Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made this
___day of July, 2002, by and between Pacific International Holdings, Inc., a
publicly-held, fully reporting corporation incorporated in Utah, but which will
engage in a redomestication merger into Interactive Motorsports and
Entertainment Corp. ("IMEC"), an Indiana corporation, and which will result in
PIH being incorporated in Indiana ("PIH") prior to closing; Perfect Line, Inc,
an Indiana corporation ("Perfect Line"); and the persons listed in Exhibit A-1
hereof who are the owners of record of all the issued and outstanding common and
preferred shares of Perfect Line who execute and deliver this Agreement
("Perfect Line Stockholders"), based on the following:
Recitals
PIH wishes to acquire all the issued and outstanding stock of Perfect Line
in exchange for stock of PIH, in a transaction intended to qualify as a tax-free
exchange pursuant to section 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended. The parties intend for this Agreement to represent the terms and
conditions of such tax-free reorganization, which Agreement the parties hereby
adopt. However, neither party is seeking tax counsel or legal or accounting
opinions on whether the transaction qualifies for tax free treatment. As used in
this Agreement, the terms PIH, PIH Common Stock and PIH Preferred Stock, also
refer to IMEC, PIH's successor by merger and to IMEC Common Stock and IMEC
Preferred Stock, respectively.
Agreement
Based on the stated premises, which are incorporated herein by
reference, and for and in consideration of the mutual covenants and agreements
hereinafter set forth, the mutual benefits to the parties to be derived
herefrom, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, it is hereby agreed as follows:
ARTICLE I
EXCHANGE OF STOCK
1.01 Exchange of Shares. On the terms and subject to the conditions set
forth in this Agreement, on the Closing Date (as defined in Section 1.05
hereof), the Perfect Line Stockholders shall assign, transfer, and deliver to
PIH, free and clear of all liens, pledges, encumbrances, charges, restrictions,
or claims of any kind, nature, or description, all issued and outstanding shares
of common and preferred shares of Perfect Line (the "Perfect Line Common Shares"
and the Perfect Line Preferred Shares respectively) held by Perfect Line
Stockholders which shares shall represent all issued and outstanding shares of
Perfect Line common and preferred stock (the Perfect Line Common Stock and the
Perfect Line Preferred Stock are hereinafter collectively referred to as the
"Perfect Line Shares"), and PIH agrees to acquire such shares on such date by
issuing and delivering in exchange therefor an aggregate of approximately
50,000,000 shares of PIH common stock, par value $0.001 per share, (the "PIH
Common Stock") for the Perfect Line common shares and approximately 4,745,456
shares of PIH preferred stock, par value $0.001 per share, (the "PIH Preferred
Stock") for the Perfect Line preferred shares. Such shares of PIH Common Stock
and PIH Preferred Stock shall be issued pro rata based on the number of Perfect
Line Common Shares and Perfect Line Preferred Shares held and as set forth
opposite the Perfect Line Stockholder's respective names in Exhibit A-1. All
shares of PIH Common Stock and the PIH Preferred Stock to be issued and
delivered pursuant to this Agreement shall be appropriately adjusted to take
into account any stock split, stock dividend, recapitalization, or similar
change in the PIH Common Stock or PIH Preferred Stock which may occur between
the date of the execution of this Agreement and the Closing Date, including any
stock split, stock dividend, recapitalization, or similar change in the PIH
Common Stock approved immediately subsequent to the Closing.
(a) Cancellation of Shares. At the Closing, 827,398 shares of the
3,651,498 shares of common stock of PIH issued and outstanding prior to the
effective date of this Agreement shall be cancelled in accordance with the
agreement attached hereto as Exhibit 1.01(a).
1.02 Delivery of Certificates by Perfect Line Stockholders. The transfer of
Perfect Line shares by the Perfect Line Stockholders shall be effected by the
delivery to PIH at the Closing (as set forth in Section 1.05 hereof) of
certificates representing the transferred shares endorsed in blank or
accompanied by stock powers executed in blank, with all signatures medallion
guaranteed and with all necessary transfer taxes and other revenue stamps
affixed and acquired at the Perfect Line Stockholders' expense.
1.03 Operation as Wholly-Owned Subsidiary. After giving effect to the
transaction contemplated hereby, PIH will own all the issued and outstanding
shares of Perfect Line and Perfect Line will be a wholly-owned subsidiary of PIH
operating under the name Perfect Line, Inc. or such other name selected by the
shareholders and management of Perfect Line.
1.04 Further Assurances. At the Closing and from time to time thereafter,
the Perfect Line Stockholders shall execute such additional instruments and take
such other action as PIH may reasonably request, without undue cost to the
Perfect Line Stockholders in order to more effectively sell, transfer, and
assign clear title and ownership in the Perfect Line Shares to PIH.
1.05 Closing and Parties. The Closing contemplated hereby shall be held at
a mutually agreed upon time and place on or before July , 2002 or on another
date to be agreed to in writing by the parties (the "Closing Date'). The
Agreement may be closed at any time following approval by a majority of the
shareholders of PIH Common Stock as set forth in Section 4.01 hereof and the
Perfect Line Stockholders as set forth in Section 5.01. The Closing may be
accomplished by wire, express mail, overnight courier, conference telephone call
or as otherwise agreed to by the respective parties or their duly authorized
representatives.
1.06 Closing Events.
(a) PIH Deliveries. Subject to fulfillment or waiver of the conditions
set forth in Article IV, PIH shall deliver to Perfect Line at Closing all
the following:
(i) A certificate of good standing from the Department of
Commerce of the State of Utah, issued as of a date within ten days
prior to the Closing Date, certifying that PIH is in good standing as
a corporation in the State of Utah
(ii) Incumbency and specimen signature certificates dated the
Closing Date with respect to the officers of PIH executing this
Agreement and any other document delivered pursuant hereto on behalf
of PIH;
(iii) Copies of the resolutions/consents of PIH's board of
directors and shareholder minutes or consents authorizing the
execution and performance of this Agreement and the contemplated
transactions, certified by the secretary or an assistant secretary of
PIH as of the Closing Date;
(iv) The certificate contemplated by Section 4.02, duly executed
by the chief executive officer of PIH;
(v) The certificate contemplated by Section 4.03, dated the
Closing Date, signed by the chief executive officer of PIH;
(vi) Certificates for 50,000,000 shares of PIH Common Stock in
the names of the Perfect Line Stockholders and in the amounts set
forth in Exhibit "A-1"; and
(vii) Certificates for 4,745,456 shares of PIH Preferred Stock in
the names of the Perfect Line Stockholders and in the amounts set
forth in Exhibit "A-1".
In addition to the above deliveries, PIH shall take all steps and actions as
Perfect Line and Perfect Line Stockholders may reasonably request or as may
otherwise be reasonably necessary to consummate the transactions contemplated
hereby.
(b) Perfect Line Deliveries. Subject to fulfillment or waiver of the
conditions set forth in Article V, Perfect Line and/or Perfect Line
Stockholder's shall deliver to PIH at Closing all the following:
(i) A certificate of good standing from the Secretary of State of
the State of Indiana, issued as of a date within ten days prior to the
Closing Date certifying that Perfect Line is in good standing as a
corporation in the State of Indiana;
(ii) Incumbency and specimen signature certificates dated the
Closing Date with respect to the officers of Perfect Line executing
this Agreement and any other document delivered pursuant hereto on
behalf of Perfect Line;
(iii) Copies of resolutions/consents of the board of directors
and of the stockholders of Perfect Line authorizing the execution and
performance of this Agreement and the contemplated transactions,
certified by the secretary or an assistant secretary of Perfect Line
as of the Closing Date;
(iv) The certificate contemplated by Section 5.02, executed by
the chief operating officer of Perfect Line; and
(v) The certificate contemplated by Section 5.03, dated the
Closing Date, signed by the chief executive officer or the chief
operating officer of Perfect Line.
In addition to the above deliveries, Perfect Line shall take all steps and
actions as PIH may reasonably request or as may otherwise be reasonably
necessary to consummate the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES OF PIH
As an inducement to, and to obtain the reliance of Perfect Line, PIH
represents and warrants as follows:
2.01 Organization. PIH is a Utah corporation; which will engage in a
redomestication merger into Interactive Motorsports and Entertainment Corp.
("IMEC"), an Indiana corporation, and which will result in PIH being
incorporated in Indiana ("PIH") prior to closing. On the Closing Date, PIH/IMEC
shall be a corporation duly organized, validly existing, and in good standing
under the laws of the State of Indiana and has the corporate power and is and
will be duly authorized, qualified, franchised, and licensed under all
applicable laws, regulations, ordinances, and orders of public authorities to
own all of its properties and assets and to carry on its business in all
material respects as it is now being conducted, and there are no other
jurisdictions in which it is not so qualified in which the character and
location of the assets owned by it or the nature of the material business
transacted by it requires qualification, except where failure to do so would not
have a material adverse effect on its business, operations, properties, assets
or condition. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not, violate any provision of PIH's articles of
incorporation or bylaws, or other agreement to which it is a party or by which
it is bound.
2.02 Approval of Agreement. PIH has full power, authority, and legal right
and have taken, or will take, all action required by law, its articles of
incorporation, bylaws, and otherwise to execute and deliver this Agreement and
to consummate the transactions herein contemplated. The board of directors of
PIH has authorized and approved the execution, delivery, and performance of this
Agreement and the transactions contemplated hereby; subject to the approval of
the PIH shareholders and compliance with state and federal corporate and
securities laws.
2.03 Capitalization. The authorized capitalization of PIH shall consist of
200,000,000 shares of common stock, $0.001 par value, and 10,000,000 shares of
preferred stock, $0.001 par value, as of the Closing Date, of which
approximately 2,825,000 shares of stock shall be issued and outstanding, prior
to issuance and cancellation of shares as set forth in Section 1.01 of this
Agreement and further subject to a split which will result in there being issued
and outstanding an aggregate total of 11,300,000 shares of PIH common stock at
the time of Closing. All issued and outstanding shares of PIH are legally
issued, fully paid, and nonassessable and not issued in violation of the
preemptive or other right of any person. There are no dividends or other amounts
due or payable with respect to any of the shares of capital stock of PIH.
2.04 Financial Statements.
(a) Included in Schedule 2.04 or otherwise available from XXXXX
through the SEC's website, xxx.xxx.xxx, are the audited balance sheet of
PIH as of December 31, 2001, and the related statements of operations,
stockholders' equity (deficit), and cash flows for the fiscal year ended
December 31, 2001, including the notes thereto, and the accompanying report
of the company's independent certified public accountant.
(b) The financial statements of PIH delivered pursuant to Section
2.04(a) have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved as
explained in the notes to such financial statements. The PIH financial
statements present fairly, in all material respects, as of their respective
dates, the financial position of PIH. PIH did not have, as of the date of
any such financial statements, except as and to the extent reflected or
reserved against therein, any liabilities or obligations (absolute or
contingent) which should be reflected therein in accordance with generally
accepted accounting principles, and all assets reflected therein presently
fairly the assets of PIH in accordance with generally accepted accounting
principles.
(c) PIH has filed or will file as the Closing Date its tax returns
required to be filed for its two most recent fiscal years. All such returns
and reports are accurate and correct in all material respect. PIH has no
material liabilities with respect to the payment of any federal, state,
county, local, or other taxes (including any deficiencies, interest, or
penalties) accrued for or applicable to the period ended on the date of the
most recent balance sheet of PIH, except to the extent reflected on such
balance sheet and all such dates and years and periods prior thereto and
for which PIH may at said date have been liable in its own right or as
transferee of the assets of, or as successor to, any other corporation or
entity, except for taxes accrued but not yet due and payable, and to the
best knowledge of PIH, no deficiency assessment or proposed adjustment of
any such tax return is pending, proposed or contemplated. To the best
knowledge of PIH, none of such income tax returns has been examined or is
currently being examined by the Internal Revenue Service and no deficiency
assessment or proposed adjustment of any such return is pending, proposed
or contemplated. PIH has not made any election pursuant to the provisions
of any applicable tax laws (other than elections that relate solely to
methods of accounting, depreciation, or amortization) that would have a
material adverse affect on PIH, its financial condition, its business as
presently conducted or proposed to be conducted, or any of its respective
properties or material assets. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any tax
return of PIH.
2.05 Outstanding Warrants and Options. At closing, PIH will have no
existing warrants, options, calls or commitments outstanding.
2.06 Due Diligence. PIH has completed its due diligence and is satisfied
with its investigation. The information concerning PIH set forth in this
Agreement and in the schedules delivered by PIH pursuant hereto is complete and
accurate in all material respects and does not contain any untrue statement of a
material fact or omit to state a material fact required to make the statements
made, in light of the circumstances under which they were made, not misleading.
PIH shall cause the information delivered by PIH pursuant hereto to Perfect Line
hereunder to be updated after the date hereof up to and including the Closing
Date.
2.07 Information. The information concerning PIH set forth in this
Agreement is complete and accurate in all material respects and does not contain
any untrue statement of a material fact or omit to state a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading. PIH shall cause the schedules delivered by it
pursuant hereto and the instruments delivered to Perfect Line hereunder to be
updated after the date hereof up to and including the Closing Date.
2.08 Absence of Certain Changes or Events. Except as set forth in this
Agreement or the schedules hereto, since the date of the most recent PIH balance
sheet described in Section 2.04 and included in the information referred to in
Section 2.07:
(a) There has not been (i) any material adverse change in the
business, operations, properties, level of inventory, assets, or condition
of PIH or (ii) any damage, destruction, or loss to PIH (whether or not
covered by insurance) materially and adversely affecting the business,
operations, properties, assets, or conditions of PIH;
(b) PIH has not (i) amended its articles of incorporation or bylaws;
(ii) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or redeem, any
of its capital stock; (iii) waived any rights of value which in the
aggregate are extraordinary or material considering the business of PIH;
(iv) made any material change in its method of management, operation, or
accounting; (v) entered into any other material transactions; (vi) made any
accrual or arrangement for or payment of bonuses or special compensation of
any kind or any severance or termination pay to any present or former
officer or employee; (vii) increased the rate of compensation payable or to
become payable by it to any of its officers or directors or any of its
employees whose monthly compensation exceeds $1,000; or (viii) made any
increase in any profit-sharing, bonus, deferred compensation, insurance,
pension, retirement, or other employee benefit plan, payment, or
arrangement made to, for, or with its officers, directors, or employees;
(c) PIH has not (i) granted or agreed to grant any options, warrants,
or other rights for its stocks, bonds, or other corporate securities
calling for the issuance thereof, (ii) borrowed or agreed to borrow any
funds or incurred, or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred in the
ordinary course of business; (iii) paid any material obligation or
liability (absolute or contingent) other than current liabilities reflected
in or shown on the most recent PIH balance sheet and current liabilities
incurred since that date in the ordinary course of business; (iv) sold or
transferred, or agreed to sell or transfer, any of its material assets,
properties, or rights (except assets, properties, or rights not used or
useful in its business which, in the aggregate have a value of less than
$5,000 or canceled, or agreed to cancel, any debts or claims (except debts
and claims which in the aggregate are of a value of less than $5,000); (v)
made or permitted any amendment or termination of any contract, agreement,
or license to which it is a party if such amendment or termination is
material, considering the business of PIH; or (vi) issued, delivered, or
agreed to issue or deliver any stock, bonds, or other corporate securities
including debentures (whether authorized and unissued or held as treasury
stock); and
(d) To the best knowledge of PIH, it has not become subject to any law
or regulation which materially and adversely affects, or in the future
would be reasonably expected to adversely affect, the business, operations,
properties, assets, or condition of PIH.
2.09 Litigation and Proceedings. There are no material actions, suits, or
administrative or other proceedings pending or, to the knowledge of PIH,
threatened by or against PIH or adversely affecting PIH or its properties, at
law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind. PIH
does not have any knowledge of any default on its part with respect to any
judgment, order, writ, injunction, decree, award, rule, or regulation of any
court, arbitrator, or governmental agency or instrumentality.
2.10 Compliance With Laws and Regulations. PIH has complied with all
applicable statutes and regulations of any federal, state, or other governmental
entity or agency thereof, except to the extent that noncompliance (i) could not
materially and adversely affect the business, operations, properties, assets, or
condition of PIH or (ii) could not result in the occurrence of any material
liability for PIH. To the best knowledge of PIH, the consummation of this
transaction will comply with all applicable statutes and regulations, subject to
the preparation and filing of any forms required by state and federal securities
laws.
2.11 Material Contract Defaults. PIH is not in default in any material
respect under the terms of any outstanding contract, agreement, lease, or other
commitment which is material to the business, operations, properties, assets, or
condition of PIH, and there is no event of default or other event which, with
notice or lapse of time or both, would constitute a default in any material
respect under any such contract, agreement, lease, or other commitment in
respect of which PIH has not taken adequate steps to prevent such a default from
occurring.
2.12 No Conflict With Other Instruments. The execution of this Agreement
and the consummation of the transactions contemplated by this Agreement will not
result in the breach of any tenant or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust, or other
material contract, agreement, or instrument to which PIH is a party or to which
any of its properties or operations are subject.
2.13 Subsidiary. PIH does not own, beneficially or of record, any equity
securities in any other entity. PIH does not have a predecessor as that term is
defined under generally accepted accounting principles or Regulation S-X
promulgated by the Securities and Exchange Commission.
2.14 PIH Schedules. PIH has delivered to Perfect Line the following
schedules, which are collectively referred to as the "PIH Schedules" and which
consist of the following separate schedules dated as of the date of execution of
this Agreement, all certified by a duly authorized officer of PIH as complete,
true, and accurate:
(a) A schedule including copies of the articles of incorporation and
bylaws of PIH in effect as of the date of this Agreement;
(b) A schedule containing copies of resolutions adopted respectively
by the board of directors and the shareholders of PIH approving this
Agreement and the transactions herein contemplated;
(c) A schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets, or
condition of PIH since the most recent PIH balance sheet, required to be
provided pursuant to Section 2.04 hereof,
(d) A schedule setting forth the financial statements required
pursuant to Section 2.04(a) hereof, and
(e) A schedule setting forth any other information, together with any
required copies of documents, required to be disclosed in the PIH Schedules
by Sections 2.01 through 2.13.
PIH shall cause the PIH Schedules and the instruments delivered to Perfect
Line hereunder to be updated after the date hereof up to and including a
specified date not more than three business days prior to the Closing Date. Such
updated PIH Schedules, certified in the same manner as the original PIH
Schedules, shall be delivered prior to and as a condition precedent to the
obligation of Perfect Line to close.
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF PERFECT LINE
As an inducement to, and to obtain the reliance of PIH, Perfect Line
represents and warrants as follows:
3.01 Organization. Perfect Line is, and will be on the Closing Date, a
corporation duly organized, validly existing under the laws of the State of
Indiana and has the corporate power and is and will be duly authorized,
qualified, franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its properties and
assets and to carry on its business in all material respects as it is now being
conducted, and there are no other jurisdictions in which it is not so qualified,
or will not be promptly qualified following the Closing in which the character
and location of the assets owned by it or the nature of the material business
transacted by it requires qualification, except where failure to do so would not
have a material adverse effect on its business, operations, properties, assets
or condition of Perfect Line. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof will not, violate any provision of Perfect
Line's articles of incorporation or bylaws, or other material agreement to which
it is a party or by which it is bound.
3.02 Approval of Agreement. Perfect Line has full power, authority, and
legal right and has taken, or will take, all action required by law, its
articles of incorporation, bylaws, or otherwise to execute and deliver this
Agreement and to consummate the transactions herein contemplated. The board of
directors of Perfect Line have authorized and approved the execution, delivery,
and performance of this Agreement and the transactions contemplated hereby;
subject to the approval of the Perfect Line Stockholders and compliance with
state and federal corporate and securities laws.
3.03 Capitalization. The authorized shares of Perfect Line consist of
200,000,000 shares of common stock, par value $.0001, and 10,000,000 of
preferred stock, of which approximately 50,000,000 shares of common stock shall
be issued and outstanding, and approximately 4,745,456 shares of preferred stock
will be issued and outstanding prior to exchange of shares as set forth in
Section 1.01 of this Agreement. All issued and outstanding shares of Perfect
Line are legally issued, fully paid, and nonassessable and not issued in
violation of the preemptive or other right of any person. All shareholders are
either offshore, sophisticated or accredited investors and have supplied written
representation to Perfect Line of such status. There are no dividends or other
amounts due or payable with respect to any of the shares of capital stock of
Perfect Line.
3.04 Financial Statements.
(a) Included in Schedule 3.04 are the unaudited proforma financial
statements (and audit of Perfect Line LLC, a predecessor entity) of Perfect
Line through the year ending December 31, 2001, and the related statements
of operations, stockholders' equity (deficit), and cash flows for the year
ended December 31, 2001, including the notes thereto.
(b) The unaudited financial statements delivered pursuant to Section
3.04(a) have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved. The
financial statements of Perfect Line present fairly, as of their respective
dates, the financial position of Perfect Line. Perfect Line did not have,
as of the date of any such balance sheets, except as and to the extent
reflected or reserved against therein, any liabilities or obligations
(absolute or contingent) which should be reflected in any financial
statements or the notes thereto prepared in accordance with generally
accepted accounting principles, and all assets reflected therein present
fairly the assets of Perfect Line, in accordance with generally accepted
accounting principles. The statements of revenue and expenses and cash
flows present fairly the financial position and result of operations of
Perfect Line as of their respective dates and for the respective periods
covered thereby.
3.05 Outstanding Warrants and Options. Perfect Line has no issued options,
calls, or commitments of any nature relating to the authorized and unissued
Perfect Line Common Stock, other than the warrants to Venture Bank, Pentech, the
warrants issued to the Preferred Stockholders in connection with a private
placement and the terms of the Perfect Line Preferred Stock, all of which have
been disclosed and copies of which have been provided to PIH. Following the
closing of this Agreement, Perfect Line may issue any warrants or options as it
deems fit.
3.06 Due Diligence. Perfect Line has completed its due diligence and is
satisfied with its investigation. The information concerning Perfect Line set
forth in this Agreement and in the schedules delivered by Perfect Line pursuant
hereto is complete and accurate in all material respects and does not contain
any untrue statement of a material fact or omit to state a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading. Perfect Line shall cause the information
delivered by Perfect Line pursuant hereto to PIH hereunder to be updated after
the date hereof up to and including the Closing Date.
3.07 Absence of Certain Changes or Events. Except as set forth in this
Agreement and the Schedules and Exhibits thereto, since the date of the most
recent Perfect Line balance sheet described in Section 3.04 and included in the
information referred to in Section 3.06:
(a) There has not been (i) any material adverse change in the
business, operations, properties, level of inventory, assets, or condition
of Perfect Line or (ii) any damage, destruction, or loss to Perfect Line
materially and adversely affecting the business, operations, properties,
assets, or conditions of Perfect Line.
(b) Perfect Line has not (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or redeem, any
of its capital stock; (iii) waived any rights of value which in the
aggregate are extraordinary and material considering the business of
Perfect Line; (iv) made any material change in its method of accounting;
(v) entered into any other material transactions other than those
contemplated by this Agreement; (vi) made any material accrual or material
arrangement for or payment of bonuses or special compensation of any kind
or any severance or termination pay to any present or former officer or
employee; or (vii) made any material increase in any profit-sharing, bonus,
deferred compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement made to, for, or with their officers,
directors, or employees;
(c) Other than as specified in Schedule 3.07(c), Perfect Line has not
(i) granted or agreed to grant any options, warrants, or other rights for
its stocks, bonds, or other corporate securities calling for the issuance
thereof, (ii) borrowed or agreed to borrow any funds or incurred, or become
subject to, any material obligation or liability (absolute or contingent)
except liabilities incurred in the ordinary course of business; (iii) paid
any material obligation or liability (absolute or contingent) other than
current liabilities reflected in or shown on the most recent Perfect Line
balance sheet and current liabilities incurred since that date in the
ordinary course of business; (iv) sold or transferred, or agreed to sell or
transfer, any of its material assets, properties, or rights, or agreed to
cancel, any material debts or claims; (v) made or permitted any amendment
or termination of any contract, agreement, or license to which it is a
party if such amendment or termination is material, considering the
business of Perfect Line; or (vi) issued, delivered, or agreed to issue or
deliver any stock, bonds, or other corporate securities including
debentures (whether authorized and unissued or held as treasury stock)
other than as disclosed herein; and
(d) To the best knowledge of Perfect Line, it has not become subject
to any law or regulation which materially and adversely affects, or in the
future would be reasonably expected to adversely affect, the business,
operations, properties, assets, or condition of Perfect Line.
3.08 Title and Related Matters. Except as provided herein or disclosed in
the most recent Perfect Line balance sheet and the notes thereto, Perfect Line
has good and marketable title to all of its properties, inventory, interests in
properties, technology, whether patented or unpatented, including, but not
limited to the Perfect Line technology, intellectual property, computer
software, and assets, which are reflected in the most recent Perfect Line
balance sheet or acquired after that date (except properties, interests in
properties, and assets sold or otherwise disposed of since such date in the
ordinary course of business), free and clear of all mortgages, liens, pledges,
charges, or encumbrances, except (i) statutory liens or claims not yet
delinquent; and (ii) such imperfections of title and easements as do not, and
will not, materially detract from, or interfere with, the present or proposed
use of the properties subject thereto or affected thereby or otherwise
materially impair present business operations on such properties. To the best
knowledge of Perfect Line, its technology does not infringe on the copyright,
patent, trade secret, know-how, or other proprietary right of any other person
or entity and comprises all such rights necessary to permit the operation of the
business of Perfect Line as now being conducted or as contemplated.
3.09 Litigation and Proceedings. Except as specified in Schedule 3.09,
there are no material actions, suits, or proceedings pending or, to the
knowledge of Perfect Line, threatened by or against Perfect Line or adversely
affecting Perfect Line, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. Perfect Line does not have any knowledge of any default
on its part with respect to any judgment, order, writ, injunction, decree,
award, rule, or regulation of any court, arbitrator, or governmental agency or
instrumentality.
3.10 Material Contract Defaults. Except as specified in Schedule 3.10,
Perfect Line is not in default in any material respect under the terms of any
outstanding contract, agreement, lease, or other commitment which is material to
the business, operations, properties, assets, or condition of Perfect Line, and
there is no event of default or other event which, with notice or lapse of time
or both, would constitute a default in any material respect under any such
contract, agreement, lease, or other commitment in respect of which Perfect Line
has not taken adequate steps to prevent such a default from occurring.
3.11 No Conflict With Other Instruments. The execution of this Agreement
and the consummation of the transactions contemplated by this Agreement will not
result in the breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust. or other
material contract, agreement, or instrument to which Perfect Line is a party or
to which any of its properties or operations are subject.
3.12 Governmental Authorizations. Perfect Line has all licenses,
franchises, permits, and other governmental authorizations that are legally
required to enable it to conduct its business in all material respects as
conducted on the date of this Agreement. Except for compliance with federal and
state securities and corporation laws, as hereinafter provided, no
authorization, approval, consent, or order of, or registration, declaration, or
filing with, any court or other governmental body is required in connection with
the execution and delivery by Perfect Line of this Agreement and the
consummation by Perfect Line of the transactions contemplated hereby.
3.13 Compliance With Laws and Relations. Perfect Line has complied with all
applicable statutes and regulations of any federal, state, or other governmental
entity or agency thereof, except to the extent that noncompliance would not
materially and adversely affect the business, operations, properties, assets, or
condition of Perfect Line or except to the extent that noncompliance would not
result in the occurrence of any material liability for Perfect Line. To the best
knowledge of Perfect Line, the consummation of this transaction will comply with
all applicable statutes and regulations, subject to the preparation and filing
of any forms required by state and federal security laws.
3.14 Subsidiary. Perfect Line does not own, beneficially or of record, any
equity securities in any other entity. Perfect Line does not have a predecessor
as that term is defined under generally accepted accounting principles or
Regulation S-X promulgated by the Securities and Exchange Commission.
3.15 Perfect Line Schedules. Perfect Line has delivered to PIH the
following schedules, which are collectively referred to as the "Perfect Line
Schedules" and which consist of the following separate schedules dated as of the
date of execution of this Agreement, and instruments and PIH as of such date,
all certified by the chief executive officer of Perfect Line as complete, true,
and accurate:
(a) A schedule including copies of the articles of incorporation and
bylaws of Perfect Line and all amendments thereto in effect as of the date
of this Agreement;
(b) A schedule containing copies of resolutions adopted respectively
by the board of directors and the shareholders of Perfect Line approving
this Agreement and the transactions herein contemplated as referred to in
Section 3.02;
(c) A schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets, or
condition of Perfect Line since the most recent Perfect Line balance sheet,
required to be provided pursuant to Section 3.04 hereof,
(d) A schedule setting forth the financial statements required
pursuant to Section 3.04 (a) hereof, and
(e) A schedule setting forth any other information, together with any
required copies of documents, required to be disclosed in the Perfect Line
Schedules by Sections 3.01 through 3.14.
Perfect Line shall cause the Perfect Line Schedules and the instruments
delivered to PIH hereunder to be updated after the date hereof up to and
including a specified date not more than three business days prior to the
Closing Date. Such updated Perfect Line Schedules, certified in the same manner
as the original Perfect Line Schedules, shall be delivered prior to and as a
condition precedent to the obligation of PIH to close.
ARTICLE IV
CONDITIONS PRECEDENT TO OBLIGATIONS OF PERFECT LINE
The obligations of Perfect Line under this Agreement are subject to the
following conditions:
4.01 Shareholder Approval.
(a) PIH shall call and hold a meeting of its shareholders, or obtain
the written consent of its shareholders, to approve the transactions
contemplated by this Agreement including the redomestication merger of PIH
into IMEC and the subsequent acquisition of Perfect Line through the
issuance of IMEC Common Stock and IMEC Preferred Stock for all of the
issued and outstanding Perfect Line common and preferred stock,
respectively, creation of preferred shares and warrants matching Perfect
Line's current authorized but unissued common shares and preferred shares
and authorized and issued warrants and increasing its authorized shares of
common stock to 200,000,000 common shares, and the change of name of PIH to
IMEC as was agreed to by the board of directors of Perfect Line.
(b) Perfect Line shall call and hold a meeting of its shareholders, or
obtain the written consent of its shareholders, to approve the transactions
contemplated by this Agreement including the exchange of PIH (IMEC) Common
Stock for all of the issued and outstanding Perfect Line Common Stock and
exchange of PIH (IMEC) Preferred Stock for all of the issued and
outstanding Perfect Line Preferred Stock. If either PIH or Perfect Line are
unable to obtain shareholder approval, Perfect Line is under no further
obligation to proceed with the transactions contemplated under this
Agreement
4.02 Accuracy of Representations. The representations and warranties made
by PIH in this Agreement were true when made and shall be true at the Closing
Date with the same force and affect as if such representations and warranties
were made at and as of the Closing Date (except for changes therein permitted by
this Agreement), and PIH shall have performed or complied with all covenants and
conditions required by this Agreement to be performed or complied with by PIH
prior to or at the Closing. Perfect Line shall be furnished with certificates,
signed by duly authorized officers of PIH and dated the Closing Date, to the
foregoing effect.
4.03 Officer's Certificates. Perfect Line shall have been furnished with
certificates dated the Closing Date and signed by the duly authorized chief
executive officer of PIH to the effect that to such officer's best knowledge no
litigation, proceeding, investigation, or inquiry is pending or, to the best
knowledge of PIH threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Agreement.
Furthermore, based on certificates of good standing, representations of
government agencies, and PIH's own documents and information, the certificate
shall represent, to the best knowledge of the officer, that:
(a) This Agreement has been duly approved by PIH's board of directors
and shareholders and has been duly executed and delivered in the name and
on behalf of PIH by its duly authorized officers pursuant to, and in
compliance with, authority granted by the board of directors of PIH
pursuant to a unanimous consent;
(b) There have been no material adverse changes in PIH up to and
including the date of the certificate;
(c) All conditions required by this Agreement have been met,
satisfied, or performed by PIH;
(d) All authorizations, consents, approvals, registrations, and/or
filings with any governmental body, agency, or court required in connection
with the execution and delivery of the documents by PIH have been obtained
and are in full force and effect or, if not required to have been obtained,
will be in full force and effect by such time as may be required; and
(e) There is no material action, suit, proceeding, inquiry, or
investigation at law or in equity by any public board or body pending or
threatened against PIH, wherein an unfavorable decision, ruling, or finding
could have an adverse effect on the financial condition of PIH, the
operation of PIH, or the acquisition and reorganization contemplated
herein, or any agreement or instrument by which PIH is bound or in any way
contests the existence of PIH.
4.04 No Material Adverse Change. Prior to the Closing Date, there shall not
have occurred any material adverse change in the financial condition, business,
or operations of PIH, nor shall any event have occurred which, with the lapse of
time or the giving of notice, may cause or create any material adverse change in
the financial condition, business, or operations of PIH.
4.05 Good Standings. Perfect Line shall have received a certificate of good
standing from the appropriate authority, dated as of the date within five days
prior to the Closing Date, certifying that PIH is in good standing as a
corporation in the State of Utah.
4.06 Other Items. Perfect Line shall have received such other documents,
certificates, or instruments relating to the transactions contemplated hereby as
Perfect Line may reasonably request.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF PIH
The obligations of PIH under this Agreement are subject to the following
conditions:
5.01 Shareholder Approval.
(a) Perfect Line shall call and hold a meeting of its shareholders, or
obtain the written consent of its shareholders, to approve the transactions
contemplated by this Agreement including the acquisition of Perfect Line
through the issuance of PIH Common and Preferred Stock for all of the
issued and outstanding Perfect Line Shares, creation of preferred shares
and warrants matching Perfect Line's current authorized but unissued
preferred shares and authorized but unissued warrants and increasing its
authorized shares of common stock to 200,000,000 common shares, and the
change of name of PIH to any name as may be agreed to by the board of
directors of Perfect Line, if desired. If Perfect Line or PIH is unable to
obtain shareholder approval, PIH is under no further obligation to proceed
with the transactions contemplated under this Agreement.
(b) Perfect Line shall call and hold a meeting of its shareholders, or
obtain the written consent of its shareholders, to approve the transactions
contemplated by this Agreement including the exchange of PIH Common Stock
and the PIH Preferred Stock for all of the issued and outstanding Perfect
Line Shares.
5.02 Accuracy of Representations. The representations and warranties made
by Perfect Line and the Perfect Line Stockholders in this Agreement were true
when made and shall be true at the Closing Date with the same force and affect
as if such representations and warranties were made at and as of the Closing
Date (except for changes therein permitted by this Agreement), and Perfect Line
shall have performed or complied with all covenants and conditions required by
this Agreement to be performed or complied with by Perfect Line prior to or at
the Closing. PIH shall be furnished with a certificate, signed by a duly
authorized officer of Perfect Line and dated the Closing Date, to the foregoing
effect.
5.03 Officer's Certificates. PIH shall have been furnished with
certificates dated the Closing Date and signed by the duly authorized chief
operating officer of Perfect Line to the effect that no litigation, proceeding,
investigation, or inquiry is pending or, to the best knowledge of Perfect Line,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement. Furthermore,
based on certificates of good standing, representations of government agencies,
and Perfect Line's own documents, the certificate shall represent, to the best
knowledge of the officer, that:
(a) This agreement has been duly approved by Perfect Line's board of
directors and shareholders and has been duly executed and delivered in the
name and on behalf of Perfect Line by its duly authorized officers pursuant
to, and in compliance with, authority granted by the board of directors of
Perfect Line pursuant to a unanimous consent of its board of directors and
a majority vote of its stockholders;
(b) Except as provided or permitted herein, there have been no
material adverse changes in Perfect Line up to and including the date of
the certificate;
(c) All authorizations, consents, approvals, registrations, and/or
filing with any governmental body, agency, or court required in connection
with the execution and delivery of the documents by Perfect Line have been
obtained and are in full force and effect or, if not required to have been
obtained will be in full force and effect by such time as may be required;
and
(d) There is no material action, suit, proceeding, inquiry, or
investigation at law or in equity by any public board or body pending or
threatened against Perfect Line, wherein an unfavorable decision, ruling,
or finding would have an adverse affect on the financial condition of
Perfect Line, the operation of Perfect Line, or the acquisition and
reorganization contemplated herein, or any material agreement or instrument
by which Perfect Line is bound or would in any way contest the existence of
Perfect Line.
5.04 No Material Adverse Change. Prior to the Closing Date, there shall not
have occurred any material adverse change in the financial condition, business
or operations of Perfect Line, nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause of create any material adverse
change in the financial condition, business, or operations of Perfect Line.
5.05 Good Standing. PIH shall have received a certificate of good standing
from the appropriate authority, dated as of a date with five days prior to the
Closing Date, certifying that Perfect Line is in good standing as a corporation
in the State of Indiana.
5.06 Ownership Documentation. PIH shall have received documentation
verifying that all rights, title and interest in and to the trade names,
technology, software, intellectual property, manufacturing equipment, inventory
and assets related to the Perfect Line products and technology shall be free and
clear of any and all liens, encumbrances, royalties and claims prior to Closing,
other than those documents in the schedules or financials delivered to PIH.
5.07 Other Items. PIH shall have received such further documents
certificates, or instruments relating to the transactions contemplated hereby as
PIH may reasonably request.
ARTICLE VI
SPECIAL COVENANTS
6.01 Activities of PIH and Perfect Line
(a) From and after the date of this Agreement until the Closing Date
and except as set forth in the respective schedules to be delivered by PIH
and Perfect Line pursuant hereto or as permitted or contemplated by this
Agreement, PIH and Perfect Line will each:
(i) Carry on its business in substantially the same manner as it
has heretofore;
(ii) Maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iii) Perform in all material respects all of its obligations
under material contracts, leases, and instruments relating to or
affecting its assets, properties, and business;
(iv) Use its best efforts to maintain and preserve it business
organization intact, to retain its key employees, and to maintain Its
relationships with its material suppliers and customers;
(v) Duly and timely file for all taxable periods ending on or
prior to the Closing Date all federal, state, county, and local tax
returns required to be filed by or on behalf of such entity or for
which such entity may be held responsible and shall pay, or cause to
pay, all taxes required to be shown as due and payable on such
returns, as well as all installments of tax due and payable during the
period commencing on the date of this Agreement and ending on the
Closing Date; and
(vi) Fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal and state laws and
all rules, regulations, and orders imposed by federal or state
governmental authorities.
(b) Except as contemplated by this Agreement and with the prior
knowledge and consent of the other parties to this Agreement, which consent
shall not be unreasonably withheld, from the date of this Agreement until
the Closing Date, PIH and Perfect Line will not:
(i) Make any change in its articles of incorporation or bylaws;
(ii) Enter into or amend any material contract, agreement, or
other instrument of any of the types described in such party's
schedules, except that a party may enter into or amend any contract,
agreement, or other instrument in the ordinary course of business,
(iii) Enter into any agreement for the sale of Perfect Line or
PIH securities without the prior approval of the other party.
(iv) Issue or cause to be issued any press announcements or news
releases other than those required by law.
6.02 Access to Properties and Records. Until the Closing Date, Perfect Line
and PIH will afford to the other party's officers and authorized representatives
full access to the properties, books, and records of the other party in order
that each party may have full opportunity to make such reasonable investigation
as it shall desire to make of the affairs of Perfect Line or PIH and will
furnish the other party with such additional financial and other information as
to the business and properties of Perfect Line or PIH as each party shall from
time to time reasonably request.
6.03 Indemnification by Perfect Line. Perfect Line will indemnify and hold
harmless PIH and their directors and officers, employees and agents, and each
person, if any, who controls PIH, within the meaning of the Securities Act, from
and against any and all losses, claims, damages, expenses, liabilities, or
actions to which any of them may become subject under applicable law (including
the Securities Act and the Securities Exchange Act) and will reimburse them for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any claims or actions, whether or not resulting in
liability, insofar as such losses, claims, damages, expenses, liabilities, or
actions arise out of or are based upon any breach of this Agreement, or any
untrue statement or alleged untrue statement of material fact contained in any
application or statement filed with a governmental body or arising out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary in order to make the statements
therein not misleading, but only insofar as any such statement or omission was
made in reliance upon and in conformity with information furnished in writing by
Perfect Line expressly for use therein. The indemnity agreement contained herein
or in this Section 6.03 shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of PIH and shall survive
the consummation of the transactions contemplated by this Agreement for a period
of six months. This indemnity agreement does not cover any acts of PIH, its
management, employees, or agents, prior to the date of this Agreement.
6.04 Indemnification by PIH and its Principal Shareholder. PIH and the
Principal Shareholder specified in Exhibit A-2, jointly and severally, will
indemnify and hold harmless Perfect Line, the Perfect Line Stockholders, Perfect
Line's directors and officers, and each person, if any, who controls Perfect
Line within the meaning of the Securities Act, from and against any and all
losses, claims, damages, expenses, liabilities, or actions to which any of them
may become subject under applicable law (including the Securities Act and the
Securities Exchange Act) and will reimburse them for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
claims or actions, whether or not resulting in liability, insofar as such
losses, claims, damages, expenses, liabilities, or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained herein or in any application or statement filed with a governmental
body or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary in order to
make the statements therein not misleading, but only insofar as any such
statement or omission was made in reliance upon and in conformity with
information furnished in writing by PIH expressly for use therein. The indemnity
agreement contained in this Section 6.04 shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of
Perfect Line and shall survive the consummation of the transactions contemplated
by this Agreement for a period of six months.
6.05 The Acquisition of PIH Common Stock. PIH and Perfect Line understand
and agree that the consummation of this Agreement including the issuance of the
PIH Common Stock and PIH Preferred stock to Perfect Line Stockholders in
exchange for the Perfect Line Shares as contemplated hereby, constitutes the
offer and sale of securities under the Securities Act and applicable state
statutes. PIH and Perfect Line agree that such transactions shall be consummated
in reliance on exemptions from the registration and prospectus delivery
requirements of such statutes that depend, among other items, on the
circumstances under which such securities are acquired.
(a) In order to provide documentation for reliance upon exemptions
from the registration and prospectus delivery requirements for such
transactions, the signing of this Agreement and the delivery of appropriate
separate representations shall constitute the parties acceptance of, and
concurrence in, the following representations and warranties:
(i) The Perfect Line Stockholders acknowledge that neither the
SEC nor the securities commission of any state or other federal agency
has made any determination as to the merits of acquiring PIH Common
Stock, and that this transaction involves certain risks.
(ii) The Perfect Line Stockholders have received and read this
Agreement and understand the risks related to the consummation of the
transactions herein contemplated.
(iii) Perfect Line Stockholders have such knowledge and
experience in business and financial matters that they are capable of
evaluating each business.
(iv) The Perfect Line Stockholders have been provided with copies
of all materials and information requested by them or their
representatives, including any information requested to verify any
information furnished (to the extent such information is available or
can be obtained without unreasonable effort or expense), and the
parties have been provided the opportunity for direct communication
regarding the transactions contemplated hereby.
(v) All information which the Perfect Line Stockholders have
provided to PIH or their representatives concerning their suitability
and intent to hold shares in PIH following the transactions
contemplated hereby is complete, accurate, and correct.
(vi) The Perfect Line Stockholders have not offered or sold any
securities of PIH or interest in this Agreement and have no present
intention of dividing the PIH Common or Preferred Stock or Perfect
Line Shares to be received or the rights under this Agreement with
others or of reselling or otherwise disposing of any portion of such
stock or rights, either currently or after the passage of a fixed or
determinable period of time or on the occurrence or nonoccurrence of
any predetermined event or circumstance.
(vii) The Perfect Line Stockholders understand that the PIH
Common Stock and PIH Preferred Stock being exchanged have not been
registered, but are being acquired by reason of a specific exemption
under the Securities Act as well as under certain state statutes for
transactions not involving any public offering and that any
disposition of the subject PIH Common or Preferred Stock may, under
certain circumstances, be inconsistent with this exemption and may
make Perfect Line or PIH an "underwriter", within the meaning of the
Securities Act. It is understood that the definition of "underwriter"
focuses upon the concept of "distribution" and that any subsequent
disposition of the subject PIH Common Stock can only be effected in
transactions which are not considered distributions. Generally, the
term "distribution" is considered synonymous with "public offering" or
any other offer or sale involving general solicitation or general
advertising. Under present law, in determining whether a distribution
occurs when securities are sold into the public market, under certain
circumstances one must consider the availability of public information
regarding the issuer, a holding period for the securities sufficient
to assure that the persons desiring to sell the securities without
registration first bear the economic risk of their investment, and a
limitation on the number of securities which the stockholder is
permitted to sell and on the manner of sale, thereby reducing the
potential impact of the sale on the trading markets. These criteria
are set forth specifically in rule 144 promulgated under the
Securities Act, and, after one year after the date the PIH Common
Stock or Perfect Line Shares is fully paid for, as calculated in
accordance with rule 144(d), sales of securities in reliance upon rule
144 can only be made in limited amounts in accordance with the terms
and conditions of that rule. After two years from the date the
securities are fully paid for, as calculated in accordance with rule
144(d), they can generally be sold without meeting those conditions,
provided the holder is not (and has not been for the preceding three
months) an affiliate of the issuer. The Perfect Line Stockholders, as
well as the PIH Principal Stockholders are aware of the SEC position
that Rule 144 may not be available to promoters or stockholders of
"blank check" companies and those persons can only sell their shares
pursuant to an effective registration statement filed with the SEC.
The Perfect Line Stockholders, as well as the PIH Principal
Stockholders are aware neither PIH or Perfect Line has sought any
advice or guidance from the SEC in regard to its position concerning
the applicability of the SEC position regard "blank check" companies
to either PIH or Perfect Line or the transactions contemplated by this
Agreement.
(viii) The Perfect Line Stockholders acknowledge that the shares
of PIH Common Stock and the PIH Preferred Stock, must be held and may
not be sold, transferred, or otherwise disposed of for value unless
they are subsequently registered under the Securities Act or an
exemption from such registration is available. Other than as set forth
herein, PIH is not under any obligation to register the PIH Common
Stock or the PIH Preferred Stock under the Securities Act. If rule 144
is available after one year and prior to two years following the date
the shares are fully paid for, only routine sales of such PIH Common
Stock in limited amounts can be made in reliance upon rule 144 in
accordance with the terms and conditions of that rule. PIH is not
under any obligation to make rule 144 available except as set forth in
this Agreement and in the event rule 144 is not available, compliance
with Regulation A or some other disclosure exemption may be required
before Perfect Line Stockholders can sell, transfer, or otherwise
dispose of such PIH Common Stock without registration under the
Securities Act. Subject to compliance with federal and state
securities laws, PIH' registrar and transfer agent will maintain a
stop transfer order against the registration of transfer of the PIH
Common Stock held by Perfect Line Stockholders and the certificates
representing the PIH Common Stock will bear a legend in substantially
the following form so restricting the sale of such securities:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND ARE "RESTRICTED SECURITIES" WITHIN THE
MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT.
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD OR TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION OR OTHER COMPLIANCE
UNDER THE SECURITIES ACT.
(ix) Subject to compliance with federal and state securities
laws, PIH may refuse to register further transfers or resales of the
PIH Common Stock in the absence of compliance with rule 144 unless the
Perfect Line Stockholders furnish PIH with an opinion of counsel
reasonably acceptable to PIH stating that the transfer is proper.
Further, unless such opinion states that the shares of PIH Common
Stock are free of any restrictions under the Securities Act, PIH may
refuse to transfer the securities to any transferee who does not
furnish in writing to PIH the same representations and agree to the
same conditions with respect to such PIH Common Stock as set forth
herein. PIH may also refuse to transfer the PIH Common Stock if any
circumstances are present reasonably indicating that the transferee's
representations are not accurate.
(b) In connection with the transaction contemplated by this Agreement,
Perfect Line and PIH shall each file, with the assistance of the other and
their respective legal counsel, such notices. applications, reports, or
other instruments as may be deemed by them to be necessary or appropriate
in an effort to document reliance on such exemptions, and the appropriate
regulatory authority in the states where the Perfect Line Stockholders
reside unless an exemption requiring no filing is available in such
jurisdictions, all to the extent and in the manner as may be deemed by such
parties to be appropriate.
(c) In order to more fully document reliance on the exemptions as
provided herein, Perfect Line, the Perfect Line Stockholders, and PIH shall
execute and deliver to the other, at or prior to the Closing, such further
letters of representation, acknowledgment, suitability, or the like as PIH
or Perfect Line and their respective counsel may reasonably request in
connection with reliance on exemptions from registration under such
securities laws.
(d) The Perfect Line Stockholders acknowledge that the basis for
relying on exemptions from registration or qualifications are factual,
depending on the conduct of the various parties, and that no legal opinion
or other assurance will be required or given to the effect that the
transactions contemplated hereby are in fact exempt from registration or
qualification.
6.06 PIH Liabilities. Immediately prior to the Closing Date, PIH shall have
no material assets and no liabilities in excess of an aggregate total of $500,
and all expenses related to this Agreement or otherwise shall have been paid.
6.07 Securities Filings. Perfect Line shall be responsible for the
preparation of a Form 8-K filing with the Securities and Exchange Commission and
Perfect Line shall be responsible for a filing of consolidated audited
financials in a separate 8-K filing within 60 days from the closing date, and
will be responsible for any and all filings in any jurisdiction where its
shareholders reside which would require a filing with a governmental agency as a
result of the transactions contemplated in this Agreement.
6.08 Sales of Securities Under Rule 144, If Applicable.
(a) PIH will use its best efforts to at all times satisfy the current
public information requirements of rule 144 promulgated under the
Securities Act so that its shareholders can sell restricted securities that
have been held for one year or more or such other restricted period as
required by rule 144 as it is from time to tune amended.
(b) Upon being informed in writing by any person holding restricted
stock of PIH as of the date of this Agreement that such person intends to
sell any shares under rule 144 promulgated under the Securities Act
(including any rule adopted in substitution or replacement thereof), PIH
will certify in writing to such person that it is in compliance with rule
144 current public information requirement to enable such person to sell
such person's restricted stock under rule 144, as may be applicable under
the circumstances.
(c) If any certificate representing any such restricted stock is
presented to PIH's transfer agent for registration or transfer in
connection with any sales theretofore made under rule 144, provided such
certificate is duly endorsed for transfer by the appropriate person(s) or
accompanied by a separate stock power duly executed by the appropriate
person(s) in each case with reasonable assurances that such endorsements
are genuine and effective, and is accompanied by an opinion of counsel
satisfactory to PIH and its counsel that such transfer has complied with
the requirements of rule 144, as the case may be, PIH will promptly
instruct its transfer agent to register such transfer and to issue one or
more new certificates representing such shares to the transferee and, if
appropriate under the provisions of rule 144. As the case may be, free of
any stop transfer order or restrictive legend. The provisions of this
Section 6.08 shall survive the Closing and the consummation of the
transactions contemplated by this Agreement for a period of two years.
(d) The shareholders of PIH as of the date of this Agreement, as well
as those receiving PIH Common Stock pursuant to this Agreement, are
intended third-party beneficiaries of this Section 6.08.
6.09 New Board of Directors and Officers. At the time of closing, the
current board of directors and officers of PIH shall resign and in their place
nominees of Perfect Line shall be appointed, subject to the approval of the
suitability and qualifications of such nominees
6.10 Employment Services. Xxxxxxx X. Xxxxxxxxx ("Xxxxxxxxx") acknowledges
and agrees that he shall provide services as CEO to Perfect Line and its
successors, and shall make himself reasonably available to Perfect Line and its
successors for the rendering of said services as Perfect Line and its successors
may reasonably request, for at least eighteen months following the Closing Date.
It is intended that Xxxxxxxxx, Perfect Line and IMEC will negotiate and enter
into an employment agreement on mutually agreeable terms pursuant to which
Xxxxxxxxx will serve as Chairman and Chief Executive Officer of Perfect Line and
IMEC.
6.11 Investment Relations. IMEC agrees that it will utilize its best effort
to retain or hire an investment relations ("IR") firm or IR individual on terms
and subject to conditions agreement to the board of directors of IMEC.
6.12 Capitalization. For a period of twelve (12) months from the Closing
Date, PIH or its successor will not engage in more than one reverse split, and
said reverse split shall not be on a greater than one-to-ten basis (i.e. the
reverse split shall not reduce the number of shares by a factor greater than
10).
ARTICLE VII
MISCELLANEOUS
7.01 Brokers/Finders. Except as provided herein, PIH and Perfect Line agree
that there were no finders or brokers involved in bringing the parties together
or who were instrumental in the negotiation, execution, or consummation of this
Agreement other than those previously disclosed. Further, PIH and Perfect Line
each agree to indemnify the other against any claim by any third person for any
commission, brokerage, or finder's fee or other payment with respect to this
Agreement or the transactions contemplated hereby based on any alleged agreement
or understanding between such party and such third person, whether express or
implied, from the actions of such party. The covenants set forth in this section
shall survive the Closing Date and the consummation of the transactions herein
contemplated. The parties acknowledge, recognize and agree that Pacific
Management Services, Inc. ("PMS") assisted in the facilitation of the
transactions contemplated by this Agreement. As a fee for such services and in
connection with providing those services, PMS shall receive from a company not a
party to this Agreement, a "finder's fee" of 2,000,000 common shares of PIH. In
addition, IMEC agreed to issue to PMS a value assurance common stock issuance
warrant in the form and subject to the conditions in Exhibit 6.10 attached
hereto.
7.02 No Representation Regarding Tax Treatment. No representation or
warranty is being made by any party to any other regarding the treatment of this
transaction for international, federal or state income taxation. Each party has
relied exclusively on its own legal, accounting, and other tax adviser regarding
the treatment of this transaction for federal and state income taxes and on no
representation, warranty, or assurance from any other party or such other
party's legal, accounting, or other adviser.
7.03 Governing Law. This Agreement shall be governed by, enforced and
construed under and in accordance with the laws of the State of Indiana.
7.04 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if personally delivered, if sent by
facsimile or telecopy transmission or other electronic communication confirmed
by registered or certified mail, postage prepaid, or if sent by prepaid
overnight courier, and any such notice or communication shall be deemed to have
been given as of the date so delivered or sent by facsimile or telecopy
transmission or other electronic communication, or one day after the date so
sent by overnight courier.
If to Perfect Line to: If to PIH to
Xxxxxx X. Xxxxxxxxx, Esq.
0 Xxxx Xxxxxxxx #000
Xxxx Xxxx Xxxx, XX 00000
000-000-0000 (Phone)
000-000-0000 (Fax)
Copy to: Copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
0000 X. Xxxxxxxx Xxxxx #000X
Xxxx Xxxx Xxxx, XX 00000
000-000-0000
000-000-0000
If to Perfect Line If to PIH Principal
Stockholders to: Stockholders to:
7.05 Attorney's Fees. In the event that any party institutes any action or
suit to enforce this Agreement or to secure relief from any default hereunder or
breach hereof, the breaching party or parties shall reimburse the nonbreaching
party or parties for all costs, including reasonable attorneys' fees, incurred
in connection therewith and in enforcing or collecting any judgment rendered
therein.
7.06 Schedules; Knowledge. Whenever in any section of this Agreement
reference is made to information set forth in the schedules provided by PIH or
Perfect Line such reference is to information specifically set forth in such
schedules and clearly marked to identify the section of this Agreement to which
the information relates. Whenever any representation is made to the "knowledge"
of any party, it shall be deemed to be a representation that no officer or
director of such party, after reasonable investigation, has any knowledge of
such matters.
7.07 Entire Agreement. This Agreement, and the Schedules and Exhibits
thereto, represent the entire agreement between the parties relating to the
subject matter hereof. All previous agreements between the parties, whether
written or oral, have been merged into this Agreement. This Agreement alone
fully and completely expresses the agreement of the parties relating to the
subject matter hereof. There are no other courses of dealing, understandings,
agreements, representations, or warranties, written or oral, except as set forth
herein.
7.08 Survival, Termination. The representations, warranties, and covenants
of the respective parties shall survive the Closing Date and the consummation of
the transactions herein contemplated for a period of six months from the Closing
Date, unless otherwise provided herein.
7.09 Counterparts; Facsimile. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument. Facsimile signatures shall constitute
original signatures, and shall be followed by delivery of original signatures.
7.10 Amendment or Waiver. Every right and remedy provided herein shall be
cumulative with every other right and remedy, whether conferred herein, at law,
or in equity, and such remedies may be enforced concurrently, and no waiver by
any party of the performance of any obligation by the other shall be construed
as a waiver of the same or any other default then, theretofore, or thereafter
occurring or existing. At any time prior to the Closing Date, this Agreement may
be amended by a writing signed by all parties hereto, with respect to any of the
terms contained herein, and any term or condition of this Agreement may be
waived or the time for performance thereof may be extended by a writing signed
by the party or parties for whose benefit the provision is intended.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective officers, hereunto duly authorized, as of the
date first above written.
Pacific International Holdings, Inc. Perfect Line, Inc.
a Utah corporation an Indiana corporation
By: _________________________ By: _______________________
AS TO SECTION 6.10:
-----------------------------
Xxxxxxx X. Xxxxxxxxx
AS TO SECTION 6.04
EXHBIT A-1
Perfect Line, Inc.
List of Shareholders
Number of Number of PIH
Perfect Line Shares Shares to be Received
Name of Shareholder Owned in Exchange
See schedule attached
Schedule to A-1
SHAREHOLDER SHARES
Xxxxxxx X. Xxxxxxxxx 17,923,982
Coldwater Capital, LLC 9,089,594
Lucky Dog, LLC 9,089,252
Xxxxx X. Xxxxxxx 3,933,935
Tampa Bay Financial 750,000
Xxxxx Xxxx 3,183,594
Xxxxxx Xxxxxxxxxxx 100,000
Xxxxxxx Xxxx 450,000
Xxxxxxx Xxxxxxx 105,788
Xxxxx Xxxxxxxxx 105,106
Xxxx Xxxxxxxx 105,106
Xxxx Xxxxxx 105,106
Xxxx Xxxxxx 84,842
Xxxx Xxxxxxxxx 84,842
Xxxx Xxxxxx 52,553
Xxxxxxx Xxxxxx 36,173
Xxxxxxx Xxxxxx 26,276
Xxx Xxxxxxxx 22,181
Xxxxxxxxx Xxxxxxxxx 19,110
Xxxxxx Xxxxxxx 17,063
Xxxxxx X. Xxxx 13,650
Xxxxxxx Xxxx 13,650
Xxxxxxx Xxxx 13,650
Xxxxxx Xxxxxxxxx 10,579
Xxxxxxx Xxxxxxx 10,579
G. Xxxxxx Xxxxxxxxx 2,730
Megan Xxxxxx Xxxxxxxxx Trust 49,811
Xxx Xxxxxxxxx Xxxxxxxxx Trust 49,811
Xxxxxx Xxxxxx & Xxxxx, Inc. 101,038
Pacific Management Services 2,000,000
Xxxxxxxx IMC Group 1,350,000
Allcom, Inc. 1,100,000
Total 50,000,000
PREFERRED SHAREHOLDERS
Xxxxx X. Xxxxxxx 2,272,728
Xxxxx Xxxx 2,272,728
Xxxx Xxxxxxx, XXX 60,000
Xxxx Xxxxxxx 40,000
Xxxx Xxxxxxx 40,000
Xxxxxxx X. Xxxxxx, Xx. 20,000
S. Xxxxx Xxxxxx 20,000
Xxxxxxx Xxxxx 20,000
Total 4,745,456
PIH (FREE TRADING)
Total 11,300,000
Total Authorized and Outstanding 66,045,456
EXHBIT A-2
Pacific International Holding, Inc.
List of Principal Shareholders
Number of
PIH Shares
Name of Shareholder Owned
Kitty Chow 436,000
