers and accountants for their
review in connection with the transactions contemplated by this Agreement.
Each party shall instruct its officers, directors, partners, employees, agents
or representatives of the confidential nature of the Evaluation Material and
shall be responsible for insuring that the Evaluation Material is kept
confidential by such persons. In the event the Closing is not consummated, all
Evaluation Material shall be returned to the respective party, within ten days
of a request therefor, with the understanding that the receiving party shall
retain no copies of the Evaluation Material and shall not disclose to any other
person the Evaluation Material or information contained therein, with the
exception of (i) information which becomes generally available to the public
other than as a result of disclosure by the receiving party, or (ii)
information included in the Evaluation Material which is first disclosed by a
third party not bound by a confidentiality agreement with either party
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and (iii) in the case of Parent, information required to be disclosed by Parent
in any registration statement or periodic report under the disclosure
requirements of applicable federal and state securities laws.
5.2 OTHER CONTRACTS. Except in the ordinary course of business,
no party shall enter into or become subject to any agreement, transaction, or
commitment which would restrict or impair in any material respect the
obligation or ability of such party to comply with all of the terms of this
Agreement.
5.3 ONGOING OPERATION. Except for certain transactions proposed
to be entered into by Parent, as set forth on Exhibit 5.3 attached hereto, each
party shall carry on its business diligently, in substantially the same manner
as heretofore conducted and in accordance in all material respects with all
applicable laws, rules and regulations and such party's past custom and
industry practice. Notwithstanding the foregoing, the parties acknowledge that
as a result of the presence of Parent's employees and representatives on the
business premises of High Performance and the efforts expended by Shareholders
on behalf of Parent, High Performance and Shareholders shall be obligated to
use their reasonable efforts, in the context of the foregoing conditions, to
preserve the business of High Performance in its ordinary course.
5.4 INDEBTEDNESS. Except as may be contemplated in connection
with the transactions identified on Exhibit 5.3, the parties will not create,
incur, assume, guarantee or otherwise become liable with respect to any
indebtedness related or connected with, or secured by, its assets, except as
consented to in writing by the other parties hereto.
5.5 RECORDS. Each party shall maintain its books, accounts and
records in the usual, regular and ordinary manner.
5.6 ARTICLES OF INCORPORATION; BYLAWS. Acquirors and High
Performance will not amend their Articles of Incorporation or Bylaws or
otherwise alter their corporate existence or powers.
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5.7 DISTRIBUTIONS OR DIVIDENDS. Other than an ordinary course
distribution to Shareholders in the amount of $114,000 and a bonus to be paid
to Xxxxx Xxxxxx in the amount of $58,000, the parties will not declare or pay
any dividend, distribution or payment to their shareholders, or repurchase any
shares of their capital stock, without the prior written consent of the other
parties.
5.8 NOTICE OF BREACH. Each party, in the event of and promptly
after becoming aware of the occurrence or threatened occurrence of any event
which would cause or constitute a material breach of any warranty,
representation, covenant or agreement of such party contained herein, shall
give prompt notice in writing of such event or threatened event to the other
parties and use all reasonable efforts to prevent or promptly remedy such
breach or threatened breach.
5.9 NONDISCLOSURE. The parties agree that the contents and timing
of any publicity release, public notice filing or any other communication (a
"Communication"), whether written or oral, identifying this proposed
transaction shall be agreed upon in advance by the parties.
5.10 INSURANCE. High Performance and Acquirors shall not cancel or
terminate their current insurance policies or cause any of the coverage
thereunder to lapse, unless simultaneously with such termination, cancellation
or lapse, replacement policies providing coverage equal to or greater than the
coverage under the cancelled, terminated or lapsed policies for substantially
similar premiums are in full force and effect.
5.11 PRESERVATION OF BUSINESS. High Performance, Acquirors and
their respective officers, directors, and employees shall (i) use their best
efforts to preserve intact such party's business organization and goodwill,
keep available the services of their officers and employees and maintain
satisfactory relationships with suppliers, distributors, customers and others
with whom they have business relationships, (ii) not intentionally take any
action which would render, or which reasonably may be expected to render, any
representation or warranty made by them in the Agreement untrue
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at the Closing, (iii) notify the other parties of any emergency or other change
in the normal course of its business or in the operation of its properties and
of any governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated) if such emergency,
change, complaint, investigation or hearing would be material, individually or
in the aggregate, to its business, operations or financial condition or their
ability to consummate the transactions contemplated by this Agreement, and (iv)
promptly notify the other parties in writing if it or its representatives shall
discover that any representation or warranty made by it in this Agreement was
when made, or has subsequently become, untrue in any material respect.
Notwithstanding the foregoing, the parties acknowledge that as a result of the
presence of Parent's employees and representatives on the business premises of
High Performance and the efforts expended by Shareholders on behalf of Parent,
High Performance and Shareholders shall be obligated to use their reasonable
efforts, in the context of the foregoing conditions, to preserve the business
of High Performance in its ordinary course.
5.12 NO NEGOTIATIONS. Neither High Performance, Shareholders nor
any of their employees or agents shall cause High Performance or Shareholders
to, directly or indirectly, solicit, initiate or encourage submission of any
proposal or offer from any person or entity (including any of its or their
partners or employees) relating to any liquidation, dissolution,
recapitalization, merger, consolidation or acquisition or the purchase of all
or a material portion of the assets of, or any equity interest in, High
Performance, or any similar transaction or business combination involving High
Performance, or participate in any negotiations regarding, or furnish to any
other person, any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person or entity to do or seek any of the foregoing. High
Performance and Shareholders shall within five business days notify Acquirors
of any such written proposal or offer, or any written inquiry from any person
with respect thereto, and
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shall promptly provide Acquirors with such information regarding such proposal,
offer or inquiry as Acquirors may request.
5.13 ASSIGNMENT OF CONTRACTS, LEASES AND OTHER AGREEMENTS. High
Performance and Shareholders agree that prior to the Closing, they will use
their best efforts, but shall not be obligated to secure the approval of all
parties with whom High Performance has a License Agreement (as set forth on
Exhibit 3.11), customer, supplier or other agreements to the extent required
for such contracts, leases, agreements or rights to continue in full force and
effect after the consummation of the transactions contemplated hereby.
5.14 BEST EFFORTS. Each party agrees to use its best efforts in
good faith to satisfy its respective requirements and conditions to Closing and
to consummate the transactions provided for herein as expeditiously as
possible. Neither party will take or knowingly permit to be taken any action
that would be in breach of the terms or provisions of this Agreement or that
would cause any of its representations and warranties contained herein to be or
become untrue in any material respect.
5.15 ADDITIONAL DISCLOSURE. From the date of this Agreement to and
including the Closing Date, each party promptly upon the occurrence thereof,
will advise the other party of each event subsequent to the date hereof which
would have had to be disclosed on their respective schedules or exhibits to
this Agreement had it occurred prior to the date hereof.
5.16 CORPORATE REORGANIZATION. The parties hereto agree that the
Merger is intended to qualify as a corporate reorganization under Section
368(a)(2)(D) of the Internal Revenue Code, and each party will take all
reasonable steps which may be necessary to ensure that the Merger qualifies as
such.
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ARTICLE VI
POST-CLOSING COVENANTS
The parties agree as follows with respect to the period following the
Closing.
6.1 FURTHER ASSURANCES. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each party will take such further action (including the execution
and delivery of such further instruments and documents) as the other party
reasonably may request, all at the sole cost and expense of the requesting
party (unless the requesting party is entitled to indemnification therefor
under Article IX).
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
7.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF HIGH PERFORMANCE AND
SHAREHOLDERS. The obligations of High Performance and Shareholders to
consummate and effect this Agreement are subject to the satisfaction in all
material respects, on or before the Closing Date, of the following conditions
(unless waived by High Performance and Shareholders in writing in the manner
provided in Paragraph 7.1(d) hereof):
(a) Representations and Warranties of Acquirors;
Performance by Acquirors. The representations and warranties of Acquirors set
forth in Article IV hereof shall (except where stated to be as of an earlier
date) be accurate in all material respects on and as of the Closing as though
made on and as of the Closing, except for any changes resulting from activities
or transactions which may have taken place after the date hereof which are
expressly permitted by this Agreement or which have been entered into in the
ordinary course of business and are not expressly prohibited by this Agreement;
Acquirors shall have, in all material respects, performed all obligations and
complied with all covenants required to be performed or to be complied with by
Acquirors under this Agreement prior to or at the Closing Date including the
delivery of all documents required at the Closing; and Shareholders shall have
received a certificate dated the Closing and signed by the
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President of Parent and HPAC to the effect that the representations and
warranties made by them in this Agreement are true and accurate in all material
respects as of the Closing (or, where applicable, as of the earlier specified
date), which certificate shall be in the form of Exhibit 7.1(a).
(b) Action. All action necessary to authorize the
execution, delivery and performance of the Purchaser Documents by Acquirors and
the consummation of the transactions contemplated thereby shall have been duly
and validly taken by Acquirors. Acquirors shall have furnished Shareholders
with copies of all consents or resolutions adopted or executed by them in
connection with such actions, certified by their respective Secretary.
(c) No Action or Proceeding. As of the Closing, no
action or proceeding by any public authority or person shall be pending before
any court or administrative body or overtly threatened to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the transactions
contemplated herein. There shall not be threatened, instituted or pending any
action or proceeding, before any court or governmental authority or agency,
domestic or foreign, (i) challenging or seeking to make illegal, or to delay or
otherwise directly or indirectly restrain or prohibit, the consummation of the
transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions, (ii) seeking to prohibit direct or indirect
ownership or operation by Acquirors of all or a material portion of the
business or assets of High Performance, or to compel High Performance or
Acquirors to dispose of or to hold separately all or a material portion of the
business or assets of High Performance, as a result of the transactions
contemplated hereby, (iii) seeking to invalidate or render unenforceable any
material provision of this Agreement or any of the other agreements attached
hereto as Exhibits or schedules, or otherwise contemplated hereby, (iv) seeking
relief against Acquirors under any federal or state law or regulation relating
to bankruptcy, insolvency, reorganization or moratorium or creditors' rights
generally, (v) otherwise relating to and materially adversely affecting the
transactions contemplated hereby, or (vi) which
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could result in any material adverse change in the business, operations,
financial condition or properties of Acquirors.
(d) Waiver of Conditions Precedent. High Performance and
Shareholders may waive any or all of the conditions precedent set forth in this
Article VII, either prospectively or retroactively, by giving written notice of
such waiver to Acquirors. No waiver of any condition precedent pursuant to
this paragraph 7.1(d) shall, unless otherwise expressly stated in such written
notice of waiver, extend to any covenant or agreement contained herein or to
any other condition precedent.
(e) Opinion of Counsel. High Performance and
Shareholders shall have received from counsel to Acquirors, an opinion dated
the Closing, to the following effect:
(i) Each Acquiror is a corporation duly
organized, validly existing and in good standing under the laws of the
State of North Carolina, and is duly qualified and authorized to do
business and is in good standing in each jurisdiction, if any, in
which the nature of the business conducted by it or the properties
owned, leased or operated by it makes such qualification necessary.
(ii) Execution and delivery of each of the
Purchaser Documents and the consummation of the transactions
contemplated thereby have been duly and validly authorized by all
necessary action, corporate and otherwise, by Acquirors. Each of the
Purchaser Documents is a valid and binding obligation of Acquirors,
enforceable against Acquirors in accordance with its terms except as
enforcement may be limited by general equitable principles or
bankruptcy, insolvency or similar laws affecting creditor's rights
generally.
(iii) The Acquisition Shares, when issued in
accordance with the terms and conditions of the Agreement, shall be
validly issued, fully-paid and nonassessable and, shall
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not be subject to any pre-emptive rights or other rights to subscribe
for or purchase securities of the Company.
(iv) The execution and delivery of each of the
Purchaser Documents will not violate or conflict with the Articles of
Incorporation or ByLaws of Acquirors or any agreement known to such
counsel to which Acquirors are a party or by which Acquirors or their
assets are bound.
(v) No consent, approval, authorization or order
of, and no notice to or filing with, any governmental agency or body
or any court is required to be obtained or made by Acquirors in
connection with the transactions contemplated by the Purchaser
Documents to this Agreement except such as has been obtained or made.
(vi) Except as disclosed in the Agreement or the
exhibits or schedules hereto, such counsel is not aware of any pending
or threatened action, suit, proceeding or investigation before any
court or any public, regulatory or governmental agency, authority or
body, involving Acquirors or any of their officers or directors, in
their capacities as, and such counsel does not know of any legal
matter or government proceedings regarding Acquirors.
(f) Merger. All appropriate steps shall have been taken
by the parties hereto such that upon the filing of the documents described in
Article 2.3, the Merger shall be properly consummated in accordance with North
Carolina law.
7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRORS. The
obligation of Acquirors to consummate and effect this Agreement are subject to
the satisfaction in all material respects, on or before the Closing Date, of
the following conditions (unless waived by Acquirors in writing in the manner
provided in paragraph 7.2(f) hereof):
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(a) Representations and Warranties of High Performance
and Shareholders; Performance by High Performance and Shareholders. The
representations and warranties of High Performance and Shareholders set forth
in Article III hereof shall (except where stated to be as of an earlier date)
be accurate in all material respects on and as of the Closing as though made on
and as of the Closing, except for any changes resulting from activities or
transactions which may have taken place after the date hereof which are
expressly permitted by this Agreement or which have been entered into in the
ordinary course of business and are not expressly prohibited by this Agreement;
High Performance and Shareholders shall have, in all material respects,
performed all obligations and complied with all covenants required to be
performed or to be complied with by them under this Agreement prior to the
Closing; and Acquirors shall have received a certificate dated as of the
Closing and signed by the President of High Performance and each of the
Shareholders to the effect that the representations and warranties made by the
President of High Performance and each of the High Performance and Shareholders
in this Agreement are true and accurate in all material respects as of the
Closing (or, where applicable, as of the earlier specified date) in the form
attached as Exhibit 7.2(a).
(b) Action. All action necessary to authorize the
execution, delivery and performance of this Agreement by High Performance and
Shareholders and the consummation of the transactions contemplated hereby shall
have been duly and validly taken by High Performance and Shareholders. High
Performance shall have furnished Acquirors with copies of all consents or
resolutions adopted or executed by High Performance in connection with such
actions, certified by the secretary of High Performance.
(c) No Action or Proceeding. As of the Closing, no
action or proceeding by any public authority or person shall be pending before
any court or administrative body or overtly threatened to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the
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transactions contemplated herein. There shall not be threatened, instituted or
pending any action or proceeding, before any court or governmental authority or
agency, domestic or foreign, (i) challenging or seeking to make illegal, or to
delay or otherwise directly or indirectly restrain or prohibit, the
consummation of the transactions contemplated hereby or seeking to obtain
material damages in connection with such transactions, (ii) seeking to prohibit
direct or indirect ownership or operation by Acquirors of all or a material
portion of the business or assets of High Performance, or to compel Acquirors
or High Performance to dispose of or to hold separately all or a material
portion of the business or assets of High Performance, as a result of the
transactions contemplated hereby, (iii) seeking to require direct or indirect
transfer or sale by Acquirors of any of the assets of High Performance, (iv)
seeking to invalidate or render unenforceable any material provision of this
Agreement or any of the other agreements attached hereto as Exhibits or
schedules, or otherwise contemplated hereby, (v) seeking relief against
Shareholders under any federal or state law or regulation relating to
bankruptcy, insolvency, reorganization or moratorium or creditors' rights
generally, (vi) otherwise relating to and materially adversely affecting the
transactions contemplated hereby, or (vii) which could result in any material
adverse change in the business, operations, financial condition or properties
of High Performance.
(d) No Adverse Changes. There shall have been no event
or change occurring between the execution of this Agreement and the Closing
which in the aggregate had a material adverse effect on the business,
operations, financial condition or properties of High Performance.
(e) Litigation. There shall be no actions, proceedings
or investigations pending against Shareholders, High Performance or its
officers or directors before any court, any administrative agency or
administrative officer or executive, which if resolved adversely to High
Performance or Shareholders could result in any material adverse change in the
business, operations, financial condition or properties of High Performance.
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(f) Waiver of Conditions Precedent. Acquirors may waive
any or all of the conditions precedent set forth in this Article 7.2, either
prospectively or retroactively, by giving written notice of such waiver to High
Performance and Shareholders. No waiver of any condition precedent pursuant to
this paragraph 7.2(f) shall, unless otherwise expressly stated in such written
notice of waiver, extend to any other covenant or agreement contained herein or
to any other condition precedent.
(g) Damage. There shall have been no damage, destruction
or loss of or to any property or properties owned or used by High Performance,
whether or not covered by insurance which, in the aggregate, has or would be
reasonably likely to have, a material adverse effect on High Performance.
(h) Opinion of Counsel. Acquirors shall have received
from counsel to High Performance and Shareholders, an opinion dated the
Closing, to the following effect:
(i) High Performance is a corporation duly
organized, validly existing and in good standing under the laws of the
State of North Carolina and is duly qualified and authorized to do
business and is in good standing in each jurisdiction, if any, in
which the nature of the business conducted by it or the properties
owned, leased or operated by it makes such qualification necessary
(ii) The authorized capital stock of High
Performance consists of 10,000 shares of Common Stock, $.01 par value
per share. As of the Closing Date, there are 1,147 shares of Common
Stock issued and outstanding, all of which have been duly and validly
authorized and issued and are fully paid and nonassessable.
(iii) Execution and delivery of the Agreement and
the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary action by High
Performance and Shareholders. The Agreement is a valid and binding
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obligation of High Performance and Shareholders, enforceable against
them in accordance with its terms except as enforcement may be limited
by general equitable principles or bankruptcy, insolvency or similar
laws affecting creditor's rights generally.
(iv) Except as disclosed in this Agreement or the
Exhibits hereto, the execution and delivery of the Agreement and the
performance by High Performance and Shareholders of their obligations
hereunder will not violate or conflict with the Articles of
Incorporation or Bylaws of High Performance or, to the knowledge of
such counsel, any agreement or instrument to which High Performance or
Shareholders is a party or by which Shareholders or the High
Performance Stock are bound.
(v) No consent, approval, authorization or order of,
and no notice to or filing with, any governmental agency or body or
any court is required to be obtained or made by High Performance or
Shareholders in connection with the transaction provided for herein,
except such as have been obtained or made.
(i) Merger. All appropriate steps shall have been taken
by the parties hereto such that upon the filing of the documents described in
Article 2.3, the Merger shall be properly consummated in accordance with North
Carolina law.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations, warranties, covenants and agreements made by the
respective parties in this Agreement or in a certificate executed and delivered
in connection with the transactions contemplated hereby shall survive the
Closing for a period of eighteen (18) months. No legal remedy, at law or in
equity, shall be available with respect to any loss, liability, or breach of
agreement or warranty or misrepresentation if the party alleging such loss,
liability, breach, or misrepresentation had actual knowledge of the existence,
nature and extent thereof on the Closing and, despite such knowledge, proceeded
with the Closing without objection.
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ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION. Subject to the provisions of Article VIII
and this Article IX, High Performance and Shareholders, jointly and severally,
agree to indemnify in respect of, and hold Acquirors harmless against, any and
all damages, claims, deficiencies, losses, and expenses (collectively
"Damages") resulting from any material misrepresentation, breach of warranty,
or nonfulfillment or failure to perform any covenant or agreement on the part
of High Performance or Shareholders made as a part of or contained in this
Agreement or in any certificate executed and delivered pursuant to this
Agreement or in connection with the transactions contemplated hereby, except
for Damages resulting from any such misrepresentation, breach of warranty or
nonfulfillment or failure to perform any such covenant or agreement known to
Acquirors and waived in writing by Acquirors as of the Closing. Subject to the
provisions of Article VIII and this Article IX, Acquirors agree to indemnify in
respect of, and hold Shareholders and High Performance and High Performance's
officers, directors, shareholders, employees and agents harmless against, any
and all Damages resulting from any material misrepresentation, breach of
warranty, or nonfulfillment or failure to perform any covenant or agreement on
the part of Acquirors made as a part of or contained in this Agreement or in
any certificate executed and delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby except for Damages
resulting from any such misrepresentation, breach of warranty or nonfulfillment
or failure to perform any such covenant or agreement known to High Performance
and Shareholders and waived in writing by High Performance and Shareholders as
of the Closing. The party claiming indemnification hereunder is hereinafter
referred to as the "Indemnified Party" and the party against whom such claims
are asserted hereunder is hereinafter referred to as the "Indemnifying Party".
Damages for which a claim or action may be asserted hereunder are hereinafter
referred to as a "Loss".
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9.2 LIMITATION OF LIABILITY. No party shall be liable to any
other party to this Agreement except to the extent that the aggregate amount of
Losses for which they would otherwise (but for this provision) be liable under
this Article X exceeds in the aggregate the sum of $100,000 and then only to
the extent of such excess. In no event shall the aggregate liability of the
Acquirors, or the aggregate liability of the Shareholders and High Performance,
under this Article IX exceed $3.25 million.
9.3 METHOD OF ASSERTING CLAIMS. All claims for indemnification by
any Indemnified Party under this Article IX shall be asserted and resolved as
follows:
(a) In the event that any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party hereunder is
asserted against or sought to be collected from such Indemnified Party by a
third party, said Indemnified Party shall, within thirty (30) days of such
claim or demand being made, notify the Indemnifying Party of such claim or
demand, specifying the nature of and specific basis for such claim or demand
and the amount or the estimated amount thereof to the extent then feasible (the
"Claim Notice"). The estimate of Loss contained in the Claim Notice shall not
limit the amount of the Indemnifying Party's ultimate liability under the
claim. The Indemnifying Party shall not be obligated to indemnify the
Indemnified Party with respect to any such claim or demand if the Indemnified
Party fails to notify the Indemnifying Party thereof in accordance with the
provisions of this Agreement within said thirty (30) day period. The
Indemnifying Party shall have 30 days from the personal delivery or mailing of
the Claim Notice (the "Notice Period") to notify the Indemnified Party (i)
whether or not the liability of the Indemnifying Party to the Indemnified Party
hereunder with respect to such claim or demand is disputed, and (ii) whether or
not the Indemnifying Party desires, at the sole cost and expense of the
Indemnifying Party, to defend the Indemnified Party against such claim or
demand; provided, however, that any Indemnified Party is hereby authorized
prior to and during the Notice Period to file any motion,
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answer or other pleading which it shall deem necessary or appropriate to
protect its interests or those of the Indemnifying Party and not unreasonably
prejudicial to the Indemnifying Party. In the event that the Indemnifying
Party notifies the Indemnified Party within the Notice Period that it desires
to defend the Indemnified Party against such claim or demand, then, except as
hereinafter provided, the Indemnifying Party shall have the right to defend by
all appropriate proceedings, which proceedings shall be promptly settled or
prosecuted by it to a final conclusion. If the Indemnified Party desires to
participate in, but not control, any such defense or settlement it may do so at
its sole cost and expense. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any claim or demand which the Indemnifying Party elects
to contest, or, if appropriate and related to the claim in question, in making
any counterclaim against the person asserting the third party claim or demand,
or any cross complaint against any person but in any such case at the sole cost
and expense of the Indemnifying Party. No claim may be settled without the
consent of the Indemnifying Party, unless such settlement includes the complete
release of the Indemnifying Party.
(b) In the event any Indemnified Party should have a
claim against any Indemnifying Party hereunder which does not involve a claim
or demand being asserted against or sought to be collected from it by a third
party, the Indemnified Party shall send a Claim Notice with respect to such
claim to the Indemnifying Party. If the Indemnifying Party does not notify the
Indemnified Party within the Notice Period that it disputes such claim, the
amount of such claim shall be conclusively deemed a liability of the
Indemnifying Party hereunder. If the Indemnifying Party has disputed such
claim, as provided above, such dispute shall be resolved by arbitration as
provided in Article 12.11.
9.4 PAYMENT OF CLAIM. Upon the determination of the liability of
an Indemnifying Party reached in accordance with Article 9.1, 9.2 and 9.3, as
the case may be, and notice thereof to the
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Indemnifying Party, the Indemnifying Party shall within thirty (30) days after
receipt of such notice pay to the Indemnified Party the amount of such
liability.
9.5 RIGHTS AND REMEDIES . The indemnification rights of the
parties under this Article IX, the remedies available to Shareholders pursuant
to the Pledge Agreement and the remedies set forth in Sections 11.5 and 12.4 of
this Agreement are the sole and exclusive remedies of the parties for any
misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto.
ARTICLE X
AMENDMENT, TERMINATION AND BREACH
10.1 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by an instrument in writing, executed after the
date hereof, making specific reference to this Article and to each Article and
paragraph hereof to which such amendment, modification or supplement applies,
which document shall be signed by an authorized officer or partner of each
party.
10.2 TERMINATION AND ABANDONMENT. This Agreement may be terminated
and the transactions provided for by this Agreement may be abandoned without
liability on the part of any party to any other party:
(a) At any time before the Closing Date, by consent of
Acquirors, High Performance and Shareholders;
(b) Immediately prior to Closing, by Acquirors, if any of
the conditions provided for in paragraph 7.2 of this Agreement have not been
met and have not been waived by Acquirors in writing; or
(c) Immediately prior to Closing, by High Performance and
Shareholders, if any of the conditions of Paragraph 7.1 of this Agreement have
not been met and have not been waived by High Performance and Shareholders in
writing.
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In the event of the termination and abandonment of this Agreement by
any party in the manner expressly permitted by this Article X, written notice
shall forthwith be given to the other party, and, except as otherwise provided
in Article 12.4, each party shall be solely responsible to pay its own expenses
incident to the negotiation and preparation of this Agreement and the
transactions contemplated hereunder.
ARTICLE XI
CLOSING
11.1 CLOSING. The closing of this Agreement (the "Closing") shall
take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC, in
Charlotte, North Carolina at 10:00 A.M. on October 24, 1997 (the "Closing
Date"), unless a later time and date is mutually agreed upon by the parties
hereto.
11.2 SHAREHOLDERS' DELIVERIES AT CLOSING. At the Closing High
Performance and Shareholders will deliver the following documents to the
Acquirors all of which shall be reasonably satisfactory in form and substance
to the Acquirors and its counsel:
(a) Stock Certificates. One or more stock certificates
representing the High Performance Stock.
(b) Opinion of Counsel. An opinion from Xxxxxx Xxxxxxx
Xxxxxxxxx and Xxxx, counsel to High Performance and Shareholders, dated the
Closing Date, in the form described in Article 7.2 of this Agreement.
(c) Consents and Approvals. All consents, approvals and
authorizations, all notices and all registrations and filings required to be
obtained, given or made under any law, statute, rule, regulation, judgment,
order, injunction, contract, agreement or other instrument to which High
Performance or Shareholders are subject, bound or a party, or by which High
Performance or Shareholders or any of their properties are bound or subject, in
each case which is required to permit the consummation of the transactions
contemplated by this Agreement without
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contravention, violation or breach by High Performance or the Shareholders of
any of the terms thereof. Notwithstanding the foregoing, High Performance and
Shareholders shall not be obligated to deliver any third party consents to the
transfer of the License Agreements.
(d) Resolutions. Certified copy of resolutions of High
Performance authorizing the execution and delivery of this Agreement and
consummation of the transactions contemplated under this Agreement.
(e) Employment Agreements. The Xxxxx Agreement, Xxxxxx
Agreement and Consulting Agreement executed by Xxxxx X. Xxxxx, Xxxxx Xxxxxx and
Xxxxx Xxxxx, respectively, in the forms attached hereto as Exhibits 11.2(e)(i),
11.2(e)(ii) and 11.2(e)(iii).
(f) Delivery of Corporate and Business Records. All
corporate and business records of High Performance.
(g) Officer's Certificate in the form described in
Article 7.2 of this Agreement.
(h) Other documents. Such other documents, instruments,
certificates and agreements, as Acquirors and its counsel may reasonably
request.
11.3 ACQUIRORS' DELIVERIES AT CLOSING. At the Closing, Acquirors
shall deliver the following to High Performance and Shareholders, all of which
shall be in a form reasonably acceptable to High Performance, Shareholders and
their counsel:
(a) Merger Consideration. The Acquisition Stock, the
Note and the Additional Cash Consideration in the amount of $2 million in
accordance with Article 2.2(d)(i).
(b) The Registration Rights Agreement in the form
attached hereto as Exhibit 11.3(b).
(c) The Pledge Agreement, together with one or more share
certificates evidencing the Pledged Securities (as defined therein).
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(d) Consents and Approvals. All consents, approvals and
authorizations, all notices and all registrations and filings required to be
obtained, given or made under any law, statute, rule, regulation, judgment,
order, injunction, contract, agreement or other instrument to which the
Acquirors are a party, or by which it or any of their properties is bound or
subject, in each case which is required to permit the consummation of the
transactions contemplated by the Purchaser Documents without contravention,
violation or breach by the Acquirors of any of the terms thereof.
(e) Opinion of Counsel. An opinion from Berliner Xxxxxx
Xxxxxx & Xxxxxxxx, P.C., counsel to the Acquirors, dated the Closing Date, in
the form described in Article 8.1 of this Agreement.
(f) Resolutions. Certified copy of resolutions of the
Board of Directors of the Acquirors authorizing the execution and delivery of
this Agreement, the Pledge Agreement, Note and Registration Rights Agreement,
the Merger, and the other transactions contemplated hereby.
(g) Officer's Certificate in the form described in
Article 7.1 of this Agreement.
(h) Employment Agreements; Consulting Agreement. The
Xxxxx Agreement, Xxxxxx Agreement and Consulting Agreement, in each case
executed by the Parent.
(i) Other Documents. Such other documents, instruments,
certificates and agreements including without limitation, if assumed, the
assumption of the lease, as Shareholders and their counsel may reasonably
request.
11.4 ACQUIRORS' DELIVERIES ON NOVEMBER 28, 1997. On or before
November 28, 1997, Acquirors shall deliver the Cash Payment to Shareholders.
11.5 ACQUIRORS' BREACH OF NOVEMBER 28, 1997 DELIVERIES. In the
event Acquirors shall fail to make the Cash Payment on or before November 28,
1997, then the parties agree that they shall simultaneously take all actions
necessary to carry out the following steps:
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(a) The Pledged Securities shall become the property of
Shareholders in accordance with the terms and conditions of the Pledge
Agreement (provided that Shareholders shall not exercise their rights to take
ownership of the Pledged Securities until all actions set forth in this Article
11.5 are completed);
(b) The Acquisition Stock shall be returned to Parent;
(c) The Notes shall be marked "Cancelled" and returned to
Parent;
(d) The Cash Payment, to the extent paid by Acquirors,
shall be repaid to Parent;
(e) HPAC shall assume all obligations under the
Additional Cash Loan.
(f) Acquirors shall pay to Shareholders the amount to
which they would be entitled pursuant to Article 12.4 upon Acquirors' breach of
this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 NOTICE. All notices and communications required or permitted
to be given hereunder shall be in writing, signed by the sender, and delivered
by personal delivery overnight courier service or by registered or certified
mail to:
If to : Xxxxxx X. Xxxxxxx, Xx., President
Parent or HPAC Wheels Sports Group, Inc.
HP Acquisition Company
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxxxx, Esq.
Berliner Xxxxxx Xxxxxx
& Xxxxxxxx, P.C.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
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If to High Performance
or Shareholders: Xxxxx X. Xxxxx
Xxxxx X. Xxxxxx
High Performance Sports Marketing,Inc.
000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
With a copy to: Cyrus X. Xxxxxxx, Xx., Esq.
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
or such other address as shall have been furnished in writing. Receipt by, or
filing with, the respective parties of any communications shall be deemed to
have occurred for the purpose of this Agreement, when personally delivered, or
next business day if sent by overnight courier, or two days after deposit
thereof, postage prepaid, properly addressed, in the United States mail.
12.2 ENTIRE AND SOLE AGREEMENT. This Agreement, including all
Exhibits and schedules hereto (which by this reference shall incorporate herein
all such Exhibits and schedules as if more fully set forth herein), constitutes
the entire agreement between the parties and as of Closing supersedes all
agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. After Closing neither party shall be bound by or charged with any oral
or written agreements, representations, warranties, statements, promises or
understandings not specifically set forth in this Agreement or in the
certificates or documents delivered in connection herewith.
12.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, all covenants and agreements of the parties contained in this
Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the parties hereto and the heirs, personal
representatives, executors and assigns of Shareholders. This Agreement may not
be assigned by any party hereto without the prior express written consent of
the other parties hereto.
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12.4 EXPENSES. Whether or not the transactions contemplated hereby
shall be consummated, each party shall be solely responsible for payment of all
expenses incurred by it in connection with the consummation of this Agreement
and the transactions contemplated hereunder except as otherwise provided
herein.
(a) Notwithstanding the foregoing, in the event Closing
does not occur as a result of Acquirors' breach of this Agreement or Acquirors'
failure to satisfy in all material respects its obligations hereunder,
Acquirors shall reimburse High Performance and Shareholders all expenses and
costs incurred by them in connection with or as a result of the transactions
contemplated by this Agreement, including legal and accounting expenses, within
five calendar days after receiving an itemization of such expenses from High
Performance and Shareholders.
(b) In the event Closing does not occur as a result of
Shareholders' or High Performance's breach of this Agreement or their failure
to satisfy in all material respects their obligations hereunder, Shareholders
and High Performance, jointly and severally, shall be obligated to reimburse
Parent all expenses incurred by it in connection with the transactions
contemplated by this Agreement, including legal and accounting expenses, within
five calendar days after receiving an itemization of such expenses from Parent.
12.5 SEVERABILITY. Should any one or more of the provisions of
this Agreement be determined to be illegal or unenforceable, all other
provisions of this Agreement shall be given effect separately from the
provision or provisions determined to be illegal or unenforceable and shall not
be affected thereby.
12.6 GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with and governed by the laws of the State of North Carolina
without regard to conflicts of laws principles.
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12.7 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be an original, but all of
which together shall constitute one and the same Agreement.
12.8 AMENDMENTS. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing in accordance with paragraph 12.1 hereof.
12.9 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of the parties hereto, and it is
not the intention of the parties to confer third-party beneficiary rights upon
any other person or entity.
12.10 HEADINGS. The headings in this Agreement are for purposes of
convenience and easy reference only and shall not limit or otherwise affect the
meaning hereof.
12.11 DISPUTES. In the event of any dispute which arises between
the parties and which relates to the subject matter of this Agreement, the
parties acknowledge and agree that any such dispute shall be submitted for
binding arbitration in Charlotte, North Carolina in accordance with the rules
and procedures established by the American Arbitration Association or, if such
association is not then in existence, an independent association of arbitrators
which may be designated by agreement of the parties. In the event the parties
are unable to agree on an independent association of arbitrators from which
arbitrators may be drawn, either party may apply to a court of competent
jurisdiction for appointment of arbitrators, however, such application will
only be made in the event the American Arbitration Association is not then in
existence. The arbitrator(s) shall make detailed written findings to support
their award. The prevailing party in any such arbitration proceeding shall be
awarded such costs and expenses (including reasonable attorney's and expert
witness' fees) as were incurred by the prevailing party as a result of the
institution and prosecution of the arbitration
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proceeding, as well as all costs and expenses (including reasonable attorney's
and expert witness fees) to enter judgment upon or enforce any such award
including all appellate proceedings.
12.12 DELIVERY OF EXHIBITS AND SCHEDULES. All Exhibits and
schedules to be delivered by either of the parties hereto upon execution of
this Agreement which are not so delivered shall be delivered to the other party
not later than 20 days from the date of the execution of this Agreement. IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
PARENT:
WHEELS SPORTS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxx, Chairman and President
HPAC:
HP ACQUISITION COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxx, President
Shareholders:
/s/ Xxxxx X. Xxxxx
---------------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxx Xxxxxx
---------------------------------------------
Xxxxx Xxxxxx
HIGH PERFORMANCE SPORTS MARKETING, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------------------
Xxxxx X. Xxxxx, President
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TABLE OF ATTACHMENTS
EXHIBIT DESCRIPTION
------- -----------------------------------------------
2.6(c)(i) Form of Promissory Note
3.1(a) Articles of Incorporation of High Performance
3.1(b) Bylaws of High Performance
3.2 Approval Certificate of High Performance
3.3 Conflicting Agreements of High Performance and Shareholders
3.4 Noncompliance with Applicable Law by High Performance and Shareholders
3.7 Litigation of Shareholders and High Performance
3.10 Exceptions to Title of Assets
3.11 License Agreements of High Performance
3.12 Intellectual Property
3.13 Significant Customers of High Performance
3.16 Liabilities not on Financial Statements of High Performance
3.19 Leases of High Performance
3.21 Tax Notices of High Performance
3.22 Employment Matters of High Performance
4.1(a) Articles of Incorporation of Acquirors
4.1(b) Bylaws of Acquirors
4.2 Approval Certificates of Acquirors
4.4 Noncompliance with Applicable Law by Acquirors
4.6 Subsidiaries of Acquirors
4.7 Litigation of Acquirors
4.10 Liabilities Not on Financial Statements of Acquirors
4.11 Material Adverse Changes to Acquirors
4.14 Tax Notices of Acquirors
4.15 Employment Matters of Acquirors
5.3 Proposed Transactions of Parent
7.1(a) Form of Certificate of Parent and HPAC
7.2(a) Form of Certificate of High Performance and Shareholder
11.2(e)(i) Employment Agreement for Xxxxx X. Xxxxx
11.2(e)(ii) Employment Agreement for Xxxxx X. Xxxxxx
11.2(e)(iii) Consultng Agreement for Xxxxx Xxxxx
11.3(b) Registration Rights Agreement
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