Exhibit 99.5
CALL AGREEMENT
THIS AGREEMENT is entered into this 30th day of June, 1998 by and among Applied
Cellular Technology, Inc. ("ACT"), a Missouri corporation, ACT-GFX Canada, Inc.
("ACTsub"), an Ontario corporation, Drummer Enterprises Ltd. ("Drummer"), an
Ontario corporation, Morstar Holdings Ltd. ("Morstar"), a Manitoba corporation,
Scozul Enterprises Ltd. ("Scozul"), an Ontario corporation, (Drummer, Morstar
and Scozul are hereinafter collectively referred to as "Sellers") and Xxxxx X.
Xxxxx (the "Principal").
RECITALS
WHEREAS the parties hereto together with Ground Effects Ltd. (the
"Acquiree") have entered into a Reorganization Agreement dated the date hereof,
whereby, among other things, certain of the issued and outstanding shares and
debt of the Acquiree shall be acquired by ACTsub for a purchase price which
shall be satisfied by the issuance to the Sellers of Class A and Class B
Exchangeable Shares in the capital of ACTsub (the "Exchangeable Shares");
AND WHEREAS, in connection with the exchange of such Exchangeable Shares
into common shares in the capital of ACT, it is desirable that the holders of
Exchangeable Shares offer to ACT a call right with respect of such Exchangeable
Shares as set out herein;
AND WHEREAS, it was a condition of the entering into of the Reorganization
Agreement that this Agreement be entered into;
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions. All capitalized terms unless otherwise defined herein, shall
have the meanings ascribed thereto in the Reorganization Agreement and the
Exchangeable Share Provisions.
ARTICLE 2
ACT TO ACQUIRE EXCHANGEABLE SHARES
2.1 ACT Liquidation Call Right
(a) ACT shall have the overriding right (the "Liquidation Call Right"), in
the event of and notwithstanding the proposed liquidation, dissolution or
winding-up of ACTsub, to purchase from all but not less than all of the holders
(other than ACT) of Exchangeable Shares on the Liquidation Date all but not less
than all of the Exchangeable Shares held by each such holder on payment by ACT
of an amount, for each Exchangeable Share held, equal to the Current Market
Price of a share of ACT Common Stock on the last Business day prior to the
Liquidation Date multiplied by the Current ACT Common Stock Equivalent. The
payment shall be satisfied in full by causing to be delivered to such holder (a)
such whole number of shares of ACT Common Stock (rounded down to the nearest
whole number) as is equal to the amount obtained by multiplying the number of
such Exchangeable Shares to be transferred by the Current ACT Common Stock
Equivalent, plus (b) an additional amount in cash equivalent to the full amount
of all dividends declared and unpaid on such Exchangeable Shares (collectively,
the "Liquidation Call Purchase Price") without interest. In the event of the
exercise of the Liquidation Call Right by ACT, each holder of Exchangeable
Shares shall be obligated to sell all the Exchangeable Shares held by such
holder to ACT on the Liquidation Date on payment by ACT to such holder of the
Liquidation Call Purchase Price.
(b) To exercise the Liquidation Call Right, ACT must notify in writing the
holders of the Exchangeable Shares of ACTOs intention to exercise such right at
least five (5) days before the Liquidation Date. If ACT exercises the
Liquidation Call Right, on the Liquidation Date ACT will purchase and the
holders will sell all of the Exchangeable Shares then outstanding for a price
equal to the Liquidation Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the Liquidation Call Right, ACT shall on the Business Day
immediately preceding the Liquidation Date, deliver to the holders of
Exchangeable Shares their proportionate part of the Liquidation Call Purchase
Price all of which shares shall be duly issued as fully paid and non-assessable
and shall be free and clear of any lien, claim, encumbrance, security interest
or adverse claim in exchange for the delivery by the holders of a certificate or
certificates representing Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the OBCA and the by-laws of ACTsub and such additional
documents and instruments as the Acquiree may reasonably require. If ACT does
not exercise the Liquidation Call Right in the manner described above, on the
Liquidation Date the holders of the Exchangeable Shares will be entitled to
receive in exchange therefor the liquidation price otherwise payable by ACTsub
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in connection with the liquidation, dissolution or windingup price otherwise
payable by ACTsub in connection with the liquidation, dissolution or winding up
of ACTsub pursuant to Article 4 of the Exchangeable Share Provisions.
2.2 ACT Redemption Call Right
(a) ACT shall have the overriding right (the "Redemption Call Right"),
notwithstanding the proposed redemption of the Exchangeable Shares by ACTsub
pursuant to either of Section 2.5 or Section 3.5 of the Exchangeable Share
Provisions, to purchase from all but not less than all of the holders of
Exchangeable Shares (other than ACT) on the Automatic Redemption Date all but
not less than all of the Exchangeable Shares held by each such holder on payment
by ACT to the holder of an amount, for each Exchangeable Share held, equal to
the Current Market Price of a shares of ACT Common Stock on the last Business
Day prior to the Automatic Redemption Date multiplied by the Current ACT Common
Stock Equivalent. The payment shall be satisfied in full by causing to be
delivered to such holder (a) such whole number of shares of ACT Common Stock
(rounded down to the nearest whole number) as is equal to the amount obtained by
multiplying the number of such Exchangeable Shares to be redeemed by the Current
ACT Common Stock Equivalent, and (b) an additional amount in cash equivalent to
the full amount of all dividends declared and unpaid on such Exchangeable Shares
(collectively, the "Redemption Call Purchase Price") without interest. In the
event of the exercise of the Redemption Call Right by ACT, each holder of
Exchangeable Shares shall be obligated to sell all the Exchangeable Shares held
by such holder to ACT on the Automatic Redemption Date on payment by ACT to the
holder of the Redemption Call Purchase Price.
(b) To exercise the Redemption Call Right, ACT must notify in writing, the
holders of Exchangeable Shares, and ACTsub of ACTOs intention to exercise such
right at least thirty (30) days before the Automatic Redemption Date. If ACT
exercises the Redemption Call Right, on the Automatic Redemption Date ACT will
purchase and the holders will sell all of the Exchangeable Shares then
outstanding (other than shares held by ACT) for the Redemption Call Purchase
Price.
(c) For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the Redemption Call Right, ACT shall on the Business Day immediately
preceding the Automatic Redemption Date, deliver to the holders of Exchangeable
Shares their proportionate part of the Redemption Call Purchase Price all of
which shares shall be duly issued as fully paid and non-assessable and shall be
free and clear of any lien, claim, encumbrance, security interest or adverse
claim in exchange for the delivery by the holders of a certificate or
certificates representing Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the OBCA and the by-laws of ACTsub and such additional
documents and instruments as the Acquiree may reasonably require. If ACT does
not exercise the Redemption Call Right in the manner described above, on the
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Automatic Redemption Date the holders of the Exchangeable Shares will be
entitled to receive in exchange therefor the redemption price otherwise payable
by the Acquiree in connection with the redemption of the Exchangeable Shares
pursuant to Section 2.5 and/or Section 3.5 of the Exchangeable Share Provisions.
2.3 ACT Retraction Call Right
(a) ACT shall have the overriding right (the "Retraction Call Right")
notwithstanding the proposed redemption of Retracted Shares by ACTsub on the
Retraction Date, to purchase from the holder of the Retracted Shares on the
Retraction Date the Retracted Shares upon payment by ACT to the holder of a
Retracted Share an amount for each Retracted Share, equal to the Current Market
price multiplied by the Current ACT Common Stock Equivalent, in each case
determined on the Retraction Date. The payment shall be satisfied in full in
respect of such Retracted Shares by causing to be delivered to the holder (a)
such whole number of shares of ACT Common Stock (rounded down to the nearest
whole number) as is equal to the amount obtained by multiplying the number of
Retracted Shares by the Current ACT Common Stock Equivalent, plus (b) an
additional amount in cash equivalent to the full amount of all dividends
declared and unpaid on such Retracted Shares (collectively, the "Retraction Call
Purchase Price") without interest. In the event of the exercise of the
Retraction Call Right by ACT, the holder of the Retracted Shares shall be
obligated to sell to ACT, and ACT shall be obligated to purchase, the Retracted
Shares on the Retraction Date upon payment by ACT to such holder of the
Retraction Call Purchase Price.
(b) In order to exercise the Retraction Call Right, ACT shall advise in
writing the holders of the Exchangeable Shares its determination to do so (the
"ACT Call Notice") on or prior to the expiry of the third (3rd) Business Day
after the receipt by the Acquiree on the Retraction Request. If ACT delivers the
ACT Call Notice before the expiry of such three (3) Business Day period, the
Retraction Request shall thereupon be deemed only to be an offer by the holder
to sell the Retracted Shares to ACT. In such event, ACTsub shall not redeem the
Retracted Shares and ACT shall purchase from such holder and such holder shall
sell to ACT on the Retraction Date the Retracted Shares for the Retraction Call
Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the Retraction Call Right, ACT shall on the Business Day immediately
preceding the Retraction Date, deliver to the holders of Exchangeable Shares
their proportionate part of the Retraction Call Purchase Price all of which
shares shall be duly issued as fully paid and non-assessable and shall be free
and clear of any lien, claim, encumbrance, security interest or adverse claim in
exchange for the delivery by the holders of a certificate or certificates
representing Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the OBCA and the by-laws of ACTsub and such additional documents and instruments
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as ACTsub may reasonably require. If ACT does not exercise the Retraction Call
Right in the manner described above, on the Retraction Date the holders of the
Exchangeable Shares will be entitled to receive in exchange therefor the
Retraction Price otherwise payable by ACTsub in connection with the Retraction
of the Exchangeable Shares pursuant to Article 5 of the Exchangeable Share
Provisions.
2.4 Consideration For Call Rights of ACT. The Retraction Call Right, the
Liquidation Call Right and the Redemption Call Right are granted to ACT by the
holders of Exchangeable Shares in consideration of the grant to such holders by
ACT of the Exchange Rights.
2.5 Economic Equivalence. The Board of Directors of ACTsub shall determine, in
good faith and in consultation with the Sellers (with the assistance of such
reputable and qualified independent financial advisors and/or other experts as
the Board may require) economic equivalence for the purposes of any provision
herein that requires such a determination and each such determination shall be
conclusive and binding on ACT and the holders of Exchangeable Shares, where
applicable.
2.6 Capital Reorganization of ACT. If at any time there is a Capital
Reorganization that is not an ACT Common Stock Reorganization, Right Offering or
a Special Distribution (as such terms are defined in the Exchangeable Share
Provisions), any holder of Exchangeable Shares whose Exchangeable Shares have
not been exchanged for ACT Common Stock in accordance with the provisions hereof
prior to the record date for such Capital Reorganization shall be entitled to
receive and shall accept, upon any such exchange occurring pursuant to the
provisions hereof or the provisions of the Exchange Agreement at any time after
the record date for such Capital Reorganization, in lieu of the ACT Common Stock
that they would otherwise have been entitled to receive pursuant to the
provisions hereof or thereof, the number of shares or other securities of ACT or
of the body corporate resulting, surviving or continuing from the Capital
Reorganization, or other property, that such holder would have been entitled to
receive as a result of such Capital Reorganization if, on the record date, they
had been the registered holder of the number of shares of ACT Common Stock to
which they were then entitled upon any exchange of their Exchangeable Shares
into shares of ACT Common Stock in accordance with the provisions hereof,
subject to adjustment thereafter in the same manner, as nearly as may be
possible, as is provided for in the definition of Current ACT Common Stock
Equivalent provided that no such Capital Reorganization shall be carried into
effect unless all necessary steps shall have been taken so that each holder of
Exchangeable Shares shall thereafter be entitled to receive, upon any exchange
of their Exchangeable Shares pursuant to the provisions hereof, such number of
shares or other securities of ACT or of the body corporate resulting, surviving
or continuing from the Capital Reorganization, or other property.
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2.7 Restriction on Transfer. No transfer of Exchangeable Shares shall be
effective or shall be registered on the books of ACTsub without the transferee
of such shares becoming a party to this Agreement, which shall be effected by
such transferee executing a counterpart hereto.
2.8 Counterparts. This Agreement may be executed 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.
2.9 Governing Law. This Agreement shall be governed by the laws of the Province
of Ontario.
2.10 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.
2.11 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.
2.12 Severability. If any part of this Agreement is deemed to be unenforceable
the balance of this Agreement shall remain in full force and effect.
2.13 Further Assurances. At any time, and from time to time, after the closing
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.
2.14 Notices to Parties. All notices and other communications between the
parties shall be in writing and shall be deemed to have been given if delivered
personally or by confirmed telecopy to the parties at the following addresses
(or at such other address for either such party as shall be specified in like
notice):
To ACT and Applied Cellular Technology, Inc.
ACTsub 000 Xxxxx Xxxx Xxx
Xxxxx 000
Xxxx Xxxxx, XX
00000, U.S.A.
Fax No. (000) 000-0000
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To Drummer: Drummer Enterprises Ltd.
c/o Del Industrial Metals Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Mr. J. Xxxxxx Xxxxx
Fax No. (000) 000-0000
To Morstar: Morstar Holdings Ltd.
c/x Xxxxxx Chevrolet Oldsmobile
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx X0X 0X0
Attention: Mr. Xxxxx Xxxxxx
Fax No. (000) 000-0000
To Scozul and/or Xxxxx: Scozul Enterprises Ltd.
and Xxxxx Xxxxx
0000 Xx. Xxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxx X0X 0X0
Attention: Xx. Xxxxx Xxxxx
Fax No. (000) 000-0000
with copies to: Xxxxxx Xxxxxxxx
Nobbs, Xxxxx & Xxxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Fax No.(000) 000-0000
with copies to: Xxx Xxxxxxxxxxx
Xxxxxxx Xxxxx & Xxxxxxxxx
Suite 2100
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxx
X0X 0X0
Fax No. (000) 000-0000
and to: Xxxx X. Creme, Esq.
Merra, Kanakis, Creme & Xxxxxx, P.C.
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
Fax No. (000) 000-0000
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
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deemed to have been given and received on the date of confirmed receipt thereof
unless such day is not a Business Day in which case it shall be deemed to have
been given and received upon the immediately following Business Day.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
APPLIED CELLULAR TECHNOLOGY, INC.
Per: --------------------------------
Xxxxxxx X. Xxxxxxxx
Its duly authorized President
DRUMMER ENTERPRISES LTD.
Per: --------------------------------
c/s
Per: --------------------------------
MORSTAR HOLDINGS LTD.
Per: --------------------------------
c/s
Per: --------------------------------
SCOZUL ENTERPRISES LTD.
Per: --------------------------------
c/s
Per: --------------------------------
ACT-GFX CANADA, INC.
Per: --------------------------------
c/s
Per: --------------------------------
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SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
----------------------------- ) --------------------------------------
Witness ) Xxxxx X. Xxxxx
