SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) :
April 27, 1996
SHARED TECHNOLOGIES CELLULAR, INC.
DELAWARE 1-13732 06-386411
(State or other (Commission (I.R.S.
jurisdiction of File Number) Employer
incorporation) Identification
No.)
100 Great Meadow Road, Suite 102
Wethersfield, CT 06109
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code
(203-258-2500)
Total number of sequentially numbered paged in this
filing, including exhibits hereto: 30
1
Item 2. Acquisition or Disposition of Assets
On April 27, 1996, Shared Technologies Cellular, Inc ("STC"
or the "Company") completed its acquisition of certain
assets of Cellular Global Investments of Northern
California, Inc., Access Cellular Corp., Summit Assurance
Cellular, Inc., Road and Show Cellular Arizona Corp., Road
and Show Cellular West, Northstar Cellular Corp.and Craig
A. Marlar. The purchase price was approximately $3,500,000,
comprised of $1,058,276 in cash payable over eight months,
$1,697,724 in assumed liabilities, and the issuance of
300,000 shares of the Company's common stock, $.01 par
value. Additionally, at closing, the Company issued three-year
warrants to purchase an aggregate of 300,000 additional shares of the
Company's common stock $.01 par value. The warrants are
excersizable as follows: 100,000 shares at $3.00 per share;
100,000 shares at $4.00 per share and 100,000 at $5.00 per
share.
Item 7. Financial Statements and Exhibits
(a)Financial statements of business acquired
i)The required audited financial statements for
the periods ended December 31, 1995 and December
31, 1994 will be filed as soon as practicable and,
in any case, within 60 days of the date of the
filing of this Current Report on Form 8-K.
(ii)Unaudited balance sheets of the Companies,
as of March 31, 1996, the related unaudited
statements of operations, and cash flows for the
period ended, March 31, 1996 will be filed as soon
as practicable and, in any case, within 60 days of
the date of the filing of this Current Report on
Form 8-K.
(b) Pro Forma financial information
The required pro forma financial information will
be filed as soon as practicable and, in any case,
within 60 days of the date of the filing of the
Current Report on Form 8-K.
2
(c) Exhibits
Exhibit No. Description Page No.
10.1 Asset Purchase Agreement
dated April 27, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
Shared Technologies
Cellular, Inc.
By: /s/ Vincent DiVincenzo
Vincent DiVincenzo
Chief Financial Officer
Date: May 9, 1996 3
ASSET PURCHASE AGREEMENT
BETWEEN
SHARED TECHNOLOGIES CELLULAR, INC. ("BUYER")
AND
CELLULAR GLOBAL INVESTMENTS OF NORTHERN CALIFORNIA, INC.,
ACCESS CELLULAR CORPORATION,
ROAD & SHOW CELLULAR WEST,
ROAD & SHOW CELLULAR ARIZONA CORPORATION,
SUMMIT ASSURANCE CELLULAR INC.,
NORTHSTAR CELLULAR CORPORATION
and
CRAIG A. MARLAR ("SELLERS")
April 27, 1996
ASSET PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of the
27th day of April, 1996, by and among:
1. Shared Technologies Cellular, Inc., a Delaware corporation (the
"Buyer"); and
2. Cellular Global Investments of Northern California Inc., a
California corporation, Access Cellular Corporation, a Florida corporation,
Road and Show Cellular West, a Nevada corporation, Road & Show Cellular Arizona
Corporation, an Arizona corporation, Summit Assurance Cellular Inc., a
California corporation, Northstar Cellular Corp., a California corporation
(collectively, the "Corporate Sellers"), and Craig A. Marlar, an individual
("Marlar")(Marlar and the Corporate Sellers are sometimes collectively referred
to herein as the "Sellers" or each individually referred to as a "Seller").
WHEREAS, Sellers, are engaged in the business of providing cellular
phone rentals to travelers and other customers primarily at locations operated
by car rental companies (such businesses of the Sellers are collectively
referred to herein as the "Business");
WHEREAS, Sellers desire to sell, and Buyer desires to
acquire certain assets used in the Business in consideration of the payment of
the purchase price on the terms and subject to the conditions contained in this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Sellers, jointly and
severally, and Buyer hereby agree as follows:
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms have the following
meanings:
Affiliate: As to any person, a person or entity who or which
controls, is controlled by, or is under common control with, any party hereto.
For purposes of this Agreement only, the Sellers are deemed to be Affiliates
of each other.
Closing: As defined in Section 6.1.
Closing Date: As defined in Section 6.1.
Code: The Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
Effective Date: As defined in Section 6.1.
Employee Benefit Plans: Any plan maintained by a Seller for the
benefit of its employees that is an "employee pension benefit plan" or an
"employee welfare benefits plan" as those terms are defined in the Employee
Retirement Income Security Act of 1974, as amended.
Enforceable: A document or other obligation is Enforceable if it can
be enforced in accordance with its terms (subject to (a) applicable bankruptcy,
reorganization, insolvency, fraudulent conveyance and moratorium laws and other
laws applicable generally to creditors' rights from time to time in effect and
(b) judicial limitations on the remedy of specific performance, injunctive
relief and other equitable remedies).
Exchange Act Filing: As defined in Section 7.2.4.
Franchise Agreement: The Franchise Agreement dated December 31,
1994, between STI Cellular Franchise Corp. and Access Cellular Corporation.
Lien: Any lien, encumbrance, mortgage, hypothecation,
equity, charge, restriction, possibility of reversion or any other similar
conflicting ownership or security interest.
License Agreements: The License Agreements include (i) the
agreement dated June 1992 between Buyer, as successor in interest to and
assignee of Road and Show Cars, Inc. and Road and Show Cars Cellular and Road
and Show Cellular West, Inc., as successor in interest to and assignee of Carl
F. Grewe, C. Richard Grewe and Safety Leasing, Inc., and (ii) the agreement
dated September 4, 1992 between Buyer, as successor in interest to and assignee
of Road and Show Cars, Inc. and Road and Show Cars Cellular and Summit
Assurance Cellular, Inc., as successor in interest to and assignee of Road and
Show Northwest, Inc.
No Default: There is No Default under a document or other
obligation if no occurrence or circumstance exists which constitutes a material
breach or default (or which, by the lapse of time or giving of notice, would
constitute a material breach or default) with respect thereto or thereunder.
The phrase "Any Default," when used in negative sentences, has the same meaning
as "No Default."
Permitted Liens:
(a) liens for taxes, assessments and other governmental charges,
if such taxes, assessments and charges are attributable to periods prior to the
Effective Date, are accrued in the ordinary course of business of the Business
and that are not due and payable prior to the Effective Date;
(b) artisans', mechanics', carriers', workers', repairmen's,
warehousemen's, materialmen's, judgment or other like liens (inchoate or
otherwise) for obligations arising or incurred in the ordinary course of
business of the Business which are attributable to periods prior to the
Effective Date, and are not due and payable prior to the Effective Date; or
(c) encumbrances not having separately or in the aggregate any
material adverse effect on the value or intended use of the Acquired Assets or
the operation of the Business on or after the Effective Date;
(d) encumbrances consisting of zoning restrictions, easements, or
other restrictions on the use of real property for the purposes intended; or
(e) liens of equipment lessors arising under the terms of leases
set forth on Schedule 2.1.5 hereof.
ARTICLE 2. PURCHASE AND SALE OF ASSETS
2.1 Acquired Assets. Subject to the terms and conditions of this
Agreement, on and as of the Effective Date (as defined in Section 6.1 hereof),
Sellers shall sell, transfer, assign and delegate to Buyer, and Buyer shall
purchase and assume from Sellers, all right, title and interest of Sellers in
and to certain of the assets and goodwill of the Sellers used in the Business,
as expressly described in Sections 2.1.1 through 2.1.12 (collectively, the
"Acquired Assets"), but (i) subject to the Permitted Liens, and (ii) excluding
the Excluded Assets described in Section 2.2.
2.1.1 All cellular telephone equipment, all computer equipment and
software, and all tools, supplies, furniture, fixtures, leasehold improvements,
inventory and all other tangible personal property set forth on Schedule 2.1.1;
2.1.2 [Intentionally omitted];
2.1.3 [Intentionally omitted];
2.1.4 All rights of Sellers under the leases,
leaseholds or rental agreements for all premises in or from
which Sellers conduct the Business set forth on Schedule 2.1.4 hereto (the
"Real Property Leases");
2.1.5 All rights of Sellers under all leases of
personal property used in the Business set forth on Schedule 2.1.5;
2.1.6 [Intentionally omitted];
2.1.7 All rights of Sellers in and under those certain agreements
with car rental agencies as set forth on Schedule 2.1.7;
2.1.8 [Intentionally omitted];
2.1.9 All rights of Sellers in and under such other contracts set
forth on Schedule 2.1.9;
2.1.10 Any claim or right against a third party to the extent it
relates to any Acquired Asset or Assumed Liability, whether such claim or right
accrued prior to, on or after the Effective Date; and
2.1.11 Up to the first collected $20,000 of accounts receivable
arising in connection with the Business, as set forth on Schedule 2.1.11
("Receivables"). Such $20,000 of Receivables shall be deemed to be part of the
Purchase Price. Any Receivables collected by Buyer in excess of $20,000 shall
be credited to Sellers in accordance with Section 3.3 hereof. Buyer shall use
its reasonable best efforts to collect all Receivables set forth in Schedule
2.1.11. Any Receivables not collected within 90 days following the Closing
Date shall revert to Sellers.; and
2.1.12 All deposits and pre-paid expenses relating to the Business
which were paid by Sellers prior to the Effective Date, as set forth on
Schedule 2.1.12, as set forth on Schedule 2.1.12.
2.2 Excluded Assets. Buyer shall not acquire and Sellers shall
not sell, transfer or assign to Buyer any of the other assets or properties of
Sellers, including, without limitation, any of the following rights, properties
and assets (the "Excluded Assets"):
2.2.1 All assets owned by any third party (except for Seller's
leasehold interest in those assets), including without limitation any interest
of any landlord in any leasehold improvements.
ARTICLE 3. ASSUMPTION OF LIABILITIES BY BUYER
3.1 Assumed Liabilities. Buyer hereby assumes, as of the
Effective Date, the following liabilities (collectively, the "Assumed
Liabilities"):
(a) Subject to the terms and conditions of this Agreement, Buyer
hereby fully assumes and agrees to pay, perform and discharge when due all
debts, obligations, contracts and liabilities of Sellers relating to the
Acquired Assets which arise or are to be performed on and after the Effective
Date.
(b) Such Assumed Liabilities shall further include Buyer's
assumption, effective as of the Effective Date, of those certain liabilities of
Sellers that are set forth on Schedule 3.1(b) attached hereto. Such
liabilities are represented at their face values, without giving effect to any
present value adjustment.
3.2 Excluded Liabilities. Except as expressly otherwise stated
herein, Buyer shall not assume or be obligated for, and Sellers shall retain,
pay, perform and discharge on a timely basis and in a manner not to disrupt or
adversely affect the Business, any and all debts, contracts, liabilities and
obligations (the "Excluded Liabilities"), including, without limitation, the
following:
3.2.1 Liabilities of any kind or nature, absolute or contingent
which arise or are to be performed prior to the Effective Date and which relate
to the Business, including, without limitation, those relating to the Acquired
Assets or the Assumed Liabilities.
3.2.2 Any and all liabilities and obligations of the Sellers
related to the conduct of any business other than the Business;
3.2.3 All liabilities and obligations of Sellers for taxes
(federal, state or local) of any kind, arising prior to the Effective Date,
including, without limitation, property taxes (other than property taxes
relating to the Acquired Assets arising on or after the Effective Date),
franchise taxes, payroll taxes and taxes based on the income or capital of
Seller, including any interest, fines or penalties thereon;
3.2.4 Any tax or other liabilities of Sellers arising or resulting
from the consummation of the transactions contemplated by the Agreement,
including, without limitation, liability for any sales taxes;
3.2.5 Employee benefits (including vacation and sick pay) accruing
prior to the Effective Date for the benefit of any employee of any Seller;
3.2.6 Any liabilities and expenses of Sellers arising out of or
relating to this Agreement or the performance of the transactions contemplated
by this Agreement, including without limitation, legal or accounting fees,
investment banking fees, any broker's commissions or finder's fees, and any
costs, expenses or liabilities incurred by Sellers to obtain the consent or
approval of any third party that is required in order for Sellers to enter into
this Agreement and consummate the transactions contemplated hereby, including
without limitation consents or approvals to the assignment of leases or other
contracts from Sellers to Buyer;
3.2.7 Sellers' obligations under any contract or agreement of
employment with any officer, director or employee, except for that certain
employment agreement dated March 15, 1995 entered into by and among Road & Show
Cellular West, Inc., as employer, and Carl Grewe and Catherine Grewe, as
employees, which is hereby included as an Assumed Liability under Article 3
hereof;
3.2.8 Sellers' obligations with respect to any Sellers Affiliate's
accounts, debts or notes payable and any cause of action or other claim against
Sellers or any of their Affiliates;
3.2.9 Liability for any severance pay or other severance benefit
paid or payable by Seller to any employee of Seller who is terminated from
employment for any reason
before the Effective Date;
3.2.10 Any Employee Benefit Plans of Seller or any liabilities of
any kind or nature under or related to such plans;
3.2.11 Any liability, cost or obligation of Seller on account of or
related to any activity of Seller from and after the Effective Date other than
such as may be incurred on Buyer's behalf pursuant to specific prior written
authorization of Buyer, which shall not be unreasonably withheld;
3.2.12 Any past, present or future costs, assessments, fines,
penalties or related contingencies assessed or assessable under any
environmental, labor, employee safety, wage and hour or other statute, rule or
regulation, arising out of or relating to any transaction, fact, event, act or
omission, or any obligations, arising prior to the Effective Date, of Seller or
any of its Affiliates or of any officers, directors, shareholders or employees
of Seller or any of its Affiliates;
3.2.13 Any workers' compensation, contingent liability or tort
claims arising out of or relating to any transaction, fact, event, act,
omission or obligation arising prior to the Effective Date, of Sellers or of
any officers, directors, shareholders or employees of Sellers;
3.2.14 Any claims, liabilities or contingencies relating to any past
or present litigation, labor dispute, governmental investigation or
administrative proceeding against or affecting Sellers; and
3.2.15 Any liability of Sellers for sales or use taxes arising prior
to the Effective Date.
3.3 Reconciliation. Buyer shall provide a reconciliation to
Seller within a reasonable time after the Closing, but in no event later than
90 days, which shall account for those accounts payable and revenues relating
to open rental agreements whose billing period begins before the Closing Date
and ends on or after the Closing Date. Such items shall be reconciled on a pro
rata basis, such that the charges payable or the collected revenues from such
open rental agreements shall be pro rated to Sellers (for the period prior to
the Closing Date) and to Buyers (for the period on and after the Closing Date)
on a per diem basis for the applicable time period. Within 60 days after the
completion of such reconciliation, Buyer or Sellers, as the case may be, shall
pay all amounts due in accordance with such reconciliation. In the event that
Buyer collects in excess of $20,000 of Receivables, as described in Section
2.1.11, then Buyer shall have the right to apply any such excess of Receivables
against any amounts payable to Sellers pursuant to the reconciliation set forth
in this Section 3.3.
ARTICLE 4. CONSENTS TO ASSIGNMENT
4.1 No Assignment Without Consent. To the extent that
the conveyance, assignment, sublease or delegation by Sellers to Buyer of any
of the Acquired Assets or the assumption of any Assumed Liability by Buyer
shall require the consent or approval of any third party, this Agreement shall
not constitute a conveyance, assignment, sublease, delegation or assumption
thereof if such attempted conveyance, assignment, sublease, delegation or
assumption would constitute a breach thereof subject to the waiver set forth in
Section 4.2 below.
4.2 Performance, Enjoyment by Buyer. Following the Closing Date
and until the required consents or approvals of third parties with respect to
the conveyance, assignment or sublease by Sellers to Buyer of any of the
Acquired Assets or to the assumption of any Assumed Liability by Buyer shall
have been obtained, Buyer, as Sellers' agent, shall perform or discharge all of
Sellers' liabilities, responsibilities, obligations and commitments which arise
from and after the Effective Date, and shall enjoy all of Sellers' rights,
benefits and entitlements under same. Following the Closing Date, and for a
period of one (1) year, Sellers shall continue to use their reasonable best
efforts, at their cost and expense, except that Buyer shall be responsible for
its own costs and expenses so incurred, to obtain the following, as reasonably
required by Buyer. Without in any way limiting Sellers' obligations to
cooperate with Buyer in obtaining the consents of landlords and equipment
lessors for the assignment of leases to Buyer hereunder, Buyer acknowledges
that such consents and approvals will not be available by the Closing Date and
Buyer waives its right to receive such consents. With respect to such leases,
Buyer shall endeavor to provide notice to such lessors of said assignments.
ARTICLE 5. PURCHASE PRICE
5.1 Purchase Price. At the Closing, (or as otherwise provided
herein), Buyer shall pay to the Sellers (as may be allocated among the Sellers
in their discretion), the following purchase price (the "Purchase "Price"):
(a) Cash: cash in the amount of $1,058,276 (the "Cash");
(b) Common Stock: 300,000 shares (the "Shares") of Buyer's common
stock, $.01 par value (the "Common Stock") issued by Buyer to Sellers, or their
nominees, subject to the six (6) month Stock Holdback as set forth in Section
5.4 hereof;
(c) Warrants: warrants to purchase an aggregate of 300,000 shares
of Buyer's Common Stock, which shall expire three (3) years after the Effective
Date (the "Warrants"), in the form as attached hereto as Exhibit 5.1(c) with
appropriate insertions, issued by Buyer to Sellers or their nominees, as
follows:
(i) Warrants to purchase 100,000 shares of Common Stock at an
exercise price of $3.00 per share;
(ii) Warrants to purchase 100,000 shares of Common Stock at an
exercise price of $4.00 per share; and
(iii) Warrants to purchase 100,000 shares of Common Stock at an
exercise price of $5.00 per share; and
(d) Assumed Liabilities. The Assumed Liabilities, assumed by STC
pursuant to Section 3.1 hereof, are considered to be part of the Purchase
Price.
5.2 Payment of Purchase Price. The Purchase Price shall be paid
by Buyer to Sellers, or their nominees, as follows:
(a) Cash. Subject to Section 5.5 hereof, Buyer shall pay to
Sellers the Cash (except for the note cancellation provided for in Section
5.2(a)(i) hereof) by bank check, certified check or wire transfer as follows:
(i) $250,000 shall be payable at Closing by cancellation of that
certain Promissory Note dated March 27, 1996, given by Sellers to Buyer in the
original principal amount of $250,000, which shall be evidenced by a receipt.
All interest accrued thereunder through Closing shall be waived by Buyer;
(ii) $40,415 shall be paid by wire transfer on April 29, 1996;
(iii) $727,446 shall be payable in six (6) equal installments of
$121,241 each, payable on the following dates: July 15, 1996, August 15, 1996,
September 15, 1996, October 15, 1996, November 15, 1996 and December 15, 1996;
and
(iv) $40,415 shall be payable on December 31, 1996.
(b) Shares and Warrants. Buyer shall deliver to Sellers duly
executed certificate(s) for an aggregate of 200,000 of the Shares and for all
of the Warrants, registered to Sellers or in such other name(s) as Sellers have
designated in writing to Buyer, indicating name, address, tax identification
number and number of Shares for each person or entity in whose name such Shares
are to be registered.
5.3 Allocation. The parties acknowledge that the transaction
contemplated by this Agreement is a taxable transaction and is an asset
purchase within the meaning of Section 1060 of the Code. The Purchase Price
paid by Buyer shall be allocated among the Acquired Assets in accordance with a
schedule, which will meet the requirements of Section 1060 of the Code, to be
mutually prepared and agreed upon by Buyer and Sellers within 60 days after the
Effective Date. The parties will prepare and file their respective tax returns
and all other required filings (including any necessary elections) based on
such allocation. In the event the parties are not able to mutually agree on
such an allocation schedule, each party shall be entitled to prepare and file
its tax returns and all other required filings (including any necessary
election) based on an allocation which is determined independently by such
party in its discretion.
5.4 Stock Holdback. 100,000 of the Shares shall be subject to a
six (6) month holdback following the Closing Date (the "Stock Holdback"), as
follows. Buyer shall have a right to withhold against such Stock Holdback in
the event that within six (6) months of the Closing Date, Buyer is named in a
lawsuit or administrative claim, arising out of this Transaction, including
without limitation a lawsuit or administrative claim relating to Excluded
Liability, based upon an allegation of an act or omission of Sellers. In such
event, the parties shall use their best efforts to arrive at a reasonable
potential exposure of the Buyer, if any, with regard to said litigation and
Buyer shall be entitled to holdback such shares as are necessary to
economically equate to said exposure. In the event that the parties cannot
agree on the reasonable potential exposure, then counsel of record for Buyer
shall be required to provide a reasonable written opinion of same. In the
event that Buyer is entitled to exercise its rights pursuant to such Stock
Holdback, the Shares shall be valued at their then current market value.
5.5 Conditional Acceleration of Cash Payments. Notwithstanding
the payment schedule set forth in Section 5.2 hereof, in the event that Buyer
completes a debt and/or equity financing after the Closing Date, then Buyer
shall at such time prepay the Cash then outstanding and unpaid by an amount
representing fifteen (15%) of the net proceeds received by Buyer from such
financing, with the amount of each remaining installment of Cash then reduced
on pro rata basis. For example, (assuming for purposes of this example only
that the amount of each payment payable pursuant to Section 5.2(a)(iii) were
$150,000) in the event that Buyer were to raise $2,500,000 on May 20, 1996, 15%
of such amount, or $375,000, would be prepaid by Buyer against the remaining
Cash payments of $750,000. The five remaining installments would then be
reduced from $150,000 each to $75,000 each.
5.6 Buyer's Right of Setoff.
(a) Except as otherwise expressly provided in this Agreement, the
parties hereto expressly agree that despite the fact that Buyer may claim an
offset from Sellers based on any obligation arising pursuant to any provision
of this Agreement from Sellers to Buyer, that such a claim of offset by Buyer
to Seller shall in no way relieve Buyer from timely paying the full amount of
payments due from Buyer to Sellers pursuant to Section 5.2(a)(iii) and
5.2(a)(iv) of this Agreement. As first referenced in Section 3.1(b) above, in
the event that, following the Closing Date, the amounts for the items listed on
Schedule 3.1(b) exceed, in the aggregate, $1,691,724, then in such event Buyer
shall have the right, but not the obligation, to assume such additional
liabilities, subject to the reasonable approval of Marlar, which approval shall
not be unreasonably withheld or delayed. If so assumed by Buyer pursuant to
mutual agreement with Sellers, as evidenced by a signed writing, Buyer shall
have a right to reduce the then unpaid Cash portion of the Purchase Price by
an amount equivalent to the amount of such additional assumed liabilities.
Such reduction shall be allocated equally against all such remaining payments
of Cash. In the event that Buyer and Sellers cannot agree on Buyer's
assumption of any such excess liabilities, then Buyer may assume such liability
and, provided that Buyer actually pays such liability, then Buyer may make a
corresponding reduction to then remaining Cash payments, which such reduction
shall be first applied against the last such payments due, provided that the
parties shall use their best good faith efforts to resolve such disagreement as
soon as practicable. In the event that Buyer pays a claimed excess liability
without the prior written approval of Sellers, such payment shall not, in any
manner, be deemed a waiver of Sellers' rights to contest said payment and seek
all sums claimed due and not paid by Buyer to Sellers pursuant to Sections
5.2(a)(iii) and 5.2(a)(iv) hereof. Any such reduction shall be to the
exclusion of Buyer exercising any rights with respect to the Stock Holdback.
5.7 Payment Default.
(a) In the event that Buyer defaults in the payment of any of the
payments required pursuant to Sections 5.2(a)(iii) or 5.2(a)(iv) hereof, and
such default continues uncured for more than ten (10) days after Buyer's
receipt of notice of such default, then, as liquidated damages, Buyer shall
incur an additional payment obligation of $100,000 for each such default, which
$100,000 shall be payable on the next installment due date following the
default date (such additional $100,000 payments are herein referred to as the
"Liquidated Damages"). However, in the event that Buyer commits more than two
defaults of such scheduled installment payments, which defaults go uncured
after ten (10) days' notice, then all then remaining installment payments shall
immediately become due and payable.
(b) The parties hereto agree that time is of the utmost essence in
connection with the payments due from Buyer to Sellers pursuant to Sections
5.2(a)(iii) and 5.2(a)(iv), and, further, the parties hereto expressly
acknowledge and agree that the amount of actual damages sustained by a breach
of the timely payments of the sums due would, from the nature of the
transactions set forth in this Agreement, be impracticable or extremely
difficult to fix. In addition, the parties hereto expressly agree that the
Liquidated Damages are fair and reasonable under the circumstances existing at
the time this Agreement is executed. Buyer expressly waives any claim that the
Liquidated Damages constitute a penalty, a forfeiture or excessive interest.
In further consideration of the setting of the Liquidated Damages, Sellers
agree that such Liquidated Damages represent Sellers' sole remedy for damages
relating to default of Buyer of its obligations under Sections 5.2(a)(iii) and
5.2(a)(iv), and to the exclusion of any and all provisional remedies, in the
event of two or less uncured defaults by Buyer of its payment obligations under
Sections 5.2(a)(iii) or 5.2(a)(iv) hereof.
(c) By way of example, (assuming for purposes of this example only
that the amount of each payment payable pursuant to Section 5.2(a)(iii) were
$150,000), if Buyer failed to make the entire payment of $150,000 due on July
15, 1996 and failed to timely cure such default, then the sum due on August 15,
1996 would be $400,000 (representing the July 15th payment of $150,000,
$100,000 of Liquidated Damages and the August 15th payment of $150,000. If
Buyer failed to make the entire payment of $400,000 due on August 15, 1996 and
failed to timely cure such default, then the sum due on September 15, 1996
would be $650,000, (representing the August 15th payment of $400,000, a second
obligation of $100,000 of Liquidated Damages and the September 15th payment of
$150,000. If Buyer failed to make the entire payment of $650,000 due on
September 15, 1996 and failed to timely cure such default, then Sellers would
have the right to institute any and all collection or enforcement remedies
available to them in law or equity to collect the $650,000 due and owing and
accelerate the remaining $450,000 payments payable under Sections 5.2(a)(iii)
and 5.2(a)(iv) hereof as currently due and payable.
ARTICLE 6. CLOSING
6.1 The Closing. The closing hereunder ("Closing") shall take
place concurrently with the execution of this Agreement, which shall be
effected by exchange, via facsimile transmission of signature pages of all
applicable documents, followed by exchange of original documents and payment of
the Purchase Price by overnight courier. The date on which such Closing occurs
shall be deemed the closing date (the "Closing Date"). Notwithstanding the
foregoing, the effective date of this Agreement shall be 12:01 a.m. Pacific
Time, April 27, 1996 (the "Effective Date").
6.2 Sellers' Obligations at Closing. Except as acknowledged by
the parties in first sentence of Section 4.2 and except as otherwise waived by
Buyer, at the Closing Sellers shall deliver to Buyer the following, at the
expense of Sellers, duly executed and acknowledged by Sellers, in form and
substance reasonably satisfactory to Buyer and its counsel:
(a) All other appropriate bills of sale, assignments, and other
good and sufficient instruments of transfer necessary to transfer to Buyer
title to the Acquired Assets in accordance with Article 2 of this Agreement.
(b) A receipt for the portion of the Purchase Price paid at
Closing and, upon request, a subsequent receipt for subsequently paid portions
of the Purchase Price.
(c) Evidence of all appropriate corporate action taken by
Sellers' Boards of Directors and stockholders to authorize the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby, including, without limitation, certificates of the Secretaries of each
of the Corporate Sellers certifying as to incumbency, the charter, the bylaws
and authorizing resolutions.
6.3 Buyer's Obligations at Closing. At the Closing,
Buyer has delivered to Sellers the following, at the expense of
Buyer, duly executed and acknowledged by Buyer, in form and
substance reasonably acceptable to Sellers and its counsel:
(a) Payment and delivery of the Purchase Price and all
instruments and certificates representing any part of the Purchase Price as
provided in Section 5.2.
(b) Incumbency Certificate of Buyer. A signed certificate of the
Secretary of Buyer which shall certify the names of the officers of Buyer
authorized to sign this Agreement, the Collateral Documents, and the other
documents or certificates to be delivered by such person pursuant to this
Agreement, together with the true signatures of each of such officers.
(c) Instruments of assumption of the Assumed Liabilities as
Sellers may reasonably request (collectively, the "Assumption Documents").
(d) Evidence of all appropriate corporate action taken by Buyer's
Board of Directors to authorize the execution, delivery and performance of this
Agreement and the transactions contemplated hereby.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties By Sellers. Sellers, jointly
and severally, represent and warrant to Buyer as follows:
7.1.1 Corporate Data and Authority.
(a) Corporate Sellers are corporations duly organized, validly
existing and in good standing under the laws of the states identified with
respect to each Corporate Seller in the preamble to this Agreement, each have
heretofore furnished to Buyer a complete and correct copy of each of their
respective charter documents, as amended, the Sellers' respective bylaws, as
amended, certified as of a recent date by their respective corporate
secretaries, receipt of which is hereby acknowledged by Buyer, which charter
documents and bylaws are in full force and effect and have not been amended or
modified in any respect since the date of the copies delivered to Buyer.
Sellers are not in violation of any of the provisions thereof in any manner
which would have a material adverse effect on the Acquired Assets, on the
Business or on the transactions contemplated by this Agreement.
(b) Corporate Sellers have corporate power and authority to carry
on the Business as it is now conducted and to own or hold under lease the
properties, real and personal, it purports to own or hold under lease which
relate to the Business.
(c) Corporate Sellers each have corporate power to execute,
deliver and perform this Agreement; the execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action on
the part of Sellers and each of their respective stockholders and Boards of
Directors and no other stockholder or board of directors approval is necessary
for the consummation of the transactions contemplated hereby.
(d) The execution and delivery of this Agreement by Sellers and
the consummation by Sellers of the transactions contemplated hereby are not
prohibited by and do not violate any provision of the charter documents or
bylaws, as amended to date, of Corporate Sellers, and do not violate any
material provision of, and will not result in the breach of, or accelerate or
permit the acceleration of the performance required by, any material term of
any material contract, agreement, indenture, mortgage, note, bond, commitment,
license or other instrument to which any Seller is a party or by which any of
the Acquired Assets is bound, the breach, violation or acceleration of which
would result in the creation or imposition of any Lien on any of the Acquired
Assets.
(e) This Agreement has been duly executed by Sellers and
constitutes a valid, legally binding, and Enforceable
obligation of Sellers.
(f) No Seller, as debtor, has: filed, or had filed against it, a
petition in bankruptcy or a petition to take advantage of any other insolvency
act; admitted in writing its inability to pay its debts generally; made an
assignment for the benefit of creditors; consented to the appointment of a
receiver for itself or any part of its property nor has any such receiver been
appointed nor is there any application for the appointment of such a receiver
pending; or generally committed any act of insolvency (including the failure to
pay obligations as they become due) or bankruptcy.
7.1.2 Property Interests.
(a) Sellers have good and marketable title to, or have valid
leasehold interests in, the Acquired Assets, free and clear of all Liens except
the Permitted Liens and except as set forth on Schedule 2.1.5 hereto.
(b) Schedule 2.1.1 sets forth a complete list of all tangible
personal property comprising the Acquired Assets (except for personal property
held by Sellers as lessee under a lease other than a lease required under
generally accepted accounting principles to be capitalized), setting forth a
description of each such item of tangible personal property. The tangible
personal property included in the Acquired Assets is in good working condition
subject only to reasonable wear and tear and is fit for its intended purposes
and no material amounts are required to be expended for the repair and
maintenance of said personal property other than amounts that are consistent
with the amounts Sellers has historically expended for such repair and
maintenance.
(c) Schedule 2.1.5 is a complete list of all leases of tangible
personal property comprising part of the Acquired Assets, together with a
description of the leased property, the termination date of each lease, the
name and address of the lessor, and the amount of the regular periodic payments
under the lease. True and complete copies of all personal property leases
listed on Schedule 2.1.5 have heretofore been delivered to Buyer.
(d) Schedule 2.1.4 is a complete list of all leases, as amended
to date, under which Sellers, as lessee, lease any premises that are used in
the Business and which comprise part of the Acquired Assets, together with the
location of the premises and the payments required thereunder.
(e) All leases of real and personal property pursuant to which
Sellers lease from others real or personal property comprising part of the
Acquired Assets are valid, subsisting and Enforceable in accordance with their
respective terms, and there is not, under any such lease, Any Default.
(f) No Seller is in violation of, or in default under, any law,
ordinance, order, regulation, authorization, permit or certificate pertaining
to the Acquired Assets or the Business that remains uncured or that has not
been waived, which violation or default would have a material adverse effect
upon the condition (financial or otherwise), of the Business, the Assumed
Liabilities or the Acquired Assets.
7.1.3 Trademarks, Etc.
(a) Except for "Shared Technologies Cellular" and "Road & Show
Cellular" and any variation thereof (the "Marks"), Sellers do not use any
trademarks, trade names, service marks or copyrights in connection with the
Business, and do not have pending any applications therefor.
(b) Sellers do not own and do not use any trade secret, process,
development, design, technique, customer or supplier list, blueprint,
specification, promotional idea, marketing or purchasing strategy, invention,
computer program, confidential data or information, or know-how that is
material in connection with the operation of the Business.
7.1.4 No Broker. Sellers have not retained a broker or finder in
connection with the transactions contemplated by this Agreement so as to give
rise to any valid claim against any Seller or Buyer for any fee, commission or
similar payment.
7.1.5 Employee Matters.
(a) Schedule 7.1.5(a) includes a complete list of the following,
copies or, in the case of oral agreements, written summaries of which will be
provided to Buyer upon its request:
(i) each oral or written contract, commitment or understanding
between any Seller and any current employee of any Seller employed in the
Business, other than any contract, commitment or understanding between any
Seller and any employee of any Seller who is employed at will by any such
Seller;
(ii) each material oral or written consulting agreement, deferred
compensation agreement, covenant not to compete, and confidentiality agreement
relating to the Business and to which any Seller is a party; and
(iii) each profit-sharing, bonus, stock option, stock purchase,
pension, retirement, savings, health, hospitalization,
insurance or similar plan or arrangement, formal or informal,
providing benefits to any current or former employee of any Seller
assigned to the Business.
(b) Except as provided in any agreement described
on Schedule 7.1.5(a), all employees of Sellers assigned to the
Business are employed at will by Sellers.
(c) Except as set forth in Schedule 7.1.5(a),
(i) Sellers are not currently involved in any labor dispute,
proceeding, work stoppage or disturbance involving employees of Sellers who are
assigned to the Business, other than routine grievances which are not material,
and
(ii) during the past two years, there have been no strikes, work
stoppages or labor union organizational campaigns involving employees
assigned to the Business, and Sellers are not aware of any threat of any such
strikes, work stoppages or organizational campaigns.
(iii) Sellers are not a party to any collective bargaining
agreement or any other contract or arrangement with any labor organization
relating to the Business.
7.1.6 Absence of Material Adverse Changes.
Since December 31, 1995, Sellers have not:
(a) operated the Business other than in the usual,
regular and ordinary course in substantially the same manner
as theretofore conducted;
(b) suffered any physical damage, destruction or loss (whether or
not covered by insurance) adversely affecting the Acquired Assets or the
Business;
(c) suffered or experienced any adverse change in, or event or
condition adversely affecting, its condition (financial or other), properties,
liabilities, business, operations, or prospects other than adverse changes,
events or conditions that are not, individually or in the aggregate, material
as they relate to the Acquired Assets and the Business;
(d) other than in the usual and ordinary course of
Business, made or suffered any amendment or termination, other than upon
expiration, of any material contract, agreement, lease or license to which it
is a party which relates to the Acquired Assets or the Business;
(e) sold, assigned, transferred, granted, amended, terminated or
waived any right concerning the Acquired Assets or the Business; or
(f) except as heretofore described, entered into any material
agreement with respect to, or otherwise creating a material obligation to do,
any of the foregoing.
7.1.7 Material Contracts.
(a) Schedules 2.1.7 and 2.1.9 set forth a complete list of all
material agreements, contracts and commitments (collectively, the "Material
Contracts") of the following types, whether written or oral, relating to the
Business or the Acquired Assets, to which Sellers are a party:
(i) mortgages, indentures, security agreements and other
agreements and instruments relating to the borrowing of
money by, or any extension of credit to Sellers;
(ii) agreements, orders or commitments for the purchase
of goods or equipment, involving payments or receipts in
excess of $5,000 individually or $10,000 in the aggregate;
(iii) partnership, joint venture or other arrangements or
agreements involving a sharing of profits or expenses;
(iv) contracts or commitments to sell, lease or otherwise
dispose of any of the Acquired Assets other than in the
ordinary course of Business;
(v) contracts or commitments, including without
limitation, non-competition, patent rights and royalty
agreements;
(vi) contracts or commitments limiting the freedom of
Sellers to compete in any line of business or in any
geographic area or with any person or entity; and
(vii) any other agreement, contract or commitment which
in any case involves more than $5,000 individually
or $10,000 in the aggregate or has a term that will continue for six
(6) months or more from and after the Effective Date and is not
cancelable upon 30 or fewer days' notice without liability, penalty or
premium, other than a nominal cancellation fee or charge.
(b) Except as disclosed by Sellers to Buyer in Schedules 3.1(b)
and 7.1.9, the Material Contracts are valid, subsisting and Enforceable in
accordance with their respective terms and there is not, under any Material
Contract, Any Default, and Sellers are not aware of Any Default thereunder by
any other party thereto.
(c) Sellers have heretofore delivered to Buyer complete copies of
all written Material Contracts, together with all amendments thereto, and
memoranda summarizing the material terms of all Material Contracts that are
oral.
(d) Sellers have no outstanding powers of attorney relating to
the Acquired Assets or the Business.
7.1.8 Environmental Matters.
(a) Sellers have not released or caused to be released any
hazardous substance, hazardous material, oil or hazardous waste, as such terms
are defined in applicable Environmental Laws, which could reasonably be
expected to result or has resulted in surface or underground contamination of
the real estate and related improvements which are the subject of the Real
Property Leases (the "Property").
(b) Sellers are in material compliance with all applicable
federal, state and local environmental laws and regulations (the "Environmental
Laws") applicable to the Business and the Property, and there are not now
pending or threatened, or any basis for any action, suit, lien, investigation
or proceeding against the Property or Sellers in connection with any past or
present noncompliance by Sellers with such Environmental Laws.
7.1.9 No Litigation. Except as disclosed in Schedule 7.1.9, there
is no action or proceeding pending or, to Sellers' knowledge, threatened or, to
Sellers' knowledge, any basis for, any litigation or claim by or against
Sellers of any kind or nature.
7.1.10 Private Placement.
(a) Sellers understand that (i) the issuance of the Shares and the
Warrants to Sellers as part of the Purchase Price is intended to be exempt from
registration under the Securities Act of 1993, as amended (the "Securities
Act") pursuant to Section 4(2) of the Securities Act.
(b) The Shares and Warrants acquired by Sellers pursuant to this
Agreement are being acquired for their own account and without a view to the
resale or distribution except as provided in Section 7.1.10(e).
(c) Sellers are "Accredited Investors" as such term is defined in
Regulation D promulgated under the Securities Act.
(d) Sellers have been furnished with and carefully read Buyer's
Exchange Act Filings filed since Buyer's initial public offering on April 21,
1995 and have been given the opportunity to ask questions of, and receive
answers from, Buyer's management concerning the Shares and Warrants, Buyer's
business and other related matters. Sellers further represent and warrant to
Buyer that Buyer has made available to Sellers or its agents all documents and
information relating to an investment in the Shares and Warrants requested by
or on behalf of Sellers.
(e) Sellers agree that the Shares and the shares of Buyer's
common stock underlying the Warrants (the "Warrant Shares") may be resold or
otherwise transferred only, (i) inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule 144A, (ii) to an Accredited
Investor who, prior to such transfer, furnishes to Sellers a signed letter to
the effect of this paragraph, (iii) outside the United States in a transaction
meeting the requirements of Rule 904 under the Securities Act, (iv) pursuant to
the exemption from registration provided by Rule 144 under the Securities Act,
(v) other valid exemptions under the Securities Act, or (vi) pursuant to a
registration statement declared effective under the Securities Act. Sellers
agree that, in the case of any resale or other transfer pursuant to clauses (i)
through (iv) of the preceding sentence, they will furnish to Buyer or its
transfer agent such certifications, legal opinions or other information as
Buyer may reasonably require to confirm that such resale or other transfer is
being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act.
(f) Each certificate for the Shares and the Warrant Shares issued
to Sellers or to a subsequent transferee shall (except for any transferee
pursuant to clauses (iv) and (vi) of the first sentence of Section 7.1.10(e))
bear a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SHARES HAVE BEEN ACQUIRED BY THE REGISTERED HOLDER(S) FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SHARES UNDER THE ACT AND QUALIFICATION UNDER STATE LAW, IF
REQUIRED, OR AN OPINION OF COUNSEL TO THE COMPANY THAT SUCH
REGISTRATION AND QUALIFICATION IS NOT REQUIRED.
provided, however, that Buyer shall remove such legend at such time that
Sellers become eligible to transfer the Shares or Warrant Shares under Rule
144(k) under the Securities Act.
7.1.11 Disclosure. No representation or warranty by Sellers
contained in this Agreement or in any Schedule or in any statement or
certificate furnished by Sellers to Buyer or their representatives in
connection herewith or pursuant hereto contains any untrue statement of a
material fact, or omits to state any material fact required to make the
statements herein or therein contained not misleading.
7.1.12 Warranty Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT AND IN THE SCHEDULES HERETO, SELLERS MAKE NO REPRESENTATIONS OR
WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, AS TO THE ACQUIRED
ASSETS, EXCEPT THAT THE ACQUIRED ASSETS ARE BEING DELIVERED IN GOOD WORKING
ORDER, ORDINARY WEAR AND TEAR EXCEPTED.
7.2 Representations and Warranties as to Buyer. Buyer represents
and warrants to Sellers as follows:
7.2.1 Corporate Data and Authority.
(a) Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Buyer has heretofore
furnished to Seller a complete and correct copy of (a) its Certificate of
Incorporation, as amended, certified as of a recent date by the Secretary of
State of Delaware and (b) its By-laws, as amended, certified as of a recent
date by its corporate secretary, which Certificate of Incorporation and By-laws
are in full force and effect and have not been amended or modified in any
respect since the date of the copies delivered to Buyer. Buyer is not in
violation of any of the provisions thereof in any manner which would have a
material adverse effect on the transactions contemplated by this Agreement.
(b) Buyer has corporate power to execute, deliver and perform
this Agreement. The execution, delivery and performance of this Agreement and
the Collateral Documents, have been duly authorized by all necessary corporate
action on the part of Buyer, and no stockholder approval or other approval of
the Board of Directors of Buyer (or any committee thereof) is necessary for the
consummation of the transactions contemplated hereby.
(c) This Agreement has been duly executed by Buyer and
constitutes the valid, legally binding and Enforceable obligation of Buyer.
(d) The Shares and Warrants are duly authorized, validly issued,
fully paid and non-assessable. Upon delivery of the Shares and Warrants to
Sellers pursuant to this Agreement, Sellers will acquire good, valid and
marketable title to the Shares and Warrants.
7.2.2 No Litigation. Except as disclosed in Schedule 7.2.2, there
is no action or proceeding pending or, to Buyer's knowledge, threatened or, to
Buyer's knowledge, any basis for, any litigation or claim by or against Buyer
of any kind or nature which, in the aggregate, would have a material adverse
effect on Buyer.
7.2.3 No Broker. Buyer has not retained any broker, investment
banker, or finder in connection with the transactions contemplated by this
Agreement so as to give rise to any valid claim against either Sellers or Buyer
for a finder's fee, brokerage commission, investment banking fee or similar
payment.
7.2.4 Disclosure. Buyer has delivered to Sellers a true and
complete copy of all reports, statements or schedules filed since Buyer's
initial public offering on April 20, 1995 (during Buyer's current and
immediately past fiscal years) by Buyer pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act")(each an "Exchange Act Filing"). All
Exchange Act filings have been so filed as of their respective filing dates.
7.2.5 Authority to Act on Behalf of Subsidiary. Buyer has been
duly authorized by its wholly-owned subsidiary, STI Cellular Franchise Corp.
("Franchise Corp."), to act on behalf of Franchise Corp. for the purposes of
Sections 12.1 and 12.2 hereof.
ARTICLE 8. PARTICULAR COVENANTS OF SELLER AND BUYER
8.1 Covenants of Sellers.
(a) Sellers hereby covenant and agree that after the Closing,
Sellers will furnish to Buyer such other instruments (executed as required) and
information as Buyer may reasonably request in order effectively to convey to
and vest in Buyer title to the Acquired Assets consistent with the provisions
of Section 2.1 of this Agreement.
(b) Sellers hereby covenant and agree that after the Closing
Sellers shall pay, perform and discharge on a timely basis, and in a manner not
to disrupt or adversely affect the Business, all of the Excluded Liabilities.
(c) Sellers hereby covenant and agree that they shall not bill any
charges to customers on the Closing Date.
8.2 Covenants of Buyer.
(a) Buyer hereby covenants and agrees that after the Closing,
Buyer will furnish to Sellers such other instruments (executed as required) and
information as Sellers may reasonably request in order to evidence and confirm
Buyer's assumption of the Assumed Liabilities.
(b) Buyer hereby agrees to cause Marlar to be nominated for
election to the Board of Directors and to vote all shares as to which Buyer may
hold voting rights (including shares under its control by proxy) in favor of
Marlar, for a period of three years following the Effective Date. Buyer shall
endeavor to cause Marlar to be so elected to Buyer's Board of Directors at or
prior to the next meeting of the Board of Directors, but in no event later than
May 31, 1996.
8.3 Covenants of Buyer and Sellers. Buyer and Sellers hereby
covenant and agree that:
(a) For a period of three (3) years following the Effective Date,
or for such longer periods as may be required to satisfy record retention
requirements of applicable law, Sellers and Buyer will retain all business
records relating to the Business, including all records required to be retained
pursuant to obligations imposed by applicable law.
(b) Buyer and Sellers shall each provide duly authorized
representatives of the other party access to all records relating to the
Business for bona fide business reasons at any time during regular business
hours, with reasonable prior notice, for a period of three (3) years after the
Effective Date or until such later time as all Federal, state and local tax
audits of Sellers' taxable years during which it owned the Business have been
completed, including any litigation related thereto, and such other party may
make abstracts from, or make copies of, any such records at its own expense.
In connection with any review of records relating to the Business as set forth
in this Subsection, Buyer and Sellers shall each provide to such duly
authorized representatives of the other party access to employees of Buyer and
Sellers, as the case may be, who are familiar with such records and who can
assist such representatives of the other party, at the other party's expense,
in locating, explaining or otherwise reviewing such records. No party shall
destroy any books, accounts, journals, information, records or computer tapes
or diskettes relating to the Business within the period referred to above
without written permission of the other, which permission shall not be
unreasonably withheld or delayed.
ARTICLE 9. EMPLOYEES AND EMPLOYEE MATTERS
9.1 Employment of Personnel. Buyer has offered employment to
certain of Sellers' employees who are assigned to the Business commencing on or
about the Effective Date. Sellers shall cooperate with Buyer in Buyer's
efforts to hire people who are employed by Sellers and who are assigned to the
Business as of the Effective Date. Sellers have terminated, as of the
Effective Date, the employment of all such employees of Sellers who have been
offered employment by Buyer. It is Buyer's intent, and Sellers understand,
that any employee of Sellers who is employed by Buyer as contemplated by this
subsection shall be an employee on an "at will" basis by Buyer, and nothing in
this Agreement shall constitute an employment agreement between Buyer and any
such employee. Buyer shall have no liability for any loss, cost or damage
arising from or related to Buyer's decision to hire or not to hire any person
who is an employee of Sellers as of the Effective Date.
9.2 Sellers' Continuing Employees. Except as provided in this
Section 9, Buyer shall have no obligation or liability with respect to any of
Sellers' employees who do not become employees of Buyer as provided in Section
9.1, including without limitation all obligations arising under COBRA.
ARTICLE 10. INDEMNIFICATION
10.1 Indemnification of Seller. Buyer shall defend, indemnify and
hold harmless Sellers, and each of their employees, officers and directors from
and against any and all claims, demands, causes of action, suits, judgments,
debts, liabilities and expenses (including but not limited to court costs and
related expenses, and reasonable fees and disbursements of counsel,
(individually, a "Claim" and collectively, "Claims") suffered or incurred by
reason of or in connection with:
(a) any misrepresentation of a material fact or omission to state
a material fact, any breach of warranty or any breach or nonfulfillment of any
agreement or covenant by Buyer contained herein or in any certificate, document
or instrument delivered to Sellers pursuant hereto or in connection herewith;
(b) any of the Assumed Liabilities; and
(c) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation,
reasonable legal fees and expenses, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.
10.2 Indemnification of Buyer. Sellers, jointly and severally,
shall defend, indemnify and hold harmless Buyer, its employees, officers and
directors from and against any and all Claims suffered or incurred by reason of
or in connection with any of the following:
(a) any misrepresentation of a material fact or omission to state
a material fact, any breach of warranty or any breach or nonfulfillment of any
agreement or covenant by Buyer contained herein or in any certificate, document
or instrument delivered to Sellers pursuant hereto or in connection herewith;
(b) any of the Excluded Liabilities;
(c) any and all loss, liability or damage arising out of or
resulting from the failure of Sellers to comply with any bulk sales or similar
law applicable to the transactions contemplated by this Agreement; and
(d) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation,
reasonable legal fees and expenses, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.
10.3 Indemnification Procedures.
(a) The party seeking indemnification hereunder (the "Indemnitee")
shall give to the party from which indemnification is sought hereunder (the
"Indemnitor") written notice of any Claim which is subject to the indemnity
obligations set forth in Section 10.1 or 10.2, as applicable, with sufficient
promptness as not to prejudice the other party's interests in respect of such
Claim and any obligation of indemnity arising therefrom. Such notice shall set
forth all facts and other information which the Indemnitee has with respect to
the Claim. As part of such notice, the Indemnitee shall furnish the Indemnitor
with copies of any pleadings, correspondence or other documents relating
thereto that are in the Indemnitee's possession. The Indemnitee's failure to
notify the Indemnitor of any such Claim shall not release the Indemnitor, in
whole or in part, from its obligations under Sections 10.1 or 10.2, as
applicable, except to the extent that the Indemnitee's ability to defend
against such claim is actually materially prejudiced thereby. The Indemnitor
shall, within 15 business days of receipt of such notice, (i) deny in writing
the Claim, (ii) pay the amount of the Claim if a monetary amount is involved,
or (iii) if a Claim of a third party is involved, by notice to the Indemnitee,
assume the defense of such Claim.
(b) Upon giving such notice to the Indemnitee, the Indemnitor
shall have the exclusive right to conduct and control, through counsel of its
own choosing, who is reasonably satisfactory to the Indemnitee, the defense of
any such Claim or any action arising therefrom, provided, that (i) the
Indemnitee is reasonably satisfied that the Indemnitor will have financial
resources, or valid insurance, available to satisfy the liabilities arising
under such Claim; and (ii) in conducting the defense of any such Claim or
action, the Indemnitor shall, and shall cause its counsel to, consult with the
Indemnitee and its counsel, if any, and shall keep the Indemnitee and its
counsel, if any, fully advised of the progress thereof.
(c) If the Indemnitor elects to assume and control the defense of
the Claim, the Indemnitee shall have the right to employ counsel separate from
counsel employed by such Indemnitor in any such action and to participate in
the defense thereof. The fees and expenses of such counsel employed by the
Indemnitee shall be at the expense of the Indemnitee unless (i) the employment
thereof has been specifically authorized by such Indemnitor in writing, (ii)
the Indemnitor has failed to promptly assume the defense and employ counsel or
the Indemnitor or its counsel has failed to provide and adequate defense in a
timely manner, or (iii) the Indemnitor is a party to such claim and the
Indemnitor has been advised by counsel that there are additional or separate
defenses, or there is otherwise a conflict of interest, between the Indemnitee
and the Indemnitor. In any such case the fees and expenses of the Indemnitee's
counsel shall be paid by the Indemnitor, provided that the Indemnitor shall not
in such event be responsible hereunder for the fees and expenses of more than
one firm or separate counsel in connection with any such action in the same
jurisdiction, in addition to any local counsel. If the Indemnitor fails or
refuses to assume the conduct and control of the defense of any such Claim or
action, then the Indemnitee shall have the exclusive right to conduct and
control such defense. The Indemnitor shall not be liable for any settlement of
any Claims effected without its written consent, which consent shall not be
unreasonably withheld or delayed. No settlement of any Claim for which
indemnification is sought hereunder shall be made without the release of the
Indemnitee from all liability relating to such Claim, in form and substance
reasonably satisfactory to the Indemnitee and its counsel.
10.4 Other Provisions Relating to Indemnification.
(a) Sellers shall not be obligated to indemnify Buyer pursuant to
Section 10.2, unless and until Buyer's Claims under Section 10.2 aggregate
$25,000, at which point Sellers shall then be obligated to indemnify Buyer for
all Claims including and in excess of $25,000.
(b) An Indemnitee shall not be entitled to duplicate recovery
from the Indemnitor and any other person on account of the same Claim.
(c) Without limiting the generality of this Article 10, Buyer's
right to indemnification shall include, without limitation, Buyer's rights
under Section 5.4 hereof.
10.5 Survival of Representations, Warranties and Agreements. All
of the representations and warranties contained in this Agreement shall survive
for a period of eighteen months (18) months after the Effective Date. The
covenants and agreements set forth in this Agreement shall survive the Closing
and shall continue until all obligations set forth therein shall have been
performed or satisfied or they shall have terminated in accordance with their
terms.
ARTICLE 11. SELLERS' COVENANT NOT TO COMPETE
11.1 The Sellers hereby covenant and agree that they will not,
for a period of two (2) years following the Effective Date, directly or
indirectly, for themselves or in connection with any person, firm or
corporation, engage in the business of renting cellular telephones anywhere in
the United States, Mexico or Canada, and will not, during such period, in any
way interfere or attempt to interfere with the cellular rental business or
related businesses, goodwill, trade, customers or employees of Buyer or its
Affiliates. Sellers hereby acknowledge and agree that this agreement not to
compete is reasonable and Sellers expressly agree to be fully bound by such
restrictions. In the event of a violation of this Section 11.1, Buyer and its
Affiliates each shall be entitled, in addition to all other available legal and
equitable remedies, to injunctive relief restraining such violation.
ARTICLE 12. TERMINATION OF LICENSE AND FRANCHISE
AGREEMENTS
12.1 Termination of Rights. The License Agreements and the
Franchise Agreement are hereby terminated as of the Closing Date and shall be
of no further force or effect whatsoever from and after the Closing Date,
except that (i) all amounts due and payable to Buyer under such agreements as
of the Closing Date, as set forth in Schedule 3.1(b), shall be included within
the $1,691,724 of Assumed Liabilities referenced in Section 3.1 hereof; and
(ii) in consideration of cancellation of the payment obligations of Access
Cellular Corporation under the Franchise Agreement, Sellers hereby agree to pay
Buyer $180,000 over a twenty-four (24) month period, in equal monthly
installments of $7,500 each, payable on the fifteenth (15th) day of each month,
with the first such payment due July 15, 1996. In the event that Sellers
default in the payment of any of the payments required pursuant to this
Sections 12.1, and such default continues uncured for more than ten (10) days
after Seller's receipt of notice of such default, then such uncured default
shall constitute a breach of this Agreement by Sellers.
12.2 Termination of Trademarks. Any and all rights of Sellers in
and to the Marks or the use thereof are hereby terminated.
ARTICLE 13. JURISDICTION; CONSENT TO SERVICE OF PROCESS.
13.1 Each party hereto irrevocably and unconditionally submits,
for itself and its property, to the exclusive jurisdiction of the any
Connecticut state court in the County of Hartford, Connecticut, or federal
court of the United States of America sitting in the County of Hartford,
Connecticut, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, and each of the
parties hereto hereby irrevocably and unconditionally agrees that any and all
claims in respect of any such action or proceeding may be heard and determined
in such Connecticut state court or, to the extent permitted by law, in such
federal court.
13.2 Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 14.2 hereof. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
ARTICLE 14. MISCELLANEOUS
14.1 Expenses. Each party shall pay its own expenses incidental
to the negotiation, preparation and performance of this Agreement and the
transactions contemplated hereby.
14.2 Notices. Any notices or other communications required or
permitted hereunder shall be in writing, and such notice shall be given by
certified mail, postage prepaid, return receipt requested; or by telecopier,
with the original thereof posted by first class mail, postage prepaid, within
two (2) business days thereafter; or by private courier requesting evidence of
receipt as a part of its service, addressed as follows, and shall be deemed
delivery upon the earliest to occur of delivery when so placed in the mails,
when telecopied or when delivered to such courier service:
To Buyer: Shared Technologies Cellular, Inc.
Attn: Legal Department
100 Great Meadow Road
Wethersfield, CT 06109
Telcopy: 860-258-2455
To Sellers: Mr. Craig A. Marlar
777 E. Tahquitz Canyon Way
Suite 333
Palm Springs, CA 92262
Telecopy: 619-323-5659
and to:
Ronald Jason Palmieri, Esq.
911 Linda Flora Drive
Los Angeles, CA 90049
Telecopy: 310-471-3511
or to such other address as may be designated in writing by any party from time
to time in accordance herewith.
14.3 Captions. Article titles and headings to Sections herein are
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement. The Schedules referred
to herein shall be construed with and as an integral part of this Agreement.
14.4 Successors and Assigns; Other Parties. This Agreement shall
be binding upon and inure to the benefit of each party hereto and their
respective successors and assigns, provided that this Agreement may not be
assigned by any party without the prior written consent of the other parties.
No assignment shall relieve a party of any of its obligations hereunder without
the prior written consent of the other party.
14.5 Entire Agreement. This Agreement (together with the
Schedules referred to herein) and the Collateral Documents, supersede any other
agreement, whether written or oral, that may have been made or entered into by
the parties hereto (or by any director, officer or representative of such
parties) relating to the matters contemplated hereby. This Agreement (together
with such Schedules and Collateral Documents) constitutes the entire agreement
by the parties hereto and there are no agreements or commitments except as
expressly set forth herein.
14.6 Waiver. Except as otherwise expressly provided in this
Agreement, neither the failure nor any delay on the part of any party to
exercise any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof, or the exercise of
any other right, power or privilege available at law or in equity.
14.7 Partial Invalidity. Whenever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision or provisions had never been
contained herein.
14.8 Counterparts. This Agreement may be executed in two or more
counterparts, any or all of which shall constitute one and the same instrument.
14.9 Amendment and Termination. This Agreement may not
be amended orally, but only by an instrument in writing duly executed by the
parties.
14.10 Construction of the Term "Sellers". The parties acknowledge
that the term "Sellers" is used in both the singular and plural with the
understanding that the Sellers, as defined in the preamble to this Agreement,
agree to be bound hereunder jointly and severally and that, therefore, the use
of such term shall be construed in a manner such that, regardless of whether it
is used in the singular or plural, in each case Buyer shall have the benefit of
the more favorable construction of the two alternative forms of the term.
14.11 Nonexclusivity of Remedies. No remedy of any party hereto
shall be exclusive of any other remedy, whether provided herein or available at
law or in equity, but each shall be cumulative to all other remedies.
14.12 Governing Law and Attorneys' Fees. This Agreement shall in
all respects be governed by and construed in accordance with the laws of such
state as may be determined to apply by a court of competent jurisdiction, in
the event of any action or proceeding arising in connection with this
Agreement. In the event of any dispute arising in connection with this
Agreement , the prevailing party shall be entitled to recovery of its
reasonable legal costs and fees, including its reasonable attorneys' fees.
IN WITNESS WHEREOF, this Agreement has been executed as
of the date first above written.
Buyer:
Shared Technologies Cellular, Inc.
By: /s/ Anthony D. Autorino
Anthony D. Autorino
Chief Executive Officer
Sellers:
Cellular Global Investments of Northern California Inc.
By: /s/ Craig A. Marlar
Craig A. Marlar
President
Access Cellular Corporation
By: /s/ Craig A. Marlar
Craig A. Marlar
President
Road and Show Cellular West
By: /s/ Craig A. Marlar
Craig A. Marlar
President
Road & Show Cellular Arizona Corporation
By: /s/ Craig A. Marlar
Craig A. Marlar
President
Summit Assurance Cellular Inc.
By: /s/ Craig A. Marlar
Craig A. Marlar
President
Northstar Cellular Corp.
By: /s/ Craig A. Marlar
Craig A. Marlar
President
Craig A. Marlar, an individual
By: /s/ Craig A. Marlar
Craig A. Marlar
