<PAGE> 1
Information Statement Pursuant to Section 14(c) of the Securities Exchange
Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
[xx] Definitive Information Statement
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Automotive Performance Group, Inc.
Payment of Filing Fee (Check the appropriate box):
[xx] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and
0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
<PAGE> 2
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party: Automotive Performance Group, Inc.
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(4) Date Filed: February 26, 1999.
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<PAGE> 3
AUTOMOTIVE PERFORMANCE GROUP, INC.
------------------------------------------------
NOTICE OF ACTION TO BE TAKEN BY
WRITTEN CONSENT OF STOCKHOLDERS
TO THE STOCKHOLDERS OF AUTOMOTIVE PERFORMANCE GROUP, INC.:
NOTICE IS HEREBY GIVEN that by the written consent of a majority of the
stockholders of Automotive Performance Group, Inc. (the "Company"), on or before
the close of business on March 18, 1998, and by delivery to the Company at its
headquarters located at 1207 N. Miller Road, Tempe, Arizona 85281, the following
action will be taken:
1. Approval of the Company's 1998 Stock Option Plan (the "Plan"),
as amended May 22, 1998, including approval of the Options
previously granted in accordance with the Plan.
Only stockholders of record at the close of business on February 26,
1999 are entitled to notice and to consent to this action. The approval of the
Plan, as amended, and the Options previously granted under the Plan, shall
become effective upon receipt by the Company of the written consents of
stockholders owning a majority of the outstanding shares of the Company's Common
and Preferred Stock. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT
TO SEND US A PROXY
By Order of the Board of Directors
/s/ Carl Walker
------------------------------
Carl Walker, Secretary
February 26, 1999
Tempe, Arizona
<PAGE> 4
GENERAL INFORMATION:
The action contemplated by the Company is the approval by the
stockholders of the Company's 1998 Stock Option Plan (the "Plan"), as adopted by
the Board of Directors of the Company on March 19, 1998, and amended, on May 22,
1998, to increase the number of shares reserved for issuance under the Plan from
Two Million (2,000,000) to Four Million (4,000,000) shares of the Company's
Common Stock, and the approval of the Options previously granted in accordance
with the Plan. A true and correct copy of the Plan, as amended, is attached
hereto as Appendix A and incorporated herein by reference. The approval of the
Plan, as amended, and the approval of the Options previously granted in
accordance with the Plan, will be taken by the written consents of the
stockholders of the Company on or before March 18, 1999, and will be effective
upon receipt by the Company of executed written consents from stockholders
owning a majority of the Company's Common and Preferred Stock. The form of the
Consent requested and required by the Company is attached hereto as Appendix B.
The adoption of the Plan, as amended, and the Options previously granted in
accordance with the Plan, is needed to attract and retain qualified personnel
for the Company and its subsidiaries.
PURPOSE:
The sole purpose of the proposed action by written consent is the
approval of the Plan, as amended, and the approval of the Options previously
granted in accordance with the Plan.
RECORD DATE AND VOTING SECURITIES:
The Record Date for the giving of these consents described herein is
February 26, 1999. As of the Record Date, Six Million One Hundred Seventy-Five
Thousand One Hundred Seventy-One (6,175,171) shares of the Company's Common
Stock were outstanding and Four Million Four Hundred Forty-Nine Thousand
(4,449,000) shares of the Company's Preferred Stock were outstanding. A majority
of the outstanding Common and Preferred shares of the Company's stock are
required for the approval of the Plan, as amended, and the approval of the
Options previously granted in accordance with the Plan. Each share of Common and
Preferred Stock of the Company shall be entitled to one vote. The cost of this
information statement will be borne by the Company and the Company estimates
that it will not represent a significant expense for the Company. Arrangements
will be made with custodians, nominees and fiduciaries for forwarding this
information statement and materials to the beneficial owners of shares held of
record by such custodians, nominees and fiduciaries. The Company will reimburse
such custodians, nominees and fiduciaries for the reasonable expenses incurred
in connection therewith.
QUORUM:
The required number of shares approving by written consent of the
stockholders of the Company is a majority of the outstanding shares of the
Common and Preferred Stock of the Company on the Record Date.
<PAGE> 5
PROPOSAL NO. 1 - APPROVAL OF THE ADOPTION OF THE 1998 STOCK OPTION PLAN
By written consent, pursuant to Article II, Section 9 of the Bylaws of
the Company, the stockholders of the Company are being requested to consider and
approve the adoption of the Plan, as amended, and the Options previously granted
in accordance with the Plan. The Plan was adopted by the Board of Directors of
the Company on March 19, 1998, by the unanimous written consent of the Board of
Directors. The Plan was amended by the Board of Directors, effective as of May
22, 1998, amending and replacing the Plan adopted March 19, 1998, to increase
the number of shares available for issuance under the Plan from Two Million
(2,000,000) to Four Million (4,000,000) shares of the Company's Common Stock.
The Plan, as amended, is intended to advance the best interests of the Company
by providing executive and other key employees of the Company, and its
subsidiaries, who have substantial responsibility for the management and growth
of the Company with additional incentives by allowing such executives and
employees to acquire an ownership interest in the Company. The Plan, as amended,
is a compensatory benefit plan within the meaning of Rule 701 under the
Securities Act of 1933. The Plan, as amended, is to be administered by the
Compensation Committee of the Company, which shall have the sole and complete
authority to (i) select Participants, (ii) grant Options, (iii) impose such
limitations, restrictions and conditions on such Options as are deemed
appropriate, (iv) interpret the Plan and adopt, amend, revise and rescind
administrative guidelines for the Plan, (v) correct any defect or omission or
reconcile any inconsistency in the Plan, or in any Options granted under the
Plan, and (vi) make all other determinations and take all other actions
necessary or advisable for the implementation and administration of the Plan.
All expenses associated with the administration of the Plan shall be borne by
the Company. The Options that may be granted under the Plan may be either
nonqualified stock options or "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code, or any successor provision. The Plan
provides for specific conditions and limitations on the vesting, exercise,
expiration and transfer of Options granted under the Plan. The maximum exercise
date for Options granted under the Plan is ten (10) years.
PURPOSE OF THE PLAN:
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to have a stock option plan in place for the
Company. The Board of Directors believes that having a stock option plan in
place is vital to retaining, motivating and rewarding employees and executives
of the Company, and its subsidiaries, by providing them with long-term equity
participation in the Company relating directly to the financial performance and
long term growth of the Company. The Board of Directors further believes that
granting stock options to employees and executives is an important contributor
to aligning the incentives of the Company's employees and executives with the
interests of the Company's stockholders. The number of Common shares reserved
for issuance under the Plan will provide the Company with an adequate pool of
Options to compete effectively with other companies for existing and new
employees. Competition for qualified employees is increasing and the Board of
Directors believes that in order to remain competitive with other similarly
situated companies, the Company must provide its employees and executives with
the opportunity to obtain equity in the Company. The inability to offer equity
incentives to new and current employees would put the Company at a severe
competitive disadvantage with respect to attracting and retaining qualified
personnel. Finally, an
<PAGE> 6
adequate pool of options will enhance the Company's ability to structure
attractive offers to retain employees of potential acquisition targets.
PLAN BENEFITS:
The current Options that have been granted under the Plan are as
follows:
<TABLE>
<CAPTION>
Name/Position Shares Option Price Date of Vesting
Granted Per Share (1) Grant Period
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jennifer Burns, 60,000 $2.00 5/21/98 4 years (2)
V.P. Marketing
- -----------------------------------------------------------------------------------------------
Ken Cardwell, 40,000 $2.00 5/22/98 4 years (2)
General Manager
D-3 Design Works
- -----------------------------------------------------------------------------------------------
Thomas Carmody 40,000 $2.00 5/22/98 4 years (2)
Director
- -----------------------------------------------------------------------------------------------
James Dunn, 100,000 $2.00 4/1/98 3 years (3)
Chief Operating
Officer and Director
- -----------------------------------------------------------------------------------------------
Douglas Heise 7,500 $2.00 6/24/98 4 years (2)
- -----------------------------------------------------------------------------------------------
Ronda Higginbotham 7,500 $2.00 8/4/98 4 years (2)
- -----------------------------------------------------------------------------------------------
Mary Ann 20,000 $2.00 6/24/98 4 years (2)
Livingston
- -----------------------------------------------------------------------------------------------
Ronnie Lott, 40,000 $2.00 5/22/98 4 years (2)
Director
- -----------------------------------------------------------------------------------------------
Richard Luther 10,000 $2.00 8/4/98 4 years (2)
- -----------------------------------------------------------------------------------------------
Joseph Marenda 60,000 $2.00 5/22/98 4 years (2)
- -----------------------------------------------------------------------------------------------
James Martin, 75,000 $2.00 5/22/98 4 years (2)
President Royal
Purple Motor Oil
- -----------------------------------------------------------------------------------------------
James R. Medley, 40,000 $2.00 5/22/98 4 years (2)
Director
- -----------------------------------------------------------------------------------------------
Mary Jane Miller, 20,000 $2.00 6/24/98 4 years (2)
Assistant Secretary
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C> <C> <C>
Terry E. Nish, 40,000 $2.00 5/22/98 4 years (2)
Director
- -----------------------------------------------------------------------------------------------
Robert Pullinsi 10,000 $2.00 6/24/98 4 years (2)
- -----------------------------------------------------------------------------------------------
Ryan Rounkle 5,000 $2.00 8/4/98 4 years (2)
- -----------------------------------------------------------------------------------------------
William Smith 5,000 $2.00 6/24/98 4 years (2)
- -----------------------------------------------------------------------------------------------
William H. Tempero 40,000 $2.00 5/22/98 4 years (2)
Director
- -----------------------------------------------------------------------------------------------
Preston Watts 10,000 $2.00 6/24/98 4 years (2)
- -----------------------------------------------------------------------------------------------
Luke Wethington, 40,000 $2.00 5/22/98 Vested
General Manager
Team Scandia, Inc.
- -----------------------------------------------------------------------------------------------
Patti Wilcox 10,000 $2.00 6/24/98 4 years (2)
- -----------------------------------------------------------------------------------------------
Dean Willard, 40,000 $2.90 6/24/98 4 years (2)
President and CEO
and Chairman
- -----------------------------------------------------------------------------------------------
Thomas G. Klein, 50,000 $2.00 Vested
Director
- -----------------------------------------------------------------------------------------------
Directors And 415,000
Officers On Board
As A Group
- -----------------------------------------------------------------------------------------------
Non-Director 120,000
Officers As A Group
- -----------------------------------------------------------------------------------------------
All Employees 770,000
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) The exercise price of these Options was equal to the fair market
value of the Company's stock as of the date that they were granted.
(2) All Options vest at the rate of 25% per year.
(3) 25% of Mr. Dunn's Options vested on April 1, 1998. His Options vest
at the rate of an additional 25% per year for the next three years.
<PAGE> 8
VOTE REQUIRED:
The affirmative consent of stockholders owning a majority of the
outstanding Common and Preferred Stock of the Company, voting together as a
class, is required to approve the adoption of the Plan, as amended, and the
Options previously granted in accordance with the Plan. The Board of Directors
recommends that the stockholders of the Company approve the adoption of the
Plan, as amended, and the Options previously granted in accordance with the
Plan. The Board of Directors is informed and believes that stockholders owing a
majority of the Common and Preferred Stock of the Company will approve the Plan.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY
The Corporation is not presently aware of any opposition to the
requested consent of the stockholders to the confirmation of the Plan, as
amended, or the approval of the Options previously granted in accordance with
the Plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
The following table sets forth, as of December 31, 1998, with respect
to the Company's Common Stock, and February 15, 1999, with respect to the
Company's Preferred Stock, certain information with respect to the beneficial
ownership of the Company's Common and Preferred Stock by (i) each person known
by the Company to own beneficially more than 5% of the Company's Common and/or
Preferred Stock, (ii) each person who has served as Chief Executive Officer of
the Company during the Company's last fiscal year, and the four most highly
compensated officers other than the Chief Executive Officer who were serving as
executive officers at the end of the Company's last fiscal year, (iii) each
director of the Company, and (iv) all directors and executive officers as a
group. The Company knows of no agreements among its stockholders which relate to
voting or investment powers of its shares of Common and/or Preferred Stock.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Five Percent Stockholders, Executive Shares of Stock Beneficially Owned Percentage
Officers And Directors Ownership (1)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Andrew & Ann Evans 3,323,373 Common Shares 31.28% (2)
Dominion Income Management Corp.
15302 25th Drive, S.E.
Mill Creek, Washington 98012
- --------------------------------------------------------------------------------------------------------------
Andrew & Ann Evans 500,000 Preferred Shares 4.71% (2)
Dominion Income Management Corp.
15302 25th Drive, S.E.
Mill Creek, Washington 98012
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 9
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
Dominion Income Management Corp. 580,522 Common Shares 5.46% (3)
Profit Sharing Plan
15302 25th Drive, S.E.
Mill Creek, Washington 98012
- -------------------------------------------------------------------------------------------------------
Maritime Capital Partners 1,678,705 Common Shares 15.60% (4)
15302 25th Drive, S.E.
Mill Creek, Washington 98012
- -------------------------------------------------------------------------------------------------------
Lancer Funds 1,875,000 Preferred Shares 17.65%
375 Park Avenue, Suite 2006
New York, New York 10152
- -------------------------------------------------------------------------------------------------------
Founders Funds 640,000 Preferred Shares 6.02%
2602 McKinney Avenue, Suite 220
Dallas, Texas 75204
- -------------------------------------------------------------------------------------------------------
James Dunn 2,967 Common Shares (5)
- -------------------------------------------------------------------------------------------------------
James Martin 6,077 Common Shares (5)
- -------------------------------------------------------------------------------------------------------
Thomas Carmody 4,553 Common Shares (5)
- -------------------------------------------------------------------------------------------------------
William H. Tempero 500 Common Shares (5)
- -------------------------------------------------------------------------------------------------------
Terry E. Nish 10,750 Common Shares (5)
- -------------------------------------------------------------------------------------------------------
Dean Willard 0 NA
- -------------------------------------------------------------------------------------------------------
All Current Officers And Directors As 3,348,220 Common Shares 36.22%
A Group (6) (7) 500,000 Preferred Shares
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) Percentage ownership calculated based on total outstanding shares
of Common and Preferred Stock.
(2) Mr. and Mrs. Evans' shares are owned directly and/or through
Dominion Income Management Corp. and/or Matrix Capital Management.
(3) Mr. Evans is a beneficiary of the Dominion Income Management Corp.
Profit Sharing Plan.
(4) Mr. Evans is a general partner and minority owner of Maritime
Capital Partners.
(5) Less than one percent (1%).
(6) The Officers of the Company who are also members of the Board of
Directors, collectively, have options for an additional 415,000 shares of the
Common Stock of the Company.
<PAGE> 10
(7) The Non-Director Officers of the Company, collectively, have
options for an additional 120,000 shares of the Common Stock of the Company.
- --------------------------------------------------------------------------------
OTHER MATTERS:
No other matters are the subject of the pending vote of the
stockholders by written consent.
The Board of Directors
/s/ Carl Walker
----------------------
Carl Walker, Secretary
February 26, 1999
<PAGE> 11
APPENDIX A
<PAGE> 12
AUTOMOTIVE PERFORMANCE GROUP, INC.,
A DELAWARE CORPORATION
1998 STOCK OPTION PLAN
ARTICLE I
PURPOSE OF PLAN
The 1998 Stock Option Plan (the "PLAN") Automotive Performance Group,
Inc. (the "COMPANY"), adopted by the Board of Directors and the Stockholders of
the Company effective May 22, 1998, amending and replacing the Plan effective
March 19, 1998 is intended to advance the best interests of the Company by
providing executive and other key employees of the Company or any Subsidiary who
have substantial responsibility for the management and growth of the Company or
any Subsidiary with additional incentives by allowing such employees to acquire
an ownership interest in the Company. The Plan is a compensatory benefit plan
within the meaning of Rule 701 under the Securities Act of 1933, as amended (the
"SECURITIES ACT").
ARTICLE II
DEFINITIONS
For purposes of the Plan the following terms have the indicated
meanings:
"AUTHORIZATION DATE" has the meaning ascribed thereto in Section 5.8(a)
hereof.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"COMMITTEE" means the Compensation Committee or such other committee of
the Board as the Board may designate to administer the Plan or, if for any
reason the Board has not designated such a committee, the Board will administer
the Plan. The Committee, if other than the Board, shall be composed of two or
more directors as appointed from time to time by the Board.
"COMMON STOCK" means the Common Stock, $.0001 par value per share, of
Automotive Performance Group, Inc., a Delaware corporation.
"ELECTION NOTICE" has the meaning ascribed thereto in Section 5.8(b)
hereof.
1
<PAGE> 13
"FAIR MARKET VALUE" per share on any given date means the average of
the closing prices of the sales of the Common Stock on all securities exchanges
on which such stock may at the time be listed, or, if there have been no sales
on any such exchange on any day, the average of the highest bid and lowest asked
prices on all such exchanges at the end of such day, or, if on any day such
stock is not so listed, the average of the representative bid and asked prices
quoted on the Nasdaq Stock Market as of 4:00 p.m., New York time, or, if on any
day such stock is not quoted on the Nasdaq Stock Market, the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization. If at any time the Common Stock is not listed or
quoted, the Fair Market Value per share shall be determined by the Committee or
the Board based on such factors as the members thereof in the exercise of their
business judgment, consider relevant.
"OPTION SHARES" shall mean (i) all shares of Common Stock issued or
issuable upon the exercise of an Option and (ii) all shares of Common Stock
issued with respect to the Common Stock referred to in clause (i) above by way
of stock dividend or stock split or in connection with any conversion, merger,
consolidation or recapitalization or other reorganization affecting the Common
Stock. Unless provided otherwise herein or in the Participant's grant, Option
Shares will continue to be Option Shares in the hands of any holder other than
the Participant (except for the Company), and each such transferee thereof will
succeed to the rights and obligations of a holder of Option Shares hereunder.
"OPTIONS" has the meaning set forth in Article IV.
"PARTICIPANT" means any executive or other key employee of the Company
or any Subsidiary who has been selected to participate in the Plan by the
Committee or the Board.
"PUBLIC OFFERING" means the sale, in one or more underwritten public
offerings registered under the Securities Act, of shares of the Company's common
stock having an aggregate offering value of at least $15 million.
"REPURCHASE NOTICE" has the meaning ascribed thereto in Section 5.8(b)
hereof.
"REPURCHASE OPTION" has the meaning ascribed thereto in Section 5.8(a)
hereof.
"RIGHT OF FIRST REFUSAL" has the meaning ascribed thereto in Section
5.9(b) hereof
"SALE NOTICE" has the meaning ascribed thereto In Section 5.9(a)
hereof.
"SALE OF THE COMPANY" means a merger or consolidation effecting a
change in control of the Company, a sale of all or substantially all of the
assets of the Company or a sale of a majority of the outstanding voting
securities of the Company effecting a change in control of the Company.
"SECURITIES ACT" has the meaning ascribed thereto in Article 1 hereof.
2
<PAGE> 14
"SUBSIDIARY" means any subsidiary corporation (as such term is defined
in Section 424(f) of the Code) of the Company.
"TERMINATION DATE" has the meaning ascribed thereto in Section 5.7(a)
hereof.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Committee. Subject to the
limitations of the Plan, the Committee shall have the sole and complete
authority to: (i) select Participants, (ii) grant Options (as defined in Article
IV) to Participants in such forms and amounts as it shall determine, (iii)
impose such limitations, restrictions and conditions upon such Options as it
shall deem appropriate, (iv) interpret the Plan and adopt, amend and rescind
administrative guidelines and other rules and regulations relating to the Plan,
(v) correct any defect or omission or reconcile any inconsistency in the Plan or
in any Options granted under the Plan and (vi) make all other determinations and
take all other actions necessary or advisable for the implementation and
administration of the Plan. The Committee's determinations on matters within its
authority shall be conclusive and binding upon the Participants, the Company and
all other persons. All expenses associated with the administration of the Plan
shall be borne by the Company. The Committee may, as approved by the Board and
to the extent permissible by law, delegate any of its authority hereunder to
such persons or entities as it deems appropriate.
ARTICLE IV
LIMITATION ON AGGREGATE SHARES
The number of shares of Common Stock with respect to which stock
purchase options ("OPTIONS") may be granted under the Plan shall not exceed, in
the aggregate, Four Million (4,000,000) shares, subject to adjustment in
accordance with Section 6.4. To the extent any Options expire unexercised or are
canceled, terminated or forfeited in any manner without the issuance of Common
Stock thereunder, such shares shall again be available under the Plan. The
shares of Common Stock available under the Plan may consist of authorized and
unissued shares, treasury shares or a combination thereof, as the Committee
shall determine.
ARTICLE V
AWARDS
5.1 GRANT OF OPTIONS. The Committee may grant Options to Participants
from time to time in accordance with this Article V. Options granted under the
Plan may be nonqualified stock options or "incentive stock options" within the
meaning of Section 422 of the Code or any successor provision, as specified by
the Committee or the Board; provided, however, that no incentive stock option
may be granted to any Participant who, at the time of grant, owns stock of the
Company (or
3
<PAGE> 15
any Subsidiary) representing more than 10% of the total combined voting power of
all classes of stock of the Company (or such Subsidiary), unless such incentive
stock option shall at the time of grant (a) have a termination date not later
than the fifth anniversary of the issuance date and (b) have an exercise price
per share equal to at least 110% of the Fair Market Value of a share of Common
Stock on the date of grant. The exercise price per share of Common Stock under
each incentive stock option shall be fixed by the Committee or the Board at the
time of grant of the Option and shall equal at least 100% of the Fair Market
Value of a share of Common Stock on the date of grant, but not less than the par
value per share (as adjusted pursuant to Section 6.4). Options shall be
exercisable at such time or times as the Committee or the Board shall determine;
provided, however, that any option intended to be an incentive stock option
shall be treated as an incentive stock option only to the extent that the
aggregate Fair Market Value of the Common Stock (determined as of the date of
Option grant) with respect to which incentive stock options (but not
nonqualified options) are exercisable for the first time by any Participant
during any calendar year (under all stock option plans of the Company and its
Subsidiaries) does not exceed $100,000. The Committee or the Board shall
determine the term of each Option, which term shall not exceed ten years from
the date of grant of the Option.
5.2 EXERCISE PROCEDURE. Options shall be exercisable by written notice
to the Company (to the attention of the Company's Secretary) accompanied by
payment in full of the applicable exercise price. Payment of such exercise price
may be made (i) in cash (including check, bank draft or money order), (ii) if
approved by the Committee or the Board prior to exercise (in the case of an
incentive stock option, if approved by the Committee or the Board in the grant),
by delivery of a full recourse promissory note of the Participant bearing
interest at a rate not less than the applicable federal rate determined pursuant
to Section 1274 of the Code as of the date of purchase or exercise (a "NOTE"),
(iii) in shares of Common Stock valued at their Fair Market Value as of the date
of exercise as provided in Section 5.3 below or (iv) in a combination of the
foregoing.
5.3 EXCHANGE OF PREVIOUSLY ACQUIRED STOCK. The Committee or the Board,
in its discretion and subject to such conditions as the Committee or the Board
may determine, may permit the option price for the shares being acquired upon
the exercise of an Option to be paid, in full or in part, by the delivery to the
Company of a number of shares of Common Stock having an aggregate Fair Market
Value as of the date of exercise equal to the exercise price for the shares
being acquired. In the case of incentive stock options, the Committee or the
Board shall specify in the Option grant whether the holder may satisfy the
exercise price with respect to shares of Common Stock purchased upon exercise of
such Option by delivering to the Company shares of previously acquired Common
Stock.
5.4 WITHHOLDING TAX REQUIREMENTS. It shall be a condition of the
exercise of any Option that the Participant exercising the Option make
appropriate payment or other provision acceptable to the Company with respect to
any withholding tax requirement arising from such exercise. The amount of
withholding tax required, if any, with respect to any Option exercise (the
"WITHHOLDING AMOUNT")shall be determined by the Treasurer or other appropriate
officer of the Company, and the Participant shall furnish such information and
make such representations as such officer requires to
4
<PAGE> 16
make such determination. If the Company determines that withholding tax is
required with respect to any Option exercise, the Company shall notify the
Participant of the Withholding Amount, and the Participant shall pay to the
Company an amount not less than the Withholding Amount. In lieu of making such
payment, the Participant may elect to pay the Withholding Amount by either (i)
delivering to the Company a number of shares of Common Stock having an aggregate
Fair Market Value as of the "measurement date" (as hereinafter defined) not less
than the Withholding Amount or (ii) directing the Company to withhold (and not
to deliver or issue to the Participant) a number of shares of Common Stock
otherwise issuable upon the Option exercise having an aggregate Fair Market
Value as of the measurement date not less than the Withholding Amount. In
addition. if the Committee or the Board approves, a Participant may elect
pursuant to the prior sentence to deliver or direct the withholding of shares of
Common Stock having an aggregate Fair Market Value in excess of the minimum
Withholding Amount but not in excess of the Participant's applicable highest
marginal combined federal income and state income tax rate, as estimated in good
faith by such Participant. Any fractional share interests resulting from the
delivery or withholding of shares of Common Stock to meet withholding tax
requirements shall be settled in cash. All amounts paid to or withheld by the
Company and the value of all shares of Common Stock delivered to or withheld by
the Company pursuant to this Section 5.4 shall be deposited in accordance with
applicable law by the Company as withholding tax for the Participant's account.
If the Treasurer or other appropriate officer of the Company determines that no
withholding tax is required with respect to the exercise of any Option (because
such Option is an incentive stock option or otherwise), but subsequently it is
determined that the exercise resulted in taxable income as to which withholding
is required (as a result of a disposition of shares or otherwise), the
Participant shall promptly, upon being notified of the withholding requirement,
pay to the Company by means acceptable to the Company the amount required to be
withheld; and at its election the Company may condition any transfer of shares
issued upon exercise of an incentive stock option upon receipt of such payment.
The term "measurement date" as used in this Section 5.4 shall mean the date on
which any taxable income resulting from the exercise of an Option is determined
under applicable federal income tax law.
5.5 NOTIFICATION OF INQUIRIES AND AGREEMENTS. Each Participant and each
permitted transferee shall notify the Company in writing within 10 days after
the date such Participant or permitted transferee (i) first obtains knowledge of
any Internal Revenue Service inquiry, audit, assertion, determination,
investigation, or question relating in any manner to the value of Options
granted hereunder, (ii) includes or agrees (including, without limitation, in
any settlement, closing or other similar agreement) to include in gross income
with respect to any Option granted under this Plan (A) any amount in excess of
the amount reported on Form 1099 or Form W-2 to such Participant by the Company,
or (B) if no such Form was received, any amount; and (iii) exercise, sells,
disposes of, or otherwise transfers (other than to a permitted transferee) an
Option acquired pursuant to this Plan. Upon request, a Participant or permitted
transferee shall provide to the
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Company any information or document relating to any event described in the
preceding sentence which the Company (in its sole discretion) requires in order
to calculate and substantiate any change in the Company's tax liability as a
result of such event.
5.6 CONDITIONS AND LIMITATIONS ON EXERCISE. At the discretion of the
Committee or the Board, exercised at the time of grant, Options may be made
exercisable, in one or more installments, upon (i) the happening of certain
events, (ii) the passage of a specified period of time, (iii) the fulfillment of
certain conditions or (iv) the achievement by the Company or any Subsidiary of
certain performance goals. Unless the Committee or the Board specifies otherwise
in the Option grant, each Option granted pursuant to this Plan will be
immediately exercisable with respect to the Common Stock issuable upon exercise
thereof. The shares of Common Stock purchasable or purchased upon exercise of
any Option shall be subject to such vesting provisions as the Committee or the
Board shall decide at the time that the Options are granted. Unless the
Committee or the Board specifies otherwise in the Option grant, the shares of
Common Stock purchasable or purchased upon exercise of any Option shall vest
with respect to 20% of such shares on each of the first through the fifth annual
anniversaries of the date of grant. In the event of a Sale of the Company, the
Committee must provide, in its discretion, that the shares of Common Stock that
are subject to or were purchased pursuant to Options shall become immediately
vested and that such Options shall terminate if not exercised as of the date of
the Sale of the Company or any other designated date or that such Options shall
thereafter represent only the right to receive the excess of the consideration
per share of Common Stock offered in such Sale of the Company over the exercise
price of such Options.
5.7 EXPIRATION OF OPTIONS.
(a) NORMAL EXPIRATION. In no event shall any part of any Option be
exercisable after the stated date of expiration thereof.
(b) EARLY EXPIRATION UPON TERMINATION OF EMPLOYMENT. Except as
otherwise provided by the Committee at the time of grant of such Options, upon
termination for any reason of a Participant's employment by the Company and its
Subsidiaries, all Options or portions thereof held by such Participant on the
date of such termination shall expire and be forfeited to the extent not
theretofore exercised on the thirtieth (30th) day (one year if termination is
caused by the Participant's death or disability) following the date of such
termination.
5.8 COMPANY'S RIGHT TO REPURCHASE OPTION SHARES UPON TERMINATION OF
EMPLOYMENT.
(a) REPURCHASE RIGHT. In the event a Participant's employment with
the Company is terminated for any reason, the Option Shares (whether held by
such Participant or one or more transferees and including any Option Shares
acquired subsequent to such termination of employment) will be subject to
repurchase by the Company pursuant to the terms and conditions set forth in this
Section 5.8 (the "REPURCHASE OPTION") at a price per share equal to (i) the
purchase price thereof for any unvested Option Shares and (ii) the Fair Market
Value thereof for any vested
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Option Shares, in each case determined as of the Termination Date. The
"TERMINATION DATE" shall be the date upon which such Participant's employment
with the Company terminated.
(b) REPURCHASE NOTICE. The Board of the Company may elect to
purchase all or any portion of the Option Shares by delivery of written notice
(the "REPURCHASE NOTICE") to the holder or holders of the Option Shares within
120 days after the Termination Date. The Repurchase Notice will set forth the
number of Option Shares to be acquired from such holder, the aggregate
consideration to be paid for such shares and the time and place for the closing
of the transaction.
(c) CLOSING OF REPURCHASE. The closing of the repurchase
transaction will take place on the date designated by the Company in the
Repurchase Notice, which date will not be more than 30 days nor less than 10
days after the delivery of such notice. The Company will pay for the Option
Shares to be purchased pursuant to the Repurchase Option by delivery, at the
option of the Company, to such Participant and/or the other holder(s) of (1) a
check in the amount of the aggregate sale price of the Option Shares to be
repurchased or (2) a check in the amount of 20% of the aggregate sale price of
the Option Shares to be repurchased and a promissory note in a principal amount
equal to the remainder of the aggregate sale price, bearing interest at a
floating rate of interest equal to the prime rate as stated from time to time by
Chase Manhattan Bank, N.A. and payable, as to principal and interest, in four
equal annual installments on the first four anniversaries of the closing of such
repurchase. At the closing, the Participant and each other seller will deliver
the certificates representing the Option Shares to be sold duly endorsed in form
for transfer to the Company or its designee, and the Company will be entitled to
receive customary representations and warranties from the Participant and the
other sellers regarding title to the Option Shares.
5.9 RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS. A Participant may not sell, pledge or otherwise
transfer any interest in any Option Shares except pursuant to the provisions of
this Section 5.8. At least 60 days prior to making any transfer, the Participant
proposing such transfer shall deliverer a written notice (the "SALE NOTICE") to
the Company. The Sale Notice will disclose in reasonable detail the identity of
the prospective transferee(s) and the terms and conditions of the proposed
transfer. Such Participant (and such Participant's transferees) shall not
consummate any such transfer until 60 days after the Sale Notice has been
delivered to the Company, unless the Company has notified such Participant in
writing that it will not exercise its rights under this Section 5.8. (The date
of the first to occur of such events is referred to herein as the "AUTHORIZATION
DATE").
(b) REPURCHASE OPTION. The Company may elect to purchase all or any
portion of the Option Shares to be transferred upon the same terms and
conditions as those set forth in the Sale Notice ("RIGHT OF FIRST REFUSAL") by
delivering a written notice of such election to such Participant within 30 days
after the receipt of the Sale Notice by the Company (the "ELECTION NOTICE"). If
the Company has not elected to purchase all of the Option Shares specified in
the Sale Notice, such Participant may transfer the Option Shares not purchased
by the Company to the prospective transferee(s) as specified in the Sale Notice
at a price and on terms no more favorable
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to the transferee(s) thereof than specified in the Sale Notice during the 60-day
period immediately following the Authorization Date. Any Option Shares not so
transferred within such 60 day period must be reoffered to the Company in
accordance with the provisions of this Section 5.8 in connection with any
subsequent proposed transfer.
(c) EXCEPTIONS. The restrictions contained in this Section 5.8
will not apply with respect to transfers of Option Shares (1) pursuant to
applicable laws of descent and distribution or (2) among the Participant's
family group; provided that the restrictions contained in this paragraph will
continue to be applicable to the Option Shares after any such transfer and the
transferees of such Option Shares have agreed in writing to be bound by the
terms and provisions of this Plan and the Option grant, as amended from time to
time. The Participant's "family group" means the Participant's spouse and
descendants (whether natural or adopted) and any trust solely for the benefit of
the Participant and/or the Participant's spouse and/or descendants.
5.10 TERMINATION OF RESTRICTIONS. The rights and obligations set forth
in Sections 5.8 and 5.9 hereof will terminate upon the earlier of (A) The
consummation by the Company of a Public Offering or (B) the sale of Option
Shares in accordance with the terms and conditions of Section 5.9 (except for a
transfer pursuant to Section 5.9 (c)); provided that with respect to clause (B)
above, such rights and obligations shall terminate only with respect to those
Option Shares sold.
ARTICLE VI
GENERAL PROVISIONS
6.1 WRITTEN AGREEMENT. Each Option granted hereunder shall be embodied
in a written option agreement which shall be signed by the Participant to whom
the Option is granted and shall be subject to the terms and conditions set forth
herein.
6.2 LISTING, REGISTRATION AND LEGAL COMPLIANCE. If at any time the
Committee or the Board determines, in its discretion, that the listing,
registration or qualification of the shares subject to Options upon any
securities exchange or under any state or federal securities or other law or
regulation, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition to or in connection with the granting of
Options or the purchase or issuance of shares thereunder, no Options may be
granted or exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee or the Board. The holders of such
Options will supply the Company with such certificates, representations and
information as the Company shall request and shall otherwise cooperate with the
Company in obtaining such listing, registration, qualification, consent or
approval. In the case of officers and other persons subject to Section 16(b) of
the Securities Exchange Act of 1934, as amended, the Committee or the Board may
at any time impose any limitations upon the exercise of Options that, in the
Committee's or the Board's discretion, are necessary or desirable in order to
comply with such Section 16(b) and the rules and regulations thereunder. If the
Company, as part of an offering of securities or otherwise, finds it desirable
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because of federal or state regulatory requirements to reduce the period during
which any Options may be exercised, the Committee or the Board may, in its
discretion and without the Participant's consult, so reduce such period on not
less than 15 days' written notice to the holders thereof.
6.3 OPTIONS NOT TRANSFERRABLE. Options may not be transferred other
than by will or the laws of descent and distribution and, during the lifetime of
the Participant to whom they were granted, may be exercised only by such
Participant (or his or her legal guardian or legal representative). In the event
of the death of a Participant, Options which are not vested and exercisable on
the date of death shall terminate; exercise of Options granted hereunder to such
Participant, which are vested as of the date of death, may be made only by the
executor or administrator of such Participant's estate or the person or persons
to whom such Participant's rights under the Options will pass by will or the
laws of descent and distribution.
6.4 ADJUSTMENTS. In the event of a reorganization, recapitalization,
stock dividend or stock split, or combination or other change in the shares of
Common Stock, the Board or the Committee may, in order to prevent the dilution
or enlargement of rights under the Plan or outstanding Options, adjust the
number and type of shares as to which options may be granted under the Plan, the
number and type of shares covered by outstanding Options, the exercise prices
specified therein and over provisions of this Plan which specify a number of
shares, all as such Board or Committee determines to be appropriate and
equitable.
6.5 RIGHTS OF PARTICIPANTS. Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any Subsidiary to terminate any
Participant's employment at any time (with or without cause), or confer upon any
Participant any right to continue in the employ of the Company or any Subsidiary
for any period of time or to continue to receive such Participant's current (or
other) rate of compensation. No employee shall have a right to be selected as a
Participant or, having been so selected, to be selected again as a Participant.
6.6 AMENDMENT, SUSPENSION AND TERMINATION OF PLAN. The Board or the
Committee may suspend or terminate the Plan or any portion thereof at any time
and may amend it from time to time in such respects as the Board or the
Committee may deem advisable; provided, however, that no such amendment shall be
made without stockholder approval to the extent such approval is required by
law, agreement or the rules of any exchange upon which the Common Stock is
listed, and no such amendment, suspension or termination shall impair the rights
of Participants under outstanding Options without the consent of the
Participants affected thereby, except as provided below. No Options shall be
granted hereunder after the tenth anniversary of the adoption of the Plan.
6.7 AMENDMENT OF OUTSTANDING OPTIONS. The Committee or the Board may
amend or modify any Option in any manner to the extent that the Committee or the
Board would have had the authority under the Plan initially to grant such
Option; provided that, except as expressly contemplated elsewhere herein or in
any agreement evidencing such Option, no such amendment or modification shall
impair the rights of any Participant under any outstanding Option without the
consent of such Participant.
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6.8 INDEMNIFICATION. In addition to such other right of indemnification
as they may have as members of the Board or the Committee, the members of the
Committee shall be indemnified by the Company against all costs and expenses
reasonably incurred by them in connection with any action, suit or proceeding to
which they or any of them may be party by reason of any action taken or failure
to act under or in connection with the Plan or any Option granted under the
Plan, and against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any such action, suit or
proceeding; provided, however, that any such Committee or Board member shall be
entitled to the indemnification rights set forth in this Section 6.8 only if
such member has acted in good faith and in a manner that such member reasonably
believed to be in or not opposed to the best interests of the Company and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
that such conduct was unlawful, and further provided that upon the institution
of any such action, suit or proceeding a Committee or Board member shall give
the Company written notice thereof and an opportunity to handle and defend the
same before such Committee or Board member undertakes to handle and defend it on
his own behalf.
6.9 RESTRICTED SECURITIES. All Common Stock issued pursuant to the
terms of this Plan shall constitute "restricted securities," as that term is
defined in Rule 144 promulgated by the Securities and Exchange Commission
pursuant to the Securities Act, and may not be transferred except in compliance
with the registration requirements of the Securities Act or an exemption
therefrom.
* * * * *
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APPENDIX B
<PAGE> 23
WRITTEN CONSENT OF THE STOCKHOLDERS OF
AUTOMOTIVE PERFORMANCE GROUP, INC.
In accordance with the provisions of Section 228(a) of the Delaware
General Corporation Law and Article II, Section 9 of the Bylaws of Automotive
Performance Group, Inc. (the "Company"), the stockholders of the Company are
authorized to take action by written consent without a meeting.
The undersigned, constituting the holders of a majority of the
outstanding stock of the Company, hereby adopt, by written consent, the
following resolution:
WHEREAS it is deemed to be in the best interest of the Company and its
stockholders to adopt and approve the Company's 1998 Stock Option Plan (the
"Plan"), as adopted by the Board of Directors of the Company on March 19, 1998
and amended by the Board of Directors of the Company on May 22, 1998, with an
effective date of March 19, 1998, and to approve the Options heretofore granted
by the Company in accordance with the Plan,
NOW, THEREFORE, BE IT RESOLVED: That the Plan, as amended, is hereby
authorized and approved and that the Options heretofore granted by the Company
in accordance with the Plan are authorized and approved.
This written consent may be executed in counterparts, each of which
shall be deemed to be an original, and all of which shall constitute one and the
same instrument.
The Secretary of the Company is hereby directed to file this written
consent and the resolutions adopted hereby with the Minutes of the proceedings
of the stockholders of the Company.
Dated:_________________________, 1999.
By_________________________
