AGREEMENT FOR PURCHASE AND SALE OF SHARE CAPITAL
OF
SIGNAL PROCESSORS LIMITED
Among
APPLIED CELLULAR TECHNOLOGY, INC.
and
XXXXX XXXXX XXXXX-XXXXXXX
ELSE XXXXXXX-XXXXX
XXXXXXXX JAN XXXXXX XXXXX
XXXXX XXXX XXXXX
XXXX XXXXXX XXXXXX
XXXXXXX XXXXXXXX XXXXXX
MANAGED TECHNOLOGY INVESTORS
BY ITS GENERAL PARTNER, MTI MANAGERS LTD.
XXXXXXXX XXXX XXXXXX
XXXXX XXXXXX XXXXXXX
XXXXXX XXXXXX
XXXXXX XXXXXXX XXXXXXXXXX
Dated July 30, 0000
Xxxxx Xxxx LLP
00 Xxxxx Xxxx'x Xxxx
Xxxxxx XX0X 0XX
0000-000-0000
0000-000-0000 (facsimile)
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AGREEMENT FOR PURCHASE AND SALE OF ISSUED SHARE CAPITAL
OF SIGNAL PROCESSORS LTD.
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is entered into as of
the 30th day of July 1997 (the "Effective Date"), by and between the following
(the "Parties"):
(a) APPLIED CELLULAR TECHNOLOGY, INC., a Missouri corporation with its
address at X.X. Xxx 0000, Xxxxx Xxxxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0, Xxxx,
Xxxxxxxx, Xxxxxx Xxxxxx 00000 ("Buyer");
(b) XXXXX XXXXX XXXXX-XXXXXXX, an individual with an address at Xxxxxxx
Xxxxx, Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxxxx XX0 0XX; ("Xxxxx-Xxxxxxx");
(c) ELSE XXXXXXX-XXXXX, an individual with an address at Xxxxxxx Xxxxx,
Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxxxx XX0 0XX ("Xxxxxxx-Xxxxx");
(d) XXXXXXXX XXX XXXXXX XXXXX, an individual with an address at 00
Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxxx XX0 0XX ("Xxxxxx Xxxxx");
(e) XXXXX XXXX XXXXX, an individual with an address at 00 Xxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxxx XX0 0XX ("Xxxxx Xxxxx");
(f) XXXX XXXXXX XXXXXX, an individual with an address at 0 Xxxxxxxx Xxxx,
Xxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxxxx XX00 0XX ("Xxxxxx");
(g) XXXXXXX XXXXXXXX XXXXXX, an individual with an address at 00 Xxxx Xxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx XX0 0XX ("Xxxxxx");
(h) MANAGED TECHNOLOGY INVESTORS, an English limited partnership registered
in England with registration number LP2964 acting by its general partner, MTI
MANAGERS LTD., an English company with an address at Xxxxxxx Xxxxx, 00 Xxxxxxx
Xxxx, Xxxxxxx, Xxxxx XX0 0XX ("MTI");
(i) XXXXXXXX XXXX XXXXXX, an individual with an address at 000 Xxxxxxx
Xxxx, Xxxxxxxxx XX0 0XX ("Xxxxxx");
(j) XXXXX XXXXXX XXXXXXX, an individual with an address at 00 Xxxxxx Xxxx,
Xxxx, Xxxxxxxxxxxxxx XX0 0XX ("Xxxxxxx"); and
(k) XXXXXX XXXXXX, an individual with an address at 0000 Xxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxx 00000 ("Barmat").
(l) XXXXXX XXXXXXX XXXXXXXXXX, an individual with an address at 00 Xxxxxxx
Xxxx, Xxxxxxx Xxxxx, Xxxxxxxxxxxxxx XX00 0XX ("Xxxxxxxxxx")
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Xxxxx-Xxxxxxx, Xxxxxxx-Xxxxx, Xxxxxx Xxxxx, Xxxxx Xxxxx, Turner, Barton,
MTI, Walker, Terrell, Xxxxxxxxxx and Barmat are referred to in this Agreement as
the Sellers".
RECITALS
A. SIGNAL PROCESSORS LTD. (the "Company") is a private limited company
registered in England with a total authorized capital as of Closing of thirty
one thousand four hundred pounds sterling ((pound)31,400), made up of three
hundred fourteen thousand (314,000) ordinary shares with a par value of ten
xxxxx ((pound).10) per share. The Company at Closing will have issued and
outstanding a total of three hundred thirteen thousand seven hundred and fifty
seven (313,757) ordinary and preferred ordinary shares (the "Shares").
B. Of the Company's total issued and outstanding share capital at Closing,
Xxxxx-Xxxxxxx owns one hundred fifty eight thousand Nine Hundred and twenty nine
(158,929) Shares, Xxxxxxx-Xxxxx owns four thousand (4,000) Shares, Xxxxxx owns
twelve thousand (12,000) Shares, Xxxxxx Xxxxx and Xxxxx Xxxxx each own six
thousand (6,000) Shares, Xxxxxx owns one thousand five hundred (1,500) Shares,
MTI are the beneficial owners of ninety four thousand one hundred seventeen
(94,117) Shares, Xxxxxx owns nineteen thousand six hundred and thirty six Shares
(19,636), Xxxxxxx owns three thousand one hundred and ninety five (3,195)
Shares, Xxxxxxxxxx owns seven thousand eight hundred and eighty (7,880) Shares
and Barmat owns five hundred (500) Shares.
X. Xxxxx-Xxxxxxx and Xxxxxx and Xxxxxxx are parties to option agreements
dated respectively the 8th day of August 1996 and the 22nd day of August 1996
("Continuing Option Agreements") pursuant to which Xxxxxx and Xxxxxxx have
options to acquire various Shares from Xxxxx-Xxxxxxx. The Company and Xxxxxx and
Xxxxxxxxxx are parties to option agreements both dated the 8th day of August
1996 (the "Option Agreements") pursuant to which Xxxxxx and Xxxxxxxxxx have
options to acquire various Shares. The Company, MTI, and Xxxxx-Xxxxxxx, Xxxxxx,
Xxxxxx Xxxxx, Xxxxxx, Xxxxxxx-Xxxxx, Xxxxxx and Xxxxxxx are parties to a
Subscription Agreement dated the 29th day of March 1989 (the "Subscription
Agreement") governing the issuance of Shares to MTI and various matters
affecting the Company's organisation and management. In anticipation of the
other transactions contemplated by this Agreement, Xxxxxx, Xxxxx-Xxxxxxx, the
Company, MTI, Xxxxxx Xxxxx, Michaelson, Turner, Xxxxxxx-Xxxxx, Xxxxxx and
Xxxxxxx will procure that the Option Agreements, but not the Continuing Option
Agreements, and the Subscription Agreement are terminated.
D. Subject to the conditions set forth in this Agreement, the Buyer has
agreed to purchase and the Sellers have agreed to sell eighty percent of the
Shares owned by Sellers (or two hundred fifty-one thousand and six (251,006)
Shares). The Buyer has also agreed to give Sellers put options for the balance
of the Shares which are not immediately purchased.
E. The Parties have agreed to enter into this Agreement to set forth the
terms and conditions governing the purchase and sale of the Shares, the grant of
the put options, and various other matters incident to these transactions.
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NOW, THEREFORE, in consideration of the recitals and the mutual covenants,
representations, warranties, conditions, and agreements hereinafter expressed,
the Parties agree as follows:
ARTICLE I
COMPLETION OF PURCHASE AND SALE
I.1 Sale of the Shares. Upon the terms and subject to the conditions and in
reliance on the representations and warranties set forth in this Agreement, at
Closing, each Seller shall sell and deliver to Buyer and Buyer shall purchase
and accept from each Seller the following Shares (the "Sale Shares"):
(a) from Xxxxx-Xxxxxxx one hundred and twenty two thousand three
hundred forty four (122,344) Shares;
(b) from Xxxxxxx-Xxxxx three thousand one hundred ninety five (3,195)
Shares;
(c) from Xxxxxx Xxxxx four thousand seven hundred ninety two (4,792)
Shares
(d) from Xxxxx Xxxxx four thousand seven hundred ninety two (4,792)
Shares;
(e) from Xxxxxx one thousand five hundred (1,500) Shares;
(f) from MTI eighty four thousand seven hundred fifty eight (84,758)
Shares;
(g) from Xxxxxx nineteen thousand six hundred thirty six (19,636)
Shares;
(h) from Xxxxxxx three thousand one hundred ninety five (3,195)
Shares;
(i) from Xxxxxxxxxx six thousand two hundred ninety four (6,294)
Shares; and
(j) from Barmat five hundred (500) Shares.
I.2 Share rights. Each of the Sellers shall sell and in the case of MTI
procure the sale of the Sale Shares with full title guarantee and all rights
attaching to them, free and clear of all security interests, claims, and
restrictions. Each of the Sellers hereby waives any pre-emption rights it may
have in relation to any of the Sale Shares whatsoever.
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ARTICLE II
PURCHASE CONSIDERATION
II.1 Consideration. The purchase consideration for the Sale Shares shall be
payable in the Buyer's Class A Common Shares validly issued, fully paid and
non-assessable (the "Buyer's Shares") with the values calculated either
according to Plan A or Plan B as defined below and as issued in installments
under such Plan A or Plan B. Each of Sellers shall be paid in accordance with
either Plan A or Plan B as indicated on Schedule 2.1 attached hereto and
incorporated herewith and shall be paid in Buyer's Shares with such values as
are set forth on such Schedule 2.1. For the avoidance of doubt, the choice of
Plan A or Plan B made by Sellers as indicated on Schedule 2.1 is fixed and
irrevocable and can not be changed at any time after execution of this
Agreement.
II.2 Plan A Consideration. The purchase consideration payable to each of
the Sellers being remunerated under Plan A ("Plan A Sellers") for the Sale
Shares shall be calculated and paid as follows:
(a) The Buyer shall issue at Closing to each of the Plan A Sellers,
Buyer's Shares with a value equal to nine hundred thousand pounds sterling
((pound)900,000), multiplied by a ratio, the numerator of which shall be
the number of Sale Shares being sold by such Plan A Seller as set forth in
Section 1.1 and the denominator of which shall be the total number of Sale
Shares.
(b) The following additional Buyer's Shares shall be issued upon
satisfaction of the conditions and at the times indicated below:
(i) In the event the Company's Operating Profit for the 1997
calendar year is equal to or greater than two hundred and forty five
thousand pounds sterling ((pound)245,000), the Buyer shall issue to
the Plan A Sellers, to be allocated in accordance with Section 2.2(d),
total additional Buyer's Shares with a value of four hundred and
eighty two thousand one hundred and thirty-three pounds sterling
((pound)482,133), to be issued within thirty (30) days of the approval
by the Company's directors of the Company's final audited accounts for
such 1997 calendar year unless the dispute resolution procedure set
forth in Section 2.6 is activated, in which case such Buyer's Shares
shall be issued upon completion of the dispute resolution process.
(ii) In the event the Company's Operating Profit for the 1997
calendar year is greater than zero pounds sterling ((pound)0) but less
than two hundred and forty five thousand pounds sterling
((pound)245,000), the Buyer shall issue to the Plan A Sellers, to be
allocated in accordance with Section 2.2(d), total additional Buyer's
Shares with a value of two hundred and forty one thousand and sixty
six pounds sterling ((pound)241,066), to be issued within thirty (30)
days of the approval by the Company's directors of the Company's final
audited accounts for such 1997 calendar year unless the dispute
resolution procedure set forth in Section 2.6 is activated, in which
case such Buyer's Shares shall be issued upon completion of the
dispute resolution process. In such a case, provided the Company's
Operating Profit for the 1998 calendar year is equal to or greater
than two hundred and forty five thousand pounds sterling
((pound)245,000), the Buyer shall also issue to the Plan A Sellers, to
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be allocated in accordance with Section 2.2(d), total additional
Buyer's Shares with a value of two hundred and forty one thousand and
sixty six pounds sterling ((pound)241,066), to be issued within thirty
(30) days of the approval by the Company's directors of the Company's
final audited accounts for such 1998 calendar year unless the dispute
resolution procedure set forth in Section 2.6 is activated, in which
case such Buyer's Shares shall be issued upon completion of the
dispute resolution process.
(c) For the avoidance of doubt, in the event that:
(i) the Company has no Operating Profit for the 1997 calendar
year, the Buyer shall have no obligation pursuant to Section 2.2(b) to
issue additional Buyer's Shares; and
(ii) the Company has Operating Profit of greater than zero pounds
sterling ((pound)0) but less than two hundred and forty five thousand
pounds sterling ((pound)245,000) for the 1997 calendar year and
Operating Profit of less than two hundred and forty five thousand
pounds sterling ((pound)245,000) for the 1998 calendar year, the
Buyer's sole obligation pursuant to Section 2.2(b) shall be to issue
additional Buyer's Shares with a value of two hundred and forty one
thousand and sixty six pounds sterling ((pound)241,066) to the
Sellers, to be allocated in accordance with Section 2.2(d), within
thirty (30) days of the approval by the Company's directors of the
Company's final audited accounts for the 1997 calendar year unless the
dispute resolution procedure set forth in Section 2.6 is activated, in
which case such Buyer's Shares shall be issued upon completion of the
dispute resolution process.
(d) Where indicated, the Buyer's Shares payable pursuant to this
Section 2.2:
(i) shall in the case of each installment be issued to each Plan
A Seller in the proportion that Plan A Seller's Sale Shares bears to
the total number of Sale Shares being sold under Plan A; and
(ii) shall in any case where the purchase price can otherwise be
paid in full only by the issuance of a fractional Buyer's Share be
rounded up or down as the case may be.
II.3 Plan B Consideration. The purchase consideration payable to the each
of the Sellers being remunerated under Plan B ("Plan B Sellers") for the Sale
Shares shall be calculated and paid as follows:
(a) The Buyer shall issue at Closing to each of the Plan B Sellers,
Buyer's Shares with a value equal to nine hundred thousand pounds sterling
((pound)900,000) multiplied by a ratio, the numerator of which shall be the
number of Sale Shares being sold by such Plan B Seller as set forth in
Section 1.1 and the denominator of which shall be the total number of all
Sale Shares.
(b) In the event the Company's Operating Profit for the 1997 calendar
year is greater than three hundred and fifty thousand pounds sterling
((pound)350,000) and within thirty (30) days of the approval of the
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Company's final audited accounts for the 1997 calendar year by the
directors of the Company unless the dispute resolution procedure in Section
2.6 is activated (in which case such Buyer's Shares shall be issued upon
completion of the dispute resolution process) the Buyer shall issue to each
of the Plan B Sellers additional Buyer's Shares with a value calculated
according to the following:
(i) the product of the following amounts:
(A) five (5) times the Company's Operating Profit for the
1997 calendar year; multiplied by
(B) a fraction, the numerator of which is the number of Sale
Shares sold by such Plan B Seller and the denominator of which is
the total number of Shares of the Company;
(ii) minus the value of the Buyer's Shares previously issued to
such Plan B Seller pursuant to Section 2.3(a).
The calculation described in this Section 2.4(b) can also be reflected in
the following formula:
[(5 x 1997 Operating Profit) x Sale Shares Sold by B Seller] -
Shares
((pound)900,000 x Sale Shares Sold by B Seller)
Total Sale Shares
(c) For the avoidance of doubt, in the event that the Company's
Operating Profit is equal to or less than three hundred and fifty thousand
pounds sterling ((pound)350,000) for the 1997 calendar year, the Buyer
shall have no obligation pursuant to Section 2.3(b) to issue additional
Buyer's Shares.
(d) In any case where the purchase price can otherwise be paid in full
only by the issuance of a fractional Buyer's Share, the Buyer's Shares
payable pursuant to this Section 2.3 shall be rounded up or down as the
case may be.
II.4 Valuation of Buyer's Shares. For all purposes of Sections 2.1 through
2.3, the Buyer's Shares shall be valued in accordance with the provisions of
this Section 2.4.
(a) The value of each of the Buyer's Shares in United States dollars
shall be the sum of the closing National Association of Securities Dealers
Automatic Quotation ("NASDAQ") bid price for the three (3) business days
prior to the Effective Date divided by three (the "Effective Date NASDAQ
Bid Price"). Provided that if for any Buyer's Shares the Effective Date
NASDAQ Bid Price is more than the average closing NASDAQ bid price for the
three (3) business days prior to the Alternative Value Date as defined
hereunder (the "Alternative NASDAQ Bid Price"), the value of each the
Buyer's Shares shall be the Alternative NASDAQ Bid Price.
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(b) The value of each of the Buyer's Shares as expressed in pounds
sterling shall be the United States dollar value as computed in accordance
with Section 2.4(a) converted into pounds sterling at an average closing
spot exchange rate:
(i) in the case of those Buyer's Shares issued pursuant to
Section 2.2(a) or 2.3(a), determined by dividing by three (3) the sum
of the closing spot exchange rates for the three (3) business days
prior to the Effective Date; and
(ii) in the case of any Buyer's Shares issued pursuant to Section
2.2(b) or 2.3(b), determined by dividing by three (3) the sum of the
closing spot exchange rates for the three (3) business days before the
Alternative Value Date.
(c) For purposes of this Section 2.4, the Alternative Value Date for
any Buyer's Shares shall be the later of:
(i) the date on which such Buyer's Shares are to be issued
pursuant to Section 2.2(b) or 2.3(b), whichever applies; or
(ii) the date on which registration of such Buyer's Shares is
completed pursuant to Article XII.
(d) The Effective Date NASDAQ Bid Price, the Alternative Bid Price,
and any exchange rates shall be as reported in the relevant issue of The
Wall Street Journal for which such information appears. All exchange rates
shall be those applicable to trading among banks in amounts of one million
United States dollars ($1,000,000) or more.
(e) Any increase in the number of Buyer's Shares arising from the
application of the other provisions of this Section 2.4 shall be made at
the earliest possible date after the Alternative Value Date and shall be
made by the issuance of such Buyer's Shares by the Buyer to the Sellers.
II.5 Operating Profit. For purposes of this Agreement, Operating Profit
shall mean the Company's profit or loss, for a twelve month financial year and
not to be an apportionment of a longer period, computed by its auditors in
accordance with generally accepted accounting principles and the Company's
accounting policies as reflected on its audited accounts for the two financial
years ended 30th June 1995 and 30th June 1996. Provided, however, that Operating
Profit for purposes of this Agreement shall consist of such amount computed:
(a) after deducting all reasonable management expenses including,
without limitation, reasonable directors' remuneration (whether by way of
fees, salary or commission) but excluding any management charges made by
the Buyer and any fees, salary, commission or costs incurred by Xxxxx
X'Xxxxxx or any of the Buyer's nominees which is not directly connected
with their actual management of or appointment as an executive director to
the board of directors of the Company;
(b) after accounting for depreciation;
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(c) before deducting any interest paid to any creditor of the Company
or any taxation on profits or on such interest;
(d) without taking into account profits or losses of a capital nature
arising on a disposal of fixed assets, investments, plant or any other
assets capitalized in the accounts of the Company; and
(e) after making such other adjustments as the Company's auditors
consider appropriate.
II.6 Dispute Resolution. If any Party disputes the Operating Profit as
computed by the Company's auditors, such Party shall so notify the other Parties
in writing ("Notice of Dispute") on or before the fourteenth (14th) day
following approval of the final audited accounts by the board of directors of
the Company, specifying in reasonable detail the points of disagreement. Upon
receipt of the Notice of Dispute, Sellers and Buyer shall promptly consult with
respect to such points of disagreement in an effort to resolve the dispute. If
any such dispute cannot be resolved by Buyer and Sellers within ten (10) days
after the Notice of Dispute, they shall refer the dispute to a mutually
agreeable chartered accountant ("Accountant") as a mediator. In the event the
Parties can not agree upon an Accountant within fifteen (15) days after the
Notice of Dispute, they shall apply to the President of the Institute of
Chartered Accountants in England and Wales to appoint such Accountant as he sees
fit. The Accountant, acting as expert not arbitrator, shall finally determine,
as soon as practicable, and in any event within thirty (30) days after such
reference, all points of disagreement with respect to Operating Profit. The
Accountant shall apply the terms of this Agreement and GAAP consistent with the
Financial Statements, and shall otherwise conduct the mediation under such
procedures as the parties may agree. The fees and expenses of the Accountant
incurred in connection with the mediation of Operating Profit shall be allocated
between the Parties by the Accountant in proportion to the extent either Party
did not prevail on items in dispute. All determinations by the Accountant shall
be final, conclusive and binding with respect to Operating Profit and the
allocation of fees and expenses.
II.7 Stamp Duty. Any stamp duty which may become payable as a result of any
transfer of the Sale Shares contemplated by this Agreement shall be payable by
the Buyer.
ARTICLE III
CONDITIONS AND RESCISSION
III.1 Conditions. The purchase of the Sale Shares and the other
transactions set forth herein are conditional upon the following (the
"Conditions"):
(a) the Buyer being satisfied that all corporate formalities required
under the Companies Xxx 0000, as amended, have been complied with; and
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(b) the Sellers having procured the termination of the Option
Agreements and Subscription Agreement without any party having any claim
against any other Party arising out of any such agreement.
If all of the Conditions are not fulfilled by 11th August 1997, this
Agreement shall cease to have effect and no Party shall have any claim under it
against any other Party, except for any prior breach.
III.2 Best Endeavours. Each of the Parties shall use its best endeavors to
ensure that this Agreement becomes unconditional by the date specified in
Section 3.1.
III.3 Buyer's Right to Rescind. The Buyer shall have the right to rescind
this Agreement by notice to the Sellers if prior to the Closing Date it appears
that any of the representations and warranties set out in Article V or elsewhere
in this Agreement (as modified by the Disclosure Schedule) (the "Warranties") is
not or was not true and accurate in all material respects or if any act or event
occurs which, had it occurred on or before the date of this Agreement, would
have constituted a breach of any of the Warranties or if there is any material
breach or nonfulfillment of any of the Warranties which (being capable of
remedy) is not remedied prior to the Closing Date. Any right of the Buyer to
rescind this Agreement pursuant to the specific provisions of this Section 3.3
shall be without prejudice to any other rights or claims which the Buyer might
have against any other Party for breach of this Agreement.
ARTICLE IV
CLOSING
IV.1 Closing Provided that it has not been rescinded in accordance with
Section 3.3, the consummation of the transactions contemplated herein
("Closing") shall take place at the offices of Xxxxx Xxxx LLP, 00 Xxxxx Xxxx'x
Xxxx, Xxxxxx XX0X 0XX on 7th August 1997, or such other date as agreed between
the Parties; provided however, that such date shall not be later than seven (7)
days after this Agreement has ceased to be conditional under Section 3.1 (the
"Closing Date") when, subject to Articles VII and VIII, all the transactions
mentioned in this Article IV shall take place. Notwithstanding the foregoing,
for purposes of allocating profits and/or losses of the Company to Buyer, the
date of the transaction shall be deemed to be the 1st day of May 1997.
IV.2 Deliveries of Sellers at Closing. Sellers shall deliver to Buyer:
(a) duly completed and signed share transfers in favor of Buyer
together with the relevant share certificates evidencing the Sale Shares;
(b) the resignations of Xxxxxxx-Xxxxx and Xxxxxx XxXxxx as directors
of the Company with a written acknowledgement from each person so resigning
executed as a deed in agreed form that he has no claim against the Company
in respect of breach of contract, compensation for loss of office,
redundancy or unfair dismissal or on any other grounds whatsoever except
only for accrued remuneration and reimbursable business expenses disclosed
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to Buyer and approved for payment by Buyer in writing on or before the
Closing Date;
(c) the statutory books of the Company complete and up-to-date and its
certificate of incorporation and common seal;
(d) appropriate forms to amend the mandates given by the Company to
its bankers; and
(e) written confirmation from the Sellers that other than the debts
reflected in the Disclosure Letter, as defined below, there are no
subsisting guarantees given by the Company in their favor and that none of
Sellers will be indebted to the Company or vice versa.
IV.3 Meetings. Meeting of the board of directors of the Company and of the
members of the Company shall be held at which:
(a) such persons as the Buyer may nominate shall be appointed
additional directors;
(b) the transfers referred to in Section 4.2(a) shall be approved
(subject to stamping);
(c) the resignations referred to in Section 4.2(b) shall be submitted
and accepted effective the end of such meeting;
(d) the accounting reference date of the Company is changed to 31st
December with the first accounting period to use the new reference date
being the period ending 31st December 1997; and
(e) such changes shall be made in the Company's articles of
association as the Buyer shall reasonably specify in advance of Closing.
IV.4 Deliveries of Buyer at Closing. Upon completion of the matters
referred to in Sections 4.2 and 4.3, the Buyer shall deliver to each of the
Sellers stock certificates respecting those Buyer's Shares to be issued to such
Seller pursuant to Sections 2.2(a) and 2.3(a).
IV.5 Cooperation by the Parties. Each Party shall reasonably cooperate, as
to matters under such Party's control, in the satisfaction of conditions to the
obligations of the Parties at Closing; provided, that the foregoing shall not
require any Party to waive any condition herein to its obligations at Closing or
to incur any substantial cost not otherwise required hereunder.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
V.1 True and Correct Warranties. Each of the Sellers represents and
warrants that each of the Warranties made by him, her or it and contained in
this Article V, except as expressly qualified herein or as set out in the
disclosure schedule attached as Exhibit 5 to this Agreement (the "Disclosure
Schedule"), is true and correct on the date hereof, and except as expressly
disclosed to the Buyer between the Effective Date and the Closing Date, shall be
true and correct on the Closing Date. In the event Sellers make any disclosure
between the Closing Date and the Effective Date which would be a breach of any
of the following Warranties if it were not made, Buyer shall have the right to
rescind the Agreement. The rights and remedies of the Buyer in respect of any
breach of the Warranties shall not be affected by Closing.
V.2 Enforceable Agreement. Each of the Sellers hereby represents and
warrants that he or she or it has the power and capacity to execute and deliver
this Agreement, to perform the obligations of Sellers and to consummate the
transactions contemplated hereby. Each of the Sellers agrees this Agreement
constitutes a valid and binding obligation enforceable against him her or it in
accordance with its terms.
V.3 Share Ownership. Each Seller hereby represents and warrants that as of
the Closing Date he, she or it will be the registered holder and beneficial
owner of such of the Sale Shares as are attributed to he, she or it in Section
1.1, except for MTI which represents it is onoly the beneficial owner of such
Sale Shares. Each Seller represents and warrants that his, hers or its shares
are owned free and clear of all security interests, pledges, liens or other
encumbrances, claims, and restrictions. Each Seller warrants that he, she or it
shall transfer or procure the transfer of good and marketable title to the Sale
Shares at Closing, free and clear of all security interests, pledges, liens or
other encumbrances, claims, and restrictions. As at Closing, each Seller
warrants that he, she or it will be entitled to transfer or procure the transfer
of the full legal and beneficial ownership of the Sale Shares to Buyer without
the consent of any other person.
V.4 Further Warranties. In addition to those representations and warranties
above, Xxxxxxx and Xxxxxx Xxxxx insofar as they are aware, and Xxxxx-Xxxxxxx,
Xxxxxxx-Xxxxx, Xxxxxxxxxx and Xxxxxx hereby make the following representations
and warranties to Buyer:
(a) Capitalization of the Company. The authorized capital of the
Company at Closing shall consist solely of three hundred fourteen thousand
Shares of ten xxxxx ((pound)0.10) each. The Sale Shares consist of two
hundred fifty one thousand and six (251,006) Shares of ten xxxxx
((pound)0.10) each. All of the Sale Shares will be duly authorized, validly
issued and fully paid. There are no other shares or other securities of the
Company which are outstanding or rights or options to acquire shares or
other securities of the Company other than the Continuing Option
Agreements. Other than the Continuing Option Agreements, neither the
Sellers nor the Company are subject to any obligation to issue, deliver,
redeem, sell, transfer or otherwise acquire or retire any Shares or any
other securities of the Company.
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(b) Corporate Existence and Qualification. The Company is duly
incorporated and validly existing under the laws of England and Wales with
all requisite corporate power and authority to carry on its business as it
is now being conducted and to own, operate and lease its properties and
assets.
(c) Financial Statements.
(i) Set forth at Exhibit 5.4(c) to this Agreement are (A)
the audited financial statements of the Company as of 30th June
for each of the years after 1993 and through 1996 and audited
statements of earnings, shareholders' equity and changes in
financial position or cash flow for the fiscal years then ended,
and all notes, reports, statements, documents and schedules
thereto, (B) the balance sheet of the Company as of 30th June
1996 ("Balance Sheet") and the related statements of earnings and
changes in financial position for the period then ended, together
with any notes or schedules thereto, ((A) and (B) together, the
"Financial Statements"). The Financial Statements, other than
where so indicated, have been audited by Xxxxxx Xxxxx,
independent registered auditors, and their unqualified opinion is
set forth at Exhibit 5.4(c).
(ii) The Financial Statements (A) present a true and fair
view of the Company's financial position and results of
operations at the dates and for the periods indicated, (B) will
not have been affected (except as stated therein) by any unusual
or nonrecurring items, (C) as of those dates will make full and
proper provision or reserve for all actual claims and
liabilities, contingencies where it is probable that a future
event will confirm a loss which can be estimated with reasonable
accuracy at the date on which the financial statements are
approved by the board of directors and for all bad and doubtful
debts, (D) make proper provision or reserve for all tax assessed
or liable to be assessed or for which the Company is accountable
including but not limited to deferred taxation, (E) comply with
the requirements of the Companies Acts and other relevant
statutes, and (F) have been prepared in accordance with generally
accepted accounting principles in the United Kingdom for
companies carrying on a similar business to that of the Company
which accounting principles have been consistently applied in the
preparation of each of the Financial Statements ("GAAP").
(d) Taxes.
(i) The Company timely has filed or caused to be filed with
the appropriate Government entity all tax returns, accounts,
reports and notices as reasonably requested or required to be
filed by or on behalf of the Company, including estimated tax and
informational returns ("Tax Returns") and no Tax Returns have
been amended. All Tax Returns are true, correct, and complete in
all respects. None of the Tax Returns currently is the subject of
any audit, administrative proceeding, judicial proceeding or
dispute.
(ii) All taxes (whether or not reflected in the Tax Returns
as filed) payable by the Company with respect to all periods
reflected on the Tax Returns have been fully paid, and there is
no liability and no grounds for the assertion or assessment of
any additional taxes against the Company or its assets with
respect to such periods. All taxes not yet due and payable are
properly accrued and specifically identified as such on the
Financial Statements and adequate reserves have been established
therefor.
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(iii) The Company has properly operated the Pay as You Earn
("PAYE") system and any other wage withholding system required by
any other jurisdiction, deducting tax as required by law from all
payments to or treated as made to or benefits provided for its
employees, ex-employees or independent contractors (including
payments within Income and Corporation Taxes Act, 1988, section
134) and has duly accounted to the Inland Revenue or such other
relevant tax authority for such taxes deducted.
(iv) The Company has complied in all respects with the
requirements and provisions of any applicable Value Added Tax
("VAT") legislation, and made and maintained up to the Closing
Date up-to-date records, invoices, accounts and other documents
required by or necessary for the purposes of the VAT legislation
and has at all times punctually paid and made all payments and
returns required under it.
(v) The Company is not liable to pay tax in any country
other than those countries listed in Exhibit 5.4(d). The Company
has performed all necessary acts in order to claim all of the
benefits of those double tax agreements to which it might be
entitled, including any and all filings and other communications
with the relevant tax authorities as might be required or
advisable.
(e) Litigation. Except as might be set forth in the Disclosure
Schedule:
(i) there is not now pending, any suit, claim, litigation,
proceeding (administrative, judicial, or in arbitration,
mediation or alternative dispute resolution), Government or grand
jury investigation, or other action (any of the foregoing,
"Action") pending or, to the knowledge of any of the Executive
Directors threatened against the Company or involving its
business, any of its property, or, in connection with its
business, any of its shareholders, directors, officers, agents,
or other personnel, including without limitation any Action
challenging, enjoining, or preventing this Agreement or the
consummation of the transactions contemplated hereby;
(ii) the Company is not now subject to any order, writ,
injunction, or decree of any court or other Government entity
("Order") other than Orders of general applicability; and
(iii) during the five years preceding the Effective Date,
neither the Sellers nor the Company has threatened or has been
threatened to be a party or subject to any Action or Order
relating to personal injury, death, or property or economic
damage arising from products of the Company.
(f) Employee Benefit Matters. Exhibit 5.4(f) sets forth a complete and
correct list of employees of the Company, their respective salaries, date
of commencement of employment, vacation entitlement, level of pension
contributions and company car entitlement. Complete and correct copies of
all employment, consulting, engagement or retainer agreements, if any, for
the provision of services to the Company have been made available to Buyer
in addition to all documents describing the amount, entitlement to and
rules governing any insurance, pension plan, sick pay, maternity leave and
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company car policy of the Company. Apart from the contributions to
independent pension plans described on the Disclosure Schedule, there are
no defined benefit pension plans, bonus schemes, profit sharing or
retirement or other similar benefit schemes operated by the Company and
there is no contracting out certificate in force for the Company. There are
no negotiations, demands or proposals which are pending or threatened or
which have been made since 30th June 1996 which concern matters now
covered, or that would be covered, by the foregoing types of agreement,
arrangement, plan, or policy.
(g) Governmental Approvals and Filings. Except as might be provided in
the Disclosure Schedule, neither the Sellers nor the Company is required to
obtain any approval, consent, or authorization of, or to make any
declaration or filing with, any Government for the valid execution and
delivery of this Agreement or any other agreement to be delivered
hereunder, the purchase and sale of the Sale Shares, or the performance or
consummation of the respective transactions contemplated hereby or thereby.
(h) Disclosure. Each Exhibit, the Disclosure Schedule and each
document attached as or on an Exhibit is true, correct, and complete. No
representation or warranty by Sellers in this Agreement or any Exhibit or
any agreement or certificate referred to in this Agreement contains or
except as expressly disclosed to the Buyer between the Effective Date and
the Closing Date, will contain as of the Closing Date any untrue statement
of a material fact or any omission of a material fact necessary to make the
respective statements contained herein or therein, in light of the
circumstances under which the statements were made, not misleading.
(i) Brokers, Finders. Except as might be provided in the Disclosure
Schedule, no finder, broker, agent, or other intermediary, acting on behalf
of Sellers or the Company, is entitled to a commission, fee, or other
compensation or obligation in connection with the negotiation or
consummation of this Agreement or any of the transactions contemplated
hereby.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to Sellers,
each of which is true and correct on the date hereof and each of which shall
survive the Closing:
VI.1 Corporate Existence and Authorization Buyer is a corporation, duly
organized, validly existing and in good standing under the laws of Missouri and
is duly qualified and in good standing in each foreign jurisdiction where the
nature of such qualification is required. Buyer has all requisite power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder, and to consummate the transactions contemplated hereby. This
Agreement constitutes a valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms.
VI.2 No Violation. Buyer is not subject to or obligated under any
certificate of incorporation, bylaw, Law, or any agreement or instrument, or any
license, franchise or permit, which would be breached or violated by its
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execution, delivery or performance of this Agreement. Buyer will comply with all
Laws in connection with its execution, delivery and performance of this
Agreement and the transactions contemplated hereby.
VI.3 Governmental Approvals and Filings. Buyer is not required to obtain
any approval, consent, or authorization of, or to make any declaration or filing
with, any Government for the valid execution and delivery of this Agreement or
any other agreement to be delivered hereunder, the purchase and sale of the Sale
Shares, or the performance or consummation of the respective transactions
contemplated hereby or thereby.
VI.4 Buyer's Shares. To the knowledge of Buyer there are no current
circumstances which will directly lead to the suspension of trading of Buyer's
Shares issued to Sellers on the public stock exchange or cause Sellers to be
unable to register or trade in such Buyer's Shares as are issued to them at the
time that they are issued.
ARTICLE VII
PERFORMANCE OF BUYER'S OBLIGATIONS
The obligations of Buyer at Closing shall be subject to the satisfaction at
Closing of each of the following (unless waived in writing by Buyer):
VII.1 Representations and Warranties. Sellers's representations and
warranties set forth in Article V and as modified or contained in the Disclosure
Schedule shall have been true and correct in all material respects when made and
shall be true and correct in all material respects on the Closing Date as though
such representations and warranties were made at and as of such date.
VII.2 Performance of Agreement. Each of the Sellers shall have fully
performed and complied with all covenants, conditions, and other obligations
under this Agreement to be performed or complied with by them at or prior to the
Closing.
VII.3 Approvals. All required consents and approvals from Governments and
under Contracts shall have been obtained and all waiting periods required by Law
shall have expired.
VII.4 No Adverse Proceeding. No action shall have been instituted and
remain pending before a grand jury or court or other Government entity:
(a) for the purpose of enjoining or preventing the consummation of
this Agreement or any of the transactions contemplated hereby; or
(b) which claims that this Agreement, such transactions, or their
consummation, is illegal.
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ARTICLE VIII
PERFORMANCE OF SELLERS' OBLIGATIONS
The obligations of Sellers at Closing shall be subject to the satisfaction
at the Closing of each of the following (unless waived in writing by Sellers):
VIII.1 Representations and Warranties. Buyer's representations and
warranties set forth in Article VI shall have been true and correct in all
respects when made and shall be true and correct in all respects on the Closing
Date as though such representations and warranties were made at and as of such
date.
VIII.2 Performance of Agreement. Buyer shall have fully performed and
complied with all covenants, conditions, and other obligations under this
Agreement to be performed or complied with by it at or prior to the Closing.
VIII.3 Approvals. All required consents and approvals from Governments and
under Contracts shall have been obtained and all waiting periods required by Law
shall have expired.
VIII.4 No Adverse Proceeding. No action shall have been instituted and
remain pending before a court or other Government entity:
(a) for the purpose of enjoining or preventing the consummation of
this Agreement or any of the transactions contemplated hereby; or
(b) which claims that this Agreement, such transactions, or their
consummation, is illegal.
ARTICLE IX
ADDITIONAL SHARES
IX.1 Right to Require Purchase. The Buyer hereby grants to each of Sellers
the right (the "Put Option") to require Buyer to purchase from such Seller those
Shares belonging to the Seller on the date of Closing which did not constitute
Sale Shares (the "Additional Shares"). Such purchase of Additional Shares by the
Buyer from each of the Sellers shall be made at the Option Price, as defined
below, shall be payable in Buyer's Shares, or in the event that Buyer's Shares
are no longer publicly traded, in cash and shall be made upon the other terms
and conditions set forth in this Article IX. For the exercise of a Put Option by
any of Sellers to be effective, such Put Option must include all of the
Additional Shares owned by such Seller on the date the Put Notice is issued.
IX.2 Time and Exercise of Put. Subject to the provisions of Section 9.7,
any of the Plan A or the Plan B Sellers may exercise a Put Option by written
notice to the Buyer (the "Put Notice") within sixty (60) days after the approval
by the Company's shareholders in annual general meeting of any of the Company's
audited financial accounts commencing with the first financial year ending on or
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after 31st December 2000 and any financial year thereafter up to the financial
year ending on 31st December 2005. Once given, a Put Notice may be withdrawn
only by the mutual consent of the Buyer and the Seller giving the Put Notice.
The Buyer shall complete the purchase of the Additional Shares subject to the
Put Notice at the Option Price within ninety (90) days following receipt of the
Put Notice.
IX.3 Plan A Option Price. The Option Price for any Additional Shares of any
of the Plan A Sellers which are subject to a Put Notice shall be equal to:
(a) a sum which shall consist of
(i) two (2) times the sum of the Operating Profit for the last
two (2) calendar years ending before the giving of the Put Notice,
(ii) multiplied by a ratio, the numerator of which will be the
number of Additional Shares held by the Plan A Seller submitting the
Put Notice, and the denominator of which will be the total number of
issued and outstanding shares of the Company at the date of such Put
Notice which sum shall be
(b) minus any dividends paid to such Seller which are treated as
having been made out of the Operating Profit making up part of the Option
Price calculation.
IX.4 Plan B Option Price. The Option Price for the Additional Shares of any
of the Plan B Sellers subject to a Put Notice shall be equal to:
(a) a sum which shall consist of
(i) two and one-half (2 1/2) times the sum of the Operating
Profit for the last two (2) calendar years ending before the giving of
the Put Notice,
(ii) multiplied by a ratio, the numerator of which will be the
number of Additional Shares held by the Plan B Seller submitting the
Put Notice, and the denominator of which will be the total number of
issued and outstanding shares of the Company at the date of such Put
Notice, which sum shall be
(b) minus any dividends paid to such Seller which are treated as
having been made out of the Operating Profit making up part of the Option
Price calculation.
IX.5 Valuation of Buyer's Shares. For purposes of Section 9.1, the Buyer's
Shares issued in exchange for the Additional Shares of any Seller shall be
valued by reference to the following information as reported in The Wall Street
Journal for the three days before the date of deemed service of such Seller's
Put Notice:
(a) the value of each of the Buyer's Shares in United States dollars
shall be the sum of the closing NASDAQ bid prices for the three days before
the date of deemed service of the Seller's Put Notice divided by three; and
(b) the value of each of the Buyer's Shares as expressed in pounds
sterling shall be the United States dollar value at Section 9.5(a)
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converted into pounds sterling by dividing by three (3) the sum of the
closing spot exchange rates for trading among banks in excess of one
million United States dollars ($1,000,000) or more, for the three (3)
business days prior to the date of deemed service of the Seller's Put
Notice.
IX.6 Buyer's Obligations. The Buyer shall use its best endeavors to procure
that the Company produces its audited financial accounts for any of the
financial years in respect of which a Put Option may be exercised as soon as is
reasonably practicable following the end of the relevant financial year and that
the annual general meeting at which those accounts are due to be presented is
convened as soon as is reasonably practicable thereafter.
IX.7 Sale of Interest in Company Notwithstanding the provisions of Section
9.2, if at any date the Buyer enters into a binding agreement to sell, directly
or indirectly, more than fifty percent (50%) of the Company's capital stock to a
third party unconnected with the Buyer, computed by reference to voting rights
or share equity ("Trigger Event"), the Buyer must give notice to Sellers holding
Additional Shares of the Trigger Event a minimum of thirty (30) days before
completion of any such sale agreement. Upon the occurrence of a Trigger Event,
Sellers holding Additional Shares and the Buyer shall have the following rights:
(a) Each of Sellers holding Additional Shares shall have the option to
participate, and the Buyer (subject to Section 9.7(b)) shall have the
option to require such Sellers to participate, in the contemplated sale by
further notice to each other within thirty (30) days after notice of the
Trigger Event and as follows:
(i) such Sellers shall sell the same proportion of Additional
Shares as are then owned by Sellers as the number of shares to be sold
by the Buyer bears to the total number of shares owned by the Buyer as
at that time; and
(ii) the sale of Additional Shares by Sellers otherwise shall be
on the same terms and conditions (including price) as apply to the
Buyer in respect of the contemplated sale.
(b) Notwithstanding the provisions of Section 9.7(a), the Buyer shall
have no right to require any of Sellers to participate in any contemplated
sale provided either:
(i) such Sellers elect to exercise their Put Option pursuant to
Section 9.1 and such election meets the requirements of Section 9.2 as
to the timing of such exercise; or
(ii) such Sellers elect by irrevocable notice to the Buyer within
forty five (45) days after notice of the Trigger Event to purchase
themselves those shares which the Buyer proposes to sell pursuant to
the contemplated sale provided such purchase is made on the same terms
and conditions (including price) as apply to such contemplated sale.
For the avoidance of doubt, in the event that the Buyer and each of Sellers
do not exercise their respective rights within the periods described in this
Section 9.7, the provisions of this Article IX shall lapse and will be of no
further effect with respect to any of Sellers or Buyer.
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XX.0 Xxxxxxxxxx. The exercise of a Put Option by any Seller shall
constitute such Seller's representation and warranty that it owns the Additional
Shares subject to such Put Option free and clear of all security interests,
claims and restrictions.
IX.9 No Assignment. Except as provided in Article X, the rights granted to
Sellers under this Article IX shall be non-assignable and non-transferrable to
any person (including but not limited to, any other Seller) unless Buyer gives
its prior written consent.
ARTICLE X
OWNERSHIP OF SALE SHARES AND ADDITIONAL SHARES
X.1 Absence of Beneficial Rights to Shares. Each of the Sellers agrees that
the Buyer shall be entitled to purchase any Sale Shares or Additional Shares
from the registered owner of such Shares as reflected in the register of members
of the Company on that date without regard to any claims of beneficial ownership
which any other Seller might have to such Shares. Each of the Sellers releases
and discharges the Buyer from any and all liabilities or claims (including
rights of rescission, if any) which any of them might have with respect to any
Sale Shares or Additional Shares purchased by the Buyer in accordance with this
Section 10.1.
X.2 Effect of Continuing Option Agreements on Exercise of Article IX
Rights. As of the date of this Agreement, Xxxxxx has the right to purchase four
thousand nine hundred forty eight (4,948) Additional Shares and Xxxxxxx has the
right to purchase eight hundred and five (805) Additional Shares from
Xxxxx-Xxxxxxx pursuant to the Continuing Option Agreements. If the Buyer has
received certified copies of the stock transfer forms duly executed by
Xxxxx-Xxxxxxx and which have been presented to the Company transferring some or
all of such Additional Shares to either or both of Xxxxxx and Xxxxxxx (and
provided such Additional Shares have not been the subject of any further
transfer) the Buyer and the transferee shall thereafter be entitled to treat the
transferee of such Additional Shares as the owner of such Shares for all
purposes of Article IX. If the Buyer has not received duly executed stock
transfer forms regarding the transfer of all of the Additional Shares subject to
the Continuing Option Agreement to Xxxxxx and Xxxxxxx, the Buyer shall be
entitled to treat Xxxxx-Xxxxxxx as the owner of those Shares not so transferred
for all purposes of Article IX and in such event:
(a) once either Xxxxx-Xxxxxxx or the Buyer has given the other notice
of the exercise of any option to purchase Additional Shares pursuant to
Article IX, Xxxxxx and Xxxxxxx shall thereafter not be entitled to exercise
any rights pursuant to the Continuing Option Agreements (whether or not
Xxxxxx and Xxxxxxx have received such notice). Xxxxx-Xxxxxxx shall not
thereafter execute any stock transfer forms in connection with the
purported exercise of any such rights, and the Buyer shall be entitled to
disregard any stock transfer form which is received after such notice; and
(b) Xxxxx-Xxxxxxx shall be entitled to exercise his Put Option for a
maximum of thirty thousand eight hundred thirty two (30,832) Additional
Shares at the Plan B Option Price and the sale of any other Additional
Shares then owned by Xxxxx-Xxxxxxx at that time shall take place at the
Plan A Option Price.
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ARTICLE XI
ADDITIONAL COVENANTS OF THE PARTIES
XI.1 Conduct of Business Before Closing. Until the Closing, the Sellers who
are directors of the Company shall:
(a) cause the Company to operate in the ordinary course of business;
and
(b) not take or permit the Company to take actions which would cause a
material adverse change in the business, financial condition, operations,
or prospects of the Company, or in the condition of the assets and
property, real and personal, tangible and intangible, of the Company (the
"Property"), including but not limited to the following actions:
(i) any declaration, setting aside, or payment of any dividend or
any distribution (in cash or in kind) to any shareholder of the
Company with respect to any of the Company's securities or any direct
or indirect redemption, purchase, or other acquisition by the Company
of any of its securities;
(ii) any increase in compensation or other remuneration payable
to or for the benefit of or committed to be paid to or for the benefit
of any shareholder, director, officer, agent, or employee of the
Company, or in any benefits granted under any plan with or for the
benefit of any such shareholder, director, officer, agent, or
employee;
(iii) any change made by the Company in its methods of doing
business or of accounting;
(iv) any grant by the Company of any mortgage, security interest,
or other encumbrance with respect to the Property;
(v) any purchase by the Company of capital assets unless such
purchase is in an amount under ten thousand pounds sterling
((pound)10,000);
(vi) any loan or advance made by the Company to any person or
entity; or
(vii) any binding commitment or agreement by the Sellers, or any
other director of the Company to do any of the foregoing items (i)
through (vi).
XI.2 Access to Records.
(a) Until the Closing, the Sellers who are directors of the Company
shall cause the Company to afford to authorized representatives of Buyer
reasonable access during normal business hours to all personnel, premises,
properties, books, records, and data of the Company. No such access or
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investigation, and no other investigation or discovery of facts by Buyer,
shall affect Buyer's right to recover for any breach of any Warranties of
Sellers hereunder.
(b) From and after the Closing, Buyer shall cause the Company to
afford to authorized representatives of Sellers reasonable access during
normal business hours to such records of the Company as the Sellers may
reasonably require to prosecute or defend any Government litigation or
investigation (including without limitation tax audits); provided that
Sellers shall reimburse Buyer for all expenses and costs incurred in
connection therewith.
XI.3 Confidentiality. No Party to this Agreement shall make any public
disclosure of the terms hereof or the transactions contemplated hereby without
the prior written consent of the other Parties, except as required by law. If
the Closing does not occur, Buyer, and if the Closing does occur, Sellers, shall
not disclose to any third person any confidential information relating to the
Company without the prior written consent of the other Parties.
XI.4 Further Assurances. From and after the Closing, the Parties shall do
such acts and execute such documents and instruments as may be reasonably
required to make effective the transactions contemplated hereby.
11.5 Bank Guarantee. Buyer shall use reasonable endeavors to procure that
Xxxxx-Xxxxxxx is released from the guarantee he has given in respect of the
Company's indebtedness to National Westminster plc.
11.6 Continuing Operations. The Parties agree that until 31st December
1997:
(a) the financial strategy of the Company shall be to maximise
Operating Profits;
(b) the Company shall be under the managerial control of those of the
Sellers who are directors of the Company who shall cause the Company to
operate in the ordinary course of business and who shall have full
managerial control of day to day and operational decisions and matters
including the following:
(i) the Company's expenses;
(ii) the employment and termination of employees and their terms
of remuneration (except for those of the employees who are directors);
(iii) the acceptance of new business and its pricing;
(iv) the production and delivery of the Company's goods and
services;
(v) the acceptance of any management or other charges from
persons who are not at arm's length for goods or services save to the
extent that such charges are added back to Operation Profit;
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(vi) any material change in the nature of the Company's business
as agreed with Buyer;
(vii) any capital transactions or sale of intellectual property
rights; provided however, that any sale of intellectual property
rights shall be made with both Buyer's and Sellers' consent and that
no capital transactions exceeding ten thousand pounds sterling
((pound)10,000) shall take place without the Buyer's consent.
(c) unless the Sellers consent, until the presentation of the audited
accounts for the period ending 31st December 1997 to the shareholders of
the Company in annual general meeting, the auditors of the Company shall be
and remain Xxxxxx Xxxxx; and
(d) any consent required to be given by the Sellers under this Section
11.6 shall be deemed given if Sellers holding 75% or more of the Sale
Shares give such consent in writing.
ARTICLE XII
SHARES AND REGISTRATION RIGHTS
XII.1 Restrictions and Registration Statement. Buyer's Shares shall be
restricted and subject to all transfer restrictions imposed by applicable
federal and state securities laws. Buyer shall have the right to affix the
legend described in Schedule 12.1 on all certificates for Buyer's Shares. Buyer
will include Buyer's Shares at that time issued and outstanding in any
registration statement or statements filed with the Securities and Exchange
Commission ("SEC") by Buyer from and after the Closing, provided that Buyer will
use all reasonable efforts to include the Buyer's Shares in such a registration
statement submitted to the SEC within ninety (90) days of the Closing Date or in
the case of payments under Sections 2.2(b) or 2.3(b), one hundred and twenty
(120) days after the issuance of the Buyer's Shares. Buyer will use reasonable
efforts to answer in a timely fashion any inquiries by the SEC in the interest
of completing the registration of the Buyer's Shares. Buyer shall advise the
Sellers as to the approval of any such statements.
XII.2 Costs. Buyer shall bear all of the cost, fees and expenses involved
in the preparation and filing of the statements and documents described in
Section 12.1 above; provided, however, that any Seller shall pay his
proportionate share of all transfer taxes and brokerage commissions which are
incurred as a result of the sale of any of Buyer's Shares by such Seller.
XII.3 Indemnification. In connection with any registration statement in
which Seller is participating, Seller shall furnish to Buyer in writing such
information and affidavits as Buyer reasonably requests for use in connection
with any such registration statement or prospectus and, to the extent permitted
by law, shall indemnify Buyer, its directors and officers against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
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stated therein or necessary to make the statements therein not misleading, but
only to the extent such untrue statement or omission is contained in any
information or affidavit so furnished in writing by Seller.
XII.4 Miscellaneous.
(a) No Inconsistent Agreements. Buyer shall not hereafter enter into
any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the Sellers in this Agreement.
(b) Adjustments Affecting Shares. Buyer shall not take any action, or
permit any change to occur, with respect to its securities which would
adversely affect the ability of the Sellers to include such Buyer's Shares
in a registration undertaken pursuant to this Agreement or which would
adversely affect the marketability of such shares in any such registration
(including, without limitation, effecting a stock split or a combination of
such shares).
ARTICLE XIII
RESTRICTIVE AGREEMENT
For the purpose of assuring to the Buyer the full benefit of the businesses
and goodwill of the Company, by way of further consideration for the obligations
of the Buyer under this agreement, and as separate and independent agreements
each of the Sellers undertake that for three (3) years after Closing, absent
prior written consent of the Buyer he will not, either on its or his own account
or for any other person directly or indirectly solicit away from, interfere with
or endeavor to entice away from the Company any person who to its or his
knowledge is, or has during the past one (1) year been, a client, customer or
employee of, or in the habit of dealing with, the Company.
ARTICLE XIV
DAMAGES
XIV.1 Survival. The respective representations and warranties made by the
Parties in Articles V and VI shall survive the Closing Date but shall expire
three years from the Closing Date unless a claim with respect thereto shall have
been made prior to such date against the Party or Parties responsible for making
such representation or warranty and thereby responsible for damages hereunder
(the "Indemnifying Party"); provided, that the foregoing shall not apply to
representations and warranties under Sections 5.1, 5.2, 5.3, 5.4(a), (b), (d)
and the first sentence of 9.8, which shall survive for a period of six years
from the Closing Date.
XIV.2 Notice of Claim. In the event that a Party seeks damages on behalf of
itself, its permitted assigns, agents, and in the case of the Buyer its
shareholders, directors, officers, successors or the Company, such Party seeking
damages (the "Indemnified Party") shall give written notice to the Indemnifying
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Party specifying in reasonable detail the facts constituting the basis for such
claim and the amount, to the extent known, of the claim asserted. The
Indemnifying Party shall pay the amount of any valid claim not more than ten
(10) days after the Indemnified Party provides notice to the Indemnifying Party
of such amount.
XIV.3 Limitations on Liability. The relevant Indemnifying Parties shall
have no liability (or such liability shall be reduced) in respect of any claim
as follows:
(a) where the matter or matters giving rise to such claim and the
amount of such claim are fairly and specifically disclosed in the
Disclosure Schedule;
(b) where the amount of such claim does not exceed fifteen thousand
pounds sterling ((pound)15,000) (or its equivalent in local currency)
(provided that where any claim exceeds fifteen thousand pounds sterling
((pound)15,000) the Indemnifying Parties shall be liable for the full
amount of such claim and not simply the excess);
(c) where provision or reserve for or in respect of the liability or
other matter giving rise to such claim has been made in the Financial
Statements, but only up to the amount specifically reserved for in the
Financial Statements;
(d) where any claim occurs or is increased as a result of any change
in legislation after the date of this Agreement (or any legislation not in
force at the date of this Agreement) which take effect retrospectively or
the withdrawal after the date of this Agreement of any published concession
or published general practice previously made by the Inland Revenue or
other taxing authority;
(e) where any claim occurs or is increased as a result of any increase
in the rate of taxation in force at the date of this Agreement;
(f) where any breach of the Warranties occurs as a result of or is
otherwise attributable to the Indemnified Party disclaiming any part of the
benefit of capital or other allowances against taxation claimed or proposed
to be claimed on or before the date of this Agreement;
(g) where the aggregate of all claims against any individual Seller
exceeds the amount that Seller received from Buyer in consideration for the
purchase of that Seller's Sale Shares under Articles II and IV, that Seller
shall not be responsible for payment to Buyer of any amount exceeding the
amount of consideration received by that Seller;
(h) where a claim is attributable to any voluntary act or omission of
or transaction or arrangement carried out by the Indemnified Party after
the Closing Date otherwise than in the ordinary course of business and
without prejudice to the generality of the foregoing the following shall
not be regarded as being within the ordinary course of business of the
Company for the purpose of this Agreement:
(i) any taxes arising under Part XVII Income and Corporation
Taxes Act 1988 (Tax Avoidance);
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(ii) any taxes arising in connection with any distribution (as
defined in Part VI Income and Corporation Taxes Act 1988) or any
deemed distribution;
(iii) any taxes arising in respect of the acquisition disposal or
supply of any assets, goods, services or business facilities for a
consideration deemed for taxation purposes to be in excess of that
actually given or received; or
(iv) any disposal or deemed disposal of chargeable assets.
(i) where a claim would not have arisen or would have been reduced or
eliminated but for the failure or omission on the part of the Indemnified
Party to make any claim, election surrender or disclaimer or give notice or
consent or do any other thing under the provisions of any enactment or
regulation relating to taxation after the Closing Date the making, giving
or doing of which was taken into account in computing the provision for
taxation in the Financial Statements;
(j) where a claim relates to a liability for taxation which would not
have arisen but for any winding up or cessation after the Closing Date of
any trade or business carried on by any Indemnified Party;
(k) where any claim would not have arisen but for a change of
accounting policy or practice of any Indemnified Party after the Closing
Date;
(l) where the amount of a claim shall cause a relief from taxation
arising by virtue of the loss or damage in respect of which the claim was
made, provided however, that any liability so reduced shall then be
increased by any amount of taxation attributable to receipt of the
indemnity payment;
(m) to the extent that that liability for taxes has been made good by
insurers or otherwise compensated for without cost to any Indemnified
Party; or
(n) to the extent that any income, profits or gains to which that
liability for taxes is attributable were actually earned or received by or
actually accrued to the Company but were not reflected in the Financial
Statements.
XIV.4 Right to Contest Claims of Third Persons. If an Indemnified Party is
entitled to damages hereunder because of a claim asserted by any claimant (other
than an Indemnified Party hereunder) ("Third Person"), the Indemnified Party
shall give the Indemnifying Party reasonably prompt notice thereof after such
assertion is actually known to the Indemnified Party; provided, however, that
the right of a person to be indemnified hereunder in respect of claims made by a
Third Person shall not be adversely affected by a failure to give such notice
unless, and then only to the extent that, an Indemnifying Party is prejudiced
thereby. The Indemnifying Party shall have the right, upon written notice to the
Indemnified Party, and using counsel reasonably satisfactory to the Indemnified
Party, to investigate, secure, contest, or settle the claim alleged by such
Third Person (a "Third-Person Claim"), provided that the Indemnifying Party has
unconditionally acknowledged to the Indemnified Party in writing his or its
obligation to indemnify the persons to be indemnified hereunder with respect to
such Third-Person Claim; the Indemnified Party may thereafter participate in
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(but not control) the defense of any such Third-Person Claim with its own
counsel at its own expense, unless separate representation is necessary to avoid
a conflict of interest, in which case such representation shall be at the
expense of the Indemnifying Party. Unless and until the Indemnifying Party so
acknowledges his or its obligation to indemnify, the Indemnified Party shall
have the right, at its option, to assume and control defense of the matter and
to look to the Indemnifying Party for the full amount of the costs of defense.
The failure of the Indemnifying Party to respond in writing to the aforesaid
notice of the Indemnified Party with respect to such Third-Person Claim within
twenty (20) days after receipt thereof shall be deemed an election not to defend
the same. If the Indemnifying Party does not so acknowledge his or its
obligation to indemnity and assume the defense of any such Third-Person Claim:
(a) the Indemnified Party may defend against such claim, in such
manner as it may deem appropriate, including, but not limited to, settling
such claim, after giving notice of the same to the Indemnifying Party, on
such terms as the Indemnified Party may deem appropriate; and
(b) the Indemnifying Party may participate in (but not control) the
defense of such action, with its own counsel at its own expense.
If the Indemnifying Party thereafter seeks to question the manner in which
the Indemnified Party defended such Third-Person Claim or the amount or nature
of any such settlement, the Indemnifying Party shall have the burden to prove by
clear and convincing evidence that conduct of the Indemnified Party in the
defense and/or settlement of such Third-Person Claim constituted gross
negligence or wilful misconduct. The Parties shall make available to each other
all relevant information in their possession relating to any such Third-Person
Claim and shall cooperate in the defense thereof.
XIV.5 Access to Records. The Indemnified Party shall provide to the
Indemnifying Party and the Indemnifying Party's professional advisers reasonable
access to premises and personnel and to any relevant assets, documents and
records within their power, possession or control for the purpose of
investigating the Third-Person Claim and enabling the Indemnifying Party to take
such action as referred to in Section 14.7 above and shall allow the
Indemnifying Party and its advisers to take copies of any relevant documents or
records.
XIV.6 Reduction in Purchase Price. Any amount payable by the Sellers to an
Indemnified Party in satisfaction of any claim made under the Warranties shall
be treated as a reduction in the amount of the purchase price paid to the Seller
concerned.
XIV.7 Over Provisions and Corresponding Benefits. If the Company's auditors
shall certify (at the request and expense of a majority of the holders of the
Sale Shares) that any provision for taxation in the Financial Statements
(excluding any provision for deferred taxation) has proved to be an over
provision or that a liability for taxes which has resulted in a payment being
made by the Sellers or for breach of any Warranty has given rise to a relief
from taxes which would not otherwise have arisen and a liability of the Company
or the Buyer to make an actual payment of taxes has been satisfied, avoided or
reduced by the use of that relief, then:
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(a) the amount of such over provision or amount of tax saved shall be
set off against any payment then due from the Sellers; and
(b) to the extent that there is an excess, a refund shall be made to
the Sellers of any previous payment or payments for breach of the
Warranties made by them under this Agreement and not previously refunded
under this Section 14.7 up to the amount of such excess; and
(c) to the extent that the excess referred to in part (b) above is not
exhausted, the remainder of any excess shall be carried forward and set off
against any future payment or payments for breach of the Warranties which
may become due from the Sellers under this Agreement.
XIV.8 Buyer acknowledges that it has not been induced to enter into this
Agreement by any representation or warranty, other than the Warranties:
(a) made by any Seller, other than Xxxxx-Xxxxxxx, Xxxxxxx-Xxxxx,
Xxxxxxxxxx and Xxxxxx;
(b) relating to any projections, future event or any other matter
other than the present or historic position of the Company.
XIV.9 Xxxxx-Xxxxxxx, Xxxxxxx-Xxxxx, Xxxxxxxxxx and Xxxxxx shall not be
liable for any misrepresentation relating to the subject matter of this
Agreement:
(a) to the extent that any loss suffered by the Buyer exceeds the
amount that the Seller concerned has received for the purchase of that
Seller's shares under Article II;
(b) to the extent Buyer receives compensation for a claim under the
Warranties in relation to the subject matter of that misrepresentation.
Nothing in this Agreement is intended to limit the Buyer's ability to make
any claims for or be compensated for any fraudulent misrepresentations.
ARTICLE XV
MISCELLANEOUS PROVISIONS
XV.1 Notices
(a) Any notice or other communication required or permitted to be
given under this Agreement shall be in writing in the English language and
delivered personally or sent by first class mail (postage prepaid) or
facsimile transmission and any notice so posted shall be deemed to have
been received in the ordinary course of post, and any notice sent by
facsimile shall be deemed to have been given twenty four (24) hours after
transmission.
(b) Notices under this Agreement shall be sent to the following
addresses:
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If to Buyer:
Applied Cellular Technology, Inc.
X.X. Xxx 0000
Xxxxx Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxx 0
Xxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxx, Chairman
Telecopier No. 417/779-5895
With a copy to:
Xxxxxxxxx Sale III
Xxxxx Xxxx LLP
One Metropolitan Square
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Telecopier No. 314/259-2020
If to Sellers:
Xxxxx Xxxxx Xxxxx-Xxxxxxx
Xxxxxxx Xxxxx,
Xxxxxxx Xxxx,
Xxxxxxxxx XX0 0XX
Telecopier No. 44-1223-311-066
Else Xxxxxxx-Xxxxx
Xxxxxxx Xxxxx,
Xxxxxxx Xxxx,
Xxxxxxxxx, XX0 0XX
Telecopier No. 44-1223-311-066
Xxxxxxxx Xxx Xxxxxx Xxxxx
00 Xxxxxxxxx Xxxxxx,
Xxxxxxxxx XX0 0XX
Xxxxx Xxxx Xxxxx
00 Xxxxxxxxx Xxxxxx,
Xxxxxxxxx XX0 0XX
Xxxx Xxxxxx Xxxxxx
0 Xxxxxxxx Xxxx,
Xxxxxxxxxx Xxxx,
Xxxxxxxxxx XX00 0XX
-00-
Xxxxxxx Xxxxxxxx Xxxxxx
00 Xxxx Xxxxx Xxxxxx,
Xxxxxxx,
Xxxxxxxxxxxx XX0 0XX
MTI Managers Ltd.
Xxxxxxx Xxxxx,
00 Xxxxxxx Xxxx
Xxxxxxx
Xxxxx XX0 0XX
Telecopier No. 44-1923-247-783
Xxxxxxxx Xxxx Xxxxxx
000 Xxxxxxx Xxxx,
Xxxxxxxxx XX0 0XX
Telecopier No. 44-1223-321-450
Xxxxx Xxxxxx Xxxxxxx
00 Xxxxxx Xxxx,
Xxxx,
Xxxxxxxxxxxxxx XX0 0XX
Xxxxxx Xxxxxx
0000 Xxxxxx Xxxxx,
Xxxxxxxx,
Xxxxxxxx 00000
Xxxxxx Xxxxxxx Xxxxxxxxxx
00 Xxxxxxx Xxxx,
Xxxxxxx Xxxxx,
Xxxxxxxxxxxxxx XX00 0XX
Telecopier No. 44-1684-893-041
XV.2 Entire Agreement. This Agreement and the Exhibits and documents
specifically mentioned herein embody the entire agreement and understanding of
the Parties with respect to the subject matter hereof, and supersede all prior
and contemporaneous agreements and understandings relative to such subject
matter.
XV.3 Assignment; Binding Agreement. This Agreement and the various rights
and obligations arising hereunder shall inure to the benefit of and be binding
upon Buyer, its successors, and permitted assigns, and the Sellers and their
legal representatives, successors, and permitted assigns. Neither this Agreement
nor any of the rights, interests, or obligations hereunder shall be transferred,
delegated, or assigned (by operation of law or otherwise) by any of the Parties
hereto without the prior written consent of the other Parties (which consent
shall not be unreasonably withheld), except that Buyer shall have the right to
transfer and assign its rights hereunder to purchase the Sale Shares and any
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other rights or benefits afforded to it by this Agreement to any entity which at
the time of such transfer and assignment is controlled by Buyer.
XV.4 Counterparts. This Agreement may be executed simultaneously in
multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
XV.5 Headings; Interpretation. The article and section headings contained
in this Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of the Agreement. Each reference in this
Agreement to an Article, Section or Exhibit, unless otherwise indicated, shall
mean an Article or a Section of this Agreement or an Exhibit attached to this
Agreement, respectively. References herein to "days", unless otherwise
indicated, are to consecutive calendar days. All of the Parties have
participated substantially in the negotiation and drafting of this Agreement and
agree that no ambiguity herein should be construed against the draftsman.
XV.6 Expenses. Sellers (and not the Company) shall pay all costs and
expenses incurred on behalf of themselves or the Company in connection with the
negotiation, preparation and execution of this Agreement and the consummation of
the transactions contemplated hereby, including, without limitation, fees and
expenses of advisors, brokers, attorneys and accountants; provided however, that
Sellers may before the Closing Date cause the Company to pay miscellaneous
expenses, which do not include any expenses mentioned above, up to a limit of
,5,000 or which have been specifically approved by Buyer in writing. Buyer shall
pay the fees of Xxxxx Xxxx LLP and its accountants incurred by it in connection
with the transactions contemplated by this Agreement.
XV.7 Termination of the Agreement. This Agreement may be terminated by a
Party hereto without further liability or obligation if:
(a) such Party is not in breach or violation hereof; and
(b) the conditions to such Party's obligations at Closing have not
been satisfied by 11th August 1997.
XV.8 Remedies Cumulative. All rights and remedies of the Parties under this
Agreement are cumulative and without prejudice to any other rights or remedies
under Law.
XV.9 Governing Law. This Agreement shall in all respects be construed in
accordance with and governed by the substantive laws of England, without
reference to its choice of law rules. The Parties submit to the non-exclusive
jurisdiction of the English courts.
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IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to
be executed as of the date first above written.
XXXXX XXXXX XXXXX-XXXXXXX
ELSE XXXXXXX-XXXXX
XXXXXXXX JAN XXXXXX XXXXX
XXXXX XXXX XXXXX
XXXX XXXXXX XXXXXX
XXXXXXX XXXXXXXX XXXXXX
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MANAGED TECHNOLOGY INVESTORS BY ITS GENERAL PARTNER, MTI MANAGERS LTD.
By: Xxxx Xxxxxx
Title: Chief Executive
XXXXXXXX XXXX XXXXXX
XXXXX XXXXXX XXXXXXX
XXXXXX XXXXXXX XXXXXXXXXX
XXXXXX XXXXXX
"Sellers"
APPLIED CELLULAR TECHNOLOGY, INC.
By: Xxxxxxx Xxxxxxxx
Title: President
"Buyer"
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