<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------------------
FORM 10-K/A
[X] Annual Report Pursuant to Section 13 or 15(d) for the Fiscal Year
Ended December 31, 1998, of the Securities Exchange Act of 1934 [Fee
Required]
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to ______________
Commission File No. 000-20068
-----------------------------------
PRECISION SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 41-1425909
-------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11800 30th Court North, St. Petersburg, Florida 33716
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(Address of registrant's principal executive offices, including zip code)
(727) 572-9300
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of
Title of Exchange
Each Class Registered
------------ ------------
None ____________
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
As of March 26, 1999, there were outstanding 17,886,707 shares of
Common Stock, 10,000 shares of Series A Preferred Stock and 4,500 shares
of Series B Preferred Stock. The aggregate market value of the voting
stock held by non-affiliates of the registrant as of March 26, 1999, was
$14,488,233.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15 (d) of
the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
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DOCUMENTS INCORPORATED BY REFERENCE:
Documents Form 10-K Reference
----------- ---------------------<PAGE>
None __________________
PART III
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures
None.
Item 10 Directors and Executive Officers of the Registrant
Directors
Hector Alcalde, 65, joined the Company as a member of the Board of
Directors in January 1994. In 1973, Mr. Alcalde founded the firm Alcalde
& Fay, a government and public affairs consulting firm in Washington,
D.C., and serves as its President and Chief Executive Officer. He has
provided consulting services to numerous local governments and national
and international organizations and has served on several public and
corporate boards.
Ian M. Dalziel, 51, was appointed to the Company's Board of Directors
in June 1996. Since 1992, Mr. Dalziel has served as Chairman of the
Board of C.S.I., Inc. In addition, since 1989, Mr. Dalziel has served as
a Director of Lepercq-Amcur Fund N.V. and as Chairman at Continental
Assets Trust PLC. He was a member of the European Parliament from 1979
to 1984.
Francis R. Santangelo, 66, was appointed to the Company's Board of
Directors in January, 1997. Mr. Santangelo is an independent legal and
financial consultant with over 30 years experience in the financial
community. From 1959 to 1988, Mr. Santangelo was a principal in Francis
R. Santangelo & Co., a specialist firm on the American Stock Exchange and
is also a former member of the Board of Directors of the American Stock
Exchange. Mr. Santangelo also served on the Company's Board from August
24, 1991 to July 8, 1993, and was a consultant to the Company from
February 1, 1996, to January 31, 1998.
Executive Officers
The following is a list of the current Executive Officers of the
Company who do not serve on the Board of Directors:
Kenneth M. Clinebell, 37, joined the Company in January 1994 and
currently serves, since October 1997, as the Chief Financial Officer,
Treasurer and Corporate Secretary and since July 30, 1998, as Interim
President and Chief Executive Officer. From January 1994 to October
1997, Mr. Clinebell was the Company's Vice President of Finance and
Controller. Prior to joining the Company, Mr. Clinebell spent five years
at Kimmins Environmental Service Corp. of Tampa, Florida, where he held
the position of Controller. Prior to Kimmins, Mr. Clinebell was with
Laventhol & Horwath, CPAs, for five years, where he held the position of
Manager in the firm's audit and accounting division.
1<PAGE>
Item 11 Executive Compensation
The following table provides information on the compensation received
by the Chief Executive Officer ("CEO") and the two other highly
compensated Executive Officers (the "Executive Officers") for the years
ended December 31, 1998 and 1997, the four-month transition period ended
December 31, 1996, and the year ended August 31, 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
--------------------------- --------------------
Other All
Annual Restricted Other
Name and Fiscal Compen- Stock Options/ Compen-
Principal Position Year(1) Salary Bonus sation Award(7) SARs sation
---------------------- -------- --------- ------- ---------- ----------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Willem Huisman(2) 1998 $ 113,460 $ - $ - $ - - $ -
Former President 1997 $ 206,879 $ 35,000$ - $100,000 (6) 300,000 $ -
and Chief 1996(1) $ 66,667 $ 35,000$ - $ - 125,000 $ -
Executive Officer 1996 $ 83,335 $ - $ - $ - 100,000 $ -
Gregory L. Baltzer(4) 1998 $ 193,827 $ - $ - $ - - $ -
Former Chief 1997 $ 156,057 $ - $ - $ 50,000 (6) 140,000 $ -
Operating Officer 1996(1) $ 42,212 $ 40,000$ - $ - - $ -
1996 $ 70,654 $ 10,000$ 6,481(5) $ 13,961 (3) 90,000 $ -
Kenneth M. Clinebell 1998 $ 142,769 $ - $ - $ - - $ -
Interim President 1997 $ 112,423 $ 10,000$ - $ 27,500 (6) 15,000 $ -
and Chief Executive 1996(1) $ 38,797 $ 10,000$ - $ - - $ -
Officer, Chief 1996 $ 88,881 $ 25,000$ - $ 11,423 (3) - $ -
Financial Officer,
Secretary and
Treasurer
</TABLE>
(1) In September 1996, the Board of Directors voted to change the
Company's fiscal year from a year ending August 31 to a calendar year.
For the purposes of the Summary Compensation Table, "1998" refers to the
fiscal year ended December 31, 1998, "1997" refers to the fiscal year
ended December 31, 1997, "1996(1)" refers to the four months ended
December 31, 1996, and "1996" refers to the fiscal year ended August 31,
1996, respectively.
(2) Mr. Huisman commenced employment with the Company in April 1996.
As a result, no information regarding compensation prior to such date is
provided herein. Mr. Huisman resigned from the Company during August
1998.
2<PAGE>
(3) Restricted stock granted in exchange for 15 percent of gross
salary; vested 50 percent on August 2, 1997, and 50 percent on August 2,
1998.
(4) Mr. Baltzer resigned from the Company during September 1998.
(5) Represents relocation expense reimbursement.
(6) Restricted stock awarded as executive compensation; total shares
granted were 44,375 (25,000 for Mr. Huisman, 12,500 for Mr. Baltzer, and
6,875 for Mr. Clinebell), of which 50 percent vested on February 28,
1998, and 50 percent vested on February 28, 1999. Mr. Huisman was issued
12,500 shares on February 28, 1998. His remaining 12,500 shares were
cancelled upon his resignation as President and Chief Executive Officer
on July 14, 1998. Mr. Baltzer was issued 6,250 shares on February 28,
1998. His remaining 6,250 shares were cancelled upon his resignation on
September 11, 1998. Mr. Clinebell was issued 3,437 shares on February 28,
1998, and 3,438 shares on February 28, 1999.
(7) As of December 31, 1998, Mr. Clinebell held 3,438 shares of the
Company's restricted stock with a fair market value of $4,083.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company did not make any option grants to Executive Officers
during fiscal 1998.
The following table summarizes the net value realized on the exercise
of options in fiscal 1998, and the value of outstanding options as of
December 31, 1998, for the named Executive Officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Value of
Unexercised
Number of In-the-Money
Unexercised Options
Options at At Fiscal Year
Shares Fiscal Year End End(1)
Acquired Net ------------------- ---------------
Fiscal on Value Exer- Unexer- Exer- Unexer-
Year Exercise Realized cisable cisable cisable cisable
------ -------- --------- -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Willem Huisman . . . . 1998 12,500 $ 15,625 - - $ - $ -
Gregory L. Baltzer . . 1998 6,250 $ 7,813 - - $ - $ -
Kenneth M. Clinebell . 1998 3,437 $ 4,296 43,700 15,438 $ 4,084 $ -
</TABLE>
(1) Difference between the fair market value of the underlying common
stock and the exercise price, for in-the-money options, on December 31,
1998.
3<PAGE>
Compensation of Directors
The Company pays an annual fee of $10,000 ($2,500 per quarter) to each
director not employed as an officer of the Company. It also pays each
director not employed as an officer of the Company $1,000 for each
meeting of the Board of Directors which he or she attends in person, or
$500 for each telephonic meeting, plus reimbursement for all reasonable
expenses incurred by such director in connection with his or her
attendance at any meeting of the Board of Directors. Furthermore, the
Company pays each member of a committee of the Board of Directors not
employed by the Company as an officer $1,000 for each meeting of a
committee of the Board of Directors which he or she attends in person, or
$500 for each telephonic meeting, plus reimbursement for any expenses
incurred in connection with his or her attendance at any committee
meeting.
The outside directors of the Company also participate in the Stock
Option Plan for Outside Directors (the "Plan"). Under the Plan, options
to purchase up to 500,000 shares of common stock may be granted to
directors who are not employees of the company. The Plan provides that
each director who is not a full-time employee of the Company shall
automatically be granted an Initial Option to purchase 25,000 shares of
common stock on the day the director is first elected to the Board. In
addition, 25,000 Tenure Options (as defined in the Plan) are
automatically granted, in addition to the Initial Option, on the date of
each director's first anniversary of his or her initial election to the
Board of Directors. The Chairman of the Board, provided he or she is not
also an employee, shall automatically be granted, in addition to the
Initial Option and the Tenure Options, an option to purchase 50,000
shares of common stock of the Company (the "COB Option"). The exercise
price for options issued under the Plan is to be equal to the fair market
value of common stock on the date prior to the date of grant.
During the fiscal year ended December 31, 1998, Francis R. Santangelo
was granted 25,000 Tenure Options at $1.9375 per share, the fair market
value of the stock on the date of the grant.
Initial Options granted under the Plan are subject to the terms of a
stock option agreement, vest and become exercisable equally over three
years beginning on the date of grant. The Tenure Options and COB Options
vest equally over five years beginning on the date of grant. All options
expire five years from the date of grant. Options granted under the Plan
expire 90 days after the resignation of a director from the Board of
Directors. The number of shares issuable under the Plan and the exercise
price for options granted under the Plan are subject to adjustment as the
result of stock splits, stock dividends, recapitalizations or mergers or
other similar changes affecting the number of outstanding shares of
common stock. No options may be granted under the Plan after the tenth
anniversary of its adoption.
4<PAGE>
Repricing of Options/SARs
The following table summarizes the repriced stock options granted to
the named Executive Officers in Fiscal 1997:
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
Length of
Original
Market Option
Number of Price Term
Securities of Stock Exercise Remaining
Underlying at Time of Price at at Date
Options/SARs Repricing Time of New of
Repriced or or Repricing or Exercise Repricing
Amended (1) Amendment Amendment(2) Price (3) or
Name Date (#) ($) ($) ($) Amendment
---------------------- ------- ------------ ----------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Willem Huisman . . . 9/5/97 125,000 $ 3.25 $ 7.75 $ 3.25 9 years
President and 9/5/97 100,000 $ 3.25 $ 5.50 $ 3.25 9 years
Chief Executive
Officer
Gregory L. Baltzer . 9/5/97 30,000 $ 3.25 $ 7.75 $ 3.25 8 years
Chief Operating 9/5/97 50,000 $ 3.25 $ 7.50 $ 3.25 7 years
Officer
</TABLE>
(1) On September 5, 1997, the Compensation Committee of the Board of
Directors authorized the grant of options with an exercise price of
$3.25, the closing price of the Company's stock on September 5, 1997, in
exchange for the cancellation of existing options priced greater than
$3.25 per share. The options were repriced to provide employees with an
incentive for long-term tenure with the Company and to maintain a
competitive position in the market place.
(2) Represents the original exercise price of the cancelled option.
(3) Represents the current exercise price of the replacement option.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1997, the Compensation
Committee for the Company was comprised of Kwang-I Yu (serving as
Chairman of the Committee), Hector Alcalde and Ian Dalziel. In February
1998, Kwang-I Yu resigned from the Board of Directors and the
Compensation Committee. Additionally, in February 1998, Ian Dalziel was
appointed to the position of Chairman of the Compensation and Benefits
Committee and Bert Kolde was appointed to the Compensation and Benefits
Committee. In February 1999, Bert Kolde resigned from the Board of
Directors and the Compensation Committee.
5<PAGE>
COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee of the Board of Directors (the
"Committee") is responsible for reviewing and approving the compensation
arrangements for each of the Company's Executive Officers and the
individual managers reporting directly to the CEO and for granting of
options to purchase shares of common stock under the Company's Employee
Stock Option and Restricted Stock Plan. The goal of the Committee is to
maintain executive compensation programs and policies which enable the
Company to attract and retain the services of highly qualified
executives. Awards of incentive compensation in the form of discretionary
cash bonuses and periodic grants of stock options and/or restricted stock
grants are designed to reward and create incentives for individual
initiative and achievement.
Salary
In 1992 the Company undertook to establish a salary program in
connection with William M. Mercer, Inc., a compensation consulting firm.
They reviewed the salary practices of various industry groups in the
local Tampa/St. Petersburg market, the southeastern region, and
nationally. In addition, in July 1995, the Committee updated such study
with additional work by Pearl Meyer Associates, which explored industry
comparables in depth. Based on these studies, the Company established a
salary grade matrix which includes matrices for merit and promotional
increases which were set at the median compensation amounts identified in
the study. Salaries paid to Executive Officers are based upon the
Committee's subjective assessment of the nature of the position,
individual and corporate performance, individual experience and
expertise, attainment of specific performance-related targets, and
Company tenure of the executive. All salary recommendations of the
individuals reporting directly to the CEO are presented by the CEO to the
Committee which is responsible for approving or disapproving those
recommendations.
Incentive Bonus
Near the beginning of each fiscal year, the Board of Directors asks
the CEO to submit to the Committee a strategic and tactical plan for the
coming fiscal year. Following each fiscal year, the CEO develops
individual bonus recommendations for executives based upon the CEO's
evaluation of each executive's contribution to the Company. No specific
formula is used; however, the CEO and the Committee review factors which
may include achieving specific objectives developed by the executive and
the CEO relating to achievement of budgeted goals of revenue,
profitability, new product development, cost containment, new customer
development, and other similar factors. Such factors are linked to
specific performance related targets and given specific weight.
6<PAGE>
The Committee adopted a bonus plan for 1998 linking targeted bonus
amounts, determined as a percentage (ranging from 50 percent to 100
percent) of base salary, to the achievement of certain corporate
objectives with a portion of each executive's targeted bonus allocable to
achievement of the specific objectives. For the year ended December 31,
1998, these objectives included certain financial, tactical and strategic
goals including targeted revenue growth, increased cash flow and net
income, new product development and improved realization on marketing
efforts. Due to the Company's failure to meet a number of financial
goals, the Committee declined to award Executive Officers with 1998
bonuses associated with those goals.
Stock Options and Restricted Stock
The Committee is authorized to grant incentive and non-qualified stock
options, as well as shares of restricted stock, to key employees of the
Company, including executives. Such grants are intended to provide
additional long-term incentive to key employees. No specific formula is
used to determine grants made to any particular person (including
executives); however, grants are based generally on factors such as the
length of employment, promotion, contribution toward Company performance,
and expected contribution toward meeting long-term strategic goals of the
Company, together with a review of outstanding options or restricted
stock grants. The Company has adopted guidelines regarding appropriate
stock option grants for employees. Option grants typically vest over a
five-year period and expire at the end of ten years. The number of stock
options granted during the year ended December 31, 1998, to Executive
Officers other than the Chief Executive Officer was based upon the
recommendation of the Chief Executive Officer's subjective evaluation of
the contribution of such officers to the Company during the fiscal year.
The number of stock options granted during the year ended December 31,
1998, to the Chief Executive Officer was based on the recommendation of
the Compensation Committee after consideration of the Chief Executive
Officer's base salary and the Compensation Committee's subjective
evaluation of the contribution of the Chief Executive Officer to the
Company during the fiscal year.
Compensation of Chief Executive Officer
Compensation of Willem Huisman (the "CEO") was determined based on
negotiations by the CEO and the Compensation Committee and ratified by
the Board of Directors. The Compensation Committee considered the
compensation studies, among other factors, as a basis for determining the
CEO's compensation package. The CEO is also eligible for the payment of a
discretionary annual bonus for achieving revenue and other performance
criteria.
Compensation of Kenneth M. Clinebell (the "Interim Chief Executive
Officer") was left unadjusted from Mr. Clinebell's compensation as the
Company's Chief Financial Officer. Currently, the Compensation Committee
is considering a bonus payment to Mr. Clinebell relating to his
additional duties as "Interim Chief Executive Officer."
7<PAGE>
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue code, enacted in 1993,
generally disallows tax deduction to public companies for compensation
over $1 million paid to the corporation's Chief Executive Officer and
four other most highly compensated Executive Officers. Qualifying
performance-based compensation will not be subject to the deduction limit
if certain requirements are met. The Compensation Committee intends to
consider the provisions of Section 162(m) in connection with the
performance-based portion of the compensation of its executives (which
currently consists of stock option grants, restricted stock grants, and
annual bonuses described above); however, the Committee does not
necessarily intend to structure compensation to its executives to avoid
disallowance of any tax deductions in the future in light of the
Company's current net operating losses and the necessity to meet all of
the requirements imposed by Section 162(m) and the proposed regulations
thereunder for compensation to be fully deductible for federal income tax
purposes.
Members of the Compensation and Benefits Committee
Ian M. Dalziel, Chairman
Hector Alcalde
Stock Performance Table
The following table compares the Company's cumulative stockholder
return on its common stock since August 31, 1994, through December 31,
1998, with the return on the Nasdaq Market Index and the Nasdaq Computer
Index. To date, no dividends have been paid with respect to the Company's
common stock.
<TABLE>
<CAPTION>
8/31/94 8/31/95 8/31/96 12/31/96 12/31/97 12/31/98
--------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Precision Systems, Inc. . . $ 100.00 $ 132.56 $ 113.95 $ 93.02 $ 37.79 $ 38.79
Nasdaq Market Index . . . . $ 100.00 $ 140.17 $ 158.05 $ 178.62 $ 219.19 $ 296.13
Nasdaq Computer Index . . . $ 100.00 $ 183.02 $ 218.56 $ 262.86 $ 318.05 $ 660.14
</TABLE>
Assumes $100 invested at the close of trading on August 31, 1994.
The stock price performance information shall not be deemed
incorporated by reference by any general statement incorporating this
Form 10-K/A into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference and shall not
otherwise be deemed filed under such acts.
8<PAGE>
Item 12 Security Ownership of Certain Beneficial Owners and Management
The following table and accompanying footnotes set forth information
concerning ownership of the Company's common stock as of April 1, 1999.
The table also shows information concerning beneficial ownership by all
directors and nominees, by each of the current Executive Officers named
in the Summary Compensation Table (the "Summary Compensation Table"), and
by all directors and Executive Officers as a group. The number of shares
beneficially owned by each Director or Executive Officer is determined
under rules of the Securities and Exchange Commission, and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares
to which the individual has the sole or shared voting power or investment
power and also any shares which the individual has the right to acquire
within sixty days of April 1, 1999 through the exercise of any stock
option or other right. Unless otherwise indicated, each person has sole
investment and voting power (or shares such powers with his or her
spouse) with respect to the shares set forth in the following table:
Number of Percent
Name Shares of Class
------------------------------------------ ------------ ----------
Alta Investissments, S.A. . . . . . . . . 2,808,427 15.70%
8 Boulevard Emmanuel Servais
L2535 Luexmbourg
Vulcan Ventures Incorporated(1) . . . . . 2,750,000 15.37%
110-110th Avenue, N.E., Suite 530
Bellevue, Washington 98004
Anschutz Digital Media, Inc.(1)(2) . . . 2,415,945 13.51%
555 17th Street, Suite 2400
Denver, Colorado 80202
Hector Alcalde(3) . . . . . . . . . . . . 65,000 *
Ian M. Dalziel(4) . . . . . . . . . . . . 35,000 *
Francis R. Santangelo(5) . . . . . . . . 157,000 *
Kenneth M. Clinebell(6) . . . . . . . . . 52,440 *
------------ ----------
All officers and directors as a group (4 309,440 1.73%
persons) . . . . . . . . . . . . . . . .
--------------------------------
* Represents less than 1 percent
The following table sets forth information relating to the beneficial
ownership of the Company's Series A Preferred Stock:
Name and Address Number of Percent
of Beneficial Owner Shares of Class
------------------------------------------ ------------ ----------
Anschutz Digital Media, Inc.(2) . . . . . 10,000 100.00%
555 17th Street, Suite 2400
Denver, Colorado 80202
9<PAGE>
The following table sets forth information relating to the beneficial
ownership of the Company's Series B Preferred Stock:
Name and Address Number of Percent
of Beneficial Owner Shares(10) of Class
------------------------------------------ ------------ ----------
Primwest Holding, N.V. . . . . . . . . . 1,500 33.33%
7, Cours de Rive
1204 Geneva, Switzerland
Vulcan Ventures, Incorporated . . . . . . 1,500 33.33%
110-110th Avenue, N.E., Suite 530
Bellevue, Washington 98004
Anschutz Digital Media, Inc. . . . . . . 1,500 33.33%
555 17th Street, Suite 2400
Denver, Colorado 80202
(1) Does not include Series B Preferred Stock. Further described in
the section titled "Certain Relationships and Related Transactions."
(2) Anschutz Digital Media, Inc., is an affiliate of Anschutz
Corporation organized under the laws of the State of Colorado. All or any
portion of Series A Preferred Stock may be converted at any time into
shares of common stock at a conversion price of $4.76 per share. The
shares of Series A Preferred Stock may be converted into 1,218,487 shares
of common stock or approximately 6.8 percent of the class. Assuming
conversion of all the outstanding shares of Series A Preferred Stock,
Anschutz Digital Media, Inc. would own 3,634,432 shares, representing
approximately 20.3 percent of the class.
(3) Does not include non-vested options to purchase 5,000 shares of
common stock pursuant to the Company's Stock Option Plan for Outside
Directors.
(4) Does not include non-vested options to purchase 15,000 shares of
common stock pursuant to the Company's Stock Option Plan for Outside
Directors. Additionally, does not include: (i) grant by Alta
Investissements S.A. ("Alta") of an option to acquire 14,720 shares of
the common stock of Precision Systems, Inc. ("Stock") and (ii) grant by
Primwest Holding N.V. (the controlling shareholder of Alta
Investissements S.A.) ("Primwest") of an option to acquire five percent
of the shares of Stock held by Primwest through its participation in Alta
(currently expected to be not more than 99,545 shares, but may be
considerably less), exercisable upon the distribution of such shares by
Alta to Primwest at an undetermined future date.
(5) Does not include non-vested options to purchase 15,000 shares of
common stock pursuant to the Company's Stock Option Plan for Outside
Directors.
(6) Does not include non-vested options to purchase 12,000 shares of
common stock pursuant to the Company's Employee Stock Option and
Restricted Stock Plan.
10<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, officers, and persons who own more than
10 percent of the Company's common stock, to file initial reports of
ownership and reports of changes in ownership with the Securities and
Exchange Commission and the NASD. Such persons are required by the
Commission's regulations to furnish the Company with copies or all
Section 16(a) reports which they file.
Based solely on its review of the copies of such forms received by it
with respect to fiscal 1998 or written representation from certain
reporting persons, the Company believes that during fiscal 1998, all
filing requirements applicable to its Directors, Executive Officers and
greater than 10 percent beneficial owners were complied with.
Item 13 Certain Relationships and Related Transactions
During July 1998, the Company entered into a settlement agreement (the
"Settlement Agreement") with Alta for certain indemnification claims
associated with a Share Exchange Agreement dated April 13, 1996, between
Alta and the Company (the "Exchange Agreement"). Under the terms of the
Exchange Agreement, whereby Alta exchanged Vicorp N.V. common stock for
the Company's common stock and the assumption by the Company of certain
Vicorp N.V. liabilities, Alta indemnified the Company against certain
claims, including intellectual property issues. Upon closing of the
Settlement Agreement, Alta paid the Company $500,000 to settle certain of
such indemnification claims.
Indemnification and Insurance. The Company maintains indemnity
agreements with the following directors and former directors: Bert Kolde,
Ian Dalziel, Francis Santangelo, and Hector Alcalde. Also, the Company
maintains indemnity agreements with the following officers: Kenneth M.
Clinebell, Carla K. Newsome, and Karen H. Luke. Each of the indemnity
agreements provides that the Company will, as soon as practicable or not
later than 30 days after written demand, indemnify to the full extent
authorized or permitted by law, such officers or directors of the Company
against any and all expenses, judgments, fines, or amounts paid in
settlement, arising in whole or in part from the performance of duties as
officer or director of the Company. The Company is not obligated to
indemnify for proceedings initiated by officers or directors, unless such
proceedings were authorized in advance or unanimously consented to by the
Board of Directors. All claims for indemnification are subject to
approval by a reviewing party, being either selected or a member of the
Board of the Company and not a party to the particular claim.
The Company has also purchased and maintains directors' and officers'
liability insurance with $5,000,000 in coverage.
Severance Agreements with Key Executives. In December 1997, the
Compensation Committee of the Board of Directors approved a Key Executive
Severance Agreement with Mr. Clinebell. The primary terms of the Key
Executive Severance Agreement include a lump sum payment of one year's
base salary in the event of termination of the Executive Officer within
one year following a change in control, other than for cause.
11<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, hereunto duly authorized.
PRECISION SYSTEMS, INC.
By: /s/ KENNETH M. CLINEBELL
-------------------------------------------
Kenneth M. Clinebell
Interim President and Chief Financial Officer
April 30, 1999
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities indicated on April 30,
1999.
Signature Title
------------------------------------ --------------------------------
/s/ KENNETH M. CLINEBELL
------------------------------------ Interim President and Chief
Kenneth M. Clinebell Financial Officer
(Principal Financial Officer)
/s/ CARLA K. NEWSOME
------------------------------------ Controller
Carla K. Newsome (Principal Accounting Officer)
/s/ HECTOR ALCADE
------------------------------------ Director
Hector Alcade
/s/ IAN DALZIEL
------------------------------------ Director
Ian Dalziel
/s/ FRANCIS SANTANGELO
------------------------------------ Director
Francis Santangelo
12<PAGE>
