<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 5)
SYS
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(Name of Issuer)
No Par Common Stock
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(Title of Class of Securities)
871880 10 0
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(CUSIP Number)
Peter R. Pancione, Esq.
Gipson Hoffman & Pancione, P.C.
1901 Avenue of the Stars, Suite 1100, Los Angeles, CA 90067
(310) 556-4660
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 15, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(Continued on following pages)
Page 1 of 10 Pages
<PAGE>
SCHEDULE 13D
CUSIP No. 871880 10 0 Page 2 of 10 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert D. Mowry
SSN: ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U. S.
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NUMBER OF 7 SOLE VOTING POWER
SHARES 118,059
BENEFICIALLY -----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 907,516
REPORTING -----------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 118,059
-----------------------------------
10 SHARED DISPOSITIVE POWER
784,438
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,116,170 (See response to Item 5)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.0%
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14 TYPE OF REPORTING PERSON*
IN
<PAGE>
SCHEDULE 13D
CUSIP No. 871880 10 0 Page 3 of 10 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Charles H. Werner
SSN: ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF; OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U. S.
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NUMBER OF 7 SOLE VOTING POWER
SHARES 208,654
BENEFICIALLY -----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING -----------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 208,654
-----------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,116,170 (See response to Item 5)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.0%
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14 TYPE OF REPORTING PERSON*
IN
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<PAGE>
SCHEDULE 13D
CUSIP No. 871880 10 0 Page 4 of 10 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BIG CANYON INVESTMENTS, INC., a California corporation
TIN:33-067 5511
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
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NUMBER OF 7 SOLE VOTING POWER
SHARES 469,457
BENEFICIALLY -----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING -----------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 469,457
-----------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,116,170 (See response to Item 5)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.0%
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14 TYPE OF REPORTING PERSON*
CO
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<PAGE>
SCHEDULE 13D
CUSIP No. 871880 10 0 Page 5 of 10 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AMERICAN TECHNOLOGY INVESTMENTS, INC., a California corporation
TIN:95-4624815
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
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NUMBER OF 7 SOLE VOTING POWER
SHARES 196,922
BENEFICIALLY -----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING -----------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 196,922
-----------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,116,170 (See response to Item 5)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.0%
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14 TYPE OF REPORTING PERSON*
CO
<PAGE>
SCHEDULE 13D
CUSIP No. 871880 10 0 Page 6 of 10 Pages
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ITEM 1. SECURITY AND ISSUER
The title and class of this statement relates to SYS's no par value
common stock (the "Common Stock"). SYS's principal executive offices are
located at 6363 Greenwich Drive, Suite 200, San Diego, California 92122.
The last known filing pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 is SYS's Quarterly Report on Form 10-Q for
the quarter ended December 31, 1996. Based on such Report, the undersigned
believe there are 2,935,686 outstanding shares of Common Stock. The
securities are not presently traded on any national securities exchange.
ITEM 2. IDENTITY AND BACKGROUND
1) a) Name: Big Canyon Investments, Inc., a California corporation
b) Business address: 1280 Bison Avenue, B9-614, Newport Beach,
California 92660
c) Principal business: investments and management of investments
d) Criminal proceedings: none
e) Civil proceedings: none
f) Citizenship: a California corporation
2) a) Name: Robert D. Mowry
b) Business address: 19 Cherry Hills Lane, Newport Beach,
California 92660
c) Principal occupation: President of Big Canyon Investments, Inc.
and American Technology Investments, Inc.,
(see 1) above and 4) below for address and
description); Mr. Mowry was elected a director
of SYS on March 19, 1997 and is also is the
President of North American Timeshare, Inc., dba
United Computer Systems, which sells computer
hardware and software, and provides maintenance
on the software. North American Timeshare, Inc.
has a business address at 8726 South Sepulveda
Boulevard, Suite C171, Los Angeles, California
90045
d) Criminal proceedings: none
e) Civil proceedings: none
f) Citizenship: US
3) a) Name: Charles H. Werner
b) Business address: Post Office Box 1966, Rancho Santa Fe,
California 92607
c) Principal occupation: Consultant, Director of SYS
d) Criminal proceedings: none
e) Civil proceedings: none
f) Citizenship: US
4) a) Name: American Technology Investments, Inc., a California
corporation
b) Business address: 1280 Bison Avenue, B9-614, Newport Beach,
California 92660
c) Principal business: investments and management of investments
d) Criminal proceedings: none
e) Civil proceedings: none
f) Citizenship: a California corporation
<PAGE>
SCHEDULE 13D
CUSIP No. 871880 10 0 Page 7 of 10 Pages
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
1) Big Canyon Investments, Inc. directly borrowed, through an unsecured
note, $20,000 in funds from its sole shareholder, Robert D. Mowry to make the
purchase of 188,800 shares of Common Stock on May 22, 1996. (Mr. Mowry's
personal funds were used to fund the loan). Big Canyon Investments, Inc.
borrowed, through an unsecured loan from an unaffiliated third party, $15,885
for the purchase of the 150,000 shares on July 26, 1996. Big Canyon
Investments, Inc. used its operating capital to purchase the 200 shares of
Common Stock for $21.20, and 130,457 shares of Common Stock for $39,137.10 on
November 25, 1996.
2) Mr. Mowry used his personal funds to purchase of 17,000 shares of
Common Stock on or about April 1991. Mr. Mowry used $50,530 of his personal
funds to purchase 85,888 shares of Common Stock on March 19, 1997 and 15,171
shares of Common Stock on March 21, 1997.
3) Mr. Werner used personal funds of $7,350 to acquire 19,600 shares of
Common Stock on December 29, 1989, funds of $29,972 from a pension plan of
which he is the beneficiary to acquire 79,925 shares of Common Stock on
September 15, 1989, and funds of $25,896 from the same pension plan to
acquire 99,600 shares of stock on April 2, 1991. Mr. Werner used personal
funds of $5,322 to purchase 8,446 shares of Common Stock on March 19, 1997
and 1,083 shares of Common Stock on March 20, 1997.
4) American Technology Investments, Inc. used $40,000 of its working
capital and directly borrowed through an unsecured note $200,000 in funds
from its sole shareholder, Robert D. Mowry to make the purchase of 196,922
shares of Common Stock on April 15, 1997. (Mr. Mowry's personal funds were
used to fund the loan.)
ITEM 4. PURPOSE OF TRANSACTION
Mr. Mowry, individually and through Big Canyon Investments, Inc. and
American Technology Investments, Inc., has acquired the SYS shares of Common
Stock, and plans to acquire additional shares, with the goal of changing the
board of directors through a special shareholders' meeting, if necessary, and
gaining control over the management and policies of SYS. Mr. Mowry intends,
through control of SYS shares of Common Stock, to influence and develop SYS's
future direction and growth in the hi-tech governmental and non-defense
related markets. Mr. Werner initially obtained his shares of Common Stock
for investment, and will join Mr. Mowry in changing the board of directors
and gaining control over the management and policies of SYS. Mr. Werner,
with Mr. Mowry, intends to influence and develop SYS's future direction and
growth in the high-tech governmental and non-defense related markets.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
1) a) Big Canyon Investments, Inc. holds 469,457 shares of Common
Stock, which represents 16.0% of the believed 2,935,686 outstanding shares of
Common Stock of SYS.
Mr. Mowry, Big Canyon Investments, Inc., American Technology
Investments, Inc. and Mr. Werner hold 1,116,170 shares of Common Stock, which
represents approximately 38.0% of the believed 2,935,686 outstanding shares
of Common Stock.
b) Big Canyon Investments, Inc. has the sole voting power and
disposition power of the 469,457 shares of Common Stock it holds.
c) On May 22, 1996, Big Canyon Investments, Inc. purchased 188,800
shares of Common Stock from Citicorp Venture Capital Ltd., with payment to
their agent Sycamore Management Corporation, for $20,000 (or approximately
10.6 cents per share) in a private purchase transaction. The transaction was
effected by telephone and facsimile, and the exchange of documents and
payment was by overnight delivery between the seller in New York, the
seller's agent in New Jersey, and the buyer in California.
<PAGE>
SCHEDULE 13D
CUSIP No. 871880 10 0 Page 8 of 10 Pages
On July 26, 1996, Big Canyon Investments, Inc. purchased an
additional 150,000 shares of Common Stock from Camp, Dresser and McKee for
$15,885 (or approximately 10.6 cents per share) in a private purchase
transaction. The transaction was effected by telephone and facsimile, and
the exchange of documents and payment was by overnight delivery between the
seller in Cambridge, Massachusetts and the buyer in California.
On October 16, 1996, Big Canyon Investments, Inc. purchased an
additional 200 shares of Common Stock from the State of Kansas for $21.20
(approximately 10.6 cents per share) in a private transaction. The
transaction was effected by telephone and facsimile, and the exchange of
documents and payment was by overnight delivery between the Seller in Kansas
and the Buyer in California.
On November 25, 1996, Big Canyon Investments, Inc. purchased an
additional 130,457 shares of Common Stock from the State of California for
$39,137.10 (approximately 30 cents per share) in a private transaction. The
transaction was effected in a brokerage transaction through the Seller's
broker, Prudential Securities, to whom a commission of $1,956.86 was paid by
Big Canyon Investments, Inc.
d) No other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale
of, the above securities, except as indicated above.
e) Not applicable.
2) a) Mr. Mowry holds 118,059 sharers of Common Stock which represent
approximately 4.0% of the believed 2,935,686 outstanding shares of Common
Stock.
Mr. Mowry, Big Canyon Investment,s Inc., American Technology
Investments, Inc. and Mr. Werner hold 1,116,170 shares of Common Stock which
represents 38.0% of the believed 2,935,686 outstanding shares of Common Stock.
b) Mr. Mowry is the sole shareholder of Big Canyon Investments,
Inc., which holds 469,457 shares of Common Stock representing 16.0% of the
believed 2,935,686 outstanding shares of Common Stock of SYS, and as the sole
shareholder, has the shared power to vote and dispose of such stock.
Mr. Mowry is the sole shareholder of American Technology
Investments, Inc. which holds 196,922 Shares of the Common Stock representing
6.7% of the believed 2,935,686 shares of Common Stock of SYS, and as the sole
shareholder, has the shared power to vote and dispose of such shares.
Mr. Mowry has a revocable proxy (subject to certain conditions) to
vote 123,078 shares of Common Stock which represents approximately 4.2% of
the believed 2,935,686 outstanding Common Stock of SYS. Mr. Mowry also has a
revocable proxy (subject to certain conditions) to vote 196,922 shares of
Common Stock, representing 6.7% of the believed 2,935,686 outstanding shares
of Common Stock, which proxy will terminate when the certificates
representing the purchase of SYS shares of Common Stock described in
paragraph 4(c) below has been issued in the name of American Technology
Investments, Inc.
Mr. Mowry has sole voting and disposition power over the 118,059
shares of Common Stock he holds.
c) On March 19, 1997 and March 21, 1997, Mr. Mowry purchased
101,059 shares of Common Stock in four private transactions. The
transactions were effected by telephone, facsimile, and personal meetings,
and the exchange of documents and payment was by personal delivery. Although
Mr. Mowry has paid for the shares of Common Stock, the share certificate
representing 4,138 shares of Common Stock has been lost by the seller and the
transfer of the shares of Common Stock will occur when the procedures for
replacing lost certificates has been completed.
Mr. Mowry has owned 17,000 of his shares of Common Stock for over
sixty days.
<PAGE>
SCHEDULE 13D
CUSIP No. 871880 10 0 Page 9 of 10 Pages
d) No other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale
of, the above securities, except as indicated above.
e) Not applicable.
d) No other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale
of, the above securities, except as indicated above.
e) Not applicable.
3) a) Mr. Werner holds 208,654 shares of Common Stock which
represents 7.1% of the believed 2,935,686 outstanding shares of SYS Common
Stock.
Mr. Mowry, Big Canyon Investments, Inc., American Technology
Investments, Inc. and Mr. Werner hold 1,116,170 shares of Common Stock, which
represents 38.0% of the believed 2,935,686 outstanding shares of Common Stock.
b) Mr. Werner has sole voting and disposition power of the 208,654
SYS shares of Common Stock he holds.
c) Mr. Werner has owned 199,125 of his shares of Common Stock for
more than 60 days. On March 19, 1997, Mr. Werner purchased an additional
8,446 shares of Common Stock in two private transactions. On March 20, 1997,
Mr. Werner purchased 1,053 shares of Common Stock in a private transaction.
The transactions were effected by telephone, facsimile and overnight mail and
payment was made by personal delivery and overnight mail. Although Mr.
Werner paid for the shares of Common Stock, the share certificate
representing 5,570 shares of Common Stock has been lost by the seller and the
transfer of the shares of Common Stock will occur when the procedures for
replacing lost certificates has been completed.
d) No other person is known to have the rights to receive or the
power to direct the receipt of dividends from, or the proceeds in the sale
of, the above securities.
e) Not applicable.
4) a) American Technology Investments, Inc. holds 196,922 shares of
Common Stock which represent approximately 6.7% of the believed 2,935,686
outstanding Common Stock. In addition, American Technology Investments, Inc.
has an option to purchase an additional 123,078 shares of Common Stock which
represent approximately 4.2% of the believed 2,935,686 outstanding shares of
Common Stock.
b) American Technology Investments, Inc. has the sole voting power
and disposition power of the 196,922 shares of SYS Common Stock it holds.
c) On April 15, 1997 American Technology Investments, Inc.
acquired 186,922 shares of Common Stock from the Carroll Living Trust and
10,000 shares of Common Stock from Robert E. Carroll for $240,000
(approximately $1.22 per share). The transaction was effected by telephone,
facsimile and E-mail and the exchange of documents was effected by personal
delivery between the buyer and sellers. In addition, American Technology
Investments, Inc. received an option from the Carroll Living Trust to
purchase an additional 123,078 shares of Common Stock, exercisable for 41,026
shares of Common Stock on each of April 15, 1998, 1999 and 2000 at an
exercise price of $1.21875 per share, as more fully described in Exhibit B
hereto which is incorporated herein by this reference. The obligations of
American Technology Investments, Inc. under the Stock Purchase and Option
Agreement are guaranteed by Mr. Mowry. In addition, Mr. Mowry received an
irrevocable proxy to vote 320,000 shares of Common Stock as more particularly
described in Exhibit C hereto which is incorporated herein by this reference.
The proxy for 196,922 shares of Common Stock will terminate when the share
certificate representing
<PAGE>
SCHEDULE 13D
CUSIP No. 871880 10 0 Page 10 of 10 Pages
196,922 shares of Common Stock purchased by American Technology Investments,
Inc. as described herein is issued in its name.
d) No other person is known to have the rights to receive or the
power to direct the receipt of dividends from, or the proceeds in the sale
of, the above securities.
e) Not applicable.
ITEM 6. CONTRACTS, AGREEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Due to the relationship identified above in Item 5(1)(b), Mr. Mowry
has complete discretion and control over all of the securities held by
Big Canyon Investments, Inc. and American Technology, Investments,
Inc. In addition, Mr. Mowry has a proxy to vote 320,000 shares of
Common Stock. Mr. Werner has Mr. Mowry have an informal understanding
to vote their shares of Common Stock in a manner which will achieve
the purposes set forth in Item 4 above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A - Agreement to File Single Statements
Exhibit B - Stock Purchase Order Option Agreement and Guaranty
Exhibit C - General Proxy
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct. This statement is being filed on behalf of all the parties
identified in Item 2 above.
Dated: April 24, 1997 Big Canyon Investments, Inc.,
a California corporation
By: /s/ Robert D. Mowry
-----------------------------
Robert D. Mowry
Its: President
/s/ Robert D. Mowry
-----------------------------
Robert D. Mowry
/s/ Charles H. Werner
-----------------------------
Charles H. Werner
American Technology Investments, Inc.,
a California corporation
By: /s/ Robert D. Mowry
-----------------------------
Robert D. Mowry
Its: President
<PAGE>
EXHIBIT A
AGREEMENT TO FILE SINGLE STATEMENT
This agreement is entered into the 24th day of April, 1997, by and
between Charles H. Werner, Robert D. Mowry, American Technology Investments,
Inc., a California corporation and Big Canyon Investments, Inc., a California
corporation.
RECITALS
A. The parties are aligned in interest regarding the ownership and
control of SYS no par value common shares; and
B. The parties desire that a single Schedule 13D be filed on each of
their behalf.
NOW, THEREFORE, the parties agree that a single Schedule 13D shall be
filed on behalf of each of them by Mr. Mowry, and that all filing costs be
payable by Big Canyon Investments, Inc.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement to file Single Statement as of the day and year first written
above.
BIG CANYON INVESTMENTS, INC.,
a California corporation
By: /s/ Robert D. Mowry
-----------------------------
Robert D. Mowry, President
/s/ Robert. Mowry
-----------------------------
Robert D. Mowry
/s/ Charles H. Werner
-----------------------------
Charles H. Werner
AMERICAN TECHNOLOGY INVESTMENTS, INC.,
a California corporation
By: /s/ Robert D. Mowry
-----------------------------
Robert D. Mowry, President
A-1
<PAGE>
EXHIBIT B
STOCK PURCHASE AND OPTION AGREEMENT
This Stock Purchase and Option Agreement is entered into as of April
15, 1997, between AMERICAN TECHNOLOGY INVESTMENTS, INC., a California
corporation ("BUYER"), THE CARROLL LIVING TRUST, DATED OCTOBER 4, 1996
("TRUST"), and ROBERT E. CARROLL ("CARROLL" and, together with Trust,
"SELLERS").
RECITALS
WHEREAS, Trust owns 310,000 shares of the Common Stock, no par value
per share (the "COMMON STOCK"), of SYS, Inc., a California corporation (the
"COMPANY"), and Carroll owns 10,000 shares of the Common Stock (the "CARROLL
SHARES"); and
WHEREAS, Sellers desire to sell, and Buyer desires to buy, 186,922
of the shares of the Common Stock owned by Trust (the "TRUST SHARES", and,
together with the Carroll Shares, the "SHARES") and all of the Carroll
Shares, for the consideration described herein and Trust has agreed to grant
to Buyer three options to purchase, in the aggregate, the remaining 123,078
of the shares of the Common Stock owned by Trust (the "OPTION SHARES") in
accordance with the terms set forth herein.
A G R E E M E N T
In consideration of the mutual promises contained herein and
intending to be legally bound the parties agree as follows:
ARTICLE I
DEFINITIONS/PURCHASE & SALE/CLOSING
1.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly
provided, (i) the terms defined in this Article I have the meanings assigned
to them in this Article I and include the plural as well as the singular, and
(ii) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.
As used in this Agreement, the following definitions shall apply.
"AGREEMENT" means this Agreement by and among Buyer and Sellers as
amended or supplemented from time to time.
"CARROLL SHARES" has the meaning assigned to that term in the
introduction.
"CLOSING" means the consummation of the purchase and sale of the
Trust Shares and the Carroll Shares under this Agreement.
"CLOSING DATE" means the date of the Closing.
"COMPANY" has the meaning assigned to that term in the introduction.
"COMMON STOCK" has the meaning assigned to that term in the
introduction.
B-1
<PAGE>
"OPTION" or "OPTIONS" has the meaning assigned to that term in the
Section 5.1.
"OPTION PERIOD" has the meaning assigned to that term in Section 5.2.
"OPTION SHARES" has the meaning assigned to that term in the
introduction.
"PROXY" has the meaning assigned to that term in Section 4.1.
"RETAINER AGREEMENT" has the meaning assigned to that term in Section
4.2.
"SECURITIES ACT" has the meaning assigned to that term in Section 3.2.
"SHARES" has the meaning assigned to that term in the introduction.
"TRUST SHARES" has the meaning assigned to that term in the
introduction.
1.2 TRANSFER OF SHARES BY SELLERS.
Subject to the terms and conditions of this Agreement, Sellers agree
to sell the Shares to Buyer at the Closing and to deliver to Buyer a copy of
instructions to be delivered to the transfer agent for the Shares requesting
that a certificate for the Shares be issued in the name of Buyer or its
nominee as Buyer may have directed prior to the Closing Date.
1.3 PURCHASE OF THE SHARES BY BUYER/PURCHASE PRICE.
Subject to the terms and conditions of this Agreement, (i) Buyer
agrees to acquire the Trust Shares from Trust and to pay $227,812.50 to Trust
at the Closing by delivery of a cashiers check or checks in such amount in
exchange for the Trust Shares and (ii) Buyer agrees to acquire the Carroll
Shares from Carroll and to pay $12,187.50 to Carroll at the Closing by
delivery of a cashiers check or checks in such amount in exchange for the
Carroll Shares.
1.4 THE CLOSING.
The Closing will take place at the offices of the Company, on April
15, 1997.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent, warrant and agree as follows:
2.1 SHARES.
Sellers own all of the Shares, and Trust owns all of the Option
Shares, beneficially and of record free and clear of any claim, charge,
easement, encumbrance, or other restriction (whether on voting, sale,
transfer, disposition or otherwise), whether imposed by agreement,
understanding, law, equity or otherwise, except for any restrictions on
transfer generally arising under any applicable federal or state securities
law. In addition, on the date of the exercise of any Option, Trust will own
all of the Option Shares subject to such Option beneficially and of record
free and clear of any claim, charge, easement, encumbrance, or other
restriction (whether on voting, sale, transfer, disposition or otherwise),
whether imposed-by agreement, understanding, law, equity or otherwise, except
for any restrictions on transfer generally arising under any applicable
federal or state securities law or contained in the Proxy.
B-2
<PAGE>
2.2 ENFORCEABILITY.
This Agreement constitutes the legal, valid and binding obligation
of Sellers, enforceable against Sellers in accordance with its terms except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents, warrants and agrees as follows:
3.1 ENFORCEABILITY
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of California with all requisite
corporate power and authority to carry out the transactions contemplated
hereby. The execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action on the part of Buyer. This
Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors' rights generally.
3.2 PURCHASE FOR INVESTMENT.
Buyer acknowledges that the Shares and the Option Shares have not
been and are not being registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and that the Shares and the Option Shares may
be resold without registration under the Securities Act only in certain
limited circumstances. Buyer represents and warrants that it is acquiring the
Shares and the Option Shares for its own account for investment, and not with
a view to, or for resale in connection with, any "distribution" of all or any
portion thereof within the meaning of the Securities Act. By making payment
for the Shares or any Option Shares pursuant to this Agreement, or by taking
delivery of any Shares or any Option Shares, Buyer shall be deemed to have
reaffirmed such representation and warranty at and as of the date of such
payment or delivery.
ARTICLE IV
CONDITIONS OF PURCHASE
The obligations of the parties to effect the Closing shall be
subject to the following conditions:
4.1 PROXY.
Trust shall have executed and delivered to Buyer a General Proxy with
respect to the Trust Shares and the Option Shares (the "PROXY").
4.2 CONSULTING AGREEMENT.
Carroll and Buyer shall have executed that certain Management
Consulting Contract Retainer Agreement dated as of April 15, 1997 (the
"RETAINER AGREEMENT").
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ARTICLE V
OPTIONS
5.1 GRANT OF OPTIONS BY TRUST.
Subject to the terms and conditions of this Agreement, Trust hereby
grants to Buyer three options, each to purchase one-third of the Option
Shares (each an "OPTION" and collectively, the "OPTIONS") for a cash price of
$1.21875 per Option Share.
5.2 EXERCISE OF OPTIONS BY BUYER.
The Options may be exercised by Buyer as follows:
(i) The first Option may be exercised as to 41,026 of the Option Shares
during the 30-day period commencing on April 15, 1998;
(ii) The second Option may be exercised as to 41,026 of the Option Shares
during the 30-day period commencing on April 15, 1999; and
(iii)The third Option may be exercised as to 41,026 of the Option
Shares during the 30-day period commencing on April 15, 2000.
Each Option may be exercised in whole but not in part and, unless sooner
terminated in accordance with the terms of this Agreement, the right to
exercise each Option shall terminate on the end of the applicable 30-day
period (each an "OPTION PERIOD").
In the event Buyer wishes to exercise any Option, Buyer shall send a
written notice to Trust specifying the date (not sooner than two or later
than 10 days from the date such notice is given and in no event after the
expiration of the applicable Option Period) for the closing of such purchase.
5.3 PURCHASE OF OPTION SHARES.
At any such closing Trust will deliver to Buyer a certificate or
certificates representing the number of Option Shares being purchased upon
exercise, and Buyer will purchase such Option Shares from Trust at a price of
$1.21875 per Option Share. Payment shall be made by cashiers check or checks
payable to or upon the order of Trust in immediately available funds.
5.4 ACCELERATION OF EXERCISABILITY OPTIONS.
The Options shall become immediately exercisable upon the effective
date of (i) any merger or consolidation of the Company with and into another
entity where the Company is not the surviving or continuing corporation or
(ii) any sale or other transfer of all or substantially all of the business,
property or capital stock of the Company.
5.5 CHANGE IN CAPITALIZATION.
In the event the Company (i) pays a dividend or makes any other
distribution with respect to the Common Stock (including the Option Shares)
in shares of its capital stock, (ii) subdivides its outstanding Common Stock
(including the Option Shares), (iii) combines its outstanding Common Stock
(including the Option Shares) into a smaller number of shares, or (iv) issues
any shares of its capital stock in a reclassification of the Common Stock
(including Option Shares), the number of shares of the Common Stock issuable
upon exercise of each Option immediately prior to the record date for such
dividend or distribution or the effective date of such subdivision or
combination shall be adjusted so that Buyer shall, from and after such record
date or effective date, be entitled to receive, upon exercise of any Option
in accordance with the terms hereof, the kind and number of shares of capital
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stock that Trust received in respect of the Option Shares subject to such
Option as a result of the happening of any of the events described above.
5.6 ESCROW.
The parties agree that within 15 business days after the Closing Date,
the Option Shares shall be delivered to a mutually agreed upon entity as
escrow agent pursuant to an escrow agreement in form and substance
satisfactory to the parties.
ARTICLE VI
TERMINATION OF OBLIGATIONS; SURVIVAL
6.1 TERMINATION OF AGREEMENT.
This Agreement may be terminated at any time by mutual consent in
writing of Buyer and Sellers.
6.2 TERMINATION OF OPTIONS.
In the event that any Option is not exercised during the applicable
Option Period, all unexercised Options shall expire, and all rights to
exercise all remaining Options shall terminate, as of the last day of such
Option Period.
All unexercised Options shall expire, and all rights to exercise all
remaining Options shall terminate, in the event of the termination of the
Retainer Agreement or the failure by Buyer or its successors or assigns to
pay any portion of the Retainer Fee (as defined in the Retainer Agreement) in
accordance with the terms thereof.
6.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties contained in or made pursuant to
this Agreement, other than that set forth in Section 2.1 with respect to the
Option Shares and other than that set forth in Section 3.2, shall expire as
of the Closing.
ARTICLE VII
GENERAL
7.1 INTEGRATION; AMENDMENTS: WAIVERS.
This Agreement supersedes all prior agreements between the parties
concerning the subject matter hereof and constitutes the entire agreement
between the parties with respect thereto. This Agreement may be amended or
modified only with a written instrument duly executed by each of the parties.
No waiver of any provision nor consent to any exception to the terms of this
Agreement shall be effective unless in writing and signed by the party to be
bound and then only to the specific purpose, extent and instance so provided.
7.2 GOVERNING LAW/CONSENT TO JURISDICTION.
This Agreement, and the legal relations between the parties, shall
be governed by and construed in accordance with the laws of the State of
California applicable to contracts made and performed in such State and
without regard to conflicts of law doctrines.
All judicial proceedings brought against the parties hereto arising
out of or relating to this Agreement, or any obligations thereunder, may be
brought in any state or federal court of competent jurisdiction in the State
of California, County of Orange. By executing and delivering this Agreement,
each party, for itself and in
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connection with its properties, irrevocably (i) accepts generally and
unconditionally the exclusive jurisdiction and venue of such courts; (ii)
waives any defense of FORUM NON CONVENIENS; (III) agrees that service of all
process in any such proceeding in any such court may be made by registered or
certified mail, return receipt requested, to such party at its address
provided in accordance with Section 7.6; (iv) agrees that service as provided
in clause (iii) above is sufficient to confer personal jurisdiction over such
party in any such proceeding in any such court, and other~vise constitutes
effective and binding service in every respect; and (v) agrees that each
other party retains the right to serve process in any other manner permitted
by law or to bring proceedings against such party in the courts of any other
jurisdiction.
7.3 ASSIGNMENT.
This Agreement shall be binding upon and shall inure to the benefit
of Buyer and its successors and assigns; PROVIDED, HOWEVER, that Buyer may
not assign or otherwise transfer this Agreement, or its obligations, duties
and rights hereunder, except to any affiliate of Buyer with the prior written
consent of Sellers, which consent shall not be unreasonably withheld. This
Agreement shall inure to the benefit of Sellers and their respective heirs,
personal representatives, successors and assigns; PROVIDED, HOWEVER, that the
obligations of Sellers hereunder may not be assigned without the prior
written consent of Buyer.
7.4 HEADINGS.
The headings and titles of the Articles, Sections and subsections of
this Agreement are inserted for convenience only and shall not be deemed a
part of or affect the construction or interpretation of any provision thereof.
7.5 COUNTERPARTS.
This Agreement and any amendment hereto or any other agreement (or
document) delivered pursuant hereto may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all such
counterparts together shall constitute but one and the same instrument.
7.6 NOTICES.
All notices and communications permitted or required to be given
hereunder shall be in writing and may be personally served, or sent by
telefacsimile, registered or certified mail with return receipt requested
(postage prepaid) or by a recognized courier service (with charges prepaid)
and shall be deemed to have been given when delivered in person or by courier
service or upon receipt of telefacsimile or registered or certified mail. For
the purposes hereof, the address of each party hereto shall be as set forth
under such party's name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice delivered to
the other parties.
7.7 EXPENSES.
Sellers and Buyer shall each pay their own expenses incident to the
negotiation, preparation and performance of this Agreement and the
transactions contemplated hereby, including but not limited to the fees,
expenses and disbursements of their respective accountants and counsel.
7.8 REMEDIES; WAIVER.
All rights and remedies existing under this Agreement and any
related agreements or documents are cumulative to and not exclusive of, any
rights or remedies otherwise available under applicable law. No failure on
the part of any party to exercise or delay in exercising any right hereunder
shall be deemed a waiver thereof, nor shall any single or partial exercise
preclude any further or other exercise of such or any other right.
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<PAGE>
7.9 ATTORNEY'S FEES.
In the event of any action by any party for breach of this
Agreement, including any participation in bankruptcy proceedings to enforce
against a party a right or claim in such proceedings, the prevailing party
shall be entitled to reasonable attorneys' fees, costs and expenses incurred
in such action. Attorneys' fees incurred in enforcing any judgment in respect
of this Agreement are recoverable as a separate item. The preceding sentence
is intended to be severable from the other provisions of this Agreement and
to survive any judgment and, to the maximum extent permitted by law, not be
deemed merged into such judgment.
7.10 REPRESENTATION BY COUNSEL; INTERPRETATION.
Sellers and Buyer each acknowledge that each party to this Agreement
has been represented by counsel in connection with this Agreement and the
transactions contemplated by this Agreement. Accordingly, any rule of law,
including but not limited to Section 1654 of the California Civil Code, or
any legal decision that would require interpretation of any claimed
ambiguities in this Agreement against the party that drafted it has no
application and is expressly waived. The provisions of this Agreement shall
be interpreted in a reasonable manner to effect the intent of Buyer and
Sellers.
7.11 SEVERABILITY.
If any provision of this Agreement is determined to be invalid,
illegal or unenforceable, the remaining provisions of this Agreement to the
extent permitted by law shall remain in full force and effect. In event of
any such determination, the parties agree to negotiate in good faith to
modify this Agreement to fulfill as closely as possible the original intents
and purposes hereof
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
BUYER
AMERICAN TECHNOLOGY INVESTMENTS, INC.
By: /s/ Robert D. Mowry
---------------------------------------------------
Name:
Title:
Address: 1280 Bison Avenue
B9-614
Newport Beach, CA 92660
Attention: Robert D. Mowry
SELLERS
THE CARROLL LIVING TRUST, DATED OCTOBER 4, 1996
By: /s/ Robert E. Carroll
---------------------------------------------------
Robert E. Carroll, as Trustee
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By: /s/ Shirley W. Carroll
---------------------------------------------------
Shirley W. Carroll, as Trustee
Address: 110 Painted Cliffs Drive
Sedona, AZ 86336
/s/ Robert E. Carroll
------------------------------------------------
ROBERT E. CARROLL
Address: 110 Painted Cliffs Drive
Sedona, AZ 86336
GUARANTY
The undersigned (the "GUARANTOR") hereby irrevocably and
unconditionally guaranties, as primary obligor and not merely as surety, the
due and punctual payment in full of all obligations of Buyer and its
successors and assigns under the foregoing Stock Purchase and Option
Agreement (the "AGREEMENT"). The Guarantor agrees that this Guaranty is a
guaranty of payment when due and not of collectibility. The Guarantor hereby
waives (a) any right to require Trust to proceed against Buyer or any other
person or to pursue any other remedy in the power of Trust whatsoever, (b)
any defense arising by reason of the incapacity, lack of authority or any
disability or other defense of Buyer, including, without limitation, any
defense based upon or arising out of the lack of validity or unenforceability
of the Agreement, (c) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor
in other respects more burdensome than that of the principal, (d) any
principles or provisions of law, statutory or otherwise, which are or might
be in conflict with this Guaranty and any legal or equitable discharge of the
Guarantor's obligations hereunder, (e) the benefit of any statute of
limitation affecting the Guarantor's liability hereunder or the enforcement
hereof, (f) promptness, diligence, notices, demands, presentments, protests,
notices of protest, notices of dishonor and notices of any action or
inaction, including acceptance of this Guaranty, notices of default under the
Agreement, notices of any renewal, extension or modification of the
obligations of Buyer under the Agreement and any right to consent to any
thereof and (g) to the fullest extent permitted by law, any defenses or
benefits that may be derived from or afforded by law which limit the
liability of or exonerate guarantors or sureties or which may conflict with
the terms of this Guaranty. In accordance with Section 2856 of the California
Civil Code the Guarantor waives any and all rights and defenses available to
the Guarantor by reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of
the California Civil Code.
The Guarantor agrees to pay, or cause to be paid, on demand, any and
all costs and expenses (including fees and disbursements of counsel) incurred
or expended by Trust in connection with the enforcement of or preservation of
any rights under this Guaranty. In the event that all or any portion of the
obligations of Buyer are paid by Buyer, the obligations of the Guarantor
hereunder shall continue and remain in full force and effect or be
reinstated, as the case may be, in the event that all or any part of such
payments are rescinded or recovered directly or indirectly from Trust as a
preference, fraudulent transfer or otherwise and any such payments which are
so rescinded or recovered shall constitute obligations guarantied hereby for
all purposes under this Guaranty.
This Guaranty shall be governed by and construed in accordance with
the laws of the State of California applicable to contracts made and
performed in such State and without regard to conflicts of law doctrines.
All judicial proceedings brought against the Guarantor arising out of
or relating to this Guaranty, or any obligations hereunder, may be brought in
any state or federal court of competent jurisdiction in the State of California,
County of Orange. By executing and delivering this Guaranty, the Guarantor, for
himself and in connection with his properties, irrevocably (i) accepts generally
and unconditionally the exclusive jurisdiction and
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venue of such courts; (ii) waives any defense of FORUM NON CONVENIENS; (iii)
agrees that service of all process in any such proceeding in any such court
may be made by registered or certified mail, return receipt requested, to the
Guarantor at the address set forth below his signature; (iv) agrees that
service as provided in clause (iii) above is sufficient to confer personal
jurisdiction over the Guarantor in any such proceeding in any such court, and
otherwise constitutes effective and binding service in every respect; and (v)
agrees that Trust retains the right to serve process in any other manner
permitted by law or to bring proceedings against the Guarantor in the courts
of any other jurisdiction.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of
April 15, 1997.
/s/ Robert D. Mowry
------------------------------------------------
ROBERT D. MOWRY
Address: 1280 Bison Avenue
B9-614
Newport Beach, CA 92660
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EXHIBIT C
GENERAL PROXY
The undersigned, as record owner of (i) 186,922 shares (the
"PURCHASED SHARES") of the Common Stock, no par value per share (the "COMMON
STOCK"), of SYS, Inc., a California corporation (the "COMPANY"), and (ii)
123,078 shares (the "OPTION SHARES") of the Common Stock which are subject to
three Options (as defined in the Option Agreement) under that certain Stock
Purchase and Option Agreement dated as of April 15, 1997 between American
Technology Investments, Inc., a California corporation ("AMERICAN
TECHNOLOGY"), Robert E. Carroll and the undersigned (the "OPTION AGREEMENT"),
hereby revokes any previous proxies and appoints ROBERT D. MOWRY as the proxy
of the undersigned to attend any and all meetings of the shareholders of the
Company and to represent, vote, execute consents and waivers and other--vise
to act for the undersigned in the same manner and with the same effect as if
the undersigned were personally present at any such meeting and voting the
shares or personally acting on any matters submitted to shareholders for
approval or consent.
The undersigned authorizes such proxy to substitute any other person
to act hereunder, to revoke any such substitution, and to file this proxy and
any substitution or revocation with the Secretary of the Company.
This proxy is coupled with an interest.
This proxy shall terminate, and the authority hereunder shall be
revoked, with respect to all of the Option Shares upon the earliest to occur
of the following: (i) the failure by American Technology or its successors or
assigns to exercise any Option on or prior to the termination of the
applicable Option Period (as defined in the Option Agreement); (ii) the
termination of the Option Agreement; (iii) the failure by American Technology
or its successors or assigns to pay the exercise price, in accordance with
the terms of the Option Agreement, upon the exercise of any Option; (iv) the
failure by American Technology or its successors or assigns to pay any
portion of the Retainer Fee (as defined in the Retainer Agreement) in
accordance with the terms of that certain Management Consulting Contract
Retainer Agreement dated as of April 15,1997 between American Technology and
Robert E. Carroll (the "RETAINER AGREEMENT"); (v) the termination of the
Retainer Agreement; or (vi) April 15, 2000.
This proxy shall terminate, and the authority hereunder shall be
revoked, with respect to the Purchased Shares upon the delivery to American
Technology of a certificate issued in its name, or that of its nominee, for
the Purchased Shares.
This proxy shall terminate, and the authority hereunder shall be
revoked, with respect to all Option Shares subject to any Option exercised
under the Option Agreement upon payment of the exercise price of such Option
Shares in accordance with the terms of the Option Agreement.
DATED: April 15,1997.
THE CARROLL LIVING TRUST, DATED OCTOBER 4, 1996
By: /s/ Robert E. Carroll
------------------------------------------------
Robert E. Carroll, as Trustee
By: /s/ Shirley W. Carroll
------------------------------------------------
Shirley W. Carroll, as Trustee
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