SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___)*
Analytical Surveys, Inc.
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(Name of Issuer)
Common Shares, no par value
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(Title of Class of Securities)
032683302
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(CUSIP Number)
Michael J. Schneider
Locke, Reynolds, Boyd & Weisell
1000 Capital Center South
201 N. Illinois Street
Indianapolis, Indiana 46204
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
July 2, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
* The remainder of this cover page shall be filled out for a reporting
person s initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be filed for the purpose of Section 18 of the Securities Exchange Act
of 1934 ( Act ) or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP No. 032683302
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1. Name of Reporting Person
Sol C. Miller
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. SEC Use Only
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Source of Funds
00
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Citizenship or Place of Organization
State of Indiana, U.S.A.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of 7. Sole Voting Power 925,000
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Beneficially 8. Shared Voting Power 0
Owned by . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Each 9. Sole Dispositive Power 925,000
Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Person With 10. Shared Dispositive Power 0
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Aggregate Amount Beneficially Owned by Reporting Person
925,000
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Percent of Class Represented by Amount in Row (11)
15.4%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
14. Type of Reporting Person
IN
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Item 1. Security and Issuer
The class of equity securities to which this Schedule 13D relates is the
common shares, no par value, of Analytical Surveys, Inc., a Colorado
corporation, (the "Company" ). The principal executive offices of the Company
are located at 1935 Jamboree Drive, Colorado Springs, Colorado 80920.
Item 2. Identity and Background
The name of the individual making this filing is Sol C. Miller (the
"Reporting Person" ) whose residence address is 1025 Laurelwood, Carmel, Indiana
46032. The Reporting Person's present principal occupation is real estate
developer.
During the last five years, the Reporting Person has not been convicted in
a criminal proceeding and, during the last five years, has not been a party to
any civil proceeding which resulted in a judgment, decree or final order
adjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws. The Reporting Person is a resident of the State of Indiana, United
States of America.
Item 3. Source and Amount of Funds or Other Consideration
The 925,000 common shares (the "Shares") of the Company being reported in
this Schedule 13D were acquired in connection with the sale of all of the
outstanding common shares of MSE Corporation, an Indiana corporation, by the
Reporting Person to the Company on July 2, 1997.
Item 4. Purpose of Transaction
Pursuant to the Purchase Agreement entered into by the Reporting Person and
the Company on July 2, 1997 (the "Purchase Agreement" ), the Reporting Person
sold all of the outstanding common shares of MSE Corporation to the Company for
the issuance of the Shares and the payment of certain cash consideration.
Pursuant to the Purchase Agreement, the Company agreed to use its best efforts,
consistent with applicable laws, to increase the size of the Board of Directors
of the Company by one member and to cause the Reporting Person to be elected as
a member of the Board of Directors until the next annual meeting of the
shareholders of the Company. The Company also agreed, subject to the fiduciary
duties of the Company and its Board of Directors under applicable laws, to
nominate the Reporting Person, as part of the Company's management slate of
nominees, as a member of the Board of Directors of the Company at each annual
meeting of the shareholders of the Company in 1998, 1999 and 2000.
<PAGE>
The Reporting Person currently has no other plans or proposals of the type
enumerated in (a) through (j) of Item 4 of Schedule 13D. However, the Reporting
Person reserves the right to purchase or sell common shares of the Company at
any time or from time to time. At the present time, the Reporting Person is
uncertain as to the timing or extent of any additional purchases of common
shares of the Company, if any. Further, the Reporting Person may reconsider his
present intention based on numerous factors including, but not limited to,
business prospects of the Company, other developments concerning the Company,
other business opportunities available to the Reporting Person, developments
with respect to the Reporting Person or the Company, general economic
conditions, and monetary and securities market conditions, as well as numerous
other factors.
Item 5. Interest in Securities of the Issuer
(a) The Reporting Person owns 925,000 common shares of the Company,
which represents 15.4 percent of the issued and outstanding common shares
of the Company (based on the representations of the Company contained in
the Purchase Agreement).
(b) The Reporting Person has sole voting and disposition power over
the Shares.
(c) Other than the acquisition of the Shares pursuant to the Purchase
Agreement reported elsewhere in this Schedule 13D, there have been no other
transactions by the Reporting Person in the common shares of the Company in
the past sixty (60) days.
(d) No other person has the right to receive, or the power to direct
the receipt of, dividends from, or the proceeds from, the sale of the
Shares, except the escrow agent under the Escrow Agreement under certain
circumstances described in Item 6 of this Schedule 13D.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Pursuant to an Escrow Agreement dated July 2, 1997, among Bank One,
Colorado, N.A. (the "Escrow Agent" ), the Company and the Reporting Person (the
"Escrow Agreement" ), 92,500 of the Shares (the "Escrowed Shares" ) and certain
cash consideration were deposited with the Escrow Agent. Pursuant to the Escrow
Agreement, the Escrow Agent has agreed to hold and distribute the Escrowed
Shares and related cash consideration in accordance with certain escrow
instructions which are attached to the Escrow Agreement as Schedule B. The
escrow instructions require the Escrow Agent to distribute fifty percent (50%)
of the Escrowed Shares to the Reporting Person on July 2, 1998, less any
Escrowed Shares reserved by the Escrow Agent to satisfy indemnity claims
asserted by the Company under the Purchase Agreement which are unresolved prior
to that time, if any. The Escrow Agent is also required to distribute the
remaining fifty percent (50%) of the Escrowed Shares to the Reporting Person on
November 30, 1999, less any Escrowed Shares reserved by the Escrow Agent to
satisfy indemnity claims asserted by the Company under the Purchase Agreement
which are unresolved prior to that time, if any.
<PAGE>
Pursuant to the Registration Rights Agreement, dated July 2, 1997, by and
between the Company and the Reporting Person (the "Registration Rights
Agreement"), the Reporting Person may not sell, exchange, assign, pledge or
otherwise dispose of any of the Shares prior to July 2, 1999, except to a
Permitted Transferee (as defined in the Registration Rights Agreement) or
pursuant to the exercise of certain Incidental Registration Rights discussed
below.
The Registration Rights Agreement provides that, between July 2, 1997, and
July 2, 2003, the Reporting Person shall have the right to include any or all of
the Shares in a registration statement filed by the Company with the following
limitations(the "Incidental Registration Rights"): (i) before July 2, 1999, the
Reporting Person may only include the number of Shares in such registration
statement equal to ten percent (10%) or less of the total shares being offered
by the Company in the offering, and (ii) between July 2, 1999, and July 2, 2000,
the Reporting Person may only include 462,500 of the Shares in such offering,
less any Shares previously disposed of by the Reporting Person. The Reporting
Person's right to have the Shares included in an underwritten offering may be
restricted if the managing underwriter, if any, of such offering determines
reasonably and in good faith that the inclusion of the Shares in the offering
would adversely effect the offering.
The Registration Rights Agreement also provides that the Reporting Person
has the right to demand the registration of his Shares by the Company: (i)
once, with respect to up to 462,500 of the Shares after July 2, 1999, but prior
to July 2, 2000, and (ii) once, with respect to up to all of the remaining
Shares between July 2, 2000, and July 2, 2003. However, at no time, may the
Reporting Person request registration of fewer than 100,000 of the Shares. The
Company has the right to suspend the Reporting Person's demand registration
rights for a period not to exceed ninety (90) days if the Company determines in
good faith that the filing of registration statement by the Company could
reasonably be expected to have a material adverse effect on the Company and its
shareholders. Such suspension right may be exercised only once in any twelve
(12) month period. The Company is required to pay all registration expenses in
connection with the first registration statement filed pursuant to the Reporting
Person's exercise of its demand registration rights described in this paragraph,
and the Reporting Person is required to pay all registration expenses in
connection with the second registration statement filed pursuant to his exercise
of such demand registration rights.
If the Reporting Person exercises his demand registration rights or
Incidental Registration Rights pursuant to the Registration Rights Agreement,
the Company shall have the option to purchase any or all of the Shares in lieu
of registering them, at the then current market price, determined in accordance
with the Registration Rights Agreement. The Company shall have fifteen (15) days
after receiving a notice of registration from the Reporting Person to exercise
its option to purchase any or all of the Shares. If the Company elects to
purchase less than all of the Shares requested by the Reporting Person to be
included in the registration statement, the Company will be obligated to
register the balance of the Shares subject to the other provisions of the
Registration Rights Agreement.
<PAGE>
Pursuant to the Registration Rights Agreement and an investment intent
letter executed by the Reporting Person in connection with his acquisition of
the Shares (the "Investment Letter" ), the Reporting Person acknowledged that
the Shares were acquired pursuant to certain exemptions from registration
requirements under applicable federal and state securities laws, and therefore,
are restricted securities. Further, the Reporting Person acknowledged that the
Shares are subject to certain restrictions on transfer set forth in the
Registration Rights Agreement and Investment Letter and that the certificates
representing the Shares may contain certain restrictive legends set forth in the
Registration Rights Agreement and Investment Letter.
Item 7. Material to be Filed as Exhibits
(1) Not applicable.
(2) Purchase Agreement dated July 2, 1997.
Letter agreement, dated July 2, 1997, whereby the Reporting Person
agrees to serve as a Director of the Company
(3) Escrow Agreement dated July 2, 1997.
Registration Rights Agreement dated July 2, 1997.
Investment Letter dated July 2, 1997.
Signature:
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: 7/10/97 /s/ Sol C. Miller
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Sol C. Miller
PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is entered into as of July 2,
1997, by and between Analytical Surveys, Inc., a Colorado corporation (the
"Buyer") and Sol C. Miller (the "Shareholder").
RECITALS
The Shareholder owns all of the issued and outstanding capital stock of MSE
Corporation, an Indiana corporation (the "Company"). The Shareholder desires to
sell, and the Buyer desires to purchase, all of the issued and outstanding
capital stock of the Company as provided in this Agreement.
AGREEMENT
The parties agree as follows:
ARTICLE I.
DEFINITIONS
1.1. For purposes of this Agreement:
Adjusted Net Worth means the assets minus the liabilities as shown on the
Latest Balance Sheet and the Closing Date Balance Sheet, as applicable.
Adjustment Date means the date that is agreed to by the Company and the
Shareholder, but if no agreement is reached then such date is the first business
day that falls 75 days after the Closing.
Adverse Consequences means all actions, suits, proceedings, investigations,
complaints, claims, demands, Orders, liabilities, liens, losses, damages,
penalties, fines, settlements, costs (including removal and remediation costs),
expenses and fees (including court costs and reasonable fees and expenses of
counsel and other experts).
Affiliate means any Person controlled by, controlling, or under common
control with another Person.
Affiliated Group means any affiliated group within the meaning of Code
Section 1504 or any similar group defined under a similar provision of state,
local or foreign law.
Benefit Arrangement has the meaning given to such term in Section
3.1(n)(iii).
Buyer Indemnitee has the meaning given to such term in Section 6.2.
<PAGE>
Change in Control means that the Buyer or the Company, directly or
indirectly, sells all or substantially all of the engineering services business
conducted by the Company's engineering division to a Person who is not an
Affiliate of the Company, or that all of the capital stock of the Company is
acquired by a Person who is not an Affiliate of the Company, whether by merger
or sale.
Closing and Closing Date have the meanings given to such terms in
Section 5.1.
Closing Date Balance Sheet has the meaning given to such term in
Section 2.3.
Code means the Internal Revenue Code of 1986, as amended.
Common Stock means the common stock of the Buyer, no par value.
Company Employee Benefit Plans have the meaning given in Section
3.1(n)(i).
Contract Value means the sum of revenues paid to the Company, amounts owed
to the Company, and amounts to become payable to the Company upon performance of
the services required under a contract, in progress as of the Closing Date,
signed by the Company and the customer but not yet commenced, or awarded to the
Company but not yet signed by both the Company and the customer.
Customer Negligence Claim means any Adverse Consequence suffered by any
Buyer Indemnitee that constitutes an insured claim under the errors and
omissions policy of the Company in place on the Closing Date (or would have
constituted an issued claim if such policy had remained in effect), to the
extent such Adverse Consequence arises from an act or omission that occurred
prior to the Closing.
Employee Benefit Plan means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan) or (d) Employee Welfare Benefit Plan.
Employee Pension Benefit Plan has the meaning given to such term in ERISA
Section 3(2).
Employee Welfare Benefit Plan has the meaning given to such term in ERISA
Section 3(1).
Encumbrance means any mortgage, pledge, conditional sale agreement, charge,
claim, interest of another Person, lien, security interest, title defect or
other encumbrance.
<PAGE>
Engineering Contract means any contract for the performance of engineering
services (or the sale, lease or licensing of goods that is incidental to the
performance of engineering services) by the Company or any Subsidiary.
Environmental Obligations means all present Legal Requirements and Permits
concerning land use, public health, safety, welfare or the environment,
including, without limitation, the Resource Conservation and Recovery Act (42
U.S.C. 6901 et seq.), as amended, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. 9601 et seq.), as amended, and the
Occupational Safety and Health Act, as amended, and any civil liability (under
any Legal Requirement or under common law) to any Person.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and any regulations, rules or orders promulgated under the Employee
Retirement Income Security Act of 1974, as amended.
Escrow Agent will be BankOne Colorado.
Escrow Agreement means the Escrow Agreement among the Buyer, the
Shareholder, and the Escrow Agent in the form of Exhibit A with respect to the
period commencing on the Closing Date and ending on the first anniversary of the
execution of this Agreement (the "Escrow Period").
GAAP means generally accepted accounting principles as in effect from time
to time in the United States, as consistently applied, and in accordance with
all pronouncements of the Financial Accounting Standards Board.
Governmental Authority means the United States of America, any state,
commonwealth, territory or possession of the United States of America, any
political subdivision of any of them (including counties, municipalities,
home-rule cities and the like), and any agency, authority or instrumentality of
any of the foregoing, including, without limitation, any court, tribunal,
department, bureau, commission or board.
Income Tax means any federal, state or local Tax based on income, gross
receipts, or profits, including any interest, penalty, or similar payment
obligation arising in connection with such Tax.
Intellectual Property means all trade, corporate, business and product
names, trademarks, trademark rights, service marks, copyrights, patents, patent
rights, trade secrets, and computer software (other than software not used or
useful in the business of the Company or any Subsidiary, and other than readily
available software purchased at a cost of less than $5,000 in the aggregate for
all sites and seats using such software), and all registrations, licenses and
applications pertaining to any of them.
Latest Balance Sheet has the meaning given to such term in Section 3.1(e).
<PAGE>
Legal Requirement means any constitution, statute, ordinance, code, or
other law (including common law), rule, regulation, Order, notice, standard,
procedure or other requirement enacted, adopted, applied or issued by any
Governmental Authority.
Multiemployer Plan has the meaning given to such term in ERISA Section
3(37).
Orders means all judgments, injunctions, orders, rulings, decrees,
directives, notices of violation or other requirements of any Governmental
Authority or arbitrator having jurisdiction in the matter, including a
bankruptcy court or trustee.
Other Buyer Agreements means any documents and instruments executed and
delivered by the Buyer at Closing, excluding this Agreement.
Other Seller Agreements means any documents and instruments executed and
delivered by the Shareholder at Closing, excluding this Agreement.
Permits means all permits, licenses, consents, franchises, authorizations,
approvals, privileges, waivers, exemptions, variances, exclusionary or
inclusionary Orders and other concessions, whether governmental or private,
including, without limitation, those relating to environmental, public health,
welfare or safety matters.
Permitted Encumbrances means: (i) liens for Taxes and other governmental
charges not yet due or delinquent; (ii) mechanics', carriers', workmen's,
repairmen's or other like Encumbrances arising or incurred in the ordinary
course of business with respect to liabilities that are not yet due or
delinquent; (iii) those Encumbrances listed on Schedule 1.1; and (iv) other
Encumbrances, if any, which, individually or in the aggregate, would not
materially detract from the value of the asset to which it relates or materially
impair the ability of the Company to use the asset to which it relates in
substantially the same manner as it was used prior to the Closing; provided, in
the case of each Encumbrance described in (i), (ii) and (iv), that the liability
secured by such Encumbrance is fully reflected on the face of the Closing Date
Balance Sheet and that such liability does not otherwise constitute a breach of
any representation, warranty or covenant of the Shareholder in this Agreement.
Person means an individual, partnership, corporation, association, joint
stock company, trust, joint venture, limited liability company, unincorporated
organization or Governmental Authority.
Premises means the real property, buildings and improvements on such real
property constituting the business premises of the Company and each Subsidiary
located at 941 and 930 North Meridian Street, Indianapolis, Indiana.
Prime Rate is the prime rate as published, from time to time, in The Wall
Street Journal.
<PAGE>
Principal Customer has the meaning given to such term in Section 3.1(p).
Right means any right, property interest, concession, patent, trademark,
trade name, copyright, know-how or other proprietary right of another Person.
Section 338(h)(10) Election has the meaning given to such term in Section
4.8(a).
Seller Indemnitee has the meaning given to such term in Section 6.1.
Shareholder has the meaning given to such term in the preamble to this
Agreement.
Shares means all of the issued and outstanding capital stock of the
Company.
Subsidiary has the meaning given to such term in Section 3.1(b).
Survival Period means, with respect to a representation or warranty, the
applicable period after the Closing Date during which such representation or
warranty survives pursuant to Section 8.13.
Tax means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, documentary, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, including any interest,
penalty or addition.
Tax Return means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment to any of them, and including any amendment of any of them.
Terminable Contracts has the meaning given to such term in Section 4.9.
ARTICLE II.
PURCHASE AND SALE
2.1. Basic Transaction. Subject to the terms and conditions set forth in
this Agreement, the Buyer agrees to purchase from the Shareholder, and the
Shareholder agrees to sell to the Buyer, all of the Shares, free and clear of
any Encumbrance, for the consideration specified in Section 2.2. The Buyer will
have no obligation under this Agreement to purchase less than all of the Shares.
<PAGE>
2.2. Purchase Price; Payment. The purchase price for the Shares is
$11,000,000 plus 925,000 shares of Common Stock. At Closing, the Buyer will (i)
pay to the Shareholder $10,700,000 and deliver to the Shareholder 832,500 shares
of Common Stock; and (ii) deposit $300,000 into an Escrow Account (as defined in
the Escrow Agreement) and deposit 92,500 shares of Common Stock with the Escrow
Agent. The cash payment at Closing will be made by wire transfer of federal or
immediately available funds to an account or accounts designated by the
Shareholder and the share payment at Closing will be made by delivery of
certificates representing such shares of Common Stock. Notwithstanding the
existence of an Escrow Account, nothing will prevent the Shareholder from paying
cash in satisfaction of its indemnification obligations under Article VI. The
Buyer Indemnitees shall be required to first seek recourse against the shares of
Common Stock deposited in the Escrow Agreement before seeking recourse directly
against the Shareholder for any indemnification obligation of the Shareholder
under Article VI, but only to the extent that the credited value of the Common
Stock held in Escrow exceeds the amount claimed by all Buyer Indemnitees.
2.3. Closing Balance Sheet. Within 45 days after the Closing, the
Shareholder will deliver to the Buyer at the Shareholder's expense a
consolidated balance sheet for the Company and any Subsidiary as of the close of
business on the Closing Date (the "Closing Date Balance Sheet"). The Closing
Date Balance Sheet will be prepared in accordance with GAAP on a basis
consistent with the accounting policies applied by the Company for the December
31, 1996 audited Financial Statements of the Company, subject to Schedule 2.3.
Notwithstanding the foregoing, the reserve for bad debts on the Closing Date
Balance Sheet will include a reserve equal to 100% of the unpaid balance of the
accounts receivable due from Estridge and Sagamore as of the Closing Date.
2.4. Adjustment to the Purchase Price; Procedure. Following delivery of the
Closing Date Balance Sheet in accordance with Section 2.3, the Purchase Price
will be adjusted as follows:
(a) The Buyer will examine the Closing Date Balance Sheet to determine
whether it believes the Closing Date Balance Sheet was prepared in accordance
with the provisions of this Agreement. In connection with that examination, the
Shareholder will provide, and will cause his accountant to provide, the Buyer
and the Buyer's accountants with access to such information as the Buyer may
reasonably request to make that determination, including access to all work
papers and calculations of the Shareholder's accountants related to the
preparation of the Closing Date Balance Sheet.
(b) Within 15 days after receipt of the Closing Date Balance Sheet, the
Buyer will, in a written notice to the Shareholder, either accept the Closing
Date Balance Sheet or object to it by describing in reasonable detail any
proposed adjustments to the Closing Date Balance Sheet and the reasons for such
proposals. If the Shareholder has not received such notice of proposed
adjustments within such 15-day period, the Buyer will be deemed to have accepted
the Closing Date Balance Sheet; provided, however, that if the Buyer's failure
to give such notice results from the Shareholder's failure to timely provide
information requested by Buyer under Section 2.4(a), the time within which Buyer
must give such notice will be extended until a reasonable time after Shareholder
provides the information requested by Buyer.
<PAGE>
(c) If any adjustments to the Closing Date Balance Sheet are proposed, the
Buyer and the Shareholder will negotiate in good faith to resolve any dispute,
provided that if the dispute is not resolved within 10 days following the
Shareholder's receipt of the proposed adjustments, the Buyer and the Shareholder
will retain a mutually acceptable nationally recognized independent public
accounting firm to resolve such dispute, which resolution will be final and
binding. The fees and expenses of any such accounting firm will be shared
equally by the Buyer and the Shareholder, and such accounting firm will be
retained by a retention letter executed by the parties that specifies that the
determination by said firm of any such disputes concerning the Closing Date
Balance Sheet will be resolved in accordance with GAAP on a basis consistent
with the accounting policies applied by the Company in its December 31, 1996
audited Financial Statements. If the Buyer and the Shareholder are unable to
agree on a mutually acceptable independent public accounting firm to resolve
such dispute, the dispute will be resolved by arbitration in accordance with
Section 7.2 of this Agreement.
(d) On the Adjustment Date (if a dispute occurs), or within 10 business
days after the resolution of a dispute (if a dispute occurs and is to be
resolved in accordance with Section 2.4(c)), as the case may be, then to the
extent that the Adjusted Net Worth of the Company as set forth on the Closing
Date Balance Sheet is less than $10,075,000, the Shareholder will pay to the
Buyer the difference between such two amounts. Such payment will include
interest accrued from the Closing Date to the date of such payment at the Prime
Rate.
2.5. Sales Taxes, Etc. The Shareholder will pay all sales, use, transfer,
licensing, recording, stamp and other Taxes, fees and charges payable in respect
of or as a result of the sale and transfer of the Shares to the Buyer pursuant
to this Agreement. The Buyer will pay all Taxes, fees and charges payable in
respect of or as a result of the sale and issuance of the shares of Common Stock
to the Shareholder pursuant to this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Shareholder. The Shareholder
represents and warrants to the Buyer as follows, as of the date of this
Agreement:
(a) Organization, Good Standing, Etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Indiana, and is qualified to do business as a foreign corporation and is in good
standing in California and Florida, which are the only jurisdictions in which
such qualification is necessary and in which the failure to be so qualified
would have a material adverse effect on the business or properties of the
Company. The Company has all requisite corporate power and authority to own,
<PAGE>
lease and operate its properties and to carry on its business as now being
conducted. True and complete copies of (i) the articles of incorporation
(certified by the Secretary of State of Indiana) and (ii) the bylaws of the
Company, both as currently in effect, have been delivered to the Buyer by the
Company and the Shareholder, and the Company is not in violation of any
provision of its articles of incorporation or bylaws. True copies of the minute
books, the stock certificate books, and stock record books of the Company have
been delivered to the Buyer by the Shareholder.
(b) Subsidiaries. Schedule 3.1(b) sets forth a correct and complete
description of (i) the name and jurisdiction of each entity of which the Company
owns, directly or indirectly, more than 50% of the capital stock, profits,
interest or interest in capital (individually a "Subsidiary" and collectively
the "Subsidiaries"), (ii) the number of shares of capital stock of each
Subsidiary authorized and outstanding and the number of shares of capital stock
of each Subsidiary owned by the Company or any other Subsidiary and (iii) the
jurisdictions, if any, in which each Subsidiary is qualified or licensed to do
business as a foreign entity. Each Subsidiary (i) is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, (ii) is duly qualified do business as a foreign entity in each
jurisdiction in which such qualification is necessary and in which the failure
to be so qualified would have a material adverse effect on the business or
properties of the Company, and (iii) has all requisite power to own, lease and
operate its properties and to conduct its business as it is now conducted. True
and complete copies of (i) the articles of organization (certified by the
Secretary of State of Indiana) and (ii) the operating agreement of each
Subsidiary, both as currently in effect, which have been delivered to the Buyer
by the Company, and no Subsidiary is in violation of any provision of its
articles of organization or operating agreement. Except for the Subsidiaries or
as otherwise disclosed in Schedule 3.1(b), the Company does not own, directly or
indirectly, any equity interest in any corporation, partnership, joint venture
or other business entity. The Company no longer owns any interest in MSE Realty
LLC.
(c) Ownership and Capitalization. The authorized capital stock of the
Company consists of 1,000,000 shares of common stock, no par value. The
Shareholder owns, beneficially and of record, free and clear of any Encumbrance,
all of the issued and outstanding capital stock of the Company. All of the
issued and outstanding shares of the Company's capital stock have been duly
authorized and validly issued and are fully paid and nonassessable. There is no
authorized or outstanding stock or security convertible into or exchangeable
for, or any authorized or outstanding option, warrant or other right to
subscribe for or to purchase, or convert any obligation into, any unissued
shares of the Company's capital stock or any treasury stock, and the Company has
not agreed to issue any security so convertible or exchangeable or any such
option, warrant or other right. There are no authorized or outstanding stock
appreciation, phantom stock, profit participation or similar rights with respect
to the Company, except pursuant to the Company's Equity Participation Plan.
There are no voting trusts, voting agreements, proxies or other agreements or
understanding with respect to any capital stock of the Company. There are no
existing rights of first refusal, buy-sell arrangements, options, warrants,
rights, calls, or other commitments or restrictions of any character relating to
any of the Shares, except those restrictions on transfer imposed by the
Securities Act of 1933, as amended, and applicable state securities laws.
<PAGE>
(d) Authority; No Violation. The Shareholder has full and absolute right,
power, authority and legal capacity to execute, deliver and perform this
Agreement and all Other Seller Agreements to which the Shareholder, is a party,
and, assuming the due authorization, execution and delivery of this Agreement
and the Other Seller Agreements by the other parties to such agreements, this
Agreement constitutes, and the Other Seller Agreements constitute, the legal,
valid and binding obligations of, and will be enforceable in accordance with
their respective terms against, the Shareholder, except as such enforcement is
subject to the effect of (i) any applicable bankruptcy, insolvency,
reorganization or similar laws relating to or affecting creditors' rights
generally and (ii) general principles of equity, including, without limitation,
concepts of reasonableness, good faith and fair dealing, and other similar
doctrines affecting the enforceability of agreements generally (regardless of
whether considered in a proceeding in equity or at law). The execution, delivery
and performance of this Agreement and the Other Seller Agreements and the
consummation of the transactions contemplated by each such agreement will not
(A) violate (x) any Legal Requirement to which the Company or the Shareholder is
subject or (y) any provision of the articles of incorporation or bylaws of the
Company, or (B) except as set forth in Schedule 3.1(d), violate, with or without
the giving of notice or the lapse of time or both, or result in the breach of
any provision of, or constitute a default under, or result in the creation of
any Encumbrance upon any properties, assets or business of the Company or of the
Shareholder, pursuant to, any indenture, mortgage, deed of trust, lien, lease,
license, Permit, agreement, instrument or other arrangement to which the
Company, any Subsidiary, or the Shareholder is a party or by which the Company,
any Subsidiary, or the Shareholder, or any of their respective assets and
properties is bound or subject, but for purposes of this representation and
warranty, any right on the part of the other party to such agreement to
terminate any such agreement upon the execution, delivery and performance of
this Agreement and the Other Seller Agreements or the consummation of the
transactions contemplated by each such agreement will not constitute a breach of
this representation and warranty (whether or not the agreement is listed on
Schedule 3.1(d)). Except for notices that have been given and consents that have
been obtained by the Shareholder prior to the execution of this Agreement (which
are set forth in Schedule 3.1(d)), neither the Company, the Shareholder or any
Subsidiary, need give any notice to, make any filing with or obtain any
authorization, consent or approval of any Governmental Authority in order for
the parties to consummate the transactions contemplated by this Agreement and
the Other Seller Agreements. Neither the Shareholder nor the Company or any
Subsidiary is a party to any litigation or proceeding (and, to the knowledge of
the Shareholders, no such litigation or proceeding has been threatened), that
seeks to prohibit or delay, or that seeks damages as a result of, the execution
and delivery of this Agreement by the Shareholder or the consummation of the
transactions contemplated by this Agreement.
(e) Financial Statements. The Shareholder has delivered to the Buyer
complete and correct copies of (i) audited balance sheets and related statements
of income, stockholders' equity and cash flow of the Company as of and for the
years ended December 31, 1996, and 1995 and all notes and schedules thereto and
(ii) the unaudited internally prepared balance sheets of the Company and the
related unaudited statements of income as of March 31, 1997 (collectively, the
"Financial Statements"). The Financial Statements are in accordance with the
books and records of the Company and of any Subsidiary and were prepared in
<PAGE>
accordance with GAAP and present fairly the Company's and Subsidiary's financial
position, results of operations and changes in financial position as of the
dates and for the periods indicated, subject in the case of the unaudited
Financial Statements only to standard year-end adjustments (none of which will
be material in amount) and the omission of footnotes. The unaudited balance
sheet as of March 31, 1997, is called the Latest Balance Sheet. At the date of
the Latest Balance Sheet, neither the Company nor any Subsidiary had any
liability or obligation, whether accrued, absolute, fixed or contingent
(including liabilities for taxes or unusual forward or long-term commitments),
required by GAAP to be reflected or reserved against in that balance sheet that
were not fully reflected or reserved against on the Latest Balance Sheet. The
balance sheets included in the Financial Statements reflect capitalized computer
software costs and capitalized mapping inventory at net realizable value as
required by SFAS No. 86. The amount of start-up revenue recognized by the
Company during the period from January 1, 1997 to the date of the Closing Date
Balance Sheet did not exceed $300,000. Copies of the financial statements
described in clause (i) are attached as Schedule 3.1(e)(i), and copies of the
financial statements described in clause (ii) of this Section are attached as
Schedule 3.(e)(ii).
(f) Absence of Certain Changes or Events. Since March 31, 1997, except as
disclosed in Schedule 3.1(f), the Company and each Subsidiary have not (i)
incurred any debt, indebtedness or other liability, except current liabilities
incurred in the ordinary course of business; (ii) delayed or postponed the
payment of accounts payable or other liabilities or accelerated the collection
of any receivable beyond stated, normal terms except in the ordinary course of
business; (iii) sold or otherwise transferred any of their equipment or other
assets or properties, except in the ordinary course of business and except for
equipment no longer needed in the Company's business that was sold for fair
market value; (iv) cancelled, compromised, settled, released, waived,
written-off or expensed any account or note receivable, right, debt or claim
involving more than $10,000 in the aggregate, except to the extent that such
amount is reserved in the Closing Date Balance Sheet; (v) changed in any
significant manner the way in which they conduct business; (vi) made or granted
any individual wage or salary increase in excess of 10% or $2.00 per hour, any
general wage or salary increase, or increased employee benefits of any kind or
nature; (vii) entered into any contract or agreement, or made any commitment,
involving more than $50,000; (viii) accelerated, terminated, delayed, modified
or cancelled any agreement, contract, lease or license (or series of related
agreements, contracts, leases and licenses) involving more than $50,000; (ix)
suffered any material adverse change to or in their business, assets, financial
condition, or existing or prospective relationships with customers or suppliers;
(x) made any payment or transfer to or for the benefit of the Shareholder or
permitted any Person, including, without limitation, the Shareholder, to
<PAGE>
withdraw assets from the Company or from any Subsidiary (other than the payment
to the Shareholder of the proportionate monthly amount of his normal annualized
salary due and payable during such period, distributions to the Shareholder to
pay Taxes on earnings of the Company attributable to him by reason of the
Company's election to be taxed as an S corporation (or to pay off previous loans
by the Company to the Shareholder to pay such Taxes), declarations of dividend
distributions to the Shareholder if and to the extent that the Adjusted Net
Worth of the Company as set forth on the Closing Date Balance Sheet exceeds
$10,075,000 (but not more than $664,000) and the transfer to the Shareholder or
an Affiliate of the Shareholder of a 1% interest in MSE Realty, LLC); (xi)
suffered any other significant occurrence, event, incident, action, failure to
act or transaction outside the ordinary course of business; or (xii) agreed to
incur, take, enter into, make or permit any of the matters described in clauses
(i) through (xi).
(g) Tax Matters.
i) The Company and each Subsidiary have filed all Income Tax Returns and,
to the knowledge of the Shareholder, all other Tax Returns that they were
required to file. All such Income Tax Returns and, to the knowledge of the
Shareholder, all other Tax Returns were correct and complete in all respects.
All Income Taxes and, to the knowledge of the Shareholder, all other Taxes owed
by the Company and by each Subsidiary (whether or not shown on any Tax Return)
have been paid. The Company and each Subsidiary are not currently the
beneficiaries of any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where the Company and
each Subsidiary do not file Tax Returns that it is or may be subject to taxation
by that jurisdiction. There are no Encumbrances on any of the assets of the
Company or on those of any Subsidiary that arose in connection with any failure
(or alleged failure) to pay any Tax.
ii) The Company and each Subsidiary withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, the Shareholder or other third
party.
iii) There is no pending or threatened dispute or claim concerning any Tax
liability of the Company or of any Subsidiary. Schedule 3.1(g)(iii) lists all
federal, state, local and foreign income Tax Returns filed with respect to the
Company and any Subsidiary for taxable periods ended on or after December 31,
1993, identifies those Tax Returns that have been audited and identifies those
Tax Returns that currently are the subject of audit. The Shareholder has
delivered to the Buyer correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies filed or assessed
against or agreed to by the Company and each Subsidiary since December 31, 1993.
iv) The Company and each Subsidiary have not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
v) Neither the Company, the Shareholder nor any Subsidiary has ever filed a
consent pursuant to Section 341(f) of the Code relating to collapsible
corporations. The Company and each Subsidiary have not made any payments, are
not obligated to make any payments and are not parties to any agreement that
under certain circumstances could obligate them to make any payments that will
not be deductible under Code Section 280G. The Company and each Subsidiary have
not been United States real property holding corporations within the meaning of
Code Section 897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii). The Company and each Subsidiary disclosed on their federal
income Tax Returns all positions taken that could give rise to a substantial
<PAGE>
understatement of federal income Tax within the meaning of Code Section 6662.
The Company and each Subsidiary are not parties to any Tax allocation or sharing
agreement. The Company and each Subsidiary have not been members of an
Affiliated Group filing a consolidated federal income Tax Return (other than a
group the common parent of which was the Company) and have no liability for the
Taxes of any Person (other than the Company) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract or otherwise.
vi) Since January 1, 1987, and for all taxable periods of the Company
thereafter, the Company has duly filed a valid S Corporation election, which
election was effective as of such date and has been continuously in effect from
such date.
vii) All Taxes payable by all present and former shareholders of the
Company and present and former shareholders or owners of any Subsidiary in
respect of the Company's and any Subsidiary's taxable income have been paid.
viii) [Intentionally omitted.]
ix) At all times since January 1, 1987, the Company (and any predecessor of
the Company) has been a validly electing S corporation within the meaning of
Code 1361 and 1362, and the Company will be an S corporation up to and including
the Closing Date.
x) Schedule 3.1(g)(x) identifies each Subsidiary that is a "qualified
subchapter S subsidiary" within the meaning of Code 1361(b)(3)(B). Each
Subsidiary so identified has been a qualified subchapter S subsidiary at all
time since the date shown on such schedule up to and including the Closing Date.
xi) The Company will not be liable for any Tax under Code 1374 in
connection with the deemed sale of the Company's assets (including the assets of
any qualified subchapter S subsidiary) caused by the Section 338(h)(10)
Election. Neither the Company nor any qualified subchapter S subsidiary of the
Company has, in the past 10 years, (A) acquired assets from another corporation
in a transaction in which the Company's Tax basis for the acquired assets was
determined, in whole or in part, by reference to the Tax basis of the acquired
assets (or any other property) in the hands of the transferor or (B) acquired
the stock of any corporation which is a qualified subchapter S subsidiary.
(h) Assets and Properties.
i) The Company has good title to (or, in the case of the assets that are
leased, valid leasehold interests in) all the assets that are used by the
Company in its business, free and clear of all Encumbrances (except for
Permitted Encumbrances). Such assets consist of the tangible and intangible
assets of the Company in existence as of the Closing Date. Such assets are all
of the tangible and intangible assets used by the Company in, or necessary for
the conduct of, its business as conducted by the Company since January 1, 1997.
<PAGE>
Such assets and any equipment leased by the Company from third parties encompass
all equipment used by the Company to generate the income reflected in the
financial statements attached as Schedule 3.1(e)(i). Schedule 3.1(h)(i) lists
all the third party equipment leased by the Company as of the date of this
Agreement. The Company does not lease any equipment from the Shareholder, except
for fixtures attached to the Premises and leased to the Company by MSE Realty
LLC. All of the Company's tangible assets are located on the Premises, except
for field equipment used on job sites in the ordinary course of business.
Each Subsidiary has good title to (or, in the case of assets that are
leased, valid leasehold interests in) all of its respective assets, free and
clear of all Encumbrances (except for Permitted Encumbrances). These assets
consist of the tangible and intangible assets of each Subsidiary in existence as
of the Closing Date. These assets are all of the tangible and intangible assets
used by each Subsidiary in, or necessary for the conduct of, its business as
conducted by the Subsidiary since January 1, 1997. These assets and any
equipment leased by each Subsidiary from third parties encompass all equipment
used by each Subsidiary to generate the income reflected in the financial
statements attached as Schedule 3.1(e)(i). Schedule 3.1(h)(i) lists all the
third party equipment leased by each Subsidiary as of the date of this
Agreement. No Subsidiary leases any equipment from the Shareholder. All of the
tangible assets are located at each Subsidiary's principal place of business.
ii) The Premises constitute all of the real property, buildings and
improvements used by the Company and each Subsidiary in their business. The
Premises are supplied with utilities and other services necessary for the
operation of the Premises. Except as set forth on Schedule 3.1(h)(ii), the
Premises have been maintained in accordance with normal industry practice, are
in good operating condition and repair and are suitable for the purposes for
which they presently are used. To the knowledge of the Shareholder, the Premises
have received all approvals of Governmental Authorities (including Permits)
required in connection with the occupation and operation of the Premises and
have been occupied, operated and maintained in accordance with applicable Legal
Requirements. Neither the Shareholder, the Company nor any Subsidiary has
received notice of violation of any Legal Requirement or Permit relating to the
condition or their operation of the Premises which has an adverse effect on the
ability of the Company or any Subsidiary to utilize the Premises or requires the
Company or any Subsidiary to incur expense in order to utilize the Premises.
iii) No party to any lease with respect to any Premises has repudiated any
provision of such lease, and there are no disputes, oral agreements or
continuing waivers in effect as to any such lease.
(i) Attached as Schedule 3.1(i) is a list of the following contracts and
agreements not yet substantially performed to which the Company or any
Subsidiary is a party:
(i) Any agreement (or group of related agreements) for the sale of goods or
the furnishing of services involving reasonably anticipated total revenues in
excess of $300,000;
<PAGE>
(ii) Any agreement (or group of related agreements) for the purchase of
goods or services involving reasonably anticipated total payments in excess of
$300,000;
(iii) Any agreement (or group of related agreements) for the lease of
personal property or real property to or from any Person providing for lease
payments in excess of $5,000 per annum, other than agreements that may be
terminated without cause and without penalty by the Company or the Subsidiary on
30 days or less notice to such Person;
(iv) All confidentiality and non-competition agreements, mortgages, deeds
of trust, indentures, loan agreements, credit agreements, promissory notes and
guaranties;
(v) Each note or account receivable from, loan or advance to, and agreement
for the purchase, sale or lease of goods or services to or from, the
Shareholder, or any Affiliate of the Shareholder, or any officer, director or
employee of the Company or any Subsidiary; and
(vi) All guaranty, warranty and indemnity agreements provided or delivered
by the Company or any Subsidiary to any of its customers of business (but
excluding such agreements included as provisions in the service agreements with
customers).
The contracts and agreements described in clauses (i) through (vi) of this
Section 3.1(i) are referred to in this Agreement as the "Material Contracts."
With respect to each such Material Contract: (A) the Material Contract is valid,
in full force and effect, and enforceable in accordance with its terms, except
as such enforcement is subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting creditors'
rights generally and general principles of equity, including, without
limitation, concepts of reasonableness, good faith and fair dealing, and other
similar doctrines affecting the enforceability of agreements generally
(regardless of whether considered in a proceeding in equity or at law); (B) no
action or claim is pending or, to the knowledge of the Shareholder, threatened
to revoke, modify, terminate or render invalid any such Material Contract; and
(C) except for financing agreements with The Fifth Third Bank of Central Indiana
and Terminable Contracts, to the knowledge of the Shareholder, neither the
Company, any Subsidiary nor any other party is in breach or default in the
performance of any of its respective obligations under, and, no event exists
which, with the giving of notice of the lapse of time or both, would constitute
a breach or default on the part of a party to, such Material Contract that is
continued unremedied, except for breaches or defaults which will not have a
material adverse effect on the business or properties of the Company. Copies of
the Material Contracts delivered to the Buyer are true and complete. The
prepayment of the Company's indebtedness to The Fifth Third Bank of Central
Indiana is not prohibited and will not result in the imposition of any
prepayment penalty or similar obligation. With respect to contracts and
agreements for the sale of goods or the furnishing of services by the Company or
any Subsidiary that is not a Material Contract, to the knowledge of the
Shareholder, neither the Company nor any Subsidiary is in breach or default in
the performance of its obligations under any such contracts or agreements.
<PAGE>
Also set forth on Schedule 3.1(i) is a list setting forth the following
items:
(vii) All items of equipment, machinery and other tangible personal
property of the Company and of each Subsidiary (including that which, as of the
date of this Agreement, has no book value), and the original cost, depreciation
and current book value of all such items which are included in the Latest
Balance Sheet;
(viii) All Permits, licenses, Orders, registrations, certificates and
similar rights of the Company and each Subsidiary;
(ix) The names and current rates of compensation as of June 20, 1997 of all
employees of the Company and any Subsidiary whose annual rate of compensation is
$40,000 or more;
(x) All items of Intellectual Property owned by the Company or any
Subsidiary, or which is used by the Company in its business, and in each case
where the Company or any Subsidiary is not the owner, the name of the owner of
the Intellectual Property; and
(xi) The name of each bank or other financial institution or entity in
which the Company or any Subsidiary has an account or safe deposit box (with the
identifying account number or symbol) and the names of all persons authorized to
draw on such account or to have access to such safe deposit box.
(j) Litigation; Compliance with Applicable Laws and Rights.
i) There is no outstanding Order against, or, except as set forth on
Schedule 3.1(j)(i), is there any litigation, proceeding, arbitration or
investigation by any Governmental Authority or other Person pending or, to the
knowledge of the Shareholder, threatened against, the Company or any Subsidiary,
their properties or their business.
ii) Except as set forth on Schedule 3.1(j)(ii), to the knowledge of the
Shareholder, the Company and each Subsidiary and each of their assets (including
their Premises, facilities, machinery and equipment) are not in violation of any
applicable Legal Requirement. Except as set forth in Schedule 3.1(j)(ii),
neither the Shareholder, the Company nor any Subsidiary has received notice from
any Governmental Authority or other Person of any violation or alleged violation
of any Legal Requirement which has not been finally resolved on a basis that
involves no continuing obligation or liability to the Company.
(k) Accounts Receivable. The accounts receivable of the Company and of each
Subsidiary reflected on the Latest Balance Sheet and on the Closing Date Balance
Sheet have arisen in the ordinary course of business and reflect bona fide
business arrangements; no payor has given the Shareholder, the Company or any
<PAGE>
Subsidiary written notice of any inability to pay such account receivable in due
course or of any claim or defense against payment of such account receivable; to
the Shareholder's knowledge, no oral statements to such effect have been made to
the Shareholder, the Company or any Subsidiary; to the Shareholder's knowledge,
no basis exists for any payor to raise any claim or defense against payment with
respect to any such account receivable; and Schedule 3.1(k) sets forth a true
and correct statement regarding the aging of such accounts receivable as of a
date within 10 days of the date of this Agreement.
(l) Product Quality, Warranty and Liability. No product or service provided
or delivered by the Company or any Subsidiary to customers on or prior to the
date of this Agreement is subject to any guaranty, warranty or other indemnity
beyond the terms set forth in the written agreement with such customer. All
product or service liability claims that have been asserted against the Company
or any Subsidiary since March 31, 1997, whether covered by insurance or not and
whether litigation has resulted or not, other than those listed and summarized
on Schedule 3.1(j)(i), are listed and summarized on Schedule 3.1(l).
(m) Insurance. The Company and each Subsidiary have policies of insurance
(i) covering risk of loss on the Company's and each Subsidiary's assets,
respectively, (ii) covering products and services liability and liability for
fire, property damage, personal injury and workers' compensation coverage and
(iii) for business interruption, all, to the knowledge of the Shareholder, with
responsible and financially sound insurance carriers in adequate amounts and in
compliance with governmental requirements and in accordance with good industry
practice. All such insurance policies are valid, in full force and effect and
enforceable in accordance with their respective terms and no party has
repudiated any provision of such policies. Neither the Company nor any other
party to any such policy is in breach or default (including with respect to the
payment of premiums or the giving of notices) in the performance of any of their
respective obligations under any such policy; no insurer under any such
insurance policy has denied coverage or reserved against coverage concerning any
claim made by the Company or any Subsidiary; and, to the knowledge of the
Shareholder, no event exists which, with the giving of notice or the lapse of
time or both, would constitute a breach, default or event of default, or permit
termination, modification or acceleration under any such policy. All premiums
have been paid on such policies as of the date of this Agreement. The Company
and each Subsidiary have been covered during the five years prior to the date of
this Agreement by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during such five-year period. All claims made
during such five-year period with respect to any insurance coverage of the
Company or any Subsidiary, other than claims made by or on behalf of employees
of the Company or any Subsidiary under the Company's health insurance policy and
other than those described on Schedule 3.1(l), are set forth on Schedule 3.1(m).
(n) Pension and Employee Benefit Matters.
i) Schedule 3.1(n) lists each Employee Benefit Plan of the Company and each
entity which is a member of the controlled group with the Company (as defined
under ERISA Section 4001(a)(14)) (the "Company Employee Benefit Plans") that:
(A) is subject to any provision of ERISA; (B) is maintained, administered or
contributed to by the Company or any controlled group member; (C) covers any
<PAGE>
employee or former employee of the Company or any controlled group entity; or
(D) under which the Company or any controlled group entity has any liability to
make contributions or pay benefits. Copies of the current versions of all such
plans, summary plan descriptions, and, if applicable, related trust agreements,
and all amendments of such plans have been delivered by the Shareholder to the
Buyer and attached to this Agreement as part of Schedule 3.1(n), and has
delivered to the Buyer the three most recent annual reports (Form 5500 including
Schedule B if applicable) and summary annual reports prepared in connection with
each such plan required to file an annual report.
ii) The only Company Employee Benefit Plans that individually or
collectively would constitute Employee Pension Benefit Plans are identified in
Schedule 3.1(n). No Company Employee Benefit Plan is subject to the Plan
Termination Insurance provisions of Title IV of ERISA. The Company and each
controlled group member have not incurred any liability under Title IV of ERISA
arising in connection with the termination of any plan covered or previously
covered by Title IV of ERISA.
iii) The Shareholder has delivered to the Buyer a current, complete and
correct copy of the Company's Employee Benefit Workbook (the "Workbook") and the
Company's Personnel and Administrative Policy Guide (the "Guide"). The Workbook
and the Guide list each employment, severance or other similar contract,
arrangement or policy and each plan or arrangement (written or oral) providing
for insurance coverage (including any self-insured arrangements), disability
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits, deferred compensation, profit sharing, bonuses, stock options, stock
appreciation rights or other forms of incentive compensation, reduced interest
or interest free loans, mortgages, relocation assistance or post-retirement
insurance, compensation or other benefits that: (A) is not an Employee Benefit
Plan; (B) is entered into, maintained or contributed to, by the Company and each
controlled group member and (C) covers any employee or former employee of the
Company or any controlled group member. Such contracts, plans and arrangements
as are described in this Section are referred to collectively as the "Benefit
Arrangements." Copies of each of these Benefit Arrangements either are set forth
in full in the Workbook or the Guide or have been made available to the Buyer or
are listed as "Other Benefit Arrangements" on Schedule 3.1(n). Neither the
Company nor any Subsidiary has any liability under any other Benefit
Arrangements that no longer are in effect.
iv) Except as set forth in any Company Employee Benefit Plan or Benefit
Arrangement identified in Schedule 3.1(n) and except as provided by a Legal
Requirement or any collective bargaining agreement or any employment contract
identified on Schedule 3.1(n), the employment of all persons presently employed
or retained by the Company or any Subsidiary is terminable at will.
v) Except as expressly so identified in Schedule 3.1(n), no Company
Employee Benefit Plan is a "Multiemployer Plan."
<PAGE>
vi) No Company Employee Benefit Plan is maintained in connection with any
trust described in Section 501(c)(9) of the Code. Any assets of any Company
Employee Benefit Plan that are subject to the trust requirement of ERISA Section
403 are held in trust in compliance with ERISA Section 403.
vii) Each Company Employee Benefit Plan that is an Employer Pension Benefit
Plan is intended to be qualified within the meaning of Section 401(a) of the
Code ("Qualified") is so Qualified, has been so Qualified during the period from
its adoption to date, has been administered in a manner that would not adversely
affect its Qualified status and has received a currently effective determination
letter (or a determination letter has been timely requested) from the Internal
Revenue Service that the Plan is (or continues to be) currently Qualified for
federal income tax purposes. The Shareholder has delivered to the Buyer copies
of such determination letters and any pending applications, and copies of such
letters and applications have been attached to this Agreement as part of
Schedule 3.1(n). Each trust in which the assets of any such Employee Pension
Benefit Plan are held is exempt from tax pursuant to Section 501(a) of the Code.
viii) There have been no prohibited transactions with respect to any
Company Employee Benefit Plan. No "Fiduciary" (as defined in Section 3(21) of
ERISA) has any liability for breach of fiduciary duty or any other failure to
act or comply in connection with the administration or investment of the assets
of any such Company Employee Benefit Plan. No action, suit, proceeding, hearing
or investigation with respect to the administration or the investment of the
assets of any Company Employee Benefit Plan (other than routine claims for
benefits) is pending or, to the knowledge of the Shareholder is threatened. The
Shareholder has no knowledge of any basis for any such action, suit, proceeding,
hearing or investigation.
ix) The Company and each controlled group member do not maintain and have
never maintained nor contribute, or ever have contributed, or ever have been
required to contribute, to any Company Employee Benefit Plan providing health or
medical benefits for current or future retired or terminated employees, their
spouses or their dependents (other than in accordance with Code Section 4980B).
No condition exists that would prevent the Company or any controlled group
member from amending or terminating any Company Employee Benefit Plan or Benefit
Arrangement providing health or medical benefits in respect of any active or
retired employees of the Company or any controlled group member (other than in
accordance with Code Section 4980B).
x) Each Company Employee Benefit Plan and Benefit Arrangement has been
maintained and administered in compliance with its terms and with the
requirements prescribed by any and all Legal Requirements, including but not
limited to ERISA and the Code, that are applicable to such Plans. Nothing done
or omitted to be done and no transaction or holding of any asset under or in
connection with any Company Employee Benefit Plan or Benefit Arrangement has
made or will make the Company, any controlled group member, any officer or
director of the Company or of any controlled group member subject to any
liability under Title I of ERISA or any liability for any Tax under Section 4972
or Section 4975 through 4980B, inclusive, of the Code.
<PAGE>
xi) Any Company Employee Benefit Plan that is a "group health plan" (as
defined in Code Section 5000(b)(l)) has been administered in accordance with the
requirements of Part 6 of Subtitle B of Title I of ERISA and Code Section 4980B
and nothing done or omitted to be done in connection with maintenance or
administration of any Company Employee Benefit Plan that is a "group health
plan" has made or will make the Company or any controlled group member subject
to any liability under Title I of ERISA, excise Tax liability under Code Section
4980B or has resulted or will result in any loss of income exclusion for a
participant under Code Sections 105(h) or 106.
xii) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company or any Subsidiary that, individually
or collectively, could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G or 162(a)(l) of the Code.
xiii) The Company and each controlled group member have made, before the
date of this Agreement, all required contributions and premium payments under
each Company Employee Benefit Plan and Benefit Arrangement for all completed
fiscal years including contributions that may not by law have otherwise been
required to be made until the due date for filing the Tax Return for any
completed fiscal year.
xiv) Except as disclosed in Schedule 3.1(n), there has not been with
respect to the Company's or any controlled group member's active or retired
employees, any amendment to, written interpretation or announcement (whether or
not written) by the Company or any Subsidiary relating to, or change in employee
participation or coverage under, any Company Employee Benefit Plan or Benefit
Arrangement that would increase the expense of maintaining or funding benefits
under such Company Employee Benefit Plan or Benefit Arrangement above the level
of the expense incurred in respect of such for the fiscal year ended on December
31, 1996, except as set forth in Schedule 3.1(n).
xv) No condition (other than pursuant to a Legal Requirement) exists that
would have prevented the Company or any Subsidiary from terminating any Company
Employee Benefit Plan, prior to the date of this Agreement. Seller acknowledges
that the Buyer will have no obligation to the Shareholder (other than pursuant
to a Legal Requirement) to employ any employee of the Company or to continue any
Company Employee Benefit Plan, and will have no liability to the Shareholder
under any plan or arrangement maintained by the Company and Subsidiary for the
benefit of any employee.
xvi) There are no retired employees of the Company or any controlled group
member who are receiving or are entitled to receive any payments from the
Company or any controlled group member which are not fully funded by an Employee
Pension Benefit Plan of the Company or a controlled group member, except those
former employees who are receiving or are entitled to receive any payments from
the Company pursuant to the Amended and Restated Equity Participation Plan of
the Company.
<PAGE>
(o) Employees and Labor. Since March 31, 1997, the Company and each
Subsidiary have not received any notice, and to the knowledge of the
Shareholder, there is no reason to believe that any executive or key employee of
the Company or any Subsidiary, or any group of employees of the Company or any
Subsidiary, has any plans to terminate his, her or its employment with the
Company or any Subsidiary, except as set forth in Schedule 3.1(o). No executive
or key employee is subject to any agreement, obligation, Order or other legal
hindrance that impedes or might impede such executive or key employee from
devoting his or her full business time to the affairs of the Company or any
Subsidiary, and, if such person becomes an employee of the Buyer, to the affairs
of the Buyer after the date of this Agreement. The Company and each Subsidiary
will not be required to give any notice under the Worker Adjustment and
Retraining Notification Act, as amended, or any similar Legal Requirement as a
result of this Agreement, the Other Seller Agreements or the transactions
contemplated by them. Except as set forth on Schedule 3.1(o), the Company and
each Subsidiary do not have any labor relations problems or disputes, and
neither the Company nor any Subsidiary has experienced any strikes, grievances,
claims of unfair labor practices or other collective bargaining disputes.
Neither the Company nor any Subsidiary is a party to or is bound by any
collective bargaining agreement, there is no union or collective bargaining unit
at the Company's or any Subsidiary's facilities, and no union organization
effort has been threatened, initiated or is in progress with respect to any
employees of the Company or of any Subsidiary.
(p) Customer Relationships. Schedule 3.1(p) lists each customer (the
"Principal Customers") that individually or with its affiliates accounted for a
Contract Value of $300,000 or more. To the knowledge of the Shareholder, the
Company and each Subsidiary have good commercial working relationships with the
Principal Customers. Since December 31, 1996, no Principal Customer has
cancelled or otherwise terminated its relationship with the Company or any
Subsidiary, materially decreased or limited its contribution of revenue to the
Company or any Subsidiary, or indicated an intention to take any such action.
The Shareholder has received no written or oral communication from a Principal
Customer that the execution and delivery of this Agreement by either party or
the consummation of the transactions contemplated by this Agreement will cause
such Principal Customer to terminate or materially reduce the service provided
by the Company under its agreements with such Principal Customer after the date
of this Agreement (other than in connection with normal rundowns in services
provided as a result of the completion of services contemplated in such
Agreements).
(q) Environmental Matters. Except as set forth on Schedule 3.1(q), neither
the Company nor any Subsidiary has ever owned any real property.
(r) Intellectual Property. The Company and each Subsidiary owns or has the
legal right to use each item of Intellectual Property required to be identified
on Schedule 3.1(i). Except as set forth on Schedule 3.1(r), the sale of the
Shares to the Buyer will not affect the Company's or any Subsidiary's right to
use any such Intellectual Property. To the knowledge of the Shareholder, the
continued operation of the business of the Company and any Subsidiary as
currently conducted will not interfere with, infringe upon, misappropriate or
<PAGE>
conflict with any Intellectual Property rights of another Person. To the
knowledge of the Shareholder, no other Person has interfered with, infringed
upon, misappropriated or otherwise come into conflict with any Intellectual
Property rights of the Company or any Subsidiary. Except as set forth on
Schedule 3.1(i), neither the Company nor any Subsidiary has granted any license,
sublicense or permission with respect to any Intellectual Property owned or used
in the Company's or the Subsidiary's business.
(s) Disclosure. In connection with the sale of the Shares under this
Agreement, the Shareholder has complied with the requirements of Rule 10b-5 of
the Securities and Exchange Commission.
3.1. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Shareholder as follows, as of the date of this Agreement:
(a) Organization and Qualification, etc. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado and has corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as it is now being conducted.
The Buyer is duly qualified to do business and is in good standing in each
jurisdiction where the failure to be so qualified would have a material adverse
effect on the business or properties of the Company.
(b) Authority Relative to Agreement. The Buyer has full and absolute right,
power and authority to execute, deliver and perform this Agreement and the Other
Buyer Agreements, and to consummate the transactions contemplated on its part by
this Agreement and the Other Buyer Agreements. The execution and delivery of
this Agreement by Buyer, and the consummation by the Buyer of the transactions
contemplated on its part by this Agreement and the Other Buyer Agreements have
been duly authorized by the Buyer's board of directors. No other corporate
approvals on the part of the board of directors or shareholders of the Buyer are
necessary to authorize the execution and delivery of this Agreement, and the
Other Buyer Agreements. This Agreement and the Other Buyer Agreements have been
duly executed and delivered by the Buyer and, assuming the due authorization,
execution and delivery of this Agreement and the Other Buyer Agreements by the
other parties to such agreements, are valid and binding agreements, enforceable
against the Buyer in accordance with their respective terms, except as such
enforcement is subject to the effect of (i) any applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting creditors'
rights generally and (ii) general principles of equity, including, without
limitation, concepts of reasonableness, good faith and fair dealing, and other
similar doctrines affecting the enforceability of agreements generally
(regardless of whether considered in a proceeding in equity or at law).
(c) Non-Contravention. The execution, delivery and performance of this
Agreement and the Other Buyer Agreements and the consummation by the Buyer of
the transactions contemplated by this Agreement and by the Other Buyer
Agreements will not, (i) violate any provision of the Articles of Incorporation
or By-laws of the Buyer, or (ii) violate, or result, with the giving of notice
or the lapse of time or both, in a violation of, any provision of, or result in
<PAGE>
the acceleration of or entitle any party to accelerate (whether after the giving
of notice or lapse of time or both) any obligation under, or result in the
creation or imposition of any encumbrance upon any of the property of the Buyer
pursuant to any provision of any mortgage or lien or lease, agreement, license
or instrument or any order, arbitration award, judgment or decree to which the
Buyer is a party or by which any of its assets are bound and do not and will not
violate or conflict with any other material restriction of any kind or character
to which the Buyer is subject or by which any of its assets may be bound, and
the same does not and will not constitute an event permitting termination of any
such mortgage or lien or lease, agreement, license or instrument to which the
Buyer is a party or (iii) violate any Legal Requirement to which the Buyer is
subject. The Company is not party to any litigation or proceeding (and, to the
knowledge of the Company, no such litigation or proceeding has been threatened),
that seeks to prohibit or delay, or that seeks damages as a result of, the
execution and delivery of this Agreement by the Company or the consummation of
the transactions contemplated by this Agreement.
(d) Government Approvals. No consent, authorization, order or approval of,
or filing or registration with, any governmental commission, board or other
regulatory body is required for or in connection with the execution and delivery
of this Agreement and the Other Buyer Agreement by the Buyer, the execution and
delivery of this Agreement by the Buyer, and the consummation by the Buyer of
the transactions contemplated by this Agreement and the Other Buyer Agreements.
(e) SEC Reports. The Buyer has filed (and has provided the Company with
copies of all required forms, reports and documents which it has been required
to file with the Securities and Exchange Commission (the "Commission") since
September 30, 1996 (collectively, the "SEC Reports"), each of which has complied
in all material respects with all applicable requirements of the Securities Act
of 1933, as amended and the Securities Exchange Act of 1934, as amended. As of
their respective dates, the SEC Reports, including, without limitation, any
financial statements or schedules included in such financial statements, did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such financial statements or necessary in order to make
the statements in such financial statements, in light of the circumstances under
which they were made, not misleading, except, in the case of any SEC Report, any
statement or omission in such SEC Report that has been corrected or otherwise
disclosed in a subsequent SEC Report. The audited financial statements of the
Buyer in its Annual Report on Form 10-K for the fiscal year ended September 30,
1996, and the unaudited interim financial statements of the Buyer in its
Quarterly Reports on Form 10-Q for the fiscal quarters ended December 31, 1996
and March 31, 1997, have been prepared in accordance with GAAP, fairly present
the consolidated financial position of the Buyer and the Subsidiaries as of the
dates of such statements and their consolidated results of operations and
changes in financial position for the periods then ended (subject to normal
year-end adjustments and the absence of certain footnote disclosures in the case
of any unaudited interim financial statements).
<PAGE>
(f) Capitalization of the Buyer. As of the date of this Agreement, the
authorized capital stock of the Buyer consists of 100,000,000 shares of common
stock, of which approximately 5,092,510 shares are validly issued and
outstanding, fully paid and nonassessable, and 2,500,000 shares of preferred
stock, no par value, none of which is outstanding. Except pursuant to the
Buyer's employee stock option and restricted stock purchase plans, as of the
date of this Agreement, the Buyer has no commitments to issue or sell any shares
of its capital stock or any securities or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for or acquire
from the Buyer, any shares of its capital stock and no securities or obligations
evidencing such rights are outstanding. Schedule 3.2(f) sets forth, as of the
date of this Agreement, the total number of options not yet granted under any
stock option plan of the Buyer, the total number of shares of Common Stock
subject to unexercised options outstanding under all such plans and the weighted
average exercise price of such outstanding options.
(g) Investment Intent. The Buyer is acquiring the Shares for its own
account and not with any present intention of distributing or selling the Shares
in violation of any federal, state or other applicable securities laws.
(h) NASDAQ. The shares of Common Stock to be issued to the Shareholder at
the Closing will be issued in compliance with all requirements necessary for the
shares of Common Stock to be quoted on the NASDAQ national market.
(i) Common Stock Issued to the Shareholders. The shares of the Buyer's
Common Stock to be issued to the Shareholder as consideration in accordance with
Article II have been duly and validly authorized for issuance by the Buyer and,
when the shares of Common Stock of the Buyer are issued and delivered to the
Shareholder as provided by this Agreement, the shares of the Common Stock of the
Buyer issued to the Shareholder hereunder will have been validly issued, fully
paid and nonassessable, and the issuance of such shares will not be subject to
any preemptive or similar rights.
(j) Absence of Material Adverse Change. Since March 31, 1997, to the date
of this Agreement, the Buyer has not experienced any material adverse change to
its assets, its business, or its business prospects. As of the date of this
Agreement, there is no existing event or condition as to which the Company is
required to file a Current Report on Form 8-K, and no pending transactions
(other than the transaction contemplated by this Agreement) on anticipated
events or conditions that would require the filing of a Current Report on Form
8-K, which has not previously been disclosed in the SEC Reports.
(k) Brokers. All negotiations relative to this Agreement and the
transactions contemplated by this Agreement have been carried out by the Buyer
directly with the Shareholder and the Company, without the intervention of any
person on behalf of the Buyer in such manner as to give rise to any valid claim
by any person against the Buyer for a finder's fee, brokerage commission, or
similar payment, except for the retention of Dain Bosworth Incorporated, whose
fees and expenses are to be borne by the Buyer and except for the payment due to
Utility Graphic Consultants Corporation under the agreement dated January 13,
1997, which is to be borne by the Company.
<PAGE>
3.3. Representations as to Knowledge. Any representation and warranty made
in Article III to the "knowledge" or "best knowledge" of a party means matters
actually known by such party and matters which would come to such party's
attention in the course of due diligence to verify the accuracy of such
representation and warranty, including (i) in the case of the Shareholder,
inquiry of William M. Howell, Randal J. Sage, Robert J. Montgomery, John J.
Dillon III, and Jeffrey A. Meyerrose, and (ii) in the case of the Buyer, inquiry
of Sidney V. Corder and Scott C. Benger.
ARTICLE IV.
POST-CLOSING COVENANTS
The parties agree as follows with respect to the period following Closing.
4.1. Further Assurances. If after Closing any further action is necessary
or desirable to carry out the purposes of this Agreement, each of the parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other party reasonably may request,
all at the sole cost and expense of the requesting party (unless the requesting
party is entitled to indemnification for such action under Article VI).
4.2. Cooperation. If and for so long as any party actively is contesting or
defending against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand in connection with (a) any transaction contemplated
by this Agreement or (b) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act or
transaction on or prior to the Closing Date involving any of the Company's or
any Subsidiary's assets or business, each of the other parties will cooperate
with such party and its counsel in the contest or defense, make available their
personnel, and provide such testimony and access to their books and records as
will be reasonably necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending party (unless the
contesting or defending party is entitled to indemnification under Article VI).
4.3. Post-Closing Announcements. Following Closing, neither the Shareholder
nor the Buyer will issue any press release or make any public announcement
relating to the subject matter of this Agreement without the prior written
approval of the other party; provided, however, that the Buyer will not be
prohibited from issuing any press release or making any public announcements or
filings required by applicable federal and state securities laws.
4.4. Financial Statements. The Shareholder will, upon request of the Buyer,
cooperate with the Buyer to produce such historical and on-going financial
statements and audits concerning the Company as the Buyer may request, all at
the sole cost and expense of the Buyer.
<PAGE>
4.5. Release of Shareholder. Within 10 days after the Closing, the Buyer
will deliver to the Shareholder a written release duly executed by The Fifth
Third Bank of Central Indiana, releasing the Shareholder from any and all
guaranties of the liabilities and obligations of the Company to The Fifth Third
Bank of Central Indiana, and pending delivery of such release, the Buyer will
indemnify the Shareholder and hold him harmless against any loss, liability,
cost or expense under such guaranties.
4.6. Shareholder's Election to Buyer's Board of Directors. At the Closing,
the Buyer will use its best efforts and will exercise all authority under
applicable laws to: (i) if necessary, increase the size of its Board of
Directors by one member, and (ii) cause the Shareholder to be elected as a
member of the Board of Directors of the Buyer until the next annual meeting of
the shareholders of the Buyer. Subject to the fiduciary duties of the Buyer and
its Board of Directors under applicable laws, the Buyer will nominate the
Shareholder as part of management's slate of nominees for election as a member
of the Board of Directors of the Buyer at each annual meeting of the
shareholders of the Buyer held in 1998, 1999 and 2000.
4.7. Access to Books and Records. Following the Closing, the Buyer will
permit the Shareholder and his authorized representatives, during normal
business hours and upon reasonable notice, to have access to, and examine and
make copies of, all books and records of the Company which relate to
transactions or events occurring on or prior to the Closing Date and
transactions or events occurring subsequent to the Closing Date which are
related to or arise out of transactions or events occurring prior to the Closing
Date, to the extent reasonably necessary for Shareholder to defend any claim for
indemnification under this Agreement, or to prepare any tax return or
effectively defend any tax audit or claim relating to periods prior to the
Closing.
4.8. Certain Tax Matters.
(a) Section 338(h)(10) Election. The Shareholder and the Company will join
with the Buyer in making an election under 338(h)(10) of the Code and Section
1.338(h)(10)-1 of the Treasury Regulations, and any corresponding election under
state, local and foreign tax laws, with respect to the purchase and sale of the
stock of the Company hereunder (a "Section 338(h)(10) Election"). The
Shareholder will include any income, gain, loss, deduction or other tax item
resulting from the Section 338(h)(10) Election on his Tax Returns to the extent
permitted by applicable laws. The Shareholder will also pay any Tax imposed on
the Company or its Subsidiaries attributable to the making of the Section
338(h)(10) Election, including, but not limited to, (i) any Tax imposed under
Code 1374, (ii) any tax imposed under Reg. 1.338(h)(10)-1(e)(5), or (iii) any
state, local or foreign Tax imposed on the Company's or its Subsidiaries' gain,
and the Shareholder will indemnify the Buyer, the Company and its Subsidiaries
against any Adverse Consequences arising out of any failure to pay any such
Taxes. The Company and the Shareholder will not revoke the Company's election to
be taxed as an S corporation within the meaning of Code 1361 and 1362. The
Company and the Shareholder will not take or allow any action that would result
in the termination of the Company's status as a validly electing S corporation
within the meaning of Code 1361 and 1362.
<PAGE>
(b) Allocation of Purchase Price. The Buyer and the Shareholder agree that
the purchase price paid to the Shareholder hereunder and the liabilities of the
Company (plus other relevant items) will be allocated to the assets of the
Company for all purposes (including Tax and financial accounting purposes) as
mutually determined by the Buyer and the Shareholder in accordance with
applicable income tax laws and regulations, which allocation is set forth on
Schedule 4.9(b) to be attached to this Agreement following the final
determination of any adjustment to the purchase price pursuant to Section 2.4.
The Buyer and the Shareholder will file, and will cause the Company to file, all
Tax Returns and information reports in a manner consistent with such
allocations.
(c) Tax Periods Ending on or Before the Closing Date. The Shareholder will
prepare or cause to be prepared and filed or caused to be filed all Tax Returns
for the Company for all periods ending on or prior to the Closing Date which are
filed after the Closing Date. The Shareholder will permit the Buyer to review
and comment on each such Tax Return described in the preceding sentence prior to
filing, and all such Tax Returns will be subject to the approval of the Buyer,
such approval not to be unreasonably withheld. To the extent permitted by
applicable law, the Shareholder will include any income, gain, loss, deduction
or other tax items for such periods on his Tax Returns in a manner consistent
with the Schedule K-1's prepared by the Shareholder for such periods. The
Shareholder will reimburse Buyer for any Taxes of the Company and its
Subsidiaries with respect to such periods within fifteen (15) days after payment
by Buyer or the Company and its Subsidiaries of such Taxes to the extent such
Taxes are not reflected in the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) shown on the face of the Closing Balance Sheet.
(d) Cooperation on Tax Matters. The Buyer and the Shareholder will, and
will cause the Company to, cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax Returns
pursuant to this Section and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation will include the retention and (upon the
other party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. The Buyer and
the Shareholder agree: (i) to retain all books and records with respect to Tax
matters pertinent to the Company relating to any taxable period beginning before
the Closing date until the expiration of the statute of limitations (and, to the
extent notified by the Buyer or the Shareholder, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (ii) to give the other party
reasonable written notice prior to the transferring, destroying or discarding
any such books and records, and, if the other party so requests, to allow the
other party to take possession of such books and records. The Buyer and the
Shareholder further agree, upon request, to use their best efforts to obtain any
certificate or other document form any governmental authority or any other
Person as may be necessary to mitigate, reduce or eliminate any Tax that could
be imposed, including without limitation, with respect to the transactions
contemplated by this Agreement.
<PAGE>
4.9. Terminable Contracts. The Buyer acknowledges that certain contracts
pursuant to which the Company provides services or goods to a third Person are
terminable at will by such Person or are subject to termination by such Person
(or may otherwise give rise to remedies to such Person) if the execution of this
Agreement or the sale of the Shares by the Shareholder pursuant to this
Agreement is not consented to by such Person (the "Terminable Contracts"). The
Buyer agrees and acknowledges that the Shareholder will not be liable to the
Buyer in any manner whatsoever because of the failure to obtain any such consent
required by a Terminable Contract, except for a breach of the representation and
warranties of the Shareholder in Section 3.1(p). However, following the Closing,
if requested by the Buyer, the Shareholder will, at the expense of the Buyer,
use his reasonable best efforts to obtain such consents and will cooperate with
the Buyer in any lawful arrangement designed to provide to the Buyer with the
benefits under such Terminable Contracts.
4.10. Asset Transfer by Shareholder. Until November 30, 1999, the
Shareholder will not make any transfers of assets owned by him if the effect of
such transfer would be to reduce or further reduce the Shareholder's net worth
below $8,500,000.
ARTICLE V.
CLOSING
5.1. Simultaneous Closing. The consummation of the transactions
contemplated by this Agreement ("Closing") will occur simultaneously with the
execution of this Agreement. Closing will take place at the offices of Locke,
Reynolds, Boyd & Weisell, in Indianapolis, Indiana, on the effective date of
this Agreement, which is July 2, 1997 (the "Closing Date").
5.2. Deliveries. The Shareholder and the Buyer have made deliveries to each
other at Closing and have acknowledged receipt of such deliveries by separate
documents.
ARTICLE VI.
REMEDIES FOR BREACHES OF THIS AGREEMENT
6.1. Indemnification by the Buyer. From and after Closing, the Buyer will
indemnify, defend and hold harmless the Shareholder and his heirs, personal
representatives, successors and permitted assigns (the "Seller Indemnitees")
from and against any and all Adverse Consequences resulting or arising from,
relating to or incurred in connection with: (a) any breach of any representation
or warranty of the Buyer contained in this Agreement or in any of the Other
Buyer Agreements, (b) any breach of any covenant of the Buyer contained in this
Agreement or in any of the Other Buyer Agreements, (c) any and all guaranties by
the Shareholder of any and all liabilities or obligations of the Company, except
to the extent that the existence of such liabilities or obligations constitute a
breach of the representations, warranties or covenants of the Shareholder in
this Agreement, and (d) any broker's or finder's fee or other commission
resulting from any services alleged to have been rendered to or at the request
of the Buyer with respect to this Agreement or any of the transactions
contemplated hereby.
<PAGE>
6.2. Indemnification by the Shareholder. From and after Closing, the
Shareholder will indemnify, defend and hold harmless the Buyer, the Company and
their respective officers, directors and controlling persons (the "Buyer
Indemnitees") from and against any and all Adverse Consequences resulting or
arising from, relating to or incurred in connection with: (a) any breach of any
representation or warranty of the Shareholder contained in this Agreement or in
any of the Other Seller Agreements, (b) any breach of any covenant of the
Shareholder contained in this Agreement or in any of the Other Seller
Agreements, (c) any broker's or finder's fee or other commission resulting from
any services alleged to have been rendered to or at the request of the
Shareholder or the Company with respect to this Agreement or any of the
transactions contemplated thereby; (d) any Environmental Obligation incurred by
any Buyer Indemnitee, resulting or arising from, relating to or incurred in
connection with (i) any event, fact, circumstance or condition (to the extent
any such event, fact, circumstance or condition occurred or existed at or prior
to the Closing and even if the Adverse Consequence manifests itself after the
Closing) and (ii) any act or omission (to the extent such act or omission
occurred prior to the Closing Date and even if the Adverse Consequence manifests
itself after the Closing); and (e) any Contract Negligence Claims, subject to
the provisions of Section 6.6.
6.3. Notice of Claim; Right to Participate in and Defend Third Party Claim.
(a) If any indemnified party receives notice of the assertion of any claim,
the commencement of any suit, action or proceeding, or the imposition of any
penalty or assessment by a third party in respect of which indemnity may be
sought under this Agreement (a "Third Party Claim"), and the indemnified party
intends to seek indemnity under this Agreement, then the indemnified party will
promptly provide the indemnifying party with prompt written notice of such Third
Party Claim, but in any event not later than 30 calendar days after receipt of
such notice of Third Party Claim. The failure by an indemnified party to notify
an indemnifying party of a Third Party Claim will not relieve the indemnifying
party of any indemnification responsibility under this Article, except to the
extent, if any, that such failure prejudices the ability of the indemnifying
party to defend such Third Party Claim.
(b) The indemnifying party will have the right to control the defense,
compromise or settlement of a Third Party Claim with its own counsel (reasonably
satisfactory to the indemnified party) if the indemnifying party delivers
written notice to the indemnified party within seven days following the
indemnifying party's receipt of notice of a Third Party Claim from the
indemnified party which acknowledges its obligations to indemnify the
indemnified party with respect to such Third Party Claim in accordance with this
Article; provided, however, that the indemnifying party will not enter into any
settlement of any Third Party Claim which would impose or create any obligation
or any financial or other liability on the part of the indemnified party if such
<PAGE>
liability or obligation (i) requires more than the payment of a liquidated sum
or (ii) is not covered by the indemnification provided to the indemnified party
under this Agreement. In its defense, compromise or settlement of any Third
Party Claim, the indemnifying party will timely provide the indemnified party
with such information with respect to such defense, compromise or settlement as
the indemnified party may request, and will not assume any position or take any
action that would impose an obligation of any kind on, or restrict the actions
of, the indemnified party. The indemnified party will be entitled (at the
indemnified party's expense) to participate in, but not control, the defense by
the indemnifying party of any Third Party Claim with its own counsel.
(c) If the indemnifying party does not undertake the defense, compromise or
settlement of a Third Party Claim in accordance with subsection (b) of this
Section, the indemnified party will have the right to control the defense or
settlement of such Third Party Claim with counsel of its choosing; provided,
however, that the indemnified party will not settle or compromise any Third
Party Claim without the indemnifying party's prior written consent (which
consent will not be unreasonably withheld), unless the terms of such settlement
or compromise release the indemnified party or the indemnifying party from any
and all liability with respect to the Third Party Claim. The indemnifying party
will be entitled (at the indemnifying party's expense) to participate in the
defense of any Third Party Claim with its own counsel.
(d) The indemnified party will assert any indemnifiable claim under this
Agreement that is not a Third Party Claim by promptly delivering notice of such
claim to the indemnifying party. If the indemnifying party does not respond to
such notice within 60 days after its receipt, it will have no further right to
contest the validity of such claim.
6.4. Basket and Deductible. No indemnified party will be entitled to
indemnification from an indemnifying party under Sections 6.1(a) or 6.2(a)
unless and until the aggregate amount of Adverse Consequences with respect to
which all Buyer Indemnitees or all Seller Indemnitees, as the case may be, would
otherwise be entitled to assert under Section 6.1(a) or 6.2(a), whichever is
applicable, exceeds $200,000, and then only for the amount by which such Adverse
Consequences exceed $200,000.
6.5. Limitations.
(a) The maximum aggregate amount that the Buyer Indemnitees, on the one
hand, or the Shareholder Indemnitees, on the other hand, may recover on account
of all Adverse Consequences under this Article VI will be limited to $8,500,000.
(b) To the extent that any breach of a representation, warranty or covenant
of the Shareholder results in an adjustment of the purchase price of the Shares
under Section 2.4, the amount of such adjustment will be offset against the
amount coverable under this Article VI.
(c) The indemnification provisions of this Article will constitute the
exclusive remedy by either party against the other arising by virtue of a breach
of any representation, warranty, or covenant under this Agreement, absent fraud.
The foregoing provision is not intended to limit any party from seeking recourse
against the other party under any law that provides a cause of action that is
independent of the rights granted by this Agreement.
<PAGE>
(d) Notwithstanding the provisions of this Article VI, neither the Company
nor any Subsidiary will have any duty to indemnify the Shareholder or contribute
funds for the benefit of the Shareholder, under the articles of incorporation or
bylaws of the Company, under the articles of organization or operating agreement
of any Subsidiary, under any resolution, contract, insurance policy, arrangement
or understanding, or under the provisions of any statute governing the Company
or any Subsidiary, or otherwise, to the extent that the facts, circumstances, or
events that otherwise would give rise to a claim of indemnification or
contribution constitute a breach of a representation, warranty or covenant under
this Agreement. The Shareholder waives any right to indemnification or
contribution to the extent that the immediately preceding sentence applies. The
Buyer agrees that it will not amend the articles of incorporation or bylaws of
the Company in such a manner as to adversely affect the rights of the
Shareholder to indemnification as such rights existed immediately prior to the
Closing.
(e) The amounts for which the indemnifying party is liable to the
indemnified party under this Article VI will be (i) reduced by the amount of any
insurance proceeds received by the indemnified party in connection with the
event giving rise to the claim for indemnification, taking into account any
effect thereon of the indemnified party's receipt of any payment under this
Article 6 and (ii) increased by interest on the amount of Adverse Consequences,
at a rate equal to one-half of a percentage point above the Prime Rate, accrued
from the later of (x) the date that any Adverse Consequence becomes a liability
of the party suffering the Adverse Consequence as determined in accordance with
GAAP, and (y) the date that the party suffering the Adverse Consequence gives
the other party notice under Section 6.3(a).
(f) No Buyer Indemnitee will be entitled to indemnification for a breach by
the Shareholder of a representation and warranty in Section 3.1 to the extent
that Sidney V. Corder or Scott C. Berger at or prior to the Closing had actual
knowledge of the fact or circumstance constituting such breach and at or prior
to the Closing had actual knowledge that such fact or circumstance constituted a
breach, and neither the Shareholder nor any of William M. Howell, Randal J.
Sage, Robert J. Montgomery, John J. Dillon III, or Jeffrey A. Meyerrose had
actual knowledge of such fact or circumstance.
6.6. Indemnification for Customer Contract Losses.
(a) With respect to any Customer Negligence Claim under an Engineering
Contract, if the Adverse Consequences exceed $50,000, the Shareholder will
indemnify all Buyer Indemnitees for one-half of such Adverse Consequences (but
not in excess of a payment by the Shareholder of $150,000 for any such Customer
Negligence Claim).
(b) Solely for purposes of this Section 6.6, Adverse Consequences does not
include attorneys' fees and costs incurred in connection with such Customer
Negligence Claim.
<PAGE>
(c) This Section 6.6 will apply only with respect to Customer Negligence
Claims as to which the Company receives a claim on or prior to November 30,
1999.
(d) This Section 6.6 will cease to apply with respect to any Customer
Negligence Claim as to which the Company receives a claim after a Change in
Control has occurred.
(e) The amount of any Customer Negligence Claim will be reduced to the
extent that the Buyer or the Company receives insurance proceeds with respect to
the Customer Negligence Claim, and the Buyer agrees to use, or to cause the
Company to use, reasonable efforts to pursue payment under any available
insurance policy with respect to any such Customer Negligence Claim.
ARTICLE VII.
ALTERNATIVE DISPUTE RESOLUTION
7.1. Mediation. If a dispute arises under or in connection with this
Agreement, including, without limitation, those involving claims for specific
performance or other equitable relief, notice must be given pursuant to Section
8.6. After such notice has been given by one party to the other, the parties in
good faith will attempt to negotiate or mediate a resolution of the dispute with
the aid of a mediator who has been mutually agreed upon by the parties.
7.2. Arbitration. If such efforts provided for in Section 7.1 do not within
30 days resolve the dispute, upon demand of any party, whether made before or
after the institution of any judicial proceeding, the dispute will be resolved
by binding arbitration under the Commercial Arbitration Rules of the American
Arbitration Association. Institution of a judicial proceeding by a party does
not waive the right of that party to demand arbitration under this Agreement,
provided that arbitration is commenced within 70 days after such judicial
proceedings are commenced. Disputes may include, without limitation, tort
claims, counterclaims, claims brought as class actions, claims arising from
documents executed in the future, or claims arising out of or connected with the
transactions contemplated by this Agreement and the Other Buyer Agreements and
Other Seller Agreements. The American Arbitration Association will choose one
arbitrator to hear the parties and settle any dispute. All arbitration hearings
will be conducted in Kansas City, Missouri. All applicable statutes of
limitation will apply to any dispute. The arbitrator will have no power to award
punitive or exemplary damages, to ignore or vary the terms of this Agreement or
any Other Buyer or Seller Agreement, and will be bound to apply controlling law.
The Shareholder and the Buyer each will pay for one-half of the arbitrator's
fees and expenses and each such party will bear its own costs and expenses
incurred in connection with the arbitration, except that the arbitrator will
award either party reimbursement of its share of the costs and expenses of
arbitration, such party's costs and expenses (including attorneys' fees and
expenses), and any special or extraordinary fees or costs incurred by the Escrow
Agent in connection with any such arbitration or dispute, if the other party
commences or conducts the arbitration in bad faith. A judgment upon the award
may be entered in any court having jurisdiction. Notwithstanding anything to the
contrary contained in this Section 7.2, the parties preserve, without
<PAGE>
diminution, certain remedies that any of them may employ or exercise freely,
either alone, in conjunction with, or during a dispute. The parties to this
Agreement have the right to proceed in any court of proper jurisdiction or by
self-help to exercise or prosecute the following remedies, as applicable: (i)
all rights of self-help including peaceful occupation of real property and
collection of rents, set off and peaceful possession of personal property; (ii)
obtaining provisional or ancillary remedies including injunctive relief,
requestration, garnishment, attachment, appointment of a receiver and filing an
involuntary bankruptcy proceeding; and (iii) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
dispute.
ARTICLE VIII.
MISCELLANEOUS
8.1. No Third-Party Beneficiaries. This Agreement will not confer any
rights or remedies upon any Person other than the parties and their respective
successors and permitted assigns.
8.2. Entire Agreement. This Agreement (including the Other Seller
Agreements and Other Buyer Agreements) constitutes the entire agreement among
the parties and supersedes any prior understandings, agreements or
representations by or among the parties, written or oral, to the extent they
relate in any way to the subject matter of this Agreement.
8.3. Succession and Assignment. This Agreement will be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. At or after the Closing, either party may assign his or its
rights under this Agreement as permitted by law, including, without limitation,
any assignment of any claim of indemnification to any debt or equity financing
source, but no assignment will release the assigning party of his or its
obligations under this Agreement.
8.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original and all of which together
will be deemed to be one and the same instrument. The execution of a counterpart
of the signature page to this Agreement will be deemed the execution of a
counterpart of this Agreement.
8.5. Headings. The section headings contained in this Agreement are
inserted for convenience only and will not affect in any way the meaning or
interpretation of this Agreement.
8.6. Notices. All notices, requests, demands, claims, and other
communications under this Agreement will be in writing. Any notice, request,
demand, claim, or other communication under this Agreement will be deemed duly
given only if it is sent by registered or certified mail, return receipt
requested, postage prepaid, or by courier, telecopy or facsimile, and addressed
to the intended recipient as set forth below:
<PAGE>
If to the
Shareholder: Copy to:
Mr. Sol C. Miller Locke, Reynolds, Boyd & Weisell
c/o Mr. Charles E. Thomas 1000 Capital Center South
Geo. S. Olive & Co. LLC 201 North Illinois Street
700 Capital Center South Indianapolis, IN 46204
201 North Illinois Street Attn: Michael J. Schneider, Esq.
Indianapolis, IN 46204 Telecopy: (317) 237-3900
Telecopy: (317) 383-4200
If to the Buyer: Copy to:
Analytical Surveys, Inc. Sherman & Howard L.L.C.
1935 Jamboree Drive, Suite 100 633 Seventeenth Street, Suite 3000
Colorado Springs, Colorado 80920 Denver, Colorado 80202
Attn: Sidney V. Corder Attn: James F. Wood, Esq.
Telecopy: (719) 598-9626 Telecopy: (303) 298-0940
Notices will be deemed given three business days after mailing if sent by
certified mail, when delivered if sent by courier, and one business day after
receipt of confirmation by person or machine if sent by telecopy or facsimile
transmission. Any party may change the address to which notices, requests,
demands, claims and other communications under this Agreement are to be
delivered by giving the other parties notice in the manner set forth in this
Agreement.
8.7. Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of Indiana without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Indiana or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Indiana.
8.8. Amendments and Waivers. No amendment of any provision of this
Agreement will be valid unless the same is in writing and signed by the Buyer
and the Shareholder. No waiver by any party of any default, misrepresentation or
breach of warranty or covenant under this Agreement, whether intentional or not,
will be deemed to extend to any prior or subsequent default, misrepresentation
or breach of warranty or covenant under this Agreement or affect in any way any
rights arising by virtue of any prior or subsequent such occurrence, and no
waiver will be effective unless set forth in writing and signed by the party
against whom such waiver is asserted.
8.9. Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction will not affect the
validity or enforceability of the remaining terms and provisions of this
Agreement or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.
<PAGE>
8.10. Expenses. Except as otherwise provided in this Agreement, the Buyer,
the Company, and the Shareholder will each pay any and all fees and expenses
incurred by it or him in connection with the negotiation, preparation, execution
and performance of this Agreement, except that the Company will pay or reimburse
the Shareholder for all expenses incurred by the Shareholder prior to the
Closing in connection with this Agreement, including all reasonable attorneys'
and accountants' fees and expenses, but only if and to the extent that such
unpaid Shareholder expenses are reflected as a liability on the Closing Date
Balance Sheet.
8.11. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the parties and no presumption or burden of proof will arise favoring
or disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. The word "including" will mean including without limitation. The
parties intend that each representation, warranty and covenant contained in this
Agreement will have independent significance. If any party breaches any
representation, warranty or covenant contained in this Agreement in any respect,
the fact that there exists another representation, warranty or covenant relating
to the same subject matter (regardless of the relative levels of specificity)
which the party has not breached will not detract from or mitigate the fact that
the party is in breach of the first representation, warranty or covenant.
8.12. Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated in this Agreement by reference and
made a part of this Agreement.
8.13. Survival. The representations and warranties made in this Agreement
will survive the Closing Date until November 30, 1999, except that:
(a) the representations and warranties of the Shareholder in Sections
3.1(a), (b), (c) and (d) (but only as to the first sentence of, and clause
(A)(x) of, Section 3.1(d)) will survive for 15 years after the Closing;
(b) the representations and warranties of the Buyer in Sections
3.2(a), (b), (c) (but only as to clauses (i) and (iii) of Section 3.2(c)),
(d), (f), and (i) will survive for 15 years after the Closing; and
(c) the representations and warranties of Seller in Sections 3.1(g)
and (n) will survive until the expiration of the applicable statutes of
limitations with respect to any such claims that could be brought regarding
such matters (including any extensions of any statutes of limitations),
plus a period of 60 days.
<PAGE>
No party will have any obligation to indemnify any person pursuant to this
Agreement with respect to any breach of a representation or warranty unless a
specific claim has been validly made under this Agreement on or prior to the
applicable period set forth above, except that, if a party has a reasonable
basis to believe that an indemnifiable claim will arise and gives notice to the
other party concerning such matter within the applicable period set forth above,
then all rights of such party to seek indemnification with respect to such
matter will survive.
The parties to this Agreement have executed this Agreement as of the date
first above written.
BUYER:
ANALYTICAL SURVEYS, INC.
By: /s/ Sid V. Corder
-------------------------------
Name: Sid V. Corder
Title: Chief Executive Officer
SHAREHOLDER:
/s/ Sol C. Miller
-------------------------------
Sol C. Miller
July 2, 1997
Analytical Surveys, Inc.
1635 Jamboree Drive, Suite 100
Colorado Springs, Colorado 80920
Attn: Sidney V. Corder, President
Re: Service on Board of Directors of Analytical Surveys, Inc.
Gentlemen:
I am writing this letter in connection with the Purchase Agreement by and
between Analytical Surveys, Inc. ( "ASI" ) and myself, dated as of the date of
this letter (the "Purchase Agreement" ).
This letter confirms that I have agreed to serve as a member of the board
of directors of ASI, as contemplated by Section 4.6 of the Purchase Agreement.
Very Truly,
/s/ Sol C. Miller
---------------------------
Bank One, Colorado, NA
1125 Seventeenth Street
Denver, CO 80202
Escrow Agreement
This escrow agreement entered into by and between Bank One, Colorado, NA,
as Escrow Agent, Analytical Surveys, Inc. (the "Buyer"), and Sol C. Miller (the
"Seller"). These instructions may be supplemented, altered, amended, modified or
revoked by writing only, signed by all of the parties hereto, and approved by
the Escrow Agent, upon payment of all fees, costs and expenses incident thereto.
No assignment, transfer, conveyance or hypothecation of any right, title or
interest in and to the property deposited with the Escrow Agent pursuant to this
Agreement, as described in the attached Schedule A (collectively referred to as
the "Escrowed Property"), shall be binding upon the Escrow Agent unless written
notice thereof shall be served upon the Escrow Agent and all fees, costs and
expenses incident thereto have been paid and then only upon the Escrow Agent's
assent thereto in writing.
The Escrow Agent will hold in an account (the "Escrow Account"), invest, if
applicable, and disburse the Escrowed Property pursuant to instructions set
forth in the attached Schedule B.
Any notice required or desired to be given by the Escrow Agent to any party
to this Escrow may be given by mailing the same addressed to such party at the
address given below the signature of such party or the most recent address of
such party shown on the records of the Escrow Agent, and notice so mailed shall
for all purposes hereof be as effectual as though served upon such party in
person at the time of depositing such notice in the mail.
The Escrow Agent may receive any payment called for hereunder after the due
date thereof unless subsequent to the due date of such payment and prior to the
receipt thereof the Escrow Agent shall have been instructed in writing to refuse
any such payment.
The Escrow Agent shall not be personally liable for any act it may do or
omit to do hereunder as such agent, while acting in good faith and in the
exercise of its own best judgment, and any act done or omitted by it pursuant to
the advice of its own attorneys shall be conclusive evidence of such good faith.
The Escrow Agent is hereby expressly authorized to disregard any and all
notices or warnings given by any of the parties hereto, or by any other person,
firm or corporation excepting only orders of process of court, and is hereby
expressly authorized to comply with and obey any and all process, orders,
judgments, or decrees of any court, and in case the Escrow Agent obeys or
1
<PAGE>
complies with any such process, order, judgment or decree of any court it shall
not be liable to any of the parties hereto or to any other person, firm, or
corporation by reason of such compliance, notwithstanding any such process,
order, judgement or decree be subsequently reversed, modified, annulled, set
aside or vacated, or found to have been issued or entered without jurisdiction.
In consideration of the acceptance of the escrow by the Escrow Agent, the
undersigned agree, jointly and severally, for themselves, their heirs, legal
representatives, successors and assigns, to pay the Escrow Agent its charges
hereunder and to indemnify and hold it harmless as to any liability by it
incurred to any other person, firm or corporation by reason of its having
accepted the same, or its carrying out any of the terms thereof, and to
reimburse it for all its expenses, including, among other things, reasonable
counsel fees and court costs incurred in connection herewith; and that the
Escrow Agent shall have a first and prior lien upon all deposits made hereunder
to secure the performance of said agreement of indemnity and the payment of its
charges and expenses, hereby expressly authorizing the Escrow Agent, in the
event payment is not received promptly from the undersigned, to deduct such
charges and expenses, without previous notice, from any funds deposited
hereunder, shall be as written above the Escrow Agent's signature at the time of
acceptance hereof.
The Escrow Agent shall be under no duty or obligation to ascertain the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver these instructions or any documents or papers
or payments deposited or called for hereunder, and assumes no responsibility or
liability for the validity or sufficiency of these instructions or any documents
or papers or payments deposited or called for hereunder.
The Escrow Agent shall not be liable for the outlawing of any rights under
any Statute of Limitations or by reason of laches in respect to the instructions
or any documents or papers deposited.
In the event of any dispute between the parties hereto as to the facts of
default, the validity or meaning of these instructions or any other fact or
matter relating to the transaction between the parties, the Escrow Agent is
instructed as follows:
(a) That it may in its sole and absolute discretion deposit the
property described herein or so much thereof as remains in its hands with
the Clerk, or acting Clerk, of the District Court of the City and County of
Denver, State of Colorado, and interplead the parties hereto, and upon so
depositing such property and filing under the terms hereof as to the
property so deposited, and furthermore, the parties hereto for themselves,
their heirs, legal representatives, successors and assigns do hereby submit
themselves to the jurisdiction of said court and do hereby appoint the then
Clerk, or acting Clerk, of said court as their Agent for the service of all
process in connection with such proceedings. The institution of any such
interpleader action shall not impair the rights of the Escrow Agent under
the paragraph beginning "In consideration of the acceptance..."
4
<PAGE>
(b) That it shall be under no obligation to act, except under process
or order of court, or until it has been adequately indemnified to its full
satisfaction, and shall sustain no liability for its failure to act pending
such process or court order of indemnification.
The provisions of these instructions shall be binding upon the legal
representatives, heirs, successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the undersigned have hereunto affixed their signatures
as of this date 7/2/97 .
Name: ANALYTICAL SURVEYS, INC. Name: SOL C. MILLER
By: /s/ Sidney V. Corder /s/ Sol C. Miller
---------------------------- -----------------------------
Address: 1935 Jamboree Drive #100 Address: Mr. Sol C. Miller
Colorado Springs, CO 80920 c/o Mr. Charles E. Thomas
Attn: Sidney V. Corder Geo. S. Olive & Co. LLC
100 Capital Center South
201 N. Illinois St.
Indianapolis, IN 46204
No of copies signed ____. Accepted
Bank One, Colorado, NA,
as Escrow Agent
By: /s/ T.D. Young, S.V.P.
--------------------------
Attached: 1) Addendum to Escrow Agreement
2) Schedule A
3) Schedule B
4) Schedule C
3
<PAGE>
Addendum to Escrow Agreement
1. Exculpation and Indemnification of Escrow Agent
-----------------------------------------------
(a) The Escrow Agent shall have no duties or responsibilities other
than those expressly set forth herein. The Escrow Agent shall have no duty
to enforce any obligation of any person to make any payment or delivery or
to direct or cause any payment or delivery to be made, or to enforce any
obligation of any person to perform any other act. The Escrow Agent shall
be under no liability to any party hereto or to anyone else by reason of
any failure on the part of any party hereto or any maker, guarantor,
endorser or other signatory of any document or any other person to perform
such person's obligations under any such document. Except for amendments to
this Agreement referred to in Section 5(b) of this Addendum and except for
instruction given to the Escrow Agent by the other party hereto relating to
the Escrow Account, the Escrow Agent shall not be obligated to recognize
any agreement between any or all of the persons referred to herein,
notwithstanding that references thereto may be made herein and whether or
not it has knowledge thereof.
(b) The Escrow Agent shall not be liable to any other party hereto or
to anyone else for any action taken or omitted by it, or any action
suffered by it to be taken or omitted, in good faith and in the exercise of
its own best judgment, except for fraud, negligence, or willful misconduct.
The Escrow Agent may rely conclusively and shall be protected in acting
upon any order, notice, demand, certificate, opinion or advice of counsel
(including counsel chosen by the Escrow Agent), statement, instrument,
report or other paper or document (not only as to its due execution and the
validity and effectiveness of its provisions, but also as to the truth and
acceptability of any information therein contained) that is believed by the
Escrow Agent to be genuine and to be signed or presented by the proper
person or persons. The Escrow Agent shall not be bound by any notice or
demand, or any waiver, modification, termination or rescission of this
Agreement or any of the terms hereof, unless evidenced by a written notice
delivered to the Escrow Agent signed by the proper party or parties and, if
the duties or rights of the Escrow Agent are affected, unless it shall give
its prior written consent thereto.
(c) The Escrow Agent shall not be responsible for the sufficiency or
accuracy of the form of, or the execution, validity, value or genuineness
of, any document or property received or held by it hereunder, or of any
signature or endorsement thereon, or for any lack of endorsement thereon,
or for any description therein, nor shall the Escrow Agent be responsible
or liable to the other parties hereto or to anyone else in any respect on
delivering or purporting to execute or deliver any document or property or
this Agreement, other than on behalf of or in the name of the Escrow Agent.
The Escrow Agent shall have no responsibility with respect to the use or
application of any funds or other property paid or delivered by the Escrow
Agent pursuant to the provision hereof. Except as provided in Section 1(b)
above, the Escrow Agent shall not be liable to any other party hereto or to
anyone else for any loss that may be incurred by reason of any investment
of any monies that it holds hereunder.
<PAGE>
(d) The Escrow Agent shall have the right to assume, in the absence of
written notice to the contrary from the proper person or persons, that a
fact or an event by reason of which an action would or might be taken by
the Escrow Agent does not exist or has not occurred, without incurring
liability to the other parties hereto or to anyone else for any action
taken or omitted, or any action suffered by it to be taken or omitted, in
good faith and in the exercise of its own best judgment, in reliance upon
such assumption; provided, however, that the Escrow Agent shall be liable
for any such liability resulting from its own fraud, negligence or willful
misconduct.
(e) To the extent that the Escrow Agent becomes liable for the payment
of taxes, including withholding taxes, in respect of income derived from
the investment of funds held hereunder or any payment made hereunder, and
held harmless against any liability for taxes and for any penalties or
interest in respect of taxes, on such investment income or payments in the
manner provided in Section 1(f).
(f) The Escrow Agent shall be indemnified and held harmless from and
against any and all expenses, including reasonable counsel fees and
disbursements, or loss suffered by the Escrow Agent in connection with any
action, suit or other proceeding involving any claim, or in connection with
any claim or demand, that in any way, directly or indirectly, arises out of
or relates to this Agreement, the services of the Escrow Agent hereunder,
the monies or other property held by it hereunder or any income earned from
investment of such monies; provided, however, that if the Escrow Agent has
been determined to be guilty of fraud, negligence or willful misconduct,
the Escrow Agent shall not be entitled to indemnification hereunder.
Promptly after the receipt by the Escrow Agent of notice of any such
action, suit or other proceeding, the Escrow Agent shall, if a claim in
respect thereof is to be made against any of the other parties hereto,
notify such other parties thereof in writing; the failure by the Escrow
Agent to give such notices shall relieve such other parties from any
liability that such parties may have to the Escrow Agent under this Section
1(f) as the particular item for which indemnification is being sought, but
not from any other liability that any of them may have to the Escrow Agent.
Each of the other parties hereto will be entitled to participate in the
defense of any action, suit or proceeding for which indemnification is
sought hereunder and, to the extent any of them so desires, jointly with
any of the other parties hereto, to assume such defense, with counsel who
shall be reasonably satisfactory to the Escrow Agent, and after notice from
any of the other parties hereto to the Escrow Agent of such parties'
election so to assume such defense, none of the other parties hereto will
be liable to the Escrow Agent under this Section 1(f) for any legal or
other expense subsequently incurred by the Escrow Agent in connection with
such defense other than reasonable costs of investigation.
<PAGE>
2. Compensation of Escrow Agent
----------------------------
The Escrow Agent shall be entitled to reasonable compensation for the
services rendered by it hereunder, as set forth on Schedule C. The Escrow Agent
shall also be entitled to reimbursement for all expenses (pre-approved) paid or
incurred by it in the administration of its duties hereunder, including, but not
limited to, all counsel advisors' and agents' fees and disbursements and all
taxes or other governmental charges.
3. Termination of Agreement and Resignation of Escrow Agent
-------------------------------------------------------------
(a) This Agreement shall terminate on the final disposition of the
monies and property held in escrow hereunder, provided that the rights of
the Escrow Agent and the obligations of the other parties hereto under
Sections 1 and 2 shall survive the termination hereof.
(b) The Escrow Agent may resign at any time and be discharged from its
duties as Escrow Agent hereunder by giving the other parties hereto at
least 60 days' notice thereof. The Escrow Agent may be removed at any time
by giving to the other parties hereto at least 30 days' notice hereof. As
soon as practicable after its resignation or removal, the Escrow Agent
shall turn over to a successor escrow agent appointed by the other parties
hereto all monies and property held hereunder (less such amount as the
Escrow Agent is entitled to retain pursuant to Section 1(e)) upon
presentation of the document appointing the new escrow agent and its
acceptance thereof. If no new escrow agent is so appointed within the
60-day period following such notice of resignation or the 30-day period
following such notice of removal, the Escrow Agent may deposit the
aforesaid monies and property with any court in the State of Colorado, it
deems appropriate. If the Escrow Agent is removed, it shall be entitled to
(i) the full payment of its flat fee, (ii) compensation for services
rendered prior to such removal and (iii) pre-approved out-of-pocket
expenses incurred prior to such removal, all as set forth on Schedule C.
4. Notices
-------
All notices, request, demands and other communications provided for herein
shall be in writing, shall be delivered by hand, first-class mail or overnight
express, shall be deemed given when received and shall be addressed to the
parties hereto at their respective addresses listed below or to such other
persons or addresses as the relevant party shall designate as to itself from
time to time in writing delivered in like manner.
<PAGE>
5. Miscellaneous
-------------
(a) All amounts referred to herein are expressed in United States
dollars and all payments by the Escrow Agent shall be made in such dollars.
(b) This Agreement shall be binding upon and inure to the benefit of
each party's respective successors, heirs, and permitted assigns. No other
person shall acquire or have any rights under of by virtue of this
Agreement. This Agreement may not be changed orally or modified, amended or
supplemented without an express written agreement executed by the Escrow
Agent and the other parties hereto.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Colorado. The representations and warranties
contained in this Agreement shall survive the execution and delivery hereof
and any investigation made by any party. The headings in this Agreement are
for purposes of reference only and shall not limit or otherwise affect any
of the terms hereof.
<PAGE>
SCHEDULE A
Deposits
The Escrowed Property will consist of cash in the amount of $200,000 (the
"Escrowed Cash") and 92,500 shares of common stock of the Buyer (the "Escrowed
Shares") deposited with the Escrow Agent.
<PAGE>
SCHEDULE B
Instructions
1. Payments from the Escrow Account. The Escrow Agent will make
distributions from the Escrow Account as follows:
(a) As directed in a written notice executed by ASI and the
Seller.
(b) As directed by a written arbitral award or court order.
(c) On the first Business Day following the Escrow Agent's
receipt of a joint notice from ASI and the Seller to the effect
that the Closing Date Balance Sheet has been completed and agreed
upon, the Escrow Agent will pay the Escrowed Cash to the Seller
and/or ASI in the respective amounts specified in that notice.
Any interest accrued on the Escrowed Cash will be paid to the
Seller.
(d) On November 30, 1998, the Escrow Agent will deliver to
the Seller 46,250 of the Escrowed Shares, less the sum of:
(i) all Escrowed Shares delivered to ASI pursuant to Section
2 of this Schedule prior to November 30, 1998, plus
(ii) all Escrowed Shares then being reserved by the Escrow
Agent in respect of Claim Certificates received prior to November
30, 1998.
(e) On November 30, 1999, the Escrow Agent will deliver to
the Seller the remaining Escrowed Shares, less all Escrowed
Shares then being reserved by the Escrow Agent in respect of
Claim Certificates received prior to such date.
(f) If less than all of the remaining Escrowed Property is
transferred to the Seller on November 30, 1999, at such time as
the Escrow Agent is no longer reserving any amounts in the Escrow
Account in respect of Claim Certificates and has made all
payments to ASI due under Sections 2(c) and 2(d) of this
Schedule, the Escrow Agent will promptly transfer to the Seller
all Escrowed Shares then remaining in the Escrow Account.
<PAGE>
2. Claims by ASI.
(a) At any time prior to November 30, 1999, ASI may deliver
to the Escrow Agent a certificate executed by ASI (a "Claim
Certificate") which Claim Certificate will:
(i) state that ASI has paid or incurred or reasonably
expects to pay or incur an amount against which it is or
will be entitled to indemnification under Article VI of the
Purchase Agreement (an "Indemnification Amount");
(ii) state the Indemnification Amount to the extent
that it has actually been paid or incurred and is definite
in amount or give a reasonable estimate of the maximum
Indemnification Amount to the extent that it has not
actually been paid or incurred or is not definite in amount,
identifying separately the amounts in each category;
(iii) specify in reasonable detail the facts and
circumstances giving rise to each Indemnification Amount,
including, if applicable, a reference to the section or
sections of the Purchase Agreement containing the
representation or warranty of the Seller alleged to have
been breached; and
(iv) request immediate payment from the Escrowed
Property of the portion of the Indemnification Amount that
has actually been paid or incurred by ASI and is definite in
amount (a "Payment Request") or instruct the Escrow Agent to
reserve from the Escrowed Property an estimated amount for
the portion of the Indemnification Amount that is expected
to be incurred by ASI or is not definite in amount (a
"Reservation Instruction").
If the Escrow Agent receives a Claim Certificate prior to November 30,
1999, the Escrow Agent will promptly deliver a copy of such Claim Certificate to
the Seller.
<PAGE>
(b) If the Seller objects to any Payment Request in any
Claim Certificate, the Seller will, within 10 days after delivery
by the Escrow Agent to the Seller of such Claim Certificate,
deliver to the Escrow Agent a certificate of the Seller, executed
by the Seller (an "Objection Certificate") which Objection
Certificate will (i) identify the Claim Certificate to which it
relates and the particular Payment Request (or portion of such
Payment Request) to which the Seller objects; and (ii) describe
in reasonable detail the basis for the objection to the Payment
Request or state that the Seller lacks sufficient information to
determine whether ASI is or will be entitled to indemnification
against the Indemnification Amount described in the Payment
Request or the amount of such Payment Request. Promptly upon
receipt of an Objection Certificate, the Escrow Agent will
deliver a copy of such Objection Certificate to ASI.
(c) If the Escrow Agent does not receive an Objection
Certificate objecting to a Payment Request within the time
specified in Section 2(b) of this Schedule, the Escrow Agent will
promptly transfer to ASI out of the Escrow Account the amount of
such Payment Request. If, within the time specified in Section
2(b), the Escrow Agent receives an Objection Certificate
objecting to only a portion of a Payment Request, the Escrow
Agent will so transfer to ASI the amount of the Payment Request
to which the Seller did not object.
(d) If the Escrow Agent receives, within the time specified
in Section 2(b) of this Schedule, an Objection Certificate
objecting to all or any portion of the Payment Request, the
amount so objected to will be reserved by the Escrow Agent in the
Escrow Account until receipt by the Escrow Agent of either (i)
joint written instructions from ASI and the Seller or (ii) a
written arbitral award or court order. Promptly after its receipt
of such instructions or such an award or order, the Escrow Agent
will transfer to ASI out of the Escrow Account, the amount to
which ASI is entitled under such instructions, award, or order,
except that if the payment to ASI is made after November 30,
1999, the amount paid to ASI will not exceed the amount
previously reserved in respect of the Payment Request. The
balance, if any, of the amount reserved in respect of the Payment
Request will be held in the Escrow Account until disbursed in
accordance with the provisions of this Agreement, but will no
longer be reserved except that if the payment to ASI under this
Section 2(d) is made after any date on which a payment or
delivery is required to be made to the Seller under Section
1(c)(i) or 1(c)(ii) (each, a "Distribution Date") in respect of a
Claim Certificate received before that Distribution Date, such
balance will be paid to the Seller to the extent that it would
have been so paid on that Distribution Date had it not then been
reserved in respect of the Payment Request.
<PAGE>
(e) If the Escrow Agent receives a Reservation Instruction
within the time specified in Section 2(a), the amount specified
in the Reservation Instruction will be reserved by the Escrow
Agent in the Escrow Account until receipt by the Escrow Agent of
(i) joint written instructions from ASI and the Seller directing
the disposition of such amount, (ii) a Claim Certificate
containing a Payment Request with respect to the Indemnification
Amount to which the Reservation Instruction relates, or (iii) a
written arbitral award or court order determining the disposition
of such amount. If the Escrow Agent receives joint written
instructions, an arbitral award, or a court order, it will hold
or dispose of the amount specified in the Reservation Instruction
in accordance with such instructions, award, or order. If the
Escrow Agent receives a Payment Request with respect to the
Indemnification Amount to which the Reservation Instruction
relates, it will proceed as provided in Section 2(a) through (d)
of this Schedule, even though the Payment Request is received on
or after November 30, 1999, but no such Payment Request received
on or after November 30, 1999 may request payment of more than
the amount reserved in respect of the Reservation Instruction. If
the Payment Request specifies an amount that is less than the
amount specified in the Reservation Instruction, the excess will
be held in the Escrow Account until disbursed in accordance with
the provisions of this Agreement, but will no longer be reserved,
except that if such Payment Request is received after a
Distribution Date and the Reservation Instruction was given
before that Distribution Date, such excess will be paid to the
Seller to the extent that it would have been so paid on that
<PAGE>
Distribution Date had it not then been reserved in respect of the
Reservation Instruction. The Seller need not object to any
Reservation Instruction and the failure to object will not imply
any agreement by the Seller that ASI is entitled to
indemnification against any or all of the Indemnification Amount
described in such Reservation Instruction. If the Seller does not
believe that all or any portion of the Indemnification Amount
described in a Reservation Instruction is indemnifiable under the
Purchase Agreement, or believes that the amount specified in a
Reservation Instruction is unreasonable, its remedy will be to
submit the matter to arbitration as provided in the Purchase
Agreement.
3. Average Closing Price. All Reservation Instructions and payments will be
calculated on the basis of the Escrowed Shares being valued at 90% of the
Average Closing Price (as defined below) of the common stock of ASI (the
"Stock"). The Average Closing Price of the Stock on any date will be the average
of the closing price of the Stock on the 10 trading days ending one trading day
prior to that date as reported by the principal exchange on which it is traded
on each such day or, if it is not traded on an exchange on any such day, as
reported by Nasdaq. If the closing price of the Stock is not reported for any
such day, the closing price of the Stock will be the average of the bid and
asked prices for that day as reported by Nasdaq, or, if bid and asked prices are
not reported by Nasdaq on any such day, as reported by the National Quotation
Bureau, Inc. If the Average Closing Price cannot be determined in any of the
ways described above, the Average Closing Price will mean the fair market value
of the Stock as determined by ASI in any reasonable manner.
4. Notice of Average Closing Price. In determining how many Escrowed Shares
are to be distributed under Section 2(a)(iv) of this Schedule, the Escrow Agent
may rely on a notice from ASI that sets forth the calculation of the Average
Closing Price, together with copies of the pertinent pages of The Wall Street
Journal containing the information utilized in determining the Average Closing
Price. For the purposes of a distribution pursuant to a Payment Request, the
Escrowed Shares will be valued as of the date of such distribution. For the
purposes of reserving any Escrowed Shares pursuant to a Reservation Instruction,
any such Reservation Instruction must contain a notice from ASI, as described
above in this Section, setting forth the Average Closing Price as of the date of
such notice. If Escrowed Shares are initially reserved and subsequently some or
all of the reserved shares are required to be distributed, the value of the
shares will be redetermined as of the date of each such distribution and the
number of shares actually distributed will be based on that redetermined value.
If the application of the Average Closing Price does not result in a whole
number of Escrowed Shares to be reserved or distributed, the Escrow Agent will
round the number of shares to be reserved or distributed up to the next highest
whole share.
REGISTRATION RIGHTS AGREEMENT
(Including Restrictions on Transfer)
July 2, 1997
Mr. Sol C. Miller
MSE Corporation
941 North Meridian Street
Indianapolis, IN 46204-1061
Dear Mr. Miller:
In connection with the Purchase Agreement dated July 2, 1997 (the "Purchase
Agreement"), between Analytical Surveys, Inc., a Colorado corporation ("ASI"),
and you (the "Shareholder"), ASI hereby covenants and agrees with the
Shareholder, and with any Permitted Transferee of the Restricted Stock (as
defined below), as follows:
1. Certain Definitions. The following terms have the following
respective meanings:
"Agreement" means this Registration Rights Agreement.
"Closing Date" means the date of this Registration Rights Agreement.
"Commission" means the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Common Stock" means the shares of common stock, no par value, of
ASI, as constituted as of the date of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same are in effect at the
time.
"Permitted Transferees" means the Shareholder's spouse, lineal
descendants (by blood or adoption) or estate, the Shareholder's
spouse's lineal descendants, or trusts or other entities created for
the exclusive benefit of, or beneficially owned exclusively by, the
Shareholder and such persons or entities.
"Registration Expenses" means the expenses so described in
Section 9.
<PAGE>
"Restricted Stock" means the shares of Common Stock issued to the
Shareholder pursuant to the Purchase Agreement and any additional
shares of Common Stock or other securities issued in respect of such
shares in connection with a stock dividend, stock split,
recapitalization, reclassification or other transaction affecting
ASI's outstanding Common Stock.
"Securities Act" means the Securities Act of 1933 or any similar
federal statute, and the rules and regulations of the Commission under
the Securities Act of 1933, all as the same are in effect at the time.
"Selling Expenses" means the expenses so described in Section 9.
"Transfer" means a sale, exchange, assignment, pledge or other
disposition of Restricted Stock or any interest therein, whether
voluntary or by operation of law, excluding a Transfer to a Permitted
Transferee.
2. Restrictive Legend. Each certificate representing Restricted Stock until
such legend is removed or such shares are sold in accordance with the other
provisions of this Agreement, will be stamped or otherwise imprinted with a
legend substantially in the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE (A) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT AND ALL APPLICABLE
STATE SECURITIES LAWS OR EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS
THEREOF AVAILABLE, AS ESTABLISHED TO THE SATISFACTION OF THE COMPANY,
BY OPINION OF COUNSEL OR OTHERWISE, AND (B) ARE SUBJECT TO CONTRACTUAL
RESTRICTIONS ON RESALE UNDER AN AGREEMENT BETWEEN THE HOLDER AND THE
COMPANY, A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICES OF
THE COMPANY.
3. Restriction on Sale. The Shareholder will not Transfer any shares of the
Restricted Stock prior to the second anniversary of the Closing Date, except
pursuant to the exercise of Incidental Rights (as defined below) provided for in
Section 6(a)(i)) or to a Permitted Transferee as provided in Section 12.
<PAGE>
4. Notice of Proposed Transfer. Prior to any proposed Transfer of any
Restricted Stock after the second anniversary of the Closing Date (other than
under the circumstances described in Sections 5 and 6 or to a Permitted
Transferee under Section 12), the Shareholder will give written notice to ASI of
his intention to effect such Transfer. Each such notice will describe the manner
of the proposed Transfer and, if requested by ASI, will be accompanied by an
opinion of counsel reasonably satisfactory to ASI to the effect that the
proposed Transfer of the Restricted Stock may be effected without registration
under the Securities Act and any state securities laws, at which point the
Shareholder will be entitled to Transfer such Restricted Stock in accordance
with the terms of its notice. Each certificate of Re- stricted Stock Transferred
as above provided will bear the legend set forth in Section 2, unless (i) such
Transfer is in accordance with the provisions of Rule 144 (or any other rule
permitting public sale without registration under the Securities Act) or (ii)
the opinion of counsel referred to above is to the further effect that the
transferee and any subsequent transferee would be entitled to Transfer such
securities in a public sale without registration under the Securities Act.
The foregoing restrictions on transferability of Restricted Stock will
terminate as to any particular shares of Restricted Stock when such shares have
been effectively registered under the Securities Act and sold or otherwise
disposed of in accordance with the intended method of disposition by the
Shareholder set forth in the registration statement concerning such shares, or
when the legend set forth in Section 2 is removed from the certificates
representing such shares in accordance with the immediately preceding sentence
of this Section 4. Whenever the Shareholder is able to demonstrate to the
reasonable satisfaction of ASI (and its counsel) that the provisions of Rule
144(k) of the Securities Act are available to him without limitation, the
Shareholder will be entitled to receive from ASI, without expense, a new
certificate not bearing the restrictive legend set forth in Section 2.
5. Demand Registration Rights.
(a) The Shareholder has the right to request registration of
Restricted Stock under the Securities Act (the "Demand Rights") with the
following restrictions: the Demand Rights may be exercised (i) once, with
respect to up to 462,500 shares of Restricted Stock (less the number of
shares of Restricted Stock sold by the Shareholder after the second
anniversary of the Closing Date under Rule 144 or privately), between the
second and third anniversaries of the Closing Date, and (ii) once, with
respect to up to all of the remaining shares of Restricted Stock, between
the third and sixth anniversaries of the Closing Date. The Shareholder may
not make a request to register fewer than 100,000 shares.
(b) ASI will use its best efforts to register under the Securities Act
for public sale in accordance with the method of disposition specified in
the initial written request from the Shareholder for registration of the
shares of Restricted Stock, subject to the limitations set forth below. If
such method of disposition is to be an underwritten public offering, ASI
may designate the managing underwriter of such offering, provided that such
managing underwriter is reasonably satisfactory to the Shareholder.
Notwithstanding anything to the contrary contained in this Agreement, the
obligation of ASI under this Section 5 will be deemed satisfied only when a
registration statement covering all shares of Restricted Stock specified in
the Shareholder's written request (subject to limitations set forth in
clause (a) of this Section), for sale in accordance with the method of
<PAGE>
disposition specified by the Shareholder, has become effective and has
remained effective for the lesser of (i) 90 days or (ii) the period within
which all shares so registered have been sold; provided, however, that if
the Shareholder requests registration of Restricted Stock under this
Section 5 and later withdraws such request, whether or not a registration
statement had been filed at the time of such withdrawal, ASI will be deemed
to have satisfied its obligation hereunder with respect to that request, as
fully as if the shares of Restricted Stock specified therein had been
registered and sold, unless, within 30 days after receiving ASI's statement
therefor, the Shareholder reimburses ASI for all expenses incurred by ASI
in connection with such registration.
(c) Notwithstanding the grant of the Demand Rights, the Shareholder
will not have the right to require registration at any time that the
provisions of Rule 144(k) are available to the Shareholder with respect to
the sale of the Restricted Stock.
(d) Notwithstanding the grant of the Demand Rights, ASI, upon notice
to the Shareholder, may suspend the right of the Shareholder to exercise
the Demand Rights, for a period not to exceed 90 days (the Suspension
Period ), if and to the extent that ASI determines, in good faith, that the
filing of a registration statement by ASI reasonably could be expected to
have a material adverse effect on ASI and its shareholders and delivers a
certificate signed by the President of ASI to such effect. Such right may
be exercised only once in any 12-month period, and, if either period
described in clauses (i) or (ii) of Section 5(a) would otherwise end during
a Suspension Period, then the period described in clause (i) or (ii) of
Section 5(a) will be extended for a period equal to the Suspension Period
plus 30 days.
6. Incidental Registration Rights.
(a) The Shareholder has incidental registration rights as described in
Section 6(b) (the "Incidental Rights") with respect to all of the shares of
the Restricted Stock, beginning on the Closing Date and ending on the sixth
anniversary of the Closing Date, with the following limitations: (i) before
the second anniversary of the Closing Date the Incidental Rights are
limited to 10% of the primary shares of Common Stock offered and sold by
ASI in the offering as to which the Incidental Rights are being exercised,
and (ii) between the second and third anniversaries of the Closing Date,
the Incidental Rights are limited to 462,500 shares of the Restricted
Stock, less shares of the Restricted Stock previously sold by the
Shareholder by any method.
<PAGE>
(b) Each time ASI proposes to register any of its equity securities
under the Securities Act (other than a registration effected solely to
implement an employee benefit or stock option plan or to sell shares
obtained under any employee benefit or stock option plan or a transaction
to which Rule 145 or any other similar rule of the Commission under the
Securities Act is applicable or a registration on any form which is not
available for the registration of Restricted Stock) ASI will give written
notice to the Shareholder of its intention to do so. The Shareholder may
give ASI a written request to register all or some of the Restricted Stock
in the registration described in the written notice from ASI, provided that
such written request is given within 20 days after receipt of any such
notice from ASI, with such request stating the number of shares of
Restricted Stock to be disposed of and the intended method of disposition
of such Restricted Stock. Upon receipt of such request, ASI will use its
best efforts to cause promptly all such shares of Restricted Stock intended
to be disposed of to be registered under the Securities Act so as to permit
their sale or other disposition in accordance with the intended methods set
forth in the request for registration; provided, however, that if the
registration relates to an underwritten offering, (i) the Shareholders
right to have shares of Restricted Stock included in the registration will
be contingent upon the Shareholder agreeing to include such Restricted
Stock in the offering and entering into an underwriting agreement as
provided in Section 8 and (ii) if the managing underwriter of such offering
determines reasonably and in good faith in writing that the inclusion of
all of the shares of Restricted Stock as to which the Shareholder has
requested registration would adversely affect the offering, the number of
shares to be registered for the account of the Shareholder will be reduced
to the extent necessary to reduce the total number of shares to be included
in such offering to the amount recommended by such managing underwriter.
Any reduction under clause (ii) will affect all persons including shares in
the registration pursuant to the exercise of incidental registration rights
like those granted to the Shareholders in this Section 6 proportionately in
accordance with the number of shares that each had requested the Company to
include in the registration. ASI's obligations under this section apply to
a registration to be effected for securities to be sold for the account of
ASI as well as a registration statement which includes securities to be
offered for the account of other holders of ASI equity securities.
7. Purchase in Lieu of Registration. If the Shareholder exercises Demand
Rights or Incidental Rights as to any shares of the Restricted Stock (a
Registration Notice ), then ASI will have the option (the Option ), which Option
may be exercised only to the extent not prohibited by Section 7-106-401, of the
Colorado Business Corporation Act, to purchase any or all of such shares, in
lieu of registering them, at the current market price determined as follows: as
to each share of Common Stock, the average of the daily closing prices for the
Common Stock for the 20 consecutive trading days before the day the Registration
Notice was received by ASI. The closing price for each day will be the last
reported sale price regular way, or, in case no such reported sale takes place
on such day, the reported closing price regular way, in either case on the
composite tape, or if the Common Stock is not quoted on the composite tape, on
<PAGE>
the principal United States securities exchange registered under the Securities
Exchange Act of 1934, on which the Common Stock is listed or admitted to
trading, or if it is not listed or admitted to trading on any such exchange, the
closing sale price (or the average of the quoted closing bid and asked prices if
no sale is reported) as reported by the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), or any comparable system, or if
the Common Stock is not quoted on the NASDAQ, or any comparable system, the
average of the closing bid and asked prices quoted to the public by a person
then making a market in the Common Stock, and if no person is a market maker in
the Common Stock, then the average of the closing bid and asked prices furnished
by any member of the National Association of Securities Dealers, Inc. ASI may
exercise the Option at any time within 15 days after receiving the Registration
Notice by giving the Shareholder written notice of its election to exercise.
Such notice must specify the number of shares of the Restricted Stock that ASI
elects to purchase, the current market price as determined according to the
formula set forth above, and the date of payment for such shares, which will be
within 60 days after ASI's receipt of the Registration Notice. On the date fixed
for payment in ASI's notice of exercise, the Shareholder will deliver
certificates representing the shares of Restricted Stock that ASI has elected to
purchase, duly endorsed for transfer to ASI, free and clear of liens, claims and
encumbrances, to ASI at its principal executive offices against payment by ASI
of the purchase price for such shares. If ASI elects to purchase less than all
of the shares covered by a registration notice, it will be obligated to register
the balance of such shares, subject to the provisions of Section 5.
8. Registration Procedures and Expenses. As to any shares of the Restricted
Stock that are subject to a Registration Notice under the Demand Rights and as
to which ASI does not exercise the Option provided for in Section 7, ASI will:
(a) as expeditiously as is reasonably practicable after the expiration
of the period within which ASI may exercise the Option, prepare and file
with the Commission, a registration statement with respect to such
securities and use its best efforts to cause such registration statement to
become effective and to remain effective for 90 days;
(b) as expeditiously as is reasonably practicable, prepare and file
with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection with such registration
statement as may be necessary to keep such registration statement effective
for the period specified in paragraph (a) above and to comply with the
provisions of the Securities Act with respect to the disposition of all
Restricted Stock covered by such registration statement in accordance with
the Shareholder's intended method of disposition set forth in such
registration statement for such period;
(c) as expeditiously as is reasonably practicable, furnish to the
Shareholder and to each underwriter such number of copies of the
registration statement and the prospectus included in the registration
statement (including each preliminary prospectus) as such persons may
reasonably request in order to facilitate the public sale or other
disposition of the Restricted Stock covered by such registration statement;
<PAGE>
(d) use its best efforts to register or qualify the Restricted Stock
covered by such registration statement under the securities or blue sky
laws of such jurisdictions as the Shareholder or, in the case of an
underwritten public offering, the managing underwriter, reasonably request,
if such registrations are required by law;
(e) immediately notify the Shareholder and each underwriter, at any
time when a prospectus relating to such registration statement is required
to be delivered under the Securities Act, of the happening of any event as
a result of which the prospectus contained in such registration statement,
as then in effect, includes an untrue statement of a material fact or omits
to state any material fact required to be stated in such prospectus or
necessary to make the statements in such prospectus not misleading in the
light of the circumstances then existing;
(f) use its best efforts (if the offering is underwritten) to furnish,
at the request of the Shareholder on the date that the Restricted Stock is
delivered to the underwriters for sale pursuant to such registration: (i)
an opinion dated such date of counsel representing ASI for the purposes of
such registration, addressed to the underwriters and to the Shareholder
stating that such registration statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no stop
order suspending the effectiveness of such registration statement has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, (B) the registration
statement, the related prospectus, and each amendment or supplement of each
of them, comply as to form in all material respects with the requirements
of the Securities Act and the applicable rules and regulations of the
Commission under the Securities Act (except that such counsel need express
no opinion as to financial statements and other financial and statistical
data contained in each of them) and (C) to such other effects as may
reasonably be requested by counsel for the underwriters or by the
Shareholder or its counsel, and (ii) a letter dated such date from the
independent public accountants retained by ASI, addressed to the under-
writers and to the Shareholder, stating that they are independent
public accountants within the meaning of the Securities Act and that, in
the opinion of such accountants, the financial statements of ASI included
in the registration statement or the prospectus, or any amendment or
supplement of such statement or prospectus, comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act, and such letter will additionally cover such other
financial matters with respect to the registration in respect of which such
letter is being given as such underwriters may reasonably request;
<PAGE>
(g) as expeditiously as is reasonably practicable, make available for
inspection by the Shareholder, and any attorney, accountant or other agent
retained by the Shareholder, all financial and other records, pertinent
corporate documents and properties of ASI, and cause ASI's officers,
directors and employees to supply all information reasonably requested by
the Shareholder or any such attorney, accountant or agent in connection
with such registration statement;
(h) as expeditiously as is reasonably practicable, cause all the
Restricted Stock covered by the registration statement to be listed on each
securities exchange on which similar securities of ASI are then listed; and
(i) provide a transfer agent and registrar for all the Restricted
Stock covered by the registration statement not later than the effective
date of such registration statement.
The provisions of Section 8(a) through (i) will also apply to all shares of
the Restricted Stock that are subject to a Registration Notice under the
Incidental Rights and as to which ASI does not exercise the Option provided for
in Section 7, except that ASI will be entitled to control the timing of the
registration process in all respects and may withdraw or terminate any such
registration at any time.
In connection with each registration under this Agreement, the Shareholder
will furnish to ASI in writing such information with respect to himself and the
proposed distribution by him as will be reasonably necessary in order to assure
compliance with federal and applicable state securities laws.
In connection with each registration pursuant to Sections 5 or 6 covering
an underwritten public offering, ASI and the Shareholder will enter into a
written agreement with the managing underwriter selected in the manner provided
above in such form and containing such provisions as are customary in the
securities business for such an arrangement between major underwriters and
companies of ASI's size and investment stature; provided, however, that such
agreement will not contain any such provision applicable to ASI or the
Shareholder which is inconsistent with the provisions of this Agreement and
provided, further, that the time and place of the closing under said agreement
will be as mutually agreed upon among ASI, such managing underwriter and the
Shareholder.
9. Expenses.
(a) All expenses incurred in complying with Sections 5 and 6,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent public
accountants for ASI, fees of the Commission and National Association of
Securities Dealers, Inc., transfer taxes and fees of transfer agents and
registrars, but excluding any Selling Expenses and fees and expenses of
counsel for the Shareholder or any other expenses of the Shareholder, are
<PAGE>
referred to as "Registration Expenses". All underwriting discounts, selling
commissions applicable to the sale of the Restricted Stock, and any
customary and reasonable underwriter's expense allowances expressed on a
percentage of the proceeds of the offering, are referred to as "Selling
Expenses".
(b) ASI will pay all Registration Expenses in connection with each
registration statement filed pursuant to Section 6, and in connection with
the first registration statement filed pursuant to the Shareholder's
exercise of Demand Rights. The Shareholder will pay all customary and
reasonable Registration Expenses in connection with the second registration
statement filed pursuant to its exercise of Demand Rights, except that: (i)
the Shareholder will not be required to pay or reimburse ASI for the costs
of any audit of ASI's financial statements that would have been performed
in any event; (ii) the Shareholder will not have to pay or reimburse ASI
for the time of any ASI executives or other personnel involved in preparing
the registration statement; and (iii) if any other shareholders of ASI
participate in such registration, the Shareholder will be required to pay
only his pro rata portion of the Registration Expenses. All Selling
Expenses in connection with any registration statement filed pursuant to
Sections 5 and 6 will be borne by the Shareholder.
10. Indemnification. In the event of a registration of any of the
Restricted Stock under the Securities Act pursuant to Section 5 or 6, ASI will
indemnify and hold harmless the Shareholder and each underwriter of Restricted
Stock under the Securities Act and each other person, if any, who controls the
Shareholder or any underwriter within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which the
Shareholder or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect of such losses, claims, damages or
liabilities) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Restricted Stock was registered, any preliminary prospectus or
final prospectus contained in such registration statement, or any amendment or
supplement of such registration statement, or arise out of or are based upon the
omission or alleged omission to state in such registration statement or
prospectus a material fact required to be therein or necessary to make the
statements therein not misleading, and will reimburse the Shareholder, each such
underwriter and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that ASI will
not be liable in any such case if and to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by the Shareholder, any underwriter or any
controlling person in writing specifically for use in such registration
statement or prospectus.
<PAGE>
In the event of a registration of any of the Restricted Stock under the
Securities Act pursuant to Section 5 or 6, the Shareholder will indemnify and
hold harmless ASI and each person, if any, who controls ASI within the meaning
of the Securities Act, each officer of ASI who signs the registration statement,
each director of ASI, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which ASI or such officer
or director or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect of such losses, claims, damages or
liabilities) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Restricted Stock was registered, any preliminary prospectus or
final prospectus contained in such registration statement or any amendment or
supplement of such registration statement, or arise out of or are based upon the
omission or alleged omission to state in such registration statement or
prospectus a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse ASI and each such
officer, director, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Shareholder will be liable under this Agreement in any such case if and
only to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with information
furnished in writing to ASI by the Shareholder specifically for use in such
registration statement or prospectus; provided, further, however, that the
liability of the Shareholder under this Agreement will be limited to the
proportion of any such loss, claim, damage, liability or expense which is equal
to the proportion that the public offering price of shares sold by the
Shareholder under such registration statement bears to the total public offering
price of all securities sold under such registration statement, but not to
exceed the proceeds received by the Shareholder from the sale of the Restricted
Stock covered by such registration statement.
Promptly after receipt by an indemnified party under this Agreement of
notice of the commencement of any action, such indemnified party will, if a
claim in respect of such action is to be made against the indemnifying party
under this Agreement, promptly notify the indemnifying party in writing of such
claim, but the omission so to notify the indemnifying party will not relieve it
from any liability which it may have to any indemnified party except to the
extent that the indemnifying party is prejudiced by such omission or delay. In
case any such action is brought against any indemnified party and it notifies
the indemnifying party of the commencement of such action, the indemnifying
party will be entitled to participate in and, to the extent it wishes, to assume
and undertake the defense of such action with counsel reasonably satisfactory to
such indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense of such
action, the indemnifying party will not be liable to such indemnified party
under this Section 10 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense of such action other than
reasonable costs of investigation and of liaison with counsel so selected
<PAGE>
(unless such indemnified party reasonably objects to such assumption on the
grounds that there are likely to be defenses available to it which are different
from or in addition to, and are in conflict with, the defenses available to such
indemnifying party, in which event the indemnified party will be reimbursed by
the indemnifying party for the reasonable expenses incurred in connection with
retaining its separate legal counsel, but only to the extent of such conflict).
The indemnifying party will lose its right to defend, contest, litigate and
settle a matter if it fails to contest such matter diligently. No matter will be
settled by an indemnifying party without the prior written consent of the
indemnified party, unless such settlement contains a full and unconditional
release of the indemnified party.
Notwithstanding the foregoing, any indemnified party has the right to
retain its own counsel in any such action, but the fees and disbursements of
such counsel will be at the expense of such indemnified party unless (i) the
indemnifying party fails to retain counsel for the indemnified person as
aforesaid or (ii) the indemnifying party and such indemnified party mutually
agree to the retention of such counsel. The indemnifying party will not, in
connection with any action or related actions in the same jurisdiction, be
liable for the fees and disbursements of more than one separate firm qualified
in such jurisdiction to act as counsel for the indemnified party. The
indemnifying party will not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there is a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
If the indemnification provided for in the first two paragraphs of this
Section 10 is unavailable or insufficient to hold harmless an indemnified party
under such paragraphs in respect of any losses, claims, damages or liabilities
or actions in respect of such losses, claims, damages or liabilities, then each
indemnifying party will in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of ASI, on the one hand, and the
underwriters and the Shareholder, on the other, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or actions, as well as any other relevant equitable considerations.
ASI and the Shareholder agree that it would not be just and equitable if
contributions pursuant to this paragraph were determined by pro rata allocation
or by any other method of allocation which did not take account of the equitable
considerations referred to above in this paragraph. Notwithstanding the
provisions of this paragraph, the Shareholder will not be required to contribute
any amount in excess of the lesser of (i) the proportion that the public
offering price of shares sold by the Shareholder under such registration
statement bears to the total public offering price of all securities sold under
such registration statement, but not to exceed the proceeds received by the
Shareholder for the sale of the Restricted Stock covered by such registration
statement and (ii) the amount of any damages which it would have otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission. No person guilty of fraudulent misrepresentations (within the meaning
of Section 11(f) of the Securities Act), will be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation.
The indemnification of underwriters provided for in this Section 10 will be
on such other terms and conditions as are at the time customary and reasonably
required by such under- writers. The indemnification provided for under this
Agreement will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party and will survive the transfer of
the shares of Restricted Stock.
<PAGE>
11. Changes in Common Stock. If the Company should take any action to
change its outstanding shares of Common Stock into a greater or lesser number of
shares, whether by stock split, stock dividend or otherwise, all numbers of
shares given in this Agreement will automatically be proportionately adjusted.
12. Permitted Transferees.
(a) In order to Transfer Restricted Stock to a Permitted Transferee,
the Shareholder will submit the certificates representing the shares to the
Company together with (i) a written agreement satisfactory in form and
substance to ASI signed by the Permitted Transferee agreeing to be bound by
all of the terms and provisions of this Agreement applicable to the
Shareholder; (ii) such evidence as ASI may reasonably request that the
proposed transferee in a Permitted Transferee; (iii) an opinion of counsel
reasonably satisfactory to ASI that the proposed Transfer may be effective
without registration under the Securities Act and any state securities
laws. The certificate issued in the name of the Permitted Transferee will
bear the legend referred to in Section 2.
(b) Following any Transfer of Restricted Stock to a Permitted
Transferee, the Shareholder and all Permitted Transferees will be jointly
and severally liable for the performance of the obligations of the
Shareholder hereunder, and the rights of the Shareholder hereunder will be
exercised by a single representative of all holders of Restricted Stock. As
long as the Shareholder is alive and legally competent and continues to own
any share of Restricted Stock, the Shareholder shall be that
representative. Upon the death or incompetency of the Shareholder, his
execution or conservation will appoint a Permitted Transferee as successor
representative. Upon the Transfer by the Shareholder of all of his
Restricted Stock, if any Permitted Transferee will own Restricted Stock
after the Transfer, the Shareholder will appoint a Permitted Transferee as
successor representative. If any successor representative appointed by the
Shareholder or his executor or conservator resigns or ceases to own
Restricted Stock, the Permitted Transferees will appoint a successor
representative by majority vote of the shares of Restricted Stock then
owned by all Permitted Transferees. The Shareholder or other person or
persons appointing or electing a successor representative will give written
notice of such election or appointment to the Company, identifying the
successor representative. The Company will be entitled to rely without
inquiry on the instructions of the representative last identified to it as
provided above and may disregard any contrary claims or demands by any
other holder of Restricted Stock.
<PAGE>
(c) After any Transfer to a Permitted Transferee, all provisions of
this Agreement will apply to all shares, transactions or actions of the
Shareholders and all Permitted Transferees in the aggregate. Without
limiting the generality of the foregoing, the number of shares as to which
the shares of the Restricted Stock Transferred by any Permitted Transferee
will be aggregated with the shares of the Restricted Stock Transferred by
the Shareholder for the purpose of determining the number of shares of the
Restricted Stock that may be sold by the Shareholder or any Permitted
Transferee pursuant to a Demand Right or an Incidental Right.
13. Miscellaneous.
(a) In order to make available to the Shareholder the benefits of
certain rules and regulations of the Commission which may permit the sale
of the shares of Restricted Stock to the public without registration, ASI
agrees that, when required by law, it will use its best efforts to: (i)
make and keep public information available, as those terms are understood
and defined in Rule 144 of the Commission, at all times; (ii) file with the
Commission in a timely manner all reports and other documents required of
ASI under the Securities Act and the Exchange Act; and (iii) so long as the
Shareholder owns any shares of Restricted Stock, furnish the Shareholder,
promptly after the Shareholder's request a written statement by ASI as to
its compliance with the reporting requirements of Rule 144.
(b) Subject to the restrictions on Transfer set forth herein, all
covenants and agreements contained in this Agreement by or on behalf of any
of the parties to this Agreement will bind and inure to the benefit of the
respective successors and assigns of the parties to this Agreement whether
so expressed or not.
(c) All notices, requests, demands, claims, and other communications
under this Agreement will be in writing. Any notice, request, demand,
claim, or other communication under this Agreement will be deemed duly
given only if it is sent by registered or certified mail, return receipt
requested, postage prepaid, or by courier, telecopy or facsimile, and
addressed to the intended recipient as set forth below:
(i) if to ASI, to it at: Analytical Surveys, Inc., 1935 Jamboree
Drive, Suite 100, Colorado Springs, Colorado 80920, Attention: Sidney
V. Corder;
(ii) if to the Shareholder, to him at: Geo. S. Olive & Co. LLC,
700 Capital Center South, 201 North Illinois Street, Indianapolis,
Indiana 46204, Attention: Mr. Charles E. Thomas, Telecopy: (317)
383-4200; and
(iii) if to any Permitted Transferee, to it at such address as
may have been furnished to ASI in writing by such holder;
<PAGE>
Notices will be deemed given three days after mailing if sent by
certified mail, when delivered if sent by courier, and one business day
after receipt of confirmation by person or machine if sent by telecopy or
facsimile transmission. Any party may change the address to which notices,
requests, demands, claims and other communications under this Agreement are
to be delivered by giving the other parties notice in the manner set forth
in this Agreement.
(d) This Agreement will be governed by and construed in accordance
with the laws of the State of Indiana.
(e) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter of this Agreement and may not be
modified or amen- ded except in writing.
(f) This Agreement may be executed in two or more counterparts, each
of which will be deemed an original, but all of which together will
constitute one and the same instrument.
(g) All references in this Agreement to Sections refer to the
pertinent provision of this Agreement unless provided otherwise.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this Agreement, whereupon this
Agreement will be a binding agreement between ASI and you.
Very truly yours,
Analytical Surveys, Inc.
By: /s/ Sid V. Corder
----------------------------
Title: Chief Executive Officer
----------------------------
AGREED TO AND ACCEPTED
as of the date first
above written.
/s/ Sol C. Miller
- -----------------
Sol C. Miller
July 2, 1997
Analytical Surveys, Inc.
1935 Jamboree Drive, Suite 100
Colorado Springs, Colorado 80920
Ladies and Gentlemen:
I am acquiring 925,000 shares (the "Shares") of Common Stock (the "Common
Stock" ) of Analytical Surveys, Inc. (the "Company") from the Company pursuant
to the Purchase Agreement dated as of the date of this letter.
I understand that the Company is transferring the Common Stock to me in
reliance upon certain exemptions from the registration requirements of the
Securities Act of 1933 and in reliance upon exemptions from registration in the
Colorado Securities Act, the securities laws of Indiana and the securities laws
of any other applicable state. I represent to and agree with the Company that:
1) I am acquiring the Shares for investment for my own account and with no
view to distribute the Shares, in whole or in part and of record or
beneficially, to any other person.
2) I understand and agree that the Shares will constitute "restricted
securities" under the Securities Act of 1933 and thus may not be sold, assigned,
or otherwise disposed of, beneficially or on the records of the Company, unless
there has been delivered to the Company an opinion of counsel, satisfactory to
the Company, to the effect that the proposed transaction will neither constitute
nor result in any violation of the registration requirements under any
applicable federal securities law or any applicable state securities law. I
agree that the Company may place on the certificates representing the Common
Stock that I purchase a restrictive legend in substantially the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE (A) HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN
REGISTERED UNDER THAT ACT AND ALL APPLICABLE STATE SECURITIES LAWS OR
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS THEREOF AVAILABLE, AS
ESTABLISHED TO THE SATISFACTION OF THE COMPANY, BY OPINION OF COUNSEL OR
OTHERWISE, AND (B) ARE SUBJECT TO CONTRACTUAL RESTRICTIONS ON RESALE UNDER
AN AGREEMENT BETWEEN THE HOLDER AND THE COMPANY, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY.
<PAGE>
I acknowledge that the requirements stated in this paragraph with respect
to any proposed sale, assignment, or other disposition of the Shares are in
addition to any restrictions upon such transactions imposed, now or in the
future, under the Articles of Incorporation or Bylaws of the Company, or under
any other agreement with respect to the Shares.
3) I acknowledge that I have had full opportunity to ask questions of, and
receive answers from, the Company's officers and directors concerning (a) the
terms of the transactions contemplated by the Purchase Agreement and (b) any
aspect of the Company's assets, financial condition, business and business
prospects, and to obtain any additional information about the Company's assets,
financial condition, business and business prospects. Without limiting the
foregoing, I have had access to, and have reviewed, (a) the Company's annual
report on Form 10-K for the period ended September 30, 1996; (b) the Company's
quarterly reports on Form 10-Q for the periods ended December 31, 1996 and March
31, 1997; (c) the Company's reports on Form 8-K dated February 13, 1997,
February 24, 1997, and March 20, 1997; and (d) the Company's annual report to
shareholders for the year ended September 30, 1996.
4) I have such knowledge and experience in financial and business matters
that I am capable of evaluating the merits and risks of an investment in the
Shares.
5) I acknowledge that no general solicitation or general advertising
(including communications published in any newspaper, magazine, or other
broadcast) has been received by me and that no public solicitation or
advertisement with respect to the offering of the Shares has been made to me.
6) I have adequate means of providing for my current needs and possible
current contingencies, and I have no need and anticipate no need in the
foreseeable future, for liquidity in my investment in the Shares. I am able to
bear the economic risks of my investment in the Shares and, consequently,
without limiting the generality of the foregoing, I am able to hold the
investment for an indefinite period and have sufficient net worth to sustain a
loss of the entire investment in the event such loss should occur.
<PAGE>
7) I am a bona fide resident of the State of Indiana, and my correct
mailing address and social security number are set forth below next to my
signature. I have no present intention of becoming a resident of any other state
or jurisdiction.
8) I understand that no securities administrator of any state has made any
finding or determination relating to the advisability or fairness of the terms
under which I am purchasing the Shares.
9) I represent and warrant to the Company that either (a) my individual net
worth, or my joint net worth with that of my spouse, presently exceeds
$1,000,000, or (b) my individual income was in excess of $200,000 during 1995
and 1996, or the joint income of myself and my spouse was in excess of $300,000
in 1995 and 1996, and in either event I have a reasonable expectation of
reaching such income levels in the current year.
10) The information set forth in this letter is true, complete and correct,
and I am aware that the Company and its counsel will rely on the information,
representations, and warranties set forth in this letter in connection with the
Company's transfer of the Shares to me. The representations that I have made in
this letter will survive the execution and delivery of this letter and the sale
of the Shares to me.
Very truly,
/s/ Sol C. Miller
-----------------------------
Sol C. Miller
Address:
Mr. Sol C. Miller
c/o Mr. Charles E. Thomas
Geo. S. Olive & Co. LLC
700 Capitol Center South
201 North Illinois Street
Indianapolis, IN 46204
Telecopy: (317) 383-4200
