<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of report (Date of Earliest Event Reported): March 15, 1999
PRECISION SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
000-20068 41-1425909
----------------------- ------------------------
(Commission File No. ) (I.R.S. Employer
Identification No.)
11800 30th Court North
St. Petersburg, Florida
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(Address of principal executive offices)
33716
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(Zip Code)
(727) 572-9300
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(Registrant's telephone number, including area code)<PAGE>
Item 1 Change in Control of Registrant
On March 15, 1999, Precision Systems, Inc. (the "Company") entered
into a definitive agreement (the "Agreement") with Anschutz Digital
Media, Inc. ("Anschutz"). At the time of the execution of the Agreement,
Anschutz did not own any capital stock of the Company. Under the terms of
the Agreement, which was initially proposed on February 17, 1999,
Anschutz would acquire all of the outstanding common stock of the Company
in a transaction wherein the Company would be merged with a subsidiary of
Anschutz, and holders of the Company's common stock would receive $1.00
per share in cash. The Agreement further contemplates that all debt to
the Company's shareholders will be repaid, and the Company's preferred
stock will be canceled for an amount equal to its liquidation preference,
plus accrued dividends and interest thereon. The Agreement also provides
the Company with a line-of-credit with available borrowings of $1,250,000
to be extended by Anschutz. Such transaction is subject to shareholder
and certain antitrust and regulatory approvals and other customary
conditions.
On March 16, 1999, Anschutz purchased all of the common and
preferred stock of the Company previously held by RMS Limited
Partnership, a company controlled by Roy M. Speer. As a result of this
transaction, Anschutz owns 2,415,945 shares (13.57 percent) of the
Company's outstanding common stock, 10,000 shares (100 percent) of the
Company's outstanding Series A Preferred Stock, 1,500 shares (33 1/3
percent) of the Company's outstanding Series B Preferred Stock, Warrants
to purchase up to 425,000 shares of the Company's common stock, a
promissory note issued by the Company in the principal amount of
$2,000,000 and promissory notes evidencing a line of credit extended to
the Company in the principal amount of $5,000,000.
Exhibits
Exhibit No. Description
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99.1 Press release dated March 16, 1999
99.2 Agreement and Plan of Merger
dated March 15, 1999<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Precision Systems, Inc.
By: /s/ Kenneth M. Clinebell
------------------------
Kenneth M. Clinebell
Interim President and
Chief Financial Officer
Date: March 30, 1999<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contacts: Kenneth M. Clinebell, Chief Financial Officer
(727) 572-9300 ext. 3210
Paula N. Burk, Corporate Marketing Manager
(727) 572-9300 ext. 3189
PRECISION SYSTEMS, INC. SIGNS DEFINITIVE AGREEMENT
WITH ANSCHUTZ DIGITAL MEDIA, INC.
St. Petersburg, FL, March 16, 1999 Precision Systems, Inc.
(Nasdaq: PSYS) today announced that its Board of Directors has
unanimously approved and the Company has entered into a definitive merger
agreement ("agreement") with Anschutz Digital Media, Inc. ("Anschutz").
Under the terms of the agreement, which was initially proposed on
February 17, 1999, Anschutz would acquire all of the outstanding common
stock of Precision Systems, Inc. ("Precision") in a transaction wherein
Precision would be merged with a subsidiary of Anschutz, and holders of
Precision's common stock would receive $1.00 per share in cash.
The agreement further contemplates that all debt to the Company's
shareholders will be repaid and the Company's preferred stock will be
canceled for an amount equal to its liquidation preference, plus accrued
dividends and interest thereon. The agreement also provides the Company
with a line-of-credit with available borrowings of $1,250,000 to be
extended by Anschutz. The transaction is subject to shareholder and
certain antitrust and regulatory approvals and other customary
conditions.
Precision Systems, Inc. is a global company that, together with is
subsidiaries, Vicorp N.V. and BFD Productions, Inc., delivers
telecommunications solutions to service providers and corporations.
Vicorp's software and hardware products support enhanced calling and
prepaid services, toll-free services, and advanced call center
applications. BFD Productions is a service bureau specializing in
audiotext and Internet applications. Headquartered in St. Petersburg, FL
(USA), Precision Systems meets the needs of its customers in more than 30
countries.
Anschutz is an affiliate of the Anschutz Company whose operating
divisions and wholly-owned subsidiaries engage in telecommunications,
natural resources, transportation, real estate and sports entertainment
businesses.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: The transaction proposed by Anschutz Digital Media, Inc. or
the possibility of any other strategic alternative is subject to many
risks and uncertainties and may never materialize. The Company assumes
no obligation to update the information in this release.<PAGE>
EXHIBIT 99.2
AGREEMENT AND PLAN OF MERGER
among
ANSCHUTZ DIGITAL MEDIA, INC.,
PS ACQUISITIONS, INC.
and
PRECISION SYSTEMS, INC.
Dated as of March 15, 1999<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Effective Time . . . . . . . . . . . . . . . . . . . 1
Section 1.4 Effects of the Merger . . . . . . . . . . . . . . . . 2
Section 1.5 Certificate of Incorporation and Bylaws . . . . . . . 2
Section 1.6 Directors; Officers . . . . . . . . . . . . . . . . . 2
ARTICLE II - EFFECT OF THE MERGER ON THE STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES . . . . . . . . 2
Section 2.1 Conversion of Securities . . . . . . . . . . . . . . 2
Section 2.2 Exchange of Certificates . . . . . . . . . . . . . . 4
Section 2.3 Stock Transfer Books . . . . . . . . . . . . . . . . 6
Section 2.4 Appraisal Rights . . . . . . . . . . . . . . . . . . 6
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . 6
Section 3.1 Organization, Qualification, Etc. . . . . . . . . . . 7
Section 3.2 Capital Stock. . . . . . . . . . . . . . . . . . . . 8
Section 3.3 Corporate Authority; No Violation . . . . . . . . . . 8
Section 3.4 Reports and Financial Statements . . . . . . . . . . 9
Section 3.5 No Undisclosed Liabilities . . . . . . . . . . . . 10
Section 3.6 Compliance with Laws . . . . . . . . . . . . . . . 10
Section 3.7 Environmental Laws . . . . . . . . . . . . . . . . 11
Section 3.8 Employee Benefit Plans . . . . . . . . . . . . . . 12
Section 3.9 Absence of Certain Changes or Events . . . . . . . 14
Section 3.10 Litigation . . . . . . . . . . . . . . . . . . . . 15
Section 3.11 Contracts . . . . . . . . . . . . . . . . . . . . . 15
Section 3.12 Labor Matters . . . . . . . . . . . . . . . . . . . 15
Section 3.13 Tax Matters . . . . . . . . . . . . . . . . . . . . 15
Section 3.14 Opinion of Financial Advisor . . . . . . . . . . . 17
Section 3.15 Takeover Laws . . . . . . . . . . . . . . . . . . . 17
Section 3.16 Required Vote of the Company Shareholders . . . . . 17
Section 3.17 Finders or Brokers . . . . . . . . . . . . . . . . 17
Section 3.18 Related Party Transactions . . . . . . . . . . . . 17
Section 3.19 Year 2000 . . . . . . . . . . . . . . . . . . . . . 18
Section 3.20 Telecom Licenses; Operations of Licensed Facilities 18
Section 3.21 Information Supplied . . . . . . . . . . . . . . . 18
Section 3.22 Property . . . . . . . . . . . . . . . . . . . . . 18
i<PAGE>
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGERSUB . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.1 Organization, Qualification, Etc. . . . . . . . . . 19
Section 4.2 Corporate Authority; No Violation . . . . . . . . . 19
Section 4.3 Finders or Brokers . . . . . . . . . . . . . . . . 20
Section 4.4 Financing . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V - COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . 21
Section 5.1 Conduct of Business by the Company . . . . . . . . 21
Section 5.2 Investigation . . . . . . . . . . . . . . . . . . . 22
Section 5.3 Stockholder Approval; Filings . . . . . . . . . . . 23
Section 5.4 Additional Reports . . . . . . . . . . . . . . . . 24
Section 5.5 Reasonable Best Efforts . . . . . . . . . . . . . . 24
Section 5.6 Takeover Statutes . . . . . . . . . . . . . . . . . 25
Section 5.7 No Solicitation . . . . . . . . . . . . . . . . . . 25
Section 5.8 Public Announcements . . . . . . . . . . . . . . . 26
Section 5.9 Indemnification and Insurance . . . . . . . . . . . 27
Section 5.10 Notification of Certain Matters . . . . . . . . . . 27
Section 5.11 Employee Plans and Benefit Arrangements . . . . . . 28
Section 5.12 Speer Financing . . . . . . . . . . . . . . . . . . 28
Section 5.13 Delivery of Final Audited Financials . . . . . . . 29
Section 5.14 Modification of Merger Structure . . . . . . . . . 29
ARTICLE VI - CONDITIONS TO THE MERGER . . . . . . . . . . . . . . . . 29
Section 6.1 Conditions to Each Party's Obligation to
Effect the Merger . . . . . . . . . . . . . . . . . . . 29
Section 6.2 Conditions to Obligations of the Company to
Effect the Merger . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.3 Conditions to Obligations of Parent to
Effect the Merger . . . . . . . . . . . . . . . . . . . 30
ARTICLE VII - TERMINATION, WAIVER, AMENDMENT AND CLOSING . . . . . . 31
Section 7.1 Termination or Abandonment . . . . . . . . . . . . 31
Section 7.2 Effect of Termination . . . . . . . . . . . . . . . 32
Section 7.3 Termination Payments . . . . . . . . . . . . . . . 33
ii<PAGE>
ARTICLE VIII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 34
Section 8.1 No Survival of Representations and Warranties . . . 34
Section 8.2 Expenses . . . . . . . . . . . . . . . . . . . . . 35
Section 8.3 Counterparts; Effectiveness . . . . . . . . . . . . 35
Section 8.4 Governing Law . . . . . . . . . . . . . . . . . . . 35
Section 8.5 Notices . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.6 Assignment; Binding Effect . . . . . . . . . . . . 36
Section 8.7 Severability . . . . . . . . . . . . . . . . . . . 36
Section 8.8 Enforcement of Agreement . . . . . . . . . . . . . 37
Section 8.9 Miscellaneous . . . . . . . . . . . . . . . . . . . 37
Section 8.10 Headings . . . . . . . . . . . . . . . . . . . . . 37
Section 8.11 Certain Definitions . . . . . . . . . . . . . . . . 37
Section 8.12 Knowledge . . . . . . . . . . . . . . . . . . . . . 37
iii<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 15, 1999 (this
"Agreement"), is among Anschutz Digital Media, Inc., a Colorado
corporation ("Parent"), PS Acquisitions, Inc., a Delaware corporation
("MERGERSUB"), and Precision Systems, Inc., a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Parent, MERGERSUB and
the Company have approved and have declared advisable the merger of the
Company with and into MERGERSUB (the "Merger"), upon the terms and
subject to the conditions set forth herein, and have determined that the
Merger and the other transactions contemplated hereby are in the best
interests of their respective companies and shareholders; and
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and
also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the
Delaware General Corporation Law (the "DGCL"), the Company shall be
merged with and into MERGERSUB at the Effective Time (as defined in
Section 1.3). Following the Effective Time, the separate corporate
existence of the Company shall cease and MergerSub shall be the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume
all the rights and obligations of the Company in accordance with the
DGCL.
Section 1.2 Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m., local time, at the offices of Hogan &
Hartson L.L.P., 1200 Seventeenth Street, Suite 1500, Denver, Colorado on
a date to be specified by the parties (the "Closing Date"), which shall
be no later than the third business day after the first date that all of
the conditions set forth in Sections 6.1(a) through (d) have been
satisfied or waived, unless another place, time or date is agreed to by
the parties hereto.
1<PAGE>
Section 1.3 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the
parties (i) shall file with the Secretary of State for the State of
Delaware (the "Delaware Secretary of State") a certificate of merger or
other appropriate documents (in any such case, the "Certificate of
Merger") executed in accordance with the relevant provisions of the DGCL
and (ii) shall make all other filings or recordings required under the
DGCL to effect the Merger. The Merger shall become effective at the time
of the filing of the Certificate of Merger with the Delaware Secretary of
State in accordance with the DGCL, or at such subsequent date or time as
Parent and the Company shall agree and specify in the Delaware
Certificate of Merger (the time the Merger becomes effective being
hereinafter referred to as the "Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
Section 1.5 Certificate of Incorporation and Bylaws.
(a) The certificate of incorporation of MergerSub, in the form
attached hereto as Exhibit A, shall be the certificate of incorporation
of the Surviving Corporation until thereafter changed or amended.
(b) The bylaws of MergerSub, as in effect immediately prior to
the Effective Time, which shall contain indemnification provisions no
less favorable to directors and officers of the Company than the
corresponding provisions in the Company's bylaws as of the date hereof,
until thereafter changed or amended, shall be the bylaws of the Surviving
Corporation.
Section 1.6 Directors; Officers. The directors and officers of
MergerSub at the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation until their respective
successors are duly elected and qualified.
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of MergerSub, the
Company or the holders of any of the following securities:
(a) Each share of common stock of the Company, par value $0.01
per share (each a "Common Share"), each share of Series A Preferred Stock
of the Company, par value $0.01 per share (each a "Series A Preferred
Share"), and each share of Series B Preferred Stock of the Company, par
value $0.01 per share (each "Series B Preferred Share" and, together with
the Series A Preferred Shares, the "Preferred Shares"), held in the
treasury of the Company and each such share or any warrant to obtain
Common Shares of Company (the "Warrants") owned by Parent or any direct
or indirect wholly owned Subsidiary (as defined in Section 8.11) of
Parent or of the Company immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof and no payment
shall be made with respect thereto.
2<PAGE>
(b) Each issued and outstanding share of common stock, par
value $.01 per share, of MergerSub immediately prior to the Effective
Time shall be converted into one validly issued, fully paid and non-
assessable share of common stock of the Surviving Corporation, and the
Surviving Corporation shall be a wholly owned subsidiary of Parent.
(c) Each Series A Preferred Share issued and outstanding
immediately prior to the Effective Time (other than those canceled
pursuant to Section 2.1(a)) shall be converted into the right to receive
$580.00 per share plus all accumulated but unpaid dividends and any
accrued interest on such unpaid dividends up to (but not beyond) the
Effective Time (the "Series A Consideration"). All such Series A
Preferred Shares shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each stock
certificate previously evidencing Series A Preferred Shares ("Series A
Stock Certificates") immediately prior to the Effective Time shall
thereafter represent the right to receive the Series A Consideration in
accordance with this Article II. The holders of Series A Stock
Certificates shall cease to have any rights with respect to the Series A
Preferred Shares evidenced thereby except as otherwise provided herein or
by Law (as defined in Section 3.6).
(d) Each Series B Preferred Share issued and outstanding
immediately prior to the Effective Time (other than those canceled
pursuant to Section 2.1(a)) shall be converted into the right to receive
$1,000.00 per share plus all accumulated but unpaid dividends and any
accrued interest on such unpaid dividends up to (but not beyond) the
Effective Time (the "Series B Consideration"). All such Series B
Preferred Shares shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each stock
certificate previously evidencing Series B Preferred Shares ("Series B
Stock Certificates") immediately prior to the Effective Time shall
thereafter represent the right to receive the Series B Consideration in
accordance with this Article II. The holders of Series B Stock
Certificates shall cease to have any rights with respect to Series B
Preferred Shares evidenced thereby except as otherwise provided herein or
by Law.
(e) Subject to the other provisions of this Section 2.1, each
Common Share that is issued and outstanding immediately prior to the
Effective Time (excluding any Common Shares canceled pursuant to Section
2.1(a)) shall be converted into the right to receive $1.00 per share
without interest (the "Per Share Consideration"). All such Common Shares
shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each stock certificate previously
evidencing Common Shares ("Common Stock Certificates" and, together with
Series A Certificates and Series B Certificates, "Stock Certificates")
immediately prior to the Effective Time shall thereafter represent the
right to receive the Per Share Consideration in accordance with this
Article II. The holders of Common Stock Certificates shall cease to have
any rights with respect to the Common Shares evidenced thereby except as
otherwise provided herein or by Law.
3<PAGE>
(f) Any outstanding Warrants and any outstanding options to
acquire Common Shares granted to directors or employees of the Company
under the Company Compensation and Benefit Plans (the "Options") shall be
canceled prior to the Effective Time and, in lieu thereof, as soon as
reasonably practicable as of or after the Effective Time, the holders of
such Warrants or Options shall receive a cash payment from Parent equal
to the product of (i) the total number of Common Shares previously
subject to such Warrant or Option (ii) the excess of the Per Share
Consideration over the exercise price per Common Share subject to such
Warrants or Options.
(g) A Letter of Transmittal (as defined in Section 2.2(b))
shall be included with each copy of the Proxy Statement (as defined in
Section 5.3(b)) mailed to shareholders of the Company in connection with
the Company Meeting (as defined in Section 5.3(a)). Parent and the
Company shall each use its reasonable best efforts to mail or otherwise
make available a Letter of Transmittal to all persons who become holders
of Common Shares or Preferred Shares (collectively, the "Shares") during
the period between the record date for the Company Meeting and the
Company Meeting.
Section 2.2 Exchange of Certificates.
(a) At or prior to the Effective Time, Parent shall deposit,
or shall cause to be deposited into an account (the "Exchange Fund") with
the Norwest Bank, N.A., or such other bank or trust company designated by
Parent and which is reasonably satisfactory to the Company (the "Exchange
Agent") for the benefit of the holders of Shares, through the Exchange
Agent, cash in an amount equal to the sum of (i) the number of Common
Shares outstanding and not otherwise subject to cancellation pursuant to
Section 2.1(a) multiplied by the Per Share Consideration, (ii) the number
of Series A Preferred Shares outstanding and not otherwise subject to
cancellation pursuant to Section 2.1(a) multiplied by the Series A
Consideration and (iii) the number of Series B Preferred Shares
outstanding and not otherwise subject to cancellation pursuant to Section
2.1(a) multiplied by the Series B Consideration (collectively, the
"Merger Consideration"). The Exchange Agent shall, pursuant to
irrevocable instructions in accordance with this Article II, deliver the
cash contemplated to be distributed out of the Exchange Fund pursuant to
Section 2.1. The Exchange Fund shall not be used for any other purpose.
The Exchange Agent shall invest any cash in the Exchange Fund, as
directed by Parent, on a daily basis. Any interest and other income
resulting from such investments shall be paid to Parent.
(b) Parent will instruct the Exchange Agent to mail to each
holder of record of Stock Certificates who has not previously surrendered
his or her Stock Certificates with a validly executed Letter of
Transmittal as soon as reasonably practicable after the Effective Time:
(i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to such holder's
Stock Certificates shall pass, only upon proper delivery of the Stock
Certificates to the Exchange Agent and shall be in such form and have
such other provisions as Parent may reasonably specify); and
4<PAGE>
(ii) instructions for use in effecting the surrender of
the Stock Certificates in exchange for cash (collectively, the "Letter of
Transmittal").
(c) Upon the later of the Effective Time and the surrender of
a Stock Certificate for cancellation (or the affidavits and
indemnification regarding the loss or destruction of such certificates in
accordance with Section 2.2(h)) to the Exchange Agent together with the
Letter of Transmittal, duly executed, and such other customary documents
as may be required pursuant thereto, the holder of such Stock Certificate
shall be entitled to receive in exchange therefor, and the Exchange Agent
shall deliver in accordance with the Letter of Transmittal that portion
of the Merger Consideration related to such Stock Certificate that such
holder has the right to receive in respect of the Shares formerly
evidenced by such Stock Certificate in accordance with Section 2.1.
In the event of a transfer of ownership of Shares that is
not registered in the transfer records of the Company, a certificate
evidencing cash paid in accordance with this Article II to a transferee
shall be issued if the Stock Certificate evidencing such Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable
stock transfer taxes have been paid.
(d) Until surrendered as contemplated by this Section 2.2,
each Stock Certificate shall be deemed at any time after the Effective
Time to evidence only the right to receive upon such surrender that
portion of the Merger Consideration related to such Stock Certificate.
(e) Any portion of the Exchange Fund which remains
undistributed to the holders of the Stock Certificates for six months
after the Effective Time shall be delivered to Parent, upon demand, and
any holders of Stock Certificates who have not theretofore complied with
this Article II shall thereafter look only to Parent for payment of their
claim for the Merger Consideration.
(f) None of Parent, the Company, MergerSub or the Exchange
Agent shall be liable to any person in respect of any cash from the
Exchange Fund in each case delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Stock
Certificate shall not have been surrendered prior to seven years after
the Effective Time (or immediately prior to such earlier date on which
any cash payable to the holder of such Stock Certificate would otherwise
escheat to or become the property of any governmental body or authority),
any Merger Consideration related to such Stock Certificate shall, to the
extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
5<PAGE>
(g) Parent and MergerSub shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Shares such amounts as Parent or MergerSub is
required to deduct and withhold with respect to the making of such
payment under the Code (as defined in Section 3.13) or any provision of
state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or MergerSub, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of
the Shares in respect of which such deduction and withholding was made by
Parent or MergerSub.
(h) If any Stock Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Stock Certificate to be lost, stolen or destroyed and, if
required by the Parent, the posting by such person of a bond in such
reasonable amount as the Parent may direct as indemnity against any claim
that may be made against it with respect to such Stock Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Stock Certificate the applicable portion of the Merger Consideration,
pursuant to this Article II.
(i) In the event this Agreement is terminated without the
occurrence of the Effective Time, Parent shall, or shall cause the
Exchange Agent to, return promptly any Stock Certificates theretofore
submitted or delivered to Parent or the Exchange Agent without charge to
the person who submitted such Stock Certificates.
Section 2.3 Stock Transfer Books. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Stock Certificates are
presented to the Surviving Corporation or the Exchange Agent for any
reason, they shall be canceled and exchanged as provided in this Article
II, except as otherwise provided by Law.
Section 2.4 Appraisal Rights. Notwithstanding Section 2.1, Shares
which are issued and outstanding immediately prior to the Effective Time
and which are held by a holder who has not voted such Shares in favor of
the Merger, who shall have delivered a written demand for relief as a
dissenting shareholder in the manner provided under Section 262 of the
DGCL, and who, as of the Effective Time, shall not have lost such right
to relief as a dissenting shareholder shall not be converted into a right
to receive Merger Consideration. The holders thereof shall be entitled
only to such rights as are granted by Section 262 of the DGCL.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and MergerSub that
except as set forth in the corresponding sections or subsections of the
Disclosure Schedule delivered to Parent by the Company concurrently with
entering into this Agreement (the "Company Disclosure Schedule"):
6<PAGE>
Section 3.1 Organization, Qualification, Etc.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the Laws (as defined in Section 3.6)
of Delaware and has the corporate power and authority to own its assets
and to carry on its business as it is now being conducted, and is duly
qualified to do business and is in good standing in each jurisdiction in
which the ownership of its assets or the conduct of its business requires
such qualification, except for jurisdictions in which such failure to be
so qualified or to be in good standing does not, individually or in the
aggregate, have a Material Adverse Effect (as defined in Section 3.1(b))
on the Company.
Copies of the Company's articles of organization and bylaws
filed or incorporated by reference in the Company's Annual Report on Form
10-K for the year ended December 31, 1997 are complete and correct and in
full force and effect on the date hereof.
(b) Each of the Company's Subsidiaries is an entity duly
organized, validly existing and in good standing (where applicable) under
the Laws of its jurisdiction of incorporation or organization, has the
corporate power and authority to own its assets and to carry on its
business as it is now being conducted, and is duly qualified to do
business and is in good standing in each jurisdiction in which the
ownership of its assets or the conduct of its business requires such
qualification, except where the failure to be so organized, existing,
qualified or in good standing does not, individually or in the aggregate,
have a Material Adverse Effect on the Company. All the outstanding
shares of capital stock of, or other ownership interests in, the
Company's Subsidiaries are validly issued, fully paid and non-assessable
and are owned by the Company, directly or indirectly, free and clear of
all liens, claims, charges or encumbrances ("Encumbrances"), except for
Encumbrances which individually or in the aggregate do not have a
Material Adverse Effect on the Company. There are no existing options,
rights of first refusal, conversion rights, preemptive rights, calls,
commitments, arrangements or obligations of any character ("Share
Arrangements") relating to the issued or unissued capital stock or other
securities of, or other ownership interests in, any Subsidiary of the
Company. None of the certificates of incorporation or bylaws or other
organizational documents of any of the Company's Subsidiaries purport to
grant rights to any person other than (1) customary rights given to all
shareholders pro rata in accordance with their holdings and (2) customary
rights with respect to corporate governance (including rights to notices)
and rights of indemnification of directors and officers. The Company has
delivered to Parent complete and correct copies of the certificate of
incorporation and bylaws or other organizational documents of each of the
Company's Subsidiaries that is not wholly owned by the Company and/or
another of its wholly owned Subsidiaries.
A complete listing of the Company's Subsidiaries is set forth
in Section 3.1(b) of the Company Disclosure Schedule. Except for the
Company's Subsidiaries listed in Section 3.1(b) of the Company Disclosure
Schedule, the Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
7<PAGE>
As used in this Agreement, any reference to any state of facts,
event, change or effect having a "Material Adverse Effect" on or with
respect to the "Company" or "Parent," as the case may be, means such
state of facts, event, change or effect that
(i) has had, or would reasonably be expected to have, a
material adverse effect on the business, results of operations or
financial condition of the Company and its Subsidiaries, taken as a
whole, or Parent and its Subsidiaries, taken as a whole, as the case may
be, or
(ii) would reasonably be expected to prevent or substantially
delay consummation of the transactions contemplated by this Agreement.
Section 3.2 Capital Stock. The authorized stock of the Company
consists of 30,000,000 Common Shares and 50,000 shares of non-redeemable
convertible preferred stock. As of March 15, 1999, 17,807,507 Common
Shares were issued and outstanding, 10,000 Series A Preferred Shares were
issued and outstanding and 4,500 Series B Preferred Shares were issued
and outstanding. All of the outstanding Shares have been validly issued
and are fully paid and non-assessable. Except as set forth in Section
3.2(a) of the Company Disclosure Schedule, as of March 15, 1999 there
were no outstanding Share Arrangements to which the Company is a party
relating to the issued or unissued capital stock or other securities of,
or other ownership interests in, the Company, other than Options or
Warrants to purchase 3,024,717 Common Shares granted on or prior to the
date hereof pursuant to the Company's stock option plans, or equity
incentive plans as set forth in Section 3.2(a) of the Company Disclosure
Schedule (such plans being referred to collectively as the "Company
Plans").
Section 3.3 Corporate Authority; No Violation.
(a) The Company has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the performance by the
Company of its obligations hereunder have been duly and validly
authorized by the Board of Directors of the Company and, except for the
approval of its shareholders of this Agreement, no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or the transactions contemplated hereby. The Board of
Directors of the Company, at a meeting duly called and held at which a
quorum was present throughout, has unanimously determined that the
transactions contemplated by this Agreement are in the best interest of
the Company and its shareholders and to recommend to such shareholders
that they vote in favor of this Agreement and the Merger (the "Company
Board Recommendation"). This Agreement has been duly and validly
executed and delivered by the Company and, assuming this Agreement
constitutes a valid and binding agreement of the other parties hereto,
constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting creditors' rights
generally, or by principles governing the availability of equitable
remedies).
8<PAGE>
(b) The execution, delivery and performance of this Agreement
by the Company do not, and the consummation by the Company of the Merger
and the other transactions contemplated hereby will not, constitute or
result in (i) a breach or violation of, or a default under, or the
creation of any rights in favor of any party under, the certificate of
incorporation or bylaws of the Company or the comparable governing
instruments of any of its Subsidiaries, (ii) a breach or violation of or
a default in any material respect under, or an acceleration of any
obligations under, or the creation of a lien, pledge, security interest
or other encumbrance on the assets of the Company or any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant to,
any agreement, lease, contract, note, mortgage, indenture, arrangement,
nongovernmental permit or license, order, decree, or other obligation
("Contracts") binding upon the Company or any of its Subsidiaries
("Company Contracts") or (provided, as to consummation, the filings and
notices are made, and approvals are obtained, as referred to in Section
3.3(c)) any applicable Law or Decree (as defined in Section 3.6) or
governmental permit or license to which the Company or any of its
Subsidiaries is subject, or (iii) any material change in the rights or
obligations of any party under any of the Company Contracts.
(c) Other than in connection with or in compliance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"), the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR Act"), and the securities or
blue sky Laws of the various states and other than the filing of the
Certificate of Merger with the Delaware Secretary of State, no
authorization, consent or approval of, or filing with, any governmental,
administrative or regulatory body or authority ("Governmental Entity") is
necessary for the consummation by the Company of the transactions
contemplated by this Agreement the failure to obtain which could be
reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.4 Reports and Financial Statements. Since January 1,
1996, the Company has timely filed with the SEC all forms, reports,
schedules, statements and other documents required to be filed by it
under the Securities Act or the Exchange Act (such documents, as
supplemented or amended since the time of filing, the "Company SEC
Reports"). As of their respective dates, the Company SEC Reports,
including without limitation, any financial statements or schedules
included or incorporated by reference therein, at the time filed (and, in
the case of registration statements and proxy statements, on the dates of
effectiveness and the dates of mailing, respectively) (a) complied in all
material respects with the applicable requirements of the Securities Act
and the Exchange Act, and (b) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim
financial statements included or incorporated by reference in the Company
9<PAGE>
SEC Reports (including any related notes and schedules) fairly present,
in all material respects, the financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the results of
their operations and their cash flows for the periods set forth therein,
in each case in accordance with past practice and generally accepted
accounting principles in the United States ("GAAP") consistently applied
during the periods involved (except as otherwise disclosed in the notes
thereto and subject, where appropriate, to normal year-end adjustments
that would not be material in amount or effect).
Section 3.5 No Undisclosed Liabilities. Except as disclosed in
Section 3.5 of the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, other than:
(a) liabilities or obligations disclosed in the footnotes to
the draft audited consolidated financial statements of the Company
(including the footnotes thereto) as of and for the fiscal year ended
December 31, 1998 submitted to Parent by Company prior to the date hereof
(the "Draft Audited Financials"); and
(b) liabilities or obligations which do not, individually or
in the aggregate, have a Material Adverse Effect on the Company.
Section 3.6. Compliance with Laws. The Company and each of its
Subsidiaries each:
(a) in the conduct of its businesses, is in compliance in all
material respects with all federal, state, local and foreign statutes and
laws, and all regulations, ordinances and rules promulgated thereunder
(collectively, "Laws"), and all judgments, orders, rulings, injunctions
or decrees of Governmental Entities (collectively, "Decrees"), applicable
thereto or to the employees conducting such businesses;
(b) has all permits, licenses, authorizations, orders and
approvals of, and have made all filings, applications and registrations
with, all Governmental Entities that are required in order to permit it
to conduct its businesses substantially as presently conducted, except
where the failure to have such permit, license, authorization, order or
approval, or to make such filing, application or registration, could not
be reasonably expected to have a Material Adverse Effect on the Company;
all such permits, licenses, authorizations, orders and approvals are in
full force and effect and, to the best of the Company's knowledge, no
suspension or cancellation of any of them is threatened; and
(c) has received, since December 31, 1993, no notification or
communication from any Governmental Entity other than those received in
the ordinary course of business or as disclosed in Section 3.6 of the
Company Disclosure Schedule:
(i) asserting that it is not in compliance with any of
the Laws or Decrees which such Governmental Entity enforces; or
(ii) threatening to revoke any permit, license,
authorization, order or approval.
10<PAGE>
Section 3.7. Environmental Laws.
(a) Neither the Company nor any of its Subsidiaries is the
subject of any pending, or to the knowledge of the Company threatened,
actions, causes of action, claims, orders, investigations, or proceedings
("Litigation") (whether civil, criminal, administrative or arbitral) by
any Governmental Entity or other person alleging liability or damages
under or non-compliance with any Environmental Law (as defined below).
(b) Neither the conduct nor the operation of the Company or
its Subsidiaries violates or has in the past violated in any material
respect any applicable Environmental Law.
(c) Except as set forth in Section 3.7 of the Company
Disclosure Schedule, there is not now on, in or under any property owned,
leased or operated by the Company or any of its Subsidiaries any of the
following:
(i) underground improvements, including but not limited
to treatment or storage tanks or underground piping associated with such
tanks, used currently or in the past for the management of Hazardous
Substances (as defined below);
(ii) asbestos-containing materials;
(iii) polychlorinated biphenyls;
(iv) other Hazardous Substances, in each case which would
reasonably be expected to form the basis of liability or other obligation
of the Company or any of its Subsidiaries under any applicable
Environmental Laws; or
(v) a dump, landfill, filled in land or wetlands.
(d) There has been no written report of any environmental
investigation, study, audit, test, review or other analysis conducted of
which the Company has knowledge and has in its possession or control in
relation to the current or prior business of the Company or any property
or facility now or previously owned, operated, or leased by the Company
or any of its Subsidiaries which has not been made available to Parent at
least ten days prior to the date hereof.
(e) No property currently or formerly owned, operated or
leased by the Company or any of its Subsidiaries, and no property to
which Hazardous Substances originating on or from such properties or the
businesses or assets of the Company or any of its Subsidiaries has been
sent for treatment or disposal, is listed or proposed to be listed on the
National Priorities List or CERCLIS or on any other governmental database
or list of properties that may or do require investigation or cleanup
under Environmental Laws.
11<PAGE>
(f) No Encumbrance in favor of any person relating to or in
connection with any claim under any Environmental Law has been filed or
has attached to the property currently owned, operated or leased by the
Company or any of its Subsidiaries.
(g) No authorization, notification, recording, filing,
consent, waiting period, remediation, investigation, or approval is
required under any Environmental Law in order to consummate the
transaction contemplated hereby, and there are no permits, licenses,
certificates or approvals required under Environmental Laws require
consent, notification, or other action to remain in full force and effect
following consummation of the transaction contemplated hereby.
(h) The Company has supplied Parent with a true and complete
list of all permits, licenses, certificates and approvals required under
Environmental Laws in order for the Company and each Subsidiary to
conduct their businesses substantially as presently conducted.
(i) "Environmental Laws" means any Laws (including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act) and Decrees, including any plans, other criteria, or
guidelines promulgated pursuant to such Laws and Decrees, relating to
the generation, production, installation, use, storage, treatment,
transportation, release (as defined below), threatened release, or
disposal of Hazardous Substances, noise control, or the protection of
human health or safety, natural resources, or the environment.
(j) "Hazardous Substances" means any wastes, substances,
radiation, or materials (whether solids, liquids or gases) (i) which are
hazardous, toxic, infectious, explosive, radioactive, carcinogenic, or
mutagenic; (ii) which are or become defined as a "pollutants,"
"contaminants," "hazardous materials," "hazardous wastes," "hazardous
substances," "toxic substances," "radioactive materials," "solid wastes,"
or other similar designations in, or otherwise subject to regulation
under, any Environmental Laws; (iii) without limitation, which contain
polychlorinated biphenyls (PCBs), asbestos and asbestos-containing
materials, lead-based paints, urea-formaldehyde foam insulation, and
petroleum or petroleum products (including, without limitation, crude
oil or any fraction thereof) or (iv) which pose a hazard to human health,
safety, natural resources, industrial hygiene, or the environment, or an
impediment to working conditions.
Section 3.8. Employee Benefit Plans.
(a) Section 3.8 of the Company Disclosure Schedule contains a
complete list of all material written bonus, vacation, deferred
compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock
and stock option plans, employment or severance contracts, medical,
dental, disability, health and life insurance plans, and other employee
benefit and fringe benefit plans or other Contracts maintained or
contributed to by the Company or any of its Subsidiaries for the benefit
of officers, former officers, employees, former employees, directors,
former directors, or the beneficiaries of any of the foregoing, or
pursuant to which the Company or any of its Subsidiaries may have any
liability that are Contracts with, or plans maintained primarily for the
12<PAGE>
benefit of, individuals employed or rendering services in the United
States and are not multiemployer plans within the meaning of Section
4001(a)(3) of ERISA (as defined in Section 3.8(c)) (collectively (whether
or not material), the "Company Compensation and Benefit Plans").
(b) The Company has delivered to Parent copies of all Company
Compensation and Benefit Plans listed on Section 3.8 of the Company
Disclosure Schedule, including, but not limited to, all amendments
thereto, and all of such copies that have been delivered are true and
correct.
(c) Each of the Company Compensation and Benefit Plans has
been and is being administered in accordance with the terms thereof and
all applicable Laws. Each "employee pension benefit plan" within the
meaning of Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") (each such plan, a "Pension Plan") included in
the Company Compensation and Benefit Plans (a "Company Pension Plan")
which is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue
Service, and the Company is not aware of any circumstances which could
result in the revocation or denial of any such favorable determination
letter. No material "prohibited transaction," within the meaning of
Section 4975 of the Code or Section 406 of ERISA, has occurred with
respect to any Company Compensation and Benefit Plan. There is no
pending or, to the Company's knowledge, threatened Litigation relating to
any of the Company Compensation and Benefit Plans.
(d) No material liability under Title IV of ERISA has been or
is reasonably expected to be incurred by the Company or any of its
Subsidiaries or any entity which is considered one employer with the
Company under Section 4001(a)(15) of ERISA or Section 414 of the Code
(any such entity, a "Company ERISA Affiliate"), other than such
liabilities that have previously been satisfied. No notice of a
"reportable event," within the meaning of Section 4043 of ERISA, for
which the 30-day reporting requirement has not been waived, has been
required to be filed for any Company Pension Plan or by any Company ERISA
Affiliate within the past 12 months.
(e) All contributions, premiums and payments required to be
made under the terms of any Company Compensation and Benefit Plan have
been made, except where the failure to do so does not, individually or in
the aggregate, have a Material Adverse Effect on the Company. Neither
any Company Pension Plan nor any single-employer plan of a Company ERISA
Affiliate has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA.
Neither the Company nor any of its Subsidiaries has provided, or is
required to provide, security to any Company Pension Plan or to any
single-employer plan of a Company ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
13<PAGE>
(f) Under each Company Pension Plan which is a defined benefit
plan, as of the last day of the most recent plan year ended prior to the
date hereof, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in such
Company Pension Plan's most recent actuarial valuation) did not exceed
the then current value of the assets of such Company Pension Plan, and
there has been no adverse change in the financial condition of such
Company Pension Plan (with respect to either assets or benefits) since
the last day of the most recent plan year.
(g) Neither the Company nor any of its Subsidiaries
contributes to or is required to contribute to any multiemployer plan
within the meaning of Section 4001(c)(3) of ERISA ("Multiemployer Plan").
Neither the Company nor any of its Subsidiaries has incurred any material
withdrawal liability (within the meaning of Section 4201 of ERISA) under
any Multiemployer Plan within the past 5 years that has not been
satisfied, nor could any such material withdrawal liability reasonably be
expected to be incurred.
(h) Except as set forth in the Company Compensation and
Benefit Plans listed in Section 3.8 of the Company Disclosure Schedule,
the execution of, and performance of the transactions contemplated in,
this Agreement will not (either alone or upon the occurrence of any
additional or subsequent events):
(i) constitute an event under any Company Compensation
and Benefit Plan, trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation
to fund benefits with respect to any officers and directors of the
Company;
(ii) result in any payment or benefit that will or may be
made by the Company, any of its Subsidiaries, Parent or any of their
respective affiliates that will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code; or
(iii) provide for any payment to any employee or
independent contractor that is not deductible under Section 162(a)(1) or
404 of the Code.
(i) The contributions of the Company and any of its
Subsidiaries to any trust described in Section 501(c)(9) of the Code have
complied with Section 419A of the Code.
(j) Neither the Company nor its Subsidiaries have any
obligations for retiree health and life benefits under any Company
Compensation and Benefit Plan, except as set forth in the Company
Disclosure Schedules. The Company or its Subsidiaries may amend or
terminate any such plan under the terms of such plan at any time without
incurring any material liability thereunder.
14<PAGE>
Section 3.9. Absence of Certain Changes or Events. Except as set
forth in Section 3.9 of the Company Disclosure Schedule, since December
31, 1998, the businesses of the Company and its Subsidiaries have been
conducted in the ordinary course consistent with past practice, the
Company and its Subsidiaries have not engaged in any transaction or
series of related transactions material to the Company and its
Subsidiaries taken as a whole other than in the ordinary course
consistent with past practice, and there has not been any event,
occurrence or development, alone or taken together with all other
existing facts, that, individually or in the aggregate, has a Material
Adverse Effect on the Company.
Section 3.10. Litigation. Except as disclosed in Section 3.10 of
the Company Disclosure Schedule, there is no Litigation pending or, to
the Company's knowledge, threatened against the Company or any of its
Subsidiaries or any of their respective properties. The Company is not
subject to any Decree that, individually or in the aggregate, has a
Material Adverse Effect on the Company.
Section 3.11. Material Contracts.
(a) All of the Company Contracts that are required to be
described in the Company SEC Reports or to be filed as exhibits thereto
are described in the Company SEC Reports or filed as exhibits thereto.
Neither the Company nor any of its Subsidiaries nor any other party is in
breach of or in default in any material respect under any Company
Contract.
(b) Except as disclosed in Section 3.11 of the Company
Disclosure Schedule, there are no material Company Contracts with any
Governmental Entity that will not continue to be binding and in full
force and effect in accordance with its terms as a result of the
consummation of the transactions contemplated herein.
Section 3.12. Labor Matters. As of the date of this Agreement, the
Company and its Subsidiaries do not have any collective bargaining
agreements with any persons employed by the Company or any of its
Subsidiaries or any persons otherwise performing services primarily for
the Company or any of its Subsidiaries, nor is the Company or any of its
Subsidiaries in the process of negotiating any such agreement. There is
no labor strike, dispute or stoppage pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries. None
of the Company or its Subsidiaries is the subject of a proceeding
asserting that it has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel it to
bargain with any labor organization as to wages and conditions of
employment. As of the date of this Agreement there are, to the knowledge
of the Company, no organizational efforts currently being made involving
any of the employees of the Company or any of its Subsidiaries.
Section 3.13. Tax Matters.
(a) The Company and each of its Subsidiaries have:
15<PAGE>
(i) filed all federal, state, local and foreign Tax
Returns (as defined below) required to be filed by them (taking into
account extensions);
(ii) paid or accrued all Taxes (as defined below) shown to
be due on such Tax Returns or which are otherwise due and payable; and
(iii) paid or accrued all Taxes for which a notice of
assessment or collection has been received.
For purposes of this Agreement,
"Code" means the Internal Revenue Code of 1986, as amended.
"Taxes" means any and all federal, state, local, foreign or
other taxes of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto)
imposed by any taxing authority, including, without limitation, taxes or
other charges on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment
compensation, or net worth, and taxes or other charges in the nature of
excise, withholding, ad valorem or value added, and includes, without
limitation, any liability for Taxes of another person, as a transferee or
successor, under Treas. Reg. Section 1.1502-6 or analogous provision of
Law or otherwise; and
"Tax Return" means any return, report or similar statement
(including the attached schedules) required to be filed with respect to
any Tax, including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
(b) Neither the Internal Revenue Service nor any other taxing
authority has asserted in writing any claim for Taxes, or to the
knowledge of the Company, is threatening to assert any claims for Taxes,
against the Company or any of its Subsidiaries. The Company and each of
its Subsidiaries have withheld or collected and paid over to the
appropriate Governmental Entities (or are properly holding for such
payment) all Taxes required by Law to be withheld or collected. There
are no outstanding agreements or waivers extending the statutory period
of limitation applicable to any material Tax Return of the Company or any
of its Subsidiaries. Neither the Company nor any of its Subsidiaries has
made an election under Section 341(f) of the Code. There are no liens
for Taxes upon the assets of the Company or any of its Subsidiaries
(other than liens for Taxes that are not yet due).
(c) Neither the Company nor any of its Subsidiaries:
(i) has any liability under Treasury Regulation Section
1.1502-6 or analogous state, local or foreign law provision, or
(ii) is a party to a Tax sharing or Tax indemnity
agreement or any other agreement of a similar nature with any entity
other than the Company or any of its Subsidiaries that remains in effect
and under which the Company or any such Subsidiary could have any
material liability for Taxes.
16<PAGE>
No claim has been made in writing by a taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not file
Tax Returns that the Company or any of its Subsidiaries is or may be
subject to taxation by that jurisdiction. Neither the Company nor any of
its Subsidiaries is the subject of any currently ongoing audit or
examination with respect to Taxes, nor, to the knowledge of the Company,
has any such audit been threatened or proposed, by any taxing authority.
Section 3.14. Opinion of Financial Advisor. The Board of Directors
of the Company has received written opinion of William Blair & Company
("Blair"), to the effect that, as of such date, the aggregate Merger
Consideration to be received by the holders of the Common Shares (other
than Parent or its affiliates) in the Merger is fair to such shareholders
of the Company from a financial point of view. A copy of the written
opinion of Blair has been delivered to Parent.
Section 3.15. Takeover Laws. The Company has taken all action
required to be taken by it in order to exempt Parent, MergerSub and this
Agreement and the transactions contemplated hereby from, and Parent,
MergerSub and this Agreement are exempt from, the requirements of all
anti-takeover Laws and regulations (collectively, "Takeover Laws") of the
State of Delaware, including without limitation Section 203 of the DGCL.
Section 3.16. Required Vote of the Company Shareholders. The
affirmative vote of the holders of a majority of the Shares outstanding
and entitled to vote at the Company Meeting (the "Company Shareholder
Approval") is required to approve this Agreement and the Merger. No
other vote of the shareholders of the Company is required by Law, the
certificate of incorporation or bylaws of the Company or otherwise in
order for the Company to consummate the Merger and the other transactions
contemplated hereby.
Section 3.17. Finders or Brokers. Neither the Company nor any of
its Subsidiaries has employed any investment banker, broker, finder or
intermediary who might be entitled to any fee or any commission in
connection with or upon consummation of the Merger, except for such fees
and expenses payable by the Company to Blair pursuant to those certain
letter agreements dated March 13, 1998, August 27, 1998 and February 17,
1999 in an aggregate amount not to exceed $635,000, of which $325,000
plus certain out-of-pocket expenses had been paid prior to March 15,
1999.
Section 3.18. Related Party Transactions. Since December 31, 1995,
none of the Company and the Company's Subsidiaries or any officer,
director, affiliate or "associate" (as that term is defined in Rule 12b-2
under the Exchange Act) of the Company has engaged in any transactions
required to be disclosed by the Company in the Company SEC Reports,
except as have been publicly disclosed by the Company or disclosed
herein.
17<PAGE>
Section 3.19. Year 2000. The Company has no knowledge or reason to
believe that any computer software utilized in and material to the
business of the Company or any of the Subsidiaries has or will develop
problems relating to the proper processing or utilization of dates that
span multiple centuries. The Company and the Subsidiaries have taken
reasonable and practicable steps, including, without limitation, (i)
evaluating all computer software utilized in the business of the Company
and (ii) obtaining certifications and other information concerning the
date-handling capabilities of any third party computer software included
in Company's or the Subsidiaries' computer software products to identify,
address, and remediate problems relating to the proper processing or
utilization of dates that span multiple centuries. The Company has fully
disclosed and made available to Parent any and all information and
materials relating to problems with the proper processing or utilization
of dates that span multiple centuries for any computer software utilized
in the business of the Company or any of the Subsidiaries.
Section 3.20. Telecom Licenses; Operations of Licensed Facilities.
The Company and its Subsidiaries do not operate any assets or conduct any
businesses for which the Company or any of its Subsidiaries is required
to hold licenses from the FCC or any state communications regulatory
authority.
Section 3.21. Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion or incorporation
by reference into the Proxy Statement will, at the date the Proxy
Statement is first mailed to the Company's stockholders or at the time of
the Company Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading.
Section 3.22. Property.
(a) Section 3.22(a) of the Company Disclosure Schedule sets
forth all of the real property owned or leased by the Company and its
Subsidiaries that are material to the conduct of business of the Company
and its Subsidiaries taken as a whole. Each of the Company and its
Subsidiaries owns fee title to each parcel of real property owned by it
free and clear of all Liens, except for Permitted Liens (as defined in
this Section 3.22).
(b) With respect to the tangible properties and assets of the
Company and its Subsidiaries (excluding real property) that are material
to the conduct of the business of the Company and its Subsidiaries, the
Company and its Subsidiaries have good title to, or hold pursuant to
valid and enforceable leases, all such properties and assets, with only
such exceptions as, individually or in the aggregate, would not have a
Material Adverse Effect on the Company and subject to the Permitted
Liens. All of the assets of the Company and its Subsidiaries have been
maintained and repaired for their continued operation and are in good
operating condition, reasonable wear and tear excepted, and usable in the
ordinary course of business, except where the failure to be in such
repair or condition or so usable would not individually or in the
aggregate have a Material Adverse Effect on the Company.
18<PAGE>
(c) Neither the Company nor any of its Subsidiaries has
received notice that any party thereto is in default in any material
respect under any material lease, sublease, license, sublicense or use or
occupancy agreement to which it is a party.
(d) As used in this Agreement, "Permitted Liens" shall mean:
(i) statutory liens securing payments not yet delinquent or the validity
of which are being contested in good faith by appropriate actions; (ii)
purchase money liens arising in the ordinary course; (iii) liens for
Taxes not yet due and payable or delinquent; (iv) liens reflected or
reserved against in the balance sheet of the Company included in the
Draft Audited Financials (which have not been discharged); (v) liens
which in the aggregate do not materially detract from the value of or
materially impair the present and continued use of the properties or
assets subject thereto in the usual and normal conduct of the business of
the Company; (vi) liens on leases, subleases, sub-subleases, easements,
licenses, rights of use, rights to access and rights of way arising from
the provisions of such agreements or benefiting or created by any
superior estate, right or interest which is prior in right or prior in
lien to that of the subject lease, sublease, sub-sublease, easement,
license, right of use, right to access or right of way; (vii) any liens
set forth in the title policies, endorsements, title commitments, title
certificates and title reports relating to the Company's interests in
real property, copies of which have been provided to Parent and
MergerSub; and (viii) Liens described in the Company SEC Reports. For
the purposes hereof "Company's real property" and "Company's interests in
real property" shall include the real property and interests therein
owned or held respectively by the Company or any of its Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERSUB
Parent and MergerSub represent and warrant to the Company that:
Section 4.1 Organization, Qualification, Etc. Parent is an
entity duly organized, validly existing and in good standing (where
applicable) under the Laws of Colorado and MergerSub is an entity duly
organized, validly existing and in good standing (where applicable) under
the Laws of Delaware. Each of Parent and MergerSub has the corporate
power and authority to own its assets and to carry on its business as it
is now being conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the ownership of its assets
or the conduct of its business requires such qualification. All the
outstanding shares of capital stock of MergerSub are validly issued,
fully paid and non-assessable and are owned by Parent, directly or
indirectly, free and clear of all Encumbrances, except for Encumbrances
which individually or in the aggregate do not have a Material Adverse
Effect on Parent.
Section 4.2 Corporate Authority; No Violation.
19<PAGE>
(a) Each of Parent and MergerSub has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the
performance by each of Parent and MergerSub of its obligations hereunder
have been duly and validly authorized by the Board of Directors of Parent
and MergerSub and no other corporate proceedings on the part of either
Parent or MergerSub are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by each of Parent and MergerSub and,
assuming this Agreement constitutes a valid and binding agreement of the
other parties hereto, constitutes a valid and binding agreement of each
of Parent and MergerSub, enforceable against Parent or MergerSub, as the
case may be, in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting creditors' rights
generally, or by principles governing the availability of equitable
remedies).
(b) Except for any breach, violation, default, acceleration,
creation or change that does not, individually or in the aggregate, have
a Material Adverse Effect on Parent or MergerSub, the execution, delivery
and performance of this Agreement by Parent and MergerSub does not, and
the consummation by Parent and MergerSub of the Merger and the other
transactions contemplated hereby will not, constitute or result in (i) a
breach or violation of, the certificate of incorporation or bylaws of
Parent or MergerSub, as the case may be, or (ii) a breach or violation
of, or a default under, or an acceleration of any obligations under, or
the creation of a lien, pledge, security interest or other encumbrance on
the assets of either of Parent or MergerSub (with or without notice,
lapse of time or both) pursuant to, any Contract binding upon Parent or
any of its Subsidiaries or MergerSub or (provided, as to consummation,
the filings and notices are made, and approvals are obtained, as referred
to in Section 4.3(c)) any applicable Law or Decree or governmental permit
or license to which Parent or any of its Subsidiaries or MergerSub is
subject.
(c) Other than in connection with or in compliance with the
provisions of the Securities Act, the Exchange Act, the HSR Act, and the
securities or blue sky Laws of the various states and other than the
filing of the Delaware Certificate of Merger with the Delaware Secretary
of State, no authorization, consent or approval of, or filing with, any
Governmental Entity is necessary for the consummation by Parent or
MergerSub of the transactions contemplated by this Agreement, except for
such authorizations, consents, approvals or filings that, if not obtained
or made, would not, individually or in the aggregate, have a Material
Adverse Effect on either Parent or MergerSub.
Section 4.3 Finders or Brokers. Neither Parent nor MergerSub has
employed any investment banker, broker, finder or intermediary who might
be entitled to any fee or any commission in connection with or upon
consummation of the Merger.
Section 4.4 Financing. Parent has or has available to it cash or
cash equivalents or lines of credit for use in connection with the
acquisition of the Company in an aggregate amount necessary to consummate
the Merger.
20<PAGE>
ARTICLE V
COVENANTS AND AGREEMENTS
Parent, MergerSub and the Company hereby covenant and agree with one
another as follows:
Section 5.1 Conduct of Business by the Company. During the
period between the date hereof and the Effective Time, except as may
otherwise be consented to in writing by the other parties hereto (which
consent shall not be unreasonably withheld) or as may be expressly
permitted pursuant to this Agreement or as set forth in Section 5.1 of
the Company Disclosure Schedule, as applicable, the Company shall, and
shall cause each of its Subsidiaries to, conduct its operations in the
ordinary and usual course of business as heretofore conducted and
preserve intact its business organization and goodwill in all material
respects, keep available the services of its officers and employees as a
group, subject to changes in the ordinary course, and maintain
satisfactory relationships with suppliers, distributors, customers and
others having business relationships with it. Without limiting the
generality of the foregoing, unless in each case in receipt of a consent
as set forth above the Company shall not, and shall cause its
Subsidiaries not to:
(a) authorize, declare, set aside or pay any dividends on or
make any distribution with respect to its outstanding shares of stock,
except that wholly owned Subsidiaries of the Company may pay dividends on
or make distributions of cash to the Company or another wholly owned
Subsidiary of the Company;
(b) except in the ordinary course of business consistent with
past practice, enter into or amend any employment, severance or similar
agreements or arrangements with, or grant any bonus or salary increases
or otherwise increase the compensation or benefits provided to, any of
their respective employees;
(c) except as expressly permitted by Section 5.8, authorize or
publicly announce an intention to authorize, or enter into an agreement
with respect to, or take any action to consummate any agreement or
arrangement with respect to:
(i) any merger, consolidation or business combination
(other than the Merger),
(ii) any liquidation, dissolution, restructuring,
recapitalization or other reorganization or
(iii) any acquisition or disposition of a material
amount of assets (other than purchases and sales of raw materials,
supplies, inventory, products or services in the ordinary course of
business consistent with past practice) or securities, or any release or
relinquishment of any material rights under any material Contracts;
(d) propose or adopt any amendments to its certificate of
incorporation or bylaws;
21<PAGE>
(e) issue, sell, pledge or otherwise dispose of or encumber
any capital stock owned by it in any of its Subsidiaries;
(f) except, in the case of the Company, upon exercise of
Options outstanding on the date hereof as set forth in Section 3.2,
issue, sell or otherwise permit to become outstanding any shares of its
capital stock, or effect any stock split or reverse stock split or
otherwise change its equity capitalization as it existed on March 15,
1999, or redeem, repurchase or otherwise acquire any shares of its
capital stock;
(g) grant or award any options (other than in the ordinary
course of business), warrants, conversion rights or other rights to
acquire any shares of capital stock of the Company or its Subsidiaries,
or enter into any other Share Arrangement relating to its capital stock;
(h) except as required by applicable Law or an existing
Contract disclosed to Parent, amend the terms of any Company Compensation
or Benefit Plan, including the Company Plans or adopt any new employee
benefit or compensation plan;
(i) except pursuant to existing credit agreements or other
agreements of the type disclosed in Section 5.1 of the Company Disclosure
Schedule and entered into in the ordinary course consistent with past
practice, incur, create, assume or otherwise become liable for any
indebtedness for borrowed money;
(j) except in the ordinary course of business, consistent with
past practice, transfer, lease, license, mortgage, pledge or encumber any
material asset or material amount of assets;
(k) incur or commit to any capital expenditure in excess of
$50,000 individually or $250,000 in the aggregate;
(l) implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by GAAP
or Regulation S-X promulgated under the Exchange Act;
(m) settle any Litigation to which it is a party or the
indemnifying party or indemnifying any third party with respect to such
Litigation; or
(n) agree or commit to do anything prohibited by this Section
5.1.
22<PAGE>
Section 5.2 Investigation. During the period between the date
hereof and the Effective Time, the Company shall afford Parent and
Parent's officers, employees, accountants, counsel and other authorized
representatives reasonable access, during normal business hours, to its
and its Subsidiaries':
(a) properties, contracts, books and records (including but
not limited to (i) tax returns, (ii) audits, assessments, reports,
studies, monitoring results and any other information or documents
relevant to the environment or occupational health and safety and (iii)
accountants work papers);
(b) any report, schedule or other document filed or received
by it pursuant to the requirements of federal or state securities Laws;
(c) any other information concerning its business, properties
and personnel as the other may reasonably request; and
(d) to (i) conduct tests of the soil, surface or subsurface
waters, and air quality at, in, on, beneath or about any of its
properties, in a manner consistent with good engineering practice; (ii)
inspect all records, reports, permits, applications, monitoring results,
studies, correspondence, data and any other information or documents
relevant to Hazardous Substances or other environmental conditions, and
(iii) to inspect all buildings and equipment at any of its properties for
asbestos-containing materials or other Hazardous Substances; provided,
however, that no investigation pursuant to this Section 5.2 shall affect
or be deemed to modify any representation or warranty made by the
Company, Parent or MergerSub.
Parent, MergerSub and the Company hereby agree that each of
them will treat any such information in accordance with the Confidential
Disclosure Agreement dated February 25, 1999 between the Company and
Parent (the "Confidentiality Agreement"). Notwithstanding any provision
of this Agreement to the contrary, no party shall be obligated to make
any disclosure in violation of applicable Laws or if disclosure would
cause a forfeiture of attorney-client privilege. The Company and Parent
will make appropriate substitute disclosure arrangements if the
circumstances of the preceding sentence apply.
Section 5.3 Stockholder Approval; Filings.
(a) Subject to the terms and conditions contained herein, the
Company shall submit this Agreement and the Merger for approval to the
holders of Shares at a meeting to be duly held for this purpose by the
Company (the "Company Meeting"). The Company shall take all action in
accordance with the federal securities Laws, the DGCL and its articles of
organization, certificate of incorporation, and bylaws necessary to duly
convene the Company Meeting. In the absence of a Company Competing
Transaction (as defined in Section 5.7(a)) or a Company Business
Combination (as defined in Section 7.3(d)) that the Board of Directors of
the Company believes to be a Superior Transaction (as defined in Section
5.7(d)), the Board of Directors of the Company shall recommend that the
Company's stockholders approve such matters, which recommendation shall
23<PAGE>
be contained in the Proxy Statement (as defined below), and use its
reasonable best efforts to take all lawful action to solicit such
approval by such stockholders.
(b) Each of the Company and Parent agrees, as to itself and
its Subsidiaries, that none of the information supplied or to be supplied
by it for inclusion or incorporation by reference in the proxy statement
to be filed with the SEC in connection with the Merger (the "Proxy
Statement") and any amendment or supplement thereto will, at the date of
mailing to stockholders and at the time of the Company Meeting, contain
any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of
the circumstances under which such statements are made, not misleading.
Each of the Company and Parent further agrees that if it shall become
aware prior to the time of the Company Meeting of any information that
would cause any of the statements in the Proxy Statement to be false or
misleading with respect to any material fact, or to omit to state any
material fact necessary in order to make the statements made therein not
false or misleading, to promptly inform the other party thereof and to
take the necessary steps to correct the Proxy Statement.
Section 5.4 Additional Reports. The Company shall furnish copies
of any Company SEC Reports that it files with the SEC on or after the
date hereof, and the Company represents and warrants that as of the
respective dates thereof, such reports will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. Any
unaudited consolidated interim financial statements included in such
reports (including any related notes and schedules) will fairly present,
in all material respects, the financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the results of
operations and changes in financial position or other information
included therein for the periods or as of the dates then ended, in each
case in accordance with past practice and GAAP consistently applied
during the periods involved (except as otherwise disclosed in the notes
thereto and subject, where appropriate, to normal year-end adjustments).
Section 5.5 Reasonable Best Efforts. Each of the parties shall
use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including (a) the obtaining of (and cooperating with the other
parties to obtain) waivers, consents, exemptions, licenses, permits,
authorizations, orders and approvals from, and the making of all other
necessary registrations and filings with, Governmental Entities
(including, without limitation, filings required to be made pursuant to
the HSR Act), (b) the obtaining of (and cooperating with the other
parties to obtain) all waivers, consents, exemptions, licenses,
authorizations and approvals from third parties which may be necessary or
desirable to be obtained by reason of the Merger or in order to
consummate the transactions contemplated by, and to fully carry out the
24<PAGE>
purposes of and realize the benefits of, this Agreement, and (c) the
execution and delivery of any additional instruments necessary to
consummate the transaction contemplated by, and to fully carry out the
purposes of and realize the benefits of, this Agreement.
Section 5.6 Takeover Statutes. None of the parties shall take
any action that would cause the transactions contemplated by this
Agreement to be subject to the requirements of any Takeover Law. If any
Takeover Law shall become applicable to the transactions contemplated by
this Agreement, each of the Company and Parent and the members of their
respective Boards of Directors shall grant such approvals and take such
actions as are necessary so that the transactions contemplated hereby may
be consummated as promptly as practicable on the terms contemplated
hereby, and otherwise act to eliminate or minimize the effects of such
Takeover Law on the transactions contemplated hereby.
Section 5.7 No Solicitation.
(a) During the term of this Agreement, the Company shall not,
and shall not authorize or permit any of its Subsidiaries or any of its
or its Subsidiaries' directors, officers, employees, agents or
representatives, directly or indirectly, to solicit or initiate, or
furnish or disclose non-public information in furtherance of, any
inquiries or the making of any proposal with respect to any
recapitalization, merger, consolidation or other business combination
involving the Company, or the acquisition of 10% or more of the
outstanding capital stock of the Company (other than upon exercise of
Options and Warrants which are outstanding as of the date hereof) or any
Subsidiary of the Company or, the acquisition of 10% or more of the
assets of the Company and its Subsidiaries, taken as a whole, in a single
transaction or a series of related transactions, or any combination of
the foregoing (a "Company Competing Transaction"), or negotiate or
otherwise engage in discussions with any person (other than Parent,
MergerSub or their respective directors, officers, employees, agents or
representatives) with respect to any Company Competing Transaction or
enter into any agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the Merger or any other
transactions contemplated by this Agreement, and will immediately cease
all existing activities, discussions and negotiations with any parties
conducted heretofore with respect to any proposal for a Company Competing
Transaction; provided that, at any time prior to the approval of the
Merger by the shareholders of the Company, the Company may furnish
information to, and negotiate or otherwise engage in discussions with,
any party (a "Company Third Party") who (x) delivers a bona fide written
proposal for a Company Competing Transaction which was not solicited or
initiated by the Company, directly or indirectly, after the date of this
Agreement and (y) enters into an appropriate confidentiality agreement
with the Company (which agreement shall be no less favorable to the
Company than the Confidentiality Agreement, and a copy of which will be
delivered to Parent promptly after the execution thereof), if, but only
if, the Board of Directors of the Company determines in good faith by a
majority vote after consultation with the Company's independent financial
advisors, that such proposal could reasonably be expected to lead to a
Superior Transaction; provided further, that nothing in this Agreement
25<PAGE>
shall prevent the Company from complying with the provisions of Rule 14e-
2 promulgated under the Exchange Act with respect to a Company Competing
Transaction.
(b) From and after the execution of this Agreement, the
Company shall promptly advise Parent in writing of the receipt, directly
or indirectly, of any inquiries or proposals relating to a Company
Competing Transaction (including the specific terms thereof and the
identity of the third party), shall keep Parent reasonably informed of
the status of any such inquiries or proposals, of the furnishing of
information to the Company Third Party, and of any negotiations or
discussions relating thereto (including any changes or adjustments to the
material terms of such Company Competing Transaction as a result of
negotiations or otherwise).
(c) If, prior to the approval of the Merger by the
shareholders of the Company, the Board of Directors of the Company
determines in good faith by a majority vote, with respect to any written
proposal from a Company Third Party for a Company Competing Transaction
received after the date hereof that was not solicited or initiated by the
Company, directly or indirectly, after the date of this Agreement, that
such Company Competing Transaction is a Superior Transaction and is in
the best interest of the Company and its shareholders, and the Board of
Directors of the Company has received a written opinion (a copy of which
shall have been delivered to Parent) from the Company's independent
financial advisors that the Company Competing Transaction is a Superior
Transaction, then the Company may terminate this Agreement and enter into
an acquisition agreement for the Superior Transaction; provided that,
prior to any such termination, and in order for such termination to be
effective, (i) the Company shall provide Parent two business days'
written notice that it intends to terminate this Agreement pursuant to
this Section 5.7(c), identifying the Superior Transaction and the parties
thereto and delivering an accurate description of all material terms of
the Superior Transaction to be entered into and (ii) on the date of
termination (provided that the opinion from the Company's financial
advisor referred to above shall continue in effect without revocation,
revision or modification), the Company shall deliver to Parent (A) a
written notice of termination of this Agreement pursuant to this Section
5.7(c), (B) a wire transfer of immediately available funds in the amount
of the Company Termination Fee and the Commitment Expenses (each as
defined in Section 7.3), and (C) a written acknowledgment from the
Company and each other party to the Superior Transaction that it will not
contest the payment of the Company Termination Fee and Commitment
Expenses, and Parent shall deliver to Company a full release.
(d) "Superior Transaction" shall mean a Company Competing
Transaction which the Board of Directors of the Company reasonably
determines is more favorable to the Company and its shareholders than the
Merger and which is not subject to any financing condition. Reference in
the foregoing definition to the "Merger" shall include any proposed
alteration of the terms of this Agreement committed to in writing by
Parent in response to such Company Competing Transaction.
26<PAGE>
Section 5.8 Public Announcements. Each of the parties agrees
that it shall not, nor shall any of their respective affiliates, issue or
cause the publication of any press release or other public announcement
with respect to the Merger, this Agreement or the transactions
contemplated hereby without the prior approval of the other party, except
such disclosure as may be required by Law, any listing agreement with a
national securities exchange or any of the rules of the NASDAQ Stock
Market; provided, if such disclosure is required by Law, any such listing
agreement or any such rules, such disclosure shall not be made without
prior consultation of the other parties.
Section 5.9 Indemnification and Insurance.
(a) Parent and MergerSub agree that all rights to exculpation
and indemnification for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former directors
or officers of the Company or any of its Subsidiaries (the "Indemnified
Parties") as provided in its articles of organization or bylaws or in any
agreement (collectively, the "Company Indemnity Provisions") shall
survive the Merger and shall continue in full force and effect in
accordance with their terms.
(b) For two years from the Effective Time, Parent shall
indemnify, defend and hold harmless each of the Indemnified Parties for
acts or omissions occurring at or prior to the Effective Time (including
any such act or omission as to which Parent or the Surviving Corporation
has received a claim during such two year period but as to which no final
judicial determination or settlement has been made) for which the
Indemnified Parties would have been entitled to indemnification under the
Company Indemnity Provisions to the fullest extent permitted by
applicable Law, including with respect to taking all actions necessary to
advance expenses to the extent permitted by applicable Law and, in any
such case, to the extent contemplated by the Company Indemnity
Provisions.
(c) Parent shall use its reasonable best efforts to obtain and
maintain in effect, or cause the Surviving Corporation to obtain and
maintain in effect, for three years from the Effective Time, the
Company's current directors' and officers' liability insurance covering
those persons who are currently covered by the Company's directors' and
officers' liability insurance policy (a copy of which has been heretofore
delivered to Parent); provided, however, that in no event shall Parent or
the Surviving Corporation be required to expend in any year an amount in
excess of 150% of the annual premiums currently paid by the Company for
such insurance, and, provided, further, that if the annual premiums of
such insurance coverage exceed such amount, Parent shall or shall cause
the Surviving Corporation to obtain a policy with the greatest coverage
available for a cost not exceeding such amount.
(d) The provisions of this Section 5.9 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and
his or her heirs and representatives and may not be amended or altered so
as to materially and adversely affect the rights of any Indemnified Party
described in this Section 5.9 without the written consent of such
affected Indemnified Party.
27<PAGE>
Section 5.10 Notification of Certain Matters. Each of the Company
and Parent shall give prompt notice to the other of any fact, event or
circumstance known to it that (i) is reasonably likely, individually or
taken together with all other existing facts, events and circumstances
known to it, to result in any Material Adverse Effect with respect to it,
or (ii) would cause or constitute a material breach of any of its
representations, warranties, covenants or agreements contained herein.
Section 5.11 Employee Plans and Benefit Arrangements.
(a) From and after the Effective Time, subject to applicable
Law, Parent shall cause the Surviving Corporation and its Subsidiaries to
honor the obligations of the Company and its Subsidiaries under all
existing Company Compensation and Benefit Plans.
(b) Parent agrees that, for at least one year from the
Effective Time, subject to applicable Law, the Surviving Corporation and
its Subsidiaries shall provide benefits to the individuals who, as of the
Effective Time, were employees of the Company or any of its Subsidiaries
which will, in the aggregate, be on the same terms and conditions as
similarly situated employees of Parent. Nothing herein shall be
construed to prevent the termination of employment of any employee or any
amendment or termination of any Company Compensation and Benefit Plan to
the extent permitted by the terms and conditions thereof as in effect on
the date hereof.
(c) After the Effective Time, Parent shall grant (if
applicable), and shall cause the Surviving Corporation and its
Subsidiaries to grant, to all individuals who are, as of the Effective
Time, employees of the Company or any of its Subsidiaries credit for all
service with the Company, any of its present and former Subsidiaries, any
other affiliate of the Company and their respective predecessors
(collectively, the "Company Affiliated Group") prior to the Effective
Time for purposes of eligibility and vesting (but not benefit accrual) to
the extent that prior service with Parent or its Subsidiaries is
recognized in respect of employees other than the employees of the
Company Affiliated Group and to the extent such service was recognized
under the corresponding plan of the Company and its Subsidiaries prior to
the Effective Time. Any employee benefit plan which provides medical,
dental or life insurance benefits after the Effective Time to any
individual who is a current or former employee of the Company Affiliated
Group as of the Effective Time or a dependent thereof shall, with respect
to such individuals, waive any waiting periods and any pre-existing
conditions and actively-at-work exclusions to the extent so waived under
present policy of the Company Affiliated Group and shall provide that any
expenses incurred on or before the Effective Time by such individuals
shall be taken into account under such plans for purposes of satisfying
applicable deductible or coinsurance provisions to the extent taken into
account under present policy of the Company Affiliated Group.
(d) The Company shall amend all trusts and other funding
arrangements to the extent necessary to provide that no event which
occurs in connection with the transactions contemplated by this Agreement
shall require the Company, the Surviving Corporation, or any of their
affiliates to make any payment of cash or other property to any such
trust or funding arrangement.
28<PAGE>
Section 5.12 Speer Financing. Upon the closing of the
transactions contemplated under that certain Asset Purchase Agreement
dated as of February 16, 1999 by and among Parent, Speer Communications
Holdings Limited Partnership, a Nevada limited partnership, Speer Virtual
Media Limited Partnership, a Nevada limited partnership, Speer World Wide
Digital Limited Partnership, a Nevada limited partnership, Speer
Productions Limited Partnership, a Nevada limited partnership,
Professional Video Services Corporation, a Delaware corporation, and
Enhanced Services of Nevada, Inc., a Nevada corporation, RMS Limited
Partnership, a Nevada limited partnership, and Roy M. Speer, Parent shall
assume the promissory notes and loan agreements in effect between Speer
Communications Holdings Limited Partnership and the Company in an
aggregate amount not to exceed $5,000,000 of which $3,750,000 has been
loaned to the Company as of the date hereof (the "Line of Credit"). In
the event such closing occurs, none of Parent, MergerSub nor any
affiliate shall accelerate or demand the payment under the Line of Credit
so assumed of any amounts outstanding thereunder prior to the termination
of this Agreement in accordance with its terms, and Parent agrees to
extend additional credit under the Line of Credit in accordance with and
subject to the terms and provisions thereof.
Section 5.13 Delivery of Final Audited Financials. Not later than
the earlier of (a) ten days from the date hereof and (b) two business
days prior to the filing of the Proxy Statement with the SEC, the Company
shall deliver to Parent final audited consolidated financial statements
of the Company as of and for the fiscal year ended December 31, 1998 (the
"Final Audited Financials").
Section 5.14 Modification of Merger Structure. The parties hereto
acknowledge that Parent has had limited opportunity to examine the
financial and tax condition of the Company. Accordingly, the Company
agrees that Parent shall have the right, within 10 business days from the
date hereof, to alter the structure of the Merger to provide that the
Company be the surviving corporation in the Merger and in the event
Parent elects to make such alteration the Company agrees to enter into an
amendment to this Agreement to effect such election accordingly;
provided, however, that the Company shall have no obligation and Parent
shall have no right to cause any other change to the terms or conditions
of this Agreement.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger
shall be subject to the fulfillment at or prior to the Closing Date (or
waiver by the party for whose benefit the applicable condition exists) of
the following conditions:
(a) The holders of the issued and outstanding Shares shall
have duly approved this Agreement and the Merger all in accordance with
applicable Law, the certificate of incorporation and bylaws of the
Company, and the rules of the NASDAQ Stock Market Smallcap Market.
29<PAGE>
(b) All regulatory approvals required to consummate the
transactions contemplated hereby shall have been obtained and shall be in
full force and effect and all statutory waiting periods in respect
thereof shall have expired or been terminated, other than any such
regulatory approvals the failure to obtain which is not reasonably
likely, individually, in the aggregate or together with all other
existing facts, events and circumstances, to result in any Material
Adverse Effect on the Company (in the case of Parent's obligation to
close) or on Parent (in the case of the Company's obligation to close).
(c) No Law or Decree shall have been enacted, entered,
promulgated, or enforced by any court or other tribunal or Governmental
Entity which prohibits or makes illegal the consummation of any of the
transactions contemplated hereby. In the event any such Decree shall
have been issued, each party shall use its reasonable efforts to remove
any such Decree.
(d) Prior to April 1, 1999, the Company shall have received
from each of Mr. Didier Primat (the beneficial owner of the Shares held
by Alta Investissements SA) and Vulcan Ventures Incorporated ("Vulcan")
or their respective successors extensions for payment of those certain
loans each of which is up to $2,000,000 (the "Preferred Shareholder
Loans") in aggregate principal amount from Mr. Primat and Vulcan to the
Company from April 1, 1999 to August 1, 1999.
Section 6.2 Conditions to Obligations of the Company to Effect
the Merger. The obligation of the Company to effect the Merger is
further subject to the conditions that:
(a) The representations and warranties of Parent and MergerSub
contained herein (which for purposes of this clause (a) shall be read as
though none of them contained any Material Adverse Effect or materiality
qualification) shall be true and correct in all respects as of the
Closing Date with the same effect as though made as of the Closing Date
(provided that any representations and warranties made as of a specified
date shall be required only to continue on the Closing Date to be true
and correct as of such specified date) except (i) for changes
specifically permitted by the terms of this Agreement and (ii) where the
failure of the representations and warranties to be true and correct in
all respects would not in the aggregate have a Material Adverse Effect on
either Parent or MergerSub.
(b) Each of Parent and MergerSub shall have in all material
respects performed all obligations and complied with all covenants
required by this Agreement to be performed or complied with by it at or
prior to the Closing Date.
(c) Each of Parent and MergerSub shall have delivered to the
Company a certificate, dated the Closing Date and signed by its President
or a Vice President, certifying the satisfaction of the conditions set
forth in the foregoing clauses (a) and (b).
(d) Parent shall have undertaken to cause the Surviving
Corporation to pay off the Preferred Shareholder Loans no later than one
business day subsequent to the Closing Date.
30<PAGE>
Section 6.3 Conditions to Obligations of Parent to Effect the
Merger. The obligation of Parent to effect the Merger is further subject
to the conditions that:
(a) The representations and warranties of the Company
contained herein (which for purposes of this clause (a) shall be read as
though none of them contained any Material Adverse Effect or materiality
qualification) shall be true and correct in all respects as of the
Closing Date with the same effect as though made as of the Closing Date
(provided that any representations and warranties made as of a specified
date shall be required only to continue on the Closing Date to be true
and correct as of such specified date) except (i) for changes
specifically permitted by the terms of this Agreement and (ii) where the
failure of the representations and warranties to be true and correct in
all respects would not in the aggregate have a Material Adverse Effect on
the Company.
(b) The Company shall have in all material respects performed
all obligations and complied with all covenants required by this
Agreement to be performed or complied with by it at or prior to the
Closing Date.
(c) The Company shall have delivered to Parent a certificate,
dated the Closing Date and signed by its President or a Vice President,
certifying the satisfaction of the conditions set forth in the foregoing
clauses (a) and (b).
ARTICLE VII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
Section 7.1 Termination or Abandonment. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time (notwithstanding any approval of this Agreement by the
shareholders of the Company):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not
have been consummated before July 15, 1999; provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to perform any covenant or
obligation under this Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date;
(c) by Parent if (i) the Board of Directors of the Company
shall or shall resolve to (A) withdraw the Company Board Recommendation,
(B) modify such recommendation in a manner adverse to Parent or MergerSub
or refuse to affirm the Company Board Recommendation as promptly as
practicable (but in any case within 10 business days) after receipt of
any written request from Parent which request was made on a reasonable
basis, or (C) approve or recommend any proposed Company Business
Combination (as defined in Section 7.3(d)), or (ii) the Company has
failed to call the Company Meeting or to mail the Proxy Statement to its
shareholders on or before June 7, 1999, or has failed to include in such
statement mailed by the Company the Company Board Recommendation;
31<PAGE>
(d) by Parent or the Company if at the Company Meeting
(including any adjournment or postponement thereof) the requisite vote of
the shareholders of the Company to approve this Agreement and the Merger
shall not have been obtained;
(e) by either the Company or Parent, if there shall be any Law
or Decree that prohibits or makes illegal consummation of the Merger or
if any Decree enjoining Parent or the Company from consummating the
Merger is entered and such Decree shall become final and nonappealable;
(f) by Parent or the Company if there shall have been a
material breach by the other of any of its representations, warranties,
covenants or agreements contained in this Agreement, which breach would
result in the failure to satisfy one or more of the conditions set forth
in Section 6.2 (in the case of a breach by the Company) or Section 6.3
(in the case of a breach by Parent), and such breach shall be incapable
of being cured or, if capable of being cured, shall not have been cured
within 30 days after written notice thereof shall have been received by
the party alleged to be in breach;
(g) by Parent if (i) the Company has filed a petition in
bankruptcy, is insolvent or has sought relief under any law related to
the Company's financial condition or its ability to meet its payment
obligations or (ii) any involuntary petition in bankruptcy has been filed
against Company, or any relief under any such law has been sought by any
creditor(s) of Company, unless such involuntary petition is dismissed, or
such relief is denied, within 30 days after it has been filed or sought;
or
(h) by Parent if (i) either (x) the aggregate liabilities of
the Company and its Subsidiaries taken as a whole or (y) the consolidated
net working capital of the Company and its Subsidiaries, each as set
forth on the Final Audited Financials, is subject to an adverse change in
excess of 3% of such aggregate liabilities or consolidated net working
capital, respectively, as set forth in the Draft Audited Financials or
(ii) the Company fails to deliver the Final Audited Financials in
accordance with the time parameters set forth in Section 5.13.
Section 7.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 7.1, this Agreement,
except for the provisions of this Section 7.2 and Sections 7.3, 8.2 and
8.4 shall become void and have no effect, without any liability on the
part of any party or any of its affiliates. Notwithstanding the
foregoing, nothing in this Section 7.2 shall relieve any party to this
Agreement of liability for any willful breach of any provision of this
Agreement.
Section 7.3 Termination Payments.
(a) Upon the happening of a Company Triggering Event (as
defined below), the Company shall pay to Parent (or to any Subsidiary of
Parent designated in writing by Parent to the Company) the amount of
$750,000 (the "Company Termination Fee") (plus any Expense Fee that may
be payable in the same circumstances), by wire transfer of immediately
available funds
32<PAGE>
(i) on the second business day after such termination in
the case of clause (a) of the definition of Company Triggering Event,
(ii) on or prior to the date of such termination, in the
case of clause (c) of the definition of Company Triggering Event, or
(iii) on the earlier of the date an agreement is
entered into with respect to a Company Business Combination (as defined
in Section 7.3(d)) or a Company Business Combination is consummated, in
the case of clauses (b) or (d) of the definition of Company Triggering
Event. In no event shall more than one Company Termination Fee be
payable under this Agreement.
"Company Triggering Event" means any one of the following:
a) a termination of this Agreement by Parent
pursuant to Section 7.1(c);
b) a termination of this Agreement by Parent or the
Company pursuant to Section 7.1(d), if (1) any
Company Business Combination is publicly
proposed or announced on or after the date
hereof and prior to the Company Meeting and (2)
any Company Business Combination is entered
into, agreed to or consummated by the Company or
any of its subsidiaries with the other party or
parties to such publicly proposed or announced
Company Business Combination within 12 months of
such termination of this Agreement;
c) a termination of this Agreement by Parent
pursuant to Section 7.1(f) (but only if the
breach of warranty, representation, covenant or
agreement that gives rise to such termination
arises out of bad faith or willful misconduct of
the Company), if any Company Business
Combination is entered into, agreed to or
consummated by the Company within 6 months of
such termination of this Agreement with a party
with which the Company had contact prior to such
termination.
(b) Notwithstanding Section 8.2, if this Agreement is
terminated by Parent or the Company pursuant to Sections 7.1(d) or
7.1(h), then the Company shall pay to Parent, on the second business day
after such termination, by wire transfer of immediately available funds,
a cash amount necessary to compensate the Parent for all reasonable fees
and expenses incurred at any time prior to such termination by it or on
its behalf in connection with the Merger, the preparation of this
Agreement and the transactions contemplated by this Agreement; provided
that Parent shall provide reasonable records relating to such fees and
expenses upon request, and further providing that such fees and expenses
shall not exceed $250,000 in the aggregate.
33<PAGE>
(c) The parties acknowledge that the agreements contained in
paragraphs (a) through (c) of this Section 7.3 are an integral part of
the transactions contemplated by this Agreement, and that, without these
agreements, Parent would not enter into this Agreement; accordingly, if
the Company fails to pay promptly any fee payable by it pursuant to this
Section 7.3, then the Company shall pay to the Parent its costs and
expenses (including attorneys' fees) in connection with such suit,
together with interest on the amount of the fee at the prime or base rate
of Norwest Bank, N.A. from the date such payment was due under this
Agreement until the date of payment.
(d) "Company Business Combination" shall mean:
(i) any merger, consolidation or other business
combination as a result of which the shareholders of the Company would
hold less than 50% of the voting securities outstanding following that
transaction;
(ii) the acquisition of 50% or more of the outstanding
capital stock of the Company; or
(iii) the acquisition of 50% or more of the assets of
the Company and its Subsidiaries taken as a whole (including capital
stock of any Subsidiary); provided that solely for purposes of clause
(b)(1) of the definition of Company Triggering Event, the percentage in
clause (i) of this definition shall be deemed to be 75% and the
percentage in clauses (ii) and (iii) of this definition shall be deemed
to be 25%.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Survival of Representations and Warranties. None
of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the
Merger, except for the agreements set forth in Article II, the provisions
of Section 5.9, Section 5.11 and this Section 8.1.
Section 8.2 Expenses. Subject to the provisions of Section 7.3,
(a) whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such
expenses, except that the expenses incurred in connection with (i) the
preparation, filing, printing and mailing the Proxy Statement (including
registration and filing fees relating thereto) shall be paid by the
Company and (ii) the fee related to the filing of a premerger
notification notice to be submitted in accordance with the requirements
of the HSR Act shall be paid 50% by Parent and 50% by the Company and (b)
if the Merger is consummated, all transfer taxes shall be paid by the
Company.
34<PAGE>
Section 8.3 Counterparts; Effectiveness. This Agreement may be
executed in two or more consecutive counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument, and shall become effective when one or
more counterparts have been signed by each of the parties and delivered
(by telecopy or otherwise) to the other parties.
Section 8.4 Governing Law. This Agreement shall be governed by
and construed in accordance with the Laws of the State of Delaware,
without regard to the principles of conflicts of Laws thereof.
Section 8.5 Notices. All notices and other communications
hereunder shall be in writing (including telecopy or similar writing) and
shall be effective (a) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section 8.5 and the
appropriate telecopy confirmation is received or (b) if given by any
other means, when delivered at the address specified in this Section 8.5
(or at such other address as may be provided in accordance with this
section):
To the Company:
Precision Systems, Inc.
11800 30th Court North
St. Petersburg, Florida 33716
Attn: Kenneth M. Clinebell
Telephone: (727) 572-9300
Facsimile: (727) 573-9193
copy to:
Foley & Lardner
100 North Tampa Street
Suite 2700
Tampa, Florida 33602
Attn: David L. Robbins
Telephone: (813) 225-4134
Facsimile: (813) 221-4210
and
Troutman Sanders LLP
600 Peachtree Street N.E.
Suite 5200
Atlanta, Georgia 30308
Attn: James L. Smith III, Esq.
Telephone: (404) 885-3111
Facsimile: (404) 962-6687
To Parent or MergerSub:
Anschutz Digital Media, Inc.
555 Seventeenth Street, Suite 2400
Denver, Colorado 80202
Attention: Craig Slater
Telephone: (303) 298-1000
Facsimile: (303) 298-8881
35<PAGE>
copy to:
Hogan & Hartson L.L.P.
One Tabor Center, Suite 1500
1200 Seventeenth Street
Denver, Colorado 80202
Attention: Steven A. Cohen
Telephone: (303) 899-7300
Facsimile: (303) 899-7333
Section 8.6 Assignment; Binding Effect. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of Law or
otherwise) without the prior written consent of the other parties;
provided however, that MergerSub may assign all of its rights and
obligations under this Agreement and the transactions contemplated hereby
to any other Subsidiary of Parent. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns.
Section 8.7 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
Section 8.8 Enforcement of Agreement. The parties hereto agree
that money damages or other remedy at Law would not be sufficient or
adequate remedy for any breach or violation of, or a default under, this
Agreement by them and that in addition to all other remedies available to
them, each of them shall be entitled to the fullest extent permitted by
Law to an injunction restraining such breach, violation or default or
threatened breach, violation or default and to any other equitable
relief, including, without limitation, specific performance, without bond
or other security being required.
Section 8.9 Miscellaneous. This Agreement:
(a) along with the Confidentiality Agreement, Exhibits and
Disclosure Schedules hereto, constitutes the entire agreement, and
supersedes all other prior agreements and understandings, both written
and oral, between the parties, or any of them, with respect to the
subject matter hereof and thereof; and
(b) except for the provisions of Section 5.9, is not intended
to and shall not confer upon any person other than the parties hereto any
rights or remedies hereunder.
Section 8.10 Headings. Headings of the Articles and Sections of
this Agreement are for convenience of the parties only, and shall be
given no substantive or interpretive effect whatsoever.
36<PAGE>
Section 8.11 Certain Definitions. References in this Agreement to
"Subsidiaries" of the Company or Parent shall mean any corporation or
other form of legal entity of which more than 50% of the outstanding
voting securities are on the date hereof directly or indirectly owned by
the Company or Parent, as the case may be. References in this Agreement
(except as specifically otherwise defined) to "affiliates" shall mean, as
to any person, any other person which, directly or indirectly, controls,
or is controlled by, or is under common control with, such person. As
used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies of a person, whether through the
ownership of securities or partnership of other ownership interests, by
contract or otherwise. References in the Agreement to "person" shall
mean an individual, a corporation, a partnership, an association, a trust
or any other entity or organization, including, without limitation, a
governmental body or authority.
Section 8.12 Knowledge. Reference to the "knowledge" of any
person that is not an individual shall be to the knowledge of the
executive officers of such person and, with respect to representations
and warranties made or deemed to be made as of the Closing Date, unless
expressly limited to a specified date of this Agreement, shall include
knowledge obtained at any time after the date hereof and prior to the
Closing Date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
ANSCHUTZ DIGITAL MEDIA, INC.
By: /s/Craig D. Slater
------------------------------
Name: Craig D. Slater
Title: Vice President
PS ACQUISITIONS, INC.
By: /s/Craig D. Slater
------------------------------
Name: Craig D. Slater
Title: Vice President
PRECISION SYSTEMS, INC.
By: /s/Kenneth M. Clinebell
------------------------------
Name: Kenneth M. Clinebell
Title: Chief Financial Officer
37<PAGE>
