EXHIBIT 2.2
THIRD AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This THIRD AMENDMENT, dated as of June 8, 2001, to the Agreement and
Plan of Merger dated March 21, 2000, as previously amended as of June 22,
2000 and August 23, 2000 (the "MERGER AGREEMENT"), is among PRECIS SMART CARD
SYSTEMS, INC., an Oklahoma corporation ("PARENT"), and FORESIGHT, INC.
(formerly Precis- Foresight Acquisition, Inc. and the surviving corporation
and successor to Foresight, Inc. (the "COMPANY")), an Oklahoma corporation
and a wholly-owned subsidiary of Parent ("MERGER SUB"), and the former
shareholders of the Company, namely Xxxx X. Xxxxxx and Xxxx X. Xxxx (the
"COMPANY SHAREHOLDERS").
W I T N E S S E T H:
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1. Parent, Merger Sub, the Company and the Company Shareholders are
parties to the Agreement and Plan of Merger pursuant to which, on December 7,
2000, the Company (which was formerly wholly-owned by the Company
Shareholders) was merged with and into Merger Sub on the terms and subject to
the conditions set forth in the Merger Agreement.
2. Section 1.6(a) of the Merger Agreement provides for the issuance
and delivery of Contingent Shares based upon the "Consolidated Adjusted
Income Before Taxes" for the years ended December 31, 2000, 2001, 2002 and
2003.
3. Parent and its wholly-owned subsidiary, Precis-Capella Group
Acquisition, Inc. ("ACQUISITION SUB"), have entered into an Agreement and
Plan of Merger, dated March 23, 2001, with The Capella Group, Inc.
("CAPELLA") and its shareholders, Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxxx, Xxxx X.
Xxxxx, Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, Xx., Trust Under The Capella
Group, Inc. IMK 2001 Bonus Plan and Trust Under The Capella Group, Inc.
Employee 2001 Bonus Plan (the "PRECIS-CAPELLA MERGER AGREEMENT"), pursuant to
which Capella will merger with and into Acquisition Sub (the "CAPELLA
MERGER").
4. In the event the Capella Merger is consummated, the parties to
this Third Amendment are willing to amend, and, as a condition of the Capella
Merger, Capella and its shareholders require amendment of, the formula for
determining the number of shares of Parent Common Stock to be issued and
delivered as the Contingent Shares pursuant to Section 1.6(a) of the Merger
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties to this Third
Amendment and the Merger Agreement have agreed, and hereby agree, as follows:
1. EFFECT ON CAPITAL STOCK. Section 1.6(a) of the Merger Agreement
is hereby amended in its entirety to read as follows:
(a) CONVERSION OF SECURITIES. The outstanding Common
Shares shall be exchanged, in the aggregate, for the following
number of shares of Parent Common Stock to be delivered as
follows:
(A) At Closing , Parent shall issue and
deliver (i) to Xxxx X. Xxxxxx 166,667 shares of
Parent's Series A Convertible Preferred Stock (the
"PARENT PREFERRED STOCK") and (ii) to the Company
Shareholders 500,000 shares of Parent Common Stock, of
which 90 percent of the shares of Parent Common Stock
shall be issued and delivered to Xxxx X. Xxxxxx and 10
percent of the shares of Parent Common Stock
shall be issued and delivered to Xxxx X. Xxxx.
(B) At closing of the Capella Merger, Parent
shall issue and deliver to the Company Shareholders
1,250,000 shares of Parent Common Stock.
(C) Parent shall issue and deliver to the
Company Shareholders one share of Parent Common Stock
for each $1.00 that Consolidated Adjusted Income
Before Taxes of Parent for the year ended December 31,
2001, exceeds $1,750,000.
For purposes of this Agreement, "CONSOLIDATED ADJUSTED INCOME BEFORE
TAXES" shall mean the net income before income tax expense for the
applicable fiscal year (determined in accordance with generally accepted
accounting principles for financial reporting purposes under the rules
and regulations of the U.S. Securities and Exchange Commission) of
Parent assuming the Capella Merger occurred on January 1, 2001, plus:
(i) if applicable, the amount of amortization, including goodwill,
during the fiscal year attributable to the acquisition of the Company
and Capella by Parent pursuant to this Agreement and the Precis-Capella
Merger Agreement; and (ii) any compensation expense recorded as a result
of the issuance and delivery of Parent Common Stock to The Capella
Group, Inc. IMR 2001 Bonus Plan or its beneficiaries pursuant to Section
5.12 of the Capella Merger Agreement. Furthermore, any shares of Parent
Common Stock to be issued and delivered to the Company Shareholders
pursuant to this Section 1.6(a), other than those shares of Parent
Common Stock issued and delivered at Closing, are referred to herein as
the "CONTINGENT SHARES."
As soon as reasonably practical following the determination of
Consolidated Adjusted Income Before Income Taxes for the year ended
December 31, 2001, any issuances and deliveries of the Parent Common
Stock pursuant to this Section 1.6(a) and not made at Closing, shall be
made as soon as reasonably practicable following the applicable
determination. Provided, however, the Contingent Shares shall be issued
and delivered to the Company Shareholders in accordance with the
separate agreement to be executed and delivered simultaneously with this
Agreement between Parent and the Company Shareholders. All shares of
Parent Common Stock and Parent Preferred Stock issued and distributed to
the Company Shareholders pursuant to this Section 1.6(a) shall be fully
paid and non-assessable shares, subject to adjustment pursuant to
Section 1.6(e).
The number of shares of Parent Common Stock and Parent
Preferred Stock into which each outstanding Common Share is converted
pursuant to this Section 1.6(a) is referred to herein as the "EXCHANGE
RATIO."
2. FULL FORCE AND EFFECT. Except as amended hereby, the Merger
Agreement shall remain in full force and effect.
3. COUNTERPARTS. This Third Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be a single agreement.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company Shareholders
have caused this Third Amendment to be executed as of the date first written
above, and in the case of Parent and Merger Sub, by their respective officers
hereunto duly authorized.
"Parent" PRECIS SMART CARD SYSTEMS, INC.
By /s/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx, Chief Executive Officer
"Merger-Sub" FORESIGHT, INC.
By /s/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx, Chief Executive Officer
"Company Shareholders" /s/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx
/s/ XXXX X. XXXX
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Xxxx X. Xxxx
