SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 4, 2000
-------------
PRE-CELL SOLUTIONS, INC.
------------------------
(Exact Name of Registrant as Specified in Charter)
Colorado 0-14978 84-0751916
-------- ------- ----------
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
255 East Drive, Suite C, Melbourne, Florida 32904
------------------------------------------- -------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (321) 308-2900
--------------
<PAGE>
Item 2. Acquisition or Disposition of Assets
On April 4, 2000 (the "Closing Date"), Pre-Cell Solutions, Inc.
("Pre-Cell"), USI Merger Corp., a Georgia corporation and wholly-owned
subsidiary of Pre-Cell ("USI Merger Subsidiary"), USIntellicom, Inc., a Georgia
corporation ("USI") and Ronald I. Kindland executed a Merger And Reorganization
Agreement ("USI Merger Agreement"), pursuant to which USI Merger Subsidiary was
to be merged ("USI Merger") with and into USI. On April 5, 2000 a Certificate of
Merger was filed with the Secretary of the State of the State of Georgia.
In connection with the USI Merger, Pre-Cell issued an aggregate of
11,440,000 shares of Pre-Cell common stock to the stockholders of USI determined
on the basis of a negotiated value of the business and proprietary technology
developed by USI and the market value of Pre-Cell's common stock. Pre-Cell also
established an option pool (the "Option Pool") consisting of 2,133,333 shares of
Pre-Cell common stock whereby certain stockholders of USI that had guaranteed
USI's line of credit shall, until December 31, 2000, have the right to acquire
the Pre-Cell shares at a per share price equal to $.75. The funds received by
Pre-cell from the exercise of the Option Pool options shall be utilized to repay
the approximately $1,600,000 borrowed under USI's line of credit. Additionally,
all outstanding options to purchase USI shares will be fully vested and
automatically converted into options to purchase Pre-Cell shares on a basis of
8.8 Pre-Cell shares for each USI share entitled to be purchased under the USI
options, at the per share price equal to the quotient of (i) the price contained
in the USI options, divided by (ii) 8.8.
Pre-Cell agreed to hold an annual meeting of its stockholders as soon
as reasonably practicable after the USI Merger and to seek stockholder approval
for an increase in the size of Pre-Cell's Board of Directors from three (3)
members to seven (7) members. Upon approval by the Pre-Cell shareholders of the
increase in the size of the Board, Pre-Cell has agreed to nominate for election
and use its best efforts to have elected to its Board (i) two (2) designees
selected by the USI Major Stockholders so long as the USI stockholders continue
to hold an aggregate of at least 7,666,666 of the Pre-Cell shares acquired in
the USI Merger; and (ii) one (1) designee selected by the USI Major Stockholders
so long as the USI stockholders continue to own 3,833,333 Pre-Cell shares
acquired in the USI Merger. In the event the USI stockholders own less than
3,833,333 of Pre-Cell shares acquired in the Merger, Pre-Cell shall have no
further obligation to nominate any USI Nominees to the Board.
On the Closing Date, Pre-Cell entered into an employment agreement
("Fricks Employment Agreement") with Thomas Fricks, the President of USI who was
appointed the President and Chief Operating Officer of Pre-Cell. The Fricks
Employment Agreement is for a three-year term through April 1, 2003. Mr. Fricks
is entitled to receive an annual base salary of $200,000, subject to annual
increases and bonuses as the Board of Directors of Pre-cell may determine.
Additionally, Mr. Fricks was awarded 856,000 shares of Pre-Cell's common stock,
which common stock will vest twenty percent (20%) on October 1, 2000, thirty
percent (30%) on January 1, 2001 and the remaining fifty percent (50%) on April
1,2001
On the Closing Date, Pre-Cell entered into an employment agreement
("O'Neal Employment Agreement") with Jonathan O'Neal, Chief Technology Officer
of USI who was appointed Chief Technology Officer of Pre-Cell. The O'Neal
<PAGE>
Employment Agreement is for a three-year term through April 1, 2003. Mr. O'Neal
is entitled to receive an annual base salary of $150,000 during the first year,
$175,000 in year two, and $200,000 in year three.
Additionally, on the Closing Date, Pre-Cell Solutions, Inc.
("Pre-Cell"), Pre-Paid Acquisitions Corp., a Florida corporation and
wholly-owned subsidiary of Pre-Cell ("Pre-Paid Merger Subsidiary"), Pre-Paid
Solutions, Inc., a Florida corporation ("Pre-Paid") and Thomas E. Biddix
executed a Merger And Reorganization Agreement ("Pre-Paid Merger Agreement"),
pursuant to which Pre-Paid Merger Subsidiary was to be merged ("Pre-Paid
Merger") with and into Pre-Paid. On April 11, 2000, Articles of Merger were
filed with the Secretary of the State of the State of Florida.
In connection with the Pre-Paid Merger, Pre-Cell issued an aggregate of
20,219,145 shares of Pre-Cell common stock to the stockholders of Pre-Paid
determined on the basis of a negotiated value of the business and certain
contracts of Pre-Paid and the market value of Pre-Cell's common stock.
Additionally, all outstanding options and warrants to purchase Pre-Paid shares
will be fully vested and will automatically be converted into options and
warrants to purchase Pre-Cell shares on a basis of 2.81915 Pre-Cell shares for
each Pre-Paid share entitled to be purchased under the Pre-Paid options, at the
per share price equal to the quotient of (i) the price contained in the Pre-Paid
options and warrants, divided by (ii) 2.81915.
Pursuant to the USI Merger Agreement and the Pre-Paid Merger Agreement,
Pre-Cell agreed to file a registration statement, as soon as practicable after
the Closing Date, but no later than October 31, 2000, with the United States
Securities and Exchange Commission ("SEC") to register (i) the Pre-Cell shares
issued to USI Stockholders and the Pre-Paid Stockholders in connection with the
mergers; (ii) those Pre-Cell shares to be issued to the holders of the USI
Options and the Pre-Paid Options that were converted into options to acquire
shares of Pre-Cell common stock upon their exercise; and (iii) those Pre-Cell
shares to be issued to the holders of the Option Pool options upon their
exercise. Notwithstanding the foregoing, each stockholder to be included in the
registration statement must have executed and delivered to Pre-Cell a "lock-up"
agreement (i) prohibiting his/her sale of such shares for a period of six months
after the Closing Date and (ii) limiting the number of shares he/she can sell to
an amount to be determined by the Pre-Cell Board of Directors during any
three-month period beginning six months after the Closing Date and ending
eighteen months after the Closing Date.
On the Closing Date, certain of Pre-Cell's shareholders retired an
aggregate of 27,217,393 shares of Common Stock pursuant to Stock Redemption
Agreements between those shareholders and Pre-Cell. Thomas E. Biddix, Chairman
and Chief Executive Officer of the Company who redeemed an aggregate of
21,550,719 shares of Common Stock redeemed the majority of these shares.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The financial statements and pro forma financial information required
to be filed in connection with the transactions described in this Report will be
filed by the Registrant under cover of an amendment to this report no later than
60 days after the date on which this Report must be filed.
(c) Exhibits.
2.1 Merger And Reorganization Agreement among Pre-Cell, USI Merger
Corp, USI and the USI Stockholders.
2.3 Merger And Reorganization Agreement among Pre-Cell, Pre-Paid
Merger Corp, Pre-Paid and the Pre-Paid Stockholders.
10.8 Employment Agreement between Pre-Cell and Thomas Fricks.
10.9 Employment Agreement between Pre-Cell and Jonathan O'Neal.
10.10 Stock Redemption Agreement between Pre-Cell and Thomas E.
Biddix
10.11 Employment Agreement between Pre-Cell and Thomas E. Biddix
10.12 Employment Agreement between Pre-Cell and Timothy F.
McWilliams
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 19, 2000 PRE-CELL SOLUTIONS, INC.
By: /s/ Timothy F. McWilliams
------------------------------------------
Timothy F. McWilliams, Executive Vice
President (and Principal Accounting Officer)
MERGER AND REORGANIZATION AGREEMENT
THIS MERGER AND REORGANIZATION AGREEMENT dated as of April 4, 2000, is
entered into among PRE-CELL SOLUTIONS, INC., a Colorado corporation
("Pre-Cell"), USI MERGER CORP., a Georgia corporation and wholly-owned
subsidiary of Pre-Cell ("Merger Subsidiary"), USINTELLICOM, INC., a Georgia
corporation ("USI"), and Ronald I. Kindland (Kindland and such other
stockholders being referred to collectively herein as, the "Stockholders").
WHEREAS, the Stockholders are the owners of all of the outstanding
capital stock of USI in the respective amounts set forth in Exhibit A;
WHEREAS, subject to the terms and conditions of this Merger and
Reorganization Agreement ("Agreement"), the Parties desire to consummate a
merger, as contemplated herein, pursuant to which the Merger Subsidiary shall be
merged with and into USI so that USI becomes a wholly-owned subsidiary of
Pre-Cell; and
WHEREAS, for Federal income tax purposes, the parties intend that such
merger qualify as a reorganization under the provisions of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code").
IT IS AGREED:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the Georgia Business
Corporation Code (the "GBCC"), the Merger Subsidiary and USI shall consummate a
merger (the "Merger") of the Merger Subsidiary with and into USI at the
Effective Time (as hereinafter defined) in accordance with the provisions of
this Agreement. Following the Merger, USI shall continue as the surviving
corporation (the "Surviving Corporation") and shall continue its existence under
the laws of the State of Georgia and the separate corporate existence of Merger
Subsidiary shall cease.
Section 1.2 Effective Time. At the Closing, USI and the Merger
Subsidiary shall file with the Georgia Secretary of State in accordance with the
GBCC an executed copy of the Certificate of Merger in the form of Exhibit B
hereto (the "Certificate of Merger") reflecting the Merger. The Merger shall
become effective at such time as the Certificate of Merger is so filed with the
Georgia Secretary of State (the "Effective Time"). To the extent permitted under
<PAGE>
law, Kindland, on behalf of and with the authority of the Stockholders, hereby
waives publication of the Articles of Merger. Kindland, on behalf of and with
the requisite authority of the Stockholders, hereby agrees to the adoption and
filing of the Certificate of Merger as required under the GBCC, and acknowledges
and agrees that his signature hereto, on behalf of himself and the Stockholders,
shall constitute the unanimous written consent of the Stockholders for purposes
of authorizing the foregoing by unanimous written consent of stockholders as
provided under the GBCC.
Section 1.3 Effects of the Merger. The Merger shall have the effects
set forth in Section OCGA-14.2-1106 of the GBCC.
Section 1.4 Certificate of Incorporation and By-Laws. The Articles of
Incorporation and the By-Laws of Merger Subsidiary shall be the Articles of
Incorporation and By-Laws of the Surviving Corporation at the Effective Time.
Section 1.5 Directors and Officers of the Surviving Corporation. At the
Effective Time, the Board of Directors and officers of the Surviving Corporation
shall consist of the persons listed in Schedule 1.5, each to serve until his or
her successor is elected and qualified.
ARTICLE II
CONVERSION OF SHARES AND RELATED MATTERS
Section 2.1 Conversion of Outstanding Stock of the Merger Subsidiary
and Exchange for Stock of Surviving Corporation. Upon consummation of the
Merger, all 100 shares of the common stock, no par value, of the Merger
Subsidiary ("Merger Subsidiary Stock") outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and exchanged for 100 shares of the
common stock, no par value, of USI ("Surviving Corporation Stock"), which shall
represent all of the issued and outstanding shares of capital stock of the
Surviving Corporation immediately after the Effective Time. All shares of
Surviving Corporation Stock shall be fully paid and non-assessable. Promptly
after the Effective Time, the Surviving Corporation shall issue to Pre-Cell a
stock certificate representing the 100 shares of Surviving Corporation Stock in
exchange for the certificate or certificates which formerly represented 100
shares of Merger Subsidiary Stock, which stock certificates shall be immediately
canceled.
Section 2.2 Conversion of USI Shares. Subject to the provisions of
Section 1.2, all of the outstanding shares of common stock, no par value, of USI
that are outstanding immediately prior to the Effective Time (the "USI Shares")
shall be converted into the right to receive, at the Closing, an aggregate of
11,440,000 shares (the "Stock Consideration") of Pre-Cell's common stock, par
value $.01 per share ("Pre-Cell Stock"),
Section 2.3 Pre-Cell Stock. The Pre-Cell Stock, upon issuance under
Section 2.2 shall be subject to the restrictions of Rule 144 promulgated by the
United States of America Securities and Exchange Commission (the "SEC") under
the Securities Act of 1933, as amended (the "Securities Act"), until properly
disposed of in accordance with the terms and conditions of Rule 144 or another
exemption to the registration requirements of the Securities Act. The number of
Page 2
<PAGE>
shares of Pre-Cell Stock constituting the consideration payable to any
Stockholder shall be rounded up or down to the nearest whole number of shares.
Section 2.4 Registration Rights.
(a) General. As soon as practicable after the Closing Date, but no
later than September 30, 2000 in any event, Pre-Cell shall file a registration
statement with the United States Securities and Exchange Commission ("SEC") to
register (i) the Pre-Cell Shares issued to USI Stockholders as the Merger
Consideration hereunder; (ii) those Pre-Cell Shares to be issued to the holders
of the Converted Options upon the exercise of the Converted Options as
contemplated thereby; and (iii) those Pre-Cell shares to be issued to USI
Stockholders under the Option Pool Agreement (as hereinafter defined)
(collectively, the "Holders") under the Securities Act of 1933, as amended (the
"Securities Act"), or shall include all such Pre-Cell Shares in a registration
statement which has been filed but not been declared effective, if allowable
under the Securities Act and the rules promulgated thereunder, so that they may
be sold by the Holders to the extent legally permissible. Pre-Cell shall use its
reasonable efforts to cause such registration statement to be declared effective
by the SEC no later than November 30, 2000, and once such registration statement
is declared effective, to keep it effective until all securities registered
thereby are either sold or can be sold under an exemption from the registration
requirements of the Securities Act. Pre-Cell shall bear all fees and expenses
incurred by it in connection with the preparation and filing of such
registration statement. Each Holder will pay all brokerage discounts and
commissions with respect to the sale of his Pre-Cell Shares and any fees and
expenses of separate counsel and accountants which may be retained by the
Holders. Each person for whom Pre-Cell Shares are to be registered for resale
under such registration statement will be required to execute a lock-up
agreement in the form annexed hereto as Exhibit F pursuant to which he shall
agree to (i) not sell any Pre-Cell Shares acquired by him hereunder until the
six month anniversary of the Closing Date; and (ii) only to sell up to that
percentage of the Pre-Cell Shares owned by him as determined by the Pre-Cell
Board of Directors during any three-month period beginning six months after the
Closing Date and ending eighteen months after the closing date.
Notwithstanding any other provision of this Section 2.4, (i) Pre-Cell
shall have no obligation hereunder to register the Pre-Cell Shares on behalf of
a Holder unless (a) such Holder executes a lock-up agreement as described above
and (b) the Holder provides Pre-Cell with all of the information and documents
with respect to his ownership of the Pre-Cell Shares, compliance with the law,
manner of proposed disposition and such other matters as Pre-Cell shall
reasonably request for disclosure in the registration statement; (ii) Pre-Cell
shall not be obligated to register any of the Pre-Cell Shares unless such
registration is then permitted by law and the policy of the SEC; and (iii) it is
understood and agreed that there may be periods of up to 90 days in duration in
any year during which the registration statement filed in accordance with this
Section lapses into noneffectiveness as a result of (a) the unavailability of
financial statements required to update such registration statement or (b) the
occurrence of material events which require the filing of an amendment to such
registration statement.
Page 3
<PAGE>
(b) Indemnification
(i) Pre-Cell shall indemnify and hold harmless, to the extent
permitted by law, each Holder, its officers and directors and each person who
controls a Holder (within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act) against all losses, claims, damages,
liabilities and expenses (including reasonable attorneys' fees, costs and
expenses) caused by any untrue or alleged untrue statement of material fact
contained in any registration statement filed pursuant to Section 2.5(a),
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto, or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in or omitted from any
information furnished in writing to Pre-Cell by such Holder for use therein.
(ii) In connection with any registration statement in which a
Holder is participating, such Holder will furnish to Pre-Cell such information
as Pre-Cell reasonably requests for use in connection with any such registration
statement or prospectus, and to the extent permitted by law, will indemnify
Pre-Cell, its directors and officers and each person who controls Pre-Cell
(within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act) against any losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees, costs and expenses) resulting from any
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is contained in or omitted from any
information so furnished by such Holder in writing which states that such
information is for use in such registration statement, prospectus or preliminary
prospectus or any amendment or supplement thereto.
(iii) Any person entitled to indemnification under this Section
2.4(b) will (i) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification; provided, that the failure
to give such notice shall not relieve the indemnifying party of its obligations
hereunder; and (ii) unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
with respect to such claim, permit such indemnifying party to assume the defense
of such claim with counsel reasonably satisfactory to the indemnified party and
such indemnifying parties shall promptly and vigorously assume such defense at
its cost and expense. If such defense is assumed, the indemnifying party will
not be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim shall promptly pay all costs and expenses of the indemnified party's
defense, but will not be obligated to pay the fees and expenses of more than one
counsel for each party indemnified by such indemnifying party with respect to
such claim.
Page 4
<PAGE>
Section 2.5 Conversion of USI Options. At the Effective time, all
outstanding options and warrants to purchase USI Shares, a list of which is
attached hereto as Schedule 2.5, ("USI Options") shall automatically be
converted into options and warrants (the "Converted Options") to purchase
Pre-Cell Shares on the basis of 8.8 Pre-Cell Shares for each USI Share entitled
to be purchased under the USI Options, at the per-share price equal to the
quotient of (i) the price contained in the USI Options, divided by (ii) 8.8.
Additionally, the vesting of the Converted Options shall be accelerated such
that all of the Converted Options shall be immediately vested upon the
consummation of the Merger. Other than the foregoing changes, each holder's
Converted Options shall have the same exercise terms as his USI Options.
ARTICLE III
Closing
Section 3.1 Time and Place of the Closing. Subject to the terms and
conditions of this Agreement, the consummation of the transactions contemplated
by this Agreement pursuant hereto shall take place at a closing (the "Closing")
to be held concurrently with the execution of this Agreement, at the offices of
Tobin & Reyes, P.A., 7251 West Palmetto Park Road, Boca Raton, Florida 33433, on
a date and at a time mutually agreeable to the parties (the "Closing Date").
Section 3.2 Procedure at the Closing. At the Closing, the parties agree
to take the following steps in the order listed below (provided, however, that
upon their completion all of these steps shall be deemed to have occurred
simultaneously):
(a) Pre-Cell shall deliver the certificates representing the Stock
Consideration to the Stockholders in accordance with Exhibit A;
(b) The Stockholders shall deliver to Pre-Cell certificates
representing their respective shares of USI common stock, duly endorsed or
accompanied by duly executed stock powers and with all requisite transfer tax
stamps;
(c) Merger Subsidiary and USI shall duly execute the Certificate of
Merger and file the Certificate of Merger with the State of Georgia Secretary of
State.
(d) Pre-Cell and the USI employees listed on Exhibit D shall execute
and deliver to each other an employment agreement as mutually agreed by the
employees and Pre-Cell (the "Employment Agreements");
(e) USI shall deliver to Pre-Cell certified copies of resolutions of
the Stockholders and directors of USI authorizing the execution and delivery of
this Agreement by USI and the performance of USI's obligations hereunder and its
consummation of the transaction contemplated hereby;
Page 5
<PAGE>
(f) Merger Subsidiary shall deliver to the Stockholders certified
copies of resolutions of the directors of Merger Subsidiary authorizing the
execution and delivery of this Agreement by Merger Subsidiary and the
performance of Merger Subsidiary's obligations hereunder and its consummation of
the transaction contemplated hereby;
(g) Pre-Cell shall deliver to the Stockholders certified copies of
resolutions of the directors of Pre-Cell authorizing the execution and delivery
of this Agreement by Pre-Cell and the performance of Pre-Cell's obligations
hereunder and its consummation of the transaction contemplated hereby;
(h) USI shall deliver the corporate books and records, correspondence
and employment records to Merger Subsidiary;
(i) The Pre-Cell Major Stockholders and the USI Major Stockholders
shall execute the Voting Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF USI
In order to induce Pre-Cell and Merger Subsidiary to enter into this
Agreement and to consummate the transactions contemplated under this Agreement,
USI hereby makes the following representations and warranties each of which is
relied upon by Pre-Cell and Merger Subsidiary regardless of any other action,
omission to act, investigation made or information obtained by Pre-Cell and
Merger Subsidiary.
Section 4.1 Organization, Power and Authority of USI. USI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Georgia and USI has the requisite corporate power and authority
to own or lease its properties and to carry on its business as it is now being
conducted. USI is duly qualified as a foreign corporation and is in good
standing under the laws of each other jurisdiction in which the conduct of its
business or the ownership of its assets requires such qualification, except
where the failure to qualify would not result in a material adverse effect on
USI or its business. USI has no subsidiaries.
Section 4.2 Due Authorization; Binding Obligation. USI has the
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. This Agreement has
been duly and validly executed and delivered by USI and is the legal, valid and
binding obligation of USI, enforceable in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, preferential transfer, moratorium or
similar laws relating to enforcement of creditors' rights generally and general
principles of equity. Except for any corporate action required by USI, no other
action on the part of any individual or other person or entity is necessary to
Page 6
<PAGE>
authorize this Agreement or for the consummation of the transactions
contemplated by this Agreement. USI has duly executed this Agreement and
authorized the execution of this Agreement and the consummation of the
transactions contemplated by this Agreement as required under the Georgia GBCC.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated by this Agreement will: (i) conflict with or violate
any provision of USI's Articles of Incorporation or by-laws, or any law,
ordinance or regulation or any decree or order of any court or administrative or
other governmental body which is either applicable to, binding upon or
enforceable against USI; (ii) result in any material breach of or default under
any material mortgage, other contract, agreement, indenture, will, trust or
other instrument which is either binding upon or enforceable against USI or any
of USI' Assets; (iii) result in any breach of or default under any contract;
(iv) violate any legally protected right of any individual or entity or give to
any individual or entity a right or claim against USI or Pre-Cell; or, (v)
impair or in any way limit any material governmental or official license,
approval, permit or authorization of USI to conduct its business. Attached to
this Agreement and marked as Exhibit G are true, correct and complete copies of
the Articles of Incorporation, as amended, and Bylaws, as amended, of USI.
Section 4.3 Financial Statements. Attached to this Agreement as Exhibit
H are true, correct and complete copies of the unaudited financial statements of
USI as of December 31, 1999 and the related statements of earnings and changes
in financial position for the period then ended (collectively, the "Financial
Statements"). The Financial Statements (i) have been prepared in accordance with
USI's accounting policies consistently applied, on a basis consistent with past
practices; (ii) are true, complete and correct; (iii) fairly present the
financial condition of USI as of their respective dates and results of its
operations for the periods ending on their respective dates; and (iv) do not
include or omit to state any fact which renders those statements misleading.
Section 4.4 No Undisclosed Liabilities. USI has no liabilities or
obligations (whether secured, unsecured, absolute, accrued, asserted, contingent
or otherwise) of any nature, whether as principal, agent, partner, co-venturer,
guarantor or in any other capacity except: (i) the liabilities and obligations
of USI that are reflected in the Financial Statements and only to the extent
reflected; (ii) liabilities incurred or accrued in the ordinary course of
business since December 31, 1999 which do not, either individually or in the
aggregate, have a material adverse effect on the financial condition of USI; or
(iii) liabilities otherwise disclosed in Schedule 4.4.
Section 4.5 Licenses; Compliance. USI possesses all licenses and other
required governmental or official approvals, permits, consents and
authorizations necessary for the operation of the Business, all of which are
listed on Schedule 4.5 (collectively the "Authorizations"). USI is in material
compliance with: (i) the terms of all Authorizations; (ii) all laws, ordinances,
statutes and regulations where noncompliance would have a material adverse
effect on USI and its business or assets; and, (iii) all judgments, orders,
rulings or other decisions of any governmental or other regulatory authority,
court or arbitrator having jurisdiction over USI. Neither the execution,
delivery or performance of this Agreement nor the performance of the
Page 7
<PAGE>
transactions contemplated by this Agreement will affect the validity of any
Authorizations and the same shall remain in full force and effect upon the
consummation of the transactions contemplated by this Agreement, except for
Authorizations which by their terms are not transferable.
Section 4.6 Consents and Approvals. No approval, consent or
authorization must be obtained by USI for the execution, delivery or performance
of this Agreement or for the consummation of the transactions contemplated by
this Agreement, including, without limitation, the filing or registration with
any governmental or other regulatory authority.
Section 4.7 No Stockholder or Affiliate Relationships with USI's
Customers; USI's Interest in Other Businesses. Neither USI nor any of the
Stockholders or their respective affiliates (as such term is defined in Rule 405
promulgated by the SEC under the Securities Act) ("Affiliate") has, or during
the past 5 years had, any direct or indirect material interest in any of USI's
customers. USI does not have any financial interest in any person, firm or
corporation which is, or during the past 5 years was, directly or indirectly,
(a) engaged in the business engaged in by USI or (b) a customer or supplier of
USI, other than ownership of not more than 1% of the equity securities of a
company whose common stock is publicly traded.
Section 4.8 Litigation, Orders and Decrees. Except as listed on
Schedule 4.8, there are no actions, suits, claims, governmental investigations
or arbitration proceedings pending or to the best of USI's knowledge, threatened
against or affecting USI or the Business, assets, or financial condition of USI
and there are no facts or circumstances which are reasonably likely to create a
basis for any of the foregoing, which, either individually or in the aggregate,
would have a material adverse affect on USI, its business or financial
condition. There are no outstanding orders, decrees or stipulations issued by
any local, state or federal judicial authority in any proceeding to which USI is
or was a party which may have a material adverse effect on USI.
Section 4.9 Real Property Owned or Leased. USI does not own any real
property. Attached to this Agreement as Schedule 4.9 is a true and complete list
of all leases of real property (the "Leased Real Property") to which USI is a
party, including all amendments and modifications thereto (the "Real Property
Leases"). USI enjoys peaceful and undisturbed possession of the Leased Real
Property, and the Real Property Leases are the valid and legally binding
obligations of USI and the respective lessors, enforceable against USI and the
respective lessors in accordance with their respective terms, and are in full
force and effect. USI (i) has not received written notice of default under any
of the Real Property Leases, (ii) is not in material default of any Real
Property Leases and (iii) no event has occurred which, with the passage of time
or the giving of notice or both, would constitute a material default under any
of the Real Property Leases.
Section 4.10 Personal Property Leased and Purchase Options. Attached as
Schedule 4.10 is a list of all leases of personal property (the "Personal
Property Leases") to which USI is a party. USI has provided to Pre-Cell true and
complete copies of the Personal Property Leases, including all amendments and
Page 8
<PAGE>
modifications thereto and true and complete copies of all agreements regarding
USI's rights to purchase the leased personal property which is the subject of
the Personal Property Leases ("the Leased Personal Property") on or before the
expiration of the Personal Property Leases, including all amendments and
modifications thereto (the "Purchase Options"). USI enjoys peaceful and
undisturbed possession of the Leased Personal Property, and the Personal
Property Leases and Purchase Options are the valid and legally binding
obligations of USI and the respective lessors and option grantors, enforceable
against USI and the respective lessors and option grantors in accordance with
their respective terms, subject to the effect of any bankruptcy or other similar
law affecting creditors' rights generally, and are in full force and effect. USI
(i) has not received written notice of default under any of the Personal
Property Leases, (ii) is not in default of any Personal Property Leases, and
(iii) no event has occurred which, with the passage of time or the giving of
notice or both, would constitute a material default under any of the Personal
Property Leases. None of the Purchase Options, if any, have expired.
Section 4.11 Title to Purchased Assets. USI has good and marketable
title to all of its property, tangible or intangible, subject to liens for
current taxes and assessments not yet due and payable. All of USI's property is
free and clear of restrictions on or conditions to transfer or assignment, and
free and clear of any mortgage, lien, charge, encumbrance, security interest or
other restrictions.
Section 4.12 Condition of Purchased Assets. All of the tangible assets
of USI and the Leased Personal Property are in good condition, in good operating
order and are fit for the purposes for which those assets are used or intended
to be used, subject to normal wear and tear.
Section 4.13 Material Contracts. Attached as Schedule 4.13 is a
complete and correct list of each of the following types of contracts or
commitments (whether oral or written) to which USI is a party (collectively the
"Contracts"): (i) Contracts for the employment of any officer or employee and
all bonus, incentive compensation, profit-sharing, retirement, pension, group
insurance, death benefit or other fringe benefit plans, deferred compensation or
post-termination obligations; (ii) Contracts for the future purchase of
materials, inventory, supplies, services or equipment; (iii) distributor
agreements and contracts for the purchase or sale of inventory or supplies; (iv)
agreements or arrangements for the purchase, sale or lease of any other assets;
(v) pledges, sales contracts, leases, security agreements or other similar
agreements with respect to USI's properties; (vi) leases of machinery or
equipment; (vii) loan agreements, promissory notes, guarantees, subordination or
similar type agreements; (viii) consulting agreements; and, (ix) any contract
not otherwise covered by clauses (i) through (viii) above which involves annual
or aggregate payments in excess of $1,000. USI has furnished to Pre-Cell true,
complete and accurate copies of all Contracts that are in writing and has
provided, in the case of oral contracts, complete and accurate descriptions of
all Contracts that are not in writing. Except as set forth in Schedule 4.13, USI
has performed all of the obligations required to be performed by it to date
under the Contracts, and is not in default (with notice or lapse of time or
both) under any of Contracts. USI has obtained all necessary consents with
respect to any USI Contract requiring consent on or prior to the date hereof.
Page 9
<PAGE>
Except as set forth on Schedule 4.13, the consummation of the transactions
contemplated by this Agreement will not materially affect the continuation,
validity or effectiveness of any of Contracts.
Section 4.14 Contracts with Customers. Schedule 4.14 sets forth a list
of (a) all Contracts or other understandings or arrangements to which USI is a
party relating to the sale or furnishing by it of goods or services where the
consideration for such sale is $1,000 or more, in any single case, (b) any
claims by parties other than USI with respect thereto, (c) product guarantees or
warranties made by USI relating to its goods or services, and (d) any pending
claims by USI with respect thereto. None of the customers, suppliers or other
persons which is a party to any of the Contracts listed in Schedule 4.14 has
notified USI of any intention to terminate its contract or arrangement for
service.
Section 4.15 Contracts Valid; No Default. All Contracts required to be
listed in any of the Schedules referred to in this Agreement are valid and
binding, enforceable in accordance with their respective terms, subject to the
effect of any bankruptcy or other similar law affecting creditors' rights
generally, and are in full force and effect. Except as set forth in such
Schedules, there is not under any such Contract, (a) any existing default by
USI, or any event which, after notice or lapse of time, or both, would
constitute a default by USI or result in a right to accelerate by any other
person or a loss of any rights of USI and (b) to the best of USI's knowledge,
any default by any other person, or any event which, after notice or lapse of
time, or both, would constitute a default by any such person or result in a
right to accelerate by USI or a loss of any rights of any such person. No
existing Contract relating to the business of USI is cancelable by any other
party thereto or is likely to be canceled. Except as disclosed in such
Schedules, USI is not a party to or bound by any Contract which, upon
performance, is reasonably expected to result in any loss or liability to USI.
True and complete copies of all Contracts and other documents listed on such
Schedules (together with any and all amendments thereto) have been delivered to
Pre-Cell.
Section 4.16 Labor Matters. USI is not a party to any collective
bargaining agreements with its employees. USI is in compliance with all federal,
state and local laws regarding employment and employment practices, conditions
of employment, wages and hours and occupational laws, the violation of which
would have a material adverse effect on USI. USI is not engaged in unfair labor
practices, and there are no unfair labor practice complaints pending or, to the
best of USI's knowledge, threatened against USI before the National Labor
Relations Board or any other governmental or regulatory board or agency
performing similar functions. There is no labor strike, slowdown, work stoppage
or dispute pending or threatened against or involving USI. To the best of USI's
knowledge, none of USI's employees are engaged in organizing or are members of
any union or other employee group that is seeking recognition as a bargaining
unit.
Section 4.17 Absence of Changes. Except as set forth in Schedule 4.17,
since December 31, 1999, there has not been: (i) any material adverse change in
the financial condition, assets, liabilities, Business or operations of USI;
(ii) any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the properties, financial condition or
business of USI; (iii) any change in the outstanding capital stock of USI; (iv)
Page 10
<PAGE>
declared, paid or set aside for payment any dividend or other distribution
(whether in cash, stock, property or any combination thereof) in respect of
USI's common stock or any cancellation, exercise or redemption or other
acquisition by USI of any shares of USI's common stock; (v) any increase in the
rate or terms of compensation payable or to become payable by USI to any of its
officers, directors or key employees or any increase in the rate or terms of
contribution to any employee benefit plans, except as required by law; (vi) any
liabilities or obligations incurred or agreed to be incurred (whether absolute,
accrued, contingent or otherwise), except as incurred in the ordinary course of
business consistent with past practices; (vii) any material capital expenditure
or commitment for replacements or additions or improvements; (viii) any change
by USI in accounting methods, principles or practices; (ix) any disposal,
mortgage, pledge or other disposition of any of its assets other than in the
ordinary course of business; or (x) receipt by USI of any notice of termination
of any contract, lease or other agreement.
Section 4.18 Accuracy of Documents, Exhibits and Schedules. All
contracts, instruments, agreements and other documents delivered by USI to
Pre-Cell for Pre-Cell's review in connection with this Agreement and the
transactions contemplated hereby, including all articles of incorporation,
by-laws, corporate minutes, stock record books, financial statements and tax
returns are true, correct and complete copies of all those contracts,
instruments, agreements and other documents. All Exhibits and Schedules to this
Agreement are true correct and complete as of the date hereof. No statement
contained in this Agreement or in any certificate, Exhibit, Schedule or
instrument furnished to Pre-Cell pursuant to the provisions of this Agreement or
in connection with the consummation of the contemplated transactions contains or
will contain any materially untrue statement or does not include or omit to
state any fact which renders those statements misleading.
Section 4.19 Investment Representations. All shares of Pre-Cell Stock
to be acquired by the Stockholders pursuant to this Agreement will be acquired
for his/her own account and not with a view towards distribution thereof. USI
and the Stockholders understand that they must bear the economic risk of the
investment in the Pre-Cell Stock, which cannot be sold by them unless they are
registered under the Securities Act, or an exemption therefrom is available, and
such sale is permitted under the terms of the Lock-Up Agreement. The
Stockholders, acting through their representatives, have had both the
opportunity to ask questions and receive answers from the officers and directors
of Pre-Cell and all persons acting on its behalf concerning the business and
operations of Pre-Cell and to obtain any additional information to the extent
Pre-Cell possesses or may possess such information or can acquire it without
unreasonable effort or expense necessary to verify the accuracy of such
information. The Stockholders acknowledge receiving copies of the SEC Filings
referred to in Section 5.5. The certificates representing the shares of Common
Stock shall bear the legends set forth in Exhibit I.
Section 4.20 Proprietary Rights.
(a) Except as listed on Schedule 4.20(a), there are no trademarks,
trademark applications, trade names, assumed names, service marks, logos,
Page 11
<PAGE>
patents, patent applications, copyrights and copyright registrations, owned or
licensed by USI and used in or necessary for the conduct of the business and
operation of USI (the foregoing together with all inventions, trade secrets,
customer lists and confidential processes, and all other similar rights
presently owned or licensed by USI are the "Proprietary Rights"). USI owns or
possesses the royalty-free license or other right to use all of the Proprietary
Rights which are required to be listed on Schedule 4.20(a) or which are
necessary to conduct its business as presently operated, and, except as set
forth on Schedule 4.20(a), no person, firm, corporation or other entity is
entitled to restrain USI from using any such Proprietary Rights. No other
Proprietary Rights are used in or are necessary for the conduct of the business
and operation of USI as presently conducted.
(b) To the best of USI's knowledge, except as disclosed in Schedule
4.20 (b), no Proprietary Rights or know-how used in or necessary for the conduct
of the business and operation of USI conflict with or infringe upon any similar
rights or services of any other person. Except as disclosed in Schedule 4.20
(b), no claims have been asserted by any person with respect to the ownership,
validity, license or use of the Proprietary Rights or the provision of any
services by USI and there is no basis for any such claim.
(c) Schedule 4.20(c) accurately identifies all material databases and
computer software owned, licensed or otherwise used in connection with USI's
business. Except as set forth on Schedule 4.20(c), USI has all the databases and
computer software used or necessary to conduct USI' business.
Section 4.21 Records. The books and records, correspondence, employment
records and files of or relating to the Business USI are complete and correct in
all material respects, and there have been, and will be, no material
transactions which are required to be set forth therein which have not been so
set forth.
Section 4.22 Taxes, Tax Returns. All federal, state, local and foreign
income, property, sales, and other taxes, assessments, governmental charges,
penalties, interest and fines due and payable by USI and by any other person,
firm or corporation which will or may be liabilities of USI ("Taxes"), for all
periods ending on or before the Balance Sheet Date, have been paid in full or
have been fully reserved against on the Balance Sheet. USI has filed all
federal, state, local and foreign income, excise, property, sales, withholding,
social security, information returns, and other tax returns, reports and related
information ("Returns") required to have been filed by it to the date hereof,
and no extension of the time for filing a Return is presently in effect. The
Returns that have been filed have been accurately prepared and have been duly
and timely filed. USI's federal income tax returns have not been audited by the
Internal Revenue Service for all fiscal years through the year ended December
31, 1998. There are no agreements, waivers or other arrangements providing for
an extension of time with respect to the filing of any Return, or payment of any
tax, governmental charge or assessment or deficiency, by USI; and there are no
actions, suits, proceedings, investigations or claims now threatened or pending
against USI in respect of taxes, governmental charges or assessments, or any
matter under discussion with any governmental authority relating to taxes,
governmental charges or assessments asserted by any such authority.
Page 12
<PAGE>
Section 4.23 Environmental Matters; Health and Safety Laws. USI is in
material compliance with all federal, state and local laws, regulations,
permits, orders and decrees relating to protection of the environment and
employee health and safety ("Applicable Requirements"). USI has not received any
notice to the effect that its operations are not in compliance with any of the
Applicable Requirements or the subject of any governmental investigation
evaluating whether any remedial action is needed to respond to a release of any
toxic or hazardous waste or other substance (including petroleum products) into
the environment and USI knows of no facts which could constitute the basis for
any thereof.
Section 4.24 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of USI, provided, however, USI entered into an agreement
with RiverHawk Capital Resources, a division of RiverHawk Holdings, Inc.
("RiverHawk"), which USI terminated. RiverHawk is claiming remuneration under
the agreement arising out of the Merger which USI denies. The matter is subject
to binding arbitration.
Section 4.25 Nature and Survival of Representations and Warranties of
USI. All statements contained in any Schedule, document, certificate or other
instrument delivered by or on behalf of USI pursuant hereto or in connection
with the transactions contemplated hereby shall be deemed representations,
warranties, covenants and agreements made by USI. Each representation, warranty,
covenant and agreement made or deemed made by USI shall survive the Closing. The
representations, warranties, covenants and agreements made or deemed made by USI
in this Agreement shall not be affected or deemed waived by reason of the fact
that Pre-Cell or its representative knew or should have known that any such
representations, warranties, covenants or agreement is or might be inaccurate in
any respect. Any furnishing of information to Pre-Cell by USI pursuant to, or
otherwise in connection with, this Agreement, including, without limitation, any
information contained in any document, contract, book or record of USI to which
Pre-Cell shall have access or any information obtained by, or made available to,
Pre-Cell as a result of any investigation made by or on behalf of Pre-Cell prior
to or after the date of this Agreement, shall not affect Pre-Cell's right to
rely on any representation, warranty, covenant or agreement made or deemed made
by USI in this Agreement and shall not be deemed a waiver thereof.
Section 4.26 Capitalization. The number of authorized, issued and
outstanding shares of capital stock of USI is set forth in Schedule 4.26. The
Stockholders (and their respective residential addresses) as set forth on
Exhibit A, and are the record and beneficial owners of all of the outstanding
capital stock of USI, free and clear of all liens, encumbrances or restrictions
to transfer. Except as set forth on Schedule 4.26, there are no options,
warrants or other contractual rights outstanding which require, or give any
person the right to require, the issuance of any capital stock of USI, whether
or not such rights are presently exercisable.
Page 13
<PAGE>
Section 4.27 Employee Benefit Plans. Schedule 4.27 sets forth a list of
all the employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), programs and
arrangements maintained for the benefit of any current or former employee,
officer or director of USI (collectively, the "USI Benefit Plans"). Each USI
Benefit Plan and any related trust intended to be qualified under Sections
401(a) and 501(a) of the Code has received a favorable determination letter from
the Internal Revenue Service that it is so qualified and nothing has occurred
since the date of such letter that could reasonably be expected to materially
adversely affect the qualified status of such USI Benefit Plan or related trust.
Each USI Benefit Plan has been operated in all material respects in accordance
with the terms and requirements of applicable law and all required returns and
filings for each USI Benefit Plan have been timely made. Neither USI nor any
entity under common control with USI has incurred any direct or indirect
liability under, arising out of or by operation of Title I or Title IV of ERISA
in connection with any USI Benefit Plan and no fact or event exists that could
reasonably be expected to give rise to any such liability. All contributions due
and payable on or before the date hereof in respect of each USI Benefit Plan
have been made in full and in proper form.
Section 4.28 Insurance Policies; Claims. Schedule 4.28 sets forth all
insurance policies and bonds maintained by or on behalf of USI. Except as
disclosed in Schedule 4.28, the insurance policies and bonds set forth in
Schedule 4.28, are provided by reputable insurers or issuers, and provide
adequate coverage for all normal risks incident to the businesses of USI and its
assets. No claims have been made against USI as a result of allegedly defective
products and USI knows of no basis for the assertion of any such claim. No
insurance policy issued to or on behalf of USI has ever been canceled by the
policy issuer.
Section 4.29 Bank Accounts. Schedule 4.29 sets forth the name of each
bank in which USI has an account or safe deposit box, vault, lock-box or other
arrangement, the account number and description of each account at each bank and
the names of all persons authorized to draw thereon or to have access thereto;
and the names of all persons, if any, holding tax or other powers of attorney
from USI.
Section 4.30 Records. The books of account, minute books, stock
certificate books and stock transfer ledgers of USI are complete and correct in
all material respects, and there have been no material transactions involving
USI of the type typically recorded in such records that have not been recorded.
Section 4.31 No Illegal or Improper Transactions. Neither USI nor any
officer, director, employee, agent or affiliate of USI has offered, paid or
agreed to pay to any person or entity (including any governmental official) or
solicited, received or agreed to receive from any such person or entity,
directly or indirectly, any money or anything of value for the purpose or with
the intent of (i) obtaining or maintaining business for the benefit of USI, (ii)
illegally or improperly facilitating the purchase or sale of any product or
service, or (iii) avoiding the imposition of any fine or penalty, in any manner
which is in violation of any applicable ordinance, regulation or law.
Page 14
<PAGE>
Section 4.32 Related Transactions. Except as disclosed in Schedule
4.32, and for compensation and related arrangements with employees for services
rendered consistent with past practices, no current or former director, officer,
employee or stockholder of USI has been, (a) a party to any transaction with USI
(including, but not limited to, any contract, agreement or other arrangements
providing for the furnishing of services by, or rental of real or personal
property from, or otherwise requiring payments to, any such director, officer,
employee or shareholder), or (b) the direct or indirect owner of an interest in
any corporation, firm, association or business organization which is a present
competitor, supplier or customer of USI, nor does any such person receive income
from any source other than USI which relates to the business of, or should
properly accrue to, USI.
Section 4.33 Software. USI owns all right, title and interest in and to
the software which is described in Schedule 4.33 (the "Software"). The
marketing, reproduction or use of the Software, does not infringe upon any
patent, copyright, trademark, trade secret or other proprietary right of any
third party. No proceedings have been instituted, are pending or are threatened
which challenge the rights of USI under or the validity of the Software, none of
the intellectual property rights relating to the Software is being infringed
upon by others and none of the intellectual property rights relating to the
Software is subject to any outstanding order or judgment. USI has taken all
steps reasonably necessary to protect the intellectual property rights in the
Software, including, but not limited to, utilization of the proper statutory
form of copyright notice on all copies of the Software and any documentation
relating of the Software that has been commercially distributed prior to the
Closing Date.
Section 4.34 Incorporation of Schedules by Reference. All of the
disclosures, lists, descriptions and otherwise set forth in any Schedule to this
Agreement shall be conclusively deemed to have been made under and with respect
to each and every other Section and Schedule to this Agreement, where
applicable. It is the intent of this provision that the disclosure by USI under
any one Schedule, shall be notice and disclosure to Pre-Cell and Merger
Subsidiary, respectively, under this Agreement.
ARTICLE V
Representations and Warranties of Pre-Cell
In order to induce USI and the Stockholders to enter into this
Agreement and to consummate the transactions contemplated under this Agreement,
Pre-Cell and Merger Subsidiary hereby make the following representations and
warranties each of which is relied upon by USI and the Stockholders regardless
of any other action, omission to act, investigation made or information obtained
by USI or the Stockholders:
Section 5.1 Organization, Power and Authority. Pre-Cell and Merger
Subsidiary are corporations duly organized and validly existing under the laws
of the States of Colorado and Georgia, respectively, with full corporate power
and authority to enter into this Agreement and perform their obligations under
this Agreement.
Page 15
<PAGE>
Section 5.2 Due Authorization; Binding Obligation. The execution,
delivery and performance of this Agreement, the consummation of the transactions
contemplated by this Agreement and the issuance of the Stock Consideration have
been duly authorized by all necessary corporate action of Pre-Cell and Merger
Subsidiary. This Agreement has been duly executed and delivered by Pre-Cell and
Merger Subsidiary and is the valid and binding obligation of Pre-Cell and Merger
Subsidiary, enforceable in accordance with its terms. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
by this Agreement will: (i) conflict with or violate any provision of the
articles of incorporation or by-laws of Pre-Cell or Merger Subsidiary, or of any
law, ordinance or regulation or any decree or order of any court or
administrative or other governmental body which is either applicable to, binding
upon or enforceable against Pre-Cell or Merger Subsidiary; (ii) result in any
material breach of or default under any material mortgage, contract, agreement,
indenture, will, trust or other instrument which is either binding upon or
enforceable against Pre-Cell or Merger Subsidiary or their respective assets.
Section 5.3 Shares. When issued in accordance with the terms of this
Agreement, the Pre-Cell Stock to be issued to the Stockholders shall be validly
issued, fully paid and non-assessable.
Section 5.4 Consents and Approvals. The execution and delivery of this
Agreement by Pre-Cell do not, and the performance of this Agreement by Pre-Cell
will not, require Pre-Cell to obtain any consent, approval, authorization or
other action by, or to make any filing with or notification to, any governmental
or regulatory authority.
Section 5.5 SEC Reports. Pre-Cell has delivered to the Stockholder its
reports (the "SEC Filings") filed pursuant to the Securities And Exchange Act of
1934, as amended (the "Securities And Exchange Act"). Each of the SEC Filings,
including the financial statements contained therein, as of their filing dates,
complied in all material respects with the requirements of the rules and
regulations promulgated by the Securities and Exchange Commission (the
"Commission") with respect thereto and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
Section 5.6 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Pre-Cell.
Section 5.7 Absence of Changes. Except as set forth in Schedule 5.7,
since December 31, 1999, there has not been: (i) any material adverse change in
the financial condition, assets, liabilities, Business or operations of
Pre-Cell; (ii) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, financial
condition or business of Pre-Cell; (iii) any change in the outstanding capital
Page 16
<PAGE>
stock of Pre-Cell; (iv) declared, paid or set aside for payment any dividend or
other distribution (whether in cash, stock, property or any combination thereof)
in respect of Pre-Cell's common stock or any cancellation, exercise or
redemption or other acquisition by USI of any shares of Pre-Cell's common stock;
(v) any increase in the rate or terms of compensation payable or to become
payable by Pre-Cell to any of its officers, directors or key employees or any
increase in the rate or terms of contribution to any employee benefit plans,
except as required by law; (vi) any liabilities or obligations incurred or
agreed to be incurred (whether absolute, accrued, contingent or otherwise),
except as incurred in the ordinary course of business consistent with past
practices; (vii) any material capital expenditure or commitment for replacements
or additions or improvements; (viii) any change by Pre-Cell in accounting
methods, principles or practices; (ix) any disposal, mortgage, pledge or other
disposition of any of its assets other than in the ordinary course of business;
or (x) receipt by Pre-Cell of any notice of termination of any contract, lease
or other agreement.
Section 5.8 Accuracy of Documents, Exhibits and Schedules. All
contracts, instruments, agreements and other documents delivered by Pre-Cell to
USI for USI's review in connection with this Agreement and the transactions
contemplated hereby, including all articles of incorporation, by-laws, corporate
minutes, stock record books, financial statements and tax returns are true,
correct and complete copies of all those contracts, instruments, agreements and
other documents. All Exhibits and Schedules to this Agreement are true correct
and complete as of the date hereof. No statement contained in this Agreement or
in any certificate, Exhibit, Schedule or instrument furnished to Pre-Cell
pursuant to the provisions of this Agreement or in connection with the
consummation of the contemplated transactions contains or will contain any
materially untrue statement or does not include or omit to state any fact which
renders those statements misleading.
Section 5.9 Limitation of Liabilities. Notwithstanding anything
contained herein to the contrary, Pre-Cell shall have no liability to the
Shareholders if any of the representations and warranties contained in this
Article V are inaccurate or for a breach of any representation or warranty
contained herein.
Section 5.10 Incorporation of Schedules by Reference. All of the
disclosures, lists, descriptions and otherwise set forth in any Schedule to this
Agreement or in any of the SEC Filings shall be conclusively deemed to have been
made under and with respect to each and every other Section and Schedule to this
Agreement, where applicable. It is the intent of this provision that the
disclosure by Pre-Cell under any one Schedule or in any one of the SEC Filings,
shall be notice and disclosure to USI and the Stockholders, respectively, under
this Agreement.
ARTICLE VI
Covenants of USI
Section 6.1 Further Assurances. From time to time after the date of
this Agreement, the Stockholders shall execute and deliver such other
instruments and shall take such other actions as Pre-Cell may reasonably request
to effectuate the transactions contemplated by this Agreement.
Page 17
<PAGE>
Section 6.2 Press Releases. Neither the Stockholders nor any of their
Affiliates shall issue or cause to be issued any press release in connection
with or referring to any of the transactions contemplated by this Agreement.
Section 6.3 Non-use of Name. From and after the date hereof, no
Stockholder or any of their Affiliates shall establish or otherwise be
associated with, as an owner, partner, shareholder, employee or otherwise, any
firm which utilizes the name "USI," "US/Intellicom," US/Intelicom" or any
variant thereof (collectively, the "Names") as part of its business name other
than in connection with their employment by Pre-Cell itself after the Closing
Date or grant to any person or entity the right to use the Names or any variant
thereof.
Section 6.4 Maintenance of USI Employee Medical Benefits. From the date
hereof, through the last day of the month in which the Closing takes place, USI
shall continue to afford coverage under its existing health and medical plans to
those employees of USI that are covered under such plans as of the date hereof.
Section 6.5 Lock-Up Agreements. Within thirty days after the Closing,
each of the Stockholders will execute and deliver to Pre-Cell a Lock-Up
Agreement substantially in the form of Exhibit F annexed to this Agreement
pursuant to which they agree to not sell any shares of Common Stock acquired by
them for the period of time indicated on Exhibit F.
Section 6.6 Opinion of Counsel. Within thirty days after the Closing,
USI shall cause its counsel, Andre & Blaustein, LLP to deliver an opinion of
counsel to Pre-Cell and Merger Subsidiary in form and content reasonably
satisfactory to Pre-Cell, Merger Subsidiary and their counsel;
ARTICLE VII
Covenants of Pre-Cell
Section 7.1 Further Assurances. From time to time after the date of
this Agreement, Pre-Cell shall execute and deliver such other instruments and
shall take such other actions as the Stockholders may reasonably request to
effectuate the transactions contemplated by this Agreement.
Section 7.2 Disclosure. Pre-Cell will not be required to obtain the
prior written consent of the Stockholders to disclose the existence or any term
or condition of this Agreement if Pre-Cell believes (based upon the advice of
counsel) such disclosure is required under the securities laws of the United
States.
Page 18
<PAGE>
Section 7.3 Membership of Purchaser's Board of Directors.
(a) As soon as reasonably practicable after the Merger, Pre-Cell
agrees to hold an annual meeting of its stockholders and to seek their approval
for an increase in the size of the Board from three (3) members to seven (7)
members. Upon approval by the Pre-Cell shareholders of the increase of the size
of the Board, Pre-Cell agrees to nominate for election and use its best efforts
to have elected to its Board (i) two (2) designees selected by the USI Major
Stockholders (as defined in the Voting Agreement) so long as the USI
stockholders continue to hold an aggregate of at least 6,900,000 of the Pre-Cell
Shares acquired n the Merger; and (ii) one (1) designee selected by the USI
Major Stockholders so long as the USI stockholders continue to own 3,450,000
Pre-Cell Shares acquired in the Merger. In the event the USI stockholders own
less than 3,450,000 of Pre-Cell Shares acquired hereunder, Pre-Cell shall have
no further obligation hereunder to nominate any USI Nominees to the Board.
Section 7.4 Release of Guarantees. Simultaneous with the Closing,
Pre-Cell shall cause the release of those guarantees and accommodations by the
Stockholders set forth in Schedule 7.4 who have exercised options on the option
pool described in Section 7.5.
Section 7.5 Option Pool. Pre-Cell shall establish an option pool
substantially in the form of Exhibit J (the "Option Pool Agreement") pursuant to
which those Stockholders listed on Schedule 7.5 (the "LOC Stockholders") shall
have the right to acquire Pre-Cell common stock at the prices and upon the terms
set forth in an Option Pool Agreement executed by the LOC Stockholders and
Pre-Cell.
Section 7.6 Opinion of Counsel. Within thirty days after the Closing,
Pre-Cell shall cause its counsel, Tobin & Reyes, P.A., to deliver an opinion of
counsel to USI in form and content reasonably satisfactory to USI and its
counsel;
ARTICLE VIII
Miscellaneous
Section 8.1 Survival of Representations and Warranties. All of the
respective representations and warranties of the parties to this Agreement shall
survive the consummation of the transactions contemplated by this Agreement. All
covenants of the parties to this Agreement shall survive the consummation of the
transactions contemplated by this Agreement.
Section 8.2 Amendment and Modification. The parties to this Agreement
may amend, modify and supplement this Agreement but only in writing and such
writing must be signed by all the parties.
Section 8.3 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors, assigns,
heirs, estates, beneficiaries, executors and legal and personal representatives.
Page 19
<PAGE>
Section 8.4 Entire Agreement. This instrument and the Exhibit and
Schedules attached to this Agreement contain the entire agreement of the parties
with respect to the acquisition and the other transactions contemplated in this
Agreement, and supersede all prior understandings and agreements of the parties
with respect to the subject matter of this Agreement. Any reference in this
Agreement shall be deemed to include the Exhibits and the Schedules.
Section 8.5 Headings. The descriptive headings in this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
Section 8.6 Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original.
Section 8.7 Notices. Any notice, demand or communication required or
permitted to be given under any provision of this Agreement shall be given: (i)
when sent by reputable overnight courier service which provides written proof of
delivery, including but not limited to via United Parcel Service, Federal
Express, or other nationally recognized carrier; (ii) when hand-delivered; or
(iii) when transmitted by facsimile, if such facsimile is confirmed to the
sender and is followed by a hard copy of the facsimile communication being
delivered to the party to be notified in accordance with the above, in each case
when addressed to the parties as set forth below, or such other addresses as
shall be specified by written notice delivered to the other parties.
If to Pre-Cell: Pre-Cell Solutions, Inc.
385 East Drive
Melbourne, Florida 32904
Attn: Thomas E. Biddix,
Chief Executive Officer
Facsimile: (407) 729-8484
With a copy to: Tobin & Reyes, P.A.
7251 West Palmetto Park Road
Suite 205
Boca Raton, Florida 33433
Attn: David S. Tobin, Esq.
Facsimile: (561) 620-0656
or the Stockholders: To the addresses set forth on Exhibit A
with a copy to: Andre & Blaustein, LLP
The Candler Building
127 Peachtree Street, N.E.
Atlanta, Georgia 30303-1800
Attn: Jon Blaustein, Esq.
Facsimile: (404) 653-0338
Page 20
<PAGE>
All notices, demands and communications shall be effective when
sent. However, the time period in which to respond to any such notice, demand or
communication shall begin to run from the date of receipt by the addressee
thereof, as designated on the return receipt of the notice, demand or
communication or on the date of the actual receipt in the case of delivery by
other means. If a notice, demand or communication is sent but not actually
received by a party as a result of that party's rejection or other refusal to
accept delivery or the inability of the other party to deliver because a change
of address as to which no notice was given, such intended recipient shall be
deemed to be in receipt of the notice, demand or request once sent.
Section 8.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida applicable to
contracts made and to be performed in Florida without reference to the choice of
law principles. Each Party hereby submits to the exclusive jurisdiction of the
courts (city, state and federal) located in the County of Palm Beach, State of
Florida, pursuant to this Agreement or any other agreement, instrument or other
document any action, proceeding or claim brought by any other Party executed and
delivered in connection with this Agreement or pursuant hereto. Service of
process in any such action or proceeding brought against a Party may be made by
registered mail addressed to such Party at the address set forth in Section 8.7
or to such other address as such Party shall notify the other Party in writing
is to be used for such purpose pursuant to Section 8.7. For purposes hereof, the
address designated for USI shall also be the address designated for the
Stockholders.
Section 8.9 Expenses. All accounting, legal and other costs and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring those fees,
costs and expenses.
Section 8.10 Waiver. Any party to this Agreement may extend the time
for or waive the performance of any of the obligations of the other, waive any
inaccuracies in the representations or warranties by the other, or waive
compliance by the other with any of the covenants or conditions contained in
this Agreement. Any such extension or waiver shall be in writing and signed by
the parties. No such waiver shall operate or be construed as a waiver of any
subsequent act or omission of the parties.
Section 8.11 Severability. The invalidity or unenforceability of any
one or more of the words, phrases, sentences, clauses, or sections contained in
this Agreement shall not affect the validity or enforceability of the remaining
provisions of this Agreement or any part of any provision, all of which are
inserted conditionally on their being valid in law, and in the event that any
one or more of the words, phrases, sentences, clauses or sections contained in
this Agreement shall be declared invalid or unenforceable, this Agreement shall
be construed as if such invalid or unenforceable word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted or shall be enforced as nearly as possible according to their
original terms and intent to eliminate any invalidity or unenforceability. If
any invalidity or unenforceability is caused by the length of any period of time
or the size of any area set forth in any part of this Agreement, the period of
Page 21
<PAGE>
time or area, or both, shall be considered to be reduced to a period or area
which would cure the invalidity or unenforceability.
Section 8.12 Attorney's Fees. In the event of any arbitration or
litigation, including appeals, with regard to this Agreement, the prevailing
party shall be entitled to recover from the non-prevailing party all reasonable
fees, costs, and expenses of counsel (at pre-trial, trial and appellate levels).
Section 8.13 No Breach. The parties agree that the execution of this
Agreement shall not be deemed to be an assignment of any contract where consent
to such assignment is required by the terms of the contract provided that the
foregoing shall not affect USI' obligation to obtain all consents as provided in
this Agreement.
Section 8.14 Construction. This Agreement shall be construed without
regard to any presumption or other rule requiring construction against the party
causing this Agreement to be drafted. If any words in this Agreement have been
stricken out or otherwise eliminated (whether or not any other words or phrases
have been added) and the stricken words initialed by the party against whom the
words are construed, this Agreement shall be construed as if the words so
stricken out or otherwise eliminated were never included in this Agreement and
no implication or inference shall be drawn from the fact that those words were
stricken out or otherwise eliminated.
Section 8.15 No Jury Trial EACH PARTY WAIVES ALL RIGHTS TO ANY TRIAL BY
JURY IN ALL LITIGATION RELATING TO OR ARISING OUT OF THIS AGREEMENT.
[signatures on next page]
Page 22
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the date hereof.
PRE-CELL SOLUTIONS, INC.,
a Colorado corporation
By: /s/ Thomas E. Biddix
-----------------------------
Thomas E. Biddix,
Chief Executive Officer
USI MERGER CORP.
a Georgia corporation
By: /s/ Thomas E. Biddix
-----------------------------
Thomas E. Biddix,
President
US/INTELICOM, INC.,
a Georgia corporation
By: /s/ Ronald Kindland
-----------------------------
Ronald Kindland,
Chief Executive Officer
Page 23
MERGER AND REORGANIZATION AGREEMENT
THIS MERGER AND REORGANIZATION AGREEMENT dated as of April 4, 2000, is
entered into among PRE-CELL SOLUTIONS, INC., a Colorado corporation
("Pre-Cell"), PRE-PAID ACQUISITIONS CORP., a Florida corporation and
wholly-owned subsidiary of Pre-Cell ("Merger Subsidiary"), PRE-PAID SOLUTIONS,
INC., a Florida corporation ("Pre-Paid"), Thomas E. Biddix ("Biddix") and each
of the other stockholders of Pre-Paid listed on Exhibit A (Biddix and such other
stockholders being referred to collectively herein as, the "Stockholders").
WHEREAS, the Stockholders are the owners of all of the outstanding
capital stock of Pre-Paid in the respective amounts set forth in Exhibit A;
WHEREAS, subject to the terms and conditions of this Merger and
Reorganization Agreement ("Agreement"), the Parties desire to consummate a
merger, as contemplated herein, pursuant to which the Merger Subsidiary shall be
merged with and into Pre-Paid so that Pre-Paid becomes a wholly-owned subsidiary
of Pre-Cell; and
WHEREAS, for Federal income tax purposes, the parties intend that such
merger qualify as a reorganization under the provisions of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code").
IT IS AGREED:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the Florida Business
Corporation Act (the "BCA"), the Merger Subsidiary and Pre-Paid shall consummate
a merger (the "Merger") of the Merger Subsidiary with and into Pre-Paid at the
Effective Time (as hereinafter defined) in accordance with the provisions of
this Agreement. Following the Merger, Pre-Paid shall continue as the surviving
corporation (the "Surviving Corporation") and shall continue its existence under
the laws of the State of Florida and the separate corporate existence of Merger
Subsidiary shall cease.
Section 1.2 Effective Time. At the Closing, Pre-Paid and the Merger
Subsidiary shall file with the Florida Secretary of State in accordance with the
BCA an executed copy of the Articles of Merger in the form of Exhibit B hereto
(the "Articles of Merger") reflecting the Merger. The Merger shall become
effective at such time as the Articles of Merger are so filed with the Florida
Secretary of State (the "Effective Time"). To the extent permitted under law,
the Stockholders hereby waive publication of the Articles of Merger. The
<PAGE>
Stockholders hereby agree to the adoption and filing of this Agreement and the
Plan of Merger as required under the BCA, and acknowledge and agree that their
respective signatures hereto shall constitute their written consent for purposes
of authorizing the foregoing by unanimous written consent of stockholders as
provided under the BCA.
Section 1.3 Effects of the Merger. The Merger shall have the effects
set forth in Section 607.1106 of the BCA.
Section 1.4 Certificate of Incorporation and By-Laws. The Articles of
Incorporation and the By-Laws of Merger Subsidiary shall be the Articles of
Incorporation and By-Laws of the Surviving Corporation at the Effective Time.
Section 1.5 Directors and Officers of the Surviving Corporation. At the
Effective Time, the Board of Directors and Officers of the Surviving Corporation
shall consist of the persons listed in Schedule 1.5, each to serve until his or
her successor is elected and qualified.
ARTICLE II
CONVERSION OF SHARES AND RELATED MATTERS
Section 2.1 Conversion of Outstanding Stock of the Merger Subsidiary
and Exchange for Stock of Surviving Corporation. Upon consummation of the
Merger, all 100 shares of the common stock, no par value, of the Merger
Subsidiary ("Merger Subsidiary Stock") outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and exchanged for 100 shares of the
common stock, no par value, of Pre-Paid ("Surviving Corporation Stock"), which
shall represent all of the issued and outstanding shares of capital stock of the
Surviving Corporation immediately after the Effective Time. All shares of
Surviving Corporation Stock shall be fully paid and non-assessable. Promptly
after the Effective Time, the Surviving Corporation shall issue to Pre-Cell a
stock certificate representing the 100 shares of Surviving Corporation Stock in
exchange for the certificate or certificates which formerly represented 100
shares of Merger Subsidiary Stock, which stock certificates shall be immediately
canceled.
Section 2.2 Conversion of Pre-Paid Shares. Subject to the provisions of
Section 1.2, all of the outstanding shares of common stock, no par value, of
Pre-Paid that are outstanding immediately prior to the Effective Time (the
"Pre-Paid Shares") shall be converted into the right to receive, at or after the
Closing, an aggregate of 20,219,145 shares (the "Stock Consideration") of
Pre-Cell's common stock, par value $.01 per share ("Pre-Cell Stock"),
Section 2.3 Pre-Cell Stock. The Pre-Cell Stock, upon issuance under
Section 2.2 shall be subject to the restrictions of Rule 144 promulgated by the
United States of America Securities and Exchange Commission (the "SEC") under
Page 2
<PAGE>
the Securities Act of 1933, as amended (the "Securities Act"), until properly
disposed of in accordance with the terms and conditions of Rule 144 or another
exemption to the registration requirements of the Securities Act. The number of
shares of Pre-Cell Stock constituting the consideration payable to any
Stockholder shall be rounded up or down to the nearest whole number of shares.
Section 2.4 Registration Rights.
(a) General. As soon as practicable after the Closing Date, but no
later than October 31, 2000 in any event, Pre-Cell shall file a registration
statement with the United States Securities and Exchange Commission ("SEC") to
register (i) the Pre-Cell Shares issued to Pre-Paid Stockholders as the Merger
Consideration hereunder, and (ii) those Pre-Cell Shares to be issued to the
holders of the Converted Options upon the exercise of the Converted Options as
contemplated thereby (collectively, the "Holders") under the Securities Act of
1933, as amended (the "Securities Act"), or shall include all such Pre-Cell
Shares in a registration statement which has been filed but not been declared
effective, if allowable under the Securities Act and the rules promulgated
thereunder, so that they may be sold by the Holders to the extent legally
permissible. Pre-Cell shall use its reasonable efforts to cause such
registration statement to be declared effective by the SEC no later than
December 31, 2000, and once such registration statement is declared effective,
to keep it effective until all securities registered thereby are either sold or
can be sold under an exemption from the registration requirements of the
Securities Act. Pre-Cell shall bear all fees and expenses incurred by it in
connection with the preparation and filing of such registration statement. Each
Holder will pay all brokerage discounts and commissions with respect to the sale
of his Pre-Cell Shares and any fees and expenses of separate counsel and
accountants which may be retained by the Holders. Each person for whom Pre-Cell
Shares are to be registered for resale under such registration statement will be
required to execute a lock-up agreement in the form annexed hereto as Exhibit D
pursuant to which he shall agree to (i) not sell any Pre-Cell Shares acquired by
him hereunder until the six month anniversary of the Closing Date; and (ii) only
to sell that percentage of the Pre-Cell Shares owned by him during any
three-month period beginning six months after the Closing Date and ending
eighteen months after the closing date as determined by the Pre-Cell board of
directors.
Notwithstanding any other provision of this Section 2.4, (i) Pre-Cell
shall have no obligation hereunder to register the Pre-Cell Shares on behalf of
a Holder unless (a) such Holder executes a lock-up agreement as described above
and (b) the Holder provides Pre-Cell with all of the information and documents
with respect to his ownership of the Pre-Cell Shares, compliance with the law,
manner of proposed disposition and such other matters as Pre-Cell shall
reasonably request for disclosure in the registration statement; (ii) Pre-Cell
shall not be obligated to register any of the Pre-Cell Shares unless such
registration is then permitted by law and the policy of the SEC; and (iii) it is
understood and agreed that there may be periods of up to 90 days in duration in
any year during which the registration statement filed in accordance with this
Section lapses into noneffectiveness as a result of (a) the unavailability of
financial statements required to update such registration statement or (b) the
occurrence of material events which require the filing of an amendment to such
registration statement.
Page 3
<PAGE>
(b) Indemnification
(i) Pre-Cell shall indemnify and hold harmless, to the extent
permitted by law, each Holder, its officers and directors and each person who
controls a Holder (within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act) against all losses, claims, damages,
liabilities and expenses (including reasonable attorneys' fees, costs and
expenses) caused by any untrue or alleged untrue statement of material fact
contained in any registration statement filed pursuant to Section 2.5(a),
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto, or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in or omitted from any
information furnished in writing to Pre-Cell by such Holder for use therein.
(ii) In connection with any registration statement in which a
Holder is participating, such Holder will furnish to Pre-Cell such information
as Pre-Cell reasonably requests for use in connection with any such registration
statement or prospectus, and to the extent permitted by law, will indemnify
Pre-Cell, its directors and officers and each person who controls Pre-Cell
(within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act) against any losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees, costs and expenses) resulting from any
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is contained in or omitted from any
information so furnished by such Holder in writing which states that such
information is for use in such registration statement, prospectus or preliminary
prospectus or any amendment or supplement thereto.
(iii) Any person entitled to indemnification under this Section
2.4(b) will (i) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification; provided, that the failure
to give such notice shall not relieve the indemnifying party of its obligations
hereunder; and (ii) unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
with respect to such claim, permit such indemnifying party to assume the defense
of such claim with counsel reasonably satisfactory to the indemnified party and
such indemnifying parties shall promptly and vigorously assume such defense at
its cost and expense. If such defense is assumed, the indemnifying party will
not be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim shall promptly pay all costs and expenses of the indemnified party's
defense, but will not be obligated to pay the fees and expenses of more than one
counsel for each party indemnified by such indemnifying party with respect to
such claim.
Page 4
<PAGE>
Section 2.5 Conversion of Pre-Paid Options. At the Effective time,
all outstanding options and warrants to purchase Pre-Paid Shares listed on
Schedule 2.5 ("Pre-Paid Options") shall automatically be converted into options
and warrants ("Converted Options") to purchase Pre-Cell Shares on the basis of
2.81915 Pre-Cell Shares for each Pre-Paid Share entitled to be purchased under
the Pre-Paid Options, at the per-share price equal to the quotient of (i) the
price contained in the Pre-Paid Options, divided by (ii) 2.81915. Additionally
the vesting of the Converted Options shall be as accelerated such that all of
the Converted Options shall be immediately vested on the consummation of the
Merger. Other than the foregoing changes, each holder's Converted Options shall
have the same exercise terms as his Pre-Paid Options.
ARTICLE III
Closing
Section 3.1 Time and Place of the Closing. Subject to the terms and
conditions of this Agreement, the consummation of the transactions contemplated
by this Agreement pursuant hereto shall take place at a closing (the "Closing")
to be held concurrently with the execution of this Agreement, at the offices of
Tobin & Reyes, P.A., 7251 West Palmetto Park Road, Boca Raton, Florida 33433, on
a date and at a time mutually agreeable to the parties (the "Closing Date").
Section 3.2 Procedure at the Closing. At the Closing, the parties agree
to take the following steps in the order listed below (provided, however, that
upon their completion all of these steps shall be deemed to have occurred
simultaneously):
(a) Pre-Cell shall deliver the certificates representing the Stock
Consideration to the Stockholders in accordance with Exhibit A;
(b) The Stockholders shall deliver to Pre-Cell certificates
representing their respective shares of Pre-Paid common stock, duly endorsed or
accompanied by duly executed stock powers and with all requisite transfer tax
stamps;
(c) Merger Subsidiary and Pre-Paid shall duly execute the Articles of
Merger and file the Articles of Merger with the State of Florida Secretary of
State.
(d) Pre-Paid shall deliver to Pre-Cell certified copies of resolutions
of the Stockholders and directors of Pre-Paid authorizing the execution and
delivery of this Agreement by Pre-Paid and the performance of Pre-Paid's
obligations hereunder and its consummation of the transaction contemplated
hereby;
(e) Merger Subsidiary shall deliver to the Stockholders certified
copies of resolutions of the directors of Merger Subsidiary authorizing the
execution and delivery of this Agreement by Merger Subsidiary and the
Page 5
<PAGE>
performance of Merger Subsidiary's obligations hereunder and its consummation of
the transaction contemplated hereby;
(f) Pre-Cell shall deliver to the Stockholders certified copies of
resolutions of the directors of Pre-Cell authorizing the execution and delivery
of this Agreement by Pre-Cell and the performance of Pre-Cell's obligations
hereunder and its consummation of the transaction contemplated hereby;
(g) Pre-Paid shall deliver the corporate books and records,
correspondence and employment records to Merger Subsidiary; and
(h) Each of the Stockholders shall execute and deliver to Pre-Cell a
Lock-Up Agreement (the "Lock-Up Agreement(s")) substantially in the form annexed
to this Agreement as Exhibit D.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PRE-PAID
In order to induce Pre-Cell and Merger Subsidiary to enter into this
Agreement and to consummate the transactions contemplated under this Agreement,
Pre-Paid hereby makes the following representations and warranties each of which
is relied upon by Pre-Cell and Merger Subsidiary regardless of any other action,
omission to act, investigation made or information obtained by Pre-Cell and
Merger Subsidiary.
Section 4.1 Organization, Power and Authority of Pre-Paid. Pre-Paid is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida and Pre-Paid has the requisite corporate power and
authority to own or lease its properties and to carry on its business as it is
now being conducted. Pre-Paid is duly qualified as a foreign corporation and is
in good standing under the laws of each other jurisdiction in which the conduct
of its business or the ownership of its assets requires such qualification,
except where the failure to qualify would not result in a material adverse
effect on Pre-Paid or its business. Pre-Paid has no subsidiaries.
Section 4.2 Due Authorization; Binding Obligation. Pre-Paid has the
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. This Agreement has
been duly and validly executed and delivered by Pre-Paid and is the legal, valid
and binding obligation of Pre-Paid, enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, preferential transfer, moratorium or
similar laws relating to enforcement of creditors' rights generally and general
principles of equity. Except for any corporate action required by Pre-Paid, no
other action on the part of any individual or other person or entity is
necessary to authorize this Agreement or for the consummation of the
transactions contemplated by this Agreement. Pre-Paid has duly executed this
Page 6
<PAGE>
Agreement and authorized the execution of this Agreement and the consummation of
the transactions contemplated by this Agreement as required under the Florida
BCA. Neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated by this Agreement will: (i) conflict with or
violate any provision of Pre-Paid's Articles of Incorporation or by-laws, or any
law, ordinance or regulation or any decree or order of any court or
administrative or other governmental body which is either applicable to, binding
upon or enforceable against Pre-Paid; (ii) result in any material breach of or
default under any material mortgage, other contract, agreement, indenture, will,
trust or other instrument which is either binding upon or enforceable against
Pre-Paid or any of Pre-Paid's Assets; (iii) result in any breach of or default
under any contract; (iv) violate any legally protected right of any individual
or entity or give to any individual or entity a right or claim against Pre-Paid
or Pre-Cell; or, (v) impair or in any way limit any material governmental or
official license, approval, permit or authorization of Pre-Paid to conduct its
business. Attached to this Agreement and marked as Exhibit E are true, correct
and complete copies of the Articles of Incorporation, as amended, and Bylaws, as
amended, of Pre-Paid.
Section 4.3 Financial Statements. Attached to this Agreement as Exhibit
F are true, correct and complete copies of the unaudited financial statements of
Pre-Paid as of June 30, 1999 and December 31, 1999 and the related statements of
earnings and changes in financial position for the period then ended
(collectively, the "Financial Statements"). The June 30, 2000 financial
statements have been prepared in accordance with generally accepted accounting
principles ("GAAP"), consistently applied, on a basis consistent with past
practices. Additionally, the Financial Statements (i) are true, complete and
correct; (ii) fairly present the financial condition of Pre-Paid as of their
respective dates and results of its operations for the periods ending on their
respective dates; and (iii) do not include or omit to state any fact which
renders those statements misleading.
Section 4.4 No Undisclosed Liabilities. Pre-Paid has no liabilities or
obligations (whether secured, unsecured, absolute, accrued, asserted, contingent
or otherwise) of any nature, whether as principal, agent, partner, co-venturer,
guarantor or in any other capacity except: (i) the liabilities and obligations
of Pre-Paid that are reflected in the Financial Statements and only to the
extent reflected; (ii) liabilities incurred or accrued in the ordinary course of
business since December 31, 1999 which do not, either individually or in the
aggregate, have a material adverse effect on the financial condition of
Pre-Paid; or (iii) liabilities otherwise disclosed in Schedule 4.4.
Section 4.5 Licenses; Compliance. Pre-Paid possesses all licenses and
other required governmental or official approvals, permits, consents and
authorizations necessary for the operation of the Business, all of which are
listed on Schedule 4.5 (collectively the "Authorizations"). Pre-Paid is in
material compliance with: (i) the terms of all Authorizations; (ii) all laws,
ordinances, statutes and regulations where noncompliance would have a material
adverse effect on Pre-Paid and its business or assets; and, (iii) all judgments,
orders, rulings or other decisions of any governmental or other regulatory
authority, court or arbitrator having jurisdiction over Pre-Paid. Neither the
Page 7
<PAGE>
execution, delivery or performance of this Agreement nor the performance of the
transactions contemplated by this Agreement will affect the validity of any
Authorizations and the same shall remain in full force and effect upon the
consummation of the transactions contemplated by this Agreement, except for
Authorizations which by their terms are not transferable.
Section 4.6 Consents and Approvals. No approval, consent or
authorization must be obtained by Pre-Paid for the execution, delivery or
performance of this Agreement or for the consummation of the transactions
contemplated by this Agreement, including, without limitation, the filing or
registration with any governmental or other regulatory authority.
Section 4.7 No Stockholder or Affiliate Relationships with Pre-Paid'
Customers; Pre-Paid' Interest in Other Businesses. Neither Pre-Paid nor any of
the Stockholders or their respective affiliates (as such term is defined in Rule
405 promulgated by the SEC under the Securities Act ("Affiliate") has, or during
the past 5 years had, any direct or indirect material interest in any of
Pre-Paid's customers. Pre-Paid does not have any financial interest in any
person, firm or corporation which is, or during the past 5 years was, directly
or indirectly, (a) engaged in the business engaged in by Pre-Paid or (b) a
customer or supplier of Pre-Paid, other than ownership of not more than 1% of
the equity securities of a company whose common stock is publicly traded.
Section 4.8 Litigation, Orders and Decrees. Except as listed on
Schedule 4.8, there are no actions, suits, claims, governmental investigations
or arbitration proceedings pending or to the best of Pre-Paid's knowledge,
threatened against or affecting Pre-Paid or the Business, assets, or financial
condition of Pre-Paid and there are no facts or circumstances which are
reasonably likely to create a basis for any of the foregoing, which, either
individually or in the aggregate, would have a material adverse affect on
Pre-Paid, its business or financial condition. There are no outstanding orders,
decrees or stipulations issued by any local, state or federal judicial authority
in any proceeding to which Pre-Paid is or was a party which may have a material
adverse effect on Pre-Paid.
Section 4.9 Real Property Owned or Leased. Pre-Paid does not own any
real property. Attached to this Agreement as Schedule 4.9 are true and complete
copies of all leases of real property (the "Leased Real Property") to which
Pre-Paid is a party, including all amendments and modifications thereto (the
"Real Property Leases"). Pre-Paid enjoys peaceful and undisturbed possession of
the Leased Real Property, and the Real Property Leases are the valid and legally
binding obligations of Pre-Paid and the respective lessors, enforceable against
Pre-Paid and the respective lessors in accordance with their respective terms,
and are in full force and effect. Pre-Paid (i) has not received written notice
of default under any of the Real Property Leases, (ii) is not in material
default of any Real Property Leases and (iii) no event has occurred which, with
the passage of time or the giving of notice or both, would constitute a material
default under any of the Real Property Leases.
Page 8
<PAGE>
Section 4.10 Personal Property Leased and Purchase Options. Attached as
Schedule 4.10 is a list of all leases of personal property (the "Personal
Property Leases") to which Pre-Paid is a party. Pre-Paid has provided to
Pre-Cell true and complete copies of the Personal Property Leases, including all
amendments and modifications thereto and true and complete copies of all
agreements regarding Pre-Paid's rights to purchase the leased personal property
which is the subject of the Personal Property Leases ("the Leased Personal
Property") on or before the expiration of the Personal Property Leases,
including all amendments and modifications thereto (the "Purchase Options").
Pre-Paid enjoys peaceful and undisturbed possession of the Leased Personal
Property, and the Personal Property Leases and Purchase Options are the valid
and legally binding obligations of Pre-Paid and the respective lessors and
option grantors, enforceable against Pre-Paid and the respective lessors and
option grantors in accordance with their respective terms, subject to the effect
of any bankruptcy or other similar law affecting creditors' rights generally,
and are in full force and effect. Pre-Paid (i) has not received written notice
of default under any of the Personal Property Leases, (ii) is not in default of
any Personal Property Leases, and (iii) no event has occurred which, with the
passage of time or the giving of notice or both, would constitute a material
default under any of the Personal Property Leases. None of the Purchase Options,
if any, have expired.
Section 4.11 Title to Purchased Assets. Pre-Paid has good and
marketable title to all of its property, tangible or intangible, subject to
liens for current taxes and assessments not yet due and payable. All of
Pre-Paid's property is free and clear of restrictions on or conditions to
transfer or assignment, and free and clear of any mortgage, lien, charge,
encumbrance, security interest or other restrictions.
Section 4.12 Condition of Purchased Assets. All of the tangible assets
of Pre-Paid and the Leased Personal Property are in good condition, in good
operating order and are fit for the purposes for which those assets are used or
intended to be used, subject to normal wear and tear.
Section 4.13 Material Contracts. Attached as Schedule 4.13 is a
complete and correct list of each of the following types of contracts or
commitments (whether oral or written) to which Pre-Paid is a party (collectively
the "Contracts"): (i) Contracts for the employment of any officer or employee
and all bonus, incentive compensation, profit-sharing, retirement, pension,
group insurance, death benefit or other fringe benefit plans, deferred
compensation or post-termination obligations; (ii) Contracts for the future
purchase of materials, inventory, supplies, services or equipment; (iii)
distributor agreements and contracts for the purchase or sale of inventory or
supplies; (iv) agreements or arrangements for the purchase, sale or lease of any
other assets; (v) pledges, sales contracts, leases, security agreements or other
similar agreements with respect to Pre-Paid's properties; (vi) leases of
machinery or equipment; (vii) loan agreements, promissory notes, guarantees,
subordination or similar type agreements; (viii) consulting agreements; and,
(ix) any contract not otherwise covered by clauses (i) through (viii) above
which involves annual or aggregate payments in excess of $1,000. Pre-Paid has
furnished to Pre-Cell true, complete and accurate copies of all Contracts that
are in writing and has provided, in the case of oral contracts, complete and
accurate descriptions of all Contracts that are not in writing. Except as set
forth in Schedule 4.13, Pre-Paid has performed all of the obligations required
to be performed by it to date under the Contracts, and is not in default (with
Page 9
<PAGE>
notice or lapse of time or both) under any of Contracts. Pre-Paid has obtained
all necessary consents with respect to any Pre-Paid Contract requiring consent
on or prior to the date hereof. Except as set forth on Schedule 4.13, the
consummation of the transactions contemplated by this Agreement will not
materially affect the continuation, validity or effectiveness of any of
Contracts.
Section 4.14 Contracts with Customers. Schedule 4.14 sets forth a list
of (a) all Contracts or other understandings or arrangements to which Pre-Paid
is a party relating to the sale or furnishing by it of goods or services where
the consideration for such sale is $1,000 or more, in any single case, (b) any
claims by parties other than Pre-Paid with respect thereto, (c) product
guarantees or warranties made by Pre-Paid relating to its goods or services, and
(d) any pending claims by Pre-Paid with respect thereto. None of the customers,
suppliers or other persons which is a party to any of the Contracts listed in
Schedule 4.14 has notified Pre-Paid of any intention to terminate its contract
or arrangement for service.
Section 4.15 Contracts Valid; No Default. All Contracts required to be
listed in any of the Schedules referred to in this Agreement are valid and
binding, enforceable in accordance with their respective terms, subject to the
effect of any bankruptcy or other similar law affecting creditors' rights
generally, and are in full force and effect. Except as set forth in such
Schedules, there is not under any such Contract, (a) any existing default by
Pre-Paid, or any event which, after notice or lapse of time, or both, would
constitute a default by Pre-Paid or result in a right to accelerate by any other
person or a loss of any rights of Pre-Paid and (b) to the best of Pre-Paid's
knowledge, any default by any other person, or any event which, after notice or
lapse of time, or both, would constitute a default by any such person or result
in a right to accelerate by Pre-Paid or a loss of any rights of any such person.
No existing Contract relating to the business of Pre-Paid is cancelable by any
other party thereto or is likely to be canceled or is subject to re-negotiation.
Except as disclosed in such Schedules, Pre-Paid is not a party to or bound by
any Contract which, upon performance, is reasonably expected to result in any
loss or liability to Pre-Paid. True and complete copies of all Contracts and
other documents listed on such Schedules (together with any and all amendments
thereto) have been delivered to Pre-Cell.
Section 4.16 Labor Matters. Pre-Paid is not a party to any collective
bargaining agreements with its employees. Pre-Paid is in compliance with all
federal, state and local laws regarding employment and employment practices,
conditions of employment, wages and hours and occupational laws, the violation
of which would have a material adverse effect on Pre-Paid. Pre-Paid is not
engaged in unfair labor practices, and there are no unfair labor practice
complaints pending or, to the best of Pre-Paid's knowledge, threatened against
Pre-Paid before the National Labor Relations Board or any other governmental or
regulatory board or agency performing similar functions. There is no labor
strike, slowdown, work stoppage or dispute pending or threatened against or
involving Pre-Paid. To the best of Pre-Paid's knowledge, none of Pre-Paid's
employees are engaged in organizing or are members of any union or other
employee group that is seeking recognition as a bargaining unit.
Page 10
<PAGE>
Section 4.17 Absence of Changes. Except as set forth in Schedule 4.17,
since December 31, 1999, there has not been: (i) any material adverse change in
the financial condition, assets, liabilities, Business or operations of
Pre-Paid; (ii) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, financial
condition or business of Pre-Paid; (iii) any change in the outstanding capital
stock of Pre-Paid; (iv) declared, paid or set aside for payment any dividend or
other distribution (whether in cash, stock, property or any combination thereof)
in respect of Pre-Paid's common stock or any cancellation, exercise or
redemption or other acquisition by Pre-Paid of any shares of Pre-Paid's common
stock; (v) any increase in the rate or terms of compensation payable or to
become payable by Pre-Paid to any of its officers, directors or key employees or
any increase in the rate or terms of contribution to any employee benefit plans,
except as required by law; (vi) any liabilities or obligations incurred or
agreed to be incurred (whether absolute, accrued, contingent or otherwise),
except as incurred in the ordinary course of business consistent with past
practices; (vii) any material capital expenditure or commitment for replacements
or additions or improvements; (viii) any change by Pre-Paid in accounting
methods, principles or practices; (ix) any disposal, mortgage, pledge or other
disposition of any of its assets other than in the ordinary course of business;
or (x) receipt by Pre-Paid of any notice of termination of any contract, lease
or other agreement.
Section 4.18 Accuracy of Documents, Exhibits and Schedules. All
contracts, instruments, agreements and other documents delivered by Pre-Paid to
Pre-Cell for Pre-Cell's review in connection with this Agreement and the
transactions contemplated hereby, including all articles of incorporation,
by-laws, corporate minutes, stock record books, financial statements and tax
returns are true, correct and complete copies of all those contracts,
instruments, agreements and other documents. All Exhibits and Schedules to this
Agreement are true correct and complete as of the date hereof. No statement
contained in this Agreement or in any certificate, Exhibit, Schedule or
instrument furnished to Pre-Cell pursuant to the provisions of this Agreement or
in connection with the consummation of the contemplated transactions contains or
will contain any materially untrue statement or does not include or omit to
state any fact which renders those statements misleading.
Section 4.19 Investment Representations. All shares of Pre-Cell Stock
to be acquired by the Stockholders pursuant to this Agreement will be acquired
for his/her own account and not with a view towards distribution thereof.
Pre-Paid and the Stockholders understand that they must bear the economic risk
of the investment in the Pre-Cell Stock, which cannot be sold by them unless
they are registered under the Securities Act, or an exemption therefrom is
available, and such sale is permitted under the terms of the Lock-Up Agreement.
The Stockholders, acting through their representatives, have had both the
opportunity to ask questions and receive answers from the officers and directors
of Pre-Cell and all persons acting on its behalf concerning the business and
operations of Pre-Cell and to obtain any additional information to the extent
Pre-Cell possesses or may possess such information or can acquire it without
unreasonable effort or expense necessary to verify the accuracy of such
information. The Stockholders acknowledge receiving copies of the SEC Filings
Page 11
<PAGE>
referred to in Section 5.5. The certificates representing the shares of Common
Stock shall bear the legends set forth in Exhibit G.
Section 4.20 Proprietary Rights.
(a) Except as listed on Schedule 4.20(a), there are no trademarks,
trademark applications, trade names, assumed names, service marks, logos,
patents, patent applications, copyrights and copyright registrations, owned or
licensed by Pre-Paid and used in or necessary for the conduct of the business
and operation of Pre-Paid (the foregoing together with all inventions, trade
secrets, customer lists and confidential processes, and all other similar rights
presently owned or licensed by Pre-Paid are the "Proprietary Rights"). Pre-Paid
owns or possesses the royalty-free license or other right to use all of the
Proprietary Rights which are required to be listed on Schedule 4.20(a) or which
are necessary to conduct its business as presently operated, and, except as set
forth on Schedule 4.20(a), no person, firm, corporation or other entity is
entitled to restrain Pre-Paid from using any such Proprietary Rights. No other
Proprietary Rights are used in or are necessary for the conduct of the business
and operation of Pre-Paid as presently conducted.
(b) To the best of Pre-Paid's knowledge, except as disclosed in
Schedule 4.20 (b), no Proprietary Rights or know-how used in or necessary for
the conduct of the business and operation of Pre-Paid conflict with or infringe
upon any similar rights or services of any other person. Except as disclosed in
Schedule 4.20 (b), no claims have been asserted by any person with respect to
the ownership, validity, license or use of the Proprietary Rights or the
provision of any services by Pre-Paid and there is no basis for any such claim.
(c) Schedule 4.20(c) accurately identifies all material databases and
computer software owned, licensed or otherwise used in connection with
Pre-Paid's business. Except as set forth on Schedule 4.20(c), Pre-Paid has, and
is assigning to Pre-Cell, as part of the Purchased Assets, all the databases and
computer software used or necessary to conduct Pre-Paid's business.
Section 4.21 Records. The books and records, correspondence, employment
records and files of or relating to the Business Pre-Paid are complete and
correct in all material respects, and there have been, and will be, no material
transactions which are required to be set forth therein which have not been so
set forth.
Section 4.22 Taxes, Tax Returns. All federal, state, local and foreign
income, property, sales, and other taxes, assessments, governmental charges,
penalties, interest and fines due and payable by Pre-Paid and by any other
person, firm or corporation which will or may be liabilities of Pre-Paid
("Taxes"), for all periods ending on or before the Balance Sheet Date, have been
paid in full or have been fully reserved against on the Balance Sheet. Pre-Paid
has filed all federal, state, local and foreign income, excise, property, sales,
withholding, social security, information returns, and other tax returns,
reports and related information ("Returns") required to have been filed by it to
Page 12
<PAGE>
the date hereof, and no extension of the time for filing a Return is presently
in effect. The Returns that have been filed have been accurately prepared and
have been duly and timely filed. Pre-Paid's federal income tax returns have not
been audited by the Internal Revenue Service for all fiscal years through the
year ended December 31, 1998. There are no agreements, waivers or other
arrangements providing for an extension of time with respect to the filing of
any Return, or payment of any tax, governmental charge or assessment or
deficiency, by Pre-Paid; and there are no actions, suits, proceedings,
investigations or claims now threatened or pending against Pre-Paid in respect
of taxes, governmental charges or assessments, or any matter under discussion
with any governmental authority relating to taxes, governmental charges or
assessments asserted by any such authority.
Section 4.23 Environmental Matters; Health and Safety Laws. Pre-Paid is
in material compliance with all federal, state and local laws, regulations,
permits, orders and decrees relating to protection of the environment and
employee health and safety ("Applicable Requirements"). Pre-Paid has not
received any notice to the effect that its operations are not in compliance with
any of the Applicable Requirements or the subject of any governmental
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or other substance (including petroleum
products) into the environment and Pre-Paid knows of no facts which could
constitute the basis for any thereof.
Section 4.24 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Pre-Paid.
Section 4.25 Nature and Survival of Representations and Warranties of
Pre-Paid. All statements contained in any Schedule, document, certificate or
other instrument delivered by or on behalf of Pre-Paid pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed
representations, warranties, covenants and agreements made by Pre-Paid. Each
representation, warranty, covenant and agreement made or deemed made by Pre-Paid
shall survive the Closing. The representations, warranties, covenants and
agreements made or deemed made by Pre-Paid in this Agreement shall not be
affected or deemed waived by reason of the fact that Pre-Cell or its
representative knew or should have known that any such representations,
warranties, covenants or agreement is or might be inaccurate in any respect. Any
furnishing of information to Pre-Cell by Pre-Paid or pursuant to, or otherwise
in connection with, this Agreement, including, without limitation, any
information contained in any document, contract, book or record of Pre-Paid or
to which Pre-Cell shall have access or any information obtained by, or made
available to, Pre-Cell as a result of any investigation made by or on behalf of
Pre-Cell prior to or after the date of this Agreement, shall not affect
Pre-Cell's right to rely on any representation, warranty, covenant or agreement
made or deemed made by Pre-Paid in this Agreement and shall not be deemed a
waiver thereof.
Page 13
<PAGE>
Section 4.26 Capitalization. The number of authorized, issued and
outstanding shares of capital stock of Pre-Paid is 7,172,061. The Stockholders
(and their respective residential addresses) as set forth on Exhibit A, and are
the record and beneficial owners of all of the outstanding capital stock of
Pre-Paid, free and clear of all liens, encumbrances or restrictions to transfer.
Except as set forth on Schedule 2.5, there are no options, warrants or other
contractual rights outstanding which require, or give any person the right to
require, the issuance of any capital stock of Pre-Paid, whether or not such
rights are presently exercisable.
Section 4.27 Employee Benefit Plans. Pre-Paid has no employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), programs and arrangements maintained for the
benefit of any current or former employee, officer or director of Pre-Paid
(collectively, the "Pre-Paid Benefit Plans"). Each Network Benefit Plan and any
related trust intended to be qualified under Sections 401(a) and 501(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service that it is so qualified and nothing has occurred since the date of such
letter that could reasonably be expected to materially adversely affect the
qualified status of such Pre-Paid Benefit Plan or related trust. Each Pre-Paid
Benefit Plan has been operated in all material respects in accordance with the
terms and requirements of applicable law and all required returns and filings
for each Pre-Paid Benefit Plan have been timely made. Neither Pre-Paid nor any
entity under common control with Pre-Paid has incurred any direct or indirect
liability under, arising out of or by operation of Title I or Title IV of ERISA
in connection with any Pre-Paid Benefit Plan and no fact or event exists that
could reasonably be expected to give rise to any such liability. All
contributions due and payable on or before the date hereof in respect of each
Pre-Paid Benefit Plan have been made in full and in proper form.
Section 4.28 Insurance Policies; Claims. Schedule 4.28 sets forth all
insurance policies and bonds maintained by or on behalf of Pre-Paid. Except as
disclosed in Schedule 4.28, the insurance policies and bonds set forth in
Schedule 4.28, are provided by reputable insurers or issuers, and provide
adequate coverage for all normal risks incident to the businesses of Pre-Paid
and its assets. No claims have been made against Pre-Paid as a result of
allegedly defective products and none of the Stockholders or Pre-Paid knows of
any basis for the assertion of any such claim. No insurance policy issued to or
on behalf of Pre-Paid has ever been canceled by the policy issuer.
Section 4.29 Bank Accounts. Schedule 4.29 sets forth the name of each
bank in which Pre-Paid has an account or safe deposit box, vault, lock-box or
other arrangement, the account number and description of each account at each
bank and the names of all persons authorized to draw thereon or to have access
thereto; and the names of all persons, if any, holding tax or other powers of
attorney from Pre-Paid.
Section 4.30 Records. The books of account, minute books, stock
certificate books and stock transfer ledgers of Pre-Paid are complete and
correct in all material respects, and there have been no material transactions
involving Pre-Paid of the type typically recorded in such records that have not
been recorded.
Page 14
<PAGE>
Section 4.31 No Illegal or Improper Transactions. Neither Pre-Paid nor
any officer, director, employee, agent or affiliate of Pre-Paid has offered,
paid or agreed to pay to any person or entity (including any governmental
official) or solicited, received or agreed to receive from any such person or
entity, directly or indirectly, any money or anything of value for the purpose
or with the intent of (i) obtaining or maintaining business for the benefit of
Pre-Paid, (ii) illegally or improperly facilitating the purchase or sale of any
product or service, or (iii) avoiding the imposition of any fine or penalty, in
any manner which is in violation of any applicable ordinance, regulation or law.
Section 4.32 Related Transactions. Except as disclosed in Schedule
4.32, and for compensation and related arrangements with employees for services
rendered consistent with past practices, no current or former director, officer,
employee or stockholder of Pre-Paid has been, (a) a party to any transaction
with Pre-Paid (including, but not limited to, any contract, agreement or other
arrangements providing for the furnishing of services by, or rental of real or
personal property from, or otherwise requiring payments to, any such director,
officer, employee or shareholder), or (b) the direct or indirect owner of an
interest in any corporation, firm, association or business organization which is
a present competitor, supplier or customer of Pre-Paid, nor does any such person
receive income from any source other than Pre-Paid which relates to the business
of, or should properly accrue to, Pre-Paid.
Section 4.33 Software. Pre-Paid owns all right, title and interest in
and to the software which is the subject of United States Patent Application
Number 08-977-735 (the "Software"). The marketing, reproduction or use of the
Software, does not infringe upon any patent, copyright, trademark, trade secret
or other proprietary right of any third party. No proceedings have been
instituted, are pending or are threatened which challenge the rights of Pre-Paid
under or the validity of the Software, none of the intellectual property rights
relating to the Software is being infringed upon by others and none of the
intellectual property rights relating to the Software is subject to any
outstanding order or judgment. Pre-Paid has taken all steps reasonably necessary
to protect the intellectual property rights in the Software, including, but not
limited to, utilization of the proper statutory form of copyright notice on all
copies of the Software and any documentation relating of the Software that has
been commercially distributed prior to the Closing Date.
ARTICLE V
Representations and Warranties of Pre-Cell
In order to induce Pre-Paid and the Stockholders to enter into this
Agreement and to consummate the transactions contemplated under this Agreement,
Pre-Cell and Merger Subsidiary hereby make the following representations and
warranties each of which is relied upon by Pre-Paid and the Stockholders
regardless of any other action, omission to act, investigation made or
information obtained by Pre-Paid or the Stockholders:
Page 15
<PAGE>
Section 5.1 Organization, Power and Authority. Pre-Cell and Merger
Subsidiary are corporations duly organized and validly existing under the laws
of the States of Colorado and Florida, respectively, with full corporate power
and authority to enter into this Agreement and perform their obligations under
this Agreement.
Section 5.2 Due Authorization; Binding Obligation. The execution,
delivery and performance of this Agreement, the consummation of the transactions
contemplated by this Agreement and the issuance of the Stock Consideration have
been duly authorized by all necessary corporate action of Pre-Cell and Merger
Subsidiary. This Agreement has been duly executed and delivered by Pre-Cell and
Merger Subsidiary and is the valid and binding obligation of Pre-Cell and Merger
Subsidiary, enforceable in accordance with its terms. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
by this Agreement will: (i) conflict with or violate any provision of the
articles of incorporation or by-laws of Pre-Cell or Merger Subsidiary, or of any
law, ordinance or regulation or any decree or order of any court or
administrative or other governmental body which is either applicable to, binding
upon or enforceable against Pre-Cell or Merger Subsidiary; (ii) result in any
material breach of or default under any material mortgage, contract, agreement,
indenture, will, trust or other instrument which is either binding upon or
enforceable against Pre-Cell or Merger Subsidiary or their respective assets.
Section 5.3 Shares. When issued in accordance with the terms of this
Agreement, the Pre-Cell Stock to be issued to the Stockholders shall be validly
issued, fully paid and non-assessable.
Section 5.4 Consents and Approvals. The execution and delivery of this
Agreement by Pre-Cell do not, and the performance of this Agreement by Pre-Cell
will not, require Pre-Cell to obtain any consent, approval, authorization or
other action by, or to make any filing with or notification to, any governmental
or regulatory authority.
Section 5.5 SEC Reports. Pre-Cell has delivered to the Stockholder its
reports (the "SEC Filings") filed pursuant to the Securities And Exchange Act of
1934, as amended (the "Securities And Exchange Act"). Each of the SEC Filings,
including the financial statements contained therein, as of their filing dates,
complied in all material respects with the requirements of the rules and
regulations promulgated by the Securities and Exchange Commission (the
"Commission") with respect thereto and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
Section 5.6 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Pre-Cell.
Page 16
<PAGE>
Section 5.7 Limitation of Liabilities. Notwithstanding anything
contained herein to the contrary, Pre-Cell shall have no liability to the
Shareholders if any of the representations and warranties contained in this
Article V are inaccurate or for a breach of any representation or warranty
contained herein.
ARTICLE VI
Covenants of the Stockholders
Section 6.1 Further Assurances. From time to time after the date of
this Agreement, the Stockholders shall execute and deliver such other
instruments and shall take such other actions as Pre-Cell may reasonably request
to effectuate the transactions contemplated by this Agreement.
Section 6.2 Press Releases. Neither the Stockholders nor any of their
Affiliates shall issue or cause to be issued any press release in connection
with or referring to any of the transactions contemplated by this Agreement.
Section 6.3 Non-use of Name. From and after the date hereof, no
Stockholder or any of their Affiliates shall establish or otherwise be
associated with, as an owner, partner, shareholder, employee or otherwise, any
firm which utilizes the name "Pre-Paid," "EZ Prepaid" or any variant thereof
(collectively, the "Names") as part of its business name other than in
connection with their employment by Pre-Cell itself after the Closing Date or
grant to any person or entity the right to use the Names or any variant thereof.
Section 6.4 Maintenance of Pre-Paid Employee Medical Benefits. From the
date hereof, through the last day of the month in which the Closing takes place,
Pre-Paid shall continue to afford coverage under its existing health and medical
plans to those employees of Pre-Paid that are covered under such plans as of the
date hereof.
Section 6.5 Lock-Up Agreements. Concurrently with the execution of this
Agreement, each of the Stockholders will execute and deliver to Pre-Cell a
Lock-Up Agreement substantially in the form of Exhibit D annexed to this
Agreement pursuant to which they agree to not sell any shares of Common Stock
acquired by them for the period of time indicated on Exhibit D.
ARTICLE VII
Covenants of Pre-Cell
Section 7.1 Further Assurances. From time to time after the date of
this Agreement, Pre-Cell shall execute and deliver such other instruments and
shall take such other actions as the Stockholders may reasonably request to
effectuate the transactions contemplated by this Agreement.
Section 7.2 Disclosure. Pre-Cell will not be required to obtain the
prior written consent of the Stockholders to disclose the existence or any term
Page 17
<PAGE>
or condition of this Agreement if Pre-Cell believes (based upon the advice of
counsel) such disclosure is required under the securities laws of the United
States.
ARTICLE VIII
Miscellaneous
Section 8.1 Survival of Representations and Warranties. All of the
respective representations and warranties of the parties to this Agreement shall
survive the consummation of the transactions contemplated by this Agreement. All
covenants of the parties to this Agreement shall survive the consummation of the
transactions contemplated by this Agreement.
Section 8.2 Amendment and Modification. The parties to this Agreement
may amend, modify and supplement this Agreement but only in writing and such
writing must be signed by all the parties.
Section 8.3 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors, assigns,
heirs, estates, beneficiaries, executors and legal and personal representatives.
Section 8.4 Entire Agreement. This instrument and the Exhibit and
Schedules attached to this Agreement contain the entire agreement of the parties
with respect to the acquisition and the other transactions contemplated in this
Agreement, and supersede all prior understandings and agreements of the parties
with respect to the subject matter of this Agreement. Any reference in this
Agreement shall be deemed to include the Exhibits and the Schedules.
Section 8.5 Headings. The descriptive headings in this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
Section 8.6 Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original.
Section 8.7 Notices. Any notice, request, information or other document
to be given hereunder to any of the parties by any other party shall be in
writing and delivered personally, sent by reputable overnight courier delivery,
prepaid, or by facsimile transmission as follows:
If to Pre-Cell: Pre-Cell Solutions, Inc.
385 East Drive
Melbourne, Florida 32904
Attn: Thomas E. Biddix,
Chief Executive Officer
Facsimile: (407) 729-8484
Page 18
<PAGE>
With a copy to: Tobin & Reyes, P.A.
7251 West Palmetto Park Road
Suite 205
Boca Raton, Florida 33433
Attn: David S. Tobin, Esq.
Facsimile: (561) 620-0657
If to the Stockholders: At the addresses indicated on Exhibit A
with a copy to: Holland & Knight, LLP
1499 South Harbor City Boulevard
Suite 201
Melbourne, Florida 32901
Attn: William Potter, Esq.
Facsimile: (321) 723-4092
Any party may change the address to which notices under this Agreement
are to be sent to it by giving written notice of a change of address in the
manner provided in this Agreement for giving notice. Any notice delivered
personally shall be deemed to have been given on the date it is so delivered,
and any notice delivered by reputable overnight courier delivery or by fax shall
be deemed to have been given on the date it is received.
Section 8.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida applicable to
contracts made and to be performed in Florida without reference to the choice of
law principles. Each Party hereby submits to the exclusive jurisdiction of the
courts (city, state and federal) located in the County of Palm Beach, State of
Florida, pursuant to this Agreement or any other agreement, instrument or other
document any action, proceeding or claim brought by any other Party executed and
delivered in connection with this Agreement or pursuant hereto. Service of
process in any such action or proceeding brought against a Party may be made by
registered mail addressed to such Party at the address set forth in Section 8.7
or to such other address as such Party shall notify the other Party in writing
is to be used for such purpose pursuant to Section 8.7. For purposes hereof, the
address designated for Pre-Paid shall also be the address designated for the
Stockholders.
Section 8.9 Expenses. All accounting, legal and other costs and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring those fees,
costs and expenses.
Section 8.10 Waiver. Any party to this Agreement may extend the time
for or waive the performance of any of the obligations of the other, waive any
inaccuracies in the representations or warranties by the other, or waive
compliance by the other with any of the covenants or conditions contained in
this Agreement. Any such extension or waiver shall be in writing and signed by
the parties. No such waiver shall operate or be construed as a waiver of any
subsequent act or omission of the parties.
Page 19
<PAGE>
Section 8.11 Severability. The invalidity or unenforceability of any
one or more of the words, phrases, sentences, clauses, or sections contained in
this Agreement shall not affect the validity or enforceability of the remaining
provisions of this Agreement or any part of any provision, all of which are
inserted conditionally on their being valid in law, and in the event that any
one or more of the words, phrases, sentences, clauses or sections contained in
this Agreement shall be declared invalid or unenforceable, this Agreement shall
be construed as if such invalid or unenforceable word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted or shall be enforced as nearly as possible according to their
original terms and intent to eliminate any invalidity or unenforceability. If
any invalidity or unenforceability is caused by the length of any period of time
or the size of any area set forth in any part of this Agreement, the period of
time or area, or both, shall be considered to be reduced to a period or area
which would cure the invalidity or unenforceability.
Section 8.12 Attorney's Fees. In the event of any arbitration or
litigation, including appeals, with regard to this Agreement, the prevailing
party shall be entitled to recover from the non-prevailing party all reasonable
fees, costs, and expenses of counsel (at pre-trial, trial and appellate levels).
Section 8.13 No Breach. The parties agree that the execution of this
Agreement shall not be deemed to be an assignment of any contract where consent
to such assignment is required by the terms of the contract provided that the
foregoing shall not affect Pre-Paid's obligation to obtain all consents as
provided in this Agreement.
Section 8.14 Construction. This Agreement shall be construed without
regard to any presumption or other rule requiring construction against the party
causing this Agreement to be drafted. If any words in this Agreement have been
stricken out or otherwise eliminated (whether or not any other words or phrases
have been added) and the stricken words initialed by the party against whom the
words are construed, this Agreement shall be construed as if the words so
stricken out or otherwise eliminated were never included in this Agreement and
no implication or inference shall be drawn from the fact that those words were
stricken out or otherwise eliminated.
Section 8.15 No Jury Trial EACH PARTY WAIVES ALL RIGHTS TO ANY TRIAL BY
JURY IN ALL LITIGATION RELATING TO OR ARISING OUT OF THIS AGREEMENT.
Page 20
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the date hereof.
PRE-CELL SOLUTIONS, INC.,
a Colorado corporation
By: /s/ Thomas E. Biddix
-----------------------------
Thomas E. Biddix,
Chief Executive Officer
PRE-PAID ACQUISITIONS CORP.
a Florida corporation
By: /s/ Thomas E. Biddix
-----------------------------
Thomas E. Biddix,
Chief Executive Officer
PRE-PAID SOLUTIONS, INC,
a Florida corporation
By: /s/ Thomas E. Biddix
-----------------------------
Thomas E. Biddix,
Chief Executive Officer
Page 21
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of April 1, 2000
is entered into between THOMAS FRICKS, residing at 3841 South Atlantic Avenue,
Daytona Beach Shores, Florida 32127 ("Executive"), and PRE-CELL SOLUTIONS, INC.,
a Colorado corporation having its principal office at 255 East Drive, Suite C,
Melbourne, Florida 33326 ("Company").
WHEREAS, the Company and Executive desire to provide for the employment
of Executive by the Company on the terms set forth herein;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 The Company hereby employs Executive as its President and
Chief Operating Officer to supervise and control the day-to-day operation of the
Company. All of Executive's powers and authority in any capacity shall at all
times be subject to the reasonable direction and control of the Company's board
of directors (the "Board") and Chief Executive Officer.
1.2 The Board or Chief Executive Officer may assign to
Executive such other executive duties for the Company or any Affiliate (as
defined in Section 5.1) as are consistent with Executive's status as President.
1.3 Executive accepts such employment and agrees to devote a
sufficient portion of his business time, energies and attention to the
performance of his duties. Executive shall perform his duties primarily in and
from the Company's offices located in Melbourne, Florida. Executive will spend
sufficient time in the Atlanta office of US/Intelicom to perform duties as USI's
Senior Executive.
2. Compensation and Benefits.
2.1 The Company shall pay to Executive a base salary
("Salary") at the aggregate rate of $200,000 per annum during the Employment
Term (as such term is defined in Section 3.1, below). Executive's Salary shall
1
<PAGE>
be paid in equal, periodic installments, in accordance with the Company's normal
payroll procedures and shall be subject to withholding taxes and other normal
payroll deductions.
2.2 The Company may award Executive a bonus (the "Bonus") at
the sole discretion of the Board, which Bonus shall be determined based upon
Executive's performance and the Company's performance generally. Notwithstanding
the foregoing, Executive understands that the Company is not obligated under any
circumstances, to award any such Bonus.
2.3 The Company shall annually review Executive's performance.
Based upon such review and such other factors as the Company may consider, the
Company may determine to increase Executive's salary. Notwithstanding the
foregoing, Executive understands that the Company is not obligated under any
circumstances, to award any such increase in salary.
2.4 Executive shall be entitled to such medical, dental and
disability insurance which is no less favorable than generally afforded to other
senior executives of the Company, subject to applicable waiting periods and
other conditions. Executive shall be entitled to five weeks of vacation in each
employment year and to a reasonable number of other days off for religious and
personal reasons. Executive acknowledges that the Company may, from time to
time, apply for and take out in its own name and at its expense, life, health,
disability, accident or other insurance, including key man insurance, upon
Executive that the Company may deem necessary and advisable to protect its
interests hereunder; and Executive agrees to submit to any medical or other
reasonable examination necessary for such purpose and to assist and cooperate
with the Company in procuring such insurance; and Executive acknowledges that he
shall have no right, title or interest in or to such insurance.
2.5 The Company will award Executive a Restricted Stock Award
of 856,000 shares of Pre-Cell Common Stock on April 1, 2000 (the "Restricted
Shares"). Executive's rights to the Restricted Shares will vest twenty percent
(20%) on October 1, 2000, thirty percent (30%) on January 1, 2001 and the
remaining fifty percent (50%) on April 1,2001. Upon each vesting, Executive will
be provided the option of meeting the resulting tax withholding requirement by
surrendering to the Company sufficient number of shares of the Company's Common
Stock whose market value equals the withholding amount. Executive shall not have
any of the rights of a stockholder with respect to the Restricted Shares until
such shares have vested in accordance with the schedule set forth herein.
2
<PAGE>
2.6 The Company will pay or reimburse Executive for all
transportation, hotel and other expenses reasonably incurred by Executive on
business trips and for all other ordinary and reasonable out-of-pocket expenses
actually incurred by him in the conduct of the business of the Company against
itemized vouchers submitted with respect to any such expenses approved in
accordance with customary procedures.
2.7 The Company will pay Executive a monthly automobile
allowance equal to $1,000.00 per month.
3. Term and Termination.
3.1 The term of this Agreement commences as of April 1, 2000,
and shall continue until April 1, 2003 (the "Employment Term"), unless sooner
terminated or extended as herein provided.
3.2 If Executive dies during the term of this Agreement, this
Agreement shall thereupon terminate.
3.3 The Company, by notice to Executive, may terminate this
Agreement if Executive shall fail because of illness or incapacity to render,
for six consecutive months, services of the character contemplated by this
Agreement.
3.4 The Company, by not less than 30 days notice to Executive,
may terminate this Agreement without cause at any time. In the event of such
termination the Company shall pay to Executive the salary due Executive pursuant
to Paragraph 2.1 through the Employment Term as provided in Section 3.1. In the
event Executive is terminated without cause during the final year of the
Employment Term, then Executive shall receive the greater (i) the salary due
Executive pursuant to Paragraph 2.1 through the Employment Term as provided in
Section 3.1. or (ii) the same salary for a period of six calendar months.
Notwithstanding such termination, the provisions of paragraph 4 shall survive.
3.5 The Company, by notice to Executive, may terminate this
Agreement for cause. As used herein, "cause" shall include, but not be limited
to: (a) the refusal or failure by Executive to carry out specific directions of
the Chief Executive Officer or Board of Directors which are of a material
nature, or the refusal or failure by Executive to perform a material part of
Executive's duties hereunder; (b) the commission by Executive of a material
3
<PAGE>
breach of any of the provisions of this Agreement; (c) common law fraud or
dishonest action by Executive in his relations with the Company or any of its
subsidiaries or affiliates, or with any customer or business contact of the
Company or any of its subsidiaries or affiliates ("dishonest" for these purposes
shall mean Executive's knowingly or recklessly making of a material misstatement
or omission for his personal benefit); or (d) the conviction of Executive of any
crime involving an act of moral turpitude. Notwithstanding the foregoing, no
"cause" for termination shall be deemed to exist with respect to Executive's
acts described in clauses (a) or (b) above, unless the Company shall have given
written notice to Executive specifying the "cause" with reasonable particularity
and, within ten business days after such notice, Executive shall not have cured
or eliminated the problem or thing giving rise to such "cause;" provided,
however, that a breach of any provision of clauses (a) or (b) above, involving
the same or substantially similar actions or conduct for which the Company
previously gave notice of termination and with respect to which, Executive
satisfactorily cured, shall be grounds for termination for cause without any
additional notice from the Company. Notwithstanding such termination, the
provisions of paragraph 4 shall survive.
3.6 The Executive, by notice to the Company, may terminate
this Agreement if the Company materially breaches any of the provisions of this
Agreement or does not comply with Section 2.4. Notwithstanding the foregoing,
the Executive shall not have grounds for termination unless Executive shall have
given written notice to the Company specifying the breach with reasonable
particularity and, within ten days after such notice, the Company shall not have
cured or eliminated the problem or thing giving rise to such breach; provided,
however, that a breach of any provision of this Agreement involving the same or
substantially similar actions or conduct for which the Executive previously gave
notice of termination and with respect to which, the Company satisfactorily
cured, shall be grounds for termination for cause without any additional notice
from the Executive. In the event of termination by Executive under this Section
3.6, the Company shall pay to Executive the Salary due Executive pursuant to
paragraph 2.1 hereof through the Employment Term. Notwithstanding such
termination, the provisions of paragraph 4 shall survive termination if the
Company continues to pay Executive the Salary as provided in the immediately
preceding sentence.
4. Protection of Confidential Information; Non-Competition.
4.1 Executive acknowledges that:
(a) As a result of his employment with the Company,
Executive will obtain secret and confidential information concerning the
business of the Company and/or its subsidiaries and affiliates (referred to
4
<PAGE>
collectively in this paragraph 4 as the "Company"), including, without
limitation, financial information, designs and other proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information").
(b) The Company will suffer substantial damage which
will be difficult to compute if, during the period of his employment with the
Company or thereafter, Executive should divulge Confidential Information.
(c) The provisions of this Agreement are reasonable
and necessary for the protection of the business of the Company.
4.2 Executive agrees that he will not at any time, either
during the term of this Agreement or thereafter, divulge to any person or entity
any Confidential Information obtained or learned by him as a result of his
employment with, or prior retention by, the Company, except (i) in the course of
performing his duties hereunder; (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
4.3 Upon termination of his employment with the Company,
Executive will promptly deliver to the Company all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and all copies
thereof) relating to the business of the Company and all property associated
therewith, which he may then possess or have under his control; provided,
however, subject to Executive's obligations under this Section 4, that Executive
shall be entitled to retain copies of such documents reasonably necessary to
document his financial relationship (both past and future) with the Company.
4.4 If Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 4.2, the Company shall have the
right and remedy:
5
<PAGE>
(a) to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by Executive that any such breach or threatened breach
will cause irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company; and
(b) to require Executive to account for and pay over
to the Company all monetary benefits received by the Executive as the result of
any transactions constituting a breach of any of the provisions of Sections 4.2,
and Executive hereby agrees to account for and pay over such benefits to the
Company.
Each of the rights and remedies enumerated in this Section 4.4
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of Section 4.4, the prevailing party in such action or proceeding shall be
entitled to be reimbursed by the other party for the reasonable attorneys' fees
and costs incurred by the prevailing party.
4.5 During the one-year period following termination of
Executive's employment with the Company for any reason, Executive, without the
prior written permission of the Company, shall not, anywhere in the United
States, (i) enter into the employ of or render any services to any person, firm
or corporation engaged in any Competitive Business, as defined below; (ii)
engage in any Competitive Business for his own account; (iii) become associated
with or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; (iv) employ or
retain, or have or cause any other person or entity to employ or retain, any
person who was employed or retained by the Company while Executive was employed
by the Company; or (v) solicit, interfere with, or endeavor to entice away from
the Company, for the benefit of a Competitive Business, any of its customers or
other persons with whom the Company has a contractual relationship or is
otherwise doing business or has done business during the term of this Agreement.
Notwithstanding the foregoing, nothing in this Agreement shall preclude
Executive from investing his personal assets in the securities of any
corporation or other business entity which is engaged in a Competitive Business
if such securities are traded on a national stock exchange or in the
over-the-counter market and if such investment does not result in his
beneficially owning, at any time, more than 4.9% of the publicly-traded equity
securities of such Competitive Business.
6
<PAGE>
4.6 If Executive shall violate any covenant contained in
Section 4 the duration of such covenant so violated shall be automatically
extended for a period of time equal to the period of such violation.
4.7 The provisions of this paragraph 4 shall survive the
termination of this Agreement for any reason.
5. Definitions.
As used in this Agreement:
5.1 "Affiliate" shall mean any entity that, directly or
indirectly, is controlled by, controlling, or under common control with the
Company.
5.2 "Competitive Business" shall mean a businesses engaged in
(i) the sale, manufacture, or distribution of wireless handsets; (ii) the
development of software to be utilized in a wireless handset; (iii) the
development of software designed or intended to provide management information
or support systems to wireless handsets; (iv) any other businesses engaged in
the sale, marketing, development or distribution of prepaid communication or
utility services; or (v) or any other business engaged in by the Company during
the fiscal year immediately prior to the termination of Executive's employment.
6. Miscellaneous Provisions.
6.1 All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when transmitted by electronic means, or when
delivered by reputable overnight courier, postage prepaid, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given upon actual receipt.
If to Executive:
Thomas E. Fricks
3841 South Atlantic Avenue
Daytona Beach Shores, Florida 32127
Marked "Personal and Confidential"
If to the Company:
Pre-Cell Solutions, Inc.
255 East Drive, Suite C
Melbourne, Florida 33326
Attention: Chairman of the Board
7
<PAGE>
6.2 This Agreement sets forth the entire agreement of the
parties relating to the employment of Executive and are intended to supersede
all prior negotiations, understandings and agreements. No provisions of this
Agreement may be waived or changed except by a writing by the party against whom
such waiver or change is sought to be enforced. The failure of any party to
require performance of any provision hereof or thereof shall in no manner affect
the right at a later time to enforce such provision.
6.3 All questions with respect to the construction of this
Agreement, and the rights and obligations of the parties hereunder, shall be
determined in accordance with the law of the State of Florida applicable to
agreements made and to be performed entirely in Florida.
6.4 This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company. This Agreement shall not
be assignable by Executive, but shall inure to the benefit of and be binding
upon Executive's heirs and legal representatives.
6.5 Should any provision of this Agreement become legally
unenforceable, no other provision of this Agreement shall be affected, and this
Agreement shall continue as if the Agreement had been executed absent the
unenforceable provision.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EXECUTIVE
/s/ Thomas Fricks
-----------------------------------
Thomas Fricks
PRE-CELL SOLUTIONS, INC.
By: /s/ Thomas E. Biddix
--------------------------------
Thomas E. Biddix
Chief Executive Officer
8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of April 1, 2000
is entered into between JONATHAN O'NEAL, residing at 4260 Edgewater Drive,
Kennesaw, Georgia 30019 ("Executive"), and PRE-CELL SOLUTIONS, INC., a Colorado
corporation having its principal office at 255 East Drive, Suite C, Melbourne,
Florida 33326 ("Company").
WHEREAS, the Company and Executive desire to provide for the employment
of Executive by the Company on the terms set forth herein;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 The Company hereby employs Executive as its Chief
Technology Officer to provide technology direction on current products and
future product development. All of Executive's powers and authority in any
capacity shall at all times be subject to the reasonable direction and control
of the Company's board of directors (the "Board") and President.
1.2 The Board or President may assign to Executive such other
executive duties for the Company or any Affiliate (as defined in Section 5.1) as
are consistent with Executive's status as Chief Technology Officer.
1.3 Executive accepts such employment and agrees to devote a
sufficient portion of his business time, energies and attention to the
performance of his duties. Executive shall perform his duties primarily in and
from the Company's offices located in Atlanta, Georgia.
2. Compensation and Benefits.
2.1 The Company shall pay to Executive a base salary
("Salary") at the aggregate rate of $150,000 per annum during the first year of
the Employment Term (as such term is defined in Section 3.1, below), $175,000 in
year two, and $200,000 in year three. Executive's Salary shall be paid in equal,
1
<PAGE>
periodic installments, in accordance with the Company's normal payroll
procedures and shall be subject to withholding taxes and other normal payroll
deductions.
2.2 The Company will award Executive a bonus based on the
successful introduction of "new" products into the marketplace. Each "new"
product will result in a $25,000.00 bonus to the Executive. "New" product is
defined as a unique product which will result in incremental revenue for the
Company (e.g. a new digital handset), or provide the Company a strategic market
advantage (e.g. a new analog handset from a major manufacturer, such as Nokia or
Motorola, or a major revision of an existing product that provides substantial
new features and functionality in response to market demand). This bonus will be
awarded at the sole discretion of the Board, based on their interpretation and
assessment of "successful introduction" and "new" product.
2.3 Intentionally omitted.
2.4 Executive shall be entitled to such medical, dental and
disability insurance which is no less favorable than generally afforded to other
senior executives of the Company, subject to applicable waiting periods and
other conditions. Executive shall be entitled to four weeks of vacation in each
employment year and to a reasonable number of other days off for religious and
personal reasons. In 2001, for that year only, Executive will be entitled to six
weeks of vacation, four of which may be taken consecutively. Executive
acknowledges that the Company may, from time to time, apply for and take out in
its own name and at its expense, life, health, disability, accident or other
insurance, including key man insurance, upon Executive that the Company may deem
necessary and advisable to protect its interests hereunder; and Executive agrees
to submit to any medical or other reasonable examination necessary for such
purpose and to assist and cooperate with the Company in procuring such
insurance; and Executive acknowledges that he shall have no right, title or
interest in or to such insurance.
2.5 The Company will pay or reimburse Executive for all
transportation, hotel and other expenses reasonably incurred by Executive on
business trips and for all other ordinary and reasonable out-of-pocket expenses
actually incurred by him in the conduct of the business of the Company against
itemized vouchers submitted with respect to any such expenses approved in
accordance with customary procedures.
2.6 The Company will pay Executive a monthly automobile
allowance equal to $500.00 per month.
2
<PAGE>
3. Term and Termination.
3.1 The term of this Agreement commences as of April 1, 2000,
and shall continue until April 1, 2003 (the "Employment Term"), unless sooner
terminated or extended as herein provided.
3.2 If Executive dies during the term of this Agreement, this
Agreement shall thereupon terminate.
3.3 The Company, by notice to Executive, may terminate this
Agreement if Executive shall fail because of illness or incapacity to render,
for six consecutive months, services of the character contemplated by this
Agreement.
3.4 The Company, by not less than 30 days notice to Executive,
may terminate this Agreement without cause at any time. In the event of such
termination the Company shall pay to Executive the salary due Executive pursuant
to Paragraph 2.1 through the Employment Term as provided in Section 3.1.
Notwithstanding such termination, the provisions of paragraph 4 shall survive.
3.5 The Company, by notice to Executive, may terminate this
Agreement for cause. As used herein, "cause" shall include, but not be limited
to: (a) the refusal or failure by Executive to carry out specific directions of
the Chief Executive Officer or Board of Directors which are of a material
nature, or the refusal or failure by Executive to perform a material part of
Executive's duties hereunder; (b) the commission by Executive of a material
breach of any of the provisions of this Agreement; (c) common law fraud or
dishonest action by Executive in his relations with the Company or any of its
subsidiaries or affiliates, or with any customer or business contact of the
Company or any of its subsidiaries or affiliates ("dishonest" for these purposes
shall mean Executive's knowingly or recklessly making of a material misstatement
or omission for his personal benefit); or (d) the conviction of Executive of any
crime involving an act of moral turpitude. Notwithstanding the foregoing, no
"cause" for termination shall be deemed to exist with respect to Executive's
acts described in clauses (a) or (b) above, unless the Company shall have given
written notice to Executive specifying the "cause" with reasonable particularity
and, within ten business days after such notice, Executive shall not have cured
or eliminated the problem or thing giving rise to such "cause;" provided,
however, that a breach of any provision of clauses (a) or (b) above, involving
the same or substantially similar actions or conduct for which the Company
previously gave notice of termination and with respect to which, Executive
3
<PAGE>
satisfactorily cured, shall be grounds for termination for cause without any
additional notice from the Company. Notwithstanding such termination, the
provisions of paragraph 4 shall survive.
3.6 The Executive, by notice to the Company, may terminate
this Agreement if the Company materially breaches any of the provisions of this
Agreement. Notwithstanding the foregoing, the Executive shall not have grounds
for termination unless Executive shall have given written notice to the Company
specifying the breach with reasonable particularity and, within ten days after
such notice, the Company shall not have cured or eliminated the problem or thing
giving rise to such breach; provided, however, that a breach of any provision of
this Agreement involving the same or substantially similar actions or conduct
for which the Executive previously gave notice of termination and with respect
to which, the Company satisfactorily cured, shall be grounds for termination for
cause without any additional notice from the Executive. In the event of
termination by Executive under this Section 3.6, the Company shall pay to
Executive the Salary due Executive pursuant to paragraph 2.1 hereof through the
Employment Term. Notwithstanding such termination, the provisions of paragraph 4
shall survive termination if the Company continues to pay Executive the Salary
as provided in the immediately preceding sentence.
4. Protection of Confidential Information; Non-Competition.
4.1 Executive acknowledges that:
(a) As a result of his employment with the Company,
Executive will obtain secret and confidential information concerning the
business of the Company and/or its subsidiaries and affiliates (referred to
collectively in this paragraph 4 as the "Company"), including, without
limitation, financial information, designs and other proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information").
(b) The Company will suffer substantial damage which
will be difficult to compute if, during the period of his employment with the
Company or thereafter, Executive should divulge Confidential Information.
(c) The provisions of this Agreement are reasonable
and necessary for the protection of the business of the Company.
4
<PAGE>
4.2 Executive agrees that he will not at any time, either
during the term of this Agreement or thereafter, divulge to any person or entity
any Confidential Information obtained or learned by him as a result of his
employment with, or prior retention by, the Company, except (i) in the course of
performing his duties hereunder; (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
4.3 Upon termination of his employment with the Company,
Executive will promptly deliver to the Company all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and all copies
thereof) relating to the business of the Company and all property associated
therewith, which he may then possess or have under his control; provided,
however, subject to Executive's obligations under this Section 4, that Executive
shall be entitled to retain copies of such documents reasonably necessary to
document his financial relationship (both past and future) with the Company.
4.4 If Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 4.2, the Company shall have the
right and remedy:
(a) to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by Executive that any such breach or threatened breach
will cause irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company; and
(b) to require Executive to account for and pay over
to the Company all monetary benefits received by the Executive as the result of
any transactions constituting a breach of any of the provisions of Sections 4.2,
and Executive hereby agrees to account for and pay over such benefits to the
Company.
5
<PAGE>
Each of the rights and remedies enumerated in this Section 4.4
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of Section 4.4, the prevailing party in such action or proceeding shall be
entitled to be reimbursed by the other party for the reasonable attorneys' fees
and costs incurred by the prevailing party.
4.5 During the one-year period following termination of
Executive's employment with the Company for any reason, Executive, without the
prior written permission of the Company, shall not, anywhere in the United
States, (i) enter into the employ of or render any services to any person, firm
or corporation engaged in any Competitive Business, as defined below; (ii)
engage in any Competitive Business for his own account; (iii) become associated
with or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; (iv) employ or
retain, or have or cause any other person or entity to employ or retain, any
person who was employed or retained by the Company while Executive was employed
by the Company; or (v) solicit, interfere with, or endeavor to entice away from
the Company, for the benefit of a Competitive Business, any of its customers or
other persons with whom the Company has a contractual relationship or is
otherwise doing business or has done business during the term of this Agreement.
Notwithstanding the foregoing, nothing in this Agreement shall preclude
Executive from investing his personal assets in the securities of any
corporation or other business entity which is engaged in a Competitive Business
if such securities are traded on a national stock exchange or in the
over-the-counter market and if such investment does not result in his
beneficially owning, at any time, more than 4.9% of the publicly-traded equity
securities of such Competitive Business.
4.6 If Executive shall violate any covenant contained in
Section 4 the duration of such covenant so violated shall be automatically
extended for a period of time equal to the period of such violation.
4.7 The provisions of this paragraph 4 shall survive the
termination of this Agreement for any reason.
5. Definitions.
As used in this Agreement:
6
<PAGE>
5.1 "Affiliate" shall mean any entity that, directly or
indirectly, is controlled by, controlling, or under common control with the
Company.
5.2 "Competitive Business" shall mean a businesses engaged in
(i) the sale, manufacture, or distribution of wireless handsets; (ii) the
development of software to be utilized in a wireless handset; (iii) the
development of software designed or intended to provide management information
or support systems to wireless handsets; (iv) any other businesses engaged in
the sale, marketing, development or distribution of prepaid communication or
utility services; or (v) or any other business engaged in by the Company during
the fiscal year immediately prior to the termination of Executive's employment.
6. Miscellaneous Provisions.
6.1 All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when transmitted by electronic means, or when
delivered by reputable overnight courier, postage prepaid, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given upon actual receipt.
If to Executive:
Jonathan O'Neal
4260 Edgewater Drive
Kennesaw, Georgia 30019
If to the Company:
Pre-Cell Solutions, Inc.
385 East Drive
Melbourne, Florida 32904
Attention: Chairman of the Board
6.2 This Agreement sets forth the entire agreement of the
parties relating to the employment of Executive and are intended to supersede
all prior negotiations, understandings and agreements. No provisions of this
Agreement may be waived or changed except by a writing by the party against whom
such waiver or change is sought to be enforced. The failure of any party to
require performance of any provision hereof or thereof shall in no manner affect
the right at a later time to enforce such provision.
6.3 All questions with respect to the construction of this
Agreement, and the rights and obligations of the parties hereunder, shall be
determined in accordance with the law of the State of Florida applicable to
agreements made and to be performed entirely in Florida.
7
<PAGE>
6.4 This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company. This Agreement shall not
be assignable by Executive, but shall inure to the benefit of and be binding
upon Executive's heirs and legal representatives.
6.5 Should any provision of this Agreement become legally
unenforceable, no other provision of this Agreement shall be affected, and this
Agreement shall continue as if the Agreement had been executed absent the
unenforceable provision.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EXECUTIVE
/s/ Jonathan O'Neal
-----------------------------------
Jonathan O'Neal
PRE-CELL SOLUTIONS, INC.
By: /s/ Thomas E. Biddix
-----------------------------
Chief Executive Officer
8
STOCK REDEMPTION AGREEMENT
THIS STOCK REDEMPTION AGREEMENT (the "Agreement"), dated April 4, 2000,
is entered into by and between PRE-CELL SOLUTIONS, INC, a Colorado corporation
("Pre-Cell") and THOMAS E. BIDDIX ("Biddix").
WITNESSETH:
WHEREAS, Pre-Cell has 45,000,000 shares of common stock, par value $.01
per share authorized for issuance (the "Common Stock"); and
WHEREAS, Pre-Cell currently has 35,268,355 shares of Common Stock
issued and outstanding; and
WHEREAS, Biddix owns 25,485,353 shares of Pre-Cell's Common Stock; and
WHEREAS, Pre-Cell desires to consummate two merger transactions (the
"Mergers") pursuant to which it will issue 24,639,468 shares of its Common
Stock; and
WHEREAS, Pre-Cell cannot issue the shares in the Mergers and thus
consummate the Merger transactions without either (i)the Pre-Cell shareholders'
approval to increase the number of authorized but unissued shares of Common
Stock or (ii) redemption of shares by the Pre-Cell shareholders; and
WHEREAS, Biddix believes that the value of his Pre-Cell Common Stock
will be enhanced by the consummation of the Mergers and, therefore, desires to
redeem 21,519,818 shares of his Pre- Cell Common Stock to the Company to ensure
that Pre-Cell can consummate the Merger, all as more particularly provided
herein.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties, intending to be legally bound, do
hereby agree as follows:
1. Redemption of Shares. On the "Closing Date" as hereinafter defined,
Biddix shall redeem, and Pre-Cell shall accept from Biddix, all of Biddix's
right, title and interest in and to 21,519,818 shares of Pre-Cell Common Stock
(the "Redeemed Shares").
2. Consideration. Biddix acknowledges and agrees that the consummation
of the Mergers and the enhanced value of his remaining shares of Pre-Cell Common
Stock after the consummation of the Mergers constitutes good and valid
consideration, notwithstanding there being no monetary consideration being
delivered to him at the Closing.
3. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place simultaneously with the execution of
this Agreement and immediately prior to the consummation of the Mergers (the
"Closing Date").
Page 1 of 5
<PAGE>
4. Procedures at the Closing. At the Closing, the parties shall take
the following actions:
A. Biddix shall deliver to Pre-Cell a stock certificate
representing the 25,485,353 Pre-Cell Shares duly
endorsed or accompanied by a duly executed stock
power;
B. Pre-Cell shall deliver to Biddix a stock certificate
representing 3,965,535 shares of Pre-Cell Common
Stock. The stock certificate shall be legended as
follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("ACT") OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT OR
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SAID ACT AND COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES
LAW, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.
5. Biddix Representations. Biddix represents and warrants that he has
(i) been given access to full and complete information regarding Pre-Cell, the
transactions contemplated by this Agreement and the Mergers and that he has
utilized such access to his satisfaction for the purpose of obtaining the
information necessary to evaluate the merits of this transaction; (ii) either
met with or been given reasonable opportunity to meet with officers of Pre-Cell
for the purpose of asking questions of, and receiving answers from, such
officers concerning the terms and conditions of this transaction, the Mergers
and the business and operations of Pre-Cell and the entities with which Pre-
Cell or its affiliates intends to merge and to obtain any additional
information, to the extent reasonably available; and (iii) received all
information and material regarding the Company, the target companies and this
transaction that he has requested.
6. Release. In consideration of the mutual premises contained herein,
and other good and valuable consideration, the receipt and sufficiency are
hereby acknowledged, Biddix and each of his heirs, executors, administrators,
successors, personal representatives and assigns do hereby waive, release,
remise, acquit, satisfy and forever discharge Pre-Cell and any and all
affiliates or related corporations and their shareholders, parents,
subsidiaries, affiliates, successors or assigns, and their attorneys, officers,
shareholders, directors, agents and employees, past, present or future, and
their heirs, executors, administrators, successors, personal representatives or
assigns (hereafter collectively referred to as, the "Pre-Cell Second Party"), of
and from any claim and all manner of action and actions, cause and causes of
action, suits, debts, obligations, liabilities, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
Page 2 of 5
<PAGE>
agreements, promises, variances, trespasses, damages, judgments, executions,
claims for negligence, damages and demands whatsoever which Biddix ever had, now
has, or which Biddix or his heirs, executors, administrators, successors,
personal representatives or assigns hereafter can, shall or may have against
Pre-Cell or any Pre-Cell Second Party, known, unknown, foreseen or unforeseen
from the beginning of the world to the date of this letter agreement relating in
any way to the transactions contemplated by this Agreement.
7. Indemnification.
(a) The Company agrees to indemnify and hold Biddix harmless
from and against any and all claims, liabilities, losses, damages, costs and
expenses, including reasonable counsel fees and disbursements (singularly, a
"Loss," and collectively, the "Losses"), arising out of or relating to actions
or claims brought against Biddix in connection with the transactions
contemplated by this Agreement.
(b) Biddix agrees to indemnify and hold harmless Pre-Cell, any
Affiliate of Pre-Cell and the directors, officers and employees of Pre-Cell or
any of its Affiliates from and against any Losses, arising out of or relating to
actions or claims brought against Pre-Cell in connection with the transactions
contemplated by this Agreement.
8 Attorneys' Fees. The prevailing party in any action brought by any of
the parties seeking to enforce its rights under this Agreement shall be entitled
to recover from the non- prevailing party its reasonable attorneys' fees and
costs.
9. Covenants. Each of the parties agrees to cooperate with the other
and execute and deliver to the other such other instruments and documents and
take such other actions as may be reasonably requested from time to time by the
other parties hereto as necessary to carry out, evidence and confirm the
intended purposes of this Agreement.
10. Notices. Any Notices, reports, demands, required or permitted under
this Agreement shall be in writing and shall be delivered by hand delivery, by
facsimile or by a nationally recognized overnight delivery service (i.e.,
Federal Express), addressed as follows:
If to Biddix: 688 Carriage Hill Road
Melbourne, Florida 32940
If to Pre-Cell Pre-Cell Solutions, Inc.
385 East Drive
Melbourne, Florida 32904
11. Assignment. This Agreement may not be assigned by any of the
parties hereto without the prior written consent of the other party, which
consent shall not be unreasonably withheld.
Page 3 of 5
<PAGE>
12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
13. Amendments. This Agreement can be amended only by an instrument in
writing duly executed by the parties hereto.
14. Waiver. No waiver of any provisions of this Agreement shall be
effective unless it is in writing signed by the party against whom waiver is
asserted, and any waiver provisions of this Agreement shall only be applicable
to the specific instance to which it is related and shall not be deemed to be a
continuing waiver.
15. Captions and Headings. Captions and paragraph headings contained in
this Agreement are for convenience and reference only and in no way define,
describe, extend or limit the scope or intent of any of the provisions hereof.
16. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
successors, legal representatives, successors in interest and permitted assigns.
17. Governing Law. This Agreement shall be construed under and governed
by the laws of the State of Florida without regard to conflict of law
principles.
18. Survival. All of the obligations of the parties contained in this
Agreement which, by their nature, are intended to survive the Closing of the
transactions contemplated hereby, shall survive the Closing.
[Signature on next page]
Page 4 of 5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
PRE-CELL SOLUTIONS, INC.
By: /s/ Timothy F. McWilliams
-------------------------
Timothy F. McWilliams
Chief Operating Officer
Page 5 of 5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of April 1, 2000
is entered into between THOMAS E. BIDDIX, residing at 688 Carriage Hill Road,
Melbourne, Florida 32940 ("Executive"), and PRE-CELL SOLUTIONS, INC., a Colorado
corporation having its principal office at 255 East Drive, Suite C, Melbourne,
Florida 33326 ("Company").
WHEREAS, the Company and Executive desire to provide for the employment
of Executive by the Company on the terms set forth herein;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 The Company hereby employs Executive as its Chief
Executive Officer. All of Executive's powers and authority in any capacity shall
at all times be subject to the reasonable direction and control of the Company's
board of directors (the "Board").
1.2 The Board may assign to Executive such other executive
duties for the Company or any Affiliate (as defined in Section 5.1) as are
consistent with Executive's status as Chief Executive Officer.
1.3 Executive accepts such employment and agrees to devote a
sufficient portion of his business time, energies and attention to the
performance of his duties. Executive shall perform his duties primarily in and
from the Company's offices located in Melbourne, Florida.
2. Compensation and Benefits.
2.1 The Company shall pay to Executive a base salary
("Salary") at the aggregate rate of $250,000 per annum during the Employment
Term (as such term is defined in Section 3.1, below). Executive's Salary shall
be paid in equal, periodic installments, in accordance with the Company's normal
payroll procedures and shall be subject to withholding taxes and other normal
payroll deductions.
1
<PAGE>
2.2 The Company may award Executive a bonus (the "Bonus") at
the sole discretion of the Board, which Bonus shall be determined based upon
Executive's performance and the Company's performance generally. Notwithstanding
the foregoing, Executive understands that the Company is not obligated under any
circumstances, to award any such Bonus.
2.3 The Company shall annually review Executive's performance.
Based upon such review and such other factors as the Company may consider, the
Company may determine to increase Executive's salary. Notwithstanding the
foregoing, Executive understands that the Company is not obligated under any
circumstances, to award any such increase in salary.
2.4 Executive shall be entitled to such medical, dental and
disability insurance which is no less favorable than generally afforded to other
senior executives of the Company, subject to applicable waiting periods and
other conditions. Executive shall be entitled to five weeks of vacation in each
employment year and to a reasonable number of other days off for religious and
personal reasons. Executive acknowledges that the Company may, from time to
time, apply for and take out in its own name and at its expense, life, health,
disability, accident or other insurance, including key man insurance, upon
Executive that the Company may deem necessary and advisable to protect its
interests hereunder; and Executive agrees to submit to any medical or other
reasonable examination necessary for such purpose and to assist and cooperate
with the Company in procuring such insurance; and Executive acknowledges that he
shall have no right, title or interest in or to such insurance.
2.5 The Company will pay or reimburse Executive for all
transportation, hotel and other expenses reasonably incurred by Executive on
business trips and for all other ordinary and reasonable out-of-pocket expenses
actually incurred by him in the conduct of the business of the Company against
itemized vouchers submitted with respect to any such expenses approved in
accordance with customary procedures.
2.6 The company will pay Executive a monthly automobile
allowance equal to $1,500 per month during the Employment Term.
3. Term and Termination.
3.1 The term of this Agreement commences as of April 1, 2000,
and shall continue until April 1, 2003 (the "Employment Term"), unless sooner
terminated or extended as herein provided.
2
<PAGE>
3.2 If Executive dies during the term of this Agreement, this
Agreement shall thereupon terminate.
3.3 The Company, by notice to Executive, may terminate this
Agreement if Executive shall fail because of illness or incapacity to render,
for six consecutive months, services of the character contemplated by this
Agreement.
3.4 The Company, by not less than 30 days notice to Executive,
may terminate this Agreement without cause at any time. In the event of such
termination the Company shall pay to Executive the salary due Executive pursuant
to Paragraph 2.1 through the Employment Term as provided in Section 3.1. In the
event Executive is terminated without cause during the final year of the
Employment Term, then Executive shall receive the greater of: (i) the salary due
Executive pursuant to Paragraph 2.1 through the Employment Term; or (ii) the
salary due Executive pursuant to Paragraph 2.1 for a period of six calendar
months. Notwithstanding such termination, the provisions of paragraph 4 shall
survive.
3.5 The Company, by notice to Executive, may terminate this
Agreement for cause. As used herein, "cause" shall include, but not be limited
to: (a) the refusal or failure by Executive to carry out specific directions of
the Board of Directors which are of a material nature, or the refusal or failure
by Executive to perform a material part of Executive's duties hereunder; (b) the
commission by Executive of a material breach of any of the provisions of this
Agreement; (c) common law fraud or dishonest action by Executive in his
relations with the Company or any of its subsidiaries or affiliates, or with any
customer or business contact of the Company or any of its subsidiaries or
affiliates ("dishonest" for these purposes shall mean Executive's knowingly or
recklessly making of a material misstatement or omission for his personal
benefit); or (d) the conviction of Executive of any crime involving an act of
moral turpitude. Notwithstanding the foregoing, no "cause" for termination shall
be deemed to exist with respect to Executive's acts described in clauses (a) or
(b) above, unless the Company shall have given written notice to Executive
specifying the "cause" with reasonable particularity and, within ten business
days after such notice, Executive shall not have cured or eliminated the problem
or thing giving rise to such "cause;" provided, however, that a breach of any
provision of clauses (a) or (b) above, involving the same or substantially
similar actions or conduct for which the Company previously gave notice of
termination and with respect to which, Executive satisfactorily cured, shall be
grounds for termination for cause without any additional notice from the
Company. Notwithstanding such termination, the provisions of paragraph 4 shall
survive.
3
<PAGE>
3.6 The Executive, by notice to the Company, may terminate
this Agreement if the Company materially breaches any of the provisions of this
Agreement or does not comply with Section 2.4. Notwithstanding the foregoing,
the Executive shall not have grounds for termination unless Executive shall have
given written notice to the Company specifying the breach with reasonable
particularity and, within ten days after such notice, the Company shall not have
cured or eliminated the problem or thing giving rise to such breach; provided,
however, that a breach of any provision of this Agreement involving the same or
substantially similar actions or conduct for which the Executive previously gave
notice of termination and with respect to which, the Company satisfactorily
cured, shall be grounds for termination for cause without any additional notice
from the Executive. In the event of termination by Executive under this Section
3.6, the Company shall pay to Executive the Salary due Executive pursuant to
paragraph 2.1 hereof through the Employment Term. Notwithstanding such
termination, the provisions of paragraph 4 shall survive termination if the
Company continues to pay Executive the Salary as provided in the immediately
preceding sentence.
4. Protection of Confidential Information; Non-Competition.
4.1 Executive acknowledges that:
(a) As a result of his employment with the Company,
Executive will obtain secret and confidential information concerning the
business of the Company and/or its subsidiaries and affiliates (referred to
collectively in this paragraph 4 as the "Company"), including, without
limitation, financial information, designs and other proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information").
(b) The Company will suffer substantial damage which
will be difficult to compute if, during the period of his employment with the
Company or thereafter, Executive should divulge Confidential Information.
(c) The provisions of this Agreement are reasonable
and necessary for the protection of the business of the Company.
4.2 Executive agrees that he will not at any time, either
during the term of this Agreement or thereafter, divulge to any person or entity
any Confidential Information obtained or learned by him as a result of his
employment with, or prior retention by, the Company, except (i) in the course of
4
<PAGE>
performing his duties hereunder; (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
4.3 Upon termination of his employment with the Company,
Executive will promptly deliver to the Company all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and all copies
thereof) relating to the business of the Company and all property associated
therewith, which he may then possess or have under his control; provided,
however, subject to Executive's obligations under this Section 4, that Executive
shall be entitled to retain copies of such documents reasonably necessary to
document his financial relationship (both past and future) with the Company.
4.4 If Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 4.2, the Company shall have the
right and remedy:
(a) to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by Executive that any such breach or threatened breach
will cause irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company; and
(b) to require Executive to account for and pay over
to the Company all monetary benefits received by the Executive as the result of
any transactions constituting a breach of any of the provisions of Sections 4.2,
and Executive hereby agrees to account for and pay over such benefits to the
Company.
Each of the rights and remedies enumerated in this Section 4.4
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
5
<PAGE>
4.5 During the one-year period following termination of
Executive's employment with the Company for any reason, Executive, without the
prior written permission of the Company, shall not, anywhere in the United
States, (i) enter into the employ of or render any services to any person, firm
or corporation engaged in any Competitive Business, as defined below; (ii)
engage in any Competitive Business for his own account; (iii) become associated
with or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; (iv) employ or
retain, or have or cause any other person or entity to employ or retain, any
person who was employed or retained by the Company while Executive was employed
by the Company; or (v) solicit, interfere with, or endeavor to entice away from
the Company, for the benefit of a Competitive Business, any of its customers or
other persons with whom the Company has a contractual relationship or is
otherwise doing business or has done business during the term of this Agreement.
Notwithstanding the foregoing, nothing in this Agreement shall preclude
Executive from investing his personal assets in the securities of any
corporation or other business entity which is engaged in a Competitive Business
if such securities are traded on a national stock exchange or in the
over-the-counter market and if such investment does not result in his
beneficially owning, at any time, more than 4.9% of the publicly-traded equity
securities of such Competitive Business.
4.6 If Executive shall violate any covenant contained in
Section 4 the duration of such covenant so violated shall be automatically
extended for a period of time equal to the period of such violation.
4.6 The provisions of this paragraph 4 shall survive the
termination of this Agreement for any reason.
5. Definitions.
As used in this Agreement:
5.1 "Affiliate" shall mean any entity that, directly or
indirectly, is controlled by, controlling, or under common control with the
Company.
5.2 "Competitive Business" shall mean a businesses engaged in
(i) the sale, manufacture, or distribution of wireless handsets; (ii) the
development of software to be utilized in a wireless handset; (iii) the
development of software designed or intended to provide management information
or support systems to wireless handsets; (iv) any other businesses engaged in
the sale, marketing, development or distribution of prepaid communication or
6
<PAGE>
utility services; or (v) or any other business engaged in by the Company during
the fiscal year immediately prior to the termination of Executive's employment.
6. Termination of all Other Agreements. This Agreement shall supersede
all prior agreements between the Company and any of its affiliates, subsidiaries
or related entities and Executive in connection with his employment.
Accordingly, that certain Employment Agreement between the Company and Executive
dated as of December 1, 1998 is hereby terminated and of no further force or
effect. Notwithstanding such termination, the Options granted to Executive under
his prior Agreement shall survive. Additionally, that certain Employment
Agreement between Executive and Pre-Paid Solutions, Inc., a wholly owned
subsidiary of the Company, dated May 1, 1998 is hereby terminated and of no
further force or effect.
7. Miscellaneous Provisions.
7.1 All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when transmitted by electronic means, or when
delivered by reputable overnight courier, postage prepaid, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 7.1. All notices shall be
deemed to have been given upon actual receipt.
If to Executive:
Thomas E. Biddix
688 Carriage Hill Road
Melbourne, Florida 32940
If to the Company:
Pre-Cell Solutions, Inc.
255 East Drive, Suite C
Melbourne, Florida 33326
Attention: Chairman of the Board
7.2 This Agreement sets forth the entire agreement of the
parties relating to the employment of Executive and are intended to supersede
all prior negotiations, understandings and agreements. No provisions of this
Agreement may be waived or changed except by a writing by the party against whom
such waiver or change is sought to be enforced. The failure of any party to
require performance of any provision hereof or thereof shall in no manner affect
the right at a later time to enforce such provision.
7
<PAGE>
7.3 All questions with respect to the construction of this
Agreement, and the rights and obligations of the parties hereunder, shall be
determined in accordance with the law of the State of Florida applicable to
agreements made and to be performed entirely in Florida.
7.4 This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company. This Agreement shall not
be assignable by Executive, but shall inure to the benefit of and be binding
upon Executive's heirs and legal representatives.
7.5 Should any provision of this Agreement become legally
unenforceable, no other provision of this Agreement shall be affected, and this
Agreement shall continue as if the Agreement had been executed absent the
unenforceable provision.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EXECUTIVE
/s/ Thomas E. Biddix
-----------------------------------
Thomas E. Biddix
PRE-CELL SOLUTIONS, INC.
By: /s/ Thomas Fricks
-------------------------------
Timothy F. McWilliams
8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of April 1, 2000
is entered into between TIMOTHY F. MCWILLIAMS, residing at 976 Villa Drive,
Melbourne, Florida 32940 ("Executive"), and PRE-CELL SOLUTIONS, INC., a Colorado
corporation having its principal office at 255 East Drive, Suite C, Melbourne,
Florida 33326 ("Company").
WHEREAS, the Company and Executive desire to provide for the employment
of Executive by the Company on the terms set forth herein;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 The Company hereby employs Executive as its Executive Vice
President. All of Executive's powers and authority in any capacity shall at all
times be subject to the reasonable direction and control of the Company's Chief
Executive Officer.
1.2 The President may assign to Executive such other executive
duties for the Company or any Affiliate (as defined in Section 5.1) as are
consistent with Executive's status as Executive Vice President.
1.3 Executive accepts such employment and agrees to devote a
sufficient portion of his business time, energies and attention to the
performance of his duties. Executive shall perform his duties primarily in and
from the Company's offices located in Melbourne, Florida.
2. Compensation and Benefits.
2.1 The Company shall pay to Executive a base salary
("Salary") at the aggregate rate of $150,000 per annum during the Employment
Term (as such term is defined in Section 3.1, below). Executive's Salary shall
be paid in equal, periodic installments, in accordance with the Company's normal
payroll procedures and shall be subject to withholding taxes and other normal
payroll deductions.
1
<PAGE>
2.2 The Company may award Executive a bonus (the "Bonus") at
the sole discretion of the Board, which Bonus shall be determined based upon
Executive's performance and the Company's performance generally. Notwithstanding
the foregoing, Executive understands that the Company is not obligated under any
circumstances, to award any such Bonus.
2.3 The Company shall annually review Executive's performance.
Based upon such review and such other factors as the Company may consider, the
Company may determine to increase Executive's salary. Notwithstanding the
foregoing, Executive understands that the Company is not obligated under any
circumstances, to award any such increase in salary.
2.4 Executive shall be entitled to such medical, dental and
disability insurance which is no less favorable than generally afforded to other
senior executives of the Company, subject to applicable waiting periods and
other conditions. Executive shall be entitled to five weeks of vacation in each
employment year and to a reasonable number of other days off for religious and
personal reasons. Executive acknowledges that the Company may, from time to
time, apply for and take out in its own name and at its expense, life, health,
disability, accident or other insurance, including key man insurance, upon
Executive that the Company may deem necessary and advisable to protect its
interests hereunder; and Executive agrees to submit to any medical or other
reasonable examination necessary for such purpose and to assist and cooperate
with the Company in procuring such insurance; and Executive acknowledges that he
shall have no right, title or interest in or to such insurance.
2.5 The Company will pay or reimburse Executive for all
transportation, hotel and other expenses reasonably incurred by Executive on
business trips and for all other ordinary and reasonable out-of-pocket expenses
actually incurred by him in the conduct of the business of the Company against
itemized vouchers submitted with respect to any such expenses approved in
accordance with customary procedures.
2.6 The company will pay Executive a monthly automobile
allowance equal to $1,250 per month during the Employment Term.
3. Term and Termination.
3.1 The term of this Agreement commences as of April 1, 2000,
and shall continue until April 1, 2003 (the "Employment Term"), unless sooner
terminated or extended as herein provided.
2
<PAGE>
3.2 If Executive dies during the term of this Agreement, this
Agreement shall thereupon terminate.
3.3 The Company, by notice to Executive, may terminate this
Agreement if Executive shall fail because of illness or incapacity to render,
for six consecutive months, services of the character contemplated by this
Agreement.
3.4 The Company, by not less than 30 days notice to Executive,
may terminate this Agreement without cause at any time. In the event of such
termination the Company shall pay to Executive the salary due Executive pursuant
to Paragraph 2.1 through the Employment Term as provided in Section 3.1. In the
event Executive is terminated without cause during the final year of the
Employment Term, then Executive shall receive the greater of: (i) the salary due
Executive pursuant to Paragraph 2.1 through the Employment Term; or (ii) the
salary due Executive pursuant to Paragraph 2.1 for a period of six calendar
months. Notwithstanding such termination, the provisions of paragraph 4 shall
survive.
3.5 The Company, by notice to Executive, may terminate this
Agreement for cause. As used herein, "cause" shall include, but not be limited
to: (a) the refusal or failure by Executive to carry out specific directions of
the Chief Executive Officer or Board of Directors which are of a material
nature, or the refusal or failure by Executive to perform a material part of
Executive's duties hereunder; (b) the commission by Executive of a material
breach of any of the provisions of this Agreement; (c) common law fraud or
dishonest action by Executive in his relations with the Company or any of its
subsidiaries or affiliates, or with any customer or business contact of the
Company or any of its subsidiaries or affiliates ("dishonest" for these purposes
shall mean Executive's knowingly or recklessly making of a material misstatement
or omission for his personal benefit); or (d) the conviction of Executive of any
crime involving an act of moral turpitude. Notwithstanding the foregoing, no
"cause" for termination shall be deemed to exist with respect to Executive's
acts described in clauses (a) or (b) above, unless the Company shall have given
written notice to Executive specifying the "cause" with reasonable particularity
and, within ten business days after such notice, Executive shall not have cured
or eliminated the problem or thing giving rise to such "cause;" provided,
however, that a breach of any provision of clauses (a) or (b) above, involving
the same or substantially similar actions or conduct for which the Company
previously gave notice of termination and with respect to which, Executive
satisfactorily cured, shall be grounds for termination for cause without any
additional notice from the Company. Notwithstanding such termination, the
provisions of paragraph 4 shall survive.
3
<PAGE>
3.6 The Executive, by notice to the Company, may terminate
this Agreement if the Company materially breaches any of the provisions of this
Agreement or does not comply with Section 2.4. Notwithstanding the foregoing,
the Executive shall not have grounds for termination unless Executive shall have
given written notice to the Company specifying the breach with reasonable
particularity and, within ten days after such notice, the Company shall not have
cured or eliminated the problem or thing giving rise to such breach; provided,
however, that a breach of any provision of this Agreement involving the same or
substantially similar actions or conduct for which the Executive previously gave
notice of termination and with respect to which, the Company satisfactorily
cured, shall be grounds for termination for cause without any additional notice
from the Executive. In the event of termination by Executive under this Section
3.6, the Company shall pay to Executive the Salary due Executive pursuant to
paragraph 2.1 hereof through the Employment Term. Notwithstanding such
termination, the provisions of paragraph 4 shall survive termination if the
Company continues to pay Executive the Salary as provided in the immediately
preceding sentence.
4. Protection of Confidential Information; Non-Competition.
4.1 Executive acknowledges that:
(a) As a result of his employment with the Company,
Executive will obtain secret and confidential information concerning the
business of the Company and/or its subsidiaries and affiliates (referred to
collectively in this paragraph 4 as the "Company"), including, without
limitation, financial information, designs and other proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information").
(b) The Company will suffer substantial damage which
will be difficult to compute if, during the period of his employment with the
Company or thereafter, Executive should divulge Confidential Information.
(c) The provisions of this Agreement are reasonable
and necessary for the protection of the business of the Company.
4.2 Executive agrees that he will not at any time, either
during the term of this Agreement or thereafter, divulge to any person or entity
any Confidential Information obtained or learned by him as a result of his
employment with, or prior retention by, the Company, except (i) in the course of
4
<PAGE>
performing his duties hereunder; (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
4.3 Upon termination of his employment with the Company,
Executive will promptly deliver to the Company all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and all copies
thereof) relating to the business of the Company and all property associated
therewith, which he may then possess or have under his control; provided,
however, subject to Executive's obligations under this Section 4, that Executive
shall be entitled to retain copies of such documents reasonably necessary to
document his financial relationship (both past and future) with the Company.
4.4 If Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 4.2, the Company shall have the
right and remedy:
(a) to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by Executive that any such breach or threatened breach
will cause irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company; and
(b) to require Executive to account for and pay over
to the Company all monetary benefits received by the Executive as the result of
any transactions constituting a breach of any of the provisions of Sections 4.2,
and Executive hereby agrees to account for and pay over such benefits to the
Company.
Each of the rights and remedies enumerated in this Section 4.4
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
5
<PAGE>
4.5 During the one-year period following termination of
Executive's employment with the Company for any reason, Executive, without the
prior written permission of the Company, shall not, anywhere in the United
States, (i) enter into the employ of or render any services to any person, firm
or corporation engaged in any Competitive Business, as defined below; (ii)
engage in any Competitive Business for his own account; (iii) become associated
with or interested in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; (iv) employ or
retain, or have or cause any other person or entity to employ or retain, any
person who was employed or retained by the Company while Executive was employed
by the Company; or (v) solicit, interfere with, or endeavor to entice away from
the Company, for the benefit of a Competitive Business, any of its customers or
other persons with whom the Company has a contractual relationship or is
otherwise doing business or has done business during the term of this Agreement.
Notwithstanding the foregoing, nothing in this Agreement shall preclude
Executive from investing his personal assets in the securities of any
corporation or other business entity which is engaged in a Competitive Business
if such securities are traded on a national stock exchange or in the
over-the-counter market and if such investment does not result in his
beneficially owning, at any time, more than 4.9% of the publicly-traded equity
securities of such Competitive Business.
4.6 If Executive shall violate any covenant contained in
Section 4 the duration of such covenant so violated shall be automatically
extended for a period of time equal to the period of such violation.
4.6 The provisions of this paragraph 4 shall survive the
termination of this Agreement for any reason.
5. Definitions.
As used in this Agreement:
5.1 "Affiliate" shall mean any entity that, directly or
indirectly, is controlled by, controlling, or under common control with the
Company.
5.2 "Competitive Business" shall mean a businesses engaged in
(i) the sale, manufacture, or distribution of wireless handsets; (ii) the
development of software to be utilized in a wireless handset; (iii) the
development of software designed or intended to provide management information
or support systems to wireless handsets; (iv) any other businesses engaged in
the sale, marketing, development or distribution of prepaid communication or
6
<PAGE>
utility services; or (v) or any other business engaged in by the Company during
the fiscal year immediately prior to the termination of Executive's employment.
6. Termination of all Other Agreements. This Agreement shall supersede
all prior agreements between the Company and any of its affiliates, subsidiaries
or related entities and Executive in connection with his employment.
Accordingly, that certain Employment Agreement between the Company and Executive
dated as of December 1, 1998 is hereby terminated and of no further force or
effect. Notwithstanding such termination, the Options granted to Executive under
his prior Agreement shall survive. Additionally, that certain Employment
Agreement between Executive and Pre-Paid Solutions, Inc., a wholly owned
subsidiary of the Company, dated May 1, 1998 is hereby terminated and of no
further force or effect.
7. Miscellaneous Provisions.
7.1 All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when transmitted by electronic means, or when
delivered by reputable overnight courier, postage prepaid, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given upon actual receipt.
If to Executive:
Timothy F. McWilliams
976 Villa Drive
Melbourne, Florida 32940
If to the Company:
Pre-Cell Solutions, Inc.
255 East Drive, Suite C
Melbourne, Florida 33326
Attention: Chairman of the Board
7.2 This Agreement sets forth the entire agreement of the
parties relating to the employment of Executive and are intended to supersede
all prior negotiations, understandings and agreements. No provisions of this
Agreement may be waived or changed except by a writing by the party against whom
such waiver or change is sought to be enforced. The failure of any party to
require performance of any provision hereof or thereof shall in no manner affect
the right at a later time to enforce such provision.
7
<PAGE>
7.3 All questions with respect to the construction of this
Agreement, and the rights and obligations of the parties hereunder, shall be
determined in accordance with the law of the State of Florida applicable to
agreements made and to be performed entirely in Florida.
7.4 This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company. This Agreement shall not
be assignable by Executive, but shall inure to the benefit of and be binding
upon Executive's heirs and legal representatives.
7.5 Should any provision of this Agreement become legally
unenforceable, no other provision of this Agreement shall be affected, and this
Agreement shall continue as if the Agreement had been executed absent the
unenforceable provision.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EXECUTIVE
/s/ Timothy F. McWilliams
-----------------------------------
Timothy F. McWilliams
PRE-CELL SOLUTIONS, INC.
By: /s/ Thomas E. Biddix
-------------------------------
Thomas E. Biddix
Cheif Executive Officer
8
