SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 and 15(d) of the
Securities and Exchange Act of 1934
Date of Report (date of earliest event reported): August 25, 1998
USASURANCE GROUP, INC.
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(Exact name of Registrant as specified in Charter)
Colorado 0-26920 84-1298212
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
7345 E. Peakview Ave.
Englewood, Colorado 80111
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (303) 689-0123.
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Item 2. Acquisition and Disposition of Assets.
Effective August 22, 1998, USAsurance Group, Inc. (the
"Company") entered into a letter of intent with 2xtreme Performance
International LLC. ("2PI"), a privately held Delaware limited
liability company, whereby the Company has agreed in principle to
acquire all of the interests of 2PI, in exchange for issuance by
the Company of previously unissued "restricted" common stock. The
relevant terms of the proposed transaction provide for 2PI to
"roll-up" itself into a Delaware corporation and thereafter,
require the Company to issue to the successors to the 2PI members
an aggregate of 8,500,000 "restricted" common shares, representing
approximately 85% of the Company's then outstanding common stock,
in exchange for all of the issued and outstanding shares of 2PI.
The proposed share exchange is subject to satisfaction of
certain conditions, including completion of due diligence
activities, completion of 2PI's independent audit and approval of
the transaction by all of the successors to the 2PI members. If
the proposed transaction with 2PI is consummated, the present
officers and directors of the Company are expected to resign their
respective positions with the Company, to be replaced by the
present management of 2PI. If these conditions are met, it is
expected that the proposed transaction with 2PI will close on or
about October 1, 1998. However, there are no assurances that the
proposed transaction will close on the aforesaid date, or that any
unforeseen delay will occur. A copy of the letter of intent
between the Company and 2PI is attached hereto as Exhibit 2.0 and
incorporated herein as if set forth.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits.
2.0 Letter of Intent between the Company and 2PI.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
USASURANCE GROUP, INC.
By: s/Matthew J. Kavanagh, III
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Matthew J. Kavanagh, III,
Secretary
Dated: August 25 , 1998
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USASURANCE GROUP, INC.
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EXHIBIT 2.0
______________________
LETTER OF INTENT BETWEEN
THE COMPANY AND
2XTREME PERFORMANCE INTERNATIONAL LLC
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August 12, 1998
Managers
2xtreme Performance International LLC
15105 Surveyor Blvd.
Dallas, TX 75224
Attention: John Polk, President
Re: Plan of Reorganization Between USAsurance Group, Inc. and
2extreme Performance International LLC.
Dear Mr. Polk:
This letter is intended to express the general terms of the Plan of
Reorganization to be formalized between USAsurance Group, Inc., a
Colorado corporation ("USA") and 2extreme Performance International
LLC, a Delaware Limited Liability Company ("2PI"). The Objective
of our discussions has been the execution and consummation of
applicable, formal Agreement(s) between USA and 2PI (the "Exchange
Agreements") which, among other things, would provide for the
various matters set forth below.
1. Plan of Reorganization and Reorganization of the Companies.
The board of directors of USA and 2PI have completed an initial
evaluation of the business plan, financial statements and other
relevant corporate documents of the other and have concluded
that a reorganization of 2PI and USA, whereby USA would issue
shares of its Common Stock equal to ownership of approximately
85% of its outstanding shares in exchange for 100% of the then
outstanding securities of 2PI would be in the best interest of
both companies. It is the intent of the parties hereto that
the proposed reorganization of 2PI and USA be effected as a
tax-free exchange pursuant to Section 368 of the Internal
revenue Code of 1986, as amended.
2. Terms of Reorganization.
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(A) USA Capitalization. USA's total authorized capital stock
consists of 900,000 shares of Common Stock, $0.001 par
value per share and 1,000,000 shares of Preferred Stock,
$0.01 par value per share. As of the date hereof there
are 1,566,000 Common Shares of USA issued and outstanding.
There are no Preferred Shares issued or outstanding.
(B) 2PI Capitalization. 2PI's total authorized capital
consists of 100 Member Shares. As of the date hereof,
there are 100 Member shares of 2PI's issued and
outstanding.
(C) Special Board and Shareholder meetings.
(i) Prior to closing, the Board of Directors of 2PI will,
if required, or deemed advisable by 2PI, call a
special meeting of the 2PI Shareholders for the
purpose of ratifying the transaction proposed herein
and shall take all additional action necessary to
cause the intent of this letter to be unanimously
adopted and ratified.
(ii) Prior to closing, the Board of Directors of USA shall
approve and ratify the terms of the transaction
proposed herein and take all action necessary to
effectuate the proposed transaction.
(D) Share Exchange. Subject to the approval of the terms and
conditions contained herein by the USA Board of Directors
and 2PI shareholders on or before October 1, 1998 (the
"Closing" or the "Closing Date"), 2PI shall consummate a
reorganization with USA by the 2PI shareholders exchanging
all the issued and outstanding 2PI Stock owned by them for
an aggregate of 8,500,000 "restricted" Common Shares of
USA, with USA emerging as the parent company and 2PI as a
wholly owned subsidiary thereof.
(E) Officers and Directors. At the Closing, the present
officers and directors of USA shall deliver to 2PI their
respective letters of resignation, along with certified
minutes of the USA Board of Directors accepting such
resignation and appointing to the USA Board those persons
designated by 2PI to be officers and directors of the
surviving entity.
3. Financial Condition of USA. As of the Closing Date, USA's
financial statements shall be consistent with the contents of
its financial statements as included in the Form 10-KSB for the
fiscal year ended May 31, 1998, as filed by USA with the
Securities and Exchange Commission.
4. Financial Condition of 2PI. 2PI hereby represents and warrants
that its unaudited balance sheet dated June 1, 1998 reflects
total assets of $4,000,000 net assets of $2,000,000 and net
profits for its most recent year $2,000,000. 2PI further
represents and warrants that no negative material changes to
its financial statements have occurred since the date of its
unaudited financial statements.
5. Conditions to Closing.
(A) Closing. The Closing of the transaction herein shall take
place on or before October 1, 1998, or such other date as
the parties hereto may so agree in the future, but as soon
as
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practical after the following conditions, in addition to
other customary conditions, have been satisfied: (i)
USA's Board of Directors has approved the transaction;
(ii) the reorganization has been approved by 2PI's
shareholders in accordance with the laws of Texas, if the
same is so required by operation of law in the sole
opinion of legal counsel to 2PI. Failure to cause this
agreement to close within the time parameters established
herein shall result in the termination of this agreement.
The closing shall take place in Aurora, Colorado at the
offices of legal counsel for USA, Andrew I. Telsey, P.C.,
2851 S. Parker Road, Suite 720, Aurora, Colorado 80014, or
such other location as the parties may so agree. At the
discretion of the parties hereto, Closing may also occur
via telephonic means.
(B) To be Provided by 2PI. As soon as possible, but in no
event later than the Closing Date, in addition to those
items which may be required to be delivered pursuant to
the terms of the applicable Exchange Agreements, 2PI shall
provide to the present Board of Directors of USA the
following:
i) a financial audit of its books as of the end of
its last fiscal year and unaudited financial
statements for those interim periods required to
be provided the SEC under Regulations SB or SK, as
applicable and as promulgated under the Securities
Act of 1933, as amended which shall be prepared in
accordance with Generally Accepted Accounting
Practices. The audited financial statements shall
be provided by an independent, SEC Certified
Public Accountant and such audit shall demonstrate
balance sheet information consistent with the
financial information provided to USA by 2PI prior
to Closing; and
ii) an investment letter in a form acceptable to
counsel to USA, duly executed by each 2PI
shareholder, acknowledging that each such
shareholder is exchanging their respective
securities of 2PI for their pro rata applicable
number of USA Common Shares, that such shares to
be acquired by each 2PI shareholder are solely
for their account and for investment and they
have no plan, intention, contract,
understanding, agreement or arrangement with an
person to sell, assign, pledge, hypothecate or
otherwise transfer to any person such shares, or
any portion thereof.
(C) Non-Delivery. Failure by 2PI to provide those items
described herein above, or failure of said audit to
confirm the financial condition of 2PI as previously
represented herein, shall render this proposed transaction
voidable at the discretion of the present Board of
Directors of USA.
(D) Representations of USA. USA hereby represents that, as of
the Closing Date, it shall be current in all filings
required to be tendered to the Securities and Exchange
Commission ("SEC") pursuant to the Securities Exchange Act
of 1934, as amended, including but not limited to, filings
on Forms 8-K, 10-K, 10-KSB, 10-Q and/or 10-QSB.
6. Default. Assuming the execution of a definitive reorganization
agreement by USA and 2PI, in the event 2PI fails to perform
pursuant to Paragraph 5(B), above, or Paragraph 8, below, or
otherwise close the transaction without the fault of USA, 2PI
shall be responsible for payment of all reasonable costs
incurred by USA, including but not limited to attorneys fees,
due
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diligence costs, costs related to proxy solicitation and such
other costs as may be incurred directly relating to this
proposed transaction. 2PI shall be responsible for payment of
its own legal, accounting and any other out-of-pocket expenses
reasonably incurred in connection with this transaction,
whether or not this transaction is consummated.
7. Confidentiality. Upon the signing of the Letter of Intent, USA
and 2PI will provide to each other full access to their books
and records and will furnish financial and operating data and
such other information with respect to their business and
assets as may reasonably be requested from time to time. If
the proposed transaction is not consummated, all parties shall
keep confidential any information (unless ascertainable from
public filings or published information), obtained concerning
the other's operation, assets and business.
8. Retainer of Counsel. The principals of the parties hereto will
assign the SEC counsel who is responsible for the preparation
of all required/desired SEC filings. As a material condition
hereto, upon execution hereto by 2PI, 2PI shall cause to be
tendered to counsel to USA in order to allow such counsel to
commence preparation of all SEC filings and other related
documentation necessary to allow USA to comply with the rules
and regulations necessary to consummate the transaction
proposed herein. $25,000 fee will not be due until said Audit
is completed and satisfactory to both parties.
9. Finders Fees. It is hereby acknowledged that each party hereto
may be responsible for payment of certain finders fees relating
to the transaction proposed herein and that as a further
condition to Closing, as defined herein, each party shall
warrant in such Closing documents that such finders fees have
bee, or will be, paid and further, shall indemnify and hold
harmless to the other party from such obligation.
10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but
all of which together shall constitute on and the same
instrument.
11. Jurisdiction. It is the intention of the parties that the laws
of the State of Colorado govern the determination of the
validity of this Agreement, the construction of its terms and
the interpretation of the rights and duties of the parties.
12. Notices. Any notice relevant herein shall be deemed to have
been sufficiently served for all purposes if delivered
personally to the party to whom the same is directed, or, if
sent, by deposit with the United States mail, certified mail,
return receipt requested postage prepaid, at such party's
address listed herein above, or to such other address as shall
be furnished in writing by any party to the other. Any such
notice shall be deemed to given three (3) days after deposited
in the U.S. mail.
13. Further Action. Each party shall execute and deliver such
papers, documents and instruments, perform such acts as are
necessary or appropriate to implement the terms hereof and the
intent of the parties hereto.
14. Amendments. This Agreement may only be amended by the mutual
consent of all the parties hereto which Amendment shall be in
writing, duly executed by the parties.
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Except for the agreements set forth in Paragraphs 6, 7 and 8
hereof, this letter is not intended as a contract or to create any
enforceable rights or obligations whatsoever on the part of either
party. No obligation on the part of either party with respect to
the matters covered hereby (other than as set forth in Paragraphs
6, 7 and 8 hereof) shall exist unless and until a written
agreement, satisfactory in form and substance to both parties, has
been approved by their respective boards of directors and
shareholders, if necessary and executed by officers specifically
authorized to do so.
If the foregoing accurately reflects your understanding of the
terms and conditions of our agreement please so indicate by signing
below as designated.
Yours truly,
USASURANCE GROUP, INC.
By: s/Matthew J. Kavanagh
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Matthew J. Kavanagh, Secretary
APPROVED AND ACCEPTED THIS 22 day of Aug , 1998.
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2XTREME PERFORMANCE INTERNATIONAL LLC
By: s/John Polk
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John Polk, President
