UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 2, 1997
Date of Report (Date of earliest event reported)
ANALYTICAL SURVEYS, INC.
(Exact name of registrant as specified in its charter)
COLORADO
(State of incorporation)
0-13111
(Commission File Number)
084-846389
(IRS Employer Identification No.)
1935 Jamboree Drive, Suite 100
Colorado Springs, Colorado 80920
(Address of principal executive offices)
(719)-264-5550
(Registrant's telephone number)
Item 2. Acquisition or Disposition of Assets
Analytical Surveys, Inc. (the "Company") purchased all of
the outstanding stock of MSE Corporation ("MSE"),an Indiana
corporation, 941 North Meridian Street, Indianapolis,
Indiana from its sole owner, Sol C. Miller on July 2, 1997.
MSE is engaged in the business of data conversion in the
geographic information systems industry (approximately 80%
of revenues) and civil engineering and land surveying
(approximately 20% of revenues).
MSE, which will operate as a wholly owned subsidiary of ASI,
reported sales of $22 million and net profit before taxes of
$1.6 million for its fiscal year ended December 31, 1996.
(MSE was an S Corporation for tax purposes and therefore
taxes on its income were paid by its owner not by the
corporation.) For the fiscal years ended December 31, 1994,
1995 and 1996, MSE's sales increased by 11%, 38%, and 23%
respectively over each of the previous years. Management of
ASI believes that it can improve MSE's operating margins and
within the next fiscal year hope to achieve net margins by
MSE (after amortization of goodwill, interest expenses and
taxes) in the range of 6.5% to 7.5% compared to ASI's net
margins of 7.8% in the first six months of fiscal year 1997.
There can be no guarantees of future results, and the
operation of MSE is subject to the same market and industry
risks as ASI. Furthermore, all acquisitions introduce new
risks to the operation of a business, including potential
loss of key customers, employees and vendors. The response
of competitors can also adversely affect the Company's
ability to win new contracts.
MSE has approximately 335 employees, most of whom are
professional and technical staff. MSE works primarily with
the utilities industry providing data conversion and other
GIS-related services, work often referred to as automated
mapping and facilities management (AM/FM) services. MSE has
been awarded more than 300 data conversion projects in the
United States, Canada, Europe, New Zealand and the Pacific
Rim. MSE also provides a wide range of professional civil
engineering and land surveying services.
Consideration paid for MSE consisted of cash in the amount
of $11,000,000 and 925,000 restricted shares of Analytical
Surveys, Inc. no par value common stock, valued at
approximately $7,317,000. The shares are subject to
contractual restrictions on sale or transfer and a
registration rights agreement. Mr. Miller has agreed not to
sell any of the shares for two years, except for shares
registered pursuant to the exercise of incidental
registration rights that are limited during such two year
period to 10% of the shares sold by the Company in a
registered offering. Mr. Miller also has certain additional
incidental registration rights beginning after July 2, 1999.
Between July 2, 1999 and July 2, 2000, Mr. Miller may
exercise demand registration rights as to one-half of the
shares (462,500), less any shares previously sold. After
July 2, 2000, Mr. Miller may demand registration as to all
of his remaining shares. Mr. Miller has granted to the
Company an option to purchase at the market price, in lieu
of registration, any shares that Miller subjects to a demand
or incidental registration. Mr. Miller is allowed to make
intra-family transfers at any time, but any transferee is
subject to the same restrictions as apply to Mr. Miller.
Prior to this transaction, there was no material
relationship between the Company or any of its affiliates,
officers or directors and MSE or any of its affiliates,
officers or directors. Mr. Miller will serve the Company in
a consulting capacity under a one year agreement that
provides for compensation in the amount of $150,000 and it
is expected that Mr. Miller will be elected to the Company's
board of directors at its next meeting. Mr. Miller will
receive compensation for his services as a director in the
same manner as other outside directors. MSE's facilities
are leased from MSE Realty, LLC, which is owned by Mr.
Miller.
The cash portion of the consideration paid was provided by a
loan from Bank One Colorado (the "Bank") in the amount of
$12,500,000, payable over a five year period with interest
at a floating rate of 2% over the one month London Interbank
Offered Rate ("LIBOR"). The Company has entered into an
interest rate swap agreement with the Bank that fixes the
interest rate at 8.07% for the first year of the loan. The
repayment terms for the loan are based on an eight year
amortization in the first and second years, a seven year
amortization in the third year and a five year amortization
thereafter, with a balloon payment due at the end of the
fifth year. A portion of the loan proceeds were used to pay
other transaction costs of approximately $1,400,000,
including consulting fees, investment banking services, and
accounting, legal and bank fees and expenses.
The restricted shares of Analytical Surveys, Inc. no par
value common stock provided as part of the purchase
consideration were newly issued from the previously
authorized but unissued shares of the Company.
The assets of the business acquired were used in its data
conversion business which included digital mapping,
facilities management and geographic information systems and
its civil engineering and land surveying business. The
Company intends to continue to operate the business in the
same general manner and in the same location.
As a long term incentive to five employees of MSE (not including
Mr. Miller) and eight employees of ASI, ASI agreed to grant
options for an aggregate of 345,000 shares of common stock
at $13.75 per share with a ten year term. In general, the
options vest 25% after six months, and an additional 25% on
each of July 2, 1998, 1999 and 2000.
Statements made in this Report on Form 8K that are not
historical facts may be forward looking statements. Actual
results may differ materially from those projected in any
forward looking statement. There are a number of important
factors that could cause actual results to differ materially
from those anticipated by any forward looking information.
A description of risks and uncertainties attendant to
Analytical Surveys and its industry and other factors which
could affect the Company's financial results are included in
the Company's Securities and Exchange Commission Annual
Report on Form 10-KSB.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired
It is impractical for the registrant to provide the required
financial statements of the business acquired in time for
inclusion in the initial filing of this report on Form 8-K.
The required financial statements of the business acquired
will be provided by an amendment to this report on Form 8-K
as soon as practical which is expected to be within 60 days.
(b) Pro forma financial information
It is impractical for the registrant to provide the required
pro forma financial information in time for inclusion in the
initial filing of this report on Form 8-K. The required pro
forma financial information will be provided by an amendment
to this report on Form 8-K as soon as practical which is
expected to be within 60 days.
(c) Exhibits
2. Plan of acquisition, reorganization, arrangement,
liquidation or succession:
2.1 Purchase Agreement dated July 2, 1997 between
Analytical Surveys, Inc. (buyer) and Sol C. Miller.(seller).
2.2 Registration Rights Agreement dated July 2, 1997,
between Analytical Surveys, Inc. and Sol C. Miller.
2.3 Consulting and Non-Competition Agreement dated
July 2, 1997, between Analytical Surveys, Inc. and Sol C.
Miller.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
Analytical Surveys, Inc.
by: /s/ Scott C. Benger
Secretary/ Treasurer<PAGE>
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:
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).<PAGE>
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.
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.
S 6901 et seq.), as amended, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. S 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,<PAGE>
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).
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<PAGE>
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.
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<PAGE>
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.
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.
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,<PAGE>
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.
(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<PAGE>
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.
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<PAGE>
properties of the Company. The Company has all requisite
corporate power and authority to own, 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<PAGE>
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.
(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<PAGE>
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
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<PAGE>
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 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).<PAGE>
(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)<PAGE>
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 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 SS 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 S 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 S 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.<PAGE>
(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. 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<PAGE>
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;
(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<PAGE>
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.
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;<PAGE>
(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 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<PAGE>
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<PAGE>
group member; (C) covers any 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<PAGE>
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."
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<PAGE>
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.
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<PAGE>
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.
(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<PAGE>
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 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<PAGE>
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<PAGE>
provision of, or result in 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<PAGE>
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).
(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<PAGE>
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.
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.
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<PAGE>
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.
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.<PAGE>
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 S
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 S 1374, (ii) any tax imposed under
Reg. S 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 S 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 SS 1361
and 1362.
(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<PAGE>
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,<PAGE>
including without limitation, with respect to the transactions
contemplated by this Agreement.
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,<PAGE>
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.
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.<PAGE>
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 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<PAGE>
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.
(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<PAGE>
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).<PAGE>
(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.
(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<PAGE>
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 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<PAGE>
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:
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<PAGE>
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.
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<PAGE>
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.
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.<PAGE>
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<PAGE>
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.
"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.
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 Restricted
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 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.
(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 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;
(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 underwriters
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;
(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 attor-
ney, accountant or agent in connection with such registra-
tion 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 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.
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
(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 Sec-
tion 10 will be on such other terms and conditions as are at the
time customary and reasonably required by such underwriters. 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.
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.
(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;
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 ac-
cordance 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 amended except in writing.
(f) This Agreement may be executed in two or more counter-
parts, 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.
\s\ S. V. Corder
By: Sidney V. Corder
Title: Chairman and Chief Executive Officer
AGREED TO AND ACCEPTED
as of the date first
above written.
\s\ Sol C. Miller
Sol C. Miller
CONSULTING AND NONCOMPETITION AGREEMENT
THIS CONSULTING AND NONCOMPETITION AGREEMENT (this
"Agreement") is entered into as of July 2, 1997, between
Analytical Surveys, Inc., a Colorado corporation ("ASI"), and Sol
C. Miller (the "Consultant").
Recitals
Pursuant to the Purchase Agreement (the "Purchase
Agreement") dated as of July 2, 1997 among ASI and the
Consultant, ASI has agreed to purchase all of the stock of MSE
Corporation (the "Company").
The execution and delivery of this Agreement is a condition
precedent to the obligations of the parties to the Purchase
Agreement to consummate the transactions contemplated by the
Purchase Agreement.
Agreement
The parties agree as follows:
I. DEFINITIONS
In addition to the terms defined elsewhere in this
Agreement, the following terms will have the meanings set forth
below:
I.1. "Affiliate" means, with respect to any Person, (i)
any Person in which such Person directly or indirectly holds an
equity or profits interest, (ii) any Person controlling,
controlled by or under common control with such Person, (iii) any
director, executive officer, partner or trustee of such Person,
(iv) any member of the immediate family of such Person, (v) any
trust in which a substantial portion of the beneficial interest
is held by one or a combination of the foregoing Persons or (vi)
any Person to whom such Person provides or has provided financial
assistance. As used in this definition, "control" means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through the ownership of voting securities or voting
interests, by contract or otherwise.
I.2. "Business" means (i) the businesses conducted or
planned to be conducted by the Company as of the day prior to the
date of this Agreement or by ASI at any time during the
Consultant's consulting arrangement with ASI, (ii) any business
conducted by the Company at any time within the one-year period
prior to the day prior to the date of this Agreement and (iii)
any business reasonably related or incident to, or constituting a
reasonable extension of, such businesses, whether or not (a) the
Company has been engaged in such business prior to, or is engaged<PAGE>
in such business as of, the day prior to the date of this
Agreement or (b) ASI has been engaged in such business prior to,
or is engaged in such business as of, the date on which the
Consultant's consulting arrangement with ASI terminates.
I.3. "Competing Business" means any Person, other than
ASI, engaged in any substantial respect in the Business or in the
Industry.
I.4. "Industry" means the business of providing data
conversion services and products for municipal utility,
government and commercial customers, and converting paper based
maps, aerial photography and other information formats into
digital form using technologies such as photogrammetry and
digital orthophotography [Discuss engineering business and ids].
I.5. "Person" means any natural person, corporation,
trust, partnership, limited liability company, joint venture,
unincorporated organization, government or governmental agency,
or other entity.
I.6. "Termination Date" means the date on which the
Consultant's consulting arrangement with ASI terminates.
I.7. "Territory" means the world.
II. CONSULTING TERMS AND CONDITIONS
II.1. Consulting. ASI agrees to utilize the consulting
services of the Consultant, and the Consultant agrees to provide
consulting services to ASI, in the capacities, and subject to the
terms and conditions, set forth in this Agreement. Consultant
agrees to provide consulting services exclusively to ASI during
the term of this Agreement, but nothing in this Agreement will
prevent Consultant from engaging, directly or indirectly, in the
real estate development business as long as such activities do
not unreasonably interfere with the Consultant's duties under
this Agreement.
II.2. Compensation. For the Consultant's performance of
the services described in this Agreement, the Consultant will be
compensated by ASI, as follows:
(i) the Consultant will receive an annual
consulting fee of $150,000, payable monthly on or about the 15th
day of each month;
(ii) the Consultant will be provided with medical
benefits substantially similar to the Consultant's medical
benefits provided by the Company on the day prior to the date of<PAGE>
this Agreement, including continuing coverage under the policy
with Time Insurance Policy, Policy No. 04197219, or substantially
similar benefits; and
(iii) ASI will pay the premiums due during the term
of this Agreement for life insurance policy #__________ with
____________________ as the insurer.
II.3. Expense Reimbursement. Upon submission to ASI of
documentation reasonably satisfactory to it, ASI will reimburse
the Consultant for all reasonable transportation, hotel, meal and
other travel expenses reasonably incurred by the Consultant on
business travel away from the Consultant's usual location and for
other reasonable business expenses reasonably incurred by the
Consultant during the term of the Consultant's consulting
arrangement with ASI, all in accordance with any policies of ASI
established from time to time, and subject to termination or
modification by ASI's Board of Directors, in its sole and
exclusive discretion, but the Consultant will be excused from
performance under this Agreement to the extent that ASI decides
not to reimburse the Consultant for reasonable expenses incurred
in connection with the Consultant's performance of any task,
project or activity under this Agreement.
II.4. Services. The Consultant will act as a consultant
to ASI and its subsidiaries, including the Company, and will be
actively engaged in efforts intended to result in the completion
of any third party contracts, under which ASI and its
subsidiaries, including the Company, are providing services to
such third party, existing and in progress as of the date of this
Agreement, and the acquisition of new contracts for ASI's and its
subsidiaries', including the Company's, services. The Consultant
will report to and be subject to the direction of the Chief
Executive Officer of ASI. The Consultant will devote the
Consultant's best efforts and skills to the business of ASI. The
parties do not intend for the Consultant to be required to
provide services on a full-time basis, or to be required to
consult on a regular and extensive basis concerning any major
projects of ASI, but intend that the Consultant make himself
reasonably available to ASI to provide services, with the
limitation that the Consultant will not be expected to provide
services for more than 40 hours per month, on the average, in the
absence of extraordinary circumstances.
II.5. Term and Termination of Consulting Arrangement.
(a) The Consultant's consulting arrangement under
this Agreement will begin on the date of this Agreement and
continue until July 2, 1998.<PAGE>
(b) ASI may terminate this Agreement prior to July
2, 1998 with Cause, and this Agreement will terminate immediately
if the Consultant dies; in either event, the Consultant will not
be entitled to any compensation or other amounts or benefits
under this Agreement (other than compensation accrued but unpaid
in respect of the period prior to the termination date) or
otherwise, and ASI will have no other liability or obligation to
the Consultant or his estate. For purposes of this Agreement,
"Cause" for termination by ASI exists if Consultant has committed
a felony; has committed a theft or other act of dishonesty
affecting ASI or any of its subsidiaries; has engaged in
threatening, harassing, abusive or otherwise unlawful behavior
toward an employee or customer of ASI, or any agent of employee
or customer; has engaged in other illegal or unlawful conduct;
was grossly negligent in the exercise of the Consultant's
authority or the performance of the Consultant's duties; has
otherwise materially breached this Agreement and has failed to
cure such breach within 30 days after receipt of notice of such
breach.
(c) The Consultant may terminate this Agreement
prior to July 2, 1998 with Cause, in which event the Consultant
will not be obligated to perform any additional services under
this Agreement. For purposes of this Agreement, "Cause" for
termination by the Consultant exists if (I) ASI has materially
breached this Agreement and has failed to cure such breach within
30 days after receipt of notice of such breach or (ii) ASI ceases
to own or control, directly or indirectly, substantially all of
the assets of the Company (but any event described in (ii) will
not be considered a breach of this Agreement by ASI and will not
entitle the Consultant to any damages).
III. CONFIDENTIALITY; NONCOMPETITION
III.1. Confidentiality.
The Consultant agrees that the Consultant and his
Affiliates will not, at any time during the term of this
Agreement and for three years thereafter: (a) disclose any trade
secret or confidential information of ASI or any of its
Affiliates (the "Confidential Information"), to any person other
than an employee of ASI or any of its Affiliates, or (b) use or
permit the use of any of the Confidential Information in any way
to compete (directly or indirectly) with ASI or its Affiliates or
in any manner adverse to ASI or its Affiliates; provided,
however, that the Confidential Information referenced in the
foregoing provision will not include any information or knowledge
which: (a) is already generally publicly known or which
subsequently becomes generally publicly known other than as a
direct or indirect result of a breach of this Agreement or (b) is<PAGE>
lawfully required to be disclosed by a governmental agency or
applicable law. In the case of any disclosure under (b), the
Consultant will provide notice to ASI prior to any such
disclosure in order to provide an opportunity to ASI to contest
such disclosure and, in any event, will redact the disclosed
information to the maximum extent permitted. The Confidential
Information relates to the conduct of ASI's business, is of
independent economic value to ASI because it is not generally
publicly known and is the subject of efforts by ASI to maintain
its secrecy. ASI acknowledges that the right to maintain the
secrecy of the Confidential Information constitutes a proprietary
right which is a trade secret and which ASI is entitled to
protect.
III.2. Employee Agreement Not to Compete.
The Consultant agrees that during the period commencing on
the date of this Agreement and ending three years after the later
of (a) the date that the Consultant ceases to be a member of the
Board of Directors of ASI, or (b) the date on which the
Consultant ceases to have a written consulting arrangement with
ASI (the "Noncompetition Period"), the Consultant will not, and
will cause each of his Affiliates not to, directly or indirectly,
take any of the following actions:
(a) serve as an officer, director, partner, joint
venturer or coventurer, agent or employee of, or a consultant to,
a Competing Business;
(b) own or acquire an ownership interest in or a
right to acquire an ownership interest in a Competing Business,
except that the Consultant may own up to 5% of the outstanding
shares of any class of capital stock of any entity whose capital
stock is registered under Section 15 of the Securities Exchange
Act of 1934; or
(c) solicit for employment any employee or officer
of ASI or any subsidiary of ASI (except for solicitation
occurring after an employee's employment by ASI or a subsidiary
of ASI has terminated).
III.3. Acknowledgment.
The Consultant acknowledges and recognizes that:
(a) this Agreement is necessary for the protection
of the legitimate business interests of ASI;
(b) the restrictions set forth in this Agreement,
including their duration, their geographic scope and the types of
activities covered, are reasonable; and<PAGE>
(c) the Consultant has no intention of competing
with ASI within the Territory during the Non-Competition Period.
IV. MISCELLANEOUS
IV.1. Specific Performance. ASI and the Consultant
acknowledge and agree that any breach of the Consultant's
covenants set forth in Sections II or III of this Agreement will
result in irreparable damage to ASI for which there will be no
adequate remedy at law. Therefore, ASI and the Consultant agree
that ASI may in its sole discretion seek temporary and permanent
court orders enjoining any breach of such covenants, without
prejudice to any other right or remedy to which ASI may be
entitled at law, in equity or under this Agreement.
IV.2. Mediation. Except as set forth in Section 4.1, if a
dispute arises in connection with the Consultant's performance of
consulting services or under this Agreement (including, without
limitation, those involving claims for specific performance or
other equitable relief), notice must be given pursuant to Section
4.14. After such notice has been given by one party to another,
the parties will in good faith 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.
IV.3. Arbitration. If such efforts provided for in Section
4.2 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 this Agreement. 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, and will
be bound to apply controlling law. The Consultant and ASI 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<PAGE>
expenses of arbitration and such party's costs and expenses
(including attorneys' fees and expenses) if the other party
commences or conducts the arbitration in bad faith. The party
who prevails on entry of the award of judgment will be entitled
to his or its costs and expenses, including reasonable attorney's
fees incurred in connection with the arbitration. A judgment
upon the award may be entered in any court having jurisdiction.
Notwithstanding anything to the contrary contained in this
Section, the parties preserve, without 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 provisional
and ancillary remedies, including injunctive relief, pending
resolution of any dispute by arbitration. 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.
IV.4. Attorneys' Fees and Costs. The prevailing party or
parties in any arbitration or in any other action to enforce this
Agreement will be entitled to all reasonable costs and expenses,
including attorneys' fees and fees and expenses of the
arbitrators, incurred in connection with such action.
IV.5. Binding Contract. The mutual reliance by ASI and
the Consultant upon the existence of this Agreement as a
condition precedent to their obligations to consummate the
transactions contemplated by the Purchase Agreement will
constitute sufficient consideration for the validity and
enforceability of each of its provisions.
IV.6. Severability. ASI and the Consultant agree that the
terms of this Agreement, and in particular the restrictions on
the Consultant set forth in Sections II and III, are reasonable
and fair in light of the transactions contemplated by this
Agreement and by the Purchase Agreement. Whenever possible each
provision of this Agreement will be interpreted so as to be fully
effective and valid under applicable law. If any provision of
this Agreement is determined to be invalid, illegal or
unenforceable in any respect as written, such provision will be
automatically modified only to the minimum extent necessary to
make it enforceable and the provision as so modified will be
enforced, without invalidating any other provision of this
Agreement. If any provision contained in this Agreement is
determined to be void or unenforceable against the Consultant in
whole or in part, it will not be deemed to affect or impair the
validity of any other provision of this Agreement or the validity
of such provision with respect to any other party. This
Agreement constitutes a fully negotiated agreement between the
parties, each with the aid and assistance of legal counsel. The
language used in this Agreement will be deemed to be the language<PAGE>
chosen by the parties to express their mutual intent and will be
construed and interpreted as though drafted by all the parties to
this Agreement.
IV.7. Extension of Periods. The periods of time set forth
in Section III of this Agreement will be extended by any period
of time during which the Consultant or any of the Consultant's
Affiliates is in breach of any term of this Agreement.
IV.8. Waiver. Any failure by ASI to insist upon strict
compliance with any term, covenant or condition of this Agreement
will not be deemed to be a waiver of such term, covenant or
condition, nor will the relinquishment of any right or power
under this Agreement by ASI at any one or more times be deemed a
waiver or relinquishment of such right or power by ASI at any
other time or times.
IV.9. Assignment. This Agreement will inure to the
benefit of and be enforceable by the parties and their successors
and assigns, but will not be assignable or delegable in whole or
in part by the Consultant.
IV.10. Headings. The headings contained in this Agreement
are inserted for convenience only and do not constitute a part of
this Agreement.
IV.11. Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed to be an
original but all of which together will constitute but one
agreement.
IV.12. Complete Agreement. This Agreement embodies the
complete agreement and understanding between the parties and
supersedes and preempts any prior understandings, agreements or
representations by the parties, written or oral, which may relate
to the subject matter of this Agreement.
IV.13. Choice of Law. The construction, validity and
interpretation of this Agreement will be governed by the internal
law of the State of Colorado without reference to any conflict of
law principles.
IV.14. 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 &
c/o Mr. Charles E. Thomas Weisell & Co. LLC
Geo. S. Olive & Co. LLC 1000 Capital Center South
700 Capital Center South 201 North Illinois Street
201 North Illinois Street Indianapolis, IN 46204
Indianapolis, IN 46204 Attn: Michael J. Schneider,
Esq.
Telecopy: (317) 383-4200 Telecopy: (317) 237-3900
If to the Buyer: Copy to:
Analytical Surveys, Inc. Sherman & Howard L.L.C.
1935 Jamboree Drive, Suite 100 633 Seventeenth Street,
Colorado Springs, Colorado 80920 Suite 3000
Attn: Sidney V. Corder Denver, Colorado 80202
Attn: James F. Wood, Esq.
Telecopy: (719) 598-9626 Telecopy: (303) 298-0940
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.
The parties to this Agreement have executed this Agreement as of
the date first above written.
ANALYTICAL SURVEYS, INC.
By: /s/ S. V. Corder
Name: Sidney V. Corder
Title:Chairman and Chief Executive Officer<PAGE>
SOL C. MILLER
/s/ Sol C. Miller<PAGE>
