1
ESCROW AGREEMENT
This Escrow Agreement is made as of the 18th day of March, 1997, by and
among Applied Cellular Technology, Inc., a Missouri corporation ("ACT"),
Xxxxxxx X. Xxxxxx, an individual, having an address at 0000 Xxxxxxx Xxxxx,
Xxxxx 0, Xxxxxxxxxx, Xxxxxxxxxx 00000 ("Xxxxxxx Xxxxxx"), Xxxxxxx X. Xxxxxx,
an individual, having an address at 0000 Xx. Xxxxxx Xxxx, Xxxxxxxxx, Xxxxxxx
00000 ("Xxxxxxx Xxxxxx") (sometimes hereinafter collectively referred to as
the "Sellers"), and Xxxxxx Xxxxxxxxx, Esquire, having an address at 0000 X.
Xxxxx, Xxxx, Xxxxxxxxxx 00000-0000 (the "Escrow Agent").
WITNESSETH
WHEREAS, prior to the date hereof, the Sellers, in the aggregate, owned all
of the issued and outstanding stock of Xxxxxx Manufacturing Company, a
California corporation ("HMC"); and
WHEREAS, effective as of the date hereof, the Sellers have sold to ACT, and
ACT has purchased from the Sellers, all of the issued and outstanding stock
of HMC (the "HMC Stock") pursuant to a certain Agreement of Sale dated as of
March 18, 1997 (the "Stock Sale Agreement"); and
WHEREAS, in consideration for the HMC Stock, ACT has transferred one hundred
seventy-nine thousand one hundred and four (179,104) shares of ACT's common
stock to the Sellers (the "ACT Stock") and, concurrent with such transfer,
HMC has refinanced its outstanding indebtedness which is guaranteed by ACT;
and
WHEREAS, as condition of closing, the Sellers and ACT have agreed that the
Sellers shall execute, together with Sellers, certain financing arrangements
as guarantors and borrowers, respectively, including, but not limited to, a
Line of Credit and a Term Loan ("Financing Arrangements"); and
WHEREAS, pending the completion of the Financing Arrangements, the Sellers
and ACT have agreed that the ACT Stock and the HMC Stock shall be held in
escrow in accordance with the terms hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is being hereby
acknowledged, the parties hereto hereby agree as follows:
1. Establishment of Escrow.
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A. The Sellers and ACT acknowledge that, as of the date hereof, they
have executed all documents required in connection with the
closing of the sale of the HMC Stock to ACT and, in
consideration therefore, the transfer of the ACT Stock by ACT
to the Sellers. The Sellers and ACT further acknowledge
that, as of the date hereof, they have placed the following
items in escrow with the Escrow Agent to be released only in
accordance with the terms hereinafter set forth:
i. Both the HMC Stock and ACT Stock (the HMC Stock and ACT
Stock being hereinafter collectively referred to as the
"Escrow Stock").
ii. Duly executed, undated stock powers as necessary to
transfer the HMC Stock to the Sellers and the ACT Stock
to ACT (the "Stock Powers").
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ESCROW AGREEMENT
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B. The Escrow Agent hereby acknowledges receipt of the Escrow Stock
and the Stock Powers. The HMC Stock and the ACT Stock are more
particularly described on the annexed Schedules A and B,
respectively.
2. Conditions to Release of Escrow.
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A. The Escrow Agent shall release the HMC Stock to ACT and the ACT
Stock to the Sellers upon the occurrence of the following event:
i. The completion of the execution of any and all documents
necessary to complete the Financing Arrangements with Sanwa
Bank California.
B. Prior to releasing the Escrow Stock in accordance with Section 2A
above, the Escrow Agent shall provide not less than one (1) day
prior written notice to the Sellers and ACT (at the addresses
and in the manner provided in the notices section of the Stock
Sale Agreement). In the event that the Escrow Agent shall
receive a written objection from any party hereto, the Escrow
Agent shall continue to hold the ACT Stock and the HMC Stock in
escrow until:
i. The receipt of the joint written instructions of ACT and
the Sellers; or
ii. Otherwise directed by a court of competent jurisdiction.
Thereafter, the Escrow Agent shall have no liability or
responsibility hereunder.
C. Upon release of the Escrow Stock, pursuant to this Section 2, the
Escrow Agent shall return each of the Stock Powers to the
party that executed the applicable Stock Power.
3. Termination Option.
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A. In the event that the Escrow Agent has not released the ACT Stock
to the Sellers due to the failure of the conditions set forth
in Section 2A above, the Sellers shall have the right, upon
written notice to the Escrow Agent and ACT, to compel the
Escrow Agent to deliver their respective shares of HMC Stock
to them together with the appropriate Stock Powers as
necessary to effectuate the transfer of such HMC Stock to the
applicable
4. Escrow Agent. This Escrow Agreement sets forth exclusively the Duties
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of the Escrow Agent with respect to any and all matters pertaining
hereto. The Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and the Escrow Agent may
assume that any person purporting to give any notice or receipt of
advice or make any statements in connection with the provisions
hereof has been duly authorized to do so. The Escrow Agent shall
not be liable for any mistake of fact or error of judgment or for
any acts or omissions of any kind except if such act or omission
constitutes bad faith or fraud. Except with respect to claims based
upon the Escrow Agent's gross negligence or willful misconduct, the
parties hereto jointly and severally shall indemnify and hold the
Escrow Agent harmless
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ESCROW AGREEMENT
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from any claim arising out of or related to this Escrow Agreement,
such indemnification to include all costs and expenses incurred by
the Escrow Agent, including, but not limited to, reasonable
attorney's fees. The parties acknowledge that the Escrow Agent is
merely serving as a depository hereunder and that it has served and
will continue to serve as counsel for HMC with respect to the
transactions contemplated by the Stock Sale Agreement. The Escrow
Agent shall be entitled to serve as legal counsel and to represent
HMC in any dispute involving the parties hereto. The Escrow Agent
shall not be treated as being in a conflict situation with respect
to its representation of HMC by virtue of its agreeing to serve as
Escrow Agent hereunder.
7. Construction. The parties acknowledge that they and their respective
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counsel have independently reviewed and had an opportunity to make
changes to this Agreement and that the normal rule of construction,
whereby ambiguities are to be resolved against the drafting party
shall be inapplicable to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Escrow Agreement as of the date first above written.
WITNESS:
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
ATTEST: APPLIED CELLULAR TECHNOLOGY, INC.
By: By: /s/ Xxxxxxx X. Xxxxxxxx
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Its: President
By: /s/ Xxxxxx Xxxxxxxxx
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Xxxxxx Xxxxxxxxx, Esquire
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SCHEDULE A
DESCRIPTION OF HMC STOCK
3,800,001 shares in the name of Xxxxxxx X. Xxxxxx
200,001 shares in the name of Xxxxxxx X. Xxxxxx
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SCHEDULE B
DESCRIPTION OF ACT STOCK
179,104 shares of restricted common shares
