Exhibit 99.4
SUPPORT AGREEMENT
THIS AGREEMENT is entered into this 30th day of June, 1998 by and between
Applied Cellular Technology, Inc. ("ACT"), a Missouri corporation and ACT-GFX
Canada, Inc., ("ACTsub") an Ontario Corporation.
RECITALS
WHEREAS pursuant to a reorganization agreement entered into the 30th day of
June, 1998 (the "Reorganization Agreement") by and between ACT, ACTsub, Drummer
Enterprises Ltd., Morstar Holdings Ltd., Scozul Enterprises Ltd., Xxxxx X. Xxxxx
and Ground Effects Ltd. (the "Acquiree"), the parties agreed that on the Closing
Date (as defined in the Reorganization Agreement), ACT and ACTsub would execute
and deliver a Support Agreement in substantially the form set forth in Exhibit
1.3 to the Reorganization Agreement together with such other terms and
conditions as may be agreed to by the parties to the Reorganization Agreement
acting reasonably;
AND WHEREAS pursuant to the Reorganization Agreement certain of the issued
and outstanding shares in the capital of the Acquiree and certain debt owed by
the Acquiree were acquired by ACTsub for a purchase price which was satisfied by
the issuance of Class A and Class B exchangeable shares in the capital of ACTsub
(collectively, the "Exchangeable Shares");
AND WHEREAS the articles of incorporation of ACTsub set forth the rights,
privileges, restrictions and conditions (collectively the "Exchangeable Share
Provisions") attaching to the Exchangeable Shares;
AND WHEREAS the parties hereto desire to make appropriate provisions and to
establish a procedure whereby ACT will take certain actions and make certain
payments and deliveries necessary to ensure that the ACTsub will be able to
deliver or cause to be delivered shares of ACT Common Stock in satisfaction of
the obligations of ACTsub under the Exchangeable Share Provisions and with
respect to the payment and satisfaction of Liquidation Amounts, Retraction
Prices and Redemption Prices all in accordance with the Exchangeable Share
Provisions;
NOW THEREFORE in consideration of the respective covenants in this
Agreement and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. Each term denoted herein by initial capital letters and not
otherwise defined herein shall have the meaning ascribed thereto in the
Exchangeable Share Provisions, unless the context requires otherwise.
1.2 Interpretation not Affected by Headings, etc. The division of this Agreement
into articles, sections and paragraphs and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this agreement.
1.3 Number, Gender, etc. Words importing the singular number only shall include
the plural and vice versa. Words importing the use of any gender shall include
all genders.
1.4 Date for any Action. If any date on which any action is required to be taken
under this Agreement is not a Business Day, such action shall be required to be
taken on the next succeeding Business Day.
ARTICLE 2
COVENANTS OF ACT AND ACTSUB
2.1 Covenants of ACT Regarding Exchangeable Shares. So long as any Exchangeable
Shares are outstanding, ACT shall:
(a) not declare or pay any dividend on ACT Common Stock unless (i) ACTsub
shall have sufficient assets, funds and other property (including, where
applicable, shares of ACT Common Stock or other securities of ACT) available to
enable the due declaration and the due and punctual payment in accordance with
applicable law, of a dividend on the Exchangeable Shares in accordance with the
Exchangeable Share Provisions and (ii) ACTsub shall simultaneously declare or
pay, as the case may be, a dividend on the Exchangeable Shares in accordance
with the Exchangeable Share Provisions;
(b) cause ACTsub to declare simultaneously with the declaration of any
dividend on shares of ACT Common Stock a dividend on the Exchangeable Shares
and, when such dividend is paid on ACT Common Stock, cause ACTsub to pay
simultaneously therewith such dividend on the Exchangeable Shares, in each case
in accordance with the Exchangeable Share Provisions;
(c) advise ACTsub sufficiently in advance of the declaration by ACT of any
dividend on shares of ACT Common Stock and take all such other actions as are
necessary, in cooperation with ACTsub, to ensure that the declaration date,
record date and payment date for any dividend on the Exchangeable Shares shall
be the same as the declaration date, record date, and payment date for the
corresponding dividend on shares of ACT Common Stock and such dates in respect
of dividends on the Exchangeable Shares shall be in accordance with any
requirement of the Exchangeable Share Provisions;
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(d) ensure that the record date for any dividend declared on shares of ACT
Common Stock, ACT Common Stock Reorganization, Rights Offering, Special
Distribution or Capital Reorganization is not less than ten (10) Business Days
after the declaration date for such dividend or effective date of such ACT
Common Stock Reorganization, Rights Offering, Special Distribution or Capital
Reorganization;
(e) take all such actions and do all such things as are necessary or
desirable to enable and permit ACTsub, in accordance with applicable law, to pay
and otherwise perform its obligations with respect to the satisfaction of the
Liquidation Amount in respect of each issued and outstanding Exchangeable Share
upon the liquidation, dissolution or winding-up of ACTsub, including without
limitation all such actions and all such things as are necessary or desirable to
enable and permit ACTsub to cause to be delivered shares of ACT Common Stock to
the holders of Exchangeable Shares in satisfaction of the Liquidation Amount for
each such Exchangeable Share, in accordance with the provisions of Article 4 of
the Exchangeable Share Provisions;
(f) take all such actions and do all such things as are necessary or
desirable to enable and permit ACTsub, in accordance with applicable law, to pay
and otherwise perform its obligations with respect to the satisfaction of the
Retraction Price and the Redemption Price, including without limitation all such
actions and all such things as are necessary or desirable to enable and permit
ACTsub to cause to be delivered shares of ACT Common Stock to the holders of
Exchangeable Shares, upon the retraction or redemption of the Exchangeable
Shares in accordance with the provisions of Article 5 or Article 6 of the
Exchangeable Share Provisions, as the case may be;
(g) not exercise its vote as a shareholder of ACTsub to initiate, consent
to or approve the voluntary liquidation, dissolution or winding-up of ACTsub nor
take any action or omit to take any action that is designed to result in the
liquidation, dissolution or winding-up of ACTsub; and
(h) not exercise its vote as a shareholder of ACTsub to authorize the
continuance or other transfer of the corporate existence of ACTsub to any
jurisdiction outside Canada.
2.2 Segregation of Funds. ACT will cause ACTsub to deposit a sufficient amount
of funds in a separate account and segregate a sufficient amount of such assets
and other property as is necessary to enable ACTsub to pay or otherwise satisfy
the applicable dividends, Liquidation Amount, Retraction Price or Redemption
Price, in each case for the benefit of holders from time to time of the
Exchangeable Shares and will cause ACTsub to use such funds, assets and other
property so segregated exclusively for the payment of dividends and the payment
or other satisfaction of the Liquidation Amount, the Retraction Price or the
Redemption Price, as applicable, in each case in accordance with the
Exchangeable Share Provisions.
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2.3 Reservation of Shares of ACT Common Stock. ACT hereby represents and
warrants that it has irrevocably reserved for issuance out of its authorized and
unissued capital stock such number of shares of ACT Common Stock as is equal to
the number of Exchangeable Shares outstanding immediately following the Closing
Date and covenants that at all times in the future while any Exchangeable Shares
are outstanding it will keep available, free from pre-emptive and other rights,
out of its authorized and unissued capital stock such number of shares of ACT
Common Stock (or other shares or securities into which ACT Common Stock may be
reclassified or changed) as is necessary to enable shares of ACT and ACTsub to
perform their respective obligations pursuant to this agreement, the
Exchangeable Share Provisions and the Exchange Agreement.
2.4 Notification of Certain Events. In order to assist ACT to comply with its
obligations hereunder, ACTsub will give ACT notice of each of the following
events at the time set forth below:
(a) in the event of any determination by the Board of Directors of ACTsub
to institute voluntary liquidation, dissolution or winding up proceedings with
respect to ACTsub or to effect any other distribution of the assets of ACTsub
among its shareholders for the purpose of winding up its affairs at least sixty
(60) days prior to the proposed effective date of such liquidation, dissolution,
winding up or other distribution;
(b) immediately, upon the earlier of (i) receipt by ACTsub of notice of,
and (ii) ACTsub otherwise becoming aware of, any threatened or instituted claim,
suit, petition or other proceedings with respect to the involuntary liquidation,
dissolution or winding up of ACTsub or to effect any other distribution of the
assets of ACTsub among its shareholders for the purpose of winding up its
affairs;
(c) immediately, upon receipt by ACTsub of a Retraction Request; and
(d) at least one hundred thirty (130) days prior to any accelerated
automatic redemption date determined by the Board of Directors of ACTsub in
accordance with the Exchangeable Share Provisions.
2.5 Delivery of ACT Common Stock. In furtherance of its obligations under
subsections 2.1(a) and (b) hereof, upon notice of any event that requires ACTsub
to cause to be delivered ACT Common Stock to any holder of Exchangeable Shares,
ACT shall forthwith issue and deliver the requisite shares of ACT Common Stock
to or to the order of the former holder of the surrendered Exchangeable Shares,
as ACTsub shall direct. All such shares of ACT Common Stock shall be duly issued
as fully paid and non-assessable and shall be free and clear of any Liens as
that term is defined in the Reorganization Agreement. In consideration of the
issuance of each of such shares of ACT Common Stock by ACT, ACTsub shall issue
to ACT, or as ACT shall direct, such number of common shares of ACTsub as is
equal to the fair market value of such ACT Common Stock.
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2.6 Tender Offers, Etc. In the event that a tender offer, share exchange offer,
issuer bid, take-over bid or similar transaction with respect to ACT Common
Stock (an "Offer") is proposed by ACT or is proposed to ACT or its stockholders
and is recommended by the Board of Directors of ACT or is otherwise effected or
to be effected with the consent or approval of the Board of Directors of ACT,
ACT will use all commercially reasonable efforts expeditiously and in good faith
to take all such actions and do all such things as are necessary or desirable to
enable and permit holders of Exchangeable Shares to participate in such Offer to
the same extent and on an economically equivalent basis as the holders of ACT
Common Stock, without discrimination. Without limiting the generality of the
foregoing, ACT will use all commercially reasonable efforts expeditiously and in
good faith to ensure that holders of Exchangeable Shares may participate in all
such Offers without being required to retract Exchangeable Shares as against
ACTsub (or, if so required, to ensure that any such retraction shall be
effective only upon, and shall be conditional upon, the closing of the Offer and
only to the extent necessary to tender or deposit to the Offer).
2.7 Ownership of Outstanding Shares. ACT covenants and agrees in favour of
ACTsub that, as long as any outstanding Exchangeable Shares are owned by any
person or entity other than ACT or any of it Affiliates, ACT will be and remain
the direct or indirect beneficial owner of all issued and outstanding shares in
the capital of ACTsub (other than Exchangeable Shares) and all outstanding
securities of ACTsub carrying or otherwise entitled to voting rights in any
circumstances (other than Exchangeable Shares), unless ACT shall have obtained
the prior approval of ACTsub and the holders of the Exchangeable Shares given in
accordance with Sections 2.7.2 and 3.7.2 of the Exchangeable Share Provisions.
2.8 ACT Not To Vote Exchangeable Shares. ACT covenants and agrees that it will
appoint and cause to be appointed proxyholders with respect to all Exchangeable
Shares held by ACT and its Affiliates for the sole purpose of attending each
meeting of holders of Exchangeable Shares in order to be counted as part of the
quorum for each such meeting. ACT further covenants and agrees that it will not,
and will cause its Affiliates not to, exercise any voting rights that may be
exercisable by holders of Exchangeable Shares from time to time pursuant to the
Exchangeable Share Provisions or pursuant to the provisions of the OBCA with
respect to any Exchangeable Shares held by it or by its Affiliates in respect of
any matter considered at any meeting of holders of Exchangeable Shares,
including without limitation any approval to be given by holders of Exchangeable
Shares pursuant to Sections 2.7.2 and 3.7.2 of the Exchangeable Share
Provisions.
2.9 Economic Equivalence. ACT hereby acknowledges that it will be bound by any
determination of economic equivalence made by the Board of Directors of the
ACTsub pursuant to Article 4 of the Exchangeable Share Provisions.
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ARTICLE 3
GENERAL
3.1 Term. This Agreement shall come into force and be effective as of the date
hereof and shall terminate and be of no further force and effect at such time as
there are no Exchangeable Shares (or securities or rights convertible into or
exchangeable for or carrying rights to acquire Exchangeable Shares) held by any
party.
3.2 Severability. If any provision of this Agreement is held to be invalid,
illegal or unenforceable, the validity, legality or enforceability of the
remainder of this Agreement shall not in any way be affected or impaired thereby
and this Agreement shall be carried out as nearly as possible in accordance with
its original terms and conditions.
3.3 Waivers Only in Writing. No waiver of any of the provisions of this
Agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by both of the parties hereto.
3.4 Enurement. This Agreement shall be binding upon and enure to the benefit of
the parties hereto and their respective successors and permitted assigns.
3.5 Notices to Parties. All notices and other communications between the parties
shall be in writing and shall be deemed to have been given if delivered
personally or by confirmed telecopy to the parties at the following addresses
(or at such other address for either such party as shall be specified in like
notice):
To ACT and Applied Cellular Technology, Inc.
ACTsub 000 Xxxxx Xxxx Xxx
Xxxxx 000
Xxxx Xxxxx, XX
00000, U.S.A.
Fax No. (000) 000-0000
with copies to: Xxx Xxxxxxxxxxx
Xxxxxxx Xxxxx & Xxxxxxxxx
Suite 2100
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxx
X0X 0X0
Fax No. (000) 000-0000
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to: Xxxxxx Xxxxxxxx
Nobbs, Xxxxx & Xxxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.(000) 000-0000
and to: Xxxx X. Creme, Esq.
Merra, Kanakis, Creme & Xxxxxx, P.C.
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
Fax No. (000) 000-0000
3.6 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, and all of which taken together shall constitute
one and the same instrument.
3.7 Jurisdiction. This Agreement shall be construed and enforced in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein.
3.8 Attornment. ACT agrees that any action or proceeding arising out of or
relating to this Agreement may be instituted in the courts of Ontario, waives
any objection which it may have now or hereafter to the venue of any such action
or proceeding, irrevocably submits to the jurisdiction of the said courts in any
such action or proceeding, agrees to be bound by any judgment of the said courts
and not to seek, and hereby waives, any review of the merits of any such
judgment by the courts of any other jurisdiction and hereby appoints the
Acquiree at its registered office as ACT's attorney for service of process.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
APPLIED CELLULAR TECHNOLOGY, INC.
Per: ------------------------------
Xxxxxxx X. Xxxxxxxx
Its duly authorized President
ACT-GFX CANADA, INC.
Per: ------------------------------
Per: ------------------------------ c/s
