AGREEMENT OF SALE
This Agreement is entered into this 30th day of July, 1997 by and between
Applied Cellular Technology, Inc. ("ACT"), a Missouri corporation, acting by and
through its subsidiary, ACT Communications, Inc., a Delaware corporation
("Buyer"), Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx (hereinafter referred to as
"Sellers") and Advanced Telecommunications, Inc., an Illinois corporation
("Acquiree").
WHEREAS, Xxxxx X. Xxxxxx owns seven hundred (700) shares, $.-0- par value and
Xxxxxx X. Xxxxxx owns three hundred (300) shares, $.-0- par value (the "Acquiree
Shares"), of the issued and outstanding common stock of Acquiree (representing
one hundred percent (100%) of the currently issued and outstanding common stock
of Acquiree);
WHEREAS, Sellers desire to sell and Buyer desires to acquire eighty percent
(80%) of the Acquiree's shares (the "Sale Shares"), such that said acquisition
qualifies as a tax-free reorganization under Section 368 of the Internal Revenue
Code.
NOW, THEREFORE, for the mutual consideration set out herein, the parties agree
as follows:
1. Purchase and Sale of Acquiree Shares
1.1 Sellers shall sell to Buyer and Buyer shall purchase from Sellers
the Sale Shares at a closing of such sale (the "Closing") to be held at the
place and on the date hereinafter provided (the "Closing Date").
1.2 The purchase price (the "Price") for the Sale Shares shall be the
amount of shares of restricted common stock of ACT, Buyer's parent corporation,
with demand registration rights, such shares having a value of six million four
hundred thousand dollars ($6,400,000.00) (for eighty percent [80%] of the
Acquiree's Shares) based upon the market value of ACT shares to be set
forty-eight (48) hours prior to closing as reflected on the NASDAQ bid price
published in "The Wall Street Journal" ("Valuation Date"), provided, however, if
the acquisition of Acquiree is completed prior to July 31, 1997, the ceiling
price for the ACT shares shall be no greater than four dollars ($4.00) per
share.
a. At the Closing, Sellers shall receive 2,048,000 (two
million forty-eight thousand) shares of restricted common stock of ACT, with
demand registration rights as provided hereinafter in Section 9 of this
Agreement, which has a value of six million four hundred thousand dollars
($6,400,000.00) as of the Valuation Date, allocated as follows:
Xxxxx X. Xxxxxx 1,433,600 Seventy Percent (70%)
Xxxxxx X. Xxxxxx 614,400 Thirty Percent (30%)
b. At the Closing Date, ACT will deliver a certificate to each
Seller representing the ACT Stock duly endorsed so as to make Sellers the sole
holders thereof, free and clear of all claims and encumbrances. The ACT Stock is
not registered under the Securities Act of 1933 as amended (the "Act"). The ACT
Stock will be subject to a usual and appropriate stop transfer order on the
books and records of Acquiree's transfer agent pertaining to securities not
registered under the Act. The certificate for the ACT Stock delivered shall bear
on its face the following restrictive legend:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and are "restricted securities" as that term is
defined in Rule 144 under the Act. The shares may not be sold or offered for
sale except pursuant to an effective registration statement under the Securities
Act of 1933 or an opinion of counsel for the corporation that registration is
not required under such Act".
2. Put Option
a. The Buyer hereby grants to Sellers a put option (the "Put") for the
consideration of ten dollars ($10.00) to require the Buyer to purchase the
remaining issued and outstanding Acquiree Shares (representing twenty percent
(20%) of the currently outstanding common shares). The Sellers may Put back to
Buyer, at any time after December 31, 2001, by providing notice to Buyer of such
exercise. The Buyer shall hold an anti-dilutive position. Anti-dilutive shall
mean in any future capitalization by the holder of eighty percent (80%) of the
outstanding shares, the holder of the remaining twenty percent (20%) shall not
suffer dilution in any form.
Within forty-five (45) days after Seller exercises the Put,
Buyer shall purchase the remaining twenty percent (20%) of the Acquiree Shares
for a purchase price equal to five (5) times the average earnings before income
taxes, depreciation and amortization ("EBITDA") of the Acquiree for the calendar
years 2000 and 2001 (the "Put Price"). EBITDA shall be determined on an accrual
basis in accordance with generally accepted accounting principles.
Notwithstanding the preceding sentence, the Put Price shall be no less than one
million six hundred thousand dollars ($1,600,000.00) and no greater than five
million ($5,000,000.00). The Put Price shall be payable to Sellers, at the
election of Sellers, in their sole discretion, in cash and/or shares of
restricted common stock (of ACT) which shall be subject to the registration
rights set forth in Section 9 of this Agreement. Buyer shall use its best
efforts to register such shares within a reasonable period of time after the
exercise of the Put.
b. After the Closing Date, Buyer shall operate Acquiree as a
wholly-owned subsidiary and any earnings attributable to entities obtained
through acquisitions made by Acquiree or by Buyer on behalf of or for the
benefit of Acquiree after the Closing Date shall be used to calculate the EBITDA
of Acquiree for purposes of calculating the Put Price. Intercompany charges or
management fees (except reasonable charges for working capital infusions) shall
not be factored into the calculation of EBITDA of Acquiree for purposes of
calculating the Put Price.
3. Representations of Sellers and Acquiree
Each Seller hereby represents and warrants severally, to the extent of
the facts known to Sellers and Acquiree, that, effective this date and the
Closing Date, the representations listed below are true and correct.
3.1 Sellers are the sole owners of one thousand (1,000) of the common
shares issued and outstanding Shares of Acquiree; such Acquiree Shares are free
from claims, liens or other encumbrances; and Sellers have the unqualified right
to transfer and dispose of such shares.
3.2 The Sale Shares constitute validly issued shares of Acquiree fully-
paid and nonassessable.
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3.3 Acquiree has previously furnished unaudited financial statements
dated April 30, 1997 (see separate Disclosure Schedule). The financial
statements are substantially correct and complete and have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis. The financial statements present fairly the financial condition of
Acquiree of the respective dates of said balance sheets and the results of
operations for the respective periods indicated in said statements of income and
retained earnings and, in the case of each such interim statement, is subject to
year-end adjustments consistent with past practice.
3.4 To the best of Sellers' knowledge, there are no actions, suits,
proceedings or investigations (whether or not purportedly on behalf of Acquiree)
pending or threatened against or affecting Acquiree, at law, or in equity or
admiralty, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau agency or instrumentality, domestic or
foreign, which involve the likelihood of any adverse judgment of liability, not
fully covered by insurance, in excess of five thousand dollars ($5,000.00) in
any one case, or ten thousand dollars ($10,000.00) in the aggregate, or which
may result in any material adverse change aside from the monetary adverse
judgment or liability) in the business, operations, properties or assets or in
the condition, financial or otherwise, of Acquiree, except in each as listed and
described in Schedule 3.4 annexed hereto. To the best of Sellers' knowledge,
Acquiree is not in default with respect to any order, writ, injunction or decree
of any court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign.
3.5 Acquiree has, to its best knowledge, complied in all material
respects with all laws, regulations and judicial or administrative tribunal
orders applicable to its business of which it is aware except as previously
disclosed to Buyer (see Disclosure Schedule).
3.6 All federal, state and local tax returns required to be filed by
Acquiree have been duly filed. Acquiree also represents and warrants that it has
paid any and all state sales taxes which may have been due in all previous
years. Federal income tax returns of Acquiree have been submitted to the
Internal Revenue Service ("IRS") for all past fiscal years through the calendar
year ended in 1996 (see Disclosure Schedule). Acquiree agrees to file its
federal and state income tax returns for the fiscal year of 1997 in a timely
manner. Acquiree shall indemnify Buyer for any failure to file. All deficiencies
by any taxing authority have either been paid or settled, or are in the process
of being paid or settled. Acquiree has been notified by the State of Illinois
that it may be subject to an adjustment as a result of the State's audit of the
Acquiree's payment of state sales taxes. Such actions shall be fully disclosed
by Acquiree to Buyer.
3.7 Acquiree and Sellers agree that any and all tax deficiencies
disclosed on the balance sheet will be paid or settled prior to Closing, except
as provided hereinabove in Section 3.6.
3.8 Since the date of the balance sheet, there has not occurred:
a. any material and adverse change in the financial condition or
operations of Acquiree;
b. any damage, destruction or loss to or of any of the material
assets or properties owned or leased by Acquiree;
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c. the creation or attachment of any lien against any of the
currently issued and distributed stock of Acquiree;
d. any waiver, release, discharge, transfer or cancellation by
Acquiree of any rights or claims of material value;
e. any issuance by Acquiree of any securities (must include all
debt or equity securities) or any merger or consolidation of Acquiree with any
other person or any acquisition by Acquiree of the business of any other person;
f. any incurrence, assumption or guarantee by Acquiree of any
indebtedness or liability other than in the ordinary course of business;
g. any declaration, setting aside or payment by Acquiree of any
dividends on, or any other distribution with respect to, any capital stock of
Acquiree or any repurchase, redemption or other acquisition of any capital stock
of Acquiree; or
h. (i) any payment of any bonus, profit sharing, pension or
similar payment or arrangement or special compensation to any employee of
Acquiree, except in the ordinary course of the business of Acquiree, (ii) any
increase in the compensation payable or to become payable to any employee of
Acquiree.
3.9 Except as set forth in the documents listed, referred to in
Exhibits hereto or the Disclosure Schedule, the execution and carrying out of
this Agreement will not conflict with, or result in any breach of any of the
terms, or create a charge or encumbrance upon any of the properties or assets,
or outstanding stock of Acquiree pursuant to any corporate charter, bylaw,
indenture, mortgage or lease to which Acquiree or any of its stockholders is a
party or by which it is bound. The execution and carrying out of this Agreement
will not violate any provision of law.
3.10 To the best knowledge of both the Sellers and Acquiree, none of
the written information and documents which have been or will be furnished by
Acquiree or by any representatives of Acquiree to Buyer or any of the
representatives of Buyer in connection with the transaction contemplated by this
Agreement contains or will contain, as the case may be, any untrue statement of
a material fact, or omits or will omit to state a material fact necessary in
order to make the statements therein not misleading in light of the
circumstances in which made. To the best of its knowledge, Acquiree has
disclosed to Buyer as the purchaser of the Sale Shares all material information
relating to Acquiree and its activities as currently conducted.
3.11 The representations and warranties made hereinabove in this
Section 3 will be correct in all material respects on and as of the Closing Date
with the same force and effect as though such representations and warranties had
been made on the Closing Date.
3.12 The Acquiree is authorized to issue fifty thousand (50,000) shares
of common stock, $.-0- par value, of which one thousand (1,000) shares are
issued and outstanding. Acquiree has one class of capital stock and all
outstanding shares have been duly authorized, validly issued and are fully paid
and nonassessable with no personal liability attaching to the ownership thereof.
There are not outstanding convertible securities, warrants, options or
commitments of any nature which may cause authorized but unissued shares to be
issued to any person.
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3.13 Organization of Acquiree. Acquiree is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois, with all requisite power and authority to own its properties and to
carry on its business as now conducted.
3.14 Officers and Directors. The present officers and directors of
Acquiree are as follows:
Officers: President Xxxxx X. Xxxxxx
Vice President Xxxxxx X. Xxxxxx
Secretary Xxxxxxxx X. Xxxxxx
Treasurer Xxxxx X. Xxxxxx
Directors: Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
3.15 Other Agreements. Acquiree is a party to no material agreement
(written or verbal) except (1) as disclosed in this Agreement, (2) orders of
merchandise in normal quantities for use in Acquiree's business, and (3) as set
forth in the separate Disclosure Schedule.
3.16 Insurance Policies. Acquiree has delivered to Buyer true, correct
and complete copies of all policies of fire, liability and other forms of
insurance now in force with respect to Acquiree and its assets, as listed in the
separate Disclosure Schedule. All premiums have been paid and all such policies
are in effect and will remain in effect through the Closing Date. Acquiree shall
amend such policies to add Buyer as an additional insured.
3.17 Sellers are currently shareholders in a company, Benchmark
Communications ("Benchmark"). Benchmark is a union-affiliated company which
occasionally works as a subcontractor to Acquiree for certain cabling and
telephone installation work.
Sellers do hereby agree to provide such subcontract work,
unless otherwise agreed, on a "break-even" basis to Acquiree subsequent to the
execution of this Agreement.
3.18 Employees. All employees of Acquiree and their current rate of
compensation are listed in the separate Disclosure Schedule. Acquiree is not a
party to any union contract.
3.19 Employee Benefit Plans. The employees of Acquiree may participate
in certain employee benefits plans, including health insurance, dental
insurance, short and long term disability plans and a 401k plan (see Disclosure
Schedule).
4. Representations of Buyer and ACT
Buyer warrants and represents, to the extent of the facts known to
Buyer, that, effective this date and the Closing Date, the representations
listed below are true and correct.
4.1 Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
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4.2 The Board of Directors of Buyer and ACT have duly approved this
Agreement.
4.3 ACT's restricted common shares deliverable pursuant to this
Agreement shall be validly issued and outstanding, fully paid and nonassessable.
4.4 The authorized capital stock of ACT consists of twenty million
(20,000,000) shares of common stock, $.001 par value, ten million sixty-eight
thousand six hundred twenty-two (10,068,622) of which have been validly issued
and are outstanding and one million (1,000,000) shares of preferred stock, ten
dollars ($10.00) par value, sixty one thousand (61,000) of which have been
validly issued and outstanding.
4.5 Annexed hereto as Exhibit 4.5 is the audited financial statements
of ACT dated December 31, 1996. The financial statements in Exhibit 4.5 are
substantially correct and complete and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis. The
financial statements present fairly the financial condition of ACT as of the
respective dates of said balance sheets and the results of operations for the
respective periods indicated in said statements of income and retained earnings
and, in the case of each such interim statement, is subject to year-end
adjustments consistent with past practice.
4.6 Other than the notification by the State of Illinois described in
Section 3.6, to the best of Buyer's knowledge, there are no actions, suits,
proceedings or investigations (whether or not purportedly on behalf of Buyer)
pending or threatened against or affecting Buyer or ACT at law or in equity or
admiralty or before or by any federal, state, municipal or other governmental
department, commission, board, bureau agency or instrumentality, domestic or
foreign, which involve the likelihood of any adverse judgment of liability, not
fully covered by insurance, in excess of $5,000.00 in any one case of $10,000.00
in the aggregate, or which may result in any material adverse change aside from
the monetary adverse judgment or liability, in the business, operations,
properties or assets or in the condition, financial or otherwise, of Buyer. To
the best of Buyer's knowledge, Buyer is not in default with respect to any
order, writ, injunction or decree of any court or federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
4.7 Buyer has complied in all material respects with all laws,
regulations and judicial or administrative tribunal orders applicable to its
business of which it is aware.
4.8 Other than the potential Illinois state sales tax adjustment
described in Section 3.6, all federal, state and local tax returns required to
be filed by Buyer have been duly filed. Federal income tax returns of Buyer have
been submitted to the IRS for all past fiscal years through the fiscal year
ended in 1995. All deficiencies proposed by any taxing authority have either
been paid or settled or are included in the amounts for accrued taxes shown on
the respective balance.
4.9 Except as set forth in the documents listed, referred to in
Exhibits hereto or the Disclosure Schedule, the execution and carrying out of
this Agreement will not conflict with, or result in any breach of any of the
terms, or create a charge or encumbrance upon any of the properties or assets,
or outstanding stock of Buyer pursuant to any corporate charter, bylaw,
indenture, mortgage or lease to which Buyer or any of its stockholders is a
party or by which it is bound. The execution and carrying out of this Agreement
will not violate any provision of law.
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4.10 To the best of its knowledge, none of the written information and
documents which have been or will be furnished by Buyer or any representatives
of Buyer to Sellers or any of the representatives of Sellers in connection with
the transactions contemplated by this Agreement contains or will contain, as the
case may be, any untrue statement of a material fact, or omits or will omit to
state a material fact necessary in order to make the statements therein not
misleading in light of the circumstances in which made.
4.11 The representations and warranties made hereinabove in this
Section 4 will be correct in all material respects on and as of the Closing Date
with the same force and effect as though such representations and warranties had
been made on the Closing Date.
4.12 Buyer is fully aware of the condition and prospects, financial and
otherwise, of the Acquiree, having been supplied with such financial and other
data relating to the Acquiree as Buyer considered necessary and advisable to
enable it to form a decision concerning the purchase herein provided.
4.13 Buyer is fully aware that the Sale Shares, when delivered, will
not have been registered under the Act; that accordingly no sale, offer to sell
or transfer of the Sale Shares shall be made unless a registration statement
under the Act with respect to the Sale Shares is then in effect or an exemption
from the registration requirements of the Act is then, in fact, applicable to
the Sale Shares or, in the opinion of Acquiree's counsel, registration is not
required.
4.14 Buyer has been fully advised by the Sellers that the Sellers will
sell the Sale Shares to Buyer without registration under the Act on the basis of
the statutory exemption in Section 4(2) of the Act relating to transactions not
involving a public offering and that Sellers' reliance upon the statutory
exemption is based in large part upon Buyer's representations made in this
Agreement.
4.15 Buyer is acquiring the Sale Shares for investment for its own
account and not with a view to resell or otherwise distribute the Sale Shares.
In making the foregoing representations, Buyer understand that, in the view of
the Securities and Exchange Commission, the statutory exemption under Section
4(2) would not be available if, notwithstanding Buyer's representations, it had
in mind merely acquiring the Sale Shares for resale upon the occurrence or
nonoccurrence of some predetermined event.
4.16 Buyer has the full right, power and authority to purchase the Sale
Shares in accordance with the terms of this Agreement and otherwise to
consummate and close the transaction provided for in this Agreement in the
manner and upon the terms herein specified.
4.17 Buyer is acquiring the Sale Shares for the purpose of controlling
Acquiree.
4.18 Buyer represents that copies of all documents which have been
filed by ACT with the Securities and Exchange Commission for the past one (1)
year period have been or will be provided to Sellers and that all
representations contained therein remain true and complete.
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5. Closing Date
The Closing Date herein referred to shall be upon such date as the
parties hereto may mutually agree upon but is expected to be during July of
1997. At the Closing, Buyer will be provided with, and accept delivery of, the
Sale Shares, and in connection therewith, will make payment of all sums due to
Seller as provided in Section 9. Certain closing documents may be delivered
subsequent to the Closing Date upon the mutual agreement of the parties hereto.
Notwithstanding the foregoing, for purposes of allocating the profits and/or
losses of Acquiree, the effective date shall be deemed the 1st day of May, 1997.
6. Conditions Precedent to the Obligations of Sellers
All obligations of the Sellers under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the following
conditions:
6.1 The negotiation and execution of employment agreements with
Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxx and Xxxxx X. Xxxxxx, on
terms and conditions agreeable to the parties thereto, providing for a base
salary, benefits and mutually agreed incentive compensation based on performance
measures. Said employment agreements are attached as Exhibit 10.1.
6.2 The representations and warranties by Buyer contained in this
Agreement or in any certificate or document delivered to Seller pursuant to the
provisions hereof shall be true in all material respects at and as of the time
of Closing as though such representations and warranties were made at and as of
such time.
6.3 Buyer shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or complied
with by it prior to or at the Closing including the payment of the Price in
accordance with the terms hereof.
6.4 Sellers shall have obtained the resignations of all present
officers and directors of, and shall appoint such new officers and directors, of
Acquiree as Buyer shall direct, subject, however, to the requirement that the
resignations of such present officers and directors shall take effect, and such
new officers and directors shall take office, only at such time following the
Closing, as such taking of office shall be lawful and proper following
compliance by Acquiree of all requirements therefor under the Securities
Exchange Act of 1934.
6.5 All instruments and documents delivered to Sellers pursuant to the
provisions hereof shall be reasonably satisfactory to legal counsel for Sellers.
7. Conditions Precedent to the Obligations of Buyer
All obligations of Buyer under this Agreement are subject to the
fulfillment, prior to the, or at the Closing on, the Closing Date, of each of
the following conditions:
7.1 A financial review of Acquiree's books and records to confirm that
two (2) years of unaudited financials can be obtained.
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7.2 The representations and warranties by Sellers contained in this
Agreement or in any certificate or document delivered to Buyer pursuant to the
provisions hereof shall be true at and as of the time of Closing as though such
representations and warranties were made at and as of such time.
7.3 Acquiree and Sellers shall have performed and complied with all
other covenants, agreement and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
8. Documents at Closing
At the Closing, the following transactions shall occur, all of such
transactions being deemed to occur simultaneously:
8.1 Sellers and Acquiree, as the case may be, will deliver, or cause to
be delivered, to Buyer the following:
a. stock certificates for the Sale Shares, duly endorsed in blank
with appropriate signature guarantees;
b. all records of Acquiree, including, without limitation, such
books and records, charter documents and Illinois certificate of good standing,
as may reasonably be available to Sellers and requested by Buyer;
c. certified copy of a resolution by Acquiree's board of directors
or executive committees thereof, thereunto duly authorized, authorizing this
transaction;
d. resignations of the present officers and directors of Acquiree
to take effect;
e. a copy of a reasonably current shareholder list of Acquiree
certifying the number of shares outstanding;
f. current financial statements as of June 30, 1997, in
addition to those previously provided by Acquiree showing no assets or debts of
any substance not otherwise disclosed, except for such sums as may be owed to
Acquiree's transfer agent and certain nominal state taxes;
g. such other instruments, documents and certificates, if any, as
are required to be delivered pursuant to the provisions of this Agreement or
which may be reasonably requested in furtherance of the provisions of this
Agreement.
8.2 Buyer will deliver or cause to be delivered to Seller such other
instruments and documents as are required to be delivered pursuant to the
provisions of this Agreement or which may be reasonably requested in furtherance
of the provisions of this Agreement.
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9. Registration Rights
9.1 ACT, agrees that it will prepare and file with the Securities and
Exchange Commission (the "Commission") a registration statement ("Registration
Statement") with respect to the restricted common stock ("Registrable
Securities"). ACT shall use its best efforts to cause the Registration Statement
to become effective within four (4) months after the Closing Date. During such
period, and for an additional eight (8) month period, ACT shall guarantee a
floor price for such Registrable Securities of four dollars ($4.00) per share.
ACT will give prompt notice (in any event, within three [3] business days of the
receipt of notice of any exercise of demand registration rights from any person)
to the Sellers of its intention to effect such a registration and will include
in such registration all the Registrable Securities with respect to which ACT
receives a written request for inclusion, if such request is received within
fifteen (15) days after receipt of ACT's notice. ACT shall prepare and file with
the Commission such amendments and supplements to the Registration Statement,
including post-effective amendments and the prospectus used in connection
therewith, that may be necessary to keep such Registration Statement effective
for a period of not less than nine (9) months and to comply with the provisions
of the Securities Act of 1933, as amended, and the regulations promulgated
pursuant thereto (the "Act").
a. ACT shall use their best efforts to cause all securities
registered pursuant to the Registration Statement to be listed on the NASDAQ
National Market System.
b. In the event of the issuance of any stop order suspending
the effectiveness of the Registration Statement, or any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in the Registration Statement, ACT will use their best
efforts to promptly obtain the withdrawal of such order.
c. ACT shall bear all costs, fees and expenses involved in the
preparation and filing of the Registration Statement, including, without
limitation, accounting and auditing fees and expenses, and expenses in
connection with state qualifications, filing fees, legal counsel fees and
expenses and printing expenses. Sellers, however, shall pay all applicable
transfer taxes and brokerage commissions as a result of any sale by the Sellers.
d. In the event that any of the Registrable Shares are sold by
means of the Registration Statement, ACT agrees to indemnify and hold harmless
the Sellers and their heirs, executors, representatives and assigns (an
"Indemnified Person") from and against any and all claims, demands, actions,
causes of action, losses, costs, damages, liabilities and expenses, including,
without limitation, reasonable legal fees (hereinafter referred to in the
singular as a "claim" and in the plural as "claims") based upon, arising out of
or resulting from any untrue statement of a material fact contained in the
Registration Statement or any failure to state therein a material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading to the extent that such claim is
based upon, arises out of or results from information furnished to ACT in
writing by Seller for use in connection with the Registration Statement. Also,
in that connection, Sellers agree to defend and indemnify and hold harmless ACT,
its officers and directors (ACT, its officers and directors and any such other
persons being referred to collectively as "Indemnified Person") from and against
any and all claims based upon, arising out of or resulting from any untrue
statement of a material fact contained in the Registration Statement or any
failure to state therein a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading to the extent that such claim is based upon, arises out of
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or results from information furnished to ACT in writing by Sellers for use in
connection with the Registration Statement. The indemnification set forth herein
shall be in addition to any liability which ACT or Sellers, respectively, may
otherwise have to the Indemnified Person.
e. Within five (5) days after receiving written notice of any
claim in respect of which an Indemnified Person may seek indemnification under
subsection 9.1(d) above, such Indemnified Person shall submit notice thereof to
ACT or Sellers, as the case may be (sometimes referred to as an "Indemnifying
Person"). The failure of the Indemnified Person to so notify the Indemnifying
Person of any such claim shall not relieve the Indemnifying Person from any
liability it may have hereunder except to the extent that (i) such liability was
caused or increased by such omission, or (ii) the ability of the Indemnifying
Person to reduce such liability was adversely affected by such omission. The
Indemnified Person and the Indemnifying Person shall cooperate with, and assist,
one another in the defense of any claim and any action, suit or proceeding
arising in connection therewith; provided, however, that the Indemnifying Person
shall have the right to investigate and defend any claim and the Indemnified
Person shall have the right to employ separate counsel and to participate in the
defense of any claim, but the fees and expenses of such counsel shall not be at
the expense of the Indemnifying Person. No settlement of any claim for
indemnification under this Section shall be made without the consent of the
Indemnifying Person.
9.2 If the registration described in this Section 9 is an underwritten
primary registration on behalf of ACT, and the managing underwriters advise ACT
in writing that, in their opinion, the number of securities requested to be
included in such registration exceeds the number which can be sold in an orderly
manner in such offering within a price range that is acceptable to ACT, ACT will
include in such registration (a) first, on a prorata basis, the securities ACT
proposes to sell and the Registrable Securities requested to be included in such
registration, and (b) second, other securities requested to be included in such
registration.
9.3 If the registration described in this Section 9 is an underwritten
secondary registration on behalf of holders of ACT's securities, and the
managing underwriters advise the company in writing that, in their opinion, the
number of securities requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such offering within a price
range acceptable to the holders initially requesting such registration, ACT will
include in such registration (a) first, the securities requested to be included
therein by the holders requesting such registration and the Registrable
Securities requested to be included in such registration, and (b) second, other
securities requested to be included in such registration.
10. Miscellaneous
10.1 Prior to Closing, Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, Xxxxxxx X.
Xxxxx and Xxxxx X. Xxxxxx shall enter into employment and non-compete agreements
with Acquiree under the terms outlined in Exhibit 10.1.
10.2 The respective representations of Sellers and Buyer contained
herein or in any certificates delivered prior to or at Closing shall survive for
a period of eighteen (18) months from the Closing Date, except as may be
required by their terms.
10.3 Further Assurances. At any time, and from time to time, after the
effective date, each party will execute such additional instruments and take
such action as may be reasonably requested by
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the other party to confirm or perfect title to any property transferred
hereunder or otherwise to carry out the intent and purposes of this Agreement.
10.4 Waiver. Any failure on the part of any party hereto to comply with
any of its obligations, agreements or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
10.5 Arbitration. Any and all disputes and differences between or among
the parties with respect to the construction or performance of the terms of this
Agreement which cannot be resolved amicably shall be resolved by arbitration
before the American Arbitration Association in accordance with its rule then
sitting in Delaware.
10.6 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given if delivered in person or if
sent by prepaid first class registered or certified mail, return receipt
requested, fax or recognized courier then upon receipt thereof to the following
addresses:
To Sellers: Xxxxx X. Xxxxxx
1 S. 000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxxx
2 S. 000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
with copies to: Xxxxxxxxx Xxxx, Esquire
000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
To Acquiree: Xxxxx X. Xxxxxx
Advanced Telecommunications, Inc.
0000 Xxxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
To Buyer: ACT Communications Corp.
P. O. Xxx 0000
Xxxx, XX 00000
with copies to: Merra, Kanakis, Creme & Xxxxxx, P.C.
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
10.7 Headings. The section and subsection headings in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
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10.8 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.9 Governing Law. This Agreement shall be governed by the laws of
the State of Delaware.
10.10 Binding Effect. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
10.11 Entire Agreement. This Agreement is the entire agreement of the
parties covering everything agreed upon or understood in the transaction. There
are no oral promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements to the
execution hereof.
10.12 Severability. If any part of this Agreement is deemed to be
unenforceable the balance of this Agreement shall remain in full force and
effect.
THE BALANCE OF THIS PAGE HAS BEEN
INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
SELLERS:
/s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
------------------------------------------
Xxxxxx X. Xxxxxx
ACQUIREE:
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Xxxxx X. Xxxxxx
Its duly authorized President
BUYER:
ACT Communications, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxxx
Its duly authorized President
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