AGREEMENT OF SALE
This Agreement is entered into this 24th day of October, 1997 by and between
Applied Cellular Technology, Inc., a Missouri corporation ("ACT or Buyer"), the
named shareholders identified in the attached Exhibit A (hereinafter
collectively referred to as "Sellers") and Alacrity Systems Incorporated, a New
Jersey corporation ("Acquiree").
WHEREAS, Sellers own shares, either common or preferred, in the number and at
the par value as indicated in the hereinabove referenced Exhibit A, of the
issued and outstanding stock of Acquiree (representing, collectively, one
hundred percent (100%) of the currently issued and outstanding stock of
Acquiree) (the "Acquiree Shares");
WHEREAS, Sellers desire to sell and Buyer desires to acquire one hundred percent
(100%) 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; Payment Price
1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, 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 a. Purchase Price. The purchase price for the Sale Shares shall be
the amount of shares of restricted common stock of Buyer ("ACT Stock"), with
demand registration rights, such shares having a value of Five Million Two
Hundred Thousand Dollars ($5,200,000.00) (the "Purchase Price") (for one hundred
percent [100%] of the Acquiree's shares) based upon the market value of ACT
shares to be set by the mean closing price of the last ten (10) trading days
immediately prior to closing as reflected on the Nasdaq closing price published
in "The Wall Street Journal" ("Valuation Date").
b. Delivery of ACT Stock. At the Closing, each Seller shall receive shares
of ACT Stock, with demand registration rights as provided hereinafter in Section
8 of this Agreement, in proportion to its percentage of ownership, as provided
in attached Exhibit A. The total value of the shares of ACT Stock conveyed
hereunder shall have a value of Five Million Two Hundred Thousand Dollars
($5,200,000.00) as of the Valuation Date.
c. Change in Capitalization. In the event that between the date of this
Agreement and the date of Closing the number of issued and outstanding shares of
ACT shall change due to a recapitalization, stock split, reverse stock split,
stock dividend or similar event, then the number of shares of the ACT Stock to
be received by the Sellers shall be adjusted to reflect fully such event and to
assure that the value of the ACT Stock received by the Sellers at Closing shall
be equal to the Purchase Price.
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 2
d. At the Closing Date, Buyer will deliver certificates representing the
ACT Stock duly endorsed so as to make each Seller 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. Representations of Sellers and Acquiree
Acquiree and each Seller, as and for himself, hereby represent and
warrant as to each Seller, to the extent of the facts known to him, that,
effective this date and the Closing Date, the representations listed below are
true and correct.
2.1 Title to Acquiree Shares. Each Seller has good and valid title to
the Sale Shares, reflected on Exhibit "A" hereto, being sold free and clear of
all liens, claims, encumbrances, security interests, options, charges and
restrictions of any kind. Upon delivery to Buyer at the Closing of certificates
representing the Sale Shares, duly endorsed in blank or accompanied by stock
powers duly endorsed in blank in proper form for transfer, good and valid title
to the Sales Shares will pass to Buyer, free and clear of all liens, claims,
encumbrances, security interests, options, charges and restrictions of any kind.
The Sale Shares are not subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding restricting or otherwise
relating to voting, dividend rights or the disposition of the Sales Shares.
2.2 Financial Statements. Acquiree has previously furnished audited
financial statements dated July 31, 1997 (see separate Disclosure Schedule). The
financial statements are 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 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.
2.3 Litigation. 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
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 3
or otherwise, of Acquiree, except in each as listed and described in Exhibit 2.3
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.
2.4 Compliance with Laws. Acquiree 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 except as previously
disclosed to Buyer (see Disclosure Schedule).
2.5 Taxes. As of the date hereof, and as of the Closing Date, all
federal, state and local tax returns required to be filed by Acquiree have been
duly filed, or will be filed, taking into account any extensions of the filing
deadlines which have been granted by to Acquiree. Federal income tax returns of
Acquiree have been submitted to the Internal Revenue Service ("IRS") for all
past fiscal years through and including 1996 (see Disclosure Schedule). 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.
2.6 Absence of Changes of Events. Since the date of the balance sheet,
and except as otherwise disclosed on Schedule 2.6, there has not occurred:
a. any undisclosed material and adverse change in the financial
condition or operations of Acquiree;
b. any undisclosed material damage, destruction or loss to or of
any of the assets or properties owned or leased by Acquiree;
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 (including 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.
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 4
2.7 No Violation. 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 is a party or by which it is
bound. The execution and carrying out of this Agreement will not violate any
provision of law.
2.8 Accuracy of Information. 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.
2.9 Capital Stock. The Acquiree is authorized to issue seventy million
(70,000,000) shares consisting of (a) forty-one million (41,000,000) shares of
Common Stock, $.01 par value, and (b) twenty-nine million (29,000,000) shares of
Preferred Stock, $.01 par value, of which (i) two hundred sixty-two thousand
(262,000) shares are designated as Class A Preferred Stock, $.01 par value, (ii)
twelve million six hundred nineteen thousand three hundred seventy-seven
(12,619,377) shares designated as Class B Preferred Stock, $.01 par value, and
(iii) fifteen million (15,000,000) shares designated as Class C Preferred Stock,
$.01 par value.
2.10 Organization and Good Standing. Acquiree is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey, with all requisite power and authority to own its properties and to
carry on its business as now conducted.
2.11 Officers and Directors. The present officers and directors of
Acquiree are as follows:
Officers: President Xxxx X. Reap
Secretary Xxxxxx X. Xxxx
Treasurer Xxxx X. Reap
Directors: Xxxxxxxxx X. Xxxxxxx
Xxxx X. Xxx
Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Xxxxxx X. Xxxx
Xxxx X. Reap
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 5
2.12 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.
2.13 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.
2.14 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.
2.15 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).
2.16 Brokers. The Agreement by and between Acquiree and Argentum
Partners, dated March 24, 1997, has expired and that neither Sellers nor
Acquiree have any continued or continuing obligations thereunder.
2.17 True and Correct. The representations and warranties made
hereinabove in this Section 2 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. Representations of Buyer
Buyer warrants and represents, that, effective this date and the
Closing Date, the representations listed below are true and correct.
3.1 Organization; Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Missouri.
3.2 Execution, Delivery and Performance of Agreement; No Conflict;
Authorization. Buyer has full power and authority to carry out the transactions
contemplated by this Agreement and the execution, delivery and performance of
this Agreement has been duly authorized by the Buyer by all necessary corporate
action and will not result in any breach of or violate or constitute a default
under its Certificate of Incorporation or Bylaws and other governing documents
of Buyer, or any statutes, laws or regulations or indenture, mortgage or other
agreement or instrument, or any order, judgment or decree to which it is a party
or may be subject.
3.3 Title to ACT Stock. ACT's Stock, deliverable pursuant to this
Agreement, shall be validly issued and outstanding, fully paid and
nonassessable.
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 6
3.4 Capital Stock. The Buyer is authorized to issue forty-five million
(45,000,000) shares consisting of (a) forty million (40,000,000) designated as
Common Stock, $.001 par value, of which seventeen million fifty-seven thousand
four hundred forty-six (17,057,446) are validly issued and outstanding and (b)
five million (5,000,000) are designated as preferred stock, of which one hundred
nine thousand (109,000) are validly issued and nine thousand (9,000) are
outstanding.
3.5 Financial Statements. Annexed hereto as Exhibit 3.5 are the audited
financial statements of Buyer dated December 31, 1996. The financial statements
in Exhibit 3.5 are 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.
3.6 Litigation. 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 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 Buyer. 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.
3.7 Compliance with Laws. 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.
3.8 Taxes. 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 1996.
3.9 No Violation. 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.
3.10 Accuracy of Information. 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.
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 7
3.11 Disclosure of Information. 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.
3.12 Sale Shares.
a. 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.
b. 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.
c. 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.
d. Buyer is acquiring the Sale Shares for the purpose of
controlling Acquiree.
3.13 Buyer represents that copies of all documents which have been
filed 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.
3.14 True and Correct. 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.
4. Closing Date
The Closing Date herein referred to shall be October 24 1997. At the
Closing, Buyer will be provided with and accept delivery of the Sale Shares, and
in connection therewith, and will exchange the ACT Stock due to Sellers in
accordance with Section 1.2(b). 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 October,
1997.
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 8
5. 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:
5.1 The negotiation and execution of an employment non-compete
agreement with Xxxx X. Reap, on terms and conditions agreeable to the parties
thereto, providing for a base salary, benefits and mutually agreed incentive
compensation based on performance measures. A form of said employment agreement
is attached as Exhibit 5.1.
5.2 The representations and warranties by Buyer contained in this
Agreement or in any certificate or document delivered to Sellers 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.
5.3 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.
5.4 All instruments and documents delivered to Sellers pursuant to the
provisions hereof shall be reasonably satisfactory to legal counsel for Sellers.
6. 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:
6.1 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.
6.2 Buyer shall have received 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.
6.3 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.
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 9
6.4 Acquiree shall have, at the Closing, a minimum of Two Million
Dollars ($2,000,000.00) in cash in hand, accounts payable and accrued expenses
of no more than Three Hundred Thousand Dollars ($300,000.00). Any adjustments to
any of the above accounts shall be reflected as an adjustment to the Price, as
defined in Section 1.2.
6.5 Acquiree shall have terminated the rights conveyed to certain
respective Employees under the Alacrity Systems Incorporated Employee Stock
Compensation Program, such rights to include an option on stock not previously
vested.
6.6 Acquiree shall have executed the Waiver Agreement and shall make
best efforts to cause the execution of the Waiver Agreement by the respective
Warrant Holder.
7. Documents at Closing
At the Closing, the following transactions shall occur, all of such
transactions being deemed to occur simultaneously:
7.1 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 New Jersey certificate of good
standing, as may reasonably be available to Sellers and requested by Buyer;
c. certified copies of resolutions 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;
e. a copy of a reasonably current shareholder list of
Acquiree certifying the number of shares outstanding;
f. current financial statements as of July 31, 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.
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 10
7.2 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.
a. Certificates representing the ACT Stock shall be delivered
to the Sellers prorata according to their respective ownership interests in
Acquiree at the time of the Closing.
b. Such secretaries' and officers' certificates or resolutions
as may be provided for under this Agreement or under any other document to be
delivered at Closing under this Agreement.
8. Registration Rights
8.1 Buyer agrees that it will prepare and file with the Securities and
Exchange Commission (the "Commission" an amendment which shall include the ACT
Stock conveyed hereinabove in Section 1.2(b) to its pending registration
statement ("Registration Statement" with respect to the restricted common stock
("Registrable Securities") on or before November 30, 1997. Buyer shall use its
best efforts to cause the Registration Statement to become effective within one
(1) month after the Closing Date. Buyer 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 Buyer receives a written request
for inclusion, if such request is received within fifteen (15) days after
receipt of Buyer's notice. 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").
a. Buyer shall use its 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, Buyer will use its best
efforts to promptly obtain the withdrawal of such order.
c. Buyer 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, Buyer agrees to indemnify and hold harmless
the Sellers and their heirs, executors, representatives and assigns (an
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 11
"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 Buyer in
writing by Sellers for use in connection with the Registration Statement. Also,
in that connection, Sellers agree to defend and indemnify and hold harmless
Buyer, 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.
e. Within five (5) days after receiving written notice of any
claim in respect of which an Indemnified Person may seek indemnification under
subsection 8.1(d) above, such Indemnified Person shall submit notice thereof to
Buyer 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.
8.2 The Buyer further agrees that if, on the effective date of the
Registration Statement for the ACT Stock conveyed hereunder, the average closing
price of such shares decreases by more than five percent (5%) from the price
established on the Valuation Date, as defined hereinabove in Section 1.2, Buyer
shall convey additional ACT Stock equal to the number of shares arrived at by
subtracting the number of shares issued at closing from the number of shares
determined by the formula noted below. Such shares shall be issued without the
same right of reevaluation upon their effective date of registration. Price
times ninety-five percent (Price x 95%) divided by the Stock Price at date of
Registration equals the adjusted number of shares to be conveyed. (By way of
example, if the Price at Registration is seven and 50/100ths dollars ($7.50),
5,200,000 x 95% divided by $7.50 = 658,667 - 622,755 = 35,912, the additional
number of shares). If price at registration is greater than ninety-five percent
(95%) of the Valuation Price, no such additional shares of ACT Stock shall be
issued.
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 12
9. Indemnification
9.1 Indemnification of Buyer. Each of the Sellers, to the extent of the
value of the ACT Stock received by each of them on the Valuation Date, and
Acquiree, agree to indemnify and hold the Buyer harmless from and against any
damages, liabilities, losses and expenses (including reasonable attorneys' fees)
of any kind or nature whatsoever (the "Losses") which may be sustained or
suffered by the Buyer based upon a breach of any representation, warranty or
covenant made by such Seller or Acquiree, as the case may be, in this Agreement,
or in any Exhibit or document or instrument prepared or given by such Seller or
Acquiree in connection with this Agreement, or by reason of any claim, action or
proceeding asserted or instituted growing out of any matter or thing covered by
such representations, warranties or covenants.
9.2 Indemnification of Sellers and Acquiree. Buyer, to the extent of
the value of the ACT Stock, agrees to indemnify and hold the Sellers and
Acquiree harmless from and against any damages, liabilities, losses and expenses
(including reasonable attorneys' fees) of any kind or nature whatsoever (the
"Losses" which may be sustained or suffered by such Sellers and/or Acquiree, as
the case may be, based upon a breach of any representation, warranty or covenant
made by Buyer in this Agreement, or in any Exhibit or document or instrument
prepared or given by Buyer in connection with this Agreement, or by reason of
any claim, action or proceeding asserted or instituted growing out of any matter
or thing covered by such representations, warranties, or covenants.
9.3 Procedure.
a. Each party claiming indemnification under this Agreement
shall give written notice to the other of the indemnification claims hereunder,
specifying the amount and nature of the claim and giving the other party the
right to contest any such claim. If any third party claim is made to which
indemnification is claimed, such indemnified party will, if a claim is to be
made against an indemnifying party hereunder, give notice to the indemnifying
party of the commencement of such claim, but the failure to notify the
indemnifying party will not relieve the indemnifying party of any liability that
it may have to any indemnified party, except to the extent that the indemnifying
party demonstrates that the defense of such action is prejudiced by the
indemnifying party's failure to give such notice.
b. If any proceeding is brought against an indemnified party
and it gives notice to the indemnifying party of the commencement of such
proceeding, the indemnifying party will, unless the claim involves taxes, be
entitled to participate in such proceeding and, to the extent that it wishes
(unless (i) the indemnifying party is also a party to such proceeding and the
indemnified party determines, in good faith, that joint representation would be
inappropriate, or (ii) the indemnifying party fails to provide reasonable
assurance to the indemnified party of its financial capacity to defend such
proceeding and provide indemnification with respect to such proceeding), to
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 13
assume the defense of such proceeding with counsel satisfactory to the
indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party for any fees of other counsel or any other
expenses with respect to the defense of such proceeding, subsequently incurred
by the indemnified party in connection with the defense of such proceeding,
other than reasonable costs of investigation. If the indemnifying party assumes
the defense of a proceeding, (i) it will be conclusively established for
purposes of this Agreement that the claims made in that proceeding are within
the scope of and subject to indemnification; (ii) no compromise or settlement of
such claims may be effected by the indemnifying party without the indemnified
party's consent unless the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any proceeding and the indemnifying party does not, within ten
(10) days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such proceeding, the
indemnifying party will be bound by any determination made in such proceeding or
any compromise or settlement effected by the indemnified party.
c. Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise or settle such proceeding, but
the indemnifying party will not be bound by any determination of a proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
10. Miscellaneous
10.1 Survival of Representations and Warranties. 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 twelve (12)
months from the Closing Date, except as may be required by their terms.
10.2 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.
10.3 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.
10.4 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 New Jersey.
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 14
10.5 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: See attached Exhibit A
To Acquiree: Alacrity Systems Incorporated
00 Xxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
with copies to: Xxxx X. Xxxxx, Esquire
Xxxxxxx, Xxxxx & Xxxxxx LLP
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
To Buyer: Applied Cellular Technology, Inc.
P. O. Box 0000
Xxxxx Xxxxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0
Xxxx, XX 00000
with copies to: Xxxx X. Creme, Esquire
Merra, Kanakis, Creme & Xxxxxx, P.C.
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
10.6 Expenses. Whether or not the transaction contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses.
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.
10.8 Broker's Accomplishment Fees. Buyer shall be solely responsible
for the payment in shares of ACT Stock to Xxxxxx Xxxxxx of a fee equal in amount
to One Hundred Fifty-Two Thousand Dollars ($152,000.00). Such shares shall be
valued in the same manner as those conveyed to Sellers as determined in Section
1.2 of this Agreement.
10.9 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.
10.10 Governing Law. This Agreement shall be governed by the
laws of the State of New Jersey.
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 15
10.11 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.
10.12 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.
10.13 Severability. If any part of this Agreement is deemed to be
unenforceable the balance of this Agreement shall remain in full force and
effect.
THE BALANCE OF THIS PAGE HAS BEEN
INTENTIONALLY LEFT BLANK
AGREEMENT OF SALE
ALACRITY SYSTEMS INCORPORATED
PAGE 16
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
SELLERS:
XXXXX XXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXX XXXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXX XXXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXX XXXXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXX X. XXXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXXX XXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXXX XXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXXX TECHNOLOGY PARTNERS II
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
4C VENTURES
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
RH INVESTMENT GROUP NO. 1
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXXX XXXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXX XXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXX X. XXXXXX TRUST
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXX X. XXXXXX TRUST
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXXX X. XXXXXX TRUST
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXXXX X. XXXXXX TRUST
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXX XXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
CHARITABLE LEAD TRUST
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXXX X. XXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXX XXXXXXXX (XXXXXXX)
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXX XXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXX XXXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXXXXX X. XXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXX X. XXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXX XXXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXX X. XXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXXX X. XxXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXX X. XXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXX XXXXXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
JO XXX XXXXXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXX X. XXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXX XXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXX XXXXXXXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXX X. XXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
X. XXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXX X. XXXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXX X. XXXXXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXXXX X. XXXXXXXXX
By: /s/ Xxxx X. Reap
------------------------------------
Xxxx X. Reap
As Attorney-In-Fact
XXXX X. REAP
By: /s/ Xxxx X. Reap
------------------------------------
ACQUIREE:
Alacrity Systems Incorporated
By: /s/ Xxxx X. Reap
--------------------------------
Xxxx X. Reap
Its duly authorized President
BUYER:
Applied Cellular Technology, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx
Its duly authorized President
