1
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
OF
INTERNATIONAL MOTOR SPORTS GROUP-HOLDING, INC.,
A DELAWARE CORPORATION
INTO
AUTOMOTIVE PERFORMANCE GROUP, INC.,
A DELAWARE CORPORATION
TABLE OF CONTENTS
ARTICLE I THE MERGER
ARTICLE II DESCRIPTION OF THE TRANSACTION
ARTICLE III CLOSING AND EFFECTIVE DATE
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF APGI
ARTICLE V REPRESENTATIONS AND WARRANTIES OF IMSG-H
ARTICLE VI COVENANTS OF THE PARTIES
ARTICLE VII OBLIGATION TO CLOSE: CONDITIONS
ARTICLE VIII SURVIVAL OF REPRESENTATIONS
ARTICLE IX SURVIVAL OF REPRESENTATIONS.
WARRANTIES AND COVENANTS OF IMSG-H
ARTICLE X TERMINATION
ARTICLE XI MISCELLANEOUS
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AGREEMENT AND PLAN OF MERGER
OF
INTERNATIONAL MOTOR SPORTS GROUP-HOLDING, INC.,
A DELAWARE CORPORATION
INTO
AUTOMOTIVE PERFORMANCE GROUP, INC.,
A DELAWARE CORPORATION
AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of March 20, 1998,
by and among INTERNATIONAL MOTOR SPORTS GROUP-HOLDING, INC., a Delaware
corporation ("IMSG-H"), and AUTOMOTIVE PERFORMANCE GROUP, INC., a Delaware
corporation ("APGI").
The Board of Directors of IMSG-H and APGI, deeming the merger of IMSG-H
with and into APGI (herein the "Surviving Corporation"), in accordance with the
applicable laws of the State of Delaware (the "Merger") to be desirable and in
the best interests of their respective stockholders, and desiring to adopt the
Plan of Reorganization resulting in a tax-free reorganization ("reorganization")
within the meaning of 368(a) of the Internal Revenue Code of 1986, as amended:
NOW, THEREFORE, in consideration of the mutual promises herein made and in
consideration of the representations, warranties and covenants herein contained,
the parties agree as follows:
ARTICLE I
THE MERGER
1.1 Merger. APGI and IMSG-H shall execute and deliver the Agreement of
Merger effective as of April 10, 1998. The merger shall be effective, subject to
the terms and conditions of this Agreement and the Plan of Merger as promptly as
possible after Closing, to be held at the offices of IMSG-H in Seattle,
Washington, or such other place as determined by IMSG-H, or such date as the
parties may select (the "Closing Date"). Subject to Article III, Section 3.3,
the merger shall be made effective by IMSG-H filing the Certificate of Merger in
accordance with the General Corporation Laws of the State of Delaware. The date
on which the merger shall become effective is herein referred to as the
"Effective Date."
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ARTICLE II
DESCRIPTION OF THE TRANSACTION
2.1 Description of the Transaction. Pursuant to the terms and conditions
of this Agreement, IMSG-H will merge with and into APGI on the Effective Date.
Upon the Effective Date of the merger, the following will occur:
(a) Corporate Existence. The separate corporate existence of
IMSG-H shall cease and APGI shall become the owner without other transfer of all
of the rights and property of the merged corporations, and APGI shall become
subject to the debts and liabilities of IMSG-H in the same manner as if the APGI
had itself incurred them.
(b) Certificate of Incorporation. Except as provided by this
Agreement and the Certificate of Merger, the Certificate of Incorporation of
APGI in effect and as of the effective date will remain the Certificate of
Incorporation of the Surviving Corporation without any modification or amendment
in the Merger.
(c) Bylaws. The Bylaws of the APGI in effect at and as of the
effective date will remain the Bylaws of the Surviving Corporation without any
modifications or amendment in the merger, except that the Corporation may have
from one to nine Directors.
(d) Officers and Directors. The Officers and Directors of APGI in
office at and as of the effective date will remain the Directors and Officers of
APGI until the first annual meeting of the shareholders of APGI following the
effective date. There will also be added one director as of the Effective Date.
The Articles of Incorporation of APGI shall also be amended to provide that one
or more non-voting Directors may be appointed by the Board of Directors and one
or more Advisory Board Members may be selected by the board of Directors. As of
the Effective Date, APGI will be changed to the following Board of Directors:
Xxxxxx X. Xxxxx, Director
Xxxxxx X. Xxxxx, Director
Xxxxx X. Xxxxxx, Director
Xxxxx Xxxx, Director
Xxxxxxx Xxxxxxx, Director
(e) Reduction in Outstanding Shares. Immediately after the
Effective Date the shares of APGI that are issued and outstanding after the
merger shall be reduced 20 for 1 so that each 20 shares that are outstanding
prior to the effective date, after giving effect to the merger, shall be
exchanged for 1 share. All shareholders shall be required to forthwith exchange
their shares as provided herein and any shares not so exchanged shall become
void within the time set by the Board of directors of APGI. The authorized
capital of APGI shall not be affected by said share reduction. Any options or
rights of shareholders as of the Effective Date shall
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be reduced proportionally 20 to 1 without further action by APGI or amendment of
any Agreements with respect thereto. No fractional shares shall be issued, and
fractional shares shall be settled by APGI as determined by the Board of
Directors.
2.2 Share Exchange. Upon the Effective Date of the Merger:
(a) Transfer of IMSG-H Shares. Each IMSG-H Share (other than any
Dissenting Share) shall be converted into the right to receive one APGI Share
(the exchange ratio of one to one Shares is referred to herein as the
"Conversion Ratio"),
(b) Fractional Interest. No fractional interests will be issued in
exchange for shares of IMSG-H. Cash will be paid for such interests of IMSG-H
which would result in receipt of a fractional interest of APGI.
(c) Dissenting Shares. Each Dissenting Share shall be converted
into the right to receive payment from the respective corporate party to the
merger with respect thereto and in accordance with the provisions of the
Delaware General Corporation Law, and
(d) IMSG-H-Owned Shares. Each IMSG-H-owned share of APGI shall be
canceled.
(e) Adjustment of Conversion Ratio. The Conversion Ratio shall be
subject to equitable adjustment in the event of any stock split, stock dividend,
reverse stock split or other change of in the number of IMSG-H Shares
outstanding. No IMSG-H Share shall be deemed to be outstanding or to have rights
other than those set forth above in this Agreement.
(f) APGI Shares. Each share of APGI issued and outstanding as of
the Effective Date will remain issued and outstanding subject to the reduction
of shares set forth above.
2.3 Procedure for Issuance of Shares. Immediately after the Effective
Date of the Merger:
(a) The APGI will furnish to Bank of New York (the "Transfer
Agent") a stock certificate (issued in the name of the Transfer Agent or its
nominee) representing that number of APGI Shares reflection the reduction of
shares provided hereabove equal to the product of (i) the Conversion Ratio times
(ii) the number of outstanding IMSG-H Shares (other than any Dissenting Shares
and APGI-owned Shares) and the APGI will cause the Transfer Agent to mail a
letter of transmittal (with instructions for its use) in the form attached
hereto as Closing Exhibit B to each record holder of outstanding IMSG-H Shares
for the holder to use in surrendering the certificates which represented his or
its IMSG-H Shares in exchange for a certificate representing the number of
IMSG-H Shares to which it is entitled. APGI will also furnish to the Transfer
Agent a stock certificate (issued
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in the name of the Transfer Agent or its nominee) representing that number of
APGI Shares to which the shareholders of APGI prior to the merger shall be
entitled after the reduction of shares provided herein after the merger and the
APGI will cause the Transfer Agent to mail a letter of transmittal (with
instructions for its use) in the form attached hereto as Closing Exhibit B to
each record holder of outstanding APGI Shares for the holder to use in
surrendering the certificates which represented his or its APGI Shares in
exchange for a certificate representing the number of APGI Shares to which he or
she or it is entitled.
(b) Neither IMSG-H nor APGI will pay any dividend or make any
distribution on IMSG-H Shares or APGI shares (with a record date at or after the
Effective Date) to any record holder of outstanding IMSG-H or APGI until the
Effective Date.
(c) APGI may cause the Transfer Agent to return any APGI Shares
and dividends and distributions thereon remaining unclaimed for 180 days after
the Effective Time, and thereafter each remaining record holder of outstanding
IMSG-H Shares shall be entitled to look to IMSG-H (subject to abandoned
property, escheat, and other similar laws) as a general creditor thereof with
respect to IMSG-H Shares and dividends and distributions thereon to which he or
it is entitled upon surrender of his or its certificates.
(d) APGI shall pay all charges and expenses incurred in connection
with the issuance of new shares by APGI in connection with this Agreement.
ARTICLE III
CLOSING AND EFFECTIVE DATE
3.1 Time and Place. The exchange of items described in Section 3.2 below
("xxx Xxxxxxx") shall be held at the offices of IMSG-H, in Seattle, Washington,
at 5:00 p.m., local time, on April 15, 1998, or at such other time and place as
determined by IMSG-H.
3.2 Actions at Closing. At the Closing (i) APGI will deliver to IMSG-H
the various certificates, instruments and documents referred to in Paragraph 4.6
of this Agreement, (ii) IMSG-H will deliver to APGI the various certificates,
instruments and documents referred to in Paragraph 5.6 below, and (iii) pursuant
to Section 3.3, IMSG-H shall file with the Secretary of the State of Delaware,
the Certificate of Merger in the form attached hereto as Closing Exhibit D (the
"Certificate of Merger") on or before the fifth day after the Closing and (iv)
the APGI will deliver to the Transfer Agent in the manner provided in Paragraph
2.3, the Certificate evidencing APGI's shares issued in the merger.
3.3 Effective Date. The merger becomes effective the later of April 15,
1998, or three days after the date the Form 10 filed with the U.S. Securities
and Exchange Commission for Xxxxx Engines & Competition Components, Inc. becomes
effective, whichever is later or in any event upon such time as the
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Certificate of Merger is filed with the Secretary of State of the State of
Delaware, subject to the right of the Directors of APGI and IMSG-H to reject the
merger as otherwise provided herein but unless rejected, in no event, no later
than five days after the time of Closing set forth in Section 3.1.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF APGI
APGI, represents and warrants to IMSG-H as of the date of the execution of
this Agreement, as of the Closing Date, and as of the Effective Date (all
representations and warranties regarding APGI shall apply to APGI and to any
other entity which is a member of the same "control group of corporations" as
APGI under Section 1563 of the Internal Revenue Code): APGI incorporates by
reference the Form 10 filing with the SEC by Xxxxx Engines & Competition
Components, Inc., a Nevada corporation and agrees at Closing to update and
correct said filing if any material event has occurred.
THE PARTIES ACKNOWLEDGE THAT THE INFORMATION SET FORTH IN THE FORM 120
FILING WITH THE SEC PROVIDES ADEQUATE ASSURANCE FOR THE BOARD OF DIRECTORS OF
IMSG-H TO RELAY UPON IN ENTERING INTO THIS MERGER. ACCORDINGLY, APGI MAKES NO
FURTHER WARRANTY OR REPRESENTATION OTHER THAN AS SET FORTH IN THIS ARTICLE AND
AS SET FORTH IN THE FORM 10.
4.1 Organization, Qualification and Corporate Power. APGI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. APGI is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required except where the lack of such qualification would not have a material
adverse effect on the financial condition of APGI and its subsidiaries taken as
a whole or on the ability of the parties to consummate the transactions
contemplated by this Agreement. APGI has full corporate power and authority to
carry on the businesses in which it is engaged and to own and use the properties
owned by it.
4.2 Authorized and Outstanding Stock. APGI's authorized capital stock
consists of 143,000,000 shares of capital stock divided into two classes;
130,000,000 Shares of $.0001 par value Common Stock, of which 7,833,902 shares
are issued and outstanding as of February 28, 1998; and 13,000,000 Shares of
$.0001 par value preferred stock, none of which had been issued as of the
Effective Date of the merger. All outstanding shares of APGI have been duly
authorized and validly issued, fully paid, nonassessable and issued in full
compliance with the preemptive rights of any existing shareholders and in full
compliance with all applicable federal and state securities laws.
Except for the Incentive Stock Option Agreement, and Registration Rights
Agreement of Xxxxxx X. Xxxxx that are part of the transactions contemplated by
this Agreement, no shares of APGI's capital stock have been reserved for
issuance for any purposes, and there are no outstanding rights, subscriptions,
warrants,
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options, conversion rights, commitments or agreements of any kind outstanding to
purchase or otherwise acquire from APGI, or to cause APGI to issue or purchase,
any shares of its capital stock, or securities or obligations of any kind
convertible into, exchangeable for, or evidencing the right to acquire any
shares of capital stock, other than set forth in Closing Exhibit E, and no
additional shares rights or warrants of APGI shall be issued from February 28
1998 to the date of Closing.
4.3 Necessary Authority. APGI has all requisite corporate power and
authority to enter into, deliver and perform this Agreement and to consummate
the transactions contemplated herein. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary action on the part of APGI's Board of
Directors and shareholder. This Agreement has been duly executed and delivered
by APGI and constitutes its valid and legally binding obligation, enforceable
against APGI in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally now or hereafter in effect, and subject to the
availability of equitable remedies.
4.4 No Conflicts. To the knowledge of the Directors and Officers of
APGI, the execution, delivery and performance of this Agreement by APGI and its
consummation of the transactions contemplated herein, do not and will not (i)
require the consent, approval, authorization, order, filing, registration or
qualification of or with any court, governmental authority or third person,
except that which already has been obtained, (ii) conflict with or result in any
violation of or default under any provision of APGI's existing Certificate of
Incorporation, as amended and in effect, or the Bylaws of APGI or of any
mortgage, indenture, lease, agreement or other instrument, permit, concession,
grant, franchise or license to which APGI is a party or by which it or its
properties are bound, (iii) violate any law, ordinance, rule, regulation,
judgment, order or decree applicable to APGI, or (iv) result in the creation of
any security interest, claim, lien, charge or encumbrance upon any of the
Shares. Except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation or security interests would not have a
material adverse effect on the financial condition of APGI or on the ability of
the Parties to consummate the transaction contemplated herein.
4.5 Subsidiaries. Except for the ownership of all of the issued and
outstanding Common Stock of Xxxxx Engines & Competition Components of Delaware,
Inc., a Delaware corporation, as disclosed in Closing Exhibit F, APGI has no
other subsidiary corporation or other entity in which it has an ownership
interest. Except as disclosed in Closing Exhibit G, there is no corporation that
is a member of the same "controlled group of corporations" as APGI, as
determined under Section 1563(a) of the Code.
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4.6 Corporate Documents. Complete and correct copies of the Certificate
of Incorporation of APGI and all amendments thereto, certified by the Secretary
of State of Delaware, and of the Bylaws of APGI, as amended, certified by the
Secretary of APGI, have been furnished to IMSG-H, and no amendments to the
Certificate of Incorporation or the Bylaws have been adopted subsequent to said
furnishing. APGI is not in default in the performance, observation or
fulfillment of its Certificate of Incorporation or Bylaws. The minute books of
APGI have been furnished to IMSG-H to the extent available. The minute books
accurately reflect all material transactions and corporate events involving APGI
and all material actions taken by the directors and/or the shareholders of APGI.
All material actions taken by APGI requiring director and/or shareholder
approval were duly approved by the directors and/or the shareholders of APGI in
accordance with APGI's Certificate of Incorporation, Bylaws and applicable law.
4.7 Absence of Financial Statements. APGI is newly formed and has no
assets or liabilities other than the assets and liabilities which will have
resulted from a merger of Xxxxx Engines & Competition Components of Delaware,
Inc. into a wholly owned subsidiary of APGI pursuant to Sec. 251(G) of the
Delaware Corporate Code by which transaction Xxxxx Engines & Competition
Components of Delaware, Inc., will become a wholly-owned subsidiary of APGI,
which will occur on or about April 7, 1998. Xxxxx Engine & Competition
Components, Inc., a Nevada corporation has prepared audited financial statements
as of September 30, 1997, which are attached hereto as Exhibit H and current
financial information to IMSG-H.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF IMSG-H
Subject to the Closing Exhibits and schedules referred to in this Article
V to be submitted by IMSG-H at Closing, additional documents which will be made
available to representatives of APGI at Closing, and with the further
qualification that to the extent the information provided in the Closing
Exhibits and schedules and additional documents which will be made available to
representatives of APGI at Closing is inconsistent with any representation in
this Article, the Closing Exhibits and/or schedule or additional documents shall
be controlling, IMSG-H, represents and warrants to APGI and as of the Effective
Date.
SAID REPRESENTATIONS AND WARRANTIES MADE HEREIN BY IMSG ARE SUBJECT TO THE
EXPRESS CONDITION THAT THEY ARE MADE ON THE REASONED INFORMATION AND GOOD FAITH
BELIEF OF IMSG, ITS OFFICERS AND AGENTS, AND ARE NOT INTENDED TO BE ABSOLUTE.
5.1 Organization, Qualification and Corporate Power. IMSG-H is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. IMSG-H is duly authorized to conduct business and is
in
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good standing under the laws of each jurisdiction where such qualification is
required except where the lack of such qualification would not have a material
adverse effect on the financial condition of IMSG-H and its subsidiaries taken
as a whole or on the ability of the parties to consummate the transactions
contemplated by this Agreement. IMSG-H has full corporate power and authority to
carry on the businesses in which it is engaged and to own and use the properties
owned by it.
5.2 Authorized and Outstanding Stock. IMSG-H's authorized capital stock
consists of 143,000,000 shares of capital stock divided into two classes;
130,000,000 Shares of $.0001 par value Common Stock, of which 108,930,887 shares
are issued and outstanding as of the Effective Date; and 13,000,000 Shares of
$.0001 par value preferred stock, none of which had been issued as of the
Effective Date of the merger. All outstanding shares of IMSG-H have been duly
authorized and validly issued, fully paid, nonassessable and issued in full
compliance with the preemptive rights of any existing shareholders and in full
compliance with all applicable federal and state securities laws.
Except for the Incentive Stock Option Agreement, and Grants thereunder,
Warrants, Contract Rights and the Registration Rights Agreements which have been
issued by or committed to by IMSG and its affiliates, which Warrants, Options,
and Rights are contained in the audited financial statements of IMSG-H dated
12/31/97, or as will have been otherwise disclosed to representatives of APGI,
no shares of IMSG-H's capital stock have been reserved for issuance for any
purposes, and there are no material outstanding rights, subscriptions, warrants,
options, conversion rights, commitments or agreements of any kind outstanding to
purchase or otherwise acquire from IMSG-H, or to cause IMSG-H to issue or
purchase, any shares of its capital stock, or securities or obligations of any
kind convertible into, exchangeable for, or evidencing the right to acquire any
shares of capital stock, other than set forth in Closing Exhibit 5.2.
5.3 Necessary Authority. IMSG-H has all requisite corporate power and
authority to enter into, deliver and perform this Agreement and to consummate
the transactions contemplated herein. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary action on the part of IMSG-H's Board of
Directors and shareholders. This Agreement has been duly executed and delivered
by IMSG-H and constitutes its valid and legally binding obligation, enforceable
against IMSG-H in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally now or hereafter in effect, and
subject to the availability of equitable remedies.
5.4 Conflicts With Authorities. To the knowledge of the Directors and
Officers of IMSG-H, the execution, delivery and performance of this Agreement by
IMSG-H and its consummation of the transactions contemplated herein, do not and
will not (i) require the consent, approval, authorization, order, filing,
registration or qualification of or with any court, governmental authority or
third person, except that which already has been obtained, (ii) conflict with or
result in any violation of
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or default under any provision of IMSG-H's existing Certificate of
Incorporation, as amended and in effect, or the Bylaws of IMSG-H or of any
mortgage, indenture, lease, agreement or other instrument, permit, concession,
grant, franchise or license to which IMSG-H is a party or by which it is bound,
(iii) violate any law, ordinance, rule, regulation, judgment, order or decree
applicable to IMSG-H, or (iv) result in the creation of any security interest,
claim, lien, charge or encumbrance upon any of the Shares. Except where the
violation, conflict, breach, default, acceleration, termination, modification,
cancellation or security interests would not have a material adverse effect on
the financial condition of IMSG-H or on the ability of the Parties to consummate
the transaction contemplated herein.
5.5 Subsidiaries. IMSG-H has no other subsidiary corporation or other
entity in which it has an ownership interest, except as disclosed in Closing
Exhibit 5.5.
5.6 Corporate Documents. Complete and correct copies of the Certificate
of Incorporation of IMSG-H and all amendments thereto, certified by the
Secretary of State of Delaware, and of the Bylaws of IMSG-H, as amended,
certified by the Secretary of IMSG-H, have been furnished to APGI , and no
amendments to the Certificate of Incorporation or the Bylaws have been adopted
subsequent to said furnishing. IMSG-H is not in default in the performance,
observation or fulfillment of its Certificate of Incorporation or Bylaws. The
minute books of IMSG-H have been furnished to APGI to the extent available. The
minute books accurately reflect all material transactions and corporate events
involving IMSG-H and all material actions taken by the directors and/or the
shareholders of IMSG-H. All material actions taken by IMSG-H requiring director
and/or shareholder approval were duly approved by the directors and/or the
shareholders of IMSG-H in accordance with IMSG-H's Certificate of Incorporation,
Bylaws and applicable law.
5.7 Financial Statements. IMSG-H will provide audited financial
statements covering the period of time from its incorporation to December 31,
1997 (The Audited Statements'). IMSG-H has no liabilities, commitments or
obligations of any nature, whether absolute, accrued, contingent, known or
unknown, due or to become due or otherwise, which are materially adverse
relative to the financial condition of APGI and IMSG as a whole to those as set
forth in the Audited Statements
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 Covenants. The Parties agree as follows with respect to the period
from and after the execution of the Agreement:
(a) General. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Article
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VII below).
(b) Notices and Consents. IMSG-H and APGI will give any notices
(and will cause its subsidiary to give any notices) to third parties, and will
use its reasonable best efforts to obtain (and will cause its subsidiary to use
its reasonable best efforts to obtain) any third party consents, that APGI or
IMSG-H reasonably may request in connection with the matters referred to in this
Agreement.
(c) Operation of Business. Except as disclosed in the Closing
Exhibits, each party will not (and will not cause or permit any of its
subsidiaries to) engage in any practice, take any action, or enter into any
transaction outside the ordinary course of business. Without limiting the
generality of the foregoing:
(1) Neither of the parties or their subsidiaries will
authorize or effect any change in their charters or bylaws;
(2) Neither of the parties or their subsidiaries will grant
any options, warrants, or other rights to purchase or obtain any of their
capital stock or issue, sell, or otherwise dispose of any of its capital stock;
(3) Neither of the parties or their subsidiaries will
declare, set aside, or pay any dividend or distribution with respect to their
capital stock (whether in cash or in kind), or redeem, repurchase, or otherwise
acquire any of its capital stock;
(4) Neither of the parties or their subsidiaries will issue
any note, bond, or other debt security or create, incur, assume, or guarantee
any indebtedness for borrowed money or capitalized lease obligation outside the
ordinary course of business;
(5) Neither of the parties or their subsidiaries will impose
any Security Interest upon any of its assets outside the ordinary course of
business;
(6) Neither of the parties or their subsidiaries will make
any capital investment in, make any loan to, or acquire the securities or assets
of any other Person outside the ordinary course of business;
(7) Neither of the parties or their subsidiaries will make
any change in employment terms for any of its directors, officers, and employees
outside the ordinary course of business; and
(8) Neither of the parties or their subsidiaries will commit
to any of the foregoing.
(d) Full Access. Each party will (and will cause each of its
Subsidiaries to) permit representatives of the other party to have full access
at all reasonable times, and in a manner so as not to interfere with the normal
business operations of
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the party being reviewed to all premises, properties, personnel, books, records
(including tax records), contracts, and documents of or pertaining to each of
the parties and their subsidiaries. The Parties will treat and hold as such any
Confidential Information it receives from the other. The Parties will treat and
hold as such any confidential information it receives from any of the Parties in
the course of the reviews contemplated by this Paragraph, will not use any of
the confidential information except in connection with this merger.
(e) Notice of Developments. Each Party will give prompt written
notice to the other of any material adverse development causing a breach of any
of its own representations and warranties in the previous two Articles above. No
disclosure by any Party pursuant to this Paragraph, however, shall be deemed to
amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(f) Insurance and Indemnification.
(1) The Surviving Corporation will provide each individual
who served as a director or officer of APGI at any time prior to the effective
time with liability insurance for a period of 48 months after the effective time
no less favorable in coverage and amount than any applicable insurance in effect
immediately prior to the effective time.
(2) APGI, as the Surviving Corporation in the Merger, will
observe any indemnification provisions now existing in the certificate of
incorporation or bylaws of IMSG-H for the benefit of any individual who served
as a director or officer of IMSG-H at any time prior to the effective time.
(3) APGI will indemnify each individual who served as a
director or officer of APGI, IAG-Xxxxx, Inc., and Xxxxx Engines & Competition
Components of Delaware, Inc. at any time prior to the effective time from and
against any and all actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses, and fees, including
all court costs and reasonable attorneys' fees and expenses, resulting from,
arising out of, relating to, in the nature of, or caused by this Agreement or
any of the transactions contemplated herein.
ARTICLE VII
OBLIGATION TO CLOSE: CONDITIONS
7.1 Conditions to Obligation of IMSG-H to Close. The obligation of
IMSG-H to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(a) APGI and its subsidiaries shall have procured all third party
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consents specified above;
(b) The representations and warranties set forth above shall be
true and correct in all material respects at and as of the Closing Date;
(c) APGI shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(d) No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (a)
prevent consummation of any of the transactions contemplated by this Agreement,
(b) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (c) affect adversely the right of the surviving
Corporation to own the former assets, to operate the former businesses, and to
control the former Subsidiaries of either party, or (d) affect adversely the
right of any of the former Subsidiaries of either party to own its assets and to
operate its businesses (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect) there shall not be any judgment, order, decree,
stipulation, injunction, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement;
(e) APGI shall have delivered to IMSG-H a certificate to the
effect that each of the conditions specified above in Paragraph 6. l(a)-(e) is
satisfied in all respects;
(f) This Agreement and the Merger shall have received the
requisite IMSG-H stockholder approval;
(g) IMSG-H shall have received from counsel to APGI an opinion in
form and substance as set forth in Closing Exhibit 7.1(g) attached hereto;
addressed to IMSG-H, and dated as of the Closing Date; and
(h) All actions to be taken by APGI in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
IMSG-H.
7.2 Acceptance by APGI. Acceptance by APGI of Closing Exhibits,
schedules submitted by IMSG-H at the Closing and documents provided to
representatives of APGI will constitute full compliance and acceptance by APGI
of the conditions to Closing and all of the conditions of this Agreement.
Acceptance of all Closing Exhibits and schedules and documents of IMSG-H at
Closing will be conclusively presumed unless rejected by the Board of Directors
of APGI within five (5) calendar days of the Closing Date.
Page 12 of 37
14
7.3 Conditions to Obligation of APGI to Close. The obligation of APGI to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) This Agreement and the Merger shall have received the
requisite IMSG-H stockholder approval;
Page 13 of 37
15
(b) The representations and warranties set forth above as IMSG-H
shall be true and correct in all material respects at and as of the Closing
Date;
(c) IMSG-H shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(d) IMSG-H shall have delivered to APGI a certificate to the
effect that each of the conditions specified above in Paragraph 6.2(a)-(c) is
satisfied in all respects;
(e) This Agreement and the Merger shall have received the
requisite APGI stockholder approval;
(f) APGI shall have received from counsel to IMSG-H an opinion in
form and substance as set forth in Closing Exhibit 7.3(f) attached hereto,
addressed to APGI, and dated as of the Closing Date;
(g) All actions to be taken by IMSG-H in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
APGI.
7.4 Acceptance by IMSG-H. Acceptance by IMSG-H of Closing Exhibit
schedules submitted by APGI at the Closing will constitute full compliance and
acceptance by IMSG-H of the conditions to Closing and all of the conditions of
this Agreement. Acceptance of all Closing Exhibits of APGI at Closing will be
conclusively presumed unless rejected by the Board of Directors of IMSG-H within
five (5) calendar days of the date the Closing Date.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS
8.1 Survival of Representations' Warranties and Covenants of APGI and
APGI's Shareholders. Except as otherwise specifically provided herein, the
representations, warranties of APGI and its shareholders shall survive the
Effective Date unless the context clearly indicates to the contrary and shall
continue in full force and effect.
8.2 Indemnity of IMSG-H. APGI and its shareholders, jointly and
severally and on a pro rata basis, agree to and shall indemnify IMSG-H against
any and all loss, damages or expense, resulting from any misrepresentation made
or breach of warranty given or covenant made in this Agreement or any of the
schedules or Closing Exhibits hereto, as well as from and against all debts,
claims and liabilities of APGI which have arisen or may rise because of or as a
result of, any fact, event or transaction existing, or claim before or after the
Effective Date, regardless of when the cause of action therefore shall be deemed
to arise except for:
Page 14 of 37
16
(a) Any such debt, claim or liability which may be included as a
liability in the financial statements (including balance sheets) (to the extent
of the amount thereof included); and
(b) Current liabilities incurred by APGI in the ordinary and usual
course of its business between and the Effective Date; and
APGI and its shareholders agree to and shall hold harmless and indemnify
IMSG-H from and against any and all costs, expenses (including without
limitation, attorney's fees) or damages arising out of any claim, action, suit
or proceeding (including, without limitation, any action, suit or proceeding
disclosed in Closing Exhibit O) concerning any such debt, claim or liability,
whether such claim, action, suit or proceeding shall be reduced to final
judgment or shall be settled prior thereto; provided, however, that the time
during which IMSG-H may make any claim against APGI or its shareholders
hereunder shall be limited to the period specified with respect to the different
types of representations, warranties and covenants in said Section; and
provided, further, that the aggregate of all such claims must exceed the sum of
Five Thousand Dollars ($5,000.00 ) before any claim may be made the said amount
of Five Thousand Dollars ($5,000.00) being a one time deductible offset of APGI
and its shareholders against all future claims which may be made hereunder by
IMSG-H. For purposes of the time period during which claims are permissible
hereunder, claims shall be deemed made with respect to any action, suit or
proceeding disclosed in Closing Exhibit O without in any way limited the
foregoing, APGI and its Shareholders expressly recognize that this indemnity is
applicable to assessments or reassessments in respect to the United States
income taxes, or other governmental taxes or like reassessments for the years
proceeding the transaction limited only by the time period set forth in said
Section.
Seller's shareholders expressly waive any defense under applicable
Statute of Limitations with respect to the period during which indemnity of any
claim by IMSG-H hereunder if such Statutes of Limitations are inconsistent with
the time periods established in this Agreement.
8.3 Notice. If IMSG-H shall claim to have suffered any loss or damage by
reason of misrepresentation made or breach of warranty given or covenant made by
APGI or its shareholders or if IMSG-H shall claim any right of indemnity under
this Agreement, IMSG-H shall send written notice of such claim to APGI's
shareholders within the time set forth in this Agreement. Said notice shall
state in reasonable detail the representation, warranty or, covenant (including
the covenant of indemnity) with respect to which the claim is made, the facts
given rise to and the basis for the claim the amount of liability of APGI's
shareholders asserted by reason thereof.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS.
WARRANTIES AND COVENANTS OF IMSG-H
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17
9.1 None of the representations, warranties and covenants of IMSG-H
(other than the provisions in Article I above concerning issuance of IMSG-H's
shares, and the provisions above concerning insurance indemnification, will
survive the Effective Date.
Page 16 of 37
18
ARTICLE X
TERMINATION
10.1 Termination of Agreement. Either of the Parties may terminate this
Agreement with the prior authorization of its Board of Directors (whether before
or after stockholder approval) as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent at any time prior to the effective time;
(b) IMSG-H may terminate this Agreement except for Article XI by
giving written notice to APGI at any time prior to the effective date (a) in the
event APGI has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, IMSG-H has notified APGI of
this breach, and the breach has continued without cure for a period of thirty
(30) days after the notice of breach or (b) if the Closing shall not have
occurred on or before April 20, 1998, by reason of the failure of any condition
precedent under Paragraph hereof (unless the failure results primarily from
IMSG-H breaching any representation, warranty, or covenant contained in this
Agreement);
(c) APGI may terminate this Agreement except for Article XI by
giving written notice to IMSG-H at any time prior to the effective date (a) in
the event IMSG-H has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, APGI has notified IMSG-H of
the Breach, and the breach has continued without cure for a period of thirty
(30) days after the notice of breach or (b) if the Closing shall not have
occurred on or before April 20, 1998, by reason of the failure of any condition
precedent under Paragraph 9(b) hereof (unless the failure results primarily from
APGI breaching any representation, warranty, or covenant contained in this
Agreement).
10.2 Effect of Termination. If any Party terminates this Agreement
pursuant to this Article, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party (except
for any liability of any Party then in breach).
ARTICLE XI
MISCELLANEOUS
11.1 Execution of Counterparts. For the convenience of the parties, this
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
document.
11.2 Notices. All notices which are required or may be given pursuant to
the terms of this Agreement shall be in writing and shall be sufficient in all
respects if delivered personally or by registered or certified mail, postage
prepaid, as follows:
Page 17 of 37
19
If to APGI: Xxxxxx X. Xxxxx
Automotive Performance Group, Inc.
0000 X. Xxxxxx Xxxx
Xxxxx, XX 00000
with a copy to: Xxxxx Xxxxxx, Esq.
Xxxxx & Xxxxxx, P.L.L.C.
0000 X. Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
If to IMSG-H to: Xxxxxx Xxxxx
00000 00xx Xxxxx X.X.
Xxxx Xxxxx, XX 00000
with a copy to: Xxxxx Xxxxxxx, Esq.
Butcher & Xxxxxxxx, X.X.
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
or to such other address as shall be furnished in like manner by any party to
the others. Any such notice shall be deemed to have been given, received and
become effective for all purposes at the time it shall have been (i) delivered
to the addressee as indicated by the return receipt (if transmitted by mail) or
the affidavit of the messenger (if transmitted by personal delivery), or (ii)
presented for delivery to the addressee as so indicated during normal business
hours, if such delivery shall have been refused for any reason.
11.3 Assignment. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. No party shall assign any of its rights or obligations
hereunder without the prior written consent of the other parties.
11.4 Applicable Laws. This Agreement shall be construed and governed by
the internal laws, and not the law of conflicts, of Washington to agreements
made and to be performed in Washington.
11.5 Entire Agreement. This Agreement, together with the Schedules and
Closing Exhibits attached hereto, constitutes the entire agreement among the
parties hereto, and no party hereto shall be bound by any communications between
them on the subject matter hereof unless such communications are in writing and
bear a date contemporaneous with or subsequent to the date hereof. Any prior
written agreements or letters of intent among the parties shall, upon the
execution of this Agreement, be null and void.
11.6 Headings. The headings in the sections of this Agreement are
inserted for convenience only and shall not constitute a part hereof or affect
the meaning or interpretation hereof.
Page 18 of 37
20
11.7 Representations as to Compliance with Law. Whenever a representation
or warranty is made herein with respect to compliance with any law, that
representation means the applicable subject matter is in compliance with
applicable statutes, regulations and ordinances as in existence on the date
hereof and on the Closing Date and does not extend to any amendments or
revisions of such laws adopted subsequent to such dates.
11.8 Waiver, Discharge, Etc. This Agreement may not be released,
discharged or modified except by an instrument in writing signed on behalf of
each of the parties hereto. The failure of a party to enforce any provision of
this Agreement shall not be deemed a waiver by such party of any other provision
or subsequent breach of the same or any other obligation hereunder.
11.9 Promissory Notes owed to IMSG. To the extent that any subsidiary of
APGI shall be indebted to IMSG-H or any subsidiary thereof at the execution
hereof, APGI shall, at the election of IMSG-H guarantee and indemnify IMSG-H or
its subsidiary for the full amount of said indebtedness as if it were the
indebtedness of APGI;
IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the 20th day of March, 1998.
INTERNATIONAL MOTOR SPORTS AUTOMOTIVE PERFORMANCE
GROUP-HOLDING, INC., a GROUP, INC., a Delaware corporation
Delaware corporation
By /s/ By /s/
---------------------------------- ---------------------------------
Xxxxxx X. Xxxxx Xxxxxx Xxxxx, President
Its: CEO & President Its: President
-------------------------------- -------------------------------
Page 19 of 37
21
STATE OF WASHINGTON )
) ss.
County of Snohomish )
This above instrument was acknowledged before me on the _____ day of
April, 1998, to be effective as of April 10, 1998, by Xxxxxx X. in his
representative capacity as President of International Motor Sports
Group-Holding, Inc., a Delaware corporation.
/s/
-----------------------------------------
Notary Public
-------------------------
Commission Expiration
STATE OF ARIZONA )
) ss.
County of Maricopa )
This above instrument was acknowledged before me on the _____ day of
April, 1998, to be effective as of April 10, 1998, by Xxxxxx Xxxxx in his
representative capacity as President of Automotive Performance Group, Inc., a
Delaware corporation.
/s/
-----------------------------------------
Notary Public
-------------------------
Commission Expiration
Page 20 of 37
22
CERTIFICATE OF MERGER
INTERNATIONAL MOTOR SPORTS GROUP-HOLDING, INC.,
A DELAWARE CORPORATION
INTO
AUTOMOTIVE PERFORMANCE GROUP, INC.,
A DELAWARE CORPORATION
The undersigned corporation
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the constituent
corporations of the merger are as follows:
NAME STATE OF INCORPORATION
INTERNATIONAL MOTOR SPORTS GROUP-HOLDING, INC. Delaware
("IMSG-H")
AUTOMOTIVE PERFORMANCE GROUP, INC. Delaware
("APGI")
SECOND: That an Agreement of Merger between the parties to the merger has been
approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of section 251 of
the General Corporation Law of Delaware.
THIRD: That the name of the surviving corporation of the merger is AUTOMOTIVE
PERFORMANCE GROUP, INC. FOURTH: That the Certificate of Incorporation of
AUTOMOTIVE PERFORMANCE GROUP, INC., a Delaware corporation, which is surviving
the merger, shall be the Certificate of Incorporation of the surviving
corporation, subject to the changes set forth herein.
Page 1 of 4
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FIFTH: That the executed Agreement of Merger is on file at the principal place
of business of the surviving corporation, the address of which is 0000 X. Xxxxxx
Xxxx, Xxxxx, Xxxxxxx 00000.
SIXTH: That a copy of the Agreement of Merger will be furnished by the surviving
corporation, on request and without cost, to any stockholder of any constituent
corporation.
SEVENTH: The authorized capital stock of each corporation which is a party to
the merger is as follows:
Par value per share
or statement that
shares are without
Corporation Class Number of Shares par value
IMSG-H Common 130,000,000 $ .0001
Preferred 10,000,000 $ .0001
APGI Common 130,000,000 $ .0001
Preferred 13,000,000
EIGHTH: There shall be a reverse split upon the merger becoming effective such
that for each twenty shares of common stock outstanding at the effective date of
the merger, there shall be exchanged one new common share. The authorized
capital of the surviving company shall remain the same.
NINTH: The Articles of Automotive Performance Group, Inc. shall be amended as
follows:
(1) The current Article VII of said Articles shall be deleted in its entirety.
(2) A new Article VII shall be added to provide that "There may be one or more
non-voting Directors who shall be appointed and may be removed by a
majority of the Board of Directors; said Directors shall not have the
power to vote on any matter whatever and are not required for a quorum, or
for actions of the Board, but shall be given notice of all meetings and
the opportunity to attend." Said Article shall further provide "There may
be one or more Advisory Board Members who shall not have the power to vote
on any matter before the Board, and who may have such role as set forth by
the Board of Directors."
TENTH: That this Certificate of Merger shall be effective on April 15, 1998.
Page 2 of 4
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AUTOMOTIVE PERFORMANCE GROUP, INC.,
a Delaware corporation
ATTEST:
/s/
---------------------------------------
Xxxxxx X. Xxxxx, President
/s/
------------------------------
Xxxxx X. Xxxxxx, Secretary
INTERNATIONAL MOTOR SPORTS
GROUP-HOLDING, INC., a Delaware corporation
ATTEST:
/s/
---------------------------------------
Xxxxxx X. Xxxxx, President
/s/
------------------------------
Xxxxxxxx Xxxxxx, Secretary
STATE OF ARIZONA )
) ss.
County of Maricopa )
This above instrument was acknowledged before me on April ___, 1998, by
Xxxxxx X. Xxxxx in his representative capacity as President of Automotive
Performance Group, Inc., a Delaware corporation.
/s/
-----------------------------------------
Notary Public
/s/
------------------------------
Commission Expiration
Page 3 of 4
25
STATE OF ARIZONA )
) ss.
County of Maricopa )
This above instrument was acknowledged before me on April ____, 1998, by
Xxxxx X. Xxxxxx in his representative capacity as Secretary of Automotive
Performance Group, Inc., a Delaware corporation.
/s/
-----------------------------------------
Notary Public
------------------------------
Commission Expiration
STATE OF WASHINGTON )
) ss.
County of Snohomish )
This above instrument was acknowledged before me on April ___, 1998, by
Xxxxxx X. Xxxxx in his representative capacity as President of International
Motor Sports Group-Holding, Inc., a Delaware corporation.
/s/
-----------------------------------------
Notary Public
------------------------------
Commission Expiration
STATE OF WASHINGTON )
) ss.
County of Snohomish )
This above instrument was acknowledged before me on April ___, 1998, by
Xxxxxxxx Xxxxxx in her representative capacity as Secretary of International
Motor Sports Group-Holding, Inc., a Delaware corporation.
/s/
-----------------------------------------
Notary Public
------------------------------
Commission Expiration
Page 4 of 4
