As Filed with the Securities and Exchange Commission on September 29, 1998
Registration No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
APPLIED CELLULAR TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 43-1641533
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Royal Palm Way, Suite 4
Palm Beach, Florida 33480
(561) 366-4800
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Garrett A. Sullivan
400 Royal Palm Way, Suite 410
Palm Beach, Florida 33480
(561) 366-4800
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all correspondence to:
Denis P. McCusker, Esq.
Bryan Cave LLP
One Metropolitan Square
211 North Broadway, Suite 3600
St. Louis, Missouri 63102-2750
(314) 259-2000
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Approximate date of commencement of proposed sale to public: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price per aggregate offering registration fee
unit(1) price
===================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, $.001 par
value per share 1,105,708 shares $2.500 $2,764,270 $815
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</TABLE>
(1) Pursuant to Rule 457(c), the proposed offering price and registration fee
has been calculated on the basis of the average of the high and low trading
prices for the Common Stock on September 25, 1998 as reported on the Nasdaq
National Market.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 29, 1998
PRELIMINARY PROSPECTUS
1,105,708 Shares
[GRAPHIC OMITTED]
Applied Cellular Technology
Common Stock
------------------
This Prospectus relates to 1,105,708 shares (the "Shares") of common stock,
par value $0.001 per share (the "ACT Common Stock"), of Applied Cellular
Technology, Inc., a Missouri corporation ("ACT" or the "Company") to be issued
from time to time upon exchange or redemption of Class A exchangeable shares
("Class A Exchangeable Shares") and Class B exchangeable shares ("Class B
Exchangeable Shares, and together with the Class A Exchangeable Shares, the
"Exchangeable Shares") of ACT-GFX Canada, Inc., an Ontario corporation ("ACT
Sub"), which is a subsidiary of ACT. Pursuant to a reorganization agreement (the
"Reorganization Agreement") among ACT, ACT Sub, Drummer Enterprises Ltd., an
Ontario corporation ("Drummer"), Morstar Holdings Ltd., a Manitoba corporation
("Morstar"), Scozul Enterprises Ltd., an Ontario corporation ("Scozul"), James
D. Scott and Ground Effects Ltd., an Ontario corporation ("Ground Effects"),
certain of the issued and outstanding shares in the capital of Ground Effects
and certain debt owed by Ground Effects were acquired by ACT Sub for a purchase
price which was satisfied by the issuance of Class A Exchangeable Shares and
Class B Exchangeable Shares. As a result, Ground Effects became a subsidiary of
ACT Sub (the "Reorganization"). See "Plan of Distribution--The Reorganization"
and "--Exchangeable Shares."
This Prospectus also relates to the resale from time to time of the Shares
after they have been issued in exchange for the Exchangeable Shares. After such
issuance, the Shares may be sold in one or more transactions (which may include
"block transactions") on the Nasdaq National Market, in the over-the-counter
market, in negotiated transactions or in a combination of such methods of sales,
at fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The selling shareholders may effect such transactions by selling the
Shares directly to purchasers, or may sell to or through agents, dealers or
underwriters designated from time to time, and such agents, dealers or
underwriters may receive compensation in the form of discounts, concessions or
commissions from the selling shareholders and/or the purchaser(s) of Shares for
whom they may act as agent or to whom they may sell as principals, or both. Such
selling shareholders and the brokers and dealers through which the sales of the
Shares may be made may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and their commissions
and discounts and other compensation may be regarded as underwriters'
compensation. The Company will not receive any proceeds from any sale of Shares
and will bear all the expenses incurred in connection with registering this
offering of the Shares.
The ACT Common Stock of the Company is listed on the Nasdaq National Market
under the symbol "ACTC." On September 25, 1998, the last reported sale price of
the ACT Common Stock on the Nasdaq National Market was $2.500 per share. See
"Price Range of ACT Common Stock."
-------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 4 IN THE PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
ACT COMMON STOCK OFFERED HEREBY.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
The date of this Prospectus is _________, 1998.
<PAGE>
AVAILABLE INFORMATION
ACT is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). These reports, proxy statements and
other information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the Commission's regional offices located at
Northeast Regional Office, Seven World Trade Center, Suite 1300, New York, New
York 10048 and Midwest Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials can also
be obtained from the Public Reference Section of the Commission, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and information
statements and other materials that are filed through the Commission's
Electronic Data Analysis and Retrieval (EDGAR) System. This Web site can be
assessed at http://www.sec.gov. Quotations relating to the ACT Common Stock
appear on the Nasdaq National Market, and such reports, proxy statements and
other information concerning ACT can also be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
ACT has filed with the Commission a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act with respect to the shares of
ACT Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement or the exhibits thereto. As
permitted by the rules and regulations of the Commission, this Prospectus omits
certain information contained or incorporated by reference in the Registration
Statement. Statements contained in this Prospectus as to the contents of any
contract or other document filed or incorporated by reference as an exhibit to
the Registration Statement are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement. For further information, reference is
hereby made to the Registration Statement and exhibits thereto, copies of which
may be inspected at the offices of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or obtained from the Commission at the same address at
prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference:
1. the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 (filed with the Commission on March 30, 1998);
2. the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 (filed with the Commission on May 14, 1998);
3. the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998 (filed with the Commission on August 14, 1998);
4. The Company's Current Reports on Form 8-K and on 8-K/A (filed with
the Commission on June 26, 1998, June 29, 1998 and September 23, 1998); and
5. The Company's Current Report on Form 8-K and on 8-K/A (filed with
the Commission on July 15, 1998 and September 23, 1998).
All documents filed by ACT with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior
to the termination of the offering shall hereby be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document incorporated or
deemed to be incorporated herein by reference, which statement is also
incorporated herein by reference, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
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<PAGE>
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Copies of these documents (excluding exhibits
unless such exhibits are specifically incorporated by reference into the
information incorporated herein) will be provided by first class mail without
charge to each person to whom this Prospectus is delivered, upon written or oral
request by such person to Applied Cellular Technology, Inc., James River
Professional Center, Highway 160 & CC, Suite 5, P.O. Box 2067, Nixa, Missouri
65714; Attention: Kay Langsford, Corporate Controller (telephone: (417)
725-9888).
No person has been authorized in connection with this offering to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by ACT, ACT Sub
or any other person. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to purchase, any securities other than those to which
it relates, nor does it constitute an offer to sell or a solicitation of an
offer to purchase by any person in any jurisdiction in which it is unlawful for
such person to make such an offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information contained herein is correct as of any time
subsequent to the date hereof or that there has been no change in the affairs of
ACT since such date.
-------------------------------------
TABLE OF CONTENTS
Available Information...................................................2
Incorporation Of Certain Documents By Reference.........................2
Risk Factors............................................................4
The Company.............................................................6
Use Of Proceeds.........................................................7
Description Of ACT Capital Stock........................................7
Plan Of Distribution....................................................8
Canadian Tax Considerations............................................10
United States Federal Tax Considerations...............................14
Legal Matters..........................................................18
Experts................................................................18
3
<PAGE>
RISK FACTORS
In addition to the other information contained herein, the following
factors should be considered carefully in evaluating ACT before investors
exchange their Exchangeable Shares for the shares of ACT Common Stock offered
hereby.
Taxability of the Exchange
The exchange of Exchangeable Shares for shares of ACT Common Stock is
generally a taxable event in Canada and the United States. A holder's tax
consequences can vary depending on a number of factors, including the residency
of the holder, the method of the exchange (redemption or exchange) and the
length of time that the Exchangeable Shares were held prior to exchange. See
"Canadian Tax Considerations" and "United States Federal Tax Considerations."
Differences in Canada and U.S. Trading Markets
The Exchangeable Shares will not be listed on any stock exchange in Canada
or the United States. ACT has agreed that the shares of ACT Common Stock
issuable from time to time in exchange for the Exchangeable Shares will be
listed on the Nasdaq National Market. There is no current intention to list the
ACT Common Stock on any other stock exchange in Canada or the United States. As
a result of the foregoing, ACT believes that the market price of the
Exchangeable Shares will reflect essentially the equivalent value of the ACT
Common Stock on the Nasdaq National Market. However, if a market for the
Exchangeable Shares should develop, there can be no assurances that the market
price of the Exchangeable Shares would correspond to that of the ACT Common
Stock.
Foreign Property
The Exchangeable Shares and the ACT Common Stock will be foreign property
under the Income Tax Act (Canada), as amended (the "Canadian Tax Act"), for
trusts governed by registered pension plans, registered retirement savings
plans, registered retirement income funds and deferred profit sharing plans or
for certain other tax-exempt persons. See "Canadian Tax Considerations."
Uncertainty of Future Financial Results
While the Company has been profitable for the last three fiscal years,
future financial results are uncertain. There can be no assurance that the
Company will continue to be operated in a profitable manner. Profitability
depends upon many factors, including the success of the Company's various
marketing programs, the maintenance or reduction of expense levels and the
ability of the Company to successfully coordinate the efforts of the different
segments of its business.
Future Sales of and Market for the Shares
As of September 25, 1998, there were 32,501,877 shares of ACT Common Stock
outstanding. In addition, 4,368,186 shares of ACT Common Stock are reserved for
issuance in exchange for the Exchangeable Shares of ACT-GFX Canada, Inc.
referred to herein and in exchange for certain exchangeable shares issued by
Commstar, Ltd., a wholly owned subsidiary of ACT. Since January 1, 1998, the
Company has issued an aggregate of 12,053,471 shares of ACT Common Stock, of
which 10,635,023 shares of ACT Common Stock were issued in acquisitions, 850,000
shares of ACT Common Stock were issued upon the exercise of warrants, 250,000
shares of ACT Common Stock were sold to certain directors and an officer of the
Company, and 318,448 shares of ACT Common Stock were issued for services
rendered, including services under employment agreements and employee bonuses.
Management of the Company anticipates that the Company will continue to
effect acquisitions and contract for certain services primarily through the
issuance of ACT Common Stock or other equity securities of the Company. Such
issuances of additional securities may be viewed as being dilutive of the value
of the ACT Common Stock in certain circumstances and may have an adverse impact
on the market price of the ACT Common Stock.
Risks Associated with Acquisitions and Expansion
The Company has engaged in a continuing program of acquisitions of other
businesses which are considered to be complementary to the lines of business
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<PAGE>
carried on by the Company, and it is anticipated that such acquisitions will
continue to occur. As of June 30, 1998, the total assets of the Company were
approximately $113.6 million. As of March 31, 1998, the total assets of the
Company were approximately $73.1 million. As of December 31, 1997, the total
assets of the Company were approximately $61.3 million, compared to
approximately $33.2 million at December 31, 1996 and approximately $4.1 million
at the end of 1995. Net operating revenues for the year ended December 31, 1997
were approximately $103.2 million compared to approximately $19.9 million in
1996 and $2.3 million in 1995. Managing these dramatic changes in the scope of
the business of the Company will present ongoing challenges to management, and
there can be no assurance that the Company's operations as currently structured,
or as affected by future acquisitions, will be successful. The businesses
acquired by the Company may require substantial additional capital, and there
can be no assurance as to the availability of such capital when needed, nor as
to the terms on which such capital might be made available to the Company. It is
the Company's policy to retain existing management of acquired companies and to
allow the new subsidiary to continue to operate in the manner which has resulted
in its success in the past, under the overall supervision of senior management
of the Company. Accordingly, the success of the operations of these subsidiaries
will depend, to a great extent, on the continued efforts of the management of
the acquired companies.
Competition
Each segment of the Company's business is highly competitive, and it is
expected that competitive pressures will continue. Many of the Company's
competitors have far greater financial and other resources than the Company. The
areas which the Company has identified for continued growth and expansion are
also target market segments for some of the largest and most strongly
capitalized companies in the United States. There can be no assurance that the
Company will have the financial, technical, marketing and other resources
required to compete successfully in this environment in the future.
Dependence on Key Individuals
The future success of the Company is highly dependent upon the Company's
ability to attract and retain qualified key employees. The Company is organized
with a small senior management team, with each of its separate operations under
the day-to-day control of local managers. If the Company were to lose the
services of any members of its central management team, the overall operations
of the Company could be adversely affected, and the operations of any of the
individual facilities of the Company could be adversely affected if the services
of the local managers should be unavailable.
Lack of Dividends on Common Stock; Issuance of Preferred Stock
The Company does not have a history of paying dividends on ACT Common
Stock, and there can be no assurance that such dividends will be paid in the
foreseeable future. The Company intends to use any earnings which may be
generated to finance the growth of the Company's businesses. The Board of
Directors has the right to authorize the issuance of preferred stock, without
further stockholder approval, the holders of which may have preferences as to
payment of dividends.
Potential Conflicts of Interests
Mr. Richard Sullivan, the Chief Executive Officer of the Company, is also
Chairman of Great Bay Technology, Inc. and Managing General Partner of the Bay
Group. Both these companies conduct business with the Company, and receive
compensation from the Company for various services, including assistance in
identifying potential acquisition candidates and in negotiating acquisition
transactions. The relationships among such companies, Mr. Sullivan and the
Company may involve conflicts of interest.
Possible Volatility of Stock Price
ACT Common Stock is quoted on the Nasdaq National Market, which stock
market has experienced and is likely to experience in the future significant
price and volume fluctuations which could adversely affect the market price of
ACT Common Stock without regard to the operating performance of the Company. In
addition, the Company believes that factors such as the significant changes to
the business of the Company resulting from continued acquisitions and
expansions, quarterly fluctuations in the financial results of the Company,
shortfalls in earnings or sales below analyst expectations, changes in the
performance of other companies in the same market sectors as the Company and the
5
<PAGE>
performance of the overall economy and the financial markets could cause the
price of ACT Common Stock to fluctuate substantially. During the 12 months
preceding the date of this Prospectus, the price per share of ACT Common Stock
has ranged from a high of $9 3/4 to a low of $1 9/16.
Forward-Looking Statements and Associated Risk
This Prospectus, including the information incorporated herein by
reference, contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements regarding, among
other items, (a) the Company's growth strategies, (b) anticipated trends in the
Company's business and demographics and (c) the Company's ability to
successfully integrate the business operations of recently acquired companies.
These forward-looking statements are based largely on the Company's expectations
and are subject to a number of risks and uncertainties, certain of which are
beyond the Company's control. Actual results could differ materially from these
forward-looking statements as a result of the factors described in "Risk
Factors," including, among others, regulatory, competitive or other economic
influences. In light of these risks and uncertainties, there can be no assurance
that the forward-looking information contained in this Prospectus will be
accurate.
THE COMPANY
ACT is a builder of infrastructure services and solutions for the
communications industry. The Company operates its business in four groups:
ACT Communications Group
This group consists of companies that provide products and services
including telephone systems, computer telephony, interactive voice response
systems, flat rate extended area calling services, long distance and local
telephone services, digital satellite services, call centers, networking
services, fiber optic cabling, power distribution services and communication
towers.
ACT Software and Services Group
This group consists of companies that develop and market software products
and services for wireless-enabled applications, data acquisition, field support,
decision support, point of sale and multi-function peripheral devices.
ACT Computer Group
This group consists of companies that provide computer systems,
peripherals, components, specialty systems, cabling, consulting, rental
services, system integration, transportation and de-installation services.
ACT Specialty Manufacturing Group
This group consists of companies that manufacture and market electrical
components, control panels, global positioning systems, satellite modems,
transceivers, controllers, communication devices, orbit modeling applications,
as well as provide design and manufacturing engineering services.
The largest part of the Company's current operations are the result of
acquisitions completed during the last two years. During 1995, the net operating
revenues of the Company were $2.3 million. For 1996, net operating revenues were
$19.9 million, of which almost $14 million was from the Company's then services
and solutions segment. In 1997, the Company completed 14 additional
acquisitions, of companies whose aggregate net revenues for 1997 were $62.4
million, or 60.5% of the Company's total revenues of $103.2 million in 1997.
Since January 1, 1998, the Company has completed 14 additional acquisitions of
companies whose aggregate net revenues for 1997 were $109.4 million.
The principal office of the Company is located at 400 Royal Palm Way, Suite
410, Palm Beach, Florida, 33480. Each operating business is conducted through a
separate subsidiary company directed by its own management team, and each
subsidiary company has its own marketing and operations support personnel. Each
management team reports to a Group Vice President and ultimately to the
Company's President, who is responsible for overall corporate control and
coordination, as well as financial planning. The Chairman is responsible for the
overall business and strategic planning of the Company.
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<PAGE>
USE OF PROCEEDS
Because Shares of ACT Common Stock will be issued upon exchange or
redemption of the Exchangeable Shares, ACT will receive no net cash proceeds
upon issuance.
DESCRIPTION OF ACT CAPITAL STOCK
The Company's Amended and Restated Articles of Incorporation, as amended
("ACT's Articles of Incorporation") authorizes the issuance of up to 80,000,000
shares of ACT Common Stock and up to 5,000,000 shares of preferred stock (the
"Preferred Stock"). The Preferred Stock may be issued from time to time and on
such terms as are specified by the Company's Board of Directors, without further
authorization from the stockholders of the Company.
As of September 25, 1998, there were outstanding 32,501,877 shares of ACT
Common Stock and two Special Preferred Shares, par value $10 per share. In
addition, 4,368,186 shares of ACT Common Stock are reserved for issuance in
exchange for the Exchangeable Shares of ACT-GFX Canada, Inc. referred to herein
and in exchange for certain exchangeable shares issued by Commstar, Ltd., a
wholly owned subsidiary of ACT.
As of September 25, 1998, (a) there were outstanding warrants to purchase
2,510,000 shares of ACT Common Stock at a weighted average exercise price of
$2.71 per share, and (b) options held by employees of the Company to purchase
7,307,100 shares of ACT Common Stock at a weighted average exercise price of
$3.66 per share. All of the warrants are currently exercisable. Of the
outstanding options, 1,205,000 are now exercisable at a weighted average
exercise price of $4.43 per share, and the rest become exercisable at various
times over the next three years.
ACT's Common Stock trades on the Nasdaq National Market under the symbol
"ACTC." The following table sets forth the high and low sale prices of ACT
Common Stock as reported by the Nasdaq National Market for each of the quarters
since the beginning of 1996.
High Low
---- ---
1996
First Quarter......... 6-7/8 2-3/4
Second Quarter........ 9-1/8 4
Third Quarter......... 7-7/8 3-3/4
Fourth Quarter........ 7-3/8 4-1/2
1997
First Quarter......... 5-7/8 4
Second Quarter........ 4-3/8 2-5/8
Third Quarter ........ 8-3/4 3-1/16
Fourth Quarter ....... 9-3/4 3-15/16
1998
First Quarter ........ 5-1/2 4-1/32
Second Quarter ....... 4-7/8 3-1/8
Third Quarter
(through September 25, 1998) 3-1/2 1-9/16
Rights of Holders of ACT Common Stock
Subject to the prior rights of any shares of Preferred Stock that may from
time to time be outstanding, holders of ACT Common Stock are entitled to share
ratably in such dividends as may be lawfully declared by the Board of Directors
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and paid by ACT and, in the event of liquidation, dissolution or winding up of
ACT, are entitled to share ratably in all assets available for distribution. ACT
is prohibited from declaring or paying dividends on the ACT Common Stock unless
ACT Sub is able to, and simultaneously does, declare or pay an equivalent
dividend on the Exchangeable Shares. In the event of liquidation, dissolution or
winding up of ACT, each outstanding Exchangeable Share (other than Exchangeable
Shares held by ACT or a single wholly-owned subsidiary of ACT) will be purchased
by ACT in exchange for ACT Common Stock as described below under "Plan of
Distribution-- Procedures for Issuance of ACT Common Stock-- Liquidation of
ACT."
The ACT Common Stock is entitled to one vote per share held of record on
each matter submitted to a vote of stockholders. Except as otherwise provided by
law or ACT's Articles of Incorporation, the ACT Common Stock and the Special
Preferred Share referred to below will vote together as a single class in the
election of directors and on all matters submitted to a vote of stockholders of
ACT. The holders of ACT Common Stock have no preemptive rights to purchase any
securities of ACT or cumulative voting rights. All outstanding shares of ACT
Common Stock are validly issued, fully paid and nonassessable. ACT is not
prohibited by ACT's Articles of Incorporation from repurchasing shares of the
ACT Common Stock. Any such repurchases would be subject to any limitations on
the amount available for such purpose under applicable corporate law, any
applicable restrictions under the terms of any outstanding Preferred Stock or
indebtedness and, in the case of market purchases, such restrictions on the
timing, manner and amount of such purchases as might apply in the circumstances
under applicable securities laws.
The transfer agent, registrar and dividend disbursing agent for the ACT
Common Stock is Florida Atlantic Stock Transfer, Inc.
ACT Special Voting Preferred Stock
The Board of Directors of ACT authorized the issuance of a single share of
ACT Special Voting Preferred Stock (the "Special Preferred Share"), to Montreal
Trust Company of Canada (the "Voting Trustee") under a Voting and Exchange Trust
Agreement (the "Voting and Exchange Trust Agreement") which was entered into
among ACT, ACT Sub, Drummer, Morstar, Scozul and the Voting Trustee. Except as
otherwise required by law or ACT's Articles of Incorporation, the Special
Preferred Share will be entitled to a number of votes equal to the number of
outstanding Exchangeable Shares not owned by ACT or certain subsidiaries of ACT,
and may be voted in the election of directors and on all other matters submitted
to a vote of stockholders of ACT. The holders of the ACT Common Stock and the
Voting Trustee, as holder of the Special Preferred Share, will vote together as
a single class on all matters, except to the extent voting as a separate class
is required by applicable law or ACT's Articles of Incorporation. The Voting
Trustee will exercise such voting rights in respect of the Special Preferred
Share on behalf of the holders of the Exchangeable Shares, as provided in the
Voting and Exchange Trust Agreement. The Voting Trustee will not be entitled to
receive any dividends or to participate in any distribution of assets to the
shareholders of ACT. When all Exchangeable Shares have been exchanged or
redeemed for shares of ACT Common Stock, the Special Preferred Share will be
cancelled.
PLAN OF DISTRIBUTION
The Reorganization
Pursuant to the Reorganization Agreement, effective as of June 30, 1998
(the "Effective Date"), among ACT, ACT Sub, Drummer, Morstar, Scozul, James D.
Scott and Ground Effects, certain of the issued and outstanding shares in the
capital of Ground Effects and certain debt owed by Ground Effects were acquired
by ACT Sub for a purchase price which was satisfied by the issuance of Class A
Exchangeable Shares and Class B Exchangeable Shares, and as a result, Ground
Effects became a subsidiary of ACT Sub. The Exchangeable Shares will be further
exchangeable into or redeemable for shares of ACT Common Stock as described
below. Holders of the Exchangeable Shares will have economic and voting rights
which are, as nearly as possible, equivalent to those of holders of ACT Common
Stock.
Exchangeable Shares
The Exchangeable Shares were issued in consideration for certain of the
issued and outstanding shares in the capital of Ground Effects and certain debt
owed by Ground Effects. Thereafter, the Exchangeable Shares may be exchanged for
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an equivalent number of shares of ACT Common Stock as described below. No
broker, dealer or underwriter has been engaged in connection with the offering
of the ACT Common Stock covered hereby.
The specific terms under which ACT Common Stock may be issued in exchange
for or on redemption of the Exchangeable Shares are set forth in the
Exchangeable Share provisions attached to ACT Sub's Articles of Incorporation, a
certain call agreement entered into among ACT, ACT Sub, Drummer, Morstar, Scozul
and James D. Scott (the "Call Agreement") and in the Voting and Exchange Trust
Agreement. The Exchangeable Share provisions, the Call Agreement and the Voting
and Exchange Trust Agreement are included as exhibits to the Registration
Statement of which this Prospectus constitutes a part, and the following
description is qualified in its entirety by reference to the Exchangeable Share
provisions, the Call Agreement and the Voting and Exchange Trust Agreement.
Procedures for Issuance of ACT Common Stock
Upon any exchange or redemption of Exchangeable Shares referred to below
(whether by ACT Sub or ACT), the holders will receive an equivalent number of
shares of ACT Common Stock, plus an amount, if any, equal to all declared and
unpaid dividends on the Exchangeable Shares. If only a part of the Exchangeable
Shares represented by any certificate is redeemed or exchanged, a new
certificate for the balance of such Exchangeable Shares will be issued to the
holder at ACT Sub's expense.
In lieu of any redemption of Exchangeable Shares referred to below, ACT may
elect to purchase such Exchangeable Shares. The ACT Common Stock (and additional
payment, if any, representing declared and unpaid dividends on the Exchangeable
Shares) to be received by the holders of the Exchangeable Shares will be
unaffected by such election.
Upon any exchange or redemption of Exchangeable Shares, the holder must
surrender the Exchangeable Share certificates representing such shares, duly
endorsed in blank and accompanied by such instruments of transfer as ACT or ACT
Sub may reasonably require.
Election by Holders to Exchange Exchangeable Shares. At any time on or
prior to the Automatic Redemption Date (as defined below), holders of the
Exchangeable Shares may retract (i.e., require ACT Sub to redeem) any or all of
their Exchangeable Shares, by presenting the certificates representing the
shares at the office of ACT Sub together with a duly executed statement (the
"Retraction Request") specifying the number of Exchangeable Shares the holder
wishes to retract and such other documents and instruments as may be required to
effect the retraction of the Exchangeable Shares. The retraction will become
effective at the close of business on the sixth business day after the request
is received by ACT Sub (the "Retraction Date"). The Retraction Price for such
Exchangeable Shares is to be satisfied by the issuance of ACT Common Stock.
The Retraction Request shall be substantially in the form attached to this
Prospectus as Exhibit A or in such other form as may be acceptable to ACT or ACT
Sub for the Exchangeable Shares in their sole discretion.
Redemption of Exchangeable Shares. ACT Sub is required to redeem the
Exchangeable Shares (by exchanging ACT Common Stock as described above) as
follows:
(a) with respect to the Class A Exchangeable Shares:
(i) on the seventh anniversary of the Effective Date; or
(ii) on a date specified by ACT Sub if less than 5% of the Class A
Exchangeable Shares originally issued remain outstanding (as
such number may be adjusted as a result of subdivision,
consolidation, stock dividend or other events); and
(b) with respect to the Class B Exchangeable Shares:
(i) on the seventh anniversary of the Effective Date; or
(ii) on a date specified by ACT Sub if less than 5% of the Class B
Exchangeable Shares originally issued remain outstanding (as
such number may be adjusted as a result of subdivision,
consolidation, stock dividend or other events).
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The earlier of either date to occur with respect to each class of
Exchangeable Shares is referred to as the "Automatic Redemption Date."
Liquidation of ACT Sub. In the event of the liquidation, dissolution or
winding up of ACT Sub or any other proposed distribution of the assets of ACT
Sub among its shareholders for the purpose of winding up its affairs, (a)
holders of the Class B Exchangeable Shares will be entitled to ACT Common Stock
in exchange for their Class B Exchangeable Shares as described above before any
distribution to the holders of the Class A Exchangeable Shares, the common
shares or any other shares of ACT Sub ranking junior to the Class B Exchangeable
Shares; and (b) holders of the Class A Exchangeable Shares will be entitled to
ACT Common Stock in exchange for their Class A Exchangeable Shares as described
above before any distribution to the holders of the common shares or any other
shares of ACT Sub ranking junior to the Class A Exchangeable Shares. Upon the
bankruptcy or insolvency of ACT Sub, the trustee under the Voting and Exchange
Trust Agreement may require ACT to purchase the Exchangeable Shares in exchange
for ACT Common Stock as described above.
Liquidation of ACT. Upon the occurrence of an ACT Liquidation Event, ACT
will be required to purchase the Exchangeable Shares in exchange for ACT Common
Stock as described above. "ACT Liquidation Event" means (a) any determination by
ACT's Board of Directors to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to ACT or to effect any other distribution
of assets of ACT among its stockholders for the purpose of winding up its
affairs or (b) receipt by ACT of notice of, or ACT otherwise becoming aware of,
any threatened or instituted claim, suit, petition or other proceeding with
respect to the involuntary liquidation, dissolution or winding up of ACT or to
effect any other distribution of assets of ACT among its stockholders for the
purpose of winding up its affairs.
CANADIAN TAX CONSIDERATIONS
Canadian Federal Income Tax Considerations
In the opinion of _____________________, who acted as counsel for ACT Sub
in connection with the Reorganization, the following is a summary of the
principal Canadian federal income tax considerations generally applicable to ACT
Sub shareholders, who, for the purposes of the Income Tax Act (Canada) (the
"Canadian Tax Act"), hold their Exchangeable Shares and will hold their ACT
Common Stock as capital property and will deal at arm's length with ACT and ACT
Sub. This summary does not apply to a holder with respect to whom ACT is a
foreign affiliate within the meaning of the Canadian Tax Act.
Certain provisions of the Canadian Tax Act (the "mark-to-market rules")
relating to financial institutions (including certain financial institutions,
registered securities dealers and corporations controlled by one or more of the
foregoing) will deem such financial institutions not to hold their Exchangeable
Shares and ACT Common Stock as capital property for purposes of the Canadian Tax
Act. Shareholders that are financial institutions should consult their own tax
advisors to determine the tax consequences to them of the application of the
mark-to-market rules. In addition, all shareholders should consult their own tax
advisors as to whether, as a matter of fact, they hold their Exchangeable Shares
and will hold their ACT Common Stock as capital property for purposes of the
Canadian Tax Act.
This summary is based on the current provisions of the Canadian Tax Act,
the regulations thereunder, the current provisions of the Canada-United States
Income Tax Convention, 1980 (the "Tax Treaty") and counsel's understanding of
the current administrative practices of Revenue Canada, Customs, Excise and
Taxation ("Revenue Canada"). This summary takes into account the amendments to
the Canadian Tax Act and regulations publicly announced by the Minister of
Finance prior to the date hereof (the "Proposed Amendments") and assumes that
all such Proposed Amendments will be enacted in their present form. However, no
assurances can be given that the Proposed Amendments will be enacted in the form
proposed, or at all.
Except for the Proposed Amendments, this summary does not take into account
or anticipate any changes in law, whether by legislative, administrative or
judicial decision or action, nor does it take into account provincial,
territorial or foreign income tax legislation or considerations, which may
differ from the Canadian federal income tax considerations described herein.
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WHILE THIS SUMMARY IS INTENDED TO ADDRESS ALL PRINCIPAL CANADIAN FEDERAL
INCOME TAX CONSIDERATIONS, IT IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO
BE, NOR SHOULD IT BE CONSTRUED TO BE, LEGAL, BUSINESS OR TAX ADVICE TO ANY
PARTICULAR SHAREHOLDER. THEREFORE, SUCH HOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THEIR PARTICULAR CIRCUMSTANCES. NO ADVANCE INCOME TAX
RULING HAS BEEN OBTAINED FROM REVENUE CANADA TO CONFIRM CONSEQUENCES OF ANY OF
THE TRANSACTIONS DESCRIBED HEREIN.
For purposes of the Canadian Tax Act, all amounts relating to the
acquisition, holding or disposition of ACT Common Stock, including dividends,
adjusted cost base and proceeds of disposition must be determined in Canadian
dollars.
In computing a shareholder's liability for tax under the Canadian Tax Act,
(a) any cash amount received by the shareholder in U.S. dollars must be
converted into the product obtained by multiplying the U.S. dollar amount by the
noon spot exchange rate on such date for U.S. dollars expressed in Canadian
dollars as reported by the Bank of Canada and (b) the amount of any non-cash
consideration received by the shareholder must be expressed in Canadian dollars,
generally determined at the time such consideration is received.
Shareholders Resident in Canada
The following portion of the summary is applicable to the shareholders who,
for purposes of the Canadian Tax Act, are resident or deemed to be resident in
Canada.
Dividends
In the case of a shareholder who is an individual, dividends received or
deemed to be received on the Exchangeable Shares will be included in computing
the shareholder's income, and will be subject to the gross-up and dividend tax
credit rules normally applicable to taxable dividends received from taxable
Canadian corporations.
The Exchangeable Shares will be "taxable preferred shares", "term preferred
shares" and "short-term preferred shares" for purposes of the Canadian Tax Act.
Accordingly, ACT Sub will be subject to a 66 2/3% tax under Part VI.1 of the
Canadian Tax Act on dividends paid or deemed to be paid on the Exchangeable
Shares. In certain circumstances, ACT Sub will be entitled to deductions under
Part I of the Canadian Tax Act which will substantially offset the impact of
Part VI.1 tax. Dividends received or deemed to be received on the Exchangeable
Shares will not be subject to the 10% tax under Part IV.1 of the Canadian Tax
Act applicable to certain corporations.
If ACT or any person with whom ACT does not deal at arm's length is a
"specified financial institution" under the Canadian Tax Act at a point in time
that a dividend is paid on an Exchangeable Share, then, subject to the exemption
described below, dividends received or deemed to be received by a shareholder
that is a corporation will not be deductible in computing taxable income but
will be fully includable in taxable income under Part I of the Canadian Tax Act.
Such dividend will not be subject to tax under Part IV of the Canadian Tax Act.
A corporation will generally be a specified financial institution for these
purposes if it is a bank, a trust company, a credit union, an insurance
corporation or a corporation whose principal business is the lending of money to
persons with whom the corporation is dealing at arm's length or the purchasing
of debt obligations issued by such persons or a combination thereof, and
corporations controlled by or related to such entities.
Subject to the foregoing, in the case of a shareholder that is a
corporation, other than a "specified financial institution" as defined in the
Canadian Tax Act, dividends received or deemed to be received on the
Exchangeable Shares will normally be deductible in computing its taxable income.
In the case of a shareholder that is a specified financial institution,
such a dividend will be deductible in computing its taxable income only if
either:
(a) the specified financial institution did not acquire the Exchangeable
Shares in the ordinary course of the business carried on by such
institution; or
(b) at the time of the receipt of the dividend by the specified financial
institution, the Exchangeable Shares are listed on a prescribed stock
exchange in Canada and the specified financial institution, either
alone or together with persons with whom it does not deal at arm's
length, does not receive (or is not deemed to receive) dividends in
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respect of more than 10% of the issued and outstanding Exchangeable
Shares. ACT Sub does not expect to list the Exchangeable Shares on a
prescribed stock exchange.
A shareholder that is a "private corporation" (as defined in the Canadian
Tax Act) or any other corporation resident in Canada and controlled or deemed to
be controlled by or for the benefit of an individual or a related group of
individuals shall be liable under Part IV of the Canadian Tax Act to pay a
refundable tax of 33 1/3% on dividends received or deemed to be received on the
Exchangeable Shares to the extent that such dividends are deductible in
computing the shareholder's taxable income.
Redemption or Exchange of Exchangeable Shares
On the redemption (including a retraction) of an Exchangeable Share by ACT
Sub, the holder of an Exchangeable Share will be deemed to have received a
dividend equal to the amount, if any, by which the redemption proceeds (the fair
market value at the time of the redemption of the ACT Common Stock received by
the shareholder from ACT Sub on the redemption plus the amount, if any, of all
accrued but unpaid dividends on the Exchangeable Share) exceeds the paid-up
capital, at that time, of the Exchangeable Share so redeemed. The amount of any
such deemed dividend will be subject to the tax treatment accorded to dividends
described above. On the redemption, the holder of an Exchangeable Share will
also be considered to have disposed of the Exchangeable Share, but the amount of
such deemed dividend will be excluded in computing the shareholder's proceeds of
disposition for purposes of computing any capital gain or capital loss arising
on the disposition of the Exchangeable Share. In the case of a shareholder that
is a corporation, in some circumstances the amount of any such deemed dividend
may be treated as proceeds of disposition and not as a dividend under certain
rules contained in the Canadian Tax Act.
On the exchange of an Exchangeable Share by the holder thereof with ACT for
a share of ACT Common Stock, including pursuant to the retraction call right,
the holder will realize a capital gain (or a capital loss) equal to the amount
by which the proceeds of disposition of the Exchangeable Share, net of any
reasonable costs of disposition, exceed (or are exceeded by) the adjusted cost
base to the holder of the Exchangeable Share. For these purposes, the proceeds
of disposition will be the fair market value of a share of ACT Common Stock at
the time of exchange plus the amount of all accrued but unpaid dividends on the
Exchangeable Share received by the holder as part of the exchange consideration.
Three-quarters of any such capital gain (the "taxable capital gain") will
be included in the shareholder's income for the year of disposition.
Three-quarters of any capital loss so realized (the "allowable capital loss")
may be deducted by the holder against taxable capital gains for the year of
disposition. Any excess of allowable capital losses over taxable capital gains
of the shareholder for the year of disposition may be carried back up to three
taxation years or forward indefinitely and deducted against net taxable capital
gains in those other years.
A shareholder that is throughout the relevant taxation year a
"Canadian-controlled private corporation" (as defined in the Canadian Tax Act)
may be liable to pay an additional refundable tax of 6 2/3% on its "aggregate
investment income" for the year, which is defined to include an amount in
respect of taxable capital gains (but not dividends or deemed dividends
deductible in computing taxable income).
If the holder of an Exchangeable Share is a corporation, the amount of any
capital loss arising from a disposition or deemed disposition of an Exchangeable
Share may be reduced by the amount of dividends received or deemed to have been
received by it on such share or on the Ground Effects common shares or Ground
Effects Class B preference shares previously owned by such holder, to the extent
and under circumstances prescribed by the Canadian Tax Act. Similar rules may
apply where a corporation is a member of a partnership or a beneficiary of a
trust that owns Exchangeable Shares or where a trust or partnership of which a
corporation is a beneficiary or a member is a member of a partnership or a
beneficiary of a trust that owns Exchangeable Shares.
The cost base of a share of ACT Common Stock received on the retraction,
redemption or exchange of an Exchangeable Share will be equal to the fair market
value of a share of ACT Common Stock at the time of such event.
Because of the existence of the retraction call right, a holder exercising
the right of retraction in respect of an Exchangeable Share cannot control
whether such holder will receive a share of ACT Common Stock by way of
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redemption of the Exchangeable Share by ACT Sub or by way of purchase of the
Exchangeable Share by ACT. As described above, the Canadian federal income tax
consequences of a redemption differ from those of a purchase.
In order to ensure a holder of Exchangeable Shares will receive capital
gains treatment rather than dividend treatment, ACT has convenanted to exercise
its retraction call right under the Voting and Exchange Trust Agreement.
ACT Common Stock. Dividends on ACT Common Stock will be included in the
recipient's income for the purposes of the Canadian Tax Act. Such dividends
received by an individual shareholder will not be subject to the gross-up and
dividend tax credit rules in the Canadian Tax Act. A corporation which is a
shareholder will include such dividends in computing its income and generally
will not be entitled to deduct the amount of such dividends in computing its
taxable income. United States non-resident withholding tax on such dividends
will be eligible for foreign tax credit or deduction treatment where applicable
under the Canadian Tax Act.
Disposition of ACT Common Stock. A disposition or deemed disposition of a
share of ACT Common Stock by a holder will generally result in a capital gain
(or capital loss) equal to the amount by which the proceeds of disposition, net
of any reasonable costs of disposition, exceed (or are exceeded by) the adjusted
cost base to the holder of the ACT Common Stock.
A shareholder that is a Canadian-controlled private corporation may be
liable to pay an additional refundable tax of 6 2/3% on dividends and taxable
capital gains.
Eligibility for Investment
Qualified Investments. Provided the ACT Common Stock is listed on a
prescribed stock exchange (which currently includes the Nasdaq National Market),
such securities will be qualified investments under the Canadian Tax Act for
trusts governed by registered retirement savings plans, registered retirement
income funds and deferred profit sharing plans (collectively, "Tax Deferred
Plans"). The voting rights and exchange rights will not be qualified investments
under the Canadian Tax Act. However, as indicated above, ACT Sub is of the view
that the fair market value of these rights is nominal. The Exchangeable Shares
will not be qualified investments for Tax Deferred Plans.
Where at the end of any month a Tax Deferred Plan holds property that is
not a qualified investment, a penalty tax is imposed by Part XI.1 of the
Canadian Tax Act.
Foreign Property. The ACT Common Stock and the Exchangeable Shares will be
foreign property under the Canadian Tax Act as will the voting rights and
exchange rights.
A penalty tax is imposed by Part XI of the Canadian Tax Act if the cost
amount of a taxpayer's investment in foreign property exceeds the statutory
limit.
Foreign Property Information Reporting. A holder of ACT Common Stock who is
a "specified Canadian entity" (as defined in the Tax Proposals) and whose cost
amount for such shares at any time in a year or fiscal period exceeds Canadian
$100,000 will be required to file an information return in respect of such
shares disclosing the holder's cost amount, any dividends received in the year
and any gains or losses realized in the year in respect of such shares. A
specified Canadian entity means a taxpayer resident in Canada in the year, other
than a corporation or a trust exempt from tax under Part I of the Canadian Tax
Act, a non-resident-owned investment corporation, a mutual fund corporation, a
mutual fund trust and certain other trusts and partnerships.
Shareholders Not Resident in Canada
The following portion of the summary is applicable to holders of the
Exchangeable Shares who, for purposes of the Canadian Tax Act, have not been and
will not be resident or deemed to be resident in Canada at any time while they
have held the Exchangeable Shares or will hold the ACT Common Stock and in the
case of a non-resident of Canada who carries on an insurance business in Canada
and elsewhere, the shares are not effectively connected with its Canadian
insurance business.
The Exchangeable Shares will be "taxable Canadian property" (as defined in
the Canadian Tax Act) to non-resident shareholders.
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Generally, ACT Common Stock will not be taxable Canadian property to a
non-resident holder, provided that such shares are listed on a prescribed stock
exchange (which currently includes the Nasdaq National Market), the holder,
persons with whom such holder does not deal at arm's length, or the holder and
such persons, has not owned (or had under option) 25% or more of the issued
shares of any class or series of the capital stock of ACT at any time within
five years preceding the date in question, and certain conditions set out in the
Canadian Tax Act are not met. A capital gain realized on a redemption (including
a retraction) of an Exchangeable Share and a capital gain realized on a
disposition of ACT Common Stock which constitutes taxable Canadian property to a
shareholder will be taxable as discussed above, unless relief is available under
an applicable tax convention, such as the Tax Treaty. Such holders should
consult their own tax advisors to determine the tax consequences in their own
situation.
Where a non-resident holder can claim the benefit of a tax-treaty and
exchanges the Exchangeable Shares for ACT Common Stock, the non-resident holder
may be deemed to have received a dividend subject to withholding tax (discussed
below) and realized a capital gain or loss (generally tax-free as discussed
above).
Unless the non-resident holder meets the requirements and complies with the
procedures contained in Division D of Part I of the Canadian Tax Act relating to
the payment of tax, ACT Sub or ACT, as the case may be, will be required to
withhold a portion of the Exchangeable Shares or ACT Common Stock otherwise
receivable by the holder.
Dividends paid on the Exchangeable Shares are subject to non-resident
withholding tax under the Canadian Tax Act at the rate of 25%, although such
rate may be reduced under the provisions of an applicable income tax treaty. For
example, under the Tax Treaty, the rate is generally reduced to 15% in respect
of dividends paid to a person who is the beneficial owner and who is resident in
the United States for purposes of the Tax Treaty.
A holder whose Exchangeable Shares are redeemed (either under ACT Sub's
redemption right or pursuant to the holder's retraction rights) will be deemed
to receive a dividend as described above, which deemed dividend will be subject
to withholding tax as described in the preceding paragraph.
UNITED STATES FEDERAL TAX CONSIDERATIONS
The following summary of the principal United States federal income tax
considerations generally applicable to a United States Holder (as defined below)
of Exchangeable Shares arising from and relating to the receipt and ownership of
ACT Common Stock represents the opinion of Bryan Cave LLP, who acted as United
States counsel to ACT in connection with the Reorganization, insofar as it
relates to matters of United States federal income tax law and legal conclusions
with respect thereto.
This summary is limited to United States Holders who hold Exchangeable
Shares as capital assets. As used herein, a United States Holder is a holder of
Exchangeable Shares who is a "United States person," including: (a) an
individual who is a citizen or resident of the United States for federal income
tax purposes, (b) a corporation or partnership created or organized in or under
the laws of the United States, or of any political subdivision thereof, (c) an
estate, the income of which is subject to United States federal income taxation
regardless of source, or (d) any trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States persons have authority to control all substantial
decisions of the trust. This summary does not address all aspects of United
States federal income taxation that may be applicable to particular United
States holders subject to special provisions of United States federal income tax
law, such as tax-exempt organizations, financial institutions, insurance
companies, broker-dealers, persons having a "functional currency" other than the
United States dollar, holders who hold Exchangeable Shares as part of a
straddle, wash sale, hedging or conversion transaction (other than by virtue of
their participation in an exchange of Exchangeable Shares for ACT Common Stock
as contemplated herein) and holders who acquired their Exchangeable Shares
through the exercise of employee stock options or otherwise as compensation for
services.
This summary is based on United States federal income tax law in effect as
of the date of this Prospectus. No statutory, judicial or administrative
authority exists that directly addresses certain of the United States federal
income tax consequences of the ownership of instruments comparable to the
Exchangeable Shares. Consequently, some aspects of the United States federal
income tax treatment of the exchange of Exchangeable Shares for shares of ACT
Common Stock are not certain. No advance income tax ruling has been sought or
obtained from the United States Internal Revenue Service (the "IRS") regarding
the tax consequences of the transactions described herein.
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This summary does not address aspects of United States taxation other than
United States federal income taxation under the United States Internal Revenue
Code of 1986, as amended (the "U.S. Code"), nor does it address all aspects of
United States federal income taxation that may be applicable to a particular
United States Holder in light of the United States Holder's particular
circumstances. In addition, this summary does not address the United States
state or local tax consequences or the foreign tax consequences of the receipt
and ownership of ACT Common Stock.
UNITED STATES HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES AND THE FOREIGN
TAX CONSEQUENCES OF THE RECEIPT AND OWNERSHIP OF ACT COMMON STOCK.
Exchange of Exchangeable Shares. A United States Holder that exercises such
holder's right to exchange its Exchangeable Shares for shares of ACT Common
Stock generally, subject to the discussion below, should recognize gain or loss
on such exchange, assuming such exchange does not constitute a reorganization.
Such gain or loss will be equal to the difference between the fair market
value of the shares of ACT Common Stock at the time of the exchange and the
United States Holder's tax basis in the Exchangeable Shares surrendered. The
gain or loss generally will be capital gain or loss, except that, with respect
to any declared but unpaid dividends on the Exchangeable Shares, ordinary income
may be recognized. Noncorporate taxpayers generally are taxed at a maximum rate
of 20 percent on net capital gains attributable to gains realized on the sale of
property held for more than eighteen months and a maximum rate of 28 percent of
net capital gains attributable to gain realized on the sale of property held for
more than one year and eighteen months or less. Pending legislation, if enacted,
will eliminate the eighteen month holding period, thereby applying the 20% rate
to the taxable sale of property held for more than one year, effective for
taxable years ending after December 31, 1997. A United States Holder generally,
subject to the discussion below, will have a tax basis in the shares of ACT
Common Stock received equal to the fair market value of such shares at the time
of the exchange. The holding period for such shares generally, subject to the
discussion below, will begin on the day after the exchange. The IRS could
assert, however, that the Exchangeable Shares and certain of the rights
associated therewith constitute "offsetting positions" for purposes of the
straddle rules set forth in Section 1092 of the U.S. Code. In such case, the
holding period of the Exchangeable Shares would not increase while held by a
United States Holder.
It is also possible that the exchange of Exchangeable Shares for shares of
ACT Common Stock could be treated as a reorganization in which no gain or loss
is recognized if the Exchangeable Shares were treated as stock of ACT for United
States federal income tax purposes. Given the lack of authority on the treatment
of shares having features and attendant rights similar to the Exchangeable
Shares, it is uncertain whether the Exchangeable Shares will be treated as
shares of ACT Common Stock for this purpose. Even if the Exchangeable Shares are
not treated as shares of ACT Common Stock, an exchange of Exchangeable Shares
for ACT Common Stock that otherwise would be taxable may be characterized as a
tax-free exchange depending upon facts and circumstances existing at the time of
the exchange, which cannot be accurately predicted as of the date hereof.
If the exchange of Exchangeable Shares for ACT Common Stock did qualify as
a tax-free exchange, a United States holder's tax basis in the shares of ACT
Common Stock received would be equal to such holder's tax basis in the
Exchangeable Shares exchanged therefor. The holding period of the shares of ACT
Common Stock received by such United States Holder would include the holding
period of the Exchangeable Shares exchanged therefor.
For United States federal income tax purposes, gain realized on the
exchange of Exchangeable Shares for shares of ACT Common Stock generally will be
treated as United States source gain, except that, under the terms of the Tax
Treaty, such gain may be treated as sourced in Canada. Any Canadian tax imposed
on the exchange may be available as a credit against United States federal
income taxes, subject to applicable limitations. A United States Holder that is
ineligible for a foreign tax credit with respect to any Canadian tax paid may be
entitled to a deduction therefor in computing United States taxable income.
Passive Foreign Investment Company Considerations. ACT Sub may be
classified as a passive foreign investment company ("PFIC") for United States
federal income tax purposes for any taxable year if either (a) 75 percent or
more of its gross income was passive income (as defined for United States
federal income tax purposes) or (b) on average for such taxable year, 50 percent
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or more of its assets (as determined in accordance with Section 1297(f) of the
U.S. Code) produced or were held for the production of passive income. For
purposes of applying the foregoing tests, the assets and gross income with
respect to which ACT Sub owns at least 25 percent of the stock (by value) will
be attributed to ACT Sub.
There can be no assurance with respect to the classification of ACT Sub as
a PFIC. Moreover, in connection with the transactions contemplated herein, no
opinion will be rendered regarding ACT Sub's status as a PFIC. Currently, ACT
Sub and ACT intend to endeavor to cause ACT Sub to avoid PFIC status in the
future, although there can be no assurance that they will be able to do so or
that their intent will not change. For each year, ACT Sub will endeavor to
notify United States Holders of Exchangeable Shares if it believes that ACT Sub
was a PFIC for that taxable year.
If ACT Sub were to be classified as a PFIC, the consequences to a United
States Holder will depend in part on whether the United States Holder has made a
"Mark-to-Market Election" or a "QEF Election" with respect to ACT Sub. If ACT
Sub is a PFIC during a United States Holder's holding period and the United
States Holder does not make a Mark-to-Market Election or a QEF Election, the
United States Holder generally will be required to pay a special United States
tax, in lieu of the U.S. tax that would otherwise apply, if such United States
Holder (a) realizes a gain upon the sale or exchange of Exchangeable Shares or
(b) receives an "excess distribution" from ACT Sub on the Exchangeable Shares.
If a United States Holder makes a QEF Election or Mark-to-Market Election, it
generally will be required to include amounts in income, based upon ACT Sub's
income or the value of the Exchangeable Shares, even if ACT Sub does not make
actual distributions to holders of Exchangeable Shares.
The foregoing summary of the possible application of the PFIC rules to ACT
Sub and the United States Holders of Exchangeable Shares is only a summary of
certain material aspects of those rules. Because the United States federal
income tax consequences to United States Holders under the PFIC provisions are
significant and complex, United States Holders are urged to discuss those
consequences with their tax advisors.
Shareholders Not Resident in or Citizens of the United States.
The following summary is applicable to holders Exchangeable Shares or of
ACT Common Stock that are not United States Holders ("non-United States
Holders"). Dividends received by a non-United States Holder with respect to ACT
Common Stock that are not effectively connected with the conduct by such holder
of a trade or business in the United States generally will be subject to United
States withholding tax at a rate of 30 percent, which rate may be reduced by an
applicable income tax treaty in effect between the United States and the
non-United States Holder's country of residence (currently 15 percent,
generally, on dividends paid to residents of Canada under the Tax Treaty).
Under current United States Treasury regulations, dividends paid to an
address in a country outside the United States are presumed to be paid to a
resident of such country for purposes of the withholding discussed above (unless
the payor has knowledge to the contrary) and under the current interpretation of
United States Treasury Regulations, for purposes of determining the
applicability of a tax treaty rate (the "address rule"). Thus, non-United States
Holders who receive dividends at addresses outside the United States generally
are not yet required to file tax forms to obtain the benefit of an applicable
treaty rate. Under recently issued Treasury regulations scheduled to take effect
January 1, 2000 (the "Final Regulations"), the address rule will no longer
apply, and a non-United States Holder who seeks to claim the benefit of an
applicable treaty rate would be required to satisfy certain certification and
other requirements. The Final Regulations also provide special rules regarding
whether, for purposes of determining the applicability of an income tax treaty,
dividends paid to a non-United States Holder that is an entity should be treated
as being paid to the entity itself or to the persons holding an interest in that
entity.
Subject to the discussion below, a non-United States Holder generally will
not be subject to United States federal income tax on gain (if any) recognized
on the exchange of the Exchangeable Shares for ACT Common Stock or on the sale
or exchange of shares of ACT Common Stock, unless (a) such gain is attributable
to an office or fixed place of business and is effectively connected with a
trade or business of the non-United States Holder in the United States or, if a
tax treaty applies, is attributable to a permanent establishment maintained by
the non-United States Holder in the United States, (b) the non-United States
Holder is an individual who holds the Exchangeable Shares or ACT Common Stock,
as the case may be, as capital assets and is present in the United States for
183 days or more in the taxable year of disposition, and certain other
conditions are satisfied, or (c) the non-United States Holder is subject to tax
pursuant to the U.S. Code provisions applicable to certain United States
16
<PAGE>
expatriates. If an individual non-United States Holder falls under clause (a) or
(c) above, he or she will be taxed on his or her net gain derived from the sale
under regular United States federal income tax rates. If the individual
non-United States Holder falls under clause (b) above, he or she will be subject
to a flat 30 percent tax on the gain derived from the sale, which may be offset
by United States source capital losses (notwithstanding the fact that he or she
is not considered a resident of the United States).
United States Real Property Holding Corporation. The discussion of the
United States taxation of non-United States Holders assumes that ACT is at no
time a United States real property holding corporation within the meaning of
Section 897(c) of the U.S. Code. Under present law, ACT would not be a United
States real property holding corporation so long as (a) the fair market value of
its United States real property interests is less than (b) 50 percent of the sum
of the fair market value of its United States real property interests, its
interests in real property located outside the United States, plus its other
assets that are used or held for use in a trade or business. ACT believes that
it is not a United States real property holding corporation and does not expect
to become such a corporation.
Federal Estate Tax. ACT Common Stock (or a previously triggered obligation
of ACT or any of its subsidiaries to deliver ACT Common Stock along with unpaid
dividends) held by a non-United States Holder at the time of death will be
included in such holder's gross estate for United States federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.
Information Reporting and Backup Withholding Tax
Dividends paid to non-United States Holders outside the United States that
are subject to the withholding described above generally will be exempt from
United States backup withholding (which generally is imposed at a rate of 31
percent on certain payments to persons that fail to furnish certain information
under United States information reporting requirements), but ACT must report
annually to the United States Internal Revenue Service and to each non-United
States Holder the amount of dividends paid to such holder and the tax withheld
from such dividend payments, regardless of whether withholding was required.
Backup withholding and information reporting generally will apply, however, to
dividends paid on shares of ACT Common Stock to a non-United States Holder at an
address in the United States, if such holder fails to establish an exemption or
to provide certain other information to the payor.
Generally, ACT may rely on the non-United States Holder's address outside
the United States (absent knowledge to the contrary) in determining that the
withholding tax discussed above applies, and consequently, that the backup
withholding provisions do not apply.
Under the currently effective Treasury Regulations ("Current Regulations"),
the payment of the proceeds of the sale of ACT Common Stock to or through the
United States office of a broker will be subject to information reporting and
possible backup withholding at a rate of 31 percent unless the owner certifies
its non-United States status under penalties of perjury or otherwise establishes
an exemption. The payment of the proceeds of the sale of ACT Common Stock to or
through the foreign office of a broker generally will not be subject to backup
withholding. In the case of the payment of proceeds from the disposition of ACT
Common Stock through a foreign office of a broker that is a United States person
or a "United States related person," the Current Regulations require information
reporting on the payment unless the broker has documentary evidence in its files
that the owner is a non-United States person and the broker has no actual
knowledge to the contrary or the holder otherwise establishes an exemption. For
this purpose, a "United States related person" is (a) a "controlled foreign
corporation" for United States federal income tax purposes or (b) a foreign
person 50 percent or more of whose gross income for a specified period is
derived from activities that are effectively connected with the conduct of a
United States trade or business.
Under the Treasury Regulations effective for payments made after December
31, 1999, the payment of dividends or the payment of proceeds from the
disposition of ACT Common Stock to a non-United States Holder may be subject to
information reporting and backup withholding unless such recipient satisfies
applicable certification requirements or otherwise establishes an exemption. Any
amounts withheld under the backup withholding rules from a payment to a
non-United States Holder will be allowed as a refund or credit against such
non-United States Holder's United States federal income tax, provided that the
required information is furnished to the IRS.
17
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the ACT Common Stock offered hereby
will be passed upon for the Company by Bryan Cave LLP, St. Louis, Missouri.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1997 and 1996, and for each of the years in the three-year period ended December
31, 1997, have been audited by Rubin, Brown, Gornstein & Co. LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, and are incorporated herein by reference, in reliance upon
the authority of such firm as experts in accounting and auditing in giving said
reports.
18
<PAGE>
Exhibit A
NOTICE OF RETRACTION
TO: ACT
This notice is given pursuant to Article 5 of the provisions (the "Share
Provisions") attaching to the share(s) represented by this certificate and all
capitalized words and expressions used in this notice that are defined in the
Share Provisions have the meanings ascribed to such words and expressions in
such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to the Retraction
Call Right referred to below, the undersigned desires to have the Corporation
redeem in accordance with Article 5 of the Share Provisions:
|_| all shares(s) represented by this certificate, or
|_| ________________ shares only.
The undersigned acknowledges the Retraction Call Right of ACT to purchase all
but not less than all the Retracted Shares from the undersigned and that this
notice shall be deemed to be an irrevocable offer (subject as hereinafter
provided) by the undersigned to sell the Retracted Shares to ACT in accordance
with the Retraction Call Right on the Retraction Date for the Retraction Call
Purchase Price and on the other terms and conditions set out in the Call
Agreement. If ACT determines not to exercise the Retraction Call Right, the
Corporation will notify the undersigned of such fact as soon as possible. The
offer contained in this notice may be revoked by the undersigned by a further
notice in writing addressed to the Corporation and ACT specifically referencing
this Notice of Retraction and delivered to the Corporation at any time prior to
the Retraction Date.
The undersigned acknowledges that if, as a result of solvency provisions of
applicable law or otherwise, the Corporation fails to redeem all Retracted
Shares, the undersigned will be deemed to have exercised the Exchange Right (as
defined in the Voting and Exchange Trust Agreement) so as to require Applied to
purchase the unredeemed Retracted Shares.
The undersigned hereby represents and warrants to the Corporation and ACT that
the undersigned has good title to, and owns, the share(s) represented by this
certificate to be acquired by the Corporation or ACT, as the case may be, free
and clear of all Liens.
- ------------------- ------------------------------ -------------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
NOTE: This panel must be completed and this certificate, together with such
additional documents as the Corporation may require, must be deposited
with the Corporation at its principal transfer office in Windsor,
Ontario. The securities resulting from the retraction or purchase of
the Retracted Shares will be issued and registered in, and made payable
to, respectively, the name of the shareholder as it appears on the
register of the Corporation and the securities resulting from such
retraction or purchase will be delivered to such shareholder as
indicated above, unless the form appearing immediately below is duly
completed.
- ---------------------------------------------- -----------------------------
Name of Person in Whose Name Securities or Date
Cheque(s) Are To Be Registered, Issued or
Delivered (please print)
- ---------------------------------------------- -----------------------------
Street Address or P.O. Box Signature of Shareholder
- ---------------------------------------------- -----------------------------
City-Province Signature Guaranteed by
NOTE: If the notice of retraction is for less than all of the share(s)
represented by this certificate, a certificate representing the
remaining shares of the Corporation will be issued and registered in
the name of the shareholder as it appears on the register of the
Corporation, unless the Share Transfer Power on the share certificate
is duly completed in respect of such shares.
19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses (other than underwriting
discounts and commissions), which other than the SEC registration fee are
estimates, payable by the Company in connection with the sale and distribution
of the shares registered hereby**:
SEC Registration Fee .................................... $ 815
Accounting Fees and Expenses............................. 2,500 *
Legal Fees and Expenses.................................. 10,000 *
Miscellaneous Expenses................................... 1,685 *
-------
Total ....................................... $ 15,000 *
=======
- -------------
* Estimated
** The Selling Shareholders will pay any sales commissions or underwriting
discount and fees incurred in connection with the sale of shares
registered hereunder.
Item 15. Indemnification of Directors and Officers.
Sections 351.355(1) and (2) of The General and Business Corporation Law
of the State of Missouri provide that a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful, except that, in the case of an action or suit by or in the right
of the corporation, the corporation may not indemnify such persons against
judgments and fines and no person shall be indemnified as to any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the corporation,
unless and only to the extent that the court in which the action or suit was
brought determines upon application that such person is fairly and reasonably
entitled to indemnity for proper expenses. Section 351.355(3) provides that, to
the extent that a director, officer, employee or agent of the corporation has
been successful in the defense of any such action, suit or proceeding or any
claim, issue or matter therein, he shall be indemnified against expenses,
including attorneys' fees, actually and reasonably incurred in connection with
such action, suit or proceeding. Section 351.355(7) provides that a corporation
may provide additional indemnification to any person indemnifiable under
subsection (1) or (2), provided such additional indemnification is authorized by
the corporation's articles of incorporation or an amendment thereto or by a
shareholder-approved bylaw or agreement, and provided further that no person
shall thereby be indemnified against conduct which was finally adjudged to have
been knowingly fraudulent, deliberately dishonest or willful misconduct or which
involved an accounting for profits pursuant to Section 16(b) of the Securities
Exchange Act of 1934.
The bylaws of the Company provide that the Company shall indemnify, to
the full extent permitted under Missouri law, any director, officer, employee or
agent of the Company who has served as a director, officer, employee or agent of
the Company or, at the Company's request, has served as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to such provisions, the Company has been informed that in the
<PAGE>
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
Item 16. Exhibits.
See Exhibit Index.
Item 17. Undertakings.
(a) The undersigned small business issuer hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most
recent post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
provided, however, that paragraphs (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
small business issuer will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Palm Beach, State of Florida, on September 28, 1998.
APPLIED CELLULAR TECHNOLOGY, INC.
By: /S/ DAVID A. LOPPERT
-----------------------------------------------
David A. Loppert, Vice President, Treasurer and
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Garrett A. Sullivan and David A. Loppert, and each of them (with full power to
each of them to act alone), the true and lawful attorney in fact and agent for
the undersigned, to act on behalf of and in the name of the undersigned in
connection with this Registration Statement, including the authority to sign any
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with exhibits and any and all other documents filed with
respect thereto, with the Securities and Exchange Commission (or any other
governmental or regulatory authority), and each such person ratifies and
confirms all that said attorneys in fact and agents may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chairman of the Board of Directors,
Chief Executive Officer and
/S/ RICHARD J. SULLIVAN Secretary(Principal Executive
- ------------------------- Officer) September 28, 1998
(Richard J. Sullivan)
President and Director (Principal
/S/ GARRETT A. SULLIVAN Operating Officer) September 28, 1998
- -------------------------
(Garrett A. Sullivan)
Vice President, Treasurer and Chief
Financial Officer (Principal
/S/ DAVID A. LOPPERT Accounting Officer) September 28, 1998
- -------------------------
( David A. Loppert)
/S/ ANGELA M. SULLIVAN Director September 28, 1998
- -------------------------
(Angela M. Sullivan)
/S/ DANIEL E. PENNI Director September 28, 1998
- -------------------------
(Daniel E. Penni.)
/S/ARTHUR F. NOTERMAN Director September 28, 1998
- -------------------------
(Arthur F. Noterman)
/S/CONSTANCE K. WEAVER Director
- -------------------------
(Constance K. Weaver) September 28, 1998
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.1 Amended and Restated Articles of Incorporation of the Company
(incorporated herein by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-3 (File No. 333-37713) filed with the
Commission on November 19, 1997)
4.2 Amendment of Restated Articles of Incorporation of the Company
(incorporated herein by reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-3 (File No. 333-59523) filed with the
Commission on July 21, 1998)
4.3 Resolution of the Board of Directors of the Company setting forth the
terms of the Special Voting Preferred Stock*
4.4 Amended and Restated Bylaws of the Company dated March 31, 1998
(incorporated herein by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-3 (File No. 333-51067) filed with the
Commission on April 27, 1998)
5.1 Opinion of Bryan Cave LLP regarding the validity of the Common Stock*
8.1 Opinion of counsel regarding Canadian tax matters*
8.2 Opinion of Bryan Cave LLP regarding tax matters*
23.1 Consent of Rubin, Brown, Gornstein & Co. LLP*
23.2 Consent of Bryan Cave LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included in Signature Page)*
99.1 Form of Exchangeable Share Provisions*
99.2 Form of Reorganization Agreement among Applied Cellular Technology,
Inc., ACT-GFX Canada, Inc., Drummer Enterprises Ltd., Morstar Holdings
Ltd., Scozul Enterprises Ltd, James D. Scott and Ground Effects Ltd.*
99.3 Form of Voting and Exchange Trust Agreement among Applied Cellular
Technology, Inc., ACT-GFX Canada, Inc., Drummer Enterprises Ltd.,
Morstar Holdings Ltd., Scozul Enterprises Ltd, and Montreal Trust
Company of Canada.*
99.4 Form of Support Agreement between Applied Cellular Technology, Inc.
and ACT-GFX Canada, Inc.*
99.5 Form of Call Agreement among Applied Cellular Technology, Inc.,
ACT-GFX Canada, Inc., Drummer Enterprises Ltd., Morstar Holdings Ltd.,
Scozul Enterprises Ltd, and James D. Scott.*
- -------------
* To be filed by amendment
