SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act
May 30, 2006
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Date of Report
(Date of earliest event reported)
PROCESS TECHNOLOGY SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
Nevada 000-29603 91-2070995
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
6371 Richmond, #200
Houston, Texas 77057
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(Address of Principal Executive Offices)
(713) 266-8005
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(Registrant's Telephone Number)
N/A
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(Former Name or Former Address if changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the Registrant under any of
the following provisions (see general instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14-a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
(a) Effective as of May 30, 2006, the Registrant, Process Technology
Systems, Inc., a Nevada corporation ("Process," the "Company," "we," "our,"
"us" and words of similar import), entered into an Agreement and Plan of
Reorganization (the "Reorganization Agreement" and the "Reorganization") among
Process; W. Scott Thompson ("Thompson")and William A. Silvey, Jr. ("Silvey"),
two of our current directors and executive officers (collectively, the
"Process Shareholders"); Forster Drilling Corporation, a Nevada corporation
("Forster"); and the shareholders of Forster (the "Forster Shareholders").
Under the Reorganization Agreement,
1. The Forster Shareholders shall assign, transfer and convey at the
Closing (as defined in the Reorganization Agreement) their respective shares
of Forster common stock (the "Forster Stock") to Process in exchange for
shares of Process common stock that are "restricted securities" as defined in
Rule 144 of the Securities and Exchange Commission ("Process Stock") to be
issued at the rate of one share of Process Stock for one share of Forster
Stock.
2. Prior to closing, Forster has the right to sell up to 3,000,000
shares of its common stock at a price of $1.00 per share and may pay sales
commissions of up to 7% cash and warrants to purchase up to 210,000 shares of
its common stock. Any such shares issued will also be exchanged for shares of
Process Stock at the same ratio that the Forster Shareholders will exchange
for Process Stock or one share of Forster Stock for one share of Process
Stock.
3. Thompson and Silvey shall indemnify, defend and hold harmless Process and
Forster against any damage, loss, claim, liability, cost or expense, including
reasonable fees and disbursements of counsel, accountants, experts and other
consultants, arising prior to the date of the closing or resulting from,
arising out of, or based upon any misstatement or omission from any
representation by, or any breach of warranty, covenant or agreement of Process
or the Process Shareholders contained in the Reorganization Agreement,
including schedules, certificates and documents delivered by Process and/or
Process Shareholders. The indemnification obligation shall terminate on May
30, 2007. Forster shall pay Thompson and Silvey the aggregate sum of $500,000
concurrently with the execution of the Indemnification Agreement, as
consideration for entering into the Indemnification Agreement. All current
outstanding liabilities of Process will first be paid from these proceeds,
with the balance to be divided equally between Messrs. Thompson and Silvey.
4. Certain Forster Shareholders have agreed to enter into a
Lock-Up/Leak-Out Agreement (the "Forster Lock-Up Agreement") and to restrict
the sale, assignment, transfer, conveyance, or hypothecation of the Process
Stock that they receive under the Reorganization Agreement. Pursuant to the
Forster Lock-Up Agreement, such Forster Shareholders have agreed that they may
not sell, pledge, hypothecate, transfer, assign or in any other manner dispose
of Process Stock for one year from the date of the Forster Lock-Up Agreement.
Thereafter, such Forster Shareholders may sell, pledge, hypothecate, transfer,
assign or in any other manner dispose of up to one twelfth of the Process
Stock per month for each month, commencing one year after the closing, with
all sales of these shares to be subject to resale pursuant to Rule 144 of the
Securities Act of 1933, as amended (the "Securities Act"). Forster
Shareholders acknowledge that the certificates representing the Process Stock
will contain certain restrictive legends reflecting these resale restrictions
and that these securities are "restricted securities" that must be sold in
compliance with Rule 144, another available exemption from registration under
the Securities Act or pursuant to an effective registration statement filed
under the Securities Act.
5. Certain Process Shareholders have agreed to enter into a
Lock-Up/Leak-Out Agreement (the "Process Lock-Up Agreement") and to limit the
sale, pledge, hypothecation, transfer, assignment or in any other manner the
disposition of Process Stock to an amount equal to one twelfth of the Process
Stock owned by such Process Shareholders per 30 day period commencing upon the
date of the Process Lock-Up Agreement. All such shares must be sold in
compliance with "broker's transactions" and "manner of sale" provisions of
Rule 144, regardless of the satisfaction by these Process Shareholders of any
holding periods of Rule 144, and be otherwise sold in compliance with Section
4(1) of the Securities Act in "routine trading transactions." Such Process
Shareholders acknowledge that the certificates representing the Process Stock
will contain certain restrictive legends reflecting these resale restrictions,
and that these securities are "restricted securities" that must be sold in
compliance with Rule 144, another available exemption from registration under
the Securities Act or pursuant to an effective registration statement filed
under the Securities Act.
6. Following the closing, the name of the Company will be changed to "Forster
Drilling Corporation"; and the following persons will be named as officers and
directors of the reorganized Process: Fred Forster III, CEO/President and
Director; Scott Thompson, Secretary, and continuing as a Director; Fred
Forster, Jr., Director; William A. Silvey, Jr., continuing as a Director; and
then, the current officers and directors of Process shall resign, in seriatim,
from any other capacities in which they currently serve with the Company.
7. At least 80% of the Forster Shareholders shall have approved the
Agreement prior to closing, which is set for June 16, 2006.
Prior to the closing, the Process Shareholders will own approximately
2,000,000 shares of common stock of the Company. Following the closing, the
Forster Shareholders will own up to 43,055,463 shares of common stock of the
Company that are "restricted securities" as defined in Rule 144, which will
include the 3,000,000 shares planned to be issued by Forster pursuant to
paragraph 2 above. Accordingly, there will be up to 45,055,463 shares of the
Company issued and outstanding on closing of the Reorganization.
The Company's Board of Directors unanimously approved the Reorganization and
related agreements. Messrs. Silvey and Thompson are also shareholders of
Forster; however, this relationship was disclosed to the Board of Directors of
Process prior to the approval of the Reorganization Agreement.
A copy of the Reorganization Agreement, including all material exhibits and
related instruments, accompanies this Current Report, which, by this
reference, is incorporated herein; the foregoing summary is modified in its
entirety by such reference. See Item 9.01, Exhibit 2.1.
Item 9.01 Financial Statements and Exhibits.
(c)(i) Registrant's Exhibits:
Attached:
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Exhibit No. Description
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2.1 Agreement and Plan of Reorganization
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Current Report to be signed on its
behalf by the undersigned hereunto duly authorized.
PROCESS TECHNOLOGY SYSTEMS, INC.
Date: 6/5/06 /s/ William A. Silvey, Jr.
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William A. Silvey, Jr.
President and Director