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EXHIBIT C
PLAN OF RECAPITALIZATION
This PLAN OF RECAPITALIZATION (the "Agreement") is executed this 22nd
day of April, 1998 by and between RMS Limited Partnership, a Nevada limited
partnership ("RMS") and Precision Systems, Inc., a Delaware corporation
("PSI").
WHEREAS, pursuant to that certain Contribution and Share Exchange
Agreement of even date herewith to which this Agreement is attached as Exhibit
2.1 (the "Contribution Agreement"), Xxxxx (as that term is defined in the
Contribution Agreement) intends to conclude the Transaction or the Alternative
Transaction (as such terms are defined in the Contribution Agreement); and
WHEREAS, the closing of the transactions contemplated in the
Contribution Agreement are contingent upon the prior closing of the transaction
contemplated by this Agreement; and
WHEREAS, in reliance on the representation and warranties of PSI set
forth in the Contribution Agreement, RMS is willing to enter into this
Agreement and to consummate the transactions specified herein; and
WHEREAS, RMS is the holder of an aggregate of 10,000 shares of Series
A Preferred Stock of PSI, 1,500 shares of Series B Preferred Stock of PSI, and
the RMS Note (as hereinafter defined); and
WHEREAS, the general and limited partners of RMS and the Board of
Directors of PSI have determined that the execution, delivery and performance
of this Agreement is in the best interests of RMS and PSI, respectively; and
WHEREAS, it is the intention of the parties that the recapitalization
under this Agreement qualifies as a reorganization within the meaning of
Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended (the
"Code").
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Capitalized words and phrases used in this
Agreement which are not otherwise defined herein have the following meanings:
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(a) "Closing Date" shall have the meaning set forth in
Article X of the Contribution Agreement;
(b) "Closing" shall have the meaning set forth in Article
X of the Contribution Agreement;
(c) "Exchange Rate" shall have the meaning set forth in
Section 2.1 of the Contribution Agreement; and
(d) "PSI Common Stock" shall have the meaning set forth
in Section 1.2 of the Contribution Agreement.
(e) "Recapitalization" shall have the meaning set forth
in Section 2.1 below.
(f) "Registration Rights Agreement" shall mean that
certain agreement in the form of Exhibit 11.1.5 to the Contribution Agreement.
ARTICLE II
RECAPITALIZATION
2.1. Recapitalization. At the Closing, RMS will surrender to PSI
for cancellation (i) all of the PSI Series A Preferred Stock (the "PSI Series A
Stock") and all of the PSI Series B Preferred Stock (the "PSI Series B Stock")
held by RMS and (ii) the outstanding principal balance and accrued interest as
of the Closing Date on that certain promissory note by and between PSI and RMS
dated September 30, 1997 (the "RMS Note"), and PSI will deliver to RMS in
exchange therefor shares of PSI Common Stock at a price equal to the Exchange
Rate as more specifically set forth below. The PSI Series A Stock and PSI
Series B Stock shall be exchanged for that number of shares of PSI Common Stock
equal to the quotient realized by dividing the sum of the aggregate liquidation
preference for the PSI Series A Stock and PSI Series B Stock held by RMS plus
the accumulated and unpaid dividends on such shares as of the Closing Date by
the Exchange Rate. The Note shall be exchanged for that number of shares of
PSI Common Stock equal to the quotient realized by dividing the sum of
principal balance and accrued interest on the RMS Note as of the Closing Date
by the Exchange Rate. In the event that the foregoing calculations yield a
number of shares including a fractional interest, the number of shares issuable
by PSI shall be rounded up to the next whole number of shares. The exchange of
PSI Common Stock for the PSI Series A Stock, the PSI Series B Stock and the RMS
Note held by RMS is referred to herein as the "Recapitalization."
2.2 Third Party Recapitalization. Not later than 20 days from the
date hereof, PSI shall enter into agreement with each of Didier Primat
("Primat"), Primwest Holding, N.V. ("Primwest") and Vulcan Ventures
Incorporated ("Vulcan") to convert (the "Conversion") (i) the PSI Series B
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Stock held by Primwest and Vulcan and (ii) the promissory notes between each of
Primat and Vulcan with PSI into shares of PSI Common Stock on terms no less
favorable to PSI than that of the Recapitalization set forth in Section 2.1.
The closing of the Conversion shall occur no later than the Closing Date.
2.3 Stockholder Approval. PSI's obligations hereunder with
respect to the Recapitalization are conditioned upon the approval by the
holders of a majority of the shares of PSI capital stock entitled to vote
thereon of an amendment to PSI's Certificate of Incorporation increasing the
number of authorized shares of PSI Common Stock thereunder to an amount
sufficient to cover the shares to be issued pursuant to this Agreement and the
Contribution Agreement. PSI agrees to use its reasonable best efforts to
obtain such stockholder approval as soon as reasonably practicable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations of PSI.
PSI hereby represents to RMS, that the following are true and accurate
as of the date first written above:
(a) Subject to obtaining stockholder approval of the
amendment to its Certificate of Incorporation referred to in Section 2.3, PSI
has the full right, power, and authority to execute and deliver this Agreement
and to perform its terms. This Agreement is a valid and binding agreement of
PSI enforceable against it in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
(b) The execution and delivery of this Agreement by PSI
and the consummation of the transactions required hereunder does not and will
not violate or conflict with any statute, regulation, judgment, order, writ,
decree, or injunction, currently applicable to PSI or any of its property or
assets.
(c) No consent or approval of any third party is required
to be obtained by PSI in connection with the execution and delivery of this
Agreement or the performance of the transactions contemplated hereunder other
than those approvals identified this Agreement and in the Contribution
Agreement. No contract or agreement to which PSI is a party restricts the
ability of PSI to fulfill its obligations and responsibilities under this
Agreement or any related agreement or to carry out the activities contemplated
herein.
(d) All of the representations and warranties of PSI set
forth in the Contribution Agreement are true and accurate in all material
respects as of the date hereof and shall be true and
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accurate as of the Closing and RMS shall be entitled to rely on such
representations and warranties which are incorporated herein by this reference.
(e) Subject to obtaining stockholder approval of the
amendment to its Certificate of Incorporation referred to in Section 2.3, all
of the shares of Common Stock to be issued by PSI pursuant to this Agreement
shall be validly issued, fully paid and nonassessable shares, not subject to
any preemptive rights, of free and clear of any liens, claims, options,
encumbrances or restrictions of any nature whatsoever.
3.2 Representations of RMS.
RMS hereby represents to PSI that the following are true and accurate
as of the date first written above.
(a) RMS is a limited partnership, duly organized, validly
existing and in good standing in the State of Nevada with the requisite power
to enter into and perform its obligations under this Agreement in accordance
with its terms.
(b) RMS has the full right, power and authority to
execute and deliver this Agreement and to perform its terms. All required
actions to approve and adopt this Agreement have been taken. This Agreement is
a duly authorized, valid and binding agreement of RMS enforceable against it in
accordance with its terms, subject as to enforcement to bankruptcy, insolvency
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(c) No consent or approval of any third party is required
to be obtained by RMS in connection with the execution and delivery of this
Agreement or the performance of the transactions contemplated hereunder other
than those approvals identified in the Contribution Agreement. No contract or
agreement to which RMS is a party restricts the ability of RMS to fulfill its
obligations and responsibilities under this Agreement or any related agreement
or to carry out the activities contemplated herein.
(d) RMS owns and will own as of the Closing Date the
Series A Preferred Stock, Series B Preferred Stock and the RMS Note free and
clear of any liens, claims, options encumbrances or restrictions of any nature
whatsoever.
ARTICLE IV
CLOSING
4.1 Delivery of Securities. The actual consummation of the
transactions contemplated by this Agreement shall take place on the Closing
Date. The Closing shall occur only in the event that the conditions to closing
set forth in the Contribution Agreement have been satisfied or waived by the
party or parties entitled to the benefit of such conditions and stockholder
approval of the
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amendment to the PSI Certificate of Incorporation has been obtained as
contemplated by Section 2.3. At the Closing, Xxxxx shall deliver to PSI for
cancellation of the RMS Note, the share certificates representing the Series A
Preferred Stock and such transfer instructions relating to the exchange of the
Series A Preferred Stock and Series B Preferred Stock as PSI may reasonably
request. At the Closing, PSI shall deliver to RMS certificates representing
the number of shares of Common Stock as determined in accordance with Section
2.1 hereof and a copy of the Registration Rights Agreement executed by PSI.
The Closing shall be conditioned upon the Closing of the Contribution and
Exchange Transaction. The obligation of each of RMS and PSI to Close, shall be
conditioned upon the representations and warranties of the other being true and
accurate in all material respects as of the Closing Date.
ARTICLE V
MISCELLANEOUS
5.1 Term and Termination.
(a) Effective Date. This Agreement shall be effective
from and after the date first set forth above until its termination pursuant to
this Section 5.1.
(b) Termination. This Agreement shall terminate
automatically without notice or any further action by any of the parties hereto
in the event of the termination of the Contribution Agreement in accordance
with its terms.
5.2 Notice. All notices required to be given under the terms of
this Agreement or which any of the parties may desire to give hereunder shall
be in writing and delivered personally or sent by express delivery, or by
facsimile, or by registered or certified mail, with proof of receipt, postage
and expenses prepaid, return receipt requested, addressed as follows:
(a) As to RMS, addressed to:
00 Xxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: C. Xxxxxx Xxxxxx, Xx., Esq.
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with a copy thereof addressed to:
Xxxxx & XxXxxxxx
000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X.
Facsimile (000) 000-0000
Attention: Xxxxxx X. Xxxx, Xx., Esq.
(b) As to PSI, addressed to:
00000 00xx Xxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
with a copy thereof addressed to:
Xxxxxxxx Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, III, Esq.
and
Xxxxx & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
5.3 Assignment. This Agreement shall not be assignable by either
Party, except with the written consent of the other Party.
5.4 Binding Effect. Every covenant, term, and provision of this
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective legal representatives, successors and permitted assigns.
5.5 Headings. Section and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any provision hereof.
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5.6 Further Action. Each Party agrees to perform all further acts
and to execute, acknowledge, and deliver any documents which may be reasonably
necessary, appropriate, or desirable to carry out the provisions of this
Agreement.
5.7 Applicable Law. The laws of the State of Florida (excluding
the rules on conflict of laws or choice of law) shall govern the validity of
this Agreement, the construction of its terms, and the interpretation of the
rights and duties of the Parties.
5.8 Choice of Forum; Venue; Service of Process. Any suit, action,
or proceeding among any or all of RMS and PSI relating to this Agreement, to
any document, instrument, or agreement delivered pursuant hereto, referred to
herein, or contemplated hereby, or in any other manner arising out of or
relating to the transactions contemplated by or referenced in this Agreement,
shall be commenced and maintained exclusively in the United States District
Court for the Middle District of Florida, or, if that Court lacks jurisdiction
over the subject matter, in a state court of competent subject-matter
jurisdiction sitting in Pinellas County, Florida. RMS and PSI hereby submit
themselves unconditionally and irrevocably to the personal jurisdiction of such
courts. RMS and PSI further agree that venue shall be in Pinellas County,
Florida. RMS and PSI irrevocably waive any objection to such personal
jurisdiction or venue including, but not limited to, the objection that any
suit, action, or proceeding brought in Pinellas County, Florida, has been
brought in an inconvenient forum. RMS and PSI irrevocably agree that process
issuing from such courts may be served on them, either personally or by
certified mail, return receipt requested, at the addresses given in Section 5.2
hereof; and RMS and PSI further irrevocably waive any objection to service of
process made in such manner and at such addresses, including without limitation
any objection that service in such manner and at such addresses is not
authorized by the local or procedural laws of Florida.
5.9 Entire Agreement. This Agreement constitutes the entire
understanding of and agreement between the Parties with respect to the subject
matter hereof and supersedes all prior representations, understandings, and
agreements.
5.10 Waiver. No waiver by any party of any term of this Agreement
or of any breach of any term of this Agreement shall constitute a waiver of any
such term or any such breach in any other case, whether prior or subsequent.
5.11 Counterpart Execution. This Agreement may be executed in
several counterparts, each of which shall be an original, and such counterparts
shall together constitute but one and the same instrument.
5.12 Amendments. This Agreement may be amended or modified
only by a written agreement signed by both of the Parties.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day first above set forth.
Precision Systems, Inc.,
A Delaware corporation
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
CEO and President
RMS Limited Partnership,
a Nevada limited partnership
By: /s/ C. Xxxxxx Xxxxxx Xx.
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C. Xxxxxx Xxxxxx, Xx.
President
Xxxxxxx Xxxxxxx, Inc.
General Partner of
RMS Limited Partnership
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