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AGREEMENT OF SALE
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AGREEMENT OF SALE
This Agreement is entered into this 24th day of March, 1997 by and between
Applied Cellular Technology, Inc. ("ACT"), a Missouri corporation, acting by
and through its subsidiary, Universal Commodities Corporation, a New Jersey
corporation ("Buyer"), Xxxxx X. Xxxxxxx (hereinafter referred to as "Seller")
and Xxxxxxx Re-Marketing, Inc., a Texas corporation ("Acquiree").
WHEREAS, Xxxxx X. Xxxxxxx owns one thousand (1,000) shares, $1.00 par value
(the "Acquiree Shares"), of the issued and outstanding common stock of
Acquiree (representing one hundred percent (100%) of the currently issued and
outstanding common stock of Acquiree);
WHEREAS, Seller desires to sell and Buyer desires to acquire eighty percent
(80%) of the Acquiree's shares (the "Sales 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
1.1 Seller shall sell to Buyer and Buyer shall purchase from Seller
the Sale Shares at a closing of such sale (the "Closing") to be held at the
place and on the date hereinafter provided (the "Closing Date").
1.2 The purchase price (the "Price") for the Sale Shares shall be the
amount of shares of restricted common stock of ACT, Buyer's parent
corporation, with demand registration rights, such shares having a value of
nine hundred sixty thousand dollars ($960,000.00) (for eighty percent (80%)
of the Acquiree's shares) based upon the value of ACT shares which is equal
to the lesser of: (i) four and 75/100ths dollars ($4.75) per share; or (ii)
the market value of the ACT shares as reflected on the NASDAQ bid price
published in "The Wall Street Journal" two (2) days prior to the Closing Date
("Valuation Price").
a. At the Closing, Seller shall receive one hundred sixty-two
thousand seven hundred fifty-four (162,754) shares of restricted common stock
of ACT with demand registration rights which has a value of seven hundred
sixty-eight thousand dollars ($768,000.00) as determined above; and
b. Upon the first anniversary of the date of this Agreement,
Seller shall receive such amount of shares of restricted common stock with
demand registration rights of ACT (which are subject to the registration
rights pursuant to Section 10 hereof) which have a value of one hundred
ninety-two thousand dollars ($192,000.00) as determined above based on the
average closing bid price for such shares on the Closing Date, plus five
percent (5%) interest on such amount accruing from the Closing Date until the
first anniversary of this Agreement, only if Acquiree's financial statements
reflect that Acquiree has earnings before income tax ("EBIT") equal to at
least three hundred thousand dollars ($300,000.00) for such period. If, upon
such first anniversary of the date of this Agreement, EBIT of Acquiree is
less than three hundred thousand dollars ($300,000.00), Buyer shall not be
obligated to pay Seller pursuant to this Section 1.2(b). Any earnings
attributable to entities obtained through acquisitions made by Acquiree or by
Buyer on behalf of or for the benefit of Acquiree between the date of this
Agreement and the first anniversary of such date shall be used to calculate
the EBIT of Acquiree for purposes of this Section 1.2(b). Intercompany
charges or management fees (except reasonable charges for working capital
infusions) shall not be factored into the calculation of EBIT of Acquiree for
purposes of this Section 1.2(b).
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c. Buyer, in conjunction with ACT, agrees that it will prepare
and file with the Securities and Exchange Commission (the "Commission") a
registration statement with respect to the one hundred ninety thousand eight
hundred thirty-three (190,833) shares of ACT's common stock issuable to
Seller pursuant to Sections 1.2(a) and 1.4 hereof (the "Registration
Statement"). Buyer shall use its reasonable efforts to cause the
Registration Statement to become effective within nine (9) months after the
date of this Agreement. Buyer, in conjunction with ACT, 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").
d. Buyer and ACT shall use their reasonable efforts to cause
all securities registered pursuant to the Registration Statement and Section
10 hereof to be listed on the NASDAQ National Market System.
e. In the event of the issuance of any stop order suspending
the effectiveness of the Registration Statement, or any order suspending or
preventing the use of any related prospectus or suspending the qualification
of any common stock included in the Registration Statement, the Buyer will
use its reasonable best efforts to require ACT to promptly obtain the
withdrawal of such order.
f. Buyer shall bear all costs, fees and expenses involved in
the preparation and filing of Registration Statement by ACT, including,
without limitation, accounting and auditing fees and expenses, expenses in
connection with the state qualifications specified above, filing fees, legal
counsel fees and expenses and printing expenses. Seller, however, shall pay
all applicable transfer taxes and brokerage commissions as a result of any
sale by Seller.
g. In the event that any of the shares of common stock of
Buyer and ACT delivered hereunder are issued by means of the Registration
Statement, Buyer agrees to indemnify and hold harmless Seller and her heirs,
executors, representatives and assigns (an "Indemnified Person") from and
against any and all claims, demands, actions, causes of action, losses,
costs, damages, liabilities and expenses, including, without limitation,
reasonable legal fees (hereinafter referred to in the singular as a "claim"
and in the plural as "claims") based upon, arising out of or resulting from
any untrue statement of a material fact contained in the Registration
Statement or any failure to state therein a material fact necessary in order
to make the statements made therein, in light of the circumstances under
which they were made, not misleading, except insofar as such claim is based
upon, arises out of or results from information furnished to Buyer in writing
by Seller for use in connection with the Registration Statement. Also, in
that connection, Seller agrees to indemnify and hold harmless Buyer and ACT,
jointly and severally, each of their officers and directors (Buyer and ACT,
their 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 Seller for use in
connection with the Registration Statement. The indemnification set forth
herein shall be in addition to any liability which Buyer or Seller,
respectively, may otherwise have to the Indemnified Person.
h. Within five (5) days after receiving written notice of any
claim in respect of which an Indemnified Person may seek indemnification
under subsection 1.2(g) above, such Indemnified Person shall submit notice
thereof to Buyer or Seller, as the case may be (sometimes referred to as an
"Indemnifying Person"). The omission of the Indemnified Person so to notify
the Indemnifying Person of any such claim shall not relieve the Indemnifying
Person from any liability
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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.
i. In the event that Buyer is unable to complete the
Registration Statement within nine (9) months of the hereinabove date, Seller
may, at her sole option, require Buyer to convey back to Seller her shares in
Xxxxxxx Re-Marketing in exchange for the shares in Buyer.
1.3 At the Closing Date, Seller will deliver a certificate
representing the Sale Shares duly endorsed so as to make Buyer the sole
holder thereof, free and clear of all claims and encumbrances. The Sale
Shares are not registered under the Securities Act of 1933 as amended (the
"Act"). The Sale Shares will be subject to a usual and appropriate stop
transfer order on the books and records of Acquiree's transfer agent
pertaining to securities not registered under the Act. The certificate for
the Sale Shares delivered shall bear on its face the following restrictive
legend:
"No sale, offer to sell or transfer of the shares represented by this
certificate shall be made unless a registration statement under the
Securities Act of 1993, as amended, with respect to such shares is
then in effect or an exemption from the registration requirements of
such Act is then, in fact, applicable to such shares".
1.4 In addition to the above, Seller shall receive twenty-eight
thousand seventy-nine (28,079) shares of restricted common stock of ACT with
demand registration rights which has a value of one hundred thirty-two
thousand five hundred dollars ($132,500.00) at Closing. The market value of
these shares shall be determined in accordance with paragraph 1.2(a). These
additional shares are to be conveyed to Seller as payment for retained
earnings of like amount.
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2. PUT OPTION
a. The Buyer hereby grants to Seller a put option (the "Put") for
the consideration of ten dollars ($10.00) to require the Buyer to purchase
the remaining issued and outstanding Acquiree Shares (representing twenty
percent (20%) of the currently outstanding common shares). The Seller may
Put back to Buyer, at any time after the fifth anniversary of this Agreement,
by providing notice to Buyer of such exercise. The Buyer shall hold an
anti-dilutive position. Anti-dilutive shall mean in any future capitalization
by the holder of eighty percent (80%) of the outstanding shares, the holder of
the remaining twenty percent (20%) shall not suffer dilution in any form.
Within forty-five (45) days after Seller exercises the Put, Buyer
shall purchase the remaining twenty percent (20%) of the Acquired Shares for
a purchase price equal to four (4) times twenty percent (20%) of the average
EBIT of the Acquiree based upon the blended average. The EBIT in the year of
the Put and the EBIT in prior year combined shall equal the blended average
(the "Put Price"). Notwithstanding the preceding sentence to the contrary,
minimum value of the Put shall be two hundred forty thousand dollars
($240,000.00). The Put Price shall be payable to Seller, at the election of
Buyer, in its sole discretion, in cash and/or shares of restricted common
stock of ACT which shall be subject to the registration rights set forth in
Section 10 hereof. Buyer shall use its best efforts to register such shares
within a reasonable period of time after the exercise of the Put.
b. After the Closing Date, Buyer shall operate Acquiree as a
wholly-owned subsidiary and any earnings attributable to entities obtained
through acquisitions made by Acquiree or by Buyer on behalf of or for the
benefit of Acquiree after the Closing Date shall be used to calculate the EBIT
of Acquiree for purposes of calculating the Put Price. Intercompany charges or
management fees (except reasonable charges for working capital infusions)
shall not be factored into the calculation of EBIT of Acquiree for purposes
of calculating the Put Price.
3. LOAN GUARANTEES
Xxxxx X. Xxxxxxx and Xxxx Xxxxxxx III have personally guaranteed
certain loans, the terms of which have been previously disclosed to Buyer
(see Disclosure Schedule). Buyer hereby agrees to use reasonable efforts to
have said guarantees released. If the appropriate lending institutions do
not agree to release any or all of the personal guarantees, Buyer hereby
agrees to indemnify Xxxxx X. Xxxxxxx and Xxxx Xxxxxxx III in the event of a
default on any of the obligations created by the loans.
3.1 Buyer agrees to indemnify and hold harmless Xxxxx X. Xxxxxxx and
Xxxx Xxxxxxx III and their heirs, executors, representatives and assigns (an
"Indemnified Person") from and against any and all claims, demands, actions,
causes of action, losses, costs, damages, liabilities and expenses,
including, without limitation, reasonable legal fees (hereinafter referred to
in the singular as a "claim" and in the plural as "claims") based upon,
arising out of or resulting from any default of the certain loans. The
indemnification set forth herein shall be in addition to any liability which
Buyer may otherwise have to the Indemnified Person.
3.2 Within five (5) days after receiving written notice of any claim
in respect of which an Indemnified Person may seek indemnification under
Subsection 3.1 above, such Indemnified Person shall submit notice thereof to
Buyer or Seller, as the case may be (sometimes referred to as an
"Indemnifying Person"). The failure of the Indemnified Person so to notify
the Indemnifying Person of any such claim shall not relieve the Indemnifying
Person from any liability it may have hereunder except to the extent that (i)
such liability was caused or increased by such omission, or (ii) the ability
of the Indemnifying Person to reduce such liability was adversely affected by
such omission. The Indemnified Person and the Indemnifying Person shall
cooperate with, and assist, one another in the defense of any claim and any
action, suit or proceeding arising in connection
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therewith; provided, however, that the Indemnifying Person shall have the right
to investigate and defend any claim as the Indemnified Person shall have the
right to employ separate counsel and to participate in the defense of any
claim, but the fees and expenses of such counsel shall not be at the expense of
the Indemnifying Person. No settlement of any claim for indemnification under
this Section 3 shall be made without the consent of the Indemnifying Person.
4. REPRESENTATIONS OF SELLER AND ACQUIREE
Seller hereby represents and warrants, to the extent of the facts known
to Seller and Acquiree, that, effective this date and the Closing Date, the
representations listed below are true and correct.
4.1 Seller is the sole owner of one thousand (1,000) of the common
shares issued and outstanding Shares of Acquiree; such Acquiree Shares are
free from claims, liens or other encumbrances; and Seller has the unqualified
right to transfer and dispose of such shares.
4.2 The Sale Shares constitute validly issued shares of Acquiree
fully-paid and nonassessable.
4.3 Acquiree has previously furnished unaudited financial statements
dated December 31, 1996 (see separate Disclosure Schedule). The financial
statements are substantially correct and complete and has been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis. The financial statement presents fairly the financial
condition of Acquiree of the respective dates of said balance sheets and the
results of operations for the respective periods indicated in said statements
of income and retained earnings and, in the case of each such interim
statement, is subject to year-end adjustments consistent with past practice.
4.4 To the best of Seller's knowledge, there are no actions, suits,
proceedings or investigations (whether or not purportedly on behalf of
Acquiree) pending or threatened against or affecting Acquiree, at law, or in
equity or admiralty, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau agency or instrumentality,
domestic or foreign, which involve the likelihood of any adverse judgment of
liability, not fully covered by insurance, in excess of $5,000.00 in any one
case or $10,000.00 in the aggregate, or which may result in any material
adverse change aside from the monetary adverse judgment or liability) in the
business, operations, properties or assets or in the condition, financial or
otherwise, of Acquiree. To the best of Seller's 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.
4.5 Acquiree has, to its best knowledge, complied in all material
respects with all laws, regulations and judicial or administrative tribunal
orders applicable to its business of which it is aware except as previously
disclosed to Buyer (see Disclosure Schedule).
4.6 All federal, state and local tax returns required to be filed by
the preceding corporation to Acquiree (Xxxxxxx Computer Marketing, Inc.) have
been duly filed. Federal income tax returns of Acquiree (f/k/a Xxxxxxx
Computer Marketing, Inc.) have been submitted to the Internal Revenue Service
("IRS") for all past fiscal years through the calendar year ended in 1995
(see separate 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.
4.7 Acquiree and Seller agree that any and all tax deficiencies
disclosed on the balance sheet will be paid or settled prior to Closing.
4.8 Since the date of the balance sheet, there has not occurred:
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a. any material and adverse change in the financial condition
or operations of Acquiree;
b. any damage, destruction or loss to or of any of the
material assets or properties owned or leased by Acquiree;
c. the creation or attachment of any lien against any of the
currently issued and distributed common stock of Acquiree;
d. any waiver, release, discharge, transfer or cancellation by
Acquiree of any rights or claims of material value;
e. any issuance by Acquiree of any securities (must include
all debt or equity securities) or any merger or consolidation of Acquiree
with any other person or any acquisition by Acquiree of the business of any
other person;
f. any incurrence, assumption or guarantee by Acquiree of any
indebtedness or liability other than in the ordinary course of business;
g. any declaration, setting aside or payment by Acquiree of
any dividends on, or any other distribution with respect to, any capital
stock of Acquiree or any repurchase, redemption or other acquisition of any
capital stock of Acquiree;
h. (i) any payment of any bonus, profit sharing, pension or
similar payment or arrangement or special compensation to any employee of
Acquiree, except in the ordinary course of the business of Acquiree, (ii) any
increase in the compensation payable or to become payable to any employee of
Acquiree; or
4.9 Except as set forth in the documents listed or referred to in
Exhibits hereto, the execution and carrying out of this Agreement will not
conflict with, or result in any breach of any of the terms, or create a
charge or encumbrance upon any of the properties or assets, or outstanding
stock of Acquiree pursuant to any corporate charter, bylaw, indenture,
mortgage or lease to which Acquiree or any of its stockholders is a party or
by which it is bound. The execution and carrying out of this Agreement will
not violate any provision of law.
4.10 To the best knowledge of the Seller and Acquiree, none of the
written information and documents which have been or will be furnished by
Acquiree or by any representatives of Acquiree to Buyer or any of the
representatives of Buyer in connection with the transaction contemplated by
this Agreement contains or will contain, as the case may be, any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary in order to make the statements therein not misleading in light of
the circumstances in which made. To the knowledge of Acquiree, Acquiree has
disclosed to Buyer as the purchaser of the Sale Shares all material
information relating to Acquiree and its activities as currently conducted.
4.11 The representations and warranties made hereinabove in this
Section 4 will be correct in all material respects on and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on the Closing Date.
4.12 The Acquiree is authorized to issue one hundred thousand
(100,000) shares of common stock, $1.00 par value, of which one thousand
(1,000) shares are issued and outstanding. Acquiree has one (1) class of
capital stock and all outstanding shares have been duly authorized, validly
issued and are fully paid and nonassessable with no personal liability
attaching to the ownership thereof. There are not outstanding convertible
securities, warrants, options or commitments of any nature which may cause
authorized but unissued shares to be issued to any person.
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4.13 Organization of Acquiree. Acquiree is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Texas, with all requisite power and authority to own its properties and to
carry on its business as now conducted.
4.14 Officers and Directors. The present officers and directors of
Acquiree are as follows:
Officers: President Xxxxx X. Xxxxxxx
Secretary Xxxx Xxxxxxx III
Directors: Xxxxx X. Xxxxxxx
Xxxx Xxxxxxx III
4.15 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.
4.16 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.
4.17 Relationship with Competitors. Seller does not own or have a
material beneficial interest and has not owned or had a beneficial interest
within the past three (3) years, directly or indirectly, in any corporation,
firm, association, partnership or proprietorship that (1) is similar to or a
competitor of Acquiree, (2) is a customer or supplier of Acquiree, or (3) has
any existing contractual relationship with Acquiree.
4.18 Employees. All employees of Acquiree and their current rate of
compensation are listed in the separate Disclosure Schedule. Acquiree is not
a party to any union contract, pension or profit-sharing plan or any other
agreement providing employee benefits.
5. REPRESENTATIONS BY BUYER AND ACT
Buyer warrants and represents, to the extent of the facts known to
Buyer, that, effective this date and the Closing Date, the representations
listed below are true and correct.
5.1 Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of New Jersey.
5.2 The Board of Directors of Buyer have duly approved this
Agreement.
5.3 ACT's restricted common shares deliverable pursuant to this
Agreement shall be validly issued and outstanding, fully paid and
nonassessable.
5.4 The authorized capital stock of ACT consists of twenty million
(20,000,000) shares of Common Stock, $.001 par value, six million four
hundred sixty-seven thousand three hundred ninety-eight (6,467,398) of which
have been validly issued and are outstanding and four million one hundred
ninety-four thousand two hundred twenty-eight (4,194,228) of those are freely
tradable without restriction or further registration under the Securities Act
of 1933.
5.5 Annexed hereto as Exhibit 5.5 is the unaudited financial
statements of Buyer dated September 30, 1996. The financial statements in
Exhibit 5.5 are substantially correct and complete
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and have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis. The financial statements present
fairly the financial condition of Buyer as of the respective dates of said
balance sheets and the results of operations for the respective periods
indicated in said statements of income and retained earnings and, in the case
of each such interim statement, is subject to year-end adjustments consistent
with past practice.
5.6 To the best of Buyer's knowledge, there are no actions, suits,
proceedings or investigations (whether or not purportedly on behalf of Buyer)
pending or threatened against or affecting Buyer at law or in equity or
admiralty or before or by any federal, state, municipal or other governmental
department, commission, board, bureau agency or instrumentality, domestic or
foreign, which involve the likelihood of any adverse judgment of liability,
not fully covered by insurance, in excess of $5,000.00 in any one care of
$10,000.00 in the aggregate, or which may result in any material adverse
change aside from the monetary adverse judgment or liability, in the
business, operations, properties or assets or in the condition, financial or
otherwise, of Buyer. To the best of Buyer's knowledge, Buyer is not in
default with respect to any order, writ, injunction or decree of any court or
federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign.
5.7 Buyer has complied in all material respects with all laws,
regulations and judicial or administrative tribunal orders applicable to its
business of which it is aware.
5.8 All federal, state and local tax returns required to be filed by
Buyer have been duly filed. Federal income tax returns of Buyer have been
submitted to the IRS for all past fiscal years through the fiscal year ended
in 1995. All deficiencies proposed by any taxing authority have either been
paid or settled or are included in the amounts for accrued taxes shown on the
respective balance.
5.9 Since the date of the balance sheet, there has not occurred:
a. any material and adverse change in the financial condition
or operations of Buyer;
b. any damage, destruction or loss to or of any of the
material assets or properties owned or leased by Buyer;
c. the creation or attachment of any lien against any of the
currently issued and distributed common stock of Buyer;
d. any waiver, release, discharge, transfer or cancellation by
Buyer of any rights or claims of material value;
e. any issuance by Buyer of any securities or any merger or
consolidation of Buyer with any other person or any acquisition by Buyer of
the business of any other person;
f. any incurrence, assumption or guarantee by Buyer of any
indebtedness or liability other than in the ordinary course of business;
g. any declaration, setting aside or payment by Buyer of any
dividends on, or any other distribution with respect to, any capital stock of
Buyer or any repurchase, redemption or other acquisition of any capital stock
of Buyer;
h. (i) any payment of any bonus, profit sharing, pension or
similar payment or arrangement or special compensation to any employee of
Buyer, except in the ordinary course of the administration of Buyer, (ii) any
increase in the compensation payable or to become payable to any employee of
Buyer; or
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5.10 Except as set forth in the documents listed or referred to in
Exhibits hereto, the execution and carrying out of this Agreement will not
conflict with, or result in any breach of any of the terms, or create a
charge or encumbrance upon any of the properties or assets, or outstanding
stock of Buyer pursuant to any corporate charter, bylaw, indenture, mortgage
or lease to which Buyer 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.
5.11 None of the written information and documents which have been or
will be furnished by Buyer or any representatives of Buyer to Seller or any
of the representatives of Seller in connection with the transactions
contemplated by this Agreement contains or will contain, as the case may be,
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary in order to make the statements therein not
misleading in light of the circumstances in which made. To the knowledge of
Buyer, Buyer has disclosed to Seller as the purchaser of the common stock of
Buyer all material information relating to Buyer and its activities as
currently conducted.
5.12 The representations and warranties made hereinabove in this
Section 5 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.
5.13 Buyer is fully aware of the condition and prospects, financial
and otherwise, of the Acquiree, having been supplied with such financial and
other data relating to the Acquiree as Buyer considered necessary and
advisable to enable it to form a decision concerning the purchase herein
provided.
5.14 Buyer is fully aware that the Sale Shares, when delivered, will
not have been registered under the Act; that accordingly no sale, offer to
sell or transfer of the Sale Shares shall be made unless a registration
statement under the Act with respect to the Sale Shares is then in effect or
an exemption from the registration requirements of the Act is then, in fact,
applicable to the Sale Shares or, in the opinion of Acquiree's counsel,
registration is not required.
5.15 Buyer has been fully advised by the Seller that the Seller 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 Seller's reliance upon
the statutory exemption is based in large part upon Buyer's representations
made in this Agreement.
5.16 Buyer is acquiring the Sale Shares for investment for its own
account and not with a view to resell or otherwise distribute the Sale
Shares. In making the foregoing representations, Buyer 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.
5.17 Buyer has the full right, power and authority to purchase the
Sale Shares in accordance with the terms of this Agreement and otherwise to
consummate and close the transaction provided for in this Agreement in the
manner and upon the terms herein specified.
5.18 Buyer is acquiring the Sale Shares for the purpose of controlling
Acquiree.
5.19 Buyer represents that copies of all documents which will be filed
by ACT with the Securities and Exchange Commission for the past one (1) year
period have been provided to Seller and that all representations contained
therein remain true and complete.
6. CLOSING DATE
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The Closing Date herein referred to shall be upon such date as the
parties hereto may mutually agree upon but is expected to be during March of
1997. At the Closing, Buyer will be provided with and accept delivery of the
Sale Shares, and in connection therewith, and will make payment of all sums
due to Seller. Certain closing documents may be delivered subsequent to the
Closing Date upon the mutual agreement of the parties hereto.
Notwithstanding the foregoing, for purposes of allocating the profits and/or
losses of Acquiree, the effective date shall be deemed the 1st day of
January, 1997.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
All obligations of the Seller under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the following
conditions:
7.1 The negotiation and execution of an employment agreement with
Xxxxx X. Xxxxxxx on terms and conditions agreeable to the parties thereto
providing for a base salary, benefits and mutually agreed incentive
compensation based on performance measures. Said employment agreement is
attached as Exhibit 11.1.
7.2 The representations and warranties by Buyer contained in this
Agreement or in any certificate or document delivered to Seller pursuant to
the provisions hereof shall be true in all material respects at and as of the
time of Closing as though such representations and warranties were made at
and as of such time.
7.3 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.
7.4 Seller shall have obtained 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.
7.5 All instruments and documents delivered to Seller pursuant to the
provisions hereof shall be reasonably satisfactory to legal counsel for
Seller.
8. 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:
8.1 A financial review of Acquiree's books and records to confirm
that two (2) years of unaudited financials can be obtained.
8.2 The representations and warranties by Seller 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.
8.3 Acquiree and Seller 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.
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Page 11
9. DOCUMENTS AT CLOSING
At the Closing, the following transactions shall occur, all of such
transactions being deemed to occur simultaneously:
9.1 Seller 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 Texas certificate of good
standing, as may reasonably be available to Seller and requested by Buyer;
c. certified copies of resolutions by Seller's and Acquiree's
boards of directors of executive committees thereof, thereunto duly
authorized, authorizing this transaction;
d. resignations of the present officers and directors of
Acquiree to take effect;
e. a copy of a reasonably current shareholder list of Acquiree
certifying the number of shares outstanding;
f. current financial statements as of January 31, 1997, in
addition to those 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.
9.2 Buyer will deliver or cause to be delivered to Seller 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.
10. REGISTRATION RIGHTS
10.1 Whenever ACT proposes to register any of its securities under the
Act and the registration form to be used may be used for the registration of
the securities issued to Seller pursuant to Section 1.2(b) and 2(a) (the
"Registerable Securities"), the Buyer will give prompt written notice (in any
event within three (3) business days after receipt of notice of any exercise
of demand registration rights from any other person) to the Seller of its
intention to effect such a registration and will include in such registration
all Registerable Securities with respect to which ACT received written
request for inclusion within fifteen (15) days after the receipt of ACT's
notice.
10.2 All costs and expenses associated with the registration of the
Registerable Securities by ACT will be paid by the Buyer.
10.3 If the registration described in this Section 10 is an
underwritten primary registration on behalf of ACT, and the managing
underwriters advise ACT in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in an orderly manner in such offering within a price range
that is acceptable to ACT, ACT will include in such registration (a) first,
on a prorata basis, the securities ACT
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AGREEMENT OF SALE
Page 12
proposes to sell and the Registerable Securities requested to be included in
such registration, and (b) secondly, other securities requested to be included
in such registration.
10.4 If the registration described in this Section 10 is an
underwritten secondary registration on behalf of holders of ACT's securities,
and the managing underwriters advise the company in writing that in their
opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in an orderly manner in
such offering within a price range acceptable to the holders initially
requesting such registration, the company will include in such registration
(a) first, the securities requested to be included therein by the holders
requesting such registration and the Registerable Securities requested to be
included in such registration, and (b) second, other securities requested to
be included in such registration.
11. MISCELLANEOUS
11.1 Prior to Closing, Xxxxx X. Xxxxxxx shall enter into an employment
agreement with Acquiree under the terms outlined in Exhibit 11.1.
11.2 The respective representations of Seller and Buyer contained
herein or in any certificates delivered prior to or at Closing shall survive
for a period of eighteen (18) months from the Closing Date.
11.3 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.
11.4 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.
11.5 Arbitration. Any and all disputes and differences between or
among the parties with respect to the construction or performance of the
terms of this Agreement which cannot be resolved amicably shall be resolved
by arbitration before the American Arbitration Association in accordance with
its rule then obtaining sitting in New Jersey.
11.6 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 Seller: Xxxxx X. Xxxxxxx
0000 Xxxx Xxxxx Xxxx
Xxxxx, XX 00000
To Acquiree: Xxxxxxx Re-Marketing, Inc.
00000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
with copies to: Xxx Xxxxxxxx, Esquire
907 North Dallas Bank Tower
00000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
To Buyer: Universal Commodities Corporation
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AGREEMENT OF SALE
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0000 Xxxxx 000 Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
with copies to: Merra, Kanakis, Creme & Xxxxxx, P.C.
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
11.7 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.
11.8 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.
11.9 Governing Law. This Agreement shall be governed by the laws of
the State of New Jersey.
11.10 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.
11.11 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.
11.12 Severability. If any part of this Agreement is deemed to be
unenforceable the balance of this Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
SELLER:
/s/ Xxxxx X. Xxxxxxx
------------------------------
Xxxxx X. Xxxxxxx
ACQUIREE:
Xxxxxxx Re-Marketing, Inc.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Xxxxx X. Xxxxxxx
Its duly authorized President
BUYER:
Universal Commodities Corporation
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AGREEMENT OF SALE
Page 14
By: /s/ Xxxx Xxxxxxx
-------------------------
Its duly authorized President
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AGREEMENT OF SALE
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EXHIBIT 5.5
Applied Cellular Technology, Inc. Audited Financial Statements
for the years ended December 31, 1996 and 1995.
"Filed on Form 10-K filed March 31, 1997
is incorporated herein by this reference"
