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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
Amendment No. 9
PRECISION SYSTEMS, INC.
-----------------------
(Name of Issuer)
Common Stock ($.01 par value)
-----------------------------
(Title of Class of Securities)
740329-10-7
-----------
(CUSIP Number)
Thomas J. Egan, Jr., Esq.
Baker & McKenzie
815 Connecticut Avenue, N.W.
Washington, D.C. 20006-4078
(202) 452-7000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 22, 1998
--------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with the statement [ ].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
Page 1 of 8 Pages
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CUSIP No. 740329-10-7
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(1) Name of Reporting Persons
S.S. or I.R.S. Identification No. of Above Persons
RMS Limited
Partnership Crystal Diamond, Inc. Roy M. Speer
88-0224372 88-0223159 ###-##-####
- -------------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member (a) [x]
of a Group (See Instructions) (b) [ ]
- -------------------------------------------------------------------------------
(3) SEC Use Only
- -------------------------------------------------------------------------------
(4) Source of Funds
PF
- -------------------------------------------------------------------------------
(5) Check Box if Disclosure of Legal Proceedings [ ]
is Required Pursuant to Items 2(d) or 2(e)
N/A
- -------------------------------------------------------------------------------
(6) Citizenship or Place of Organization
RMS Limited Partnership -- Nevada limited partnership
Crystal Diamond, Inc. -- Nevada corporation
Roy M. Speer -- individual citizen of the United States
- -------------------------------------------------------------------------------
Number of Shares (7) Sole Voting Power
Beneficially Owned 0
by Each Reporting ------------------------------------
Person With (8) Shared Voting Power
3,634,432 by each person
------------------------------------
(9) Sole Dispositive Power
0
------------------------------------
(10) Shared Dispositive Power
3,634,432 by each person
- -------------------------------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
RMS Limited Partnership -- 3,634,432 shares
Crystal Diamond, Inc. -- 3,634,432 shares
Roy M. Speer -- 3,634,432 shares
- -------------------------------------------------------------------------------
(12) Check Box if the Aggregate Amount in Row (11) [x]
Excludes Certain Shares
- -------------------------------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11)
RMS Limited Partnership -- 19.84%
Crystal Diamond, Inc. -- 19.84%
Roy M. Speer -- 19.84%
- -------------------------------------------------------------------------------
(14) Type of Reporting Person
RMS Limited Partnership -- PN
Crystal Diamond, Inc. -- CO
Roy M. Speer -- IN
Page 2 of 8 Pages
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Securities and Exchange Commission
Washington, D.C.
Schedule 13D
- ----------------------------------
RMS Limited Partnership, a Nevada limited partnership ("RMS"), Crystal
Diamond, Inc., a Nevada corporation, and Roy M. Speer hereby amend their
Schedule 13D as filed on July 31, 1992 and as amended by that Amendment No. 1
to the Schedule 13D dated December 17, 1993, by that Amendment No. 2 to the
Schedule 13D dated January 5, 1995, by that Amendment No. 3 to the Schedule 13D
dated April 5, 1995, by that Amendment No. 4 to the Schedule 13D dated June 10,
1996 and by that Amendment No. 5 to the Schedule 13D dated June 27, 1996 and by
that Amendment No. 6 to the Schedule 13D dated April 7, 1997 and by that
Amendment No. 7 to the Schedule 13D dated September 30, 1997 and by that
Amendment No. 8 to the Schedule 13D dated March 4, 1998 (as amended the
"Schedule 13D"), with respect to the Common Stock, par value $.01 per share
(the "Common Stock"), of Precision Systems, Inc., a Delaware corporation.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 of the Schedule 13D is amended by adding the following to the
disclosure contained therein:
Pursuant to a Contribution and Share Exchange Agreement ("Agreement")
dated April 22, 1998 between Speer Communications Holdings Limited Partnership;
Speer World Wide Digital Transmission & Vaulting Limited Partnership; Speer
Productions Limited Partnership; and Speer Virtual Media Limited Partnership
(collectively "Speer") and Precision Systems, Inc., a Delaware corporation (the
"Company" or "PSI"), Speer agreed to exchange certain assets, $15 million in
cash and the capital stock of Professional Video Services Corporation in
exchange for 101,508,343 shares (the "Exchange Consideration") of Common Stock
of PSI (the "Contribution and Exchange Transaction"). In addition, pursuant
to the terms of a Real Estate Transfer Agreement (the "Real Estate Agreement")
RMS agreed to contribute certain real estate to PSI in exchange for 3,789,393
shares (the "Real Estate Consideration") of Common Stock of PSI (the "Real
Estate Transaction"). Pursuant to the terms of a Plan of Recapitialization
between RMS and the Company, RMS also agreed to deliver to PSI shares of Series
A Preferred Stock and Series B Preferred Stock held by RMS, as well as a
promissory note by and between PSI and RMS dated September 30, 1997, in
exchange for shares of PSI Common Stock to be issued by PSI to RMS at a price
of $1.00 per share (the "Recapitalization Plan"). Finally, Speer agreed
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to provide PSI a line of credit of up to $3 million prior to the closing of the
transactions.
The source of the assets, securities and real estate to be used in the
Contribution and Exchange Transaction and the Real Estate Transaction is the
business and operations of Speer, its controlled limited partnerships and RMS;
the source of the funds to be used in the Contribution and Exchange Transaction
is the working capital of Speer and its controlled limited partnerships. The
source of funds for the $3 million line of credit to PSI is the working capital
of Speer.
ITEM 4. PURPOSE OF TRANSACTION
Item 4(a) of the Schedule 13D is amended as follows:
On April 22, 1998, Speer and PSI executed the Agreement, a copy of
which is attached hereto as Exhibit A, whereby Speer agreed to exchange
certain assets, cash and securities held by Speer for common stock of PSI. As
a result of the Agreement, Speer agreed, subject to the satisfaction of certain
customary conditions, including shareholder approval, to contribute certain
assets, $15 million in cash and the capital stock of Professional Video
Services Corporation in exchange for 101,508,343 shares of Common Stock of PSI.
In addition, pursuant to the Real Estate Agreement RMS agreed to contribute
certain real estate to PSI in exchange for 3,789,393 shares of Common Stock.
Pursuant to the Recapitalization Plan RMS also agreed to deliver to PSI shares
of Series A Preferred Stock and Series B Preferred Stock held by RMS, as well
as a promissory note by and between PSI and RMS dated September 30, 1997, in
exchange for shares of PSI Common Stock to be issued by PSI to RMS at a price
of $1.00 per share.
Prior to the closing date, Speer is entitled, upon not less than 20
days prior written notice, to elect not to close the Contribution and Exchange
Transaction and the Real Estate Transaction. In lieu of these transactions and
subject to the terms and conditions of the Agreement, Speer Communications and
Speer Virtual Media ("SVM") would transfer to PSI certain assets of SVM and $60
million in cash (the "Alternative Transaction"). In consideration for the
assets of SVM and the $60 million in cash, PSI, in lieu of delivering the Share
Exchange Consideration and the
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Real Estate Consideration, would issue and deliver 65,000,000 newly issued
shares of PSI Common Stock to Speer Communications and SVM.
Item 4(d) of the 13D is amended as follows:
Pursuant to the terms of the Agreement, PSI has agreed to increase the
number of members of its Board of Directors from five to eight persons. Upon
consummation of the Agreement, three nominees of Speer will be elected to fill
vacancies on the PSI Board of Directors. At the closing date, PSI will appoint
a nominee of Speer to serve as President and Chief Executive Officer of PSI.
Upon consummation of the Contribution and Exchange Transaction, the
Recapitalization Plan and Real Estate Transaction, Speer will control
approximately 84% of the Common Stock of PSI.
Item 4(e) of the 13D is amended as follows:
Concurrently with the execution of the Agreement, Speer Communications
entered into voting agreements with Alta Investissements S.A., Vulcan Ventures
Incorporated and certain other entities and persons whereby each of the voting
parties agreed to not sell any of the shares of capital stock of PSI owned by
such parties between the date of the voting agreement and the closing date; and
each of the parties agreed to vote all shares of PSI Common Stock held by each
party in favor of the Contribution and Exchange Transaction and the Real Estate
Transaction or the Alternative Transaction and the Recapitalization Plan, and
an amendment of the Certificate of Incorporation of PSI increasing the number
of authorized shares of PSI Common Stock to not less than 200,000,000 shares,
or such other number as the parties may agree.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Item 5 of Schedule 13D is amended by adding the following paragraph
thereto:
Mr. Speer indirectly controls and is the beneficial owner of
substantially all of the partnership interests in each of the Speer entities.
In the event of the consummation of the Contribution and Exchange Transaction
and the Real Estate Transaction, or the Alternative Transaction, and the
Recapitalization Plan, Mr. Speer
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will be the beneficial owner of the consideration received by the Speer
entities involved in those transactions.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Item 6 of the Schedule 13D is amended by adding the following
paragraph thereto:
On April 22, 1998, Speer and certain affiliates entered into the
Agreement with PSI, whereby Speer, agreed, subject to the satisfaction of
certain conditions, to transfer to PSI all right, title and interest in
certain assets, tangible and intangible, held by Speer and used in certain
businesses as conducted by Speer, including: resale of long distance
telecommunications services; provision of remotely accessed virtual office
information services; provision of audiovisual production and post-production
facilities and services; provision of digital information storage services; and
provision of satellite uplink and downlink information transmission services.
The assets to be contributed by Speer also include the issued and outstanding
capital stock of Professional Video Services Corporation, a District of
Columbia corporation, and $15 million in cash. In consideration for the
foregoing, PSI has agreed to deliver 101,508,343 newly issued shares of PSI
Common Stock, par value $0.01 to Speer.
Pursuant to a Real Estate Transfer Agreement between PSI and RMS
("Real Estate Agreement"), a copy of which is attached hereto as Exhibit B, RMS
has agreed, subject to the closing of the Contribution and Exchange
Transaction, to transfer certain real estate holdings to PSI in exchange for
3,789,393 shares of PSI Common Stock. In addition, pursuant to the
Recapitalization Plan between PSI and RMS, a copy of which is attached hereto
as Exhibit C, RMS has agreed to deliver to PSI for cancellation (i) all of the
shares of PSI Series A Preferred Stock and the shares of PSI Series B Preferred
Stock held by RMS, and (ii) the promissory note by and between PSI and RMS
dated September 30, 1997 (the "Note") in exchange for shares of PSI Common
Stock to be issued by PSI to RMS at a price of $1.00 per share. The shares of
PSI Series A Stock and PSI Series B Stock held by RMS will be exchanged for a
number of shares of PSI Common Stock equal to the quotient realized by dividing
the sum of the aggregate liquidation preference for the shares of PSI Series A
Stock and PSI Series B Stock held by RMS plus the accumulated and unpaid
dividends on such shares as of the
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closing date by the exchange rate and rounding any fraction resulting from such
calculation to the next largest whole number. The Note will be converted into
a number of shares of PSI Common Stock equal to the quotient realized by
dividing the principal balance and accrued interest on the RMS Note as of the
closing date by the Exchange Rate and rounding any fraction resulting from such
calculation to the next largest whole number.
Prior to the closing date, Speer will be entitled, upon not less than
twenty days prior written notice, to elect not to close the Contribution and
Exchange Transaction and the Real Estate Transaction. In lieu of such
transactions and subject to the terms and conditions of the Agreement, Speer
Communications and SVM would transfer to PSI certain assets of SVM and $60
million in cash. In consideration for the contribution of the assets of SVM
and the cash, and in lieu of PSI's obligation to deliver the Share Exchange
Consideration and the Real Estate Consideration, PSI would issue and deliver
65,000,000 newly issued shares of PSI Common Stock to Speer Communications and
SVM.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A - Contribution and Share Exchange Agreement dated as of
April 22, 1998, by and among Speer Communications
Holdings Limited Partnership, Speer World Wide
Digital Transmission & Vaulting Limited partnership,
Speer productions Limited partnership, Speer Virtual
media Limited Partnership and Precision Systems, Inc.
Exhibit B - Real Estate Transfer Agreement dated as of April 22,
1998, by and between Precision System, Inc., and RMS
Limited Partnership
Exhibit C - Plan of Recapitalization dated as of April 22, 1998,
by and between Precision Systems, Inc., and RMS
Limited Partnership
Exhibit D - Voting Agreements
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 22, 1998
/s/ Roy M. SPEER
------------------------------
ROY M. Speer
RMS LIMITED PARTNERSHIP,
a Nevada limited partnership
/s/ C. Thomas Burton
------------------------------
C. Thomas Burton
President
of Crystal Diamond, Inc.,
the Managing General Partner of
RMS Limited Partnership
CRYSTAL DIAMOND, INC.,
------------------------------
a Nevada corporation
/s/ C. Thomas Burton
------------------------------
C. Thomas Burton
President
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EXHIBIT A
CONTRIBUTION AND SHARE EXCHANGE AGREEMENT
BY AND AMONG
SPEER COMMUNICATIONS HOLDINGS LIMITED PARTNERSHIP,
A NEVADA LIMITED PARTNERSHIP
SPEER WORLD WIDE DIGITAL TRANSMISSION & VAULTING
LIMITED PARTNERSHIP,
A NEVADA LIMITED PARTNERSHIP
SPEER PRODUCTIONS LIMITED PARTNERSHIP,
A NEVADA LIMITED PARTNERSHIP
SPEER VIRTUAL MEDIA LIMITED PARTNERSHIP,
A NEVADA LIMITED PARTNERSHIP
AND
PRECISION SYSTEMS, INC.,
A DELAWARE CORPORATION
APRIL 22, 1998
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TABLE OF CONTENTS
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ARTICLE I CONTRIBUTION AND SHARE EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1. Speer Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Share Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Real Estate Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. Alternative Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II RECAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1. Recapitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1. Corporate Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4. Operation of PSI's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5. No Material Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.6. Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.7. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.9. SEC Filings; Financial Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10. Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.11. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.12. Environmental and Health and Safety Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.13. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.14. Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.16. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.17. Customer and Supplier Relationships; Warranty Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.18. Bonds; Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.19. Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.20. Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.21. Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.22. No Misrepresentations or Nondisclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.23. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.24. Board Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.25. Absence of Questionable Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF SPEER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1. Due Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2. Authority to Execute and Perform Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3. Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4. Contributed Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.5. Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.7. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.8. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.9. Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.10. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.11. No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.12. Operations of Speer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.13. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.14. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.15. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.16. Environmental and Health and Safety Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.17. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.18. Customer and Supplier Relationships; Warranty Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.19. Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V COVENANTS OF PSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.1. Management of PSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.2. Accounting Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.3. No Distribution of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.4. No New Stock Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.5. Purchases and Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.6. Compensation of PSI's Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.7. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.8. Preserve Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.9. Access to the Records of PSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.10. Consents and Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.11. Fulfill Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.12. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.13. Financial Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.14. Certificate of Incorporation and By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.15. Damage or Destruction of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.16. No Shop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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5.17. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.18 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.19. NASDAQ Quotation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.1. Voting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.2. Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.3. Recapitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.4. Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.5. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.6. President and Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.7. Interim Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.8. Preparation of Proxy Statement; Other Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.9. Defense of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII COVENANTS OF SPEER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1. Management of Speer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2. No Distribution of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3. No New Stock Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.4. Purchase and Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.5. Compensation of Speer's Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.6. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.8. Access to Records of Speer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.9. Consents and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.11. Certificate of Incorporation, By-Laws and Limited
Partnership Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.12. Damage or Destruction of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.13. Fulfill Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.14. Third Parties and Government Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.15. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VIII CONDITIONS PRECEDENT TO CLOSING BY SPEER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.2. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.3. Officers Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.4. Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.5. Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.6. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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8.7. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.8. Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.9. Corporate and Third Party Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.10. Employment of Speer Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.11. Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.12. Recapitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.13. Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.14. Confirmation of Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.15. Listing of PSI Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.16. Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.17. Non-Fulfillment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IX CONDITIONS PRECEDENT TO CLOSING BY PSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.2. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.3. Officers Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.4. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.5. Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.6. Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.7. Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.8. Corporate Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.9. Confirmation of Recapitalizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.10. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.11. Non-Fulfillment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE X CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XI OBLIGATIONS AT THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.1. PSI' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.2. Speer's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE XII FURTHER COVENANTS OF PSI AND Speer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.1. Joint Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.2. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.3. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.4. Further Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.5. Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE XIII EXPENSES WITH RESPECT TO TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
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ARTICLE XIV BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE XV INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
15.1. Indemnification by Speer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
15.2. Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.3. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.4. Defense of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.5. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XVI NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
16.1. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
16.2. Receipt of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE XVII EFFECTIVENESS AND ASSIGNABILITY OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XVIII ANNOUNCEMENT OF TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XIX COMPLETENESS OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XX CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE XXI APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE XXII CHOICE OF FORUM; VENUE; SERVICE OF PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE XXIII COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XXIV NO THIRD PARTY BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XXV UNILATERAL RIGHT TO WAIVE FAILURES OF OTHER PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 49
25.1. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
25.2. Effect of Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XXVI SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XXVII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
27.1. Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
27.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
27.3. Third Party Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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SCHEDULES
- ---------
Schedule 1.1(a)(i) Speer Assets
Schedule 1.1(a) Excluded Assets
Schedule 1.1(b) Assumed Liabilities
Schedule 3 Entities Owned by PSI
EXHIBITS
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Exhibit 1.1 Assignment and Assumption Agreement
Exhibit 1.3 Real Estate Transfer Agreement
Exhibit 2.1 Plan of Recapitalization
Exhibit 6.1 Voting Agreement
Exhibit 6.7 Promissory Note
Exhibit 11.1.5 Registration Rights Agreement
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INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM SECTION
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<S> <C>
"Acquisition Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 27.1
"Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.21
"Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Alta" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.1
"Assignment and Assumption Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
"Alternative Consideration" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.4
"Alternative Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.4
"Assumed Liabilities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(b)
"Businesses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.4(a)
"Cash" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
"Certificate of Incorporation" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.20
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article X
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article X
"COBRA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.8
"Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Company SEC Reports" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.9(a)
"Contribution" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
"Contribution and Share Exchange Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Employee Benefit Plans" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.8
"Environmental Laws" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.12
"Equipment" (PSI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.6
"Equipment" (Speer) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.5
"Equity Interests" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
"ERISA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.8
"ERISA Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.8
"Exchange Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.9(a)
"Exchange Rate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1
"Excluded Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
"Excluded Liabilities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(b)
"GAAP" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.9(b)
"Hazardous Substances" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.12
"HSR Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.8
"Indemnifying Party" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 15.5
"Intellectual Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.12
</TABLE>
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<TABLE>
<S> <C>
"Internal Revenue Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.8
"Laws" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.7
"Liabilities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.9
"Losses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 15.5(a)
"Other Filings" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.8
"PCBs" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.12
"Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 27.3
"Primat" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.3
"Primwest" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.3
"Promissory Note" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.7
"Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.12
"Proxy Statement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.10
"PSI" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"PSI Common Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2
"PSI Consideration" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1
"PSI Disclosure Letter" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article III
"PSI Series A Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1
"PSI Series B Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1
"PVS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
"Recapitalization" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1
"Recapitalization Consideration" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1
"Real Estate Consideration" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3
"Real Estate Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3
"Real Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3
"RMS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"RMS Note" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1
"SEC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.9(a)
"Securities Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.9(a)
"Share Exchange Consideration" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2
"Share Increase" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.1
"Shareholders Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.10
"Special Committee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.24
"Speer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Speer Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
"Speer Balance Sheet" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.8
"Speer Communications" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Speer Disclosure Letter" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article IV
"Speer Employee Benefit Plans" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.6(b)
"Speer Entities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Speer Financial Statements" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.8
</TABLE>
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<PAGE> 10
<TABLE>
<S> <C>
"Speer Productions" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Speer Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.16
"Speer PVS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Speer Software" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.5
"Speer Transmission" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Speer Third Party Software" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.5
"Speer World Wide" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Stockholders Meeting" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.2
"SVM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Third Party Software" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.6
"Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
"Voting Parties" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.1
"Vulcan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.1
</TABLE>
- ix -
<PAGE> 11
CONTRIBUTION AND SHARE EXCHANGE AGREEMENT
This CONTRIBUTION AND SHARE EXCHANGE AGREEMENT (the "Agreement") is
executed this 22nd day of April, 1998 by and among Speer Communications
Holdings Limited Partnership, a Nevada limited partnership ("Speer
Communications"), Speer World Wide Digital Transmission & Vaulting Limited
Partnership, a Nevada limited partnership ("Speer World Wide"), Speer
Productions Limited Partnership, a Nevada limited partnership ("Speer
Productions"), Speer Virtual Media Limited Partnership, a Nevada limited
partnership ("SVM") and Precision Systems, Inc., a Delaware corporation
("PSI").
WHEREAS, Speer Communications, Speer World Wide, SVM and Speer
Productions (collectively, "Speer" or the "Speer Entities") intend to
contribute certain of their assets to PSI together with $15 million in cash in
exchange for newly issued shares of common stock of PSI (the "Contribution and
Exchange Transaction") and RMS Limited Partnership, a Nevada limited
partnership ("RMS") intends to transfer certain real property to PSI and to
exchange certain securities and a debt obligation of PSI for newly issued
shares of common stock of PSI (together with the Contribution and Exchange
Transaction, the "Transaction"); and
WHEREAS, the general and limited partners of Speer and the Board of
Directors of PSI have determined that the Transaction or the Alternative
Transaction (as hereinafter defined) is in the best interests of Speer, PSI and
the shareholders of PSI; and
WHEREAS, for United States federal income tax purposes, it is intended
that the transfer of the Speer Assets, as defined below, by Speer to PSI
together with the transfer of real property by RMS to PSI qualify as a transfer
subject to Section 351(a) of the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder (the " Internal Revenue
Code");
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows.
<PAGE> 12
ARTICLE I
CONTRIBUTION AND SHARE EXCHANGE
1.1. Speer Contribution.
(a) Subject to the terms and conditions of this
Agreement, at the Closing Date, as hereinafter defined, Speer agrees to grant,
contribute, convey, assign, transfer and deliver to PSI (the "Contribution")
pursuant to an Assignment and Assumption Agreement substantially in the form
attached as Exhibit 1.1 hereto (the "Assignment and Assumption Agreement") all
right, title and interest in all of the assets, tangible or intangible, along
with all contractual and leasehold rights Speer holds necessary for PSI to
operate the Businesses (as hereinafter defined) as Speer operates them as of
the date hereof (the "Speer Assets") in exchange for the consideration set
forth in Section 1.2. The Speer Assets include, without limitation, those
assets set forth in Schedule 1.1(a)(i), together with all of the issued and
outstanding capital stock of Professional Video Services Corporation, a
Delaware corporation ("PVS") (the "Equity Interests") and $15 million in cash
(the "Cash"), but do not include those assets set forth in Schedule 1.1(a) (the
"Excluded Assets").
(b) The Speer Assets, the Equity Interests and the Cash
shall be contributed and transferred to PSI free and clear of all liabilities,
liens, charges, encumbrances and obligations of Speer, fixed, contingent or
unmatured, disclosed or undisclosed (the "Excluded Liabilities"), except for
the specific liabilities, licenses, charges, encumbrances and obligations of
Speer set forth on Schedule 1.1(b) which shall be transferred to and assumed by
PSI as of the Closing Date (the "Assumed Liabilities").
1.2. Share Exchange. In consideration for the Contribution
specifically set forth in Section 1.1, at the Closing Date PSI shall issue and
deliver 101,508,343 newly issued shares of common stock, par value $0.01, of
PSI ("PSI Common Stock") to Speer (the "Share Exchange Consideration").
1.3. Real Estate Transfer. Pursuant to a Real Estate Transfer
Agreement between PSI and RMS, an executed copy of which is attached as Exhibit
1.3 hereto, at the Closing Date RMS will transfer certain real estate holdings
(the "Real Property") to PSI in exchange for 3,789,393 shares (the "Real Estate
Consideration") of PSI Common Stock (the "Real Estate Transaction").
1.4 Alternative Transaction. Prior to the Closing Date, Speer
shall be entitled in its sole discretion and upon not less than twenty (20)
days prior written notice to elect not to close
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<PAGE> 13
the Contribution and Exchange Transaction and the Real Estate Transaction. In
lieu of such transactions and subject to the terms and conditions of this
Agreement, Speer Communications and SVM would grant, contribute, convey,
assign, transfer and deliver to PSI all of the assets of SVM identified as SVM
assets in Schedule 1.1(a)(i) (subject only to the Assumed Liabilities of SVM
identified on Schedule 1.1(b)) and Sixty Million Dollars ($60,000,000) in cash
(the "Alternative Transaction"). In consideration for the contribution of the
assets of SVM and cash referred to in the preceding sentence, and in lieu of
PSI's obligation to deliver the Share Exchange Consideration and the Real
Estate Consideration, PSI shall issue and deliver 65,000,000 newly issued
shares of PSI Common Stock (the "Alternative Consideration") to Speer
Communications and SVM. Speer shall not have any obligation or liability to
PSI with respect to the Contribution and Exchange Transaction or the Real
Estate Transaction, and PSI shall have no right to conclude the Contribution
and Exchange Transaction or the Real Estate Transaction in the event Speer
elects to pursue the Alternative Transaction.
ARTICLE II
RECAPITALIZATION
2.1. Recapitalization. Pursuant to the Plan of Recapitalization
between PSI and RMS, an executed copy of which is attached as Exhibit 2.1
hereto, on the Closing Date RMS will deliver to PSI for cancellation (i) all of
the shares of PSI Series A Preferred Stock (the "PSI Series A Stock") and
documents of transfer with respect to all of the shares of PSI Series B
Preferred Stock (the "PSI Series B Stock") held by RMS and (ii) that certain
promissory note by and between PSI and RMS dated September 30, 1997 (the "RMS
Note") in exchange for shares of PSI Common Stock to be issued by PSI to RMS at
a price of $1.00 per share (the "Exchange Rate") as more specifically set forth
below (the "Recapitalization"). The shares of PSI Series A Stock and PSI
Series B Stock held by RMS shall be exchanged for a number of shares of PSI
Common Stock equal to the quotient realized by dividing the sum of the
aggregate liquidation preference for the shares of PSI Series A Stock and PSI
Series B Stock held by RMS plus the accumulated and unpaid dividends on such
shares as of the Closing Date by the Exchange Rate and rounding any fraction
resulting from such calculation to the next largest whole number. The Note
shall be converted into a number of shares of PSI Common Stock equal to the
quotient realized by dividing the principal balance and accrued interest on the
RMS Note as of the Closing Date by the Exchange Rate and rounding any fraction
resulting from such calculation to the next largest whole number. Shares of
PSI Common Stock issuable in the Recapitalization shall be referred to as the
"Recapitalization Consideration." The Share Exchange Consideration, the Real
Estate Consideration, and the Recapitalization Consideration, or if the
Alternative Transaction is elected, the Alternative Consideration and the
Recapitalization Consideration, shall be collectively referred to as the "PSI
Consideration."
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<PAGE> 14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PSI
Unless otherwise required by the context in which it is used, the term
"PSI" as used in this Article III includes PSI and all corporations,
partnerships and other entities owned by it entirely or in part, all of which
are listed on Schedule 3 attached hereto. PSI represents and warrants the
following as of the date hereof and as of the Closing Date. The
representations and warranties of PSI are qualified in their entirety by the
disclosures included in the Disclosure Letter from PSI to Speer of even date
herewith and as such letter may be supplemented or amended from time to time
prior to the Closing Date with the consent of Speer (the "PSI Disclosure
Letter").
3.1. Corporate Standing. PSI is duly organized, validly existing,
and in good standing under the laws of its jurisdiction of incorporation. PSI
has full corporate authority to own, lease and operate its properties and
businesses, and is in good standing and is qualified to transact business as a
foreign corporation in all states in which the nature of its business or the
properties owned by it require it to qualify to transact business.
3.2. Authority. PSI has the full corporate power and authority to
enter into, execute, deliver, and perform this Agreement and all Exhibits to
which it is a party. The execution, delivery and performance of this Agreement
and such Exhibits, and the consummation of all transactions contemplated herein
and therein, have been duly authorized by all necessary corporate and other
actions of PSI, except that the Transaction and the Alternative Transaction are
subject to approval by the stockholders of PSI. This Agreement and such
Exhibits, when executed and delivered by PSI, shall be valid and binding
obligations of PSI, enforceable against PSI in accordance with their terms,
subject to bankruptcy, insolvency and other similar laws affecting the rights
of creditors generally and except that the remedies of specific performance,
injunction and other forms of mandatory equitable relief may not be available.
Except for approvals of governmental authorities described in Section 6.8 and
approval of the stockholders of PSI described in Section 8.9 and except as set
forth in Section 3.2 of the PSI Disclosure Letter, neither the execution and
delivery of this Agreement nor the execution and delivery of the certificates
and documents set forth as Exhibits hereto nor the consummation of the
transactions contemplated hereby or thereby will (i) conflict with or violate
any provision of the Articles or Certificate of Incorporation or By-Laws of
PSI, (ii) conflict with or violate in any material respect any law, rule,
regulation, ordinance, order, writ, injunction, judgment or decree applicable
to PSI or its businesses or by which any of its assets is affected, or (iii)
conflict with or result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become
- 4 -
<PAGE> 15
a default) in any material respect under, or give to others any rights of
termination or cancellation of, or accelerate the performance required by or
maturity of, or result in the creation of any security interest, lien, charge
or encumbrance on any of PSI's assets pursuant to any of the terms, conditions
or provisions of any material note, bond, mortgage, indenture, permit, license,
franchise, lease, contract, or other instrument or obligation to which PSI is a
party or by which any of its assets is affected. Except as set forth in
Section 3.2 of the PSI Disclosure Letter, PSI is not required to submit any
notice, declaration, report or other filing or registration with any
governmental or regulatory authority or instrumentality, and no approvals or
non-objections are required to be obtained or made by PSI in connection with
the execution, delivery or performance by PSI of this Agreement or any Exhibit
or the consummation of the transactions contemplated hereby or thereby.
3.3. Capitalization. PSI is a Delaware corporation having
authorized capital stock consisting of: 30,000,000 shares of common stock,
$0.01 par value per share, of which 17,916,144 are issued and outstanding;
50,000 shares of preferred stock, $0.01 par value per share, of which 14,500
are issued and outstanding; and options to acquire 2,264,357 shares of common
stock, at exercise prices ranging from $0.01 to $15.75 per share. Section
3.3(A) of the PSI Disclosure Letter lists all persons or entities holding
options or warrants to acquire any of PSI's capital stock, as well the amount
of stock covered by each such option or warrant and the exercise price
therefor. All of the outstanding shares of PSI stock are, and all of the
shares issued as the PSI Consideration will be, validly issued, fully paid and
nonassessable. Except as described in Section 3.3(B) of the PSI Disclosure
Letter, there are no agreements, arrangements, warrants, calls, options,
convertible rights or other rights (vested or contingent) to acquire any
capital stock of PSI, and no such agreements, arrangements, warrants, calls,
options, convertible rights or other rights (vested or contingent) to acquire
any capital stock of PSI will be issued, entered into, or granted prior to the
Closing Date without the prior written consent of Speer.
3.4. Operation of PSI's Business. Except as disclosed in Section
3.4 of the PSI Disclosure Letter, PSI owns and retains all such assets,
tangible or intangible, contractual, license and leasehold rights necessary (i)
to operate the business of PSI as PSI operates it on the date hereof, and (ii)
to utilize the assets and contractual, license and leasehold rights in the same
manner as they were used on the date of this Agreement. With the exception of
those assets used in the business of PSI pursuant to license and leasehold
rights in favor of PSI, all of the assets used in the business of PSI are owned
by PSI, and none are owned by any other party.
3.5. No Material Change. Except as set forth in Section 3.5 of the
PSI Disclosure Letter, there has been no material adverse change since the date
of the 1997 Balance Sheet (as hereinafter defined) in the business or condition
(financial or otherwise) of PSI, or in its properties, assets, liabilities
(actual or contingent), operations, or the manner of conducting its business,
other than changes in the ordinary course of business which in the aggregate
are not material and adverse.
- 5 -
<PAGE> 16
Except as set forth in Section 3.5 of the PSI Disclosure Letter, since December
31, 1997, there has been no event or condition of any character which, either
individually or in the aggregate, might reasonably be expected to affect in a
materially adverse manner the business, operations, properties, assets,
liabilities, earnings or financial condition of PSI. Except as set forth in
Section 3.5 of the Disclosure Letter, since December 31, 1997 PSI has not (i)
declared or, directly or indirectly, paid any dividends or made any other
distributions or payments of any kind to its shareholders or partners, (ii)
incurred any indebtedness for borrowed money, (iii) created or permitted to be
created any liens, encumbrances, or adverse charges of any nature on any of the
assets of PSI, (iv) discharged, satisfied or paid, in whole or in part, or
permitted to be discharged, satisfied or paid, in whole or in part, any
obligation or liability (contingent or absolute) relating to the business or
the properties of PSI, other than in the ordinary course of business, or (v)
waived or permitted to be waived any material right or claim of PSI.
3.6. Assets. PSI has good and marketable title to all of its
assets (except for leased property and Third Party Software, for which PSI has
valid and enforceable leases or licenses as the case may be), free and clear of
all mortgages, options, leases, covenants, conditions, agreements, liens,
security interests, adverse claims, restrictions, charges, encumbrances or
rights of others. There exists no material restriction on the use or transfer
of any of PSI's assets. Section 3.6A of the PSI Disclosure Letter sets forth a
list of (i) all machinery or equipment, including without limitation, computer
hardware, used to conduct the business of PSI with an original market value in
excess of $25,000 (the "Equipment"), together with the date of acquisition of
each piece of Equipment, and the location of each piece of Equipment and (ii)
all "Company Software," which shall include all of PSI's material software and
computer programs used in its business, including any software or computer
programs not wholly-owned by PSI ("Third Party Software") embedded therein, in
machine readable source code forms and in machine executable object code forms
and all related specifications (including, without limitation, all logic
architectures, algorithms and logic flows and all physical, functional,
operating and design parameters), operating systems and procedures (including
development methodology), designs, design revisions, related applications
software in any language, concepts, ideas, processes, techniques, software
design and test tools, third party software interfaces, methods of
implementation and packaging, all associated know-how and show-how and all
related programmer and user manuals, which are used by PSI to install, operate,
maintain, correct, test, repair, enhance, extend, modify, prepare derivative
works based upon, design, develop, reproduce and package such software and
computer programs. Except as set forth in Section 3.6B of the PSI Disclosure
Letter, the tangible assets of PSI are in good operating condition and repair,
ordinary wear and tear excepted, and are satisfactory for the purposes for
which such assets are being used in PSI's business. PSI does not, and has not
since the date of its formation, own or have any interest in real estate except
as described in Section 3.6C of the PSI Disclosure Letter.
- 6 -
<PAGE> 17
3.7. Compliance with Laws. Except as listed in Section 3.7 of the
PSI Disclosure Letter, the operation of PSI's business and the use of its
assets comply in all material respects with all applicable laws, ordinances,
rules and regulations, including but not limited to Federal, state, local and
foreign environmental, work place safety and employee benefits laws and rules
(collectively the "Laws"). PSI has all requisite licenses, permits and
certificates from federal, state and local governmental authorities as may be
necessary to conduct its business and own and operate its assets, except where
the failure to have such license, permit or certificate would not have a
material adverse effect on PSI, and such permits are valid and in full force
and effect and will not be terminated or adversely affected by the consummation
of the transactions contemplated hereby. Except as disclosed in Section 3.7 of
the PSI Disclosure Letter, PSI has not received any notice alleging any
violations by PSI of any Laws, or of investigations of PSI initiated by
administrative agencies, and, to the knowledge of PSI, no allegations or
investigations are pending or have been threatened.
3.8. Employee Benefit Plans.
(a) Except as set forth in Section 3.8.1(A) of the PSI
Disclosure Letter, with respect to all employees and former employees of PSI,
neither PSI nor any ERISA Affiliate of PSI presently maintains, contributes to
or has any liability under:
(1) any bonus, incentive compensation, profit
sharing, retirement, pension, group insurance, death benefit, group
health, medical expense reimbursement, cafeteria, dependent care,
stock option, stock purchase, stock appreciation rights, savings,
deferred compensation, consulting, severance pay or termination pay,
vacation pay, life insurance, welfare or other employee benefit or
fringe benefit plan, program or arrangement;
(2) any plan, program or arrangement which is an
"employee pension benefit plan" as such term is defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or an "employee welfare benefit plan" as defined in
Section 3(1) of ERISA.
For purposes of this Agreement, "ERISA Affiliate" shall mean each person (as
defined in section 3(9) of ERISA) that, together with PSI (or any person whose
liabilities PSI has assumed or is otherwise subject to), currently or in the
past would be treated as a single employer under Section 4001(b) of ERISA or
that would be deemed to be a member of the same "controlled group" within the
meaning of Section 414(b) and (c) of the Internal Revenue Code. The plans,
programs and arrangements set forth in Section 3.8.1(A) of the PSI Disclosure
Letter are herein referred to as the "Employee Benefit Plans."
- 7 -
<PAGE> 18
(b) With respect to all employees and former employees of
PSI, neither PSI nor any ERISA Affiliate of PSI presently maintains,
contributes to or has any liability under any funded or unfunded medical,
health or life insurance plan or arrangement for present or future retirees or
present or future terminated employees except as required by the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"). Neither PSI
nor any ERISA Affiliate of PSI maintains or contributes to a trust,
organization or association described in any of Sections 501(c)(9), 501(c)(17)
or 501(c)(20) of the Internal Revenue Code.
(c) Favorable determination letters have been received
from the Internal Revenue Service with respect to each Employee Benefit Plan
which is intended to comply with the provisions of Section 401(a) of the
Internal Revenue Code, evidencing compliance with the relevant provisions of
the Tax Equity and Fiscal Responsibility Act of 1982, the Tax Reform Act of
1984 and the Retirement Equity Act of 1984. Each such Employee Benefit Plan
complies in form and to the knowledge of PSI, has been operated, in all
materials respects, in compliance with the requirements of the Internal Revenue
Code and meets the requirements of a "qualified plan" under Section 401(a) of
the Internal Revenue Code. Additionally, amendments have been made to each
such Employee Benefit Plan for the Tax Reform Act of 1986 and subsequent
legislation and regulations to the extent they are required. A proper and
timely application for a favorable determination letter with respect to each
such Employee Benefit Plan, as amended, has been made with the Internal Revenue
Service, and no unfavorable responses have been received with respect to any
such application from the Internal Revenue Service.
(d) To the knowledge of PSI, with respect to each
Employee Benefit Plan which is subject to Title 1 of ERISA, neither PSI nor any
ERISA Affiliate of PSI has failed in any material respect to comply with any of
the applicable reporting, disclosure or other requirements of ERISA and the
Internal Revenue Code, and there has been no "prohibited transaction" as
described in Section 4975 of the Internal Revenue Code or Section 406 of ERISA.
(e) To the knowledge of PSI, neither PSI nor any ERISA
Affiliate of PSI, nor any of their respective directors, officers, employees or
any other "fiduciary," as such term is defined in Section 3(21) of ERISA, has
any material liability for failure to comply with ERISA or the Internal Revenue
Code for any action or failure to act in connection with the administration or
investment of the Employee Benefit Plans.
(f) Neither PSI nor any ERISA Affiliate of PSI presently
maintains, contributes to or has any liability (including current or potential
withdrawal liability) with respect to any "multiemployer plan" as such term is
defined in Section 3(37) of ERISA.
(g) There is no pending or to PSI's knowledge threatened
legal action, proceeding or investigation against or involving any Employee
Benefit Plan maintained by PSI or any
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ERISA Affiliate of PSI (other than routine claims for benefits) and, to PSI's
knowledge, there is no basis for or fact which could give rise to any such
legal action, proceeding or investigation. Any bonding required with respect
to the Employee Benefit Plans in accordance with applicable provisions of ERISA
has been obtained and is in full force and effect.
(h) Except as set forth in Section 3.8.11 of the PSI
Disclosure Letter,
(1) PSI is not a party to any employment
agreement, whether written or oral, or agreement with change in
control or similar provisions, or collective bargaining agreement or
contract with any labor union relating to any employees or former
employees of PSI;
(2) PSI does not have outstanding any loan or
loans to any current or former employees of PSI, nor has PSI
guaranteed such loans;
(3) No amount payable to an employee or former
employee of PSI will be an "excess parachute payment" which is
non-deductible under Section 280G of the Internal Revenue Code.
(i) There has been no act or acts with respect to PSI
which would result in a disallowance of a deduction or the imposition of a tax
pursuant to Section 4980B, or with regard to plan years beginning before
December 31, 1988, Section 162(i) of the Internal Revenue Code as in effect
immediately prior to the enactment of the Technical and Miscellaneous Revenue
Act of 1988, or any regulations promulgated thereunder, whether final,
temporary or proposed. No event has occurred with respect to which PSI or any
ERISA Affiliate of PSI could be liable for a tax imposed by any of Sections
4972, 4976, 4977, 4979, or 4980 of the Internal Revenue Code, or for a civil
penalty under Section 502(c) of ERISA.
(j) With respect to each of the Employee Benefit Plans,
PSI has made available to Speer true and complete copies of: (i) the plan
documents, including any related trust agreements, insurance contracts or other
funding arrangements, or a written summary of the terms and conditions of the
plan if there is no written plan document; (ii) the most recent determination
letter received from the Internal Revenue Service; (iii) the most recent IRS
Form 5500; (iv) the most recent actuarial valuation; (v) the most recent
financial statement; (vi) all correspondence with the Internal Revenue Service,
the Department of Labor and the Pension Benefit Guaranty Corporation with
respect to the past three plan years other than IRS Form 5500 filings and PBGC
premium payments; and (vii) the most recent summary plan description.
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3.9. SEC Filings; Financial Statement.
(a) PSI has made available to Speer a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by PSI with the Securities and Exchange Commission
("SEC") on or after January 1, 1995 and prior to the date of this Agreement
(the "Company SEC Reports"), which are all the forms, reports and documents
required to be filed by the Company with the SEC since such date. As of their
respective dates, the Company SEC Reports and any forms, reports and other
documents filed by PSI with the SEC after the date of this Agreement (i)
complied or will comply in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as the case may be, and
the rules and regulations of the SEC thereunder applicable thereto, and (ii)
did not at the time they were filed (or if amended or superseded by a filing
prior to the date of this Agreement then on the date of such filing) or will
not at the time they are filed contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading.
None of PSI's subsidiaries is required to file any reports or other documents
with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Company
SEC Reports complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto, had been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the period involved (except as may be indicated in the notes thereto
or, in the case of the unaudited statement, as permitted by Form 10-Q of the
SEC), and each fairly presented the consolidated financial position of PSI and
its consolidated subsidiaries in all material respects as at the respective
dates thereof and the consolidated results of its operations and cash flows for
the periods indicated (subject, in the case of the unaudited interim financial
statements, to normal audit adjustments which were not and are not expected,
individually or in the aggregate, to be material in amount).
(c) Neither PSI nor any of its subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise) of a nature required
to be disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are, individually
or in the aggregate, material to the business, results of operations or
financial condition of PSI and its subsidiaries taken as a whole, except
liabilities (i) set forth in Section 3.9 of the PSI Disclosure Letter or the
Company SEC Reports filed with the SEC prior to the date of this Agreement or
provided for in PSI's balance sheet (and related notes thereto) as of December
31, 1997 filed in the Company SEC Reports, or (ii) incurred since December 31,
1997 in the ordinary course of business, none of which are material to the
business, results of operations or financial condition of PSI and its
subsidiaries, taken as a whole.
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3.10. Proxy Statement. None of the information supplied or to be
supplied by PSI for inclusion or incorporation by reference in the proxy
statement to be disseminated to the stockholders of PSI in connection with a
stockholders meeting to vote upon the Transaction or the Alternative
Transaction, as the case may be, ("Proxy Statement") will, at the date the
Proxy Statement is mailed to the stockholders of PSI and at the time of the
stockholders meeting of PSI required pursuant to Section 6.2 hereof, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made, in light of the circumstances
under which they are made, not misleading. The Proxy Statement will comply as
to form in all material respects with the provisions of the Exchange Act and
the rules and regulations promulgated by the SEC thereunder.
3.11. Litigation. Other than as listed in Section 3.11 of the PSI
Disclosure Letter, there is no claim, counterclaim, suit, order, proceeding,
action, or investigation pending, notice of which has been received, or, to the
knowledge of PSI, threatened against PSI, including but not limited to product
liability claims. PSI is not a plaintiff or petitioner in any litigation or
proceeding other than as listed in Section 3.11 of the PSI Disclosure Letter.
3.12. Environmental and Health and Safety Matters.
(a) Set forth in Section 3.12.1 of the PSI Disclosure
Letter is a true, accurate and complete list of all real property, owned,
leased and/or otherwise used or occupied by PSI (the "Property").
(b) Except as set forth in Section 3.12.2 of the PSI
Disclosure Letter, PSI and the Property have been at all times and are in all
material respects in compliance with the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation, and Liability Act,
the Superfund Amendments and Reauthorization Act, the Federal Water Control
Act, the Occupational Safety and Health Act, and all other federal, state and
local laws, regulations and ordinances relating to pollution, safety, health or
protection of the environment, including, without limitation, those relating to
containment, emissions, discharges, releases or threatened releases of
industrial, toxic or hazardous substances, materials or wastes or other
pollutants, contaminates, petroleum products, asbestos, polychlorinated
biphenyls ("PCBs"), or chemicals (collectively, "Hazardous Substances") into
the environment (including without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
manufacturing, processing, distribution, use, treatment, labeling, storage,
disposal, abatement, transport or handling of Hazardous Substances (the
"Environmental Laws").
(c) PSI has obtained and is in material compliance with
all permits, licenses and other consents or authorizations which are required
with respect to the operation of its business under the Environmental Laws,
including without limitation those that are required to (a) operate
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<PAGE> 22
or install any equipment or facilities and (b) generate, manufacture,
formulate, store, treat, handle, transport, discharge, emit or dispose of
Hazardous Substances generated by its business, a true and complete list of
which is included in Section 3.12.3 of the PSI Disclosure Letter.
(d) Except as listed in Section 3.12.4(a) of the PSI
Disclosure Letter, PSI has not generated, used, treated, stored, maintained,
disposed of, or otherwise deposited PCBs, TCE, PCE, or asbestos containing
materials and, to the knowledge of PSI, such chemicals are not otherwise
located, at the Property, or any premises at which the business of PSI was or
is located. Additionally, except as described in Section 3.12.4(b) of the PSI
Disclosure Letter, there are and were no underground storage tanks used,
stored, maintained, located on or otherwise related to the Property, the
business of PSI, or any premises at which the business of PSI is located. PSI
has removed and properly disposed of all used or other obsolete materials
regulated by environmental, health and safety laws, including chemical or other
hazardous substances or wastes, that are not used by PSI's business. With
respect to underground storage tanks, Section 3.12.4(b) of the PSI Disclosure
Letter sets forth the size, location, construction, installation date, use and
testing history of all such underground storage tanks (whether or not excluded
from regulation under Environmental Laws), including all underground storage
tanks in use, out of service, closed, abandoned or decommissioned.
(e) To the knowledge of PSI, there has been no "release"
as defined in 42 U.S.C. Section 9601(22) or, to the knowledge of PSI, threat of
a "release" of any Hazardous Substance on, from or under any premises from
which the operations of PSI have been or are being conducted which would
require removal or remediation under Environmental Laws.
(f) PSI has not received notice that it has any potential
liability with respect to the contamination, investigation, or cleanup of any
site at which Hazardous Substances have been or have alleged to have been
generated, treated, stored, released, discharged, emitted or disposed of, and,
to the knowledge of PSI, there are no past or present events, facts, conditions
or circumstances which may interfere with or prevent compliance by the business
of PSI in accordance with Environmental Laws, or with any order, decree,
judgment, injunction, notice or demand issued, entered, promulgated or approved
thereunder, or which may give rise to any common law or other legal liability,
including, without limitation, liability under any Environmental Laws, or
otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, notice of violation, study or investigation, based on or related to
the manufacture, process, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened
release into the environment of Hazardous Substances by PSI, as a result of any
act or omission of PSI.
(g) To the knowledge of PSI, Section 3.12.7 of the PSI
Disclosure Letter contains a true, correct and complete listing of all
Hazardous Substances (other than Hazardous
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<PAGE> 23
Substances comprising an ingredient or component of a mixture or product or
included in equipment) used by the business of PSI in the conduct of its
operations since January 1, 1990, and a list of the methods used by PSI
(including, but not limited to, a list of past and present disposal or
recycling sites, waste haulers, and manifest numbers) since January 1, 1990 to
dispose of or recycle Hazardous Substances (other than Hazardous Substances
comprising an ingredient or component of a mixture or product or included in
equipment) generated by PSI's operations and by the activities of PSI Entities.
(h) Except as disclosed in Section 3.12.8 of the PSI
Disclosure Letter, all of PSI's disposal and recycling practices relating to
Hazardous Substances have been accomplished in all material respects in
accordance with all applicable Environmental Laws.
3.13. Intellectual Property. Section 3.13 of the PSI Disclosure
Letter lists all material patents, trademarks, service marks, trade names and
copyrights and that are used in the business of PSI (the "Intellectual
Property"), all of which are owned or lawfully used by PSI. None of the
Intellectual Property has been held or stipulated to be invalid in any
litigation or proceeding. Except as disclosed in Section 3.13 of the PSI
Disclosure Letter, the validity of the Intellectual Property, and of PSI's
rights to the Intellectual Property, has not been questioned in any litigation
or proceeding currently pending or which, to the knowledge of PSI, has been
threatened, and there exists no basis for a claim against PSI for infringement
of any third party's intellectual property. PSI has not received any notice to
the effect that any product it makes or sells, or the distribution or use by it
or another of any such product, or any services it performs in the course of
its business, may infringe any trademark, service mark, trade name, copyright,
patent, trade secret, or similar legally protectable right of another. All
patentable inventions utilized or first reduced to practice in connection with
the business or activities of PSI or the employment by same of individuals, are
the property of PSI and no other party. Except as set forth in Section 3.13 of
the PSI Disclosure Letter or another section of the PSI Disclosure Letter, PSI
has not entered into and is not a party to any material development, work for
hire, license or other agreement pursuant to which PSI has secured the right or
obligation to use, or granted others the right or obligation to use, any
trademarks, service marks, trade names, copyrights, patents or know-how.
3.14. Related Party Transactions. Since January 1, 1997, no officer
or director of PSI or any affiliate thereof has, directly or indirectly,
entered into any transaction with PSI, except for any arrangements which are
either (i) disclosed on the 1997 Balance Sheet or (ii) listed in Section 3.14
of the PSI Disclosure Letter. For purposes of this Section 3.14 only, the term
"affiliate" of PSI shall mean and include any officer or director or
shareholder of PSI or any person related to any officer, director or
shareholder of PSI by blood or by marriage, or any corporation, partnership,
proprietorship, trust or other entity in which such officer or director or
shareholder of PSI (or any spouse, ancestor or descendant of the same) has more
than a five percent (5%) legal
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<PAGE> 24
or beneficial interest, or any corporation, partnership, proprietorship, trust
or other entity which controls, is controlled by or is under common control
with PSI.
3.15. Taxes. As to any tax imposed by the Federal government, or any
state government or any subdivision or municipality thereof, or the government
of any other country or political subdivision thereof, including, without
limitation, (i) taxes imposed on or measured by income, (ii) taxes based on
employment (including amounts withheld from employees' compensation), and (iii)
any property, franchise or sales tax, which, in each case, relates to or could
cause a lien or encumbrance upon any of the assets or the business of PSI, PSI
has timely, properly and lawfully filed all returns and elections necessary to
be filed and has paid in full the applicable taxes shown to be due on such
returns; to the best knowledge of PSI, no taxes are due which were not reported
on such returns; no claims for any unpaid taxes, interest or penalties are
being asserted by any governmental authority, for any period, against PSI or
any assets of PSI. PSI has not paid and is not required to pay any material
income taxes to any country other than those listed in Section 3.15A of the PSI
Disclosure Letter, or to any state other than those listed in Section 3.15B of
the PSI Disclosure Letter. PSI pays personal property and/or franchise taxes
with respect to its business and properties only in those countries, states or
political subdivisions listed in Section 3.15C of to the PSI Disclosure Letter.
PSI has timely filed and paid all material estimated taxes due on or prior to
the Closing Date. PSI has made available to Speer true and complete copies of
each of the Federal, state, local and foreign income and excise tax returns,
and franchise tax returns, and any amendments thereto, as they relate to
taxable periods since January 1, 1995, and PSI has made available to Speer all
material reports of and communications from Internal Revenue Service agents and
the corresponding agents of other state, local and foreign governmental
agencies who have examined the books and records of PSI at any time including
and since the last Internal Revenue Service audit. Except as disclosed in
Section 3.15D of the PSI Disclosure Letter, no audit or examination of PSI by
any taxing authority or agency is now pending or currently in progress, nor has
PSI received from any taxing authority or agency any notice of such an audit or
examination. No waiver of any statute of limitations has been given and is in
effect in respect to the assessment of any taxes against PSI.
3.16. Insurance. PSI maintains in effect, and since January 1, 1993,
has maintained in effect, product liability insurance, motor vehicle and
comprehensive general liability insurance and workers' compensation insurance
covering the business of PSI and fire and extended coverage insurance with
respect to the properties and assets of PSI. Section 3.16 of the PSI
Disclosure Letter is a complete list of all insurance policies (including the
amount of coverage thereunder) in effect at present. All such insurance
policies are owned solely and exclusively by PSI. No event has occurred that
may enable an insurer to rescind any such policies.
3.17. Customer and Supplier Relationships; Warranty Claims. Except
as set forth in Section 3.17 of the PSI Disclosure Letter, PSI has not received
any notice that any customer or
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<PAGE> 25
supplier of PSI intends to discontinue or alter the prices or terms of, or
substantially diminish, its relationship with PSI. Other than as set forth in
Section 3.17 of the PSI Disclosure Letter, since December 31, 1997, there are
no outstanding warranty claims against PSI by any of its customers with respect
to products sold or services rendered by PSI.
3.18. Bonds; Guarantees. Other than as listed in Section 3.18 of
the PSI Disclosure Letter, there are no bonds, guarantees, notes, sureties,
letters of credit, or other similar credit agreements or debt obligations that
exist with respect to PSI, its business or any of its assets. PSI is not in
default on the payment of any principal or interest on any indebtedness for
borrowed money, nor is PSI otherwise in default under any indemnity, fidelity
or contract bond or letter of credit, note, guarantee or other credit agreement
or debt obligation or instrument.
3.19. Absence of Undisclosed Liabilities. Except as specifically
reserved against or reflected in the 1997 Balance Sheet, or described in
Section 3.19 or another Section of the PSI Disclosure Letter, PSI is not
subject to any material liability or financial obligation (known or unknown,
direct or indirect, absolute, contingent, accrued or otherwise), other than
liabilities or financial obligations arising in the ordinary course of business
since the date of the 1997 Balance Sheet. Except as disclosed in Section 3.19
of the PSI Disclosure Letter, PSI is not in default with respect to any term or
condition of any material indebtedness or liability (including any current or
deferred trade payable). PSI does not know of any facts or circumstances which
might reasonably serve as the basis for any material liabilities or financial
obligations with respect to PSI which are not disclosed in the PSI Disclosure
Letter. For purposes of this Section 3.19, any individual liability, or all
such liabilities in the aggregate, should be deemed to be material if the
individual or aggregate value is greater than $50,000.
3.20. Charter Documents. PSI has delivered or made available to
Speer certified copies of its Articles or Certificate of Incorporation as
amended to date (the "Certificate of Incorporation") and By-laws, as amended to
date, as well as copies of its minute books covering the period from January 1,
1995 to the date hereof. Such Articles or Certificate of Incorporation and
By-laws are complete, correct and current. The minute books of PSI contain a
complete, correct and current record of all meetings and other corporate
actions of the stockholders and Board of Directors of PSI from January 1,1995
through March 31, 1998.
3.21. Subsidiaries and Affiliates. Schedule 3.28 lists all
subsidiaries and Affiliates of PSI. For the purposes of this Agreement (except
for Section 3.15), the term "Affiliate" of a person shall mean any person or
entity that, directly or indirectly, controls, is controlled by or is under
common control with such person.
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3.22. No Misrepresentations or Nondisclosures. Neither this
Agreement nor any Exhibit or Schedule attached hereto contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
3.23. Opinion of Financial Advisor. PSI's Board of Directors has
received the written opinion of William Blair & Company that, as of the date of
this Agreement, the Transaction and the Alternative Transaction are fair to the
stockholders of PSI from a financial point of view, a copy of which opinion
will be delivered to Speer, and such opinion has not been withdrawn or modified
in any material respect.
3.24. Board Approval. The Board of Directors of PSI based on the
recommendation of the Special Committee of independent directors (the "Special
Committee") has, prior to this Agreement, (a) approved this Agreement and all
related agreements and exhibits and the transactions contemplated hereby and
thereby (including for purposes of Section 203 of the Delaware General
Corporation Law), (b) determined that the Transaction and the Alternative
Transaction are fair to and in the best interests of the stockholders of PSI
and (c) recommended that the stockholders of PSI approve the Transaction or the
Alternative Transaction and the Share Increase (as hereinafter defined).
3.25 Absence of Questionable Payments. No director, officer,
agent, employee, or other person acting on behalf of PSI has used any of PSI's
funds for improper or unlawful contributions, payment, gifts or entertainment,
or made any improper or unlawful expenditures relating to political activity to
governmental officials or others. Neither PSI nor any director, officer,
agent, employee or other person acting on behalf of PSI has accepted or
received any improper or unlawful contributions, payments, gifts or
entertainment expenditures. PSI has adequate financial controls to prevent the
making or receiving of such improper or unlawful contributions, payments,
gifts, entertainment or expenditures. PSI has not made sales of products,
either directly or indirectly, into embargoed countries in contravention of
applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SPEER
Unless otherwise required by the context in which it is used, the term
"Speer" as used in this Article IV and Article VII, includes the Speer Entities
and PVS. All representations and warranties contained herein are qualified in
their entirety by reference to the Disclosure Letter of even date herewith
delivered to PSI by Speer and as such letter may be supplemented or amended
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from time to time prior to the Closing Date with the consent of PSI (the "Speer
Disclosure Letter"). Speer represents and warrants to PSI as follows:
4.1. Due Organization and Qualification. Each of the Speer
Entities which is a partnership is a partnership duly organized and validly
existing under the laws of the State of Nevada and has the requisite power and
lawful authority to own, lease and operate its assets, properties and business
and to carry on its business as now conducted. PVS is a corporation duly
organized, validly existing and in good standing under the laws of the District
of Columbia. PVS has full corporate authority to own, lease and operate its
properties and businesses, and is in good standing and is qualified to transact
business as a corporation in all states in which the nature of its business or
the properties owned by it require it to qualify to transact business.
4.2. Authority to Execute and Perform Agreements. Each of the
Speer Entities which is a partnership has the full legal right and power and
all authority and approval required to enter into, execute and deliver this
Agreement and each agreement contemplated hereby to which it is a party, and
each such agreement has been duly authorized by all general partners and
limited partners of each of the Speer Entities which is a party to such
agreement in accordance with the respective limited partnership agreement of
such partnership, and each of the Speer Entities which is a partnership has
full legal right and power and all authority and approval required to perform
fully the respective obligations of such entity under this Agreement and all
agreements referred to as exhibits hereto to which it is a party. This
Agreement has been duly executed and delivered and is the valid and binding
obligation of each of the Speer Entities which is a partnership enforceable in
accordance with its terms, except as may be limited by bankruptcy, moratorium,
reorganization, insolvency or other similar laws now or hereafter in effect
generally affecting the enforcement of creditors' rights. No approval or
consent of any foreign, federal, state, county, local or other governmental or
regulatory body, and (except as otherwise specified in this Agreement or the
Speer Disclosure Letter) no approval or consent of any other person is required
in connection with the execution and delivery by Speer of this Agreement and
the consummation and performance by any of the partnerships included in Speer
of the transactions contemplated herein. Neither the execution and delivery of
this Agreement nor the execution and delivery of any agreement referred to as
an exhibit hereto will (i) conflict with any provision of any partnership
agreement of any partnership included in Speer; or (ii) conflict with or
violate in any material respect any law, rule or regulation, ordinance, order,
writ, injunction, judgment or decree applicable to Speer or to any of its
Businesses or by which any of its assets are affected. Except as set forth in
Section 4.2 of the Speer Disclosure Letter, Speer is not required to submit any
notice, declaration, report or other filing or registration with any
governmental or regulatory or instrumentality, and no approval or
non-objections are required to be obtained or made by Speer in connection with
the execution, delivery or performance by Speer of this Agreement or any
agreement referred to as an exhibit hereto or the consummation of the
transactions contemplated hereby or thereby.
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4.3. Agreements. Section 4.3 of the Speer Disclosure Letter sets
forth all customer and supplier contracts and other agreements relating to the
Speer Assets or the business of PVS (whether written or oral) to which Speer or
PVS is a party, or by or to which it or its assets or properties are bound or
subject, which relate to or which do or might affect the Speer Assets. All of
the contracts and agreements set forth in Section 4.3 of the Speer Disclosure
Letter have been made available to PSI and are valid, subsisting agreements, in
full force and effect and binding upon the parties thereto in accordance with
their terms, and Speer is not in default under any of them, nor to the
knowledge of Speer is any other party to any such contract or other agreement
in default thereunder, nor does any condition exist which with notice or lapse
of time or both would constitute a material default thereunder. Except as set
forth in Section 4.3 of the Speer Disclosure Letter no approval or consent of
any person is needed in order that the contracts or other agreements set forth
in Section 4.3 of the Speer Disclosure Letter continue in full force and effect
with PSI following the consummation of the transactions contemplated by this
Agreement.
4.4 Contributed Businesses.
(a) At Closing, by completing the transactions
contemplated in Section 1.1 hereof (provided the Alternative Transaction is not
selected by Speer), Speer will contribute to PSI (or cause the contribution to
PSI of) all right, title and interest in the following businesses as conducted
by Speer as of the date hereof (the "Businesses"):
(1) resale of long distance telecommunications
services;
(2) provision of remotely accessed virtual office
information services;
(3) provision of audiovisual production and
post-production facilities and services;
(4) provision of digital information storage
services; and
(5) provision of satellite uplink and downlink
information transmission services.
In the event the Alternative Transaction is selected by Speer, the
Businesses shall include only the businesses of SVM as conducted as of the date
hereof and identified in clauses (1) and (2) above.
(b) Other than the Real Property, Speer owns and retains
all such assets, tangible or intangible and contractual, license and leasehold
rights necessary for Speer (i) to operate the Businesses as each such entity
operates its business on the date hereof, and (ii) to
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utilize the assets and contractual, license and leasehold rights in the same
manner as they were used on the date of this Agreement. With the exception of
the Real Property and those assets used in the Businesses pursuant to license
and leasehold rights in favor of Speer, all of the assets used in the
Businesses are owned by Speer and none are owned by any other party.
4.5 Assets. Speer has good and marketable title to all of its
assets (except for any leased property and Third Party Software for which Speer
has valid and enforceable leases or licenses, as the case may be), free and
clear of all mortgages, options, leases, covenants, conditions, agreements,
liens, security interests, adverse claims, restrictions, charges, encumbrances
or rights of others. No material restrictions exist on the use or transfer of
the Speer Assets. The Speer Assets, as identified on Schedule 1.1(a)(i) or
Section 4.5 of the Speer Disclosure Letter and the assets owned by PVS include
(i) all machinery or equipment, including without limitation, computer
hardware, with an original market value in excess of $25,000 used to conduct
the Business (the "Equipment"), together with the date of acquisition of each
piece of Equipment and the location of each piece of Equipment (other than
Equipment owned by PVS) and (ii) all "Speer Software," which shall include all
of Speer's material software and computer programs used in the Businesses,
including any software computer programs not wholly owned by Speer ("Speer
Third Party Software") imbedded therein, in machine readable source code forms
and in machine executable object code forms and all related specifications
(included, without limitation, all logic architectures, algorithms and logic
flows and all physical, functional, operating and design parameters, operation
systems and procedures (including developmental methodology), designs, design
revisions, related application software in any language, concepts, ideas,
processes, techniques. software design and test tools, Third Party Software
interfaces, methods of implementation and packaging, all associated know-how
and show-how and all related programmer and user manuals, which are used by
Speer to install, operate, maintain, correct, test, repair, enhance, extend,
modify, prepare derivative works based upon design, develop, reproduce and
package software and computer programs. Except as set forth in Section 4.5 of
the Speer Disclosure Letter, the intangible assets included in the Speer Assets
and the tangible assets of PVS are in good operating condition and repair,
ordinary wear and tear excepted, and are satisfactory for the purposes of which
such assets are being used in Speer's business. Speer does not and has not
owned or have any interest in real estate except as described in Section 4.5 of
the Speer Disclosure Letter.
4.6 Employees.
(a) Except as set forth in Section 4.6 of the Speer
Disclosure Letter, (i) PVS is not a party to any employment agreement, whether
written or oral, or agreement with change in control or similar provisions, or
collective bargaining agreement or contract with any labor union relating to
any employees or former employees of PVS or SVM, as the case may be; (ii) PVS
has no outstanding loan or loans to any current or former employees of PVS, nor
has PVS
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guaranteed any such loans; and (iii) no amount payable to an employee or former
employee of PVS will be an "excess parachute payment" which is nondeductible
under Section 280(g) of the Internal Revenue Code.
(b) Section 4.6 of the Speer Disclosure Letter sets forth
(i) the total amount of compensation paid to all employees of Speer during
1997; (ii) the names and total 1997 compensation paid to each employee of Speer
whose W-2 earnings in 1997 exceeded $25,000; and (iii) any bonus, incentive
compensation, profit sharing, retirement, pension, group insurance, death
benefit, group health, medical expense reimbursement, cafeteria, dependent
care, stock option, stock purchase, stock appreciation right, savings, deferred
compensation, consulting, severance payment or termination pay, vacation pay,
life insurance, welfare or other employee benefit or fringe benefit plan,
program or arrangement with respect to any employee or former employee of PVS
(the "Speer Employee Benefit Plans"). Favorable determination letters have
been received from the Internal Revenue Service with respect to each Speer
Employee Benefit Plan which is intended to comply with the provisions of
Section 401(a) of the Internal Revenue Code, evidencing compliance with the
relevant provisions of the Tax Equity and Fiscal Responsibility Act of 1982,
the Tax Reform Act of 1984 and the Retirement Equity Act of 1984. Each Speer
Employee Benefit Plan complies in form and, to the knowledge of Speer, operates
in compliance in all material respects with the requirements of the Internal
Revenue Code and meets the requirements of a "qualified plan" under Section
401(a) of the Internal Revenue Code. Additionally, amendments have been made
to each such Speer Employee Benefit Plan of the Tax Reform Act of 1986 and
subsequent legislation and regulations as they are required. With respect to
each Speer Employee Benefit Plan which is the subject to Title I of ERISA, PVS
has not failed in any material respect to comply with any of the applicable
reporting, disclosure or other requirements of ERISA and the Internal Revenue
Code, and there has been no "prohibited transaction" as described in Section
4975 of the Internal Revenue Code or Section 406 of ERISA. Neither PVS nor any
of its directors, officers, employees, partners or any other "fiduciary" as
such term is defined in Section 3(21) of ERISA, has any material liability for
failure to comply with ERISA or the Internal Revenue Code for any action or
failure to act in connection with the administration or investment of the Speer
Employee Benefit Plans. PVS does not presently maintain, contribute to or have
any liability (including current or potential withdrawal liability) with
respect to any "defined benefit plan," as such term is defined in Section 3(35)
of ERISA, or any "multi-employer plan," as such term is defined in Section
3(37) of ERISA. There is no pending or, to Speer's knowledge, threatened legal
action, proceeding or investigation against or involving any Speer Employee
Benefit Plan (other than routine claims for benefits) and to Speer's knowledge,
there is no basis for or fact which could give rise to any such legal action,
proceeding or investigation. Any bonding required with respect to any Speer
Employee Benefit Plan in accordance with applicable provisions of ERISA has
been obtained and is in full force and effect.
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4.7. Intellectual Property. Section 4.7 of the Speer Disclosure
Letter sets forth all patents, copyrights, trademarks, service marks and trade
names relating to the Businesses, all of which are owned or lawfully used by
Speer, all applications for any of the foregoing, all data bases and all
permits, grants and licenses of such rights running to or from Speer relating
to any of the foregoing. The rights of Speer in the property set forth in
Section 4.7 of the Speer Disclosure Letter are free and clear of any liens or
other encumbrances. Speer does not have any notice of any adversely held
copyright, trademark, service mark or trade name of any other person or notice
of any claim of any other person relating to any of the property set forth in
Section 4.7 of the Speer Disclosure Letter, and Speer does not know of any
basis for any such charge or claim. To the knowledge of Speer, no person has
possession of any copies of or use of Speer's customer lists and/or data bases.
4.8. Financial Statements. Speer has provided to PSI combined
balance sheets of Speer Communications Holdings Limited Partnership and Speer
Communications Holdings I Limited Partnership as of December 31, 1997 (the
"Speer Balance Sheet") and 1996, and the related combined statements of
operations and owners' equity and cash flows for the years then ended (the
"Speer Financial Statements"). The Speer Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the period involved (except as may be indicated
in the notes thereto), and each fairly presents the financial position of Speer
in all material respects as at the respective dates thereof and the results of
operations and cash flows of Speer for the periods indicated (except for the
fact that the Speer Financial Statements include the assets and operations of
Speer Communications Holdings I Limited Partnership, MOR Music TV, Inc.,The
Ritz Limited Partnership, PVS Speer-Atlanta Limited Partnership, Speer
Transmission Services Limited Partnership and Speer PVS Limited Partnership,
which are not included in Speer as that term is defined for purposes of this
Article IV).
4.9. Liabilities. Except as set forth in Section 4.9 of the Speer
Disclosure Letter or Schedule 1.1(b) and except for liabilities incurred in the
ordinary course of business since December 31, 1997, none of which is material,
Speer does not have any direct or indirect indebtedness, liability, claim,
loss, damage, deficiency, obligation or responsibility, known or unknown, fixed
or unfixed, choate or inchoate, liquidated, secured or unsecured, accrued,
absolute, contingent or otherwise, relating to the Businesses, including, but
not limited to, liabilities on account of taxes, other governmental charges or
law-suits brought, whether or not of a kind required by generally accepted
accounting principles to be set forth on a financial statement ("Liabilities"),
which are not set forth on or disclosed in the Speer Balance Sheet.
4.10. Accounts Receivable. All trade accounts receivable of Speer
on the date of this Agreement have arisen in the ordinary course of business
and represent valid obligations to Speer.
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Collection of accounts receivable by Speer through the date hereof has been and
is consistent with past business practices of Speer.
4.11. No Material Adverse Change. Since December 31, 1997 there has
been no material adverse change in the assets, properties, business,
operations, liabilities or condition of the Speer Assets and Speer does not
know of any such change which is threatened, nor has there been any damage,
destruction or loss materially affecting the assets, properties, business,
operations or condition of the Speer Assets, whether or not covered by
insurance.
4.12. Operations of Speer. Except as set forth in Section 4.12 of
the Speer Disclosure Letter, from December 31, 1997 through the date hereof,
Speer has not:
(a) Waived, or agreed to waive, any right of material
value to the Speer Assets;
(b) Materially changed, or agreed to materially change,
any of its business policies or practices relating to or affecting the Speer
Assets including, without limitation, production, advertising, marketing,
pricing, purchasing, accounting, sales, returns, budget or product acquisition
policies or practices;
(c) Except in the ordinary course of business relating to
the Speer Assets, other than for fair market value, sold, abandoned or made, or
agreed to sell, abandon or make, any other disposition of any of its assets or
properties; or granted or suffered, or agreed to grant or suffer, any lien or
other encumbrance on any of its assets or properties;
(d) Except for inventory or equipment acquired in the
ordinary course of business of the Speer Assets, made any acquisition of all or
any part of the assets, properties, capital stock or business of any other
persons or made any commitments to do any of the foregoing relating to the
Business;
(e) Suffered or incurred any damage, destruction or loss
(whether or not covered by insurance) materially adversely affecting the
assets, properties, business, operations or conditions relating to the Speer
Assets; or
(f) Entered into, or agreed to enter into, any other
material contract or other agreement or other material transaction relating to
the Speer Assets.
4.13. Compliance with Laws. Speer has complied in all material
respects with all federal, state, county, local and foreign laws, ordinances,
regulations, orders, judgments, injunctions, awards or decrees applicable to
the Speer Assets and has not received any notice of violation of any of the
foregoing. Speer has all requisite licenses, permits and certificates from
federal, state
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and local governmental authorities as may be necessary to conduct the
Businesses and to own and operate its assets except to the extent that the
failure to obtain such licenses, permits and certificates would not have a
material adverse effect on the Businesses taken as a whole, and such permits
are valid, in full force and effect and will not be terminated or adversely
affected by the consummation of the transactions contemplated hereby. Except
as disclosed in Section 4.13 of the Speer Disclosure Letter, Speer has not
received any notice alleging any violation by Speer of any laws, or any
investigation by administrative agencies.
4.14. Tax Matters. PSI will not assume or otherwise become liable
for any income, excise, sales, use, gross receipts, franchise, employment,
payroll related, property or any other tax of any sort relating to the assets,
business or property of Speer with respect to any period commenced prior to the
Closing Date or arising out of the transactions contemplated hereby. Speer has
filed all income tax, excise tax, sales tax, use tax, gross receipts tax,
franchise tax, employment and payroll related tax, property tax, and all other
tax returns which Speer is required to file and has paid or provided for all
taxes shown on such returns, and all deficiencies or other assessments of tax,
interest or penalties owed by Speer.
4.15. Litigation. Other than as listed in Section 4.15 of the Speer
Disclosure Letter, there is no claim, counterclaim, suit, order, proceeding,
action, or investigation pending, notice of which has been received, or, to the
knowledge of Speer, threatened against Speer, including but not limited to
product liability claims. Speer is not a plaintiff or petitioner in any
litigation or proceeding other than as listed in Section 4.15 of the Speer
Disclosure Letter.
4.16. Environmental and Health and Safety Matters.
(a) Set forth in Section 4.16(a) of the Speer Disclosure
Letter is a true, accurate and complete list of all real property leased and/or
otherwise used or occupied by Speer (the "Speer Property").
(b) Except as set forth in Section 4.16(b) of the Speer
Disclosure Letter, Speer and the Speer Property have been at all times and are
in all material respects in compliance with the Environmental Laws.
(c) Speer has obtained and is in full compliance with all
permits, licenses and other consents or authorizations which are required with
respect to the operation of its business under the Environmental Laws,
including without limitation those that are required to (a) operate or install
any equipment or facilities and (b) generate, manufacture, formulate, store,
treat, handle, transport, discharge, emit or dispose of Hazardous Substances
generated by the Businesses, a true and complete list of which is included in
Section 4.16(c) of the Speer Disclosure Letter.
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<PAGE> 34
(d) Except as listed in Section 4.16.(d) of the Speer
Disclosure Letter, Speer has not generated, used, treated, stored, maintained,
disposed of, or otherwise deposited PCBs, TCE, PCE, or asbestos containing
materials in, on, or related to the Speer Property, the Businesses, or any
premises at which the Businesses were or are located. Additionally, except as
described in Section 4.16(d) of the Speer Disclosure Letter, there are and were
no underground storage tanks used, stored, maintained, located on or otherwise
related to the Speer Property, the Businesses, or any premises at which the
Businesses were or are located. Speer has removed and properly disposed of all
used or other obsolete materials regulated by environmental, health and safety
laws, including chemical or other hazardous substances or wastes, that are not
used by Speer's business. With respect to underground storage tanks, Section
4.16(d) of the Speer Disclosure Letter sets forth the size, location,
construction, installation date, use and testing history of all such
underground storage tanks (whether or not excluded from regulation under
Environmental Laws), including all underground storage tanks in use, out of
service, closed, abandoned or decommissioned.
(e) To the knowledge of Speer, there has been no
"release" as defined in 42 U.S.C. Section 9601(22) or threat of a "release" of
any Hazardous Substance in, from or under any premises from which the
operations of Speer have been or are being conducted.
(f) Speer has not received notice that it has any
potential liability with respect to the contamination, investigation, or
cleanup of any site at which Hazardous Substances have been or have alleged to
have been generated, treated, stored, released, discharged, emitted or disposed
of, and, to the knowledge of Speer, there are no past or present events, facts,
conditions or circumstances which may interfere with or prevent compliance by
the Businesses in accordance with Environmental Laws, or with any order,
decree, judgment, injunction, notice or demand issue, entered, promulgated or
approved thereunder, or which may give rise to any common law or other legal
liability, including, without limitation, liability under any Environmental
Laws, or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, notice of violation, study or investigation, based on or
related to the manufacture, process, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment of Hazardous Substances by Speer as a
result of any act or omission of Speer.
(g) To the knowledge of Speer, Section 4.16(g) of the
Speer Disclosure Letter contains a true, correct and complete listing of all
Hazardous Substances (other than Hazardous Substances comprising an ingredient
or component of a mixture or product or included in equipment) used in the
Businesses in the conduct of its operations since the commencement of its
operations, and a list of the methods used by Speer (including, but not limited
to, a list of past and present disposal or recycling sites, waste haulers, and
manifest numbers) since commencement of its operations to dispose of or recycle
Hazardous Substances (other than Hazardous Substances
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<PAGE> 35
comprising an ingredient or component of a mixture or product or included in
equipment) generated by Speer's operations and by the activities of Speer.
(h) Except as disclosed in Section 4.16(h) of the Speer
Disclosure Letter, all of Speer's disposal and recycling practices relating to
Hazardous Substances have been accomplished in all material respects in
accordance with all applicable Environmental Laws.
4.17 Insurance. Except as to PVS which has maintained the
referenced policies in effect since January 1, 1996, Speer maintains in effect,
and since commencement of its operations, has maintained in effect, motor
vehicle and comprehensive general liability insurance and workers' compensation
insurance covering the Businesses and fire and extended coverage insurance with
respect to the properties and assets of Speer. Section 4.17 of the Speer
Disclosure Letter contains a complete list of all insurance policies (including
the amount of coverage thereunder) in effect at present. All such insurance
policies are owned solely and exclusively by Speer. No event has occurred that
may enable an insurer to rescind any such policies.
4.18. Customer and Supplier Relationships; Warranty Claims. Except
as set forth in Section 4.18 of the Speer Disclosure Letter, Speer has not
received any notice that any customer or supplier of Speer intends to
discontinue or alter the prices or terms of, or substantially diminish its
relationship with Speer. Other than as set forth in Section 4.18 of the Speer
Disclosure Letter, there are no outstanding warranty claims against Speer by
any of its customers with respect to products sold or services rendered by
Speer.
4.19 Investment. Speer is acquiring the PSI Common Stock for
investment only and not with a view to the public distribution or resale
thereof or any interest therein in violation of the Securities Act or any other
applicable federal or state securities laws or regulations. Speer is familiar
with the meaning of such representation and fully understands the restrictions
and limitations that are imposed thereby. PSI has disclosed to Speer that
Speer must bear the economic risk of the investment in the PSI Common Stock for
an indefinite period of time because the PSI Common Stock has not been
registered under the Securities Act or any state blue sky law and therefore,
the PSI Common Stock cannot be sold unless it is subsequently registered under
the Securities Act and applicable state blue sky laws or an exemption from such
registration is available. Speer is able and prepared to bear the economic
risks of investing in and holding the PSI Common Stock for an indefinite period
of time. At all times during the Transaction and at the date of this
Agreement, Speer has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risk of the investment
in the PSI Common Stock. Speer has had access to such financial and other
information and has been afforded the opportunity to ask such question of PSI
and its representatives and has received answers thereto, as it deems necessary
in connection with its decision to acquire the PSI Common Stock.
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ARTICLE V
COVENANTS OF PSI
Between the date of this Agreement and the Closing Date, PSI shall:
5.1. Management of PSI. Operate the business of PSI in a prudent
manner consistent with past practices, and in the usual and ordinary course,
and use its reasonable best efforts to preserve the goodwill of suppliers,
distributors, sales representatives, customers, creditors and others having
business relationships with PSI, and shall safeguard and preserve the
confidentiality of all books, records and information relating to PSI in a
prudent manner consistent with past practices.
5.2. Accounting Practices. Refrain from making any change in the
accounting practices or procedures governing PSI.
5.3. No Distribution of Dividends. Except as otherwise
contemplated by this Agreement, including the Recapitalizations referred to in
Sections 2.1 and 6.3, refrain from paying or declaring any dividend, or making
any distribution on account of, any of the outstanding shares of capital stock
of PSI, or redeeming, purchasing or otherwise acquiring any of the capital
stock of PSI, or issuing any shares of capital stock of PSI, or granting,
issuing, selling or disposing of any option, warrant or right to acquire any
shares of capital stock of PSI.
5.4. No New Stock Rights. Except as otherwise contemplated by this
Agreement, including the Recapitalizations referred to in Sections 2.1 and 6.3,
not enter into, issue, or grant any agreements, arrangements, warrants, calls,
options, convertible rights or other rights (vested or contingent) to acquire
any capital stock of PSI.
5.5. Purchases and Sales. Maintain the fixed assets of PSI in good
condition, repair and working order, normal wear and tear excepted; and refrain
from (a) making or permitting any sales, transfers or dispositions of any asset
of the business of PSI (other than inventory in the ordinary course of
business); (b) entering into any contracts, leases, or commitments, or any
amendments or modifications to contracts, leases or commitments existing at the
date of the execution of this Agreement, involving the business or assets of
PSI, other than those in the ordinary course of business involving
consideration or other expenditure of less than $50,000, and other than those
that can be terminated without obligation or penalty at the Closing; and (c)
taking or permitting any action or entering into or permitting any contract or
agreement prohibited by Section 3.5.
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5.6. Compensation of PSI's Employees. Refrain from making or
permitting any change in the compensation or benefits payable or to become
payable to any of the employees or agents of the business of PSI, or making any
new bonus payment or arrangement or benefit to or with any of them, or hiring
any additional employees, except in accordance with compensation and hiring
practices previously followed by PSI.
5.7. Insurance. Use its reasonable best efforts to have in effect
and maintain at all times all insurance now in force relating to PSI and the
business and assets of PSI.
5.8. Preserve Organization. Preserve the business organization of
PSI intact and keep available the services of the present officers and
employees of PSI.
5.9. Access to the Records of PSI. Allow Speer, its
representatives, attorneys and accountants to continue to have reasonable
access to the records and files, audits and properties of PSI relating to PSI,
the business and assets of PSI, as well as all information relating to taxes,
commitments, contracts, titles and financial condition of, or otherwise
pertaining to, PSI. PSI agrees to use its reasonable best efforts to cause its
accountants to cooperate with Speer and its accountants in making available all
financial information concerning PSI as is requested, and Speer and its
accountants shall have the right to examine all working papers pertaining to
examinations of PSI relating to PSI and its business and assets, provided that
such examinations shall be designed to cause minimal disruption to PSI and its
business and work force, and in any event, shall be undertaken with reasonable
prior notice and during normal business hours of PSI.
5.10. Consents and Authorizations. Use its reasonable best efforts
to obtain all government authorizations and contractual and leasehold consents
and permits necessary to enable the consummation of all transactions
contemplated hereby without causing the discontinuation or termination of any
permits or of any contractual relationships maintained by PSI.
5.11. Fulfill Closing Conditions. Use its reasonable best efforts
to take, or to cause to be taken, all action reasonably necessary or
appropriate to cause each of the conditions set forth in Article VIII to be
fulfilled on or prior to the Closing Date.
5.12. Taxes. Pay when due all federal, state, local and foreign
income, franchise and other taxes of PSI, other than any taxes on or arising
out of the Transaction.
5.13. Financial Reports. Provide Speer with (i) copies of any
financial statements prepared by PSI in the course of its business, to be
provided promptly after they become available, and (ii) cumulative and monthly
management reports of PSI's business (including statements of revenues and
expenses), to be provided within 15 days following the end of each month.
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5.14. Certificate of Incorporation and By-Laws. Refrain from
amending the Certificate of Incorporation or By-Laws of PSI other than amending
the Certificate of Incorporation to effect the Share Increase (as hereinafter
defined).
5.15. Damage or Destruction of Assets. Notify Speer immediately in
the event of any material damage to or material destruction of any of the
material assets of PSI.
5.16. No Shop. Refrain, and cause PSI's officers, directors,
employees, agents and Affiliates to refrain, except as required by its or their
fiduciary duties under Delaware law or as contemplated by this Agreement,
including the Recapitalizations referred to in Sections 2.1 and 6.3, from
initiating any negotiations or soliciting or encouraging (including by way of
furnishing non-public information) any offer or proposal regarding the sale,
direct or indirect, of any of the outstanding shares of capital stock of PSI;
the sale, direct or indirect, of any of the assets of PSI (other than inventory
in the ordinary course of business); the issuance of any capital stock of PSI
or any options, warrants, or rights to acquire capital stock of PSI; or any
merger, consolidation or similar transaction involving the Shares or any of the
assets of PSI; with any party other than Speer or an Affiliate of Speer. PSI
shall promptly notify Speer of any such proposal or offer, or any inquiry or
contact with any person with respect thereto, and the terms thereof.
5.17. Confidentiality.
(a) Not disclose, and cause PSI's officers, directors,
employees, agents and Affiliates not to disclose, any terms of the Transaction
or the Alternative Transaction, or to make any public statement regarding the
Transaction or the Alternative Transaction prior to the Closing, without the
prior written consent of Speer except as may be required by law; provided,
however, that the parties understand and agree that certain disclosures
regarding the Transaction or the Alternative Transaction may be made to third
parties whose consent or approval may be required in connection with the
Transaction or the Alternative Transaction or as may be required by law, and
that in each case such disclosures may be made by PSI, without Speer's prior
written consent, but only to the extent such disclosures are so required.
(b) Continue, and cause PSI's officers, directors,
employees, agents and Affiliates to continue, to observe, perform, and comply
with that certain confidentiality agreement dated March 17, 1998, between PSI
and Speer.
5.18. Tax Treatment. Refrain from taking any action which would
cause the Transaction to fail to qualify as transfer pursuant to Section 351(a)
of the Internal Revenue Code.
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5.19 NASDAQ Quotation. Use its reasonable best efforts to cause
the shares of PSI Common Stock constituting the PSI Consideration to be
eligible for listing on the NASDAQ Small Cap Market and the Boston Stock
Exchange upon official notification of issuance.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Voting Agreement. Concurrently with the execution of this
Agreement, Speer Communications shall have entered into Voting Agreements with
Alta Investissements S.A. ("Alta"), Vulcan Ventures Incorporated ("Vulcan") and
certain other entities and persons (the "Voting Parties"), in the form attached
as Exhibit 6.1 hereto, whereby each of the Voting Parties agrees to (i) not
sell any of the shares of capital stock of PSI owned by such persons between
the date of the Voting Agreement and the Closing Date, and (ii) vote all of the
shares of PSI Common Stock held by such person in favor of approval of the
Transaction or the Alternative Transaction and the amendment of the Certificate
of Incorporation increasing the number of authorized Shares of PSI Common Stock
to not less than 200,000,000 shares or such other number of authorized shares
as the parties may agree upon (the "Share Increase") in connection with the
Stockholders Meeting, as defined below.
6.2. Stockholders Meeting. PSI shall call a meeting of
stockholders to be held as soon as reasonably practicable for the purpose of
voting upon the required stockholder approvals requested in connection with
this Agreement (the "Stockholders Meeting"). Except as otherwise required by
the fiduciary duties of the directors of PSI, the Board of Directors of PSI
shall recommend to the stockholders of PSI a vote in favor of approval of the
Transaction or the Alternative Transaction if selected by Speer and the Share
Increase.
6.3. Recapitalization. No later than 20 days from the date hereof,
PSI shall enter into agreement with each of Didier Primat ("Primat"), Primwest
Holding N.V. ("Primwest") and Vulcan to convert (i) the PSI Series A Stock and
PSI Series B Stock and (ii) the promissory notes between each of Primat and
Vulcan with PSI into shares of PSI Common Stock at terms no less favorable to
PSI than that of the Recapitalization set forth in Section 2.1.
6.4. Board of Directors. Prior to the Closing Date, PSI shall
adopt a resolution fixing the number of Board members of its Board of Directors
to eight (8) members.
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6.5. Employees. At the Closing Date all employees of Speer shall
become employees of PSI under the terms of such employees' employment with
Speer and shall be provided with benefits not less favorable than employees of
PSI with similar tenure.
6.6. President and Chief Executive Officer. At the Closing Date,
PSI shall appoint a nominee of Speer to serve as President and Chief Executive
Officer of PSI.
6.7. Interim Loan. Within two (2) days of the date hereof and
following execution and delivery by PSI of a promissory note in the form of
Exhibit 6.7 (the "Promissory Note"), Speer shall provide PSI a line of credit
of up to $3,000,000 on the terms and conditions set forth in the Promissory
Note. The principal amount and the accrued interest of such loan shall become
due and payable on the earlier of Closing Date and September 1, 1998; provided,
however, that at Speer's sole discretion the repayment of such loan may be
forgiven and the amount of the cash required to be delivered by Speer at
Closing shall be reduced by an amount equal to the principal balance and unpaid
interest on the Promissory Note so forgiven.
6.8. Preparation of Proxy Statement: Other Filings. As promptly as
practicable after the date of this Agreement, PSI shall prepare and file with
the SEC a preliminary Proxy Statement reasonably satisfactory to each of PSI
and Speer. Each of PSI and Speer shall use its reasonable best efforts to
respond to any comments of the SEC and to cause the Proxy Statement to be
mailed to its respective stockholders at the earliest practicable time. As
promptly as practicable after the date of this Agreement, PSI shall prepare and
file any other filings required under the Exchange Act, the Securities Act or
any other federal or Blue Sky Laws relating to the Transaction and the other
transactions contemplated by this Agreement including, without limitation,
under state takeover laws (the "Other Filings"). PSI and Speer will notify the
other parties promptly of the receipt of any comments from the SEC or its staff
and of any request by the SEC or its staff or any other government officials
for amendments or supplements to the Proxy Statement or any Other Filing or for
additional information and will supply the other with copies of all
correspondence between it or any of its representatives, on the one hand, and
the SEC, or its staff or any other government officials, on the other hand,
with respect to the Proxy Statement or any Other Filing. The Proxy Statement
and Other Filings shall comply in all material respects with all applicable
requirements of law. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Proxy Statement or any Other Filing,
PSI and Speer, as the case may be, shall promptly inform the other parties of
such occurrence and cooperate in filing with the SEC or its staff or any other
government officials, and/or mailing to stockholders of PSI, such amendment or
supplement. Except as otherwise required by the fiduciary duties of the
directors of PSI, the Proxy Statement shall include the recommendations of the
Board of Directors of PSI in favor of the Transaction or the Alternative
Transaction, as the case may be. PSI and Speer each shall promptly provide the
other (or its counsel) copies of all filings made by it with any Governmental
Entity in connection with this Agreement and the transactions contemplated
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hereby. The covenants in this Section shall apply to the filing by PSI and
Speer, if applicable, of a pre-merger notification report under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and responding to any further informational requests in connection with
the receipt of termination of expiration of the applicable waiting period under
the HSR Act.
6.9. Defense of Litigation. Each of PSI and Speer agrees to
vigorously defend against all actions, suits or proceedings in which such party
is named as a defendant which seek to enjoin, restrain or prohibit the
transactions contemplated hereby or seek damages with respect to such
transactions. Neither PSI nor Speer shall settle any such action, suit or
proceeding or fail to perfect on a timely basis any right to appeal any
judgment rendered or order entered against such party therein without the
consent of the other party (which consent shall not be withheld unreasonably).
Each of PSI and Speer shall notify the other party of any such initiated
actions, suits or proceedings.
ARTICLE VII
COVENANTS OF SPEER
Between the date of this Agreement and the Closing Date, Speer shall
undertake to do or refrain from doing, as the case may be, the following:
provided, however, that in the event that Speer elects to proceed with the
Alternative Transaction, the following covenants shall apply only to SVM and
not to any other Speer Entity. The following covenants shall not in any way
preclude, restrict or limit Speer's ability to enter into an agreement and to
close a transaction relating to the sale of all or substantially all of the
Speer Assets (other than SVM) to a party other than PSI provided Speer has
given PSI notice of its election to pursue the Alternative Transaction:
7.1. Management of Speer. Operate the Businesses in a prudent
manner consistent with past practices, and in the usual and ordinary course,
and use its reasonable best efforts to preserve the goodwill of suppliers,
distributors, sales representatives, customers, creditors and others having
business relationships with Speer, and shall safeguard and preserve the
confidentiality of all books, records and information relating to Speer in a
prudent manner consistent with past practices.
7.2 No Distribution of Dividends. Refrain from paying or
declaring any dividend, or making any distribution on account of shares of
capital stock of PVS, or redeeming, purchasing or otherwise acquiring any of
the shares of PVS, or issuing any shares of capital stock of PVS, or granting,
issuing, selling or disposing of any option, warrant or right to acquire any
shares of capital stock of PVS.
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7.3 No New Stock Rights. Not enter into, issue, or grant any
agreements, arrangements, warrants, calls, options, convertible rights or other
rights (vested or contingent) to acquire any capital stock of PVS.
7.4 Purchases and Sales. Maintain the Speer Assets and the fixed
assets of PVS in good condition, repair and working order, normal wear and tear
excepted; and refrain from (a) making or permitting any sales, transfers or
disposition of any of the Speer Assets; and (b) entering into any contracts,
leases, or commitments, or any amendments or modifications to contracts, leases
or commitments existing at the date of the execution of this Agreement,
involving the Businesses or the Speer Assets, other than those in the ordinary
course of business involving consideration or other expenditure of less than
$50,000, and other than those that can be terminated without obligation or
penalty at the Closing and other than those expected or scheduled expenditures
identified in Section 7.4 of the Speer Disclosure Letter.
7.5 Compensation of Speer's Employees. Refrain from making or
permitting any change in the compensation or benefits payable or to become
payable to any of the employees or agents of the Businesses of Speer, or making
any new bonus payment or arrangement or benefit to or with any of them.
7.6 Insurance. Use reasonable best efforts to have in effect and
maintain at all times all insurance now in force relating to Speer, the
Businesses and the Speer Assets.
7.7 Preserve Organization. Preserve the business organizations of
Speer intact and keep available the services of the present officers and
employees of Speer.
7.8 Access to Records of Speer. Allow PSI, its representatives,
attorneys and accountants to continue to have reasonable access to the records
and files, audits and properties of Speer relating to Speer, the Businesses and
the Speer Assets, as well as all information relating to taxes, commitments,
contracts, titles and financial condition of, or otherwise pertaining to,
Speer. Speer agrees to use its reasonable best efforts to cause its
accountants to cooperate with PSI and its accountants in making available all
financial information concerning Speer as is requested, and PSI and its
accountants shall have the right to examine all working papers pertaining to
examinations of Speer relating to Speer, the Businesses and Speer Assets,
provided that such examinations shall be designed to cause minimal disruption
to Speer, the Businesses and the Speer work force, and in any event, shall be
undertaken with reasonable prior notice and during normal business hours of
Speer.
7.9 Consents and Authorizations. Use its reasonable best efforts
to obtain all government authorizations and contractual and leasehold consents
and permits necessary to enable
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the consummation of all transactions contemplated hereby without causing the
discontinuation or termination of any permits or of any contractual
relationships maintained by Speer.
7.10. Taxes. Pay when due all federal, state, local and foreign
income, franchise and other taxes of Speer, including any taxes on or arising
out of the Transaction.
7.11. Certificate of Incorporation, By-Laws and Limited Partnership
Agreements. Refrain from amending the articles or certificate of incorporation
or By-Laws of PVS and any limited partnership agreements of Speer other than as
may be necessary to complete the Transaction or the Alternative Transaction, as
the case may be.
7.12 Damage or Destruction of Assets. Notify PSI immediately in
the event of any material damage to or material destruction of any of the Speer
Assets or assets of the Businesses.
7.13. Fulfill Closing Conditions. Use its best efforts to take, or
cause to be taken, all action reasonably necessary or appropriate to cause each
of the conditions set forth in Article IX to be fulfilled on or prior to the
Closing Date.
7.14. Third Parties and Government Approvals. Use its best efforts
to file and obtain approval of all necessary documentation, and to obtain all
necessary approvals of third parties and of appropriate regulatory authorities,
with respect to the transactions contemplated by this Agreement.
7.15. Confidentiality.
(a) Not disclose, and cause Speer's officers, directors,
employees, agents and Affiliates not to disclose, any terms of the Transaction
or the Alternative Transaction), or to make any public statement regarding the
Transaction or the Alternative Transaction prior to the Closing, without the
prior written consent of PSI; provided, however, that the parties understand
and agree that certain disclosures regarding the Transaction or the Alternative
Transaction may be to be made to third parties whose consent or approval may be
required in connection with the Transaction or the Alternative Transaction, and
that in each case such disclosures may be made by Speer, without PSI's prior
written consent, but only to the extent such disclosures are so required.
(b) Continue, and cause Speer's officers, directors,
employees, agents and Affiliates to continue, to observe, perform, and comply
with that certain confidentiality agreement dated March 17, 1998, between PSI
and Speer.
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ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING BY SPEER
Speer shall not be required to proceed on the Closing Date with the
transactions contemplated by this Agreement unless the following conditions
precedent shall have been fulfilled and satisfied, or shall have been waived in
writing by Speer:
8.1. Representations and Warranties. Each of the warranties and
representations of PSI contained herein shall be true and correct as of the
date of this Agreement, and shall also be true and correct as of the Closing
Date as if then originally made.
8.2. Covenants. PSI shall have complied in all material respects
with each of the covenants required of it on or prior to Closing;
8.3. Officers Certificate. PSI shall have delivered to Speer a
certificate of the Chief Executive Officer and Chief Financial Officer of PSI,
dated the Closing Date, certifying to the best of the knowledge and belief of
such officers and in such detail as Speer reasonably requests to the accuracy
of the representations and warranties contained herein, and to the fulfillment
of the covenants and to the conditions precedent to Speer's obligations to
consummate the transactions contemplated by this Agreement;
8.4. Good Standing. PSI shall have delivered to Speer certificates
of good standing in the state or country of incorporation for PSI and each of
its Affiliates;
8.5. Legal Opinion. PSI shall have delivered to Speer a legal
opinion, in form and substance satisfactory to Speer, from Troutman Sanders LLP
or Foley & Lardner, counsel to PSI;
8.6. Governmental Approvals. PSI or Speer shall have received all
governmental and regulatory consents, non-objections or permits from all
Federal, state, local and foreign governmental authorities, or shall have made
reasonably satisfactory alternative arrangements pursuant to the last sentence
of Section 12.4, necessary to permit PSI to consummate the transactions
contemplated by this Agreement, and to enable PSI to conduct its business after
the Closing Date in all material respects as PSI conducted such businesses on
the date of this Agreement, and specifically including the following: any
necessary approvals of the Department of Justice, Federal Communications
Commission, or any state communications commissions.
8.7. Material Adverse Change. There shall have been no material
adverse change (or changes which in the aggregate are materially adverse) since
the date hereof in the financial
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condition, results of operations, properties, business, or products and
services provided by PSI, whether by reason of change in government regulation
or action or otherwise;
8.8. Bankruptcy. PSI shall not be the subject of a petition for
reorganization or liquidation under the Federal bankruptcy laws, or under state
or foreign insolvency laws, nor shall an assignment for the benefit of
creditors or any similar protective proceeding or act or event of bankruptcy
have occurred;
8.9. Corporate and Third Party Authorizations. There shall have
been obtained, by means in conformity with all applicable provisions of federal
and Delaware law approval of the Transaction or the Alternative Transaction if
such is elected by Speer and the Share Increase from the shareholders who hold
at least a majority of the voting capital stock of PSI;
8.10. Employment of Speer Employees. PSI shall have offered
employment to each of the full-time employees of Speer and PVS or, in the case
the Alternative Transaction is elected by Speer, the employees of SVM on the
same terms as such individuals are employed by Speer, PVS or SVM, as the case
may be, subject only to the Closing of the Transaction;
8.11. Lawsuits. No action, suit or proceeding shall have been
instituted or threatened by the federal or any state government before a court,
arbitration panel or governmental body with respect to the transactions
contemplated hereby, and no regulatory enforcement proceeding shall be pending
before any governmental agency or body with respect to the transactions
contemplated hereby;
8.12. Recapitalization. PSI shall have completed and closed prior
to or simultaneous with the Closing the Recapitalization pursuant to Section
2.1 hereof and the recapitalization transactions and with respect to Primat,
Primwest and Vulcan pursuant to Section 6.3;
8.13. Tax Opinion. Speer shall have received a tax opinion from
Baker & McKenzie with respect to the tax free nature of the Transaction in form
and substance satisfactory to Speer; provided, however that in the event Speer
elects the Alternative Transaction, such condition shall be deemed to be waived
by Speer;
8.14 Confirmation of Other Transactions. The following
transactions shall have been completed and closed before or simultaneously with
the Closing: (i) the transfer or real estate from RMS to PSI pursuant to the
Real Estate Transfer Agreement referred to in Section 1.3 hereof; and (ii)
execution and delivery of lease and/or service agreements with WNAB and MOR
Galleria in form and substance satisfactory to PSI; provided, however that such
conditions shall be deemed to have been waived or satisfied in the event Speer
elects the Alternative Transaction;
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8.15. Listing of PSI Common Stock. The shares of PSI Common Stock
representing the PSI Consideration shall have been accepted for listing on the
NASDAQ Small Cap Market and the Boston Stock Exchange upon official
notification of issuance.
8.16 Election of Directors. Three nominees of Speer shall have
been elected to fill vacancies on the PSI Board of Directors.
8.17. Non-Fulfillment Date. In the event that one or more of the
foregoing conditions in this Article VIII is not fulfilled as of August 31,
1998, Speer may, upon notice to PSI and on or prior to the Closing Date, elect
not to consummate the transactions provided for herein, or may waive the
condition and proceed to Closing, but any breach of condition, warranty,
representation or covenant known to Speer at the Closing Date as to which Speer
does not make a claim by the Closing Date shall be deemed to have been waived.
ARTICLE IX
CONDITIONS PRECEDENT TO CLOSING BY PSI
PSI shall not be required to proceed on the Closing Date with the
transactions contemplated by this Agreement unless the following conditions
precedent shall have been fulfilled and satisfied, or shall have been waived in
writing by PSI:
9.1. Representations and Warranties. Each of the representations
and warranties of Speer contained herein shall be true and correct as of the
date of this Agreement and shall be true and correct as of the Closing Date as
if then originally made; provided, however that in the event that Speer elects
the Alternative Transaction, the representations and warranties set forth in
Article IV hereof shall be deemed to include only the representations and
warranties of SVM set forth in such Article IV and the representations and
warranties of Speer Communications in Sections 4.1, 4.2 and 4.19 and only those
representations and warranties shall be true and correct as of the Closing
Date;
9.2. Covenants. Speer, or in the event of the Alternative
Transaction, SVM and Speer Communications shall have complied with each of the
covenants required of it on or prior to Closing;
9.3. Officers Certificate. Speer shall have delivered to PSI a
certificate of an officer or authorized person of its general partner, and of
the President and Chief Financial Officer of PVS or in the case the Alternative
Transaction is elected, only an officer or authorized person of the general
partner of SVM, dated the Closing Date, certifying to the best of the knowledge
and belief
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of each such person and in such detail as PSI reasonably requests to the
accuracy of Speer's representations and warranties, and to the fulfillment of
Speer's covenants and of the conditions precedent to PSI's obligations to
consummate the transactions contemplated by this Agreement;
9.4. Governmental Approvals. Speer and PSI shall have received all
governmental and regulatory consents, non-objections or permits, from all
Federal, state, local and foreign governmental authorities, or shall have made
reasonably satisfactory alternative arrangements pursuant to the last sentence
of Section 12.4, necessary to permit Speer to consummate the transactions
contemplated by this Agreement and to enable PSI to conduct the Businesses
after the Closing Date in all material respects as Speer conducted the
Businesses as of the date of this Agreement including: any necessary approvals
of the Department of Justice, Federal Communications Commission or any state
communications commissions;
9.5. Bankruptcy. Speer shall not be the subject of a petition for
reorganization or liquidation under the Federal bankruptcy laws, or under state
insolvency laws, nor shall an assignment for the benefit of creditors or any
similar protective proceeding or act or event of bankruptcy have occurred;
9.6. Lawsuits. No action, suit or proceeding shall have been
instituted or threatened by the federal or any state government before a court,
arbitration panel or governmental body with respect to the transactions
contemplated hereby, and no regulatory enforcement proceeding shall be pending
before any governmental agency or body with respect to the transactions
contemplated hereby;
9.7. Legal Opinion. Speer shall have delivered to PSI a legal
opinion, in form and substance satisfactory to PSI, from Baker & McKenzie,
counsel to Speer, except that with respect to matters of Nevada State law such
opinion shall be provided by Burton, Bartlett & Glogovac;
9.8. Corporate Authorizations. There shall have been obtained, by
means in conformity with all applicable provisions of the partnership
agreements of each of the partnerships included in Speer, or in the case of the
Alternative Transaction, of SVM and Speer Communications, and of federal and
Nevada law, the approval of such entities' partners to the transactions
contemplated by this Agreement;
9.9 Confirmation of Recapitalizations. The following transactions
shall have been completed and closed before or simultaneously with the Closing:
(i) the recapitalization transaction between PSI and RMS pursuant to Section
2.1 hereof; and (ii) the recapitalization transaction between PSI, Primat,
Primwest and Vulcan pursuant to Section 6.3 hereof;
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9.10 Other Transactions. The following transaction shall have been
completed and closed before or simultaneously with the Closing: (i) the
transfer of real estate from RMS to PSI pursuant to the Real Estate Transfer
Agreement referred to in Section 1.3 hereof; and (ii) execution and delivery of
lease and/or service agreements with WNAB and MOR Galleria in form and
substance satisfactory to PSI; provided, however that such conditions shall be
deemed to have been waived or satisfied in the event Speer elects the
Alternative Transaction
9.11. Non-Fulfillment Date. In the event that one or more of the
foregoing conditions in this Article VIII is not fulfilled as of August 31,
1998, PSI may, upon notice to Speer and on or prior to the Closing Date, elect
not to consummate the transactions provided for herein, or may waive the
condition and proceed to Closing, but any breach of condition, warranty,
representation or covenant known to PSI at the Closing Date as to which PSI
does not make a claim by the Closing Date shall be deemed to have been waived.
ARTICLE X
CLOSING
The actual consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place on the fifth business day following
the last to occur of the conditions set forth in Articles VIII and IX (the
"Closing Date") at the offices of Baker & McKenzie in Washington, D.C. The
Closing Date may be set at such other date or at such other place as shall be
fixed by agreement of the parties hereto.
ARTICLE XI
OBLIGATIONS AT THE CLOSING
11.1. PSI's Obligations. At the Closing, PSI shall deliver to Speer
or Speer Communications in the event of the Alternative Transaction:
(a) Certificates signed by the Chief Executive Officer
and Chief Financial Officer of PSI, to the effect that, to the actual knowledge
of such officers, each of the representations and warranties made by PSI
hereunder is true and correct in all material respects as of the Closing Date
(or, if any such representation or warranty is untrue or incorrect in any
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material respect, specifying the respect in which it is untrue or incorrect),
and that PSI has fulfilled its covenants hereunder in all material respects as
of the Closing Date (or, if any such covenant is unfulfilled in any material
respect, specifying the respect in which it is unfulfilled), and that PSI has
fulfilled the conditions precedent to Speer's obligations to consummate the
purchase contemplated by this Agreement in all material respects (or, if any
such condition is unfulfilled in any material respect, specifying the respect
in which it is unfulfilled);
(b) A copy of resolutions adopted by the Board of
Directors and stockholders of PSI, certified by the Secretary of PSI, approving
and authorizing or ratifying the execution and delivery of this Agreement, and
the performance by PSI of its obligations hereunder and thereunder;
(c) An opinion of Troutman & Sanders or Foley & Lardner,
counsel for PSI, addressed to Speer, in form and substance satisfactory to
Speer;
(d) [Intentionally Omitted];
(e) Certificates representing all of the shares of PSI
Common Stock in the PSI Consideration in the amounts and in the names of such
Speer Entities as designated prior to the Closing by Speer Communications; and
(f) The Registration Rights Agreement set forth as
Exhibit 11.1.5 executed by an authorized officer of PSI.
11.2. Speer's Obligations. At the Closing Speer or, in the event of
the Alternative Transaction, Speer Communications shall deliver to PSI:
(a) Certificates signed by the Chief Operating Officer
and Chief Financial Officer of the general partner of each Speer Entity to the
effect that, to the best of the knowledge of such officers, each of the
representations and warranties made by Speer or in the case of the Alternative
Transaction, Speer Communications and SVM hereunder are true and correct in all
material respects as of the Closing Date (or, if any such representation or
warranty is untrue or incorrect in any material respect, specifying the respect
in which it is untrue or incorrect), and that Speer or in the case of the
Alternative Transaction, Speer Communications and SVM has fulfilled its
covenants hereunder in all material respects as of the Closing Date (or, if any
such covenant is unfulfilled in any material respect, specifying the respect in
which it is unfulfilled), and that Speer or in the case of the Alternative
Transaction, Speer Communications and SVM has fulfilled the conditions
precedent to PSI's obligations to consummate the purchase contemplated by this
Agreement (or, if any such condition is unfulfilled in any material respect,
specifying the respect in which it is unfulfilled);
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(b) A copy of resolutions adopted by each limited
partnership included in Speer or in the case of the Alternative Transaction,
Speer Communications and SVM, certified by an officer or authorized person of,
their respective general partner, authorizing or ratifying the execution and
delivery of this Agreement and the performance by Speer of its respective
obligations hereunder;
(c) An opinion of Baker & McKenzie or Burton, Bartlett &
Glogovac, counsel for Speer, addressed to PSI, in form and substance
satisfactory to PSI; and
(d) Current funds in the amount specified in Article 2
(subject to adjustment pursuant to Section 6.7).
(e) In the event the Alternative Transaction is not
elected, the Assignment and Assumption Agreement referred to in Article I and
such bills of sale, deeds, assignments and other transaction documents as shall
be required to effectuate the transfer of the Speer Assets to PSI.
(f) In the event the Alternative Transaction is not
elected, documents satisfactory to PSI evidencing transfer and conveyance of
title to the real estate contemplated in the Real Estate Transfer Agreement
referred to Section 1.3.
(g) In the event the Alternative Transaction is not
elected, certificates representing all of the shares of capital stock of PVS to
be transferred to PSI pursuant to Article I, duly endorsed for transfer to or
accompanied by appropriate instruments of transfer to PSI.
(h) Certificates representing all of the outstanding
partnership interests in SVM duly endorsed for transfer to or accompanied by
appropriate instruments transferring to PSI.
ARTICLE XII
FURTHER COVENANTS OF PSI AND SPEER
PSI and Speer or, in the event of the Alternative Transaction, Speer
Communications and SVM shall, as described below, each perform the indicated
tasks designated to be performed by them:
12.1. Joint Notice. After the Closing, PSI and Speer shall
cooperate, to the extent practicable and reasonable, in giving joint notice of
the consummated transactions to each customer, creditor, distributor, sales
representative and supplier of the business of PSI.
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12.2. Further Assurances. PSI agrees that, from time to time and
without further consideration, it will execute and deliver such further
documents and take such other action as Speer may require more effectively to
transfer to and vest in Speer and put Speer in possession of the shares
included in the Share Exchange Consideration and all right and interest in the
shares included in the Share Exchange Consideration. Speer agrees that, from
time to time and without further consideration, it will execute and deliver
such further documents and take such other action as PSI may require more
effectively to transfer to and invest in PSI and put PSI in possession of the
Speer Assets and all right, title and interests in the Speer Assets, including,
without limitation, the Equity Interests and the Cash or in the event the
Alternative Transaction is elected, possession of the assets of SVM and the
cash to be contributed in the Alternative Transaction.
12.3. Registration Rights. PSI will grant registration rights to
Speer and its Affiliates pursuant to the Registration Rights Agreement set
forth as Exhibit 11.1.5 hereto.
12.4 Further Arrangements. Work together diligently to have all
appropriate federal, state, local and foreign authorizations, permits and
approvals necessary to the operation of the Businesses (as Speer operates them
as of the date of this Agreement, or as operated by SVM in the case of the
Alternative Transaction), transferred, reassigned or issued to PSI. If PSI and
Speer are unable by Closing to secure in PSI's name all government permits
necessary to conduct the Businesses in PSI's name after Closing, then Speer
(through the entity which previously conducted the relevant Business) or SVM in
the case of the Alternative Transaction will cooperate with PSI so that PSI can
conduct such Business after Closing in such Speer entity's name (but with PSI
retaining and being solely responsible for all economic benefits and burdens of
such Business) until such time as PSI secures all such government permits.
12.5 Bulk Sales Law. As an inducement to PSI to waive compliance
with the provisions of any applicable bulk sales or transfer laws, Speer hereby
agrees that all of its debts, obligations and liabilities of Speer which are
not expressly assumed by PSI under this Agreement will be paid and discharged
by Speer as and when they become due and payable in the ordinary course of
business. In the event the Alternative Transaction is not elected, Speer
further agrees to indemnify and hold PSI harmless from any and all liabilities
incurred by PSI by reason of or arising out of claims made by creditors with
respect to any non-compliance with any applicable bulk sales or transfer laws
(except to the extent such claims constitute Assumed Liabilities).
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ARTICLE XIII
EXPENSES WITH RESPECT TO TRANSACTION
PSI agrees that it will pay all fees, costs and expenses incurred by
it in connection with this transaction, including, without limitation, the fees
and expenses of its attorneys, accountants and other persons, and no portion
thereof shall be paid by Speer. Speer agrees that it will pay all fees, costs
and expenses incurred by it in connection with this transaction, including,
without limitation, the fees and expenses of its attorneys, accountants and
other persons, and no portion thereof shall be paid by PSI. Notwithstanding
the foregoing, PSI and Speer shall share equally any fees accompanying filings
required to be made to governmental agencies in connection with the
transactions contemplated by this Agreement.
ARTICLE XIV
BROKERS
Each party hereby agrees to indemnify and save and hold harmless the
other parties, their shareholders, directors and officers from and against any
and all claims, losses, damages, costs or expenses of any kind or character
(including attorneys' fees) arising out of or resulting from any agreement,
arrangement or understanding alleged to have been made by such party with any
broker or finder in connection with this Agreement or the transactions
contemplated hereby, and to supply at Closing a letter releasing the other
parties to this Agreement from the claims of any such broker and finder.
ARTICLE XV
INDEMNIFICATION
15.1. Indemnification by Speer.
(a) From and after the Closing of the Transaction and
subject to the limitations set forth in Section 15.2(a) and (c), Speer shall
indemnify and hold harmless PSI and its officers, directors, employees,
shareholders, Affiliates, successors and permitted assigns from all Losses
resulting from (i) a breach by Speer of any representation or warranty under
this Agreement (after
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giving effect to any supplement or amendment to the Speer Disclosure Letter
agreed to or accepted in writing by PSI); (ii) a breach by Speer of a covenant
or agreement under this Agreement; (iii) any liabilities arising after the
Closing Date and relating to the Speer Assets or the conduct of the Businesses
prior to the Closing Date other than those assumed by PSI pursuant to the
Assignment and Assumption Agreement referred to in Section 1.1 or disclosed in
Section 4.9 of the Speer Disclosure Letter and other than liabilities of PVS
set forth in Schedule 1.1(b), or (iv) any liabilities resulting from any
applicable bulk sales or transfer laws as set forth in Section 12.5. The
foregoing obligation of Speer shall not arise and will not be enforceable
against Speer in the event the Alternative Transaction is closed.
(b) From and after the Closing of the Alternative
Transaction and subject to the limitations set forth in Section 15.2(b) and
(c), Speer Communications shall indemnify and hold harmless PSI and its
officers, directors, employees, shareholders, Affiliates, successors and
permitted assigns from all Losses resulting from (i) a breach by Speer
Communications or SVM of any representation or warranty by such entities under
this Agreement (after giving effect to any supplement or amendment to the Speer
Disclosure Letter agreed to or accepted in writing by PSI) or (ii) a breach of
Speer Communications or SVM of a covenant or agreement under this Agreement.
The foregoing obligation of Speer Communications and SVM shall not arise and
will not be enforceable against Speer Communications and SVM in the event the
Transaction is closed and is in lieu of, and not in addition to, the
obligations of Speer set forth in Section 15.1(a).
15.2 Limitations.
(a) Unless and until the Losses incurred by PSI exceed
$500,000, PSI shall not be entitled to indemnification under Section 15.1(a);
provided, however, that once the damages exceed $500,000, PSI shall be entitled
to indemnification for the full amount of such Losses. The maximum liability
of Speer pursuant to clause (i) of Section 15.1(a) shall be the amount of
$10,000,000; provided, however there shall be no limitations on Losses
resulting from a breach by Speer of a representation or warranty which is the
result of fraud or willful misrepresentation on the part of Speer. Any claim
for Losses under clause (i) of Section 15.1(a) may be satisfied by an exchange
of shares of PSI Common Stock valued at the greater of the fair market value of
such stock as of the Closing Date or as of the date such claim is asserted
against Speer or in cash or a combination of both cash and stock at the sole
discretion of Speer.
(b) Unless and until the Losses incurred by PSI exceed
$100,000, PSI shall not be entitled to indemnification under Section 15.1(b);
provided, however, that once the damages exceed $100,000. PSI shall be entitled
to indemnification for the full amount of such Losses. The maximum liability
of Speer pursuant to clause (i) of Section 15.1)(b) shall be the amount of $1
million; provided, however, there shall be no limitation on Losses resulting
from a breach by
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Speer Communications or SVM which is the result of fraud or wilful
misrepresentation on the part of Speer Communications or SVM.
(c) The agreements, representations and warranties and
covenants of Speer or Speer Communications and SVM, as the case may be,
contained in this Agreement shall survive the Closing until the one (1) year
anniversary of the Closing Date. Notwithstanding the preceding sentence, any
covenant, agreement, representation or warranty in respect of which indemnity
may be sought under Section 15.1 shall survive the time at which it would
otherwise terminate pursuant to the preceding sentences, if notice of the
inaccuracy or breach thereof giving rise to such right to indemnity shall have
been given to the party against whom such indemnity may be sought prior to such
time.
15.3. Notice. The Indemnified Party (as hereinafter defined) shall
give prompt written notice to the Indemnifying Party of any claim or event
known to it which does or may give rise to a claim by the Indemnified Party
against the Indemnifying Party based on this Agreement, stating the nature and
basis of said claims or events and the amounts thereof, to the extent known.
Such notice shall be given in accordance with Article XVI hereof. Such notice
shall be a condition precedent to any liability of the Indemnifying Party
hereunder. Notwithstanding the foregoing, the failure to give reasonably
prompt written notice by the Indemnified Party shall not defeat a claim made
pursuant hereto except to the extent that the Indemnifying Party can establish
that it has been injured by such delay.
15.4. Defense of Claims. In the event of any claim, action, suit or
proceeding made or brought by third parties against the Indemnified Party, the
Indemnified Party shall give written notice of such claim, action, suit or
proceeding as described in Section 15.4 above, with a copy of the claim,
process and all legal pleadings with respect thereto. After notification, the
Indemnifying Party shall participate in, and jointly with any other
Indemnifying Party similarly notified, assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party at the time of such
assumption. The Indemnified Party shall have the right to employ its own
counsel and such counsel may participate in such action, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party, when
and as incurred, unless (i) the employment of counsel by such Indemnified Party
has been authorized by the Indemnifying Party, or (ii) the Indemnifying Party
shall not in fact have employed counsel to assume the defense of such action
reasonably satisfactory to the Indemnified Party at the time of the
Indemnifying Party's assumption of the defense. If clause (ii) of the
preceding sentence shall be applicable, then counsel for the Indemnified Party
shall have the right to direct the defense of such claim, action, suit or
proceeding on behalf of the Indemnified Party. The Indemnified Party and the
Indemnifying Party, as the case may be, shall be kept fully informed of such
claim, action, suit or proceeding at all stages thereof whether or not such
party is represented by its own counsel.
- 44 -
<PAGE> 55
15.5. Definitions.
(i) As used herein, the term "Losses" means any and all claims,
demands, costs, losses, damages and liabilities, net of any insurance proceeds
received. The term "Losses" includes reasonable attorneys' fees and costs
incurred in the investigation and defense of a claim, demand, cost, loss or
liability.
(ii) As used herein, the term "Indemnifying Party" shall mean the
person or persons against whom a party (the "Indemnified Party") makes a claim
for indemnification hereunder.
ARTICLE XVI
NOTICES
16.1. Notice. All notices required to be given under the terms of
this Agreement or which any of the parties may desire to give hereunder shall
be in writing and delivered personally or sent by express delivery, or by
facsimile, or by registered or certified mail, with proof of receipt, postage
and expenses prepaid, return receipt requested, addressed as follows:
(a) As to Speer, addressed to:
Speer Communications Holdings
Limited Partnership
3201 Dickerson Pike
Nashville, Tennessee 37207
Facsimile: (615) 650-6292
Attention: Roy M. Speer
with a copy thereof addressed to:
Baker & McKenzie
815 Connecticut Avenue, N.W.
Washington, D.C. 20006-4078
Facsimile (202) 452-7074
Attention: Thomas J. Egan, Jr., Esq.
or to such other address or addresses and to the attention of such other person
or persons as Speer may from time to time designate in writing to PSI; and
- 45 -
<PAGE> 56
(b) As to PSI, addressed to:
Precision Systems, Inc.
11800 30th Court North
St. Petersburg, Florida 33716-1846
Facsimile: (813) 573-9193
Attention: Kenneth M. Clinebell
with a copy thereof addressed to:
Troutman Sanders LLP
NationsBank Plaza
600 Peachtree Street, N.E.
Suite 5200
Atlanta, Georgia 30308-2216
Facsimile: (404) 885-3995
Attention: James L. Smith, III, Esq.
and
Foley & Lardner
100 North Tampa Street
Suite 2700
Tampa, Florida 33602
Facsimile: (813) 221-4210
Attention: David L. Robbins, Esq.
or to such other address or addresses and to the attention of such other person
or persons as PSI may from time to time designate in writing to Speer.
16.2. Receipt of Notice. Any notice given in accordance with this
Article XVII shall be deemed to have been given when delivered personally, or
when received if sent via express delivery; facsimile; or registered or
certified mail, postage prepaid and return receipt requested.
- 46 -
<PAGE> 57
ARTICLE XVII
EFFECTIVENESS AND ASSIGNABILITY OF AGREEMENT
This Agreement shall become effective when executed and delivered by
Speer and PSI, and shall be binding in all respects upon the respective
successors and permitted assigns of each of the parties hereto. No party
hereto may assign this Agreement in whole or in part without first obtaining
the written consent of the other parties, except that Speer may assign its
rights and obligations under this Agreement to one or more Affiliates so long
as Speer remains responsible for its performance hereunder.
ARTICLE XVIII
ANNOUNCEMENT OF TRANSACTION
Subject to the provisions of Section 12.1, no party hereto shall make
a public announcement of any of the transactions contemplated by this Agreement
without approval of the other parties, unless required by law or by applicable
stock exchange requirements, and in any event such person shall provide notice
accompanied by a copy of all proposed announcements to the other parties.
ARTICLE XIX
COMPLETENESS OF AGREEMENT
This Agreement and the Schedules and Exhibits hereto and Closing
documents represent the entire contract between the parties with respect to the
subject matter hereof and supersede all offers, proposals, statements,
representations and agreements with respect to the subject matter hereof. The
Exhibits and Schedules hereto and Closing documents are incorporated herein by
reference, and shall be deemed to be included in any reference to this
Agreement. This Agreement may not be amended except by action of each of the
parties hereto set forth in an instrument in writing signed on behalf of each
of the parties hereto.
- 47 -
<PAGE> 58
ARTICLE XX
CAPTIONS
The captions to the Articles and Sections contained in this Agreement
are for reference only, do not form a substantive part of this Agreement and
shall not restrict nor enlarge any substantive provision of this Agreement.
ARTICLE XXI
APPLICABLE LAW
This Agreement, the Schedules and Exhibits, and all other documents
given in connection herewith, shall be construed in accordance with the laws of
the State of Florida, without regard to the principles of conflicts of laws.
ARTICLE XXII
CHOICE OF FORUM; VENUE; SERVICE OF PROCESS
Any suit, action, or proceeding among any or all of Speer and PSI
relating to this Agreement, to any document, instrument, or agreement delivered
pursuant hereto, referred to herein, or contemplated hereby, or in any other
manner arising out of or relating to the transactions contemplated by or
referenced in this Agreement, shall be commenced and maintained exclusively in
the United States District Court for the Middle District of Tampa, Florida
Division, or, if that Court lacks jurisdiction over the subject matter, in a
state court of competent subject-matter jurisdiction sitting in Pinellas
County, Florida. Speer and PSI hereby submit themselves unconditionally and
irrevocably to the personal jurisdiction of such courts. Speer and PSI further
agree that venue shall be in Pinellas County, Florida. Speer and PSI
irrevocably waive any objection to such personal jurisdiction or venue
including, but not limited to, the objection that any suit, action, or
proceeding brought in Pinellas County, Florida, has been brought in an
inconvenient forum. Speer and PSI irrevocably agree that process issuing from
such courts may be served on them, either personally or by certified mail,
return receipt requested, at the addresses given in Article XVII hereof; and
Speer and PSI further irrevocably waive any objection to service of process
made in such manner and at such addresses, including without limitation any
objection
- 48 -
<PAGE> 59
that service in such manner and at such addresses is not authorized by the
local or procedural laws of Florida.
ARTICLE XXIII
COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be considered an original but all of which shall constitute but one
and the same Agreement by and among the parties.
ARTICLE XXIV
NO THIRD PARTY BENEFICIARY
This Agreement is intended to inure to the benefit of Speer and PSI
only; and no third party shall have any rights, express or implied, by reason
of this Agreement.
ARTICLE XXV
UNILATERAL RIGHT TO WAIVE FAILURES OF OTHER PARTIES
25.1. Waiver. Any of the parties may:
(a) Extend in writing the time for the performance of any
of the obligations herein contained to be performed for the benefit of such
party;
(b) Waive in writing any inaccuracies in the
representations and warranties made to it contained in this Agreement or any
Exhibit or Schedule hereto or any certificate or certificates delivered by
another party to this Agreement;
(c) Waive in writing the failure in performance of any of
the conditions herein expressed for its benefit; and
- 49 -
<PAGE> 60
(d) Waive in writing compliance with any of the covenants
herein contained for its benefit.
25.2. Effect of Waiver. No such waiver or extension shall be valid
unless in writing and signed by the party granting the waiver or extension, and
no such waiver or extension shall be construed to excuse or mitigate any
subsequent breach or violation of this Agreement not specifically covered by
such waiver.
ARTICLE XXVI
SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect the other provisions hereof, and the Agreement shall be
construed in all respects as if such invalid or unenforceable provisions were
omitted. Furthermore, upon the request of any party hereto, the parties to
this Agreement shall add, in lieu of such invalid or unenforceable provisions,
provisions as similar in terms to such invalid or unenforceable provisions as
may be possible and legal, valid and enforceable.
ARTICLE XXVII
TERMINATION
27.1. Termination Events. This Agreement may be terminated at any
time prior to the Closing Date as follows:
(a) By mutual written consent of Speer and PSI; or
(b) By PSI, upon written notice to Speer:
(1) if the Closing shall not have occurred on or
before August 31, 1998, due to a failure of any of the conditions precedent set
forth in Article IX; or
(2) if Speer fails to perform in any material
respect any of its respective obligations under this Agreement;
- 50 -
<PAGE> 61
(3) if, after a bona fide proposal is made by a
third party to PSI or its stockholders to engage in an "acquisition
transaction", as hereinafter defined, PSI's Board of Directors shall have
determined, upon the basis of advice of outside counsel, that such action is
necessary in order for the Board of Directors to act in the manner consistent
with its fiduciary obligation under applicable law; or
(4) if the Assets, properties and rights of Speer
are damaged or destroyed by reason of fire or other casualty to such an extent
that the operations of the Businesses are substantially impaired.
(c) By Speer, upon written notice to PSI:
(1) if the Closing shall not have occurred on or
before August 31, 1998, due to a failure of any of the conditions precedent set
forth in Article VII; or
(2) if PSI fails to perform in any material
respect any of its obligations under this Agreement; or
(3) if the assets, properties and rights of PSI
are damaged or destroyed by reason of fire or other casualty to such an extent
that the operations of the business of PSI are substantially impaired.
27.2. Effect of Termination. In the event of the termination of
this Agreement as provided in Section 27.1, this Agreement shall forthwith
become void, and there shall be no liability on the part of Speer or PSI,
except as set forth in Section 27.3 or Articles XIII and XIV hereof; provided
that the foregoing shall not relieve any party for liability for damages
actually incurred as a result of any breach of this Agreement.
27.3 Third Party Termination. In recognition of the efforts,
expenses and other opportunities foregone by Speer while structuring the
Transaction, the parties agree that PSI shall pay to Speer the termination fee
of One Million Dollars ($1,000,000) in cash on demand if, during a period of
eighteen (18) months after the date hereof but prior to the earlier of (i) the
Closing Date or (ii) termination of this Agreement in accordance with its terms
(other than a termination by PSI pursuant to Section 27.1(b)(3)) any of the
following occurs:
(a) the acquisition by any person other than Speer or an
Affiliate of Speer of beneficial ownership of 20% or more of the then
outstanding voting power of PSI;
(b) PSI, without having received Speer's prior written
consent, shall have entered into an agreement to engage in an Acquisition
Transaction (as defined herein) with any
- 51 -
<PAGE> 62
person (the term "person" for purposes of this Section 27.2 having the meaning
assigned thereto in Sections 3(a)(9) and 3(d)(3) of the Exchange Act and the
rules and regulations thereunder) other than Speer or its Affiliates or the
Board of Directors of PSI shall have recommended that the stockholders of PSI
approve or accept any Acquisition Transaction with any person other than Speer
or an Affiliate of Speer. For purposes of this Agreement, "Acquisition
Transaction" shall mean (x) a merger or consolidation, or any similar
transaction, involving PSI, (y) a purchase, lease or other acquisition of all
or substantially all of the assets of PSI or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 20% or more of the voting power of PSI;
or
(c) after a bona fide proposal is made by a third party
to PSI or its stockholders to engage in an Acquisition Transaction, (i) PSI
shall have willfully breached any covenant or obligation contained in the
Agreement and such breach would entitle Speer to terminate the Agreement or
(ii) the holders of PSI Common Stock shall not have approved the Transaction
or the Alternative Transaction at the Stockholder Meeting, or the Stockholder
Meeting shall not have been held or shall have been canceled prior to
termination of the Agreement or (iii) PSI's board of directors shall have
withdrawn or modified in a manner adverse to Speer the recommendation of PSI's
board of directors with respect to the Agreement or (iv) PSI shall have
terminated this Agreement pursuant to Section 27.1.(b)(3).
[Remainder Of This Page Intentionally Left Blank]
- 52 -
<PAGE> 63
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
SPEER COMMUNICATIONS HOLDINGS
LIMITED PARTNERSHIP,
a Nevada Limited partnership
By: /s/ Roy M. Speer
---------------------------------------
Roy M. Speer
President, Holdings Investments, Inc.
General Partner of Speer Communications
Holdings Limited Partnership
SPEER VIRTUAL MEDIA LIMITED PARTNERSHIP,
a Nevada limited partnership
By: /s/ Roy M. Speer
---------------------------------------
Roy M. Speer
President, Magnatone Entertainment
Group, Inc.
General Partner of Speer Virtual Media
Limited Partnership
SPEER WORLD WIDE DIGITAL TRANSMISSION &
VAULTING LIMITED PARTNERSHIP,
a Nevada limited partnership
By: /s/ Roy M. Speer
---------------------------------------
Roy M. Speer
President, Speer World Wide, Inc.
General Partner of Speer World Wide
Digital Transmission & Vaulting
Limited Partnership
- 53 -
<PAGE> 64
SPEER PRODUCTIONS LIMITED PARTNERSHIP,
a Nevada limited partnership
By: /s/ Roy M. Speer
-----------------------------------------
Roy M. Speer
President, Dickerson Communications, Inc.
General Partner of Speer Productions
Limited Partnership
PRECISION SYSTEMS, INC.,
a Delaware corporation
By: /s/ Roy M. Speer
-----------------------------------------
Willem Huisman
CEO and President
- 54 -
<PAGE> 65
SCHEDULE 1.1(a)(i)
SPEER ASSETS
The Speer Assets shall include the assets listed in Section 4.5 of the Speer
Disclosure Letter and the intellectual property rights identified in Section
4.7 of the Disclosure Letter.
<PAGE> 66
SCHEDULE 1.1(a)
EXCLUDED ASSETS
1. Cash held by the Speer Entities as of the Closing Date
2. Accounts Receivable of the Speer Entities as of the Closing Date
3. Notes receivable from related parties held by Speer Communications
(other than obligations of PVS to Speer Communications which will be
forgiven at Closing)
4. Amounts due from affiliates totaling: $128,652 (Speer Communications),
$112,644 (Speer World Wide), and
$271,695 (Speer Productions)
5. The partnership interests in the Speer Entities, the Ritz Limited
Partnership, PVS Speer-Atlanta Limited Partnership, Speer Transmission
Services Limited Partnership, Speer World Wide Digital Consulting
Limited Partnership and the capital stock of MOR Music TV, Inc. held
by Speer Communications and the capital stock of Entertainment Made
Convenient (EmC(3)) International Holding, B.V. held by Speer World
Wide
6. All rights relating to that certain senior secured interim loan and
security agreement by and between intouch Group, Inc., a California
corporation, and Speer Communications and any related litigation
<PAGE> 67
SCHEDULE 1.1(b)
ASSUMED LIABILITIES
- - Liabilities owed by SVM and PVS and identified in Schedule 4.9 of the
Speer Disclosure Letter which amount is exclusive of notes payable by
PVS and SVM to affiliates of Speer and interest accrued on such notes
- - The agreements identified in Section 4.3 of the Speer Disclosure
Letter
<PAGE> 68
SCHEDULE 3
LIST OF SUBSIDIARIES OF PRECISION SYSTEMS, INC. AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Name of Subsidiary State or Country of Incorporation
- ------------------------------------------------------------------------------------------------------------
<S> <C>
BFD Productions, Inc. . . . . . . . . . . . . . . . . . . . . . . . . Nevada
Vicorp Canada Incorporated . . . . . . . . . . . . . . . . . . . . . Canada
Vicorp Systems Espana, S.A. . . . . . . . . . . . . . . . . . . . . . Spain
Vicorp Italia, s.r.l . . . . . . . . . . . . . . . . . . . . . . . . Italy
Interactive Services, Inc. . . . . . . . . . . . . . . . . . . . . . Delaware
The Renaissance Group . . . . . . . . . . . . . . . . . . . . . . . . California
Vicorp, N.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Netherlands Antilles
Vicorp Europe Holding B.V. . . . . . . . . . . . . . . . . . . . . . The Netherlands
Vicorp Nederland B.V. . . . . . . . . . . . . . . . . . . . . . . . . The Netherlands
Vicorp International Services Nederland B.V. . . . . . . . . . . . . The Netherlands
Vicorp International Services, Belux . . . . . . . . . . . . . . . . Belgium
Vicorp France S.A. . . . . . . . . . . . . . . . . . . . . . . . . . France
Vicorp Denmark A/S . . . . . . . . . . . . . . . . . . . . . . . . . Denmark
Vicorp Sweden A/B . . . . . . . . . . . . . . . . . . . . . . . . . . Sweden
Vicorp U. K. Holding . . . . . . . . . . . . . . . . . . . . . . . . England
Vicorp U. K. Limited . . . . . . . . . . . . . . . . . . . . . . . . England
Vicorp Finland OY . . . . . . . . . . . . . . . . . . . . . . . . . . Finland
Vicorp Interactive Systems, Inc. . . . . . . . . . . . . . . . . . . Massachusetts
Vicorp Deutschland GmbH . . . . . . . . . . . . . . . . . . . . . . . Germany
Vicorp Asia Holding Limited . . . . . . . . . . . . . . . . . . . . . Hong Kong
Vicorp Asia-Pacific Services Pte Ltd. . . . . . . . . . . . . . . . . Singapore
Vicorp Geminus GmbH . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Belle System Networking ApS . . . . . . . . . . . . . . . . . . . . . Denmark
</TABLE>
<PAGE> 1
EXHIBIT B
REAL ESTATE TRANSFER AGREEMENT
THIS AGREEMENT made and entered into as of the 22nd day of April,
1998, by and between RMS LIMITED PARTNERSHIP, a Nevada limited partnership
(hereinafter referred to as "Seller") and PRECISION SYSTEMS, INC., a Delaware
corporation (hereinafter referred to as "Purchaser").
RECITALS:
WHEREAS, Seller desires to sell the hereinafter described property and
Purchaser desires to purchase the same on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, the parties covenant and agree as follows:
1. Purchase and Sale. Seller hereby agrees to sell and convey to
Purchaser and Purchaser hereby agrees to purchase from Seller, subject to the
terms and conditions hereinafter set forth, all that certain parcel of land
(the "Land") lying and being situated in Nashville, Davidson County,
Tennessee, and being more particularly described on Exhibit "A," attached
hereto and made a part hereof for all purposes, together with the following:
(a) All buildings and other improvements situated thereon.
(b) All the rights and appurtenances pertaining thereto, including
any right, title and interest of Seller in and to adjacent
streets, roads, alleys, and rights-of-way;
(c) All fixtures, equipment and machinery owned by Seller and
located on, attached to, or used in connection with the
buildings and other improvements situated on the Land; and
(d) Such other rights, interests and properties as may be
specified in this Agreement to be sold, transferred, assigned,
or conveyed by Seller to Purchaser.
The Land together with the buildings and other improvements, rights, interests,
fixtures, and other properties described above, are collectively called the
"Property."
2. Consideration. The consideration for the transfer of the
Property shall be 3,789,393 shares of the common stock of Purchaser (the
"Purchaser Common Stock") which shall be issued and delivered to Seller at
Closing pursuant to the terms and conditions of that certain Contribution and
Share Exchange Agreement (the "Contribution Agreement") dated as of April 22,
1998, by and among Purchaser and Speer Communications Holdings Limited
Partnership, a Nevada limited partnership, Speer World Wide Digital
Transmission & Vaulting Limited Partnership, a Nevada limited partnership,
Speer Productions Limited Partnership, a Nevada limited partnership and Speer
<PAGE> 2
Virtual Media Limited Partnership, a Nevada limited partnership (collectively
"Seller's Related Entities").
3. Title to the Property. Title to the Property shall be good
and marketable and free of all leases, liens and other encumbrances except for
the following (hereinafter referred to as the "Permitted Exceptions"):
(a) Taxes for the current year, which shall be pro-rated as of the
Closing Date and assumed by Purchaser;
(b) All applicable zoning ordinances of the Metropolitan
Government of Nashville and Davidson County, Tennessee and
other governmental regulations, laws and ordinances governing
the use of the Property; and
(c) Those matters set forth on Exhibit "B" hereto.
4. Title Insurance. Within ten (10) days following the final
execution of this Agreement, Seller shall apply for and furnish Purchaser a
standard ALTA commitment with any documents of record affecting title of the
Property attached thereto, for owner's title insurance covering the Property
issued by a reputable title insurance company selected by Seller and approved
by Purchaser and doing business in Tennessee. Within fifteen (15) days after
the delivery of such commitment to Purchaser, Purchaser shall advise Seller of
its objections to any defect or limitation in title shown thereon (other than
the Permitted Exceptions), and Seller shall then have a reasonable time in
which to cure or remove any such defect. If Seller shall fail to cure or
remove any such defect in title, then, at the election of Purchaser, as
evidenced by written notice to Seller, the sale shall be closed subject to said
matters, or in the alternative, Purchaser may elect to terminate this Agreement
in which event neither party shall have any further claim or rights against the
other; provided that Purchaser shall advise Seller of its election to either so
close this transaction (at the time and otherwise in the manner as herein
provided), or to terminate this Agreement within ten (10) days following notice
from Seller to Purchaser as to any such defect in title that will not be cured
or removed. Notwithstanding anything to the contrary, any defect or limitation
in title created after the date of this Agreement shall be deemed a default of
this Agreement, and at the election of Purchaser, as evidenced by written
notice to Seller, Purchaser may terminate this Agreement, or in the
alternative, may cure any such defect or limitation and deduct such costs of
cure from the consideration to be provided on the Closing Date.
Upon closing of this transaction, Seller, at its expense, shall
provide for the furnishing to Purchaser of an owner's title insurance policy in
the amount of the purchase price covering the Property on standard ALTA Form B
in accordance with the above commitment subject only to the Permitted
Exceptions, such other matters as may be disclosed in the above commitment
which are not objected to by Purchaser as above provided. Seller agrees to
furnish any affidavits or guaranties that may be required by the title insurer
to remove the exception for mechanics' and materialmen's liens or rights of
parties in possession.
2
<PAGE> 3
5. Representations and Warranties and Covenants of Seller.
Seller represents and warrants and covenants to Purchaser as follows:
(a) Seller is a limited partnership (i) duly formed and validly
existing under the laws of the State of Nevada and its
partnership agreement, (ii) fully qualified to do business in
Tennessee, to the extent such qualification is required to
consummate the transactions contemplated by this Agreement,
(iii) having the power, authority and legal right to carry on
the business conducted by it and to engage in the transactions
contemplated by this Agreement, and (iv) having authorized by
all necessary actions of the partners of Seller the execution
and delivery of this Agreement.
(b) Marketable Title. Seller has good, marketable and insurable
title to the Property, free and clear of all mortgages, liens,
encumbrances, leases, tenancies, security interests,
covenants, conditions, restrictions, rights-of-way, easements,
judgments, and other matters affecting title except the
Permitted Exceptions.
(c) No Condemnation Pending or Threatened. There is no pending or
threatened condemnation or similar proceeding affecting the
Property or any portion thereof, nor has Seller knowledge that
any such action is presently contemplated.
(d) Adverse Information. Seller has no information or knowledge
of any change contemplated in any applicable laws, ordinances,
or restrictions, or any judicial or administrative action, or
any action by adjacent landowners, or natural or artificial
conditions upon the Property, which would prevent, limit,
impede, or render more costly Purchaser's contemplated use of
the Property.
(e) Compliance with Laws. Seller has complied in all material
respects with all applicable laws, ordinances, regulations,
statutes, rules, and restrictions pertaining to and affecting
the Property. Performance of this Agreement will not result
in any breach of, or constitute any default under, or result
in the imposition of, any lien or encumbrance under the
Property under any agreement or other instrument to which
Seller is a party or by which Seller or the Property might be
bound.
(f) Pending Litigation. There are no legal actions, suits, or
other legal or administrative proceedings, including
condemnation cases and matters of applications before any
governmental authority having zoning jurisdiction of the
Property, pending or threatened, against the Property, and
Seller is not aware of any facts which might result in any
such action, suit or other proceedings.
(g) Zoning. The Property is zoned under a CS, Commercial Services
zoning classification of the Metropolitan Government of
Nashville and Davidson County, Tennessee. Seller has no
knowledge of any fact, action or proceeding, whether actual,
pending or threatened, which would result in a modification or
the termination of such zoning.
3
<PAGE> 4
(h) No Special Assessments. No portion of the Property is
affected by any special assessments, whether or not
constituting a lien thereon.
(i) Access to Highways and Roads. The Property has full, free,
and adequate access to and from public highways and roads, and
Seller has no knowledge of any fact or condition which would
result in the termination of such access.
(j) Parties in Possession. There are no parties in possession of
any portion of the Property as lessees, tenants at sufferance
or trespassers, except as expressly set forth herein.
(k) Special Flood Hazard Area. To the best of Seller's knowledge,
none of the Property is located within a special flood hazard
area.
(l) Existing Improvements. All buildings and improvements
(including all streets, curbs, sidewalks, sewers and other
utilities) have been completed and installed in accordance
with the plans and specifications approved by the various
governmental authorities having jurisdiction. Permanent
certificates of occupancy, all licenses, permits,
authorizations, approvals required by all governmental
authorities having jurisdiction have been issued for the
buildings and improvements and have been paid for, and, as of
the Closing, all of the same will be in full force and effect.
(m) No Violations of Zoning Laws, Etc. No zoning, building, or
similar law, ordinance, or regulation is, or as of the Closing
will be, violated by the continued maintenance, operation, or
use of any buildings, improvements, or structures presently
erected on the Property or by the continued maintenance,
operation, or use of the parking areas. There are not, and as
of the Closing there will not be, any uncured violations of
federal, state, or municipal laws, ordinances, orders,
regulations, or requirements affecting any portions of the
Property. No heating equipment, incinerators, or other
burning devices violate, or as of the Closing will violate,
any applicable federal, state, or municipal laws, ordinances,
orders, regulations or requirements.
(n) Maintenance of Property. Subsequent to the execution of this
Agreement and until the Closing, the Property will be kept in
sound order and all repairs and replacements, structural and
nonstructural, ordinary and extraordinary, required with
respect to any portion of the Property will be made. There
are not, and as of the Closing there will not be any
structural defects in any of the buildings or other
improvements erected on the Property. The heating, air
conditioning, electrical, plumbing, and other building
equipment, including the roof, are, and as of the Closing will
be, in good condition and working order and adequate in
quantity and quality for normal operations.
(o) Environmental Matters. Except as disclosed in Section 4.16 of
the Speer Disclosure Letter of the Contribution Agreement, to
the best of Seller's knowledge, the Property and the use
thereof is not in direct or indirect violation of any local,
state or federal
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<PAGE> 5
law, rule or regulation pertaining to environmental
regulation, contamination, or cleanup (collectively,
"Environmental Laws"), including without limitation the
Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the
Superfund Amendments and Reauthorization Act, the Federal
Water Control Act, the Occupational Safety and Health Act,
state and federal super-lien and environmental cleanup
statutes, and that the Property does not contain asbestos or
any underground storage tank and is not subject to any private
or governmental claims, liens or judicial or administrative
notices or actions relating to hazardous and/or toxic
substances, waste, materials, pollutants or contaminates, or
any other substances or materials which are included under or
regulated by Environmental Laws (said materials, together with
asbestos, petroleum and petroleum-derived products,
the"Hazardous Substances", and the Property has not been by
the Seller used for the storage, processing, treatment or
disposal of Hazardous Substances and to the best of Seller's
knowledge no Hazardous Substances have been released,
introduced, spilled, discharged or disposed of on the
Property.
(p) Survival of Representations and Warranties. The
representations and warranties set forth in this Article 5
shall be continuing and shall be true and correct on and as of
the Closing Date with the same force and effect as if made at
the time, and all of such representations and warranties shall
survive the Closing for a period of one (1) year after the
Closing Date.
(q) Investment. Seller is acquiring the Purchaser Common Stock
under this Agreement for investment only and not with a view
to the public distribution or resale thereof or any interest
therein in violation of the Securities Act of 1933, as amended
(the "Securities Act") or any other applicable federal or
state securities laws or regulations. Seller is familiar with
the meaning of such representation and fully understands the
restrictions and limitations that are imposed thereby.
Purchaser has disclosed to Seller that Seller must bear the
economic risk of the investment in the Purchaser Common Stock
for an indefinite period of time because the Purchaser Common
Stock has not been registered under the Securities Act or any
state blue sky law and therefore, the Purchaser Common Stock
cannot be sold unless it is subsequently registered under the
Securities Act and applicable state blue sky laws or an
exemption for such registration is available. Seller is able
and prepared to bear the economic risks of investing in and
holding the Purchaser Common Stock for an indefinite period of
time. At all times during the negotiation of this Agreement
and at the date hereof, Seller has such knowledge and
experience in financial and business matters that it is
capable of evaluating the merits and risk of the investment in
the Purchaser Common Stock. Seller has had access to such
financial and other information and has been afforded the
opportunity to ask such questions of Purchaser and its
representative and has received answers thereto, as it deems
necessary in connection with its decision to acquire the
Purchaser Common Stock.
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<PAGE> 6
6. Representation and Warranties of Purchaser. The warranties
and representations of Purchaser contained in Article III of the Contribution
Agreement are incorporated herein and all such representations and warranties
are hereby made to Seller as if copied in full.
7. Indemnification.
(a) Indemnification from Seller. From and after the Closing
through and until the first anniversary thereof, Seller shall
indemnify and hold harmless Purchaser and its officers,
directors, employees, shareholders, affiliates, successors and
permitted assigns from all Losses (as hereinafter defined)
resulting from a breach by Seller of any representation,
warranty, covenant or agreement under this Agreement, provided
that written notice of Losses (or any event known to Purchaser
which does not or may give rise to Losses) has been given by
Purchaser to Seller on or prior to the first anniversary of
the Closing Date.
(b) Notice. The Indemnified Party (as hereinafter defined) shall
give prompt written notice to the Indemnifying Party of any
claim or event known to it which does or may give rise to a
claim by the Indemnified Party against the Indemnifying Party
based on this Agreement, stating the nature and basis of said
claims or event and the amounts thereof, to the extent known.
Such notice shall be given in accordance with Section 12
herein. Such notice shall be a condition precedent to any
liability of the Indemnifying Party hereunder.
Notwithstanding the foregoing, the failure to give reasonably
prompt written notice by the Indemnified Party shall not
defeat a claim made pursuant hereto except to the extent that
the Indemnifying Party can establish that it has been injured
by such delay.
(c) Defense of Claims. In the event of any claim, action, suit or
proceeding made or brought by third parties against the
Indemnified Party, the Indemnified Party shall given written
notice of such claim, action, suit or proceeding as described
in Section 12 herein, with a copy of the claim, process and
all legal pleadings with respect thereto. After notification,
the Indemnifying Party shall participate in, and jointly with
any other Indemnifying Party similarly notified, assume the
defense thereof, with counsel reasonably satisfactory to such
Indemnified Party at the time of such assumption. The
Indemnified Party shall have the right to employ its own
counsel and such counsel may participate in such action, but
the fees and expenses of such counsel shall be at the expense
of the Indemnified Party, when and as incurred, unless (i) the
employment of counsel by such Indemnified Party has been
authorized by the Indemnifying Party, of (ii) the Indemnifying
Party shall not in fact have employed counsel to assume the
defense of such action reasonably satisfactory to the
Indemnified Party at the time of the Indemnifying Party's
assumption of the defense. If clause (ii) of the preceding
sentence shall be applicable, then counsel for the Indemnified
Party shall have the right to direct the defense of such
claim, action, suit or proceeding on behalf of the Indemnified
Party. The Indemnified Party and the Indemnifying Party, as
the case may be, shall be kept fully informed of such claim,
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<PAGE> 7
action, suit or proceeding at all stages thereof whether or
not such party is represented by its own counsel.
(d) Definitions.
(i) As used herein, the term "Losses" means any and all
claims, demands, costs, losses, damages and
liabilities, net of any insurance proceeds received.
The term "Losses" includes reasonable attorneys' fees
and costs incurred in the investigation and defense
of a claim, demand, cost, loss or liability
notwithstanding anything herein contained to the
contrary, in no event shall the Indemnifying Party be
liable for Losses in an amount less than $100,000 or
more than $1,000,000.
(ii) As used herein, the term "Indemnifying Party" shall
mean the person or persons against whom a party (the
"Indemnified Party") makes a claim for
indemnification hereunder.
8. Closing.
(a) Closing Date. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take
place pursuant to the provisions of Article X of the
Contribution Agreement on the date set forth therein (the
"Closing Date").
(b) Conditions to Purchaser's Obligations. The obligations of
Purchaser to consummate the transactions contemplated by this
Agreement are subject to the satisfaction of each of the
following conditions as of the Closing Date, except to the
extent any such condition is waived in whole or in part by
Purchaser in writing at or prior to the Closing:
(i) Satisfaction. The representations and warranties of
Seller contained in this Agreement shall have been
true on the date of this Agreement and on Closing (as
if made as of the Closing Date without limitation to
the "knowledge" or awareness of Seller). Seller
shall have performed all obligations and complied
with all covenants required by this Agreement.
(ii) Satisfaction of Conditions in Contribution Agreement.
All conditions precedent to Closing contained in
Article IX of the Contribution Agreement shall have
been fulfilled, satisfied or waived by Purchaser.
(iii) No Adverse Change. No material and adverse change
shall have occurred, without Purchaser's written
consent, in the state or condition of the Property.
(c) Conditions to Seller's Obligations. The obligations of
Seller to consummate the transactions contemplated by this
Agreement are subject to the satisfaction of each
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<PAGE> 8
of the following conditions as of the Closing Date, except to
the extent any such condition is waived in whole or in part by
Seller in writing at or prior to the Closing.
(i) Satisfaction. The representations and warranties of
Purchaser contained in this Agreement shall have been
true on the date of this Agreement and on Closing.
Purchaser shall have performed all obligations and
complied with all covenants required by this
Agreement.
(ii) Satisfaction of Conditions in Contribution Agreement.
All conditions precedent to Closing contained in
Article VIII of the Contribution Agreement shall have
been fulfilled, satisfied or waived by Seller and/or
Seller's Related Entities.
(d) Seller's Obligations at Closing. At the Closing, Seller shall
do the following:
(i) Execute, acknowledge, and deliver to Purchaser a
General Warranty Deed in a form suitable for
recording conveying the Property to Purchaser subject
only to the Permitted Exceptions.
(ii) Execute and deliver to Purchaser a blanket
assignment and bill of sale assigning and conveying
to Purchaser title to any personal property covered
by this Agreement, free and clear of all liens and
encumbrances, other than the Permitted Exceptions.
(iii) Execute and deliver to Purchaser an assignment or
assignments assigning to Purchaser all existing
assignable guarantees and warranties issued or made
in connection with the construction, improvement,
alteration, and repair of any improvements comprising
a part of the Property, together with the original of
each such guaranty and warranty, if any.
(iv) Deliver to Purchaser plans and specifications of the
property and of any improvements thereon, and copies
of all certificates of occupancy, license, permits,
authorizations, and approvals required by law and
issued by all governmental authorities having
jurisdiction and copies of all certificates issued by
the local board of fire underwriters (or other body
exercising similar functions), if any, and the
original of each bill for current real estate and
personal property taxes, together with proof of
payment thereof (if any of the same have been paid).
(e) Purchaser's Obligations at Closing. Subject to the terms,
conditions, and provisions hereof, and contemporaneously with
the performance by Seller of its obligations set forth in
Section (d) above, Purchaser shall do the following at
Closing;
(i) Deliver to Seller the consideration pursuant to the
terms of the Contribution Agreement and this
Agreement.
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<PAGE> 9
(f) Closing Costs. Seller shall pay the following costs and
expenses in connection with the Closing:
(i) The costs of the preparation of the Warranty Deed;
(ii) The premium payable for the Owner's Policy of Title
Insurance to be furnished to Purchaser; and
(iii) Its attorney's fees.
Purchaser shall pay the following costs in connection with
the Closing:
(i) The costs of recording of the Warranty Deed and the
transfer taxes assessed thereon pursuant to T.C.A.
Section 67-4-409; and
(ii) Its attorney's fees.
(g) Proration of Taxes, Utilities, Rents, Interest and Insurance.
Taxes, utilities and insurance premiums of the year of the
Closing shall be prorated to the date of Closing. If the
Closing shall occur before the tax rate is fixed for the then
current year, the apportionment of taxes shall be upon the
basis of the tax rate for the preceding year applied to the
latest assessed valuation. Subsequent to the Closing, when
the tax rate is fixed for the year in which the Closing
occurs, Seller and Purchaser agree to adjust the proration of
taxes and, if necessary, to refund or pay (as the case may be)
such sums as shall be necessary to effect such adjustment. In
the event that Purchaser shall elect not to continue present
insurance coverage on the Property, such coverage shall be
terminated as of the Closing Date and there shall be no
proration of insurance premiums.
9. Casualty Loss. Seller represents to Purchaser that the
improvements located on the Property are presently insured by a policy of fire
and extended coverage insurance in an amount at least equal to the full
insurable value. In the event such improvements are materially damaged or
destroyed by fire or other casualty prior to the Closing of this Agreement,
Purchaser, at its election, may terminate this Agreement, and neither party
shall have any further claim or rights against the other, or Purchaser may
elect to proceed to close the purchase of the Property, in which event the
amount of any insurance proceeds payable by reason of such damage or
destruction, or any claim therefor, shall be assigned or paid to Purchaser.
Except as otherwise provided herein, all risk of loss to any improvements
located on the Property prior to the Closing of this transaction shall be borne
by the Seller.
10. Condemnation. If, during the term of this Agreement, all or
any material portion of the Property shall be condemned or otherwise taken by
power of eminent domain, Purchaser may elect to terminate this Agreement, and
there shall be no further rights, duties or obligations on the part of either
party hereunder, and Purchaser shall promptly release whatever claim, if any,
it may have in or to the condemnation award. If there shall be any such
condemnation or taking and if this
9
<PAGE> 10
Agreement is not terminated as a result thereof, then any condemnation award or
other amount to be paid for the value of the Property taken shall, be assigned
or paid to Purchaser, and the transaction shall close with no abatement of the
purchase price.
11. Remedies. In the event of a default under this Agreement by
either party, the non-defaulting party shall be entitled to exercise all
remedies available to it under the terms of the Contribution Agreement.
12. Notice. Any notice request or other communication which may
be required or desired to be given hereunder by any party to any other party
shall be in writing and shall be personally delivered or sent by United States
registered or certified mail, with postage prepaid, or sent by Federal Express
or other widely used overnight courier service, or sent by facsimile
transmission, and addressed as follows:
To Seller:
RMS Limited Partnership
50 West Liberty Street
Suite 650
Reno, Nevada 89501
Facsimile: (702) 333-0412
Attn: C. Thomas Burton, Jr., Esq.
with a copies thereof addressed to:
Baker & McKenzie
815 Connecticut Avenue, N.W.
Washington, D.C. 20006-4078
Facsimile: (202) 452-7074
Attn: Thomas J. Egan, Jr., Esq.
and
George E. Mudter, Jr., Esq.
2000 Richard Jones Road, Suite 110
Nashville, TN 37215
Facsimile: (615) 383-2605
or to such other address or addresses and to the attention of such other person
or persons as Seller may from time to time designate in writing; and
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<PAGE> 11
To Purchaser:
Precision Systems, Inc.
11800 30th Court North
St. Petersburg, FL 33716-1846
Facsimile: (813) 573-9193
Attn: Kenneth M. Clinebell
with copies thereof addressed to:
Troutman Sanders LLP
NationsBank Plaza
600 Peachtree Street, N.E.
Suite 5200
Atlanta, GA 30308-2216
Facsimile: (404) 885-3995
Attn: James L. Smith, III, Esq.
and
Foley & Lardner
100 North Tampa Street
Suite 2700
Tampa, FL 33602
Facsimile: (813) 221-4210
Attn: David L. Robbins, Esq.
or to such other address or addresses and to the attention of such other person
or persons as Purchaser may from time to time designate in writing.
A party may designate by such notice a new address or fax number to
which any notice, request or other communication to it shall thereafter be
sent. A notice shall be deemed received on the date that is three (3) calendar
days after the date that the notice is deposited in the United States mail if
sent by registered or certified mail, or, if personally delivered, on the date
such personal delivery is made. If notice is given by Federal Express or other
widely used overnight courier service, the notice shall be deemed received on
the next business day following the date that the notice is deposited with
Federal Express or such other overnight courier service. If notice is given by
facsimile transmission, the notice shall be deemed received when electronic
confirmation of receipt is obtained.
12. Brokerage. Each party represents to the other that no broker
has been involved in this transaction. It is agreed that if any claims for
brokerage commissions or fees are ever made against Seller or Purchaser in
connection with this transaction, all such claims shall be handled and paid by
the party whose actions or alleged commitments form the basis of such claim.
It is further agreed that each party agrees to indemnify and hold harmless the
other from and against any and all such
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<PAGE> 12
claims or demands with respect to any brokerage fees or agents' commissions or
other compensation asserted by any person, firm, or corporation in connection
with this Agreement or the transactions contemplated hereby.
13. Non-Foreign Seller. Seller represents and warrants that no
part of the transfer of the Property constitutes a disposition of "United
States Real Property Interest by a 'Foreign' Person", as those terms are
defined in Sections 897 and 1445, respectively of the Internal Revenue Code of
1986, as amended (the "Code"). In the event that it is determined that
withholding tax is required under the Code, Seller hereby consents to the
deduction, withholding and deposit by Purchaser with the Internal Revenue
Service of ten percent (10%), or such other amount as required by law, of the
amount realized pursuant to this agreement if Seller is deemed to be a "foreign
person," and further agrees to full compliance by Purchaser with the
requirements of said Code. Seller agrees to execute, at the Closing, under
oath, an affidavit in form acceptable to Purchaser swearing that Seller's
disposition of the Property does not constitute the disposition of a "United
States Real Property Interest By a Foreign Person" as above defined, but only
if the same is required by and conforms to the Code and any regulations adopted
pursuant thereto.
14. Miscellaneous.
(a) Assignment. Neither Purchaser nor Seller may assign this
Agreement in whole or in part without first obtaining the
written consent of the other party, except that Seller may
assign its rights and obligations under this Agreement to one
or more of Seller's Related Entities so long as Seller remains
responsible for its performance thereunder.
(b) Entire Agreement. This Agreement constitutes the sole and
entire agreement between the parties with reference to the
Property and no modification hereof shall be binding unless
signed by all the parties to this Agreement. No
representations, promises or inducements other than as are set
forth in this Agreement shall be binding upon either of the
parties hereto.
(c) Construction and Effect. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective heirs, representatives, successors and assigns.
This Agreement shall be construed in accordance with the laws
of the state of Tennessee. As herein used, the singular
number shall be applicable to all genders, except where the
context would fairly require a different construction. TIME
IS OF THE ESSENCE OF THIS AGREEMENT AND ALL THE PROVISIONS
HEREOF.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original
and all of which together shall comprise one and the same
instrument.
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written; provided, however, that for the
purpose of determining "the date hereof" or "the date of final execution
hereof," as used in this Agreement, such date shall be the last date any of the
parties hereto execute this Agreement.
PURCHASER: SELLER:
PRECISION SYSTEMS, INC. RMS LIMITED PARTNERSHIP
By:/s/ Willem Huisman By: /s/ C. Thomas Burton, Jr.
-------------------- --------------------------------
Willem Huisman C. Thomas Burton, Jr.
CEOO and President President, Crystal Diamond, Inc.
General Partner of RMS Limited
Partnership
Date of Execution: Date of Execution:
April 22, 1998 April 22, 1998
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<PAGE> 14
Exhibit "A"
TRACT I:
Beginning at an iron pipe in the East right-of-way line of
Dickerson Pike, said point also being a Southwest corner of the
property more particularly described as follows:
Thence with the East right-of-way line of Dickerson Pike North
05 degrees 14'28" East, a distance of 655.11' to an iron pipe;
thence South 16 degrees 14'03" East, a distance of 42.82' to
an iron pin; thence South 84 degrees 53'56" East, a distance
of 234.98' to an iron pin; thence North 05 degrees 04'18"
East, a distance of 184.63' to an iron pipe; thence South 85
degrees 58'44" East, a distance of 678.20' to an iron pin;
thence South 09 degrees 38'26" West, a distance of 566.41' to
an iron pipe; thence South 13 degrees 25'30" West, a distance
of 301.68' to an iron pipe in the North right-of-way line of
Maplewood Lane; thence with said right-of-way line North 83
degrees 06'14" West, a distance of 817.71' to an iron pipe,
said point being the beginning of a curve to the right; thence
with the arc of a curve to the right, with a radius of 25.00'
and a chord bearing and distance of North 39 degrees 15'46"
West, 34.79' an arc distance of 38.48' to the point of
beginning and containing 16.18 acres or 704,799 square feet.
Being the same property conveyed to RMS Limited Partnership, a
Nevada limited partnership by quitclaim deed from WNAB Channel
58 Nashville, Inc., a Tennessee corporation for record in Book
10121, page 507, Register's Office for Davidson country,
Tennessee.
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<PAGE> 15
Exhibit "B"
TRACT I:
1. 1998 real property taxes, a lien, but not yet due and payable.
2. Easements for sanitary sewers and/or storm drainage/detention
of record in Book 5713, page 763 and Book 6549, page 793,
Register's Office for Davidson County, Tennessee.
3. Non-exclusive easement for ingress and egress over and
driveways, exits and entrances of the shopping center property
to Burger King Limited Partnership III, of record in Book
6690, page 494, Register's Office for Davidson County,
Tennessee.
4. Driveway easement to Burger King Limited Partnership II, of
record in Book 6690, page 494, Register's Office for Davidson
County, Tennessee.
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<PAGE> 1
EXHIBIT C
PLAN OF RECAPITALIZATION
This PLAN OF RECAPITALIZATION (the "Agreement") is executed this 22nd
day of April, 1998 by and between RMS Limited Partnership, a Nevada limited
partnership ("RMS") and Precision Systems, Inc., a Delaware corporation
("PSI").
WHEREAS, pursuant to that certain Contribution and Share Exchange
Agreement of even date herewith to which this Agreement is attached as Exhibit
2.1 (the "Contribution Agreement"), Speer (as that term is defined in the
Contribution Agreement) intends to conclude the Transaction or the Alternative
Transaction (as such terms are defined in the Contribution Agreement); and
WHEREAS, the closing of the transactions contemplated in the
Contribution Agreement are contingent upon the prior closing of the transaction
contemplated by this Agreement; and
WHEREAS, in reliance on the representation and warranties of PSI set
forth in the Contribution Agreement, RMS is willing to enter into this
Agreement and to consummate the transactions specified herein; and
WHEREAS, RMS is the holder of an aggregate of 10,000 shares of Series
A Preferred Stock of PSI, 1,500 shares of Series B Preferred Stock of PSI, and
the RMS Note (as hereinafter defined); and
WHEREAS, the general and limited partners of RMS and the Board of
Directors of PSI have determined that the execution, delivery and performance
of this Agreement is in the best interests of RMS and PSI, respectively; and
WHEREAS, it is the intention of the parties that the recapitalization
under this Agreement qualifies as a reorganization within the meaning of
Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended (the
"Code").
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Capitalized words and phrases used in this
Agreement which are not otherwise defined herein have the following meanings:
<PAGE> 2
(a) "Closing Date" shall have the meaning set forth in
Article X of the Contribution Agreement;
(b) "Closing" shall have the meaning set forth in Article
X of the Contribution Agreement;
(c) "Exchange Rate" shall have the meaning set forth in
Section 2.1 of the Contribution Agreement; and
(d) "PSI Common Stock" shall have the meaning set forth
in Section 1.2 of the Contribution Agreement.
(e) "Recapitalization" shall have the meaning set forth
in Section 2.1 below.
(f) "Registration Rights Agreement" shall mean that
certain agreement in the form of Exhibit 11.1.5 to the Contribution Agreement.
ARTICLE II
RECAPITALIZATION
2.1. Recapitalization. At the Closing, RMS will surrender to PSI
for cancellation (i) all of the PSI Series A Preferred Stock (the "PSI Series A
Stock") and all of the PSI Series B Preferred Stock (the "PSI Series B Stock")
held by RMS and (ii) the outstanding principal balance and accrued interest as
of the Closing Date on that certain promissory note by and between PSI and RMS
dated September 30, 1997 (the "RMS Note"), and PSI will deliver to RMS in
exchange therefor shares of PSI Common Stock at a price equal to the Exchange
Rate as more specifically set forth below. The PSI Series A Stock and PSI
Series B Stock shall be exchanged for that number of shares of PSI Common Stock
equal to the quotient realized by dividing the sum of the aggregate liquidation
preference for the PSI Series A Stock and PSI Series B Stock held by RMS plus
the accumulated and unpaid dividends on such shares as of the Closing Date by
the Exchange Rate. The Note shall be exchanged for that number of shares of
PSI Common Stock equal to the quotient realized by dividing the sum of
principal balance and accrued interest on the RMS Note as of the Closing Date
by the Exchange Rate. In the event that the foregoing calculations yield a
number of shares including a fractional interest, the number of shares issuable
by PSI shall be rounded up to the next whole number of shares. The exchange of
PSI Common Stock for the PSI Series A Stock, the PSI Series B Stock and the RMS
Note held by RMS is referred to herein as the "Recapitalization."
2.2 Third Party Recapitalization. Not later than 20 days from the
date hereof, PSI shall enter into agreement with each of Didier Primat
("Primat"), Primwest Holding, N.V. ("Primwest") and Vulcan Ventures
Incorporated ("Vulcan") to convert (the "Conversion") (i) the PSI Series B
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<PAGE> 3
Stock held by Primwest and Vulcan and (ii) the promissory notes between each of
Primat and Vulcan with PSI into shares of PSI Common Stock on terms no less
favorable to PSI than that of the Recapitalization set forth in Section 2.1.
The closing of the Conversion shall occur no later than the Closing Date.
2.3 Stockholder Approval. PSI's obligations hereunder with
respect to the Recapitalization are conditioned upon the approval by the
holders of a majority of the shares of PSI capital stock entitled to vote
thereon of an amendment to PSI's Certificate of Incorporation increasing the
number of authorized shares of PSI Common Stock thereunder to an amount
sufficient to cover the shares to be issued pursuant to this Agreement and the
Contribution Agreement. PSI agrees to use its reasonable best efforts to
obtain such stockholder approval as soon as reasonably practicable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations of PSI.
PSI hereby represents to RMS, that the following are true and accurate
as of the date first written above:
(a) Subject to obtaining stockholder approval of the
amendment to its Certificate of Incorporation referred to in Section 2.3, PSI
has the full right, power, and authority to execute and deliver this Agreement
and to perform its terms. This Agreement is a valid and binding agreement of
PSI enforceable against it in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
(b) The execution and delivery of this Agreement by PSI
and the consummation of the transactions required hereunder does not and will
not violate or conflict with any statute, regulation, judgment, order, writ,
decree, or injunction, currently applicable to PSI or any of its property or
assets.
(c) No consent or approval of any third party is required
to be obtained by PSI in connection with the execution and delivery of this
Agreement or the performance of the transactions contemplated hereunder other
than those approvals identified this Agreement and in the Contribution
Agreement. No contract or agreement to which PSI is a party restricts the
ability of PSI to fulfill its obligations and responsibilities under this
Agreement or any related agreement or to carry out the activities contemplated
herein.
(d) All of the representations and warranties of PSI set
forth in the Contribution Agreement are true and accurate in all material
respects as of the date hereof and shall be true and
- 3 -
<PAGE> 4
accurate as of the Closing and RMS shall be entitled to rely on such
representations and warranties which are incorporated herein by this reference.
(e) Subject to obtaining stockholder approval of the
amendment to its Certificate of Incorporation referred to in Section 2.3, all
of the shares of Common Stock to be issued by PSI pursuant to this Agreement
shall be validly issued, fully paid and nonassessable shares, not subject to
any preemptive rights, of free and clear of any liens, claims, options,
encumbrances or restrictions of any nature whatsoever.
3.2 Representations of RMS.
RMS hereby represents to PSI that the following are true and accurate
as of the date first written above.
(a) RMS is a limited partnership, duly organized, validly
existing and in good standing in the State of Nevada with the requisite power
to enter into and perform its obligations under this Agreement in accordance
with its terms.
(b) RMS has the full right, power and authority to
execute and deliver this Agreement and to perform its terms. All required
actions to approve and adopt this Agreement have been taken. This Agreement is
a duly authorized, valid and binding agreement of RMS enforceable against it in
accordance with its terms, subject as to enforcement to bankruptcy, insolvency
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(c) No consent or approval of any third party is required
to be obtained by RMS in connection with the execution and delivery of this
Agreement or the performance of the transactions contemplated hereunder other
than those approvals identified in the Contribution Agreement. No contract or
agreement to which RMS is a party restricts the ability of RMS to fulfill its
obligations and responsibilities under this Agreement or any related agreement
or to carry out the activities contemplated herein.
(d) RMS owns and will own as of the Closing Date the
Series A Preferred Stock, Series B Preferred Stock and the RMS Note free and
clear of any liens, claims, options encumbrances or restrictions of any nature
whatsoever.
ARTICLE IV
CLOSING
4.1 Delivery of Securities. The actual consummation of the
transactions contemplated by this Agreement shall take place on the Closing
Date. The Closing shall occur only in the event that the conditions to closing
set forth in the Contribution Agreement have been satisfied or waived by the
party or parties entitled to the benefit of such conditions and stockholder
approval of the
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<PAGE> 5
amendment to the PSI Certificate of Incorporation has been obtained as
contemplated by Section 2.3. At the Closing, Speer shall deliver to PSI for
cancellation of the RMS Note, the share certificates representing the Series A
Preferred Stock and such transfer instructions relating to the exchange of the
Series A Preferred Stock and Series B Preferred Stock as PSI may reasonably
request. At the Closing, PSI shall deliver to RMS certificates representing
the number of shares of Common Stock as determined in accordance with Section
2.1 hereof and a copy of the Registration Rights Agreement executed by PSI.
The Closing shall be conditioned upon the Closing of the Contribution and
Exchange Transaction. The obligation of each of RMS and PSI to Close, shall be
conditioned upon the representations and warranties of the other being true and
accurate in all material respects as of the Closing Date.
ARTICLE V
MISCELLANEOUS
5.1 Term and Termination.
(a) Effective Date. This Agreement shall be effective
from and after the date first set forth above until its termination pursuant to
this Section 5.1.
(b) Termination. This Agreement shall terminate
automatically without notice or any further action by any of the parties hereto
in the event of the termination of the Contribution Agreement in accordance
with its terms.
5.2 Notice. All notices required to be given under the terms of
this Agreement or which any of the parties may desire to give hereunder shall
be in writing and delivered personally or sent by express delivery, or by
facsimile, or by registered or certified mail, with proof of receipt, postage
and expenses prepaid, return receipt requested, addressed as follows:
(a) As to RMS, addressed to:
50 West Liberty Street
Suite 650
Reno, Nevada 89501
Facsimile: (702) 333-0412
Attention: C. Thomas Burton, Jr., Esq.
- 5 -
<PAGE> 6
with a copy thereof addressed to:
Baker & McKenzie
815 Connecticut Avenue, N.W.
Washington, D.C.
Facsimile (202) 452-7074
Attention: Thomas J. Egan, Jr., Esq.
(b) As to PSI, addressed to:
11800 30th Court North
St. Petersburg, Florida 33716
Facsimile: (813) 573-9193
Attention: Chief Financial Officer
with a copy thereof addressed to:
Troutman Sanders LLP
600 Peachtree Street, N.W.
Suite 5200
Atlanta, Georgia 30308
Facsimile: (404) 885-3995
Attention: James L. Smith, III, Esq.
and
Foley & Lardner
100 North Tampa Street
Suite 2700
Tampa, Florida 33602
Facsimile: (813) 221-4210
Attention: David L. Robbins, Esq.
5.3 Assignment. This Agreement shall not be assignable by either
Party, except with the written consent of the other Party.
5.4 Binding Effect. Every covenant, term, and provision of this
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective legal representatives, successors and permitted assigns.
5.5 Headings. Section and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any provision hereof.
- 6 -
<PAGE> 7
5.6 Further Action. Each Party agrees to perform all further acts
and to execute, acknowledge, and deliver any documents which may be reasonably
necessary, appropriate, or desirable to carry out the provisions of this
Agreement.
5.7 Applicable Law. The laws of the State of Florida (excluding
the rules on conflict of laws or choice of law) shall govern the validity of
this Agreement, the construction of its terms, and the interpretation of the
rights and duties of the Parties.
5.8 Choice of Forum; Venue; Service of Process. Any suit, action,
or proceeding among any or all of RMS and PSI relating to this Agreement, to
any document, instrument, or agreement delivered pursuant hereto, referred to
herein, or contemplated hereby, or in any other manner arising out of or
relating to the transactions contemplated by or referenced in this Agreement,
shall be commenced and maintained exclusively in the United States District
Court for the Middle District of Florida, or, if that Court lacks jurisdiction
over the subject matter, in a state court of competent subject-matter
jurisdiction sitting in Pinellas County, Florida. RMS and PSI hereby submit
themselves unconditionally and irrevocably to the personal jurisdiction of such
courts. RMS and PSI further agree that venue shall be in Pinellas County,
Florida. RMS and PSI irrevocably waive any objection to such personal
jurisdiction or venue including, but not limited to, the objection that any
suit, action, or proceeding brought in Pinellas County, Florida, has been
brought in an inconvenient forum. RMS and PSI irrevocably agree that process
issuing from such courts may be served on them, either personally or by
certified mail, return receipt requested, at the addresses given in Section 5.2
hereof; and RMS and PSI further irrevocably waive any objection to service of
process made in such manner and at such addresses, including without limitation
any objection that service in such manner and at such addresses is not
authorized by the local or procedural laws of Florida.
5.9 Entire Agreement. This Agreement constitutes the entire
understanding of and agreement between the Parties with respect to the subject
matter hereof and supersedes all prior representations, understandings, and
agreements.
5.10 Waiver. No waiver by any party of any term of this Agreement
or of any breach of any term of this Agreement shall constitute a waiver of any
such term or any such breach in any other case, whether prior or subsequent.
5.11 Counterpart Execution. This Agreement may be executed in
several counterparts, each of which shall be an original, and such counterparts
shall together constitute but one and the same instrument.
5.12 Amendments. This Agreement may be amended or modified
only by a written agreement signed by both of the Parties.
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day first above set forth.
Precision Systems, Inc.,
A Delaware corporation
By: /s/ Willem Huisman
-------------------------
Willem Huisman
CEO and President
RMS Limited Partnership,
a Nevada limited partnership
By: /s/ C. Thomas Burton Jr.
-------------------------
C. Thomas Burton, Jr.
President
Crystal Diamond, Inc.
General Partner of
RMS Limited Partnership
- 8 -
<PAGE> 1
April 22, 1998
Speer Communications Holdings
Limited Partnership
50 West Liberty Street, Suite 650
Reno, Nevada 89501
Ladies and Gentlemen:
The Board of Directors of Precision Systems, Inc., a Delaware corporation
(the "Company"), has approved, and concurrently herewith, Speer Communications
Holdings Limited Partnership, a Nevada limited partnership ("Speer
Communications"), Speer Virtual Media Limited Partnership, a Nevada limited
partnership, Speer World Wide Digital Transmission & Vaulting Limited
Partnership, a Nevada limited partnership, Speer Productions Limited
Partnership, a Nevada limited partnership, and the Company are entering into a
Contribution and Share Exchange Agreement of even date herewith (the
"Contribution Agreement") (all capitalized terms used but not defined herein
shall have the meanings set forth in the Contribution Agreement) and the Company
and RMS Limited Partnership, a Nevada limited partnership ("RMS") are entering
into a Plan of Recapitalization (the "Recapitalization Plan") and a Real Estate
Transfer Agreement (the "Real Estate Agreement") of even date herewith. Each of
the undersigned owns, beneficially and of record, the number of shares (the
"Shares") of the common stock, par value $.01 per share, of the Company (the
"Company Stock"), set forth opposite the undersigned's name on Exhibit A hereto,
which are all the shares of the Company Stock so owned by such person.
The entering into of this letter agreement is a condition to the
willingness of Speer to enter into the Contribution Agreement and to consummate
the transactions identified in such agreement and a condition to the willingness
of RMS to enter into the Recapitalization Plan and the Real Estate Agreement and
consummate the transactions identified therein (collectively, the
"Transactions").
<PAGE> 2
Each of the undersigned agrees that at any meeting of the stockholders of
the Company, however called, it shall (a) vote the Shares in favor of the
Transactions, to the extent that such holder's voting of such Shares is in
accordance with the stockholder approval requirement specified in the
Contribution Agreement; (b) vote the Shares in favor of an amendment to the
Certificate of Incorporation of the Company increasing the number of authorized
shares of common stock of the Company; and (c) vote the Shares against any
action or agreement (other than the Contribution Agreement or the transactions
contemplated thereby) that would impede, interfere with, delay, postpone or
attempt to discourage any of the Transactions, including, but not limited to:
(i) any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company; (ii) a sale or transfer of all
or substantially all of the assets of the Company and its subsidiaries or a
reorganization, recapitalization or liquidation of the Company and its
subsidiaries; (iii) any material change in the present capitalization or
dividend policy of the Company; or (iv) any other material change in the
Company's corporate structure or business.
This Agreement shall terminate on the first to occur of (i) the Closing
Date, (ii) the day after the termination of the Contribution Agreement in
accordance with its terms, and (iii) written notice of termination of this
Agreement by Speer Communications to the undersigned. Each of the undersigned
represents and warrants that as of the date hereof, (i) it has due authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby, (ii) it is the owner of record and beneficially owns the
Shares set forth opposite its name on Exhibit A, and such Shares constitute all
of the shares owned of record or beneficially by it; (iii) the undersigned has
sole voting power and sole power of disposition with respect to all of the
Shares, with no restrictions, on its rights of disposition pertaining thereto,
subject to applicable securities laws; (iv) the transactions contemplated by
this Agreement will not affect the voting rights of any of the Shares except as
provided in this Agreement; and (v) neither the execution and delivery of this
Agreement by it nor the consummation of the transactions contemplated hereby
will (x) require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority (except
filings under the Securities Exchange Act of 1934, as amended, or where the
failure to obtain such consent, approval, authorization or permit, or to make
such filing or notification, would not prevent or delay consummation of the
transactions contemplated by this Agreement or would not otherwise prevent the
undersigned from performing its obligations under this Agreement), (y) result in
a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
license, agreement or other instrument or
-2-
<PAGE> 3
obligation to which the undersigned is a party, except for such defaults (or
rights of termination cancellation or acceleration) as to which requisite
waivers or consents have been obtained or which would not adversely affect the
performance of the obligations of the undersigned hereunder or (z) violate any
order, writ, injunction or decree applicable to it.
Each of the undersigned further covenants and agrees, while this Agreement
is in effect, and except as contemplated hereby or by the Contribution
Agreement, not to (i) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares; provided, that the
undersigned shall be permitted to pledge or grant a security interest in the
Shares, provided that any such pledge or grant of security interest shall
provide that the pledgee or secured party hereunder shall take any pledge or
interest subject to the pledgor's voting obligations hereunder; (ii) grant any
proxies, deposit the Shares into a voting trust or enter into a voting agreement
with respect to the Shares; or (iii) take any action that would make any
representation or warranty made by it herein untrue or incorrect in any material
respect or have the effect of preventing or disabling it from performing its
obligations under this letter agreement.
The undersigned agrees to promptly notify Speer Communications of the
number of any new shares of Company Stock acquired by it (whether by purchase or
conversion or exercise of options, warrants or other securities convertible into
Company Stock), if any, after the date hereof. Any such Shares acquired shall
become additional Shares subject to the terms of this Agreement.
This Agreement (i) constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof, and (ii) shall not be
assigned by operation of law or otherwise, provided that Speer may assign any of
its rights and obligations to any affiliate of Speer, but no such assignment
shall relieve Speer of its obligations hereunder. This Agreement may not be
amended except by an instrument in writing signed on behalf of all the parties
affected by such amendment.
The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific
-3-
<PAGE> 4
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
federal or state court located in the State of Delaware (as to which the parties
agree to submit to jurisdiction for the purposes of such action), this being in
addition to any other remedy to which they are entitled at law or in equity.
This Agreement shall be governed by and construed in accordance with the
substantive laws of the State of Delaware regardless of the laws that might
otherwise govern under principles of conflicts of laws applicable thereto. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement,
which shall remain in full force and effect. Speer Communications and the
undersigned acknowledge and agree that this Agreement is being entered into by
the undersigned solely in its capacity as a stockholder of the Company and that
none of the obligations contained herein is intended to, and such obligations do
not, limit, restrict or otherwise affect the obligations and duties of the
undersigned (or its affiliates or associates) in any capacity it may have as an
officer and/or director of the Company. The obligations of each undersigned are
several and not joint.
[Remainder Of This Page Intentionally Left Blank]
-4-
<PAGE> 5
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and the
same agreement.
ALTA INVESTISSEMENTS SA
By: /s/ Ian M. Dalziel
-------------------------------------
Name: Ian M. Dalziel
Title: Chairman
PRIMWEST HOLDINGS N.V.
By:
-------------------------------------
Name:
Title:
By: /s/ Didier Primat
-------------------------------------
Name: Didier Primat
Title: President, Managing Director
SPEER COMMUNICATIONS HOLDINGS
LIMITED PARTNERSHIP
By: /s/ Roy M. Speer
---------------------------------------
Roy M. Speer
President, Holdings Investments, Inc.
General Partner of Speer Communications
Holdings Limited Partnership
-5-
<PAGE> 6
Exhibit A
Company Share Ownership
No. of Shares
Name of Common Stock
Alta Investissements S.A.
Primwest Holdings N.V.
-6-
<PAGE> 7
April 22, 1998
Speer Communications Holdings
Limited Partnership
50 West Liberty Street, Suite 650
Reno, Nevada 89501
Ladies and Gentlemen:
The Board of Directors of Precision Systems, Inc., a Delaware corporation
(the "Company"), has approved, and concurrently herewith, Speer Communications
Holdings Limited Partnership, a Nevada limited partnership ("Speer
Communications"), Speer Virtual Media Limited Partnership, a Nevada limited
partnership, Speer World Wide Digital Transmission & Vaulting Limited
Partnership, a Nevada limited partnership, Speer Productions Limited
Partnership, a Nevada limited partnership, and the Company are entering into a
Contribution and Share Exchange Agreement of even date herewith (the
"Contribution Agreement") (all capitalized terms used but not defined herein
shall have the meanings set forth in the Contribution Agreement) and the Company
and RMS Limited Partnership, a Nevada limited partnership ("RMS") are entering
into a Plan of Recapitalization (the "Recapitalization Plan") and a Real Estate
Transfer Agreement (the "Real Estate Agreement") of even date herewith. Each of
the undersigned owns, beneficially and of record, the number of shares (the
"Shares") of the common stock, par value $.01 per share, of the Company (the
"Company Stock"), set forth opposite the undersigned's name on Exhibit A hereto,
which are all the shares of the Company Stock so owned by such person.
The entering into of this letter agreement is a condition to the
willingness of Speer to enter into the Contribution Agreement and to consummate
the transactions identified in such agreement and a condition to the willingness
of RMS to enter into the Recapitalization Plan and the Real Estate Agreement and
consummate the transactions identified therein (collectively the
"Transactions").
<PAGE> 8
The undersigned agrees that at any meeting of the stockholders of the
Company, however called, it shall (a) vote the Shares in favor of the
Transactions, to the extent that such holder's voting of such Shares is in
accordance with the stockholder approval requirement specified in the
Contribution Agreement; (b) vote the Shares in favor of an amendment to the
Certificate of Incorporation of the Company increasing the number of authorized
shares of common stock of the Company; and (c) vote the Shares against any
action or agreement (other than the Contribution Agreement or the transactions
contemplated thereby) that would impede, interfere with, delay, postpone or
attempt to discourage any of the Transactions, including, but not limited to:
(i) any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company; (ii) a sale or transfer of all
or substantially all of the assets of the Company and its subsidiaries or a
reorganization, recapitalization or liquidation of the Company and its
subsidiaries; (iii) any material change in the present capitalization or
dividend policy of the Company; or (iv) any other material change in the
Company's corporate structure or business.
This Agreement shall terminate on the first to occur of (i) the Closing
Date, (ii) the day after the termination of the Contribution Agreement in
accordance with its terms, and (iii) written notice of termination of this
Agreement by Speer Communications to the undersigned. The undersigned represents
and warrants that as of the date hereof, (i) it has due authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
(ii) it is the owner of record and beneficially owns the Shares set forth
opposite its name on Exhibit A, and such Shares constitute all of the shares
owned of record or beneficially by it; (iii) the undersigned has sole voting
power and sole power of disposition with respect to all of the Shares, with no
restrictions, on its rights of disposition pertaining thereto, subject to
applicable securities laws; (iv) the transactions contemplated by this Agreement
will not affect the voting rights of any of the Shares except as provided in
this Agreement; and (v) neither the execution and delivery of this Agreement by
it nor the consummation of the transactions contemplated hereby will (x) require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority (except filings under
the Securities Exchange Act of 1934, as amended, or where the failure to obtain
such consent, approval, authorization or permit, or to make such filing or
notification, would not prevent or delay consummation of the transactions
contemplated by this Agreement or would not otherwise prevent the undersigned
from performing its obligations under this Agreement), (y) result in a default
(or give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any note, license, agreement or
other instrument or
-2-
<PAGE> 9
obligation to which the undersigned is a party, except for such defaults (or
rights of termination cancellation or acceleration) as to which requisite
waivers or consents have been obtained or which would not adversely affect the
performance of the obligations of the undersigned hereunder or (z) violate any
order, writ, injunction, decree or statute applicable to it.
The undersigned further covenants and agrees, while this Agreement is in
effect, and except as contemplated hereby or by the Contribution Agreement, not
to (i) sell, transfer, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding with
respect to the sale, transfer, pledge, encumbrance, assignment or other
disposition of, any of the Shares; provided, that the undersigned shall be
permitted to pledge or grant a security interest in the Shares, provided that
any such pledge or grant of security interest shall provide that the pledgee or
secured party hereunder shall take any pledge or interest subject to the
pledgor's voting obligations hereunder; (ii) grant any proxies, deposit the
Shares into a voting trust or enter into a voting agreement with respect to the
Shares; or (iii) take any action that would make any representation or warranty
made by it herein untrue or incorrect in any material respect or have the effect
of preventing or disabling it from performing its obligations under this letter
agreement.
The undersigned agrees to promptly notify Speer Communications of the
number of any new shares of Company Stock acquired by it (whether by purchase or
conversion or exercise of options, warrants or other securities convertible into
Company Stock), if any, after the date hereof. Any such Shares acquired shall
become additional Shares subject to the terms of this Agreement.
This Agreement (i) constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof, and (ii) shall not be
assigned by operation of law or otherwise, provided that Speer may assign any of
its rights and obligations to any affiliate of Speer, but no such assignment
shall relieve Speer of its obligations hereunder. This Agreement may not be
amended except by an instrument in writing signed on behalf of all the parties
affected by such amendment.
The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific
-3-
<PAGE> 10
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
federal or state court located in the State of Delaware (as to which the parties
agree to submit to jurisdiction for the purposes of such action), this being in
addition to any other remedy to which they are entitled at law or in equity.
This Agreement shall be governed by and construed in accordance with the
substantive laws of the State of Delaware regardless of the laws that might
otherwise govern under principles of conflicts of laws applicable thereto. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement,
which shall remain in full force and effect. Speer Communications and the
undersigned acknowledge and agree that this Agreement is being entered into by
the undersigned solely in its capacity as a stockholder of the Company and that
none of the obligations contained herein is intended to, and such obligations do
not, limit, restrict or otherwise affect the obligations and duties of the
undersigned (or its affiliates or associates) in any capacity it may have as an
officer and/or director of the Company. The obligations of each undersigned are
several and not joint.
[Remainder Of This Page Intentionally Left Blank]
-4-
<PAGE> 11
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and the
same agreement.
VULCAN VENTURES INCORPORATED
By: /s/ William D. Savoy
------------------------
Name: William D. Savoy
Title: Vice President
SPEER COMMUNICATIONS HOLDINGS
LIMITED PARTNERSHIP
By: /s/ Roy M. Speer
---------------------------------------
Roy M. Speer
President, Holdings Investments, Inc.
General Partner of Speer Communications
Holdings Limited Partnership
-5-
<PAGE> 12
Exhibit A
Company Share Ownership
No. of Shares
Name of Common Stock
Vulcan Ventures Incorporated
-6-
