Exhibit 99.6
SHAREHOLDERS AGREEMENT
THIS AGREEMENT is entered into this 30th day of June 1998 by and among
Applied Cellular Technology, Inc. ("ACT"), a Missouri corporation, ACT-GFX
Canada, Inc. ("ACTsub"), an Ontario corporation, Scozul Enterprises Ltd.
("Scozul"), an Ontario Corporation, Xxxxx X. Xxxxx ("Xxxxx") and Ground
Effects Ltd. (the "Corporation").
RECITALS
WHEREAS ACTsub is the registered holder of a majority of the issued and
outstanding shares in the capital of the "Corporation;
AND WHEREAS Scozul is the registered holder of certain of the issued and
outstanding shares in the capital of the Corporation (the "Scozul Shares");
AND WHEREAS pursuant to an option agreement dated the date hereof between
the Corporation and Xxxxx (the "Option Agreement"), Xxxxx has an option (the
"Option") to acquire certain of the issued and outstanding shares in the capital
of the Corporation (the "Optioned Shares");
AND WHEREAS if the Optioned Shares were issued to Xxxxx, the Optioned
Shares together with the Scozul Shares would represent twenty percent (20%) of
the issued and outstanding shares in the capital of the Corporation;
AND WHEREAS the parties desire to enter into an agreement whereby Xxxxx
will have certain rights to put his shares in the Corporation to ACTsub;
AND WHEREAS the parties desire to enter into a shareholders agreement to
address the terms and conditions pursuant to which Xxxxx and Scozul may elect,
or may be required, to dispose of their shares in the capital of Corporation
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
PUT
1.1 At any time following December 31, 2002, Scozul, or if Xxxxx has exercised
his Option pursuant to the Option Agreement, Xxxxx and Scozul jointly, (Scozul,
or Xxxxx and Scozul jointly, as applicable are in this Article 1 referred to as
the "Seller") shall be entitled to send a notice in writing (the "Notice") to
each of ACT and ACTsub requiring ACTsub or ACT, as Seller may elect, (ACTsub or
ACT as applicable are referred to in this Article 1 as the "Buyer") to purchase
all, but not less than all, of the shares in the capital of the Corporation
owned by Seller (the "Purchased Shares") and upon receipt of such notice Seller
shall sell and Buyer shall purchase from Seller the Purchased Shares upon the
terms and conditions hereinafter set forth.
1.2 The purchase price for the Purchased Shares (the "Purchase Price") shall be
equal to the greater of (i) One Million Three Hundred Twenty Thousand Dollars
($1,320,000) and (ii) the average of four (4) times twenty percent (20%) of the
audited EBIT for the Corporation for each of the two (2) consecutive calendar
years prior to the year the Notice is sent.
For the purposes of this agreement, "EBIT" for any financial year of the
Corporation shall mean the net income (excluding extraordinary gains or losses)
of the Corporation before federal or provincial income taxes, depreciation and
management fees as defined in the Reorganization Agreement, all as determined in
accordance with Canadian accepted accounting principles, consistently applied.
1.3 The Purchase Price shall be paid in full by the Buyer by delivery of ACT
shares with the price per ACT Share being the closing price of ACT Shares as
listed in the Wall Street Journal on the day on which the Notice by Seller is
delivered by the Seller.
1.4 The closing of the transaction of purchase and sale contemplated hereby
shall take place at the office of the Corporation at 10:00 a.m. (the "Time of
Closing") on the date which is thirty (30) days after receipt by the Buyer of
the Notice (the "Closing Date").
1.5 The closing of the transaction set out herein shall be conditional upon the
following:
(i) all loans made by the Corporation in favour of Seller shall be
satisfied on the Closing Date and any amounts due and owing to Seller
as part of the Purchase Price hereunder shall be applied first in
payment and satisfaction of any such loans; and
(ii) any options to purchase shares in the capital of the Corporation
outstanding to Seller at the time of Closing shall be cancelled and
Seller shall deliver to the Corporation an acknowledgment and release
of any such options.
2
In the event of a termination for cause of Xxxxx pursuant to the employment
agreement entered into between Xxxxx and the Corporation dated the date hereof
(the "Employment Agreement"), Scozul, or Scozul and the Employee jointly, as
applicable, shall be deemed to have exercised the put set out above in such an
event. For the purposes of determining the purchase price in such event, the
applicable period shall be the period from the date hereof to the date of
Xxxxx'x termination, in the event that such termination for cause occurs at a
date within five (5) years of the date hereof.
In the event of the termination of Xxxxx'x employment pursuant to the Employment
Agreement, Scozul, or Scozul and Xxxxx jointly, as applicable shall be entitled
at their option to exercise the put set out in this Article 1 immediately upon
such termination or at any time thereafter, whether or not they would otherwise
be entitled to exercise such put. For the purposes of calculating the purchase
price pursuant to the put, the period to be considered, if such put is exercised
prior to the expiry of five (5) years from the date hereof, shall be such period
from the date hereof to the date of the exercise of the put. All other
provisions of the put shall remain in full force and effect.
ARTICLE TWO
RIGHT OF FIRST REFUSAL
2.1 Neither of ACTsub, Scozul, nor Xxxxx (in this Article 2 referred to as a
"Shareholder") shall entertain offers for the purchase of any of their shares in
the capital of the Corporation nor make agreements for the sale, transfer or
assignment or such Shares except upon compliance with this Article Two and
subject to the terms and conditions hereinafter set forth:
(i) no sale, transfer or assignment of Shares shall be considered by a
Shareholder (the "Selling Shareholder") unless he or it shall have
first received a bona fide offer (the "Third Party Offer") in writing
from a third party (the "Third Party") dealing at arm's length with
the Selling Shareholder, which Third Party shall be a responsible
purchaser of good business reputation, to purchase all of the Shares
of the Selling Shareholder;
(ii) if the conditions of paragraph 2.1(i) are satisfied and the Selling
Shareholder is prepared to accept the Third Party Offer, the Selling
Shareholder shall, within ten (10) days of the receipt of such offer,
deliver a copy of the Third Party Offer, together with the Selling
Shareholder's offer (the "Selling Shareholder's Offer") to sell all of
the Shares of the Selling Shareholder to the other Shareholder (for
the purposes of this agreement, Scozul and Xxxxx are considered as one
Shareholder) upon the same terms and conditions as are contained in
the Third Party Offer;
3
(iii)the Shareholder receiving the Selling Shareholder's Offer shall have
the first right and option to purchase the Shares to be sold by the
Selling Shareholder for a period of thirty (30) days from the date of
receipt of the Selling Shareholder's Offer such right and option to be
exercised before the expiration of such thirty (30) days by notice in
writing;
(iv) if the other Shareholder accepts the Selling Shareholder's Offer
within the time stipulated, he or it shall purchase all of the Shares
owned by the Selling Shareholder upon the same terms and conditions as
are contained in the Third Party Offer;
(v) if the other Shareholders do not accept the Selling Shareholder Offer
within the time stipulated in paragraph 2.1(iii) hereof or the Selling
Shareholder shall accept the offer of, and complete the transaction
with, the Third Party in accordance with the Third Party Offer.
2.2 If the completion of any sale of Shares to a Third Party in accordance with
this Article Two would result in the said Third Party acquiring more than twenty
per cent (20%) of the Shares, each of the Shareholders receiving the offer of
the Selling Shareholder (hereinafter referred to as the "Offeree") shall have
the further right, to be exercised by notice in writing to the Selling
Shareholder within the time limited for the acceptance of the Selling
Shareholder's Offer, to require the Selling Shareholder to sell to the Third
Party all but not less than all of the Shares owned or controlled by the Offeree
upon the same terms and conditions as are contained in the Third Party Offer. If
the Offeree exercises such right, the Selling Shareholder shall not complete the
sale of its Shares unless all of the Shares of the Offeree who shall have so
exercised such right are also sold to the Third Party on the same terms and
conditions as are contained in the Third Party Offer.
2.3 Notwithstanding the provisions of Section 2.1, ACTsub shall be entitled to
sell, transfer or assign its shares in the capital of the Corporation to any
other member of the ACT group of companies provided such transferee becomes a
party to this Shareholders Agreement by signing a counterpart hereof (a copy of
each signed counterpart shall be delivered to each party hereto).
ARTICLE 3
PUT/CALL UPON DEATH OF XXXXX
3.1 Upon the death of Xxxxx, the estate of Xxxxx collectively with Scozul shall
be entitled immediately to exercise the put option contained in Article 1
hereof, upon the same terms and conditions set out therein.
3.2 If the estate of Xxxxx has not exercised the put option set out in Section
3.1 above within sixty (60) days of the death of Xxxxx, ACT or ACTsub as they
may elect (in this Article 3 called the "Buyer") shall be entitled to send a
notice in writing to the estate of Xxxxx and Scozul (in this Article 3 Scozul
4
and the estate of Xxxxx are collectively called the "Seller") requiring the
Seller to sell to the Buyer all of the shares in the capital of the Corporation
owned by the Seller (hereinafter in this Article called the "Purchased Shares");
and upon receipt of such notice the Seller shall sell to the Buyer and the Buyer
shall purchase from the Seller the Purchased Shares upon the terms and
conditions hereinafter set forth in Sections 1.2 through 1.4.
3.3 In the event of the exercise of the call right set out in this Section 3.2
by the Buyer, the closing of the purchase and sale shall be conditional upon:
(a) all loans made by the Corporation in favour of the Seller or Xxxxx,
being satisfied on the Closing Date and the amounts due and owing to
Xxxxx or Scozul or Xxxxx'x estate as part of the Purchase Price shall
be applied first to payment and satisfaction of any such loans in
favour of Xxxxx or Scozul; and
(b) any options to purchase shares in the capital of the Corporation in
favour of Xxxxx which have not been exercised as at the death of
Xxxxx, shall be cancelled and the estate of Xxxxx shall deliver to the
Corporation an acknowledgment and release of any such options.
ARTICLE 4
NO CAPITALIZATION
4.1 During the period that Scozul, and, if applicable Xxxxx remains a
shareholder of the Corporation, ACT and ACTsub hereby agree that neither of them
shall take any action or cause any action to be taken which would result in the
issuance of any shares, agreements, options or rights or privileges, capable to
becoming an agreement, including convertible securities, warrants or convertible
obligations of any nature for the purchase description, allotment or issuance of
any unissued shares or other securities of the Corporation which would cause the
aggregate of shares in the capital of the Corporation issued to Scozul and
shares under option to Xxxxx to be less than twenty percent (20%) of the issued
and outstanding shares in the capital of the Corporation.
ARTICLE 5
DRAG ALONG RIGHTS
5.1 In the event that ACTsub or its successor in interest receives an offer in
writing by a third party dealing at arm's length with ACTsub, and provided that
Scozul or, as applicable, Scozul and Xxxxx have not exercised their right of
first refusal pursuant to Article 2 hereof, ACTsub may, by notice in writing
require Scozul or Scozul and Xxxxx, as applicable, to sell all but not less than
all of their shares in the capital of the Corporation to such third party
purchasers upon the same terms and conditions as such sale shall take place with
ACTsub. If Xxxxx has not exercised the Option, at the time of such sale, such
5
option shall be automatically exercised such that at the time of such third
party sale, Scozul and Xxxxx collectively shall own 20% of the issued and
outstanding shares of each class in the capital of the Corporation.
ARTICLE 6
ENCUMBRANCES
6.1 Xxxxx hereby represents and warrants to ACT and ACTsub and acknowledges that
ACT and ACTsub are relying upon such representation and warranty, that all of
the registered and beneficial shareholders in the capital of Scozul are as
follows: [Set out shareholders]. Xxxxx hereby agrees that the voting control of
Scozul shall not be changed, directly or indirectly whether by operation of law
or otherwise from that as set out in this Section 6.1, without the prior written
consent of ACT. If such prior consent is not contained and the control of Scozul
changes as aforesaid, the call option granted to ACT and ACTsub upon the death
of Xxxxx as set forth in Article 3 hereof shall immediately apply mutatis
mutandis.
6.2 Xxxxx and Scozul hereby represent and warrant to ACT and ACTsub and
acknowledge that ACT and ACTsub are relying upon such representation and
warranty, that all of the issued and outstanding shares in the capital of the
Corporation of which Scozul is the registered holder and option agreement and
the option rights pursuant thereto which are held by Xxxxx are free and clear of
all mortgages, charges, pledges or other encumbrances and Xxxxx and Scozul
covenant and agree that all shares in the capital of the Corporation owned by
Scozul and owned by Xxxxx any time in the future, and the option agreement and
the option rights represented thereby shall continue to be owned beneficially by
Xxxxx and Scozul as applicable and not as a nominee of any other party, free and
clear of all mortgages, charges, pledges or other encumbrances during the term
of this agreement.
ARTICLE 7
GENERAL
7.1 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 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
6
To Scozul and Scozul Enterprises Ltd.
to Xxxxx: and Xxxxx Xxxxx
0000 Xx. Xxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxx Xxxxx
To the Corporation: Ground Effects Ltd.
0000 Xx. Xxxxxxx Xxxx.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: The President
with copies to: Xxx Xxxxxxxxxxx
Xxxxxxx Xxxxx & Xxxxxxxxx
Suite 2100
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxx
X0X 0X0
Fax No. (000) 000-0000
with copies to: Xxxx X. Creme, Esq.
Merra, Kanakis, Creme & Xxxxxx, P.C.
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
Fax No. (000) 000-0000
7.2 For the purpose of this Agreement, Xxxxx and Scozul shall be treated as one
shareholder.
7.3 Time shall be of the essence of this Agreement.
7.4 This Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the Province of Ontario, and the laws of Canada
applicable therein.
7.5 This Agreement and the rights and obligations hereunder shall enure to the
benefit of and be binding upon the parties hereto and their respective
successors. Except as contemplated herein, neither this Agreement, nor the
rights of the parties hereunder shall be assignable, except with the written
consent of the parties hereto.
7.6 This Agreement constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof and supersedes prior agreements relating
thereto.
7.7 Each Party hereto hereby agrees that upon the written request of any other
Party hereto, it will do all such acts and execute all such further documents,
conveyances, deeds, assignments, transfers and the like, and will cause the
doing of all such acts and will cause the execution of all such further
7
documents as are within its power to cause the doing or execution of, as any
other Party hereby may from time to time reasonably request be done and/or
executed as may be required to consummate the transactions contemplated hereby
or as may be necessary or desirable to effect the purpose of this Agreement or
any document, agreement or instrument delivered pursuant hereto and to carry out
their provisions or to better or more properly or fully evidence or give effect
to the transactions contemplated hereby, whether before or after the Closing.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
APPLIED CELLULAR TECHNOLOGY, INC.
Per: -----------------------------
Xxxxxxx X. Xxxxxxxx
Its duly authorized President
ACT-GFX CANADA, INC.
Per: -----------------------------
c/s
Per: -----------------------------
SCOZUL ENTERPRISES LTD.
Per: -----------------------------
c/s
Per: -----------------------------
GROUND EFFECTS LTD.
Per: -----------------------------
c/s
Per: -----------------------------
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
---------------------------- ) -----------------------------------
Witness ) Xxxxx X. Xxxxx
