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AGREEMENT OF SALE
This Agreement is entered into as of the eighteenth day of March, 1997 by
and between Applied Cellular Technology, Inc., a Missouri corporation
("Buyer"), Xxxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx (hereinafter referred to
as "Sellers") and Xxxxxx Manufacturing Co., a California corporation
("Acquiree").
WHEREAS, Xxxxxxx X. Xxxxxx owns three million eight hundred thousand and one
(3,800,001) shares, $-0- par value and Xxxxxxx X. Xxxxxx owns two hundred
thousand and one (200,001) 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); and
WHEREAS, Sellers desire to sell and Buyer desires to acquire one hundred
percent (100%) of the Acquiree's shares (the "Sales Shares").
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") shall be Seven Hundred Fifty
Thousand Dollars ($750,000.00) in the form of restricted common shares of
Buyer with demand registration rights. The number of shares has been
determined by the market price of Buyer's shares as of January 1, 1997 as
reflected in the NASDAQ bid price published in "The Wall Street Journal".
Also, at the time of Closing, Buyer will also refinance certain outstanding
debts of Acquiree. As part of such refinancing, Buyer will negotiate new
financing which will allow Acquiree and Sellers to satisfy certain
outstanding debt and other obligations. Upon the payment and satisfaction of
these certain obligations, Xxxxxxx X. Xxxxxx shall, in addition to the above,
receive in cash an amount not to exceed ninety-eight thousand two hundred
sixty-three dollars ($98,263.00). Such cash proceeds shall become available
only in the event of the successful completion of the above-referenced
refinancing.
a. Buyer agrees that it will prepare and file with the
Securities and Exchange Commission (the "Commission") a registration
statement with respect to the one hundred seventy-nine thousand one hundred
four (179,104) shares of Buyer's common stock issuable to Sellers pursuant to
Section 1.2 hereof (the "Registration Statement"). Buyer shall use its
reasonable efforts to cause the Registration Statement to become effective
within nine (9) months after the date of this Agreement. Buyer 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").
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b. Buyer shall use its reasonable efforts to cause all
securities registered pursuant to the Registration Statement to be listed on
the NASDAQ National Market System.
c. 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, the Buyer will
use its reasonable best efforts to promptly obtain the withdrawal of such
order.
d. Buyer shall bear all costs, fees and expenses involved in
the preparation and filing of Registration Statement, including, without
limitation, accounting and auditing fees and expenses, expenses in connection
with the state qualifications specified above, 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 Sellers.
e. In the event that any of the shares of common stock of
Buyer delivered hereunder are issued by means of the Registration Statement,
Buyer agrees to indemnify and hold harmless 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, except insofar as such claim is based
upon, arises out of or results from information furnished to Buyer in writing
by Sellers for use in connection with the Registration Statement. Also, in
that connection, Sellers agree to indemnify and hold harmless Buyer, each of
its officers and directors (Buyer, 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 or results from information furnished to Buyer 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
Buyer or Sellers, respectively, may otherwise have to the Indemnified Person.
f. Within five (5) days after receiving written notice of any
claim in respect of which an Indemnified Person may seek indemnification
under subsection 1.2(e) above, such Indemnified Person shall submit notice
thereof to Buyer or Seller, as the case may be (sometimes referred to as an
"Indemnifying Person"). The failure of the Indemnified Person so to 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
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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.
g. In the event that Buyer is unable to complete the
Registration Statement by September 30, 1997, Sellers may, at their sole
option, require Buyer to convey back to Sellers their respective shares in
Xxxxxx Manufacturing Company in exchange for the shares in Buyer or they may
agree to extend the time for completion of the registration.
1.3 At the Closing Date, Sellers will deliver a certificate
representing the Sale Shares duly endorsed so as to make Buyer the sole
holder thereof, free and clear of all claims and encumbrances. The Sale
Shares are not registered under the Securities Act of 1933 as amended (the
"Act"). The Sale Shares 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 Sale Shares delivered shall bear on its face the following restrictive
legend:
"No sale, offer to sell or transfer of the shares represented by this
certificate shall be made unless a registration statement under the
Securities Act of 1993, as amended, with respect to such shares is
then in effect or an exemption from the registration requirements of
such Act is then, in fact, applicable to such shares".
2. Loan Guarantees
Xxxxxxx X. Xxxxxx has personally guaranteed certain loans as previously
disclosed (see separate Disclosure Schedule). Buyer hereby agrees to use
reasonable efforts to have said guarantees released. If the appropriate
lending institutions do not agree to release any or all of the personal
guarantees, Buyer hereby agrees to indemnify Xxxxxxx X. Xxxxxx in the event
of a default on any of the obligations created by the loans.
2.1 Buyer agrees to indemnify and hold harmless Xxxxxxx X. Xxxxxx and
his 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 default of the certain loans. The indemnification set
forth herein shall be in addition to any liability which Buyer may otherwise
have to the Indemnified Person.
2.2 Within five (5) days after receiving written notice of any claim
in respect of which an Indemnified Person may seek indemnification under
Subsection 2.1 above, such Indemnified Person shall submit notice thereof to
Seller, as the case may be (sometimes referred to as an "Indemnifying
Person"). The failure of the Indemnified Person so to 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,
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however, that the Indemnifying Person shall have the right to investigate and
defend any claim as 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 2
shall be made without the consent of the Indemnifying Person.
3. Representations of Sellers and Acquiree
Sellers hereby represent and warrant, to the extent of the facts known
to Sellers and Acquiree, that, effective as of the Closing Date, the
representations listed below are true and correct.
3.1 Sellers are the sole owners of four million and two (4,000,002)
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.
3.3 Acquiree has previously furnished unaudited financial statements
dated January 31, 1997 (see separate Disclosure Schedule). 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 Acquiree's knowledge, Acquiree has not been cited
nor threatened with any citation for any violation of federal, state and
local environmental protection laws or regulations. Further, to the best of
Acquiree's knowledge, Acquiree has not violated any federal, state or local
environmental protection laws or regulations.
3.5 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 $5,000.00 in any one
case or $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 the
Disclosure Schedule 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.
3.6 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.
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3.7 All federal, state and local tax returns required to be filed by
Acquiree have been duly filed. 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 1995. All deficiencies by any
taxing authority have either been paid or settled or are included in the
amounts for accrued taxes shown on the respective balance sheet.
3.8 Acquiree and Seller agree that any and all tax deficiencies
disclosed on the balance sheet will be paid or settled prior to Closing.
3.9 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;
c. the creation or attachment of any lien against any of the
currently issued and distributed common 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;
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; or
3.10 Except as set forth in the documents listed or referred to in 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.
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3.11 To the best knowledge of 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 knowledge of Acquiree, Acquiree has
disclosed to Buyer as the purchaser of the Sale Shares all material
information relating to Acquiree and its activities as currently conducted.
3.12 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.
3.13 The Acquiree is authorized to issue five million (5,000,000)
shares of common stock, zero (-0-) par value, of which four million and two
(4,000,002) shares are issued and outstanding. Acquiree has only 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.
3.14 Organization of Acquiree. Acquiree is a corporation duly
organized, validly existing and in good standing under the laws of the State
of California, with all requisite power and authority to own its properties
and to carry on its business as now conducted.
3.15 Officers and Directors. The present officers and directors of
Acquiree are as follows:
Officers: President Xxxxxxx X. Xxxxxx
Secretary Xxxxx Xxxx
Director: Xxxxxxx X. Xxxxxx
3.16 Other Agreements. Acquiree is a party to no material agreement
(written or verbal) except (i) as disclosed in this Agreement, (ii) orders of
merchandise in normal quantities for use in Acquiree's business, and (iii) as
set forth in the separate Disclosure Schedule.
3.17 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 accrued 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.
3.18 Relationship with Competitors. Sellers do not own or have a
material beneficial interest and have not owned or had a beneficial interest
within the past three (3) years, directly or indirectly, in any corporation,
firm, association, partnership or proprietorship that (i) is similar to or
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a competitor of Acquiree, (ii) is a customer or supplier of Acquiree, or (iii)
has any existing contractual relationship with Acquiree.
3.19 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, pension or profit-sharing plan or any other
agreement providing employee benefits except a health and dental insurance
plan with Kaiser Permante and Business Men's Assurance Company of America,
respectively.
3.20 Licenses. (Deleted).
4. Representations by Buyer
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 Missouri.
4.2 The Board of Directors of Buyer have duly approved this
Agreement.
4.3 The Buyer'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 Buyer consists of 20,000,000
shares of Common Stock, $.001 par value, six million two hundred seventy-three
thousand nine hundred sixty-six (6,273,966) of which have been validly issued
and are outstanding and four million one hundred ninety-four thousand two
hundred twenty-eight (4,194,228) of those are freely tradable without
restriction or further registration under the Securities Act of 1933.
4.5 Annexed hereto as Exhibit 4.5 is the unaudited financial
statements dated September 30, 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 Buyer 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 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 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
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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 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 Since the date of the balance sheet, there has not occurred:
a. any material and adverse change in the financial condition
or operations of Buyer;
b. any damage, destruction or loss to or of any of the
material assets or properties owned or leased by Buyer;
c. the creation or attachment of any lien against any of the
currently issued and distributed common stock of Buyer;
d. any waiver, release, discharge, transfer or cancellation by
Buyer of any rights or claims of material value;
e. any issuance by Buyer of any securities or any merger or
consolidation of Buyer with any other person or any acquisition by Buyer of
the business of any other person;
f. any incurrence, assumption or guarantee by Buyer of any
indebtedness or liability other than in the ordinary course of business;
g. any declaration, setting aside or payment by Buyer of any
dividends on, or any other distribution with respect to, any capital stock of
Buyer or any repurchase, redemption or other acquisition of any capital stock
of Buyer;
h. (i) any payment of any bonus, profit sharing, pension or
similar payment or arrangement or special compensation to any employee of
Buyer, except in the ordinary course of the administration of Buyer, (ii) any
increase in the compensation payable or to become payable to any employee of
Buyer; or
4.10 Except as set forth in the documents listed or referred to in
Exhibits hereto, 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
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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.
4.11 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 Buyer 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. To the knowledge of
Buyer, Buyer has disclosed to Sellers as the purchaser of the common stock of
Buyer all material information relating to Buyer and its activities as
currently conducted.
4.12 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.
4.13 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.
4.14 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.
4.15 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.
4.16 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 understands 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.
4.17 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.
4.18 Buyer is acquiring the Sale Shares for the purpose of controlling
Acquiree.
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4.19 Buyer represents that copies of all documents filed with the
Securities and Exchange Commission for the past one (1) year period have been
provided to Sellers and that all representations contained therein remain
true and complete.
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 March 18, 1997.
At the Closing, Buyer will be provided with and accept delivery of the Sale
Shares, and in connection therewith, and will make payment of all sums due to
Seller. 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 January, 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 an Employment Agreement with
Xxxxxxx 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 Agreement is
attached as Exhibit 9.1.
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 him 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, 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:
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7.1 A financial review of Acquiree's books and records to confirm
that two (2) years of audited financials can be obtained.
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 California certificate of good
standing, as may reasonably be available to Sellers and requested by Buyer;
c. certified copies of resolutions by Sellers' and Acquiree's
boards of directors of 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 January 31, 1997, in
addition to those provided by Acquiree previously of 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.
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8.2 Buyer will deliver or cause to be delivered to Sellers 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.
9. Miscellaneous
9.1 Prior to Closing, Xxxxxxx X. Xxxxxx shall enter into an
Employment Agreement with Acquiree under the terms outlined in Exhibit 9.1.
9.2 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.
9.3 Broker's Accomplishment Fee. The Buyer shall be solely
responsible for the payment in shares with a value of sixty thousand dollars
($60,000.00) as accomplishment fees due Xxxxx X. Xxxxxx, individually.
Payment shall be made at Closing. The value of the shares transferred
hereunder shall be determined as of March 7, 1997 as reflected in the NASDAQ
bid price published in "The Wall Street Journal".
9.4 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 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.
9.5 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.
9.6 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 obtaining sitting in Missouri.
9.7 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: Xxxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxx, Xxxxx 0
Xxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx
0000 Xx. Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
13
AGREEMENT OF SALE
Page 13
To Acquiree: Xxxxxx Manufacturing Company
0000 Xxxxxxx Xxxxx, Xxxxx 0
Xxxxxxxxxx, XX 00000
with copies to: Xxxxxx X. Xxxxxxxxx, Esquire
0000 X. Xxxxx
Xxxx, XX 00000-0000
To Buyer: Applied Cellular Technology, Inc.
Nixa Professional Center
Xxxxxxx 000 & XX, Xxxxx 0
Xxxx, XX 00000
with copies to: Merra, Kanakis, Creme & Xxxxxx, P.C.
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
9.8 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.
9.9 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.
9.10 Governing Law. This Agreement shall be governed by the laws of
the State of Missouri.
9.11 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.
9.12 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.
9.13 Severability. If any part of this Agreement is deemed to be
unenforceable the balance of this Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
SELLERS:
/s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx
14
AGREEMENT OF SALE
Page 14
/s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx
ACQUIREE:
Xxxxxx Manufacturing Co.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Its: President
BUYER:
Applied Cellular Technology, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Title: President
15
EXHIBIT 4.5
Applied Cellular Technology, Inc. and Subsidiaries
Audited Consolidated Financial Statements for
Year Ending December 31, 1996
Filed on Form 10-KSB filed March 31, 1997
which is incorporated herein by reference
16
EXHIBIT 9.1
EMPLOYMENT AND NON-COMPETE AGREEMENT
This Employment and Non-Compete Agreement ("Agreement") is entered into this
18th day of March, 1997 by and between Xxxxxx Manufacturing Company ("HMC")
and Xxxxxxx X. Xxxxxx ("Xxxxxx"). The parties agree:
1. Employment
HMC employs Xxxxxx and Xxxxxx accepts the employment on the following
terms as well as those set forth in HMC's Employee Handbook as it may, from
time to time, adopt. If there is a conflict, these provisions control.
Xxxxxx shall serve in the capacity of President and Chief Executive
Officer of Xxxxxx Manufacturing Co., Inc., wholly owned subsidiary of Applied
Cellular Technology, Inc. Xxxxxx'x principal duties and responsibilities
shall include those customarily performed by the President and Chief
Executive Officer of the company. Xxxxxx shall perform such other services
and duties as may, from time to time, be decided upon by HMC. Except during
vacation periods or in accordance with HMC's personnel policies covering
executive leaves and reasonable periods of illness or other incapacitation,
Xxxxxx shall devote a substantial part of, but not all of, his business time
and services to the business and interest of HMC. Xxxxxx shall perform the
duties of his office and those assigned to him by HMC's Board of Directors
with fidelity, to the best of his ability and in the best interests of HMC.
2. Term of Employment
Xxxxxx'x term of employment by HMC shall commence on March 18, 1997 and
shall continue for a period of one (1) year, terminating at midnight on March
17, 1998 ("Employment Period"). The Agreement may be extended upon the
mutual agreement of the parties. Such extension shall be in accordance with
the terms of this Agreement unless specifically modified in writing.
3. Compensation
Xxxxxx'x annual base compensation shall be Seventy-Two Thousand Dollars
($72,000.00). Such compensation shall be paid in accordance with HMC's usual
payroll procedure.
If, during the Employment Period, or any extension thereof, Xxxxxx
introduces Applied Cellular Technology, Inc. ("ACT") to a company which it
later acquires at least an eighty percent (80%) interest in, ACT shall then
pay Xxxxxx directly a commission computed as a percentage of the gross
purchase price of that interest as follows:
17
EMPLOYMENT AND NON-COMPETE AGREEMENT
Page 2
5% of the first $1,000,000.00;
4% of the next $1,000,000.00;
3% of the next $1,000,000.00;
2% of the next $1,000,000.00;
1% of the remaining purchase price.
In any event, the first Seventy-Two Thousand Dollars ($72,000.00)
generated annually, in accordance with the above, shall be retained by ACT.
Xxxxxx shall collect all commissions in excess of Seventy-Two Thousand
Dollars ($72,000.00) annually.
Gross Purchase Price shall be defined as the total amount paid by ACT
for the acquisition of the acquired company's shares.
4. Insurance, Expenses and Vehicles
HMC shall provide Xxxxxx health insurance (medical, dental and
hospitalization insurance) as it provides to other employees. Xxxxxx shall
also be entitled to participate in any and all employee benefit plans,
medical insurance plans, life insurance plans, disability income plans and
other benefit plans, from time to time, in effect for executives of HMC.
Such participation shall be subject to the terms of the applicable plan
documents, generally applicable HMC policies and the discretion of the Board
of Directors or any administrative or other committee provided for in, or
contemplated by, such plan. In addition, Xxxxxx shall be entitled to receive
benefits which are the same, or substantially similar, to those which are
currently being provided to the other executives by HMC.
In accordance with HMC's policy, Xxxxxx will be reimbursed for all
"out-of-pocket" and other direct business expenses (exclusive of commuting
costs). In addition to the above, HMC shall reimburse Xxxxxx for all
automobile expenses incurred as a result of the business use of his
automobile, including the assumption of the outstanding loan payment.
5. Vacation
HMC shall provide Xxxxxx six (6) weeks of paid vacation during the Term
of this Agreement in blocks of not greater than two (2) weeks. Such vacation
may be taken at the mutual convenience of the parties.
6. Termination
Notwithstanding the provisions of Paragraph 2, Xxxxxx'x employment
hereunder shall terminate under the following circumstances:
18
EMPLOYMENT AND NON-COMPETE AGREEMENT
Page 3
a. Death or Permanent Disability. In the event of Xxxxxx'x death
-----------------------------
during the Employment Period, his employment shall terminate on the date of
his death or Permanent Disability (as defined below).
Permanent Disability. For the purposes of this Agreement, the
--------------------
term "Permanent Disability" shall mean Xxxxxx'x inability to perform his
duties as prescribed in this Agreement for a period of time in excess of
three (3) months, which, following a written request by either HMC or Xxxxxx,
shall be determined by agreement between the parties and, if they cannot
agree, by a panel of three (3) physicians, one of whom will be selected by
HMC, one by Xxxxxx and the third by the first two so selected. Said panel
shall also fix the date of the occurrence of the Permanent Disability. Said
panel's determination shall be conclusive. Notwithstanding anything to the
contrary set forth herein, Xxxxxx shall be presumed to be permanently
disabled as of the date he is receiving payments for permanent disability
under any disability insurance policies, or under the Social Security Act.
b. Temporary Disability. If, due to physical or mental illness,
--------------------
disability or injury, Xxxxxx shall be disabled so as to be unable to perform
substantially all of his duties and responsibilities hereunder, the Board of
Directors may designate another person to act in his place during the period
of such disability. Notwithstanding any such designation, Xxxxxx shall
continue to receive his full salary and benefits under Paragraph 3 of this
Agreement until he becomes eligible for disability income under HMC's
disability income plan. In the absence of a disability income plan at the
time of such disability, HMC shall pay Xxxxxx benefits equal to those Xxxxxx
would have received if HMC's current disability income plan were in effect at
such time; provided, however, that HMC's obligations hereunder shall cease
twelve (12) months from the onset of such disability.
c. Termination by HMC for Cause. Xxxxxx'x employment hereunder may
----------------------------
be terminated for cause, without further liability on the part of HMC, by a
majority vote of all of the members of the Board of Directors. Termination
for cause includes, but is not limited to:
i. Deliberate dishonesty of Xxxxxx with respect to HMC.
ii. Conviction of Xxxxxx of a crime involving moral turpitude.
iii. Gross and willful failure to perform a substantial portion
of his duties and responsibilities hereunder.
iv. Xxxxxx'x abandonment of his duties hereunder for a period
of more than ninety (90) days. Abandonment by Xxxxxx of duties hereunder
shall be deemed to have occurred if: Xxxxxx ceases to function and perform
duties hereunder, leaves the geographic area in which HMC engages in its
business or conducts himself with intentional disregard of HMC's interest and
its business.
Upon termination of this Agreement, regardless of reason, HMC shall
transfer the title of the automobile to Xxxxxx, free and clear of any future
claim or claims.
19
EMPLOYMENT AND NON-COMPETE AGREEMENT
Page 4
Upon termination of the Agreement, payments under this Agreement shall
cease; provided, however, that Xxxxxx shall be entitled to payments for
periods or partial periods that occurred prior to the date of termination and
for which Xxxxxx has not yet been paid.
7. Resignation as Officer and Director
In the event that Xxxxxx'x employment with HMC is terminated for any
reason whatsoever, Xxxxxx agrees to immediately resign as an Officer and
Director of HMC.
8. Non-Competition
In the event that Xxxxxx elects to leave the employment of HMC during
or at the end of this Agreement, or any extension thereto, or if Xxxxxx is
terminated for cause, Xxxxxx is not permitted to engage in direct competition
with HMC for a further period of three (3) years. For purposes of
definition, "direct competition" is deemed to be a similar company engaged in
the remanufacture of automotive parts within a twenty (20) miles radius of
any of HMC's facilities.
9. Restriction on Authority of Xxxxxx
Notwithstanding anything set forth in this Agreement to the contrary,
Xxxxxx, in the performance of his duties hereunder, shall not take any of the
following actions without the written consent of the Board of Directors:
a. Enter into negotiations or execute documents which would effect
the existing debt level and/or structure or alter, modify or change any
banking relationships after such Closing Date.
10. Representations and Warranties
Xxxxxx hereby represents and warrants that he is free to enter this
Agreement and to render his services pursuant hereto and that neither the
execution and delivery of this Agreement, nor the performance of his duties
hereunder, violates the provisions of any other agreements to which he is a
party or by which he is bound.
11. Confidentiality
Xxxxxx recognizes that HMC has and will have inventions, business
affairs, products, future plans, trade secrets, customer lists and other
vital information (collectively "Confidential Information") which are
valuable, special and unique assets of HMC. Xxxxxx agrees that he will not,
at any time or in any manner, either directly or indirectly, divulge,
disclose or communicate in any manner any Confidential Information to any
third party without the prior written consent of the Board of Directors of
HMC. Xxxxxx will protect the Confidential Information and treat it as
strictly confidential.
20
EMPLOYMENT AND NON-COMPETE AGREEMENT
Page 5
In the event of a breach, or threatened breach, by Xxxxxx of his
obligations under this Paragraph, Xxxxxx hereby acknowledges and stipulates
that HMC shall not have an adequate remedy at law, shall suffer irreparable
harm and, therefore, it is mutually agreed and stipulated by the parties
hereto that, in addition to any other remedies at law or in equity which HMC
may have, Xxxxxx shall be entitled to obtain in a court of law and/or equity
(i) a temporary and/or permanent injunction from disclosing in whole or in
part such Confidential Information or (ii) from providing any services to any
party to whom such Confidential Information has been disclosed, or may be
disclosed. HMC shall not be prohibited by this Paragraph from pursuing other
remedies, including a claim for losses and damages.
12. Notices
All notices required or permitted under this Agreement shall be in
writing and shall be deemed delivered when delivered in person or deposited
in the United States mail, postage paid, addressed as follows:
Employer: Xxxxxx Manufacturing Company
0000 Xxxxxxx Xxxxx, Xxxxx 0
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
Chairman of the Board
Employee: Xxxxxxx X. Xxxxxx
c/o Xxxxxx Xxxxxxxxx, Esquire
0000 Xxxx Xxxxx
Xxxx, XX 00000-0000
Such addresses may be changed from time to time by either party by
providing written notice in the manner set forth above.
13. Binding Agreement
The rights and obligations of HMC under this Agreement shall inure to
the benefit of and shall be binding on the successors and assigns of HMC,
provided that Xxxxxx'x duties and general location of employment shall not be
materially changed by any assignment of this Agreement.
21
EMPLOYMENT AND NON-COMPETE AGREEMENT
Page 6
14. Attorney's Fees
If any legal action arises under this Agreement, the prevailing party
shall be entitled to recover all costs and expenses, including reasonable
attorney's fees.
15. Waiver
Either party's failure to enforce any provision of this Agreement shall
not in any way be construed as a waiver of any such provision or prevent that
party from enforcing any other provision of this Agreement.
16. Governing Law
This Agreement shall be governed by the laws of the State of
California.
XXXXXX MANUFACTURING COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Its: Chairman
/s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxx
