AGREEMENT
THIS AGREEMENT is made as of the 3rd day of June, 1996, by
and among WORLDWIDE APPLIED TELECOM TECHNOLOGY, INC., a Delaware
corporation ("WWATT") and Xxxxxx X. Xxxxxxxxx and Xxxxxx
Xxxxxxxxx (collectively, the "NATCRI Shareholders").
BACKGROUND
The NATCRI Shareholders own all the outstanding capital
stock North American Telecom Cable Representatives, Inc., a
Florida corporation ("NATCRI"). WWATT wishes to acquire NATCRI,
and the NATCRI Shareholders wish to own common stock in WWATT and
to continue to conduct NATCRI's business as a subsidiary of
WWATT.
Accordingly, in consideration of the mutual agreements set
forth herein, the parties agree as follows:
ARTICLE 1
STOCK FOR STOCK EXCHANGE
1.1 Exchange of NATCRI Shares for WWATT Shares. Subject to
the terms and conditions of this Agreement, WWATT agrees to issue
to the NATCRI Shareholders a total of 490,000 shares of WWATT's
common stock (the "WWATT Common Stock"), in exchange for all the
outstanding shares of capital stock of NATCRI (the "NATCRI
Stock"). Each NATCRI Shareholder shall transfer to WWATT at the
Closing (as hereinafter defined) the number of shares of NATCRI
Stock shown opposite such person's name on Exhibit 1.1 and shall
receive in exchange therefor the number of shares of WWATT Common
Stock shown opposite such person's name on Exhibit 1.1.
The parties hereto, including the NATCRI Shareholders,
NATCRI and WWATT, intend for this exchange of stock to be treated
as a tax free reorganization as defined within the U.S. Internal
Revenue Code Section 368.
1.2 Closing. The exchange of WWATT Common Stock for NATCRI
Stock shall take place at a closing (the "Closing") at such place
as shall be mutually agreed to by the parties at 10:00 a.m. on
June 3, 1996, or as soon as practicable thereafter upon the
satisfaction or waiver of the conditions to Closing set forth in
Article 5. The date on which the Closing takes place is referred
to as the "Closing Date." At the Closing, each NATCRI
Shareholder shall deliver to WWATT stock certificates
representing the NATCRI Stock owned by such NATCRI Shareholder,
duly endorsed for transfer or with duly executed stock powers
attached, together with such other documents as WWATT may
reasonably request prior to the Closing. At the Closing, WWATT
shall deliver to each NATCRI Shareholder a stock certificate
representing the WWATT Common Stock issued to such NATCRI
Shareholder in exchange for his or her NATCRI Stock, together
with such other documents as each NATCRI Shareholder may
reasonably request prior to the Closing. The parties agree to
execute such additional documents after the Closing as may be
necessary or desirable to carry out the terms of this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF NATCRI SHAREHOLDERS
The NATCRI Shareholders, jointly (except where otherwise
expressly indicated to the contrary) and severally, represent and
warrant as follows:
2.1 Organization. To the best of their knowledge, NATCRI
is duly incorporated, validly existing and in good standing under
the laws of the State of its incorporation, is qualified to do
business as a foreign corporation in each other jurisdiction in
which the failure to be so qualified would have a material
adverse effect on the transactions contemplated by this Agreement
or on the business, financial condition or results of operation
of NATCRI, and has full corporate power and authority to conduct
its business as presently conducted and to enter into and perform
this Agreement.
2.2 Authorization. Each NATCRI Shareholder represents and
warrants that he or she has full power, capacity and authority to
execute, deliver and perform this Agreement subject to the
security interest held, and rights of approval or consent which
may be asserted, by Resource Bank. This Agreement has been duly
executed and delivered by such NATCRI Shareholder and (assuming
the due execution and delivery by the other parties hereto)
constitutes the legal, valid and binding agreement of such NATCRI
Shareholder enforceable against such person in accordance with
its terms, except as may be limited by applicable bankruptcy,
insolvency or other laws affecting the enforcement of creditors'
rights and remedies generally and by general principles of
equity. The NATCRI Shareholders shall, at the Closing, provide a
fully executed resolution of the NATCRI Board of Directors
indicated that there are no existing conditions that preclude the
transaction as defined in Section 1.1 and authorizing such
exchange as documented by a Plan of Reorganization that
references those actions to accomplish the tax free result
intended by the parties in this transaction which will be
incorporated within this NATCRI Board of Directors resolution.
2.3 No Consents, Conflicts. Each NATCRI Shareholder
represents and warrants that (a) no consent, approval or other
action by any governmental authority or third party is required
in connection with the execution, delivery and performance of
this Agreement by such NATCRI Shareholder; and (b) neither the
execution, delivery or performance of this Agreement by such
NATCRI Shareholder will (i) violate, conflict with or result in a
breach of any provision of or constitute a default or an event
which with notice or lapse of time or both, would constitute a
default under NATCRI's articles of incorporation or bylaws or any
agreement or obligation to which NATCRI or such NATCRI
Shareholder is a party or by which either of such persons may be
bound or affected where such violation, conflict, breach or
default would have a material adverse effect on the transactions
contemplated by this Agreement, or (ii)violate any order, writ,
injunction, decree, statute, rule or regulation applicable to
NATCRI or such NATCRI Shareholder where such violation would have
a material adverse effect on the transactions contemplated by
this Agreement.
2.4 Financial Statements. The NATCRI Shareholders have
previously delivered to WWATT the balance sheets and related
statements of income, shareholders' equity and cash flows as of
and for the calendar year period ended December 31, 1995 (the
"Financial Statements"). The Financial Statements have been
prepared in accordance with NATCRI's books and records, present
fairly in all material respects the financial position, results
of operations, shareholders' equity and cash flows for the year
then ended. There has been no material adverse change in the
business, financial condition, results of operations or prospects
of NATCRI since December 31, 1995. Except as disclosed in the
Financial Statements, NATCRI does not have any liabilities,
commitments or obligations (whether accrued, absolute, contingent
or otherwise), other than obligations incurred since the date of
the Financial Statements in the ordinary course of business and
consistent with past practice and none of which has or will have
a material adverse effect, on the business, financial condition,
results of operations or prospects of Xxxxxxx.
2.5 Compliance, No Litigation. To the best of their
knowledge, NATCRI is in material compliance with all applicable
federal, state, local and foreign laws, ordinances, orders, rules
and regulations and with all agreements, commitments or
obligations to which it is a party or by which it or any of its
assets may be bound. To the best of their knowledge, there is no
proceeding, investigation or inquiry pending or threatened
against NATCRI, its business or any of its assets, nor is there
any basis for any such proceeding, investigation or inquiry.
Neither NATCRI nor, to the best of their knowledge, its business
or any of its assets is subject to any judgment, order, writ or
injunction of any court, arbitrator or governmental agents or
instrumentality.
2.6 Authorized Capital Stock. The authorized capital stock
of NATCRI consists of 7,500 shares of common stock, of which
1,000 shares are issued and outstanding, all of which are owned
by the NATCRI Shareholders. All the outstanding shares of NATCRI
Stock have been validly issued and are fully paid and non
assessable. There are no outstanding options, warrants, rights
or other commitments obligating NATCRI to issue any of its
capital stock.
2.7 Title to NATCRI Stock. Each NATCRI Shareholder owns
the NATCRI Stock to be transferred to WWATT at the Closing, free
and clear of all liens, claims and encumbrances, and at the
Closing, WWATT will acquire good and valid title to such NATCRI
Stock, free and clear of all liens, claims and encumbrances.
2.8 Investment Representations. Each NATCRI Shareholder
represents and warrants that he or she has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the WWATT
Common Stock in exchange for the NATCRI Stock owned by such
NATCRI Shareholder, and has been given the opportunity to examine
all documents and ask questions of, and receive answers from
representatives of WWATT concerning the terms and conditions of
such exchange and the financial condition, business and prospects
of WWATT, and to obtain such additional information as he or she
deemed necessary in connection with the transaction contemplated
by this agreement. The WWATT common stock to be acquired by such
NATCRI Shareholder pursuant to this agreement is being acquired
by such NATCRI Shareholder pursuant to this agreement is being
acquired for such person's own account for investment and not
with a view to the public distribution thereof, and such NATCRI
Shareholder will not effect any transfer of such WWATT Common
Stock except pursuant to an effective registration statement
under the Securities Act of 1933 or exemptions from registration
thereunder and in compliance with all applicable state securities
laws. Each NATCRI Shareholder understands that the WWATT Common
Stock to be received by such person at the Closing will bear
appropriate restrictive legends referred to the foregoing
transfer restrictions.
2.9 Reliance on Own Tax Advisors. The NATCRI Shareholders
are relying on their own tax advisors in connection with
determining the tax consequences to them of the transactions
contemplated by this Agreement and are not relying on WWATT or
WWATT's attorneys, accountants or advisors for any such advice.
2.10 Brokers and Finders. Neither WWATT nor any of its
shareholders, officers, directors or agents is liable for any
brokers' or finders' fees or expenses in connection with this
Agreement or the transactions contemplated hereby.
2.11 No Misrepresentations. Neither this Agreement nor any
document executed or to be executed by any NATCRI Shareholder in
connection with the transactions contemplated hereby contains or
will contain when executed any untrue statement of a material
fact or omits or will omit when executed to state a material fact
necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF WWATT
WWATT represents and warrants as follows:
3.1 Organization. WWATT is duly incorporated, validly
existing and in good standing under the laws of the State of its
incorporation, is qualified to do business as a foreign
corporation in each other jurisdiction in which the failure to be
so qualified would have a material adverse effect on the
transactions contemplated by this Agreement or on the business,
financial condition or results of operations of WWATT, and has
full corporate power and authority to conduct its business as
presently conducted and to enter into and perform this Agreement.
3.2 Authorization. WWATT has full power, capacity and
authority to execute, deliver and perform this Agreement. This
Agreement has been duly executed and delivered by WWATT and
(assuming the due execution and delivery by the other parties
hereto) constitutes the legal, valid and binding agreement of
WWATT enforceable against WWATT in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency or
other laws affecting the enforcement of creditors' rights and
remedies generally and by general principles of equity. WWATT
shall, at the Closing, provide a fully executed resolution of the
WWATT Board of Directors indicating that there are no existing
conditions that preclude the transaction as defined in Section
1.1 and authorizing such exchange as documented by a Plan or
Reorganization that references those actions to accomplish the
tax free result intended by the parties in this transaction which
will be incorporated within this WWATT Board of Directors
resolution.
3.3 No Consents, Conflicts. No consent, approval or other
action by any governmental authority or third party is required
in connection with the execution, delivery and performance of
this Agreement by WWATT and neither the execution, delivery or
performance of this Agreement by WWATT will (i) violate, conflict
with or result in a breach of any provision of, or constitute a
default or an event which with notice or lapse of time or both,
would constitute a default under WWATT's articles of incorporated
or bylaws or any agreement or obligation to which WWATT is a
party or by which it may be bound or effected where such
violation, conflict, breach or default would have a material
adverse effect on the transactions contemplated by this
Agreement, or (ii) violate any order, writ, injunctions, decree,
statue, rule or regulation applicable to WWATT where such
violation would have a material adverse effect on the
transactions contemplated by this Agreement.
3.4 Business of WWATT. WWATT has had no business
operations to date except as set forth on Exhibit 3.4. WWATT will
deliver at the closing to each NATCRI Shareholder a statement of
financial condition as of May 31, 1996, which has been prepared
in accordance with the books and records of WWATT, and presents
fairly in all material respects the financial position of WWATT
as of the date thereof. There has been no material adverse
change in the business, financial condition, results of
operations or prospects of WWATT since the date of WWATT's
balance sheet referred to above. Except as disclosed in such
balance sheet and as otherwise herein specifically noted, WWATT
does not have any liabilities, commitments or obligations
(whether accrued, absolute, contingent or otherwise), other than
obligations incurred since the date of the Financial Statements
in the ordinary course of business and consistent with past
practice and none of which has or will have a material adverse
effect, on the business, financial conditions, results of
operations or prospects of WWATT.
3.5 Compliance, No Litigation. WWATT is in material
compliance with all applicable federal, state, local and foreign
laws, ordinances, orders, rules and regulations and with all
agreements, commitments or obligations to which it is a party or
by which it or any of its assets may be bound. There is no
proceeding, investigation or inquiry pending or threatened
against WWATT, its business or any of its assets, nor is there
any basis for any such proceeding, investigation or inquiry.
Neither WWATT nor its business or any of its assets is subject to
any judgment, order, writ or injunction of any court, arbitrator
or governmental agency or instrumentality.
3.6 Authorized Capital Stock. The authorized capital stock
of the Company is 20,000,000 shares, consisting of 5,000,000
shares of convertible preferred Stock, $.001 par value per share,
none of which are issued or outstanding and 15,000,000 shares of
Common Stock, $.001 par value per share, of which 1,320,000
shares have been validly issued and are outstanding, and
1,300,000 shares are planned on being offered for sale.
3.7 Title to WWATT Stock. The WWATT Common Stock to be
issued to each NATCRI Shareholder will be duly and validly
issued, fully paid and non assessable, and each NATCRI
Shareholder will acquire title to the WWATT Common Stock to be
issued to such person hereunder free and clear of all liens,
claims and encumbrances.
3.8 Investment Representations. WWATT represents and
warrants that it has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits
and risks of an investment in the NATCRI Stock in exchange for
the WWATT Common Stock, and has been given the opportunity to
examine all documents and ask questions of and receive answers
from representatives of NATCRI concerning the terms and
conditions of such exchange and the financial condition, business
and prospects of NATCRI, and to obtain such additional
information as it deems necessary in connection with the
transactions contemplated by this Agreement the NATCRI Stock to
be acquired by WWATT pursuant to this Agreement is being acquired
for WWATT's own account for investment and not with a view to the
public distribution thereof, and WWATT will not effect any
transfer of such NATCRI Stock except pursuant to an effective
registration statement under the Securities Act of 1933 or
exemptions from registration thereunder and in compliance with
all applicable state securities laws. WWATT understands that the
NATCRI Common Stock to be received by WWATT at the Closing will
bear appropriate restrictive legends referred to the foregoing
transfer restrictions. WWATT agrees to comply with Blue Sky Laws
in the States of Florida and Wisconsin.
3.9 Reliance on Own Tax Advisers. WWATT is relying on
their own tax advisors in connection with determining the tax
consequences to them of the transactions contemplated by this
Agreement and are not relying on NATCRI or NATCRI's attorneys,
accountants or advisors for any such advice.
3.10 Brokers and Finders. Neither NATCRI nor any of its
shareholders, officers, director or agents is liable for any
brokers' or finders' fees or expenses in connection with this
Agreement or the transactions contemplated hereby.
3.11 No Misrepresentations. Neither this Agreement nor any
document executed or to be executed by WWATT in connection with
the transactions contemplated hereby contains or will contain
when executed any untrue statement of a material fact or omits or
will omit when executed to state a material fact necessary in
order to make the statements made, in light of the circumstances
under which they were made, not misleading.
ARTICLE 4
ACTIONS PRIOR TO CLOSING
4.1 Ordinary Course. From the date hereof until the
Closing, each NATCRI Shareholder agrees to use reasonable best
efforts to cause NATCRI to conduct its business only in the
ordinary course, consistent with past practice.
4.2 Best Efforts. Each party agrees to use reasonable best
efforts to cause the fulfillment at the earliest practicable date
of all the conditions to the Closing.
4.3 Access. During the period prior to Closing, WWATT
shall give each NATCRI Shareholder, and the NATCRI Shareholder
shall cause NATCRI to give WWATT, and their respective
representatives reasonable access during normal business hours to
all of its books and records, and to cause to be furnished to
each other and their representatives all information with respect
to their respective businesses and affairs as the other may
reasonably request.
4.4 Plan of Reorganization. NATCRI and WWATT will effect a
plan of Reorganization that documents the actions it is taking to
accomplish transactions in accordance with tax free intent of the
parties, including the NATCRI Shareholders, NATCRI, NATCRI and
WWATT, as defined in Section 1.1 above.
ARTICLE 5
CONDITIONS TO CLOSING
5.1 NATCRI Shareholders' Obligations to Close. Each and
every obligation of each NATCRI Shareholder to be performed on
the Closing Date shall be subject to the satisfaction or waiver
of each of the following conditions:
5.1.1 Representations, Warranties and Covenants.
The representations and warranties of WWATT set forth in this
Agreement shall be true and correct in all material respects when
made and as of the Closing Date as though such representations
and warranties were made on and as of the Closing Date, and WWATT
shall have performed all obligations required to be performed by
it under this Agreement on or before the Closing Date.
5.1.2 Tax Consequences. The NATCRI Shareholders
shall have determined, in consultation with their own tax
advisors, that the transactions to be consummated at the Closing
will not result in taxable income to them (the parties agree to
use reasonable best efforts to restructure the transactions
contemplated hereby in the event that the NATCRI Shareholders are
unable to make such a determination, so that the foregoing
condition can be satisfied).
5.2 WWATT's Obligations to Close. Each and every
obligation of WWATT to be performed on the Closing Date shall be
subject to the satisfaction or waiver of each of the following
conditions:
5.2.1 Representations, Warranties and Covenants.
The representations and warranties of each NATCRI Shareholder set
forth in this Agreement shall be true and correct in all material
respects when made and as of the Closing Date as though such
representations and warranties were made on and as of the Closing
Date, and each NATCRI Shareholder shall have performed all
obligations required to be performed by such person under this
Agreement on or before the Closing Date.
5.2.2 Tax Consequences. WWATT shall have
determined, in consultation with their own tax advisors, that the
transactions to be consummated at the Closing will not result in
taxable income to them (the parties agree to use reasonable best
efforts to restructure the transactions contemplated hereby in
the event that WWATT is unable to make such a determination, so
that the foregoing condition can be satisfied).
ARTICLE 6
TERMINATION
6.1 Termination by Either Party. This Agreement may be
terminated, without liability, By WWATT or by the NATCRI
Shareholders if the terminating party is not itself in default
hereunder by written notice of such election to the other if the
closing has not occurred by November 1, 1996. If for any reason,
other than a failure by WWATT to perform according to this
Agreement or a failure of any condition to closing set forth in
Section 5.1 hereof or the failure to close by November 1, 1996,
NATCRI chooses to withdraw from the merger, NATCRI and/or the
NATCRI Shareholders, jointly and severally, shall pay to WWATT,
as liquidated damages in lieu of any and all claims, damages,
costs and expenses incurred by WWATT, and not as a penalty, the
sum of $25,000 to be paid within thirty (30) days after written
notice of said election to withdraw. If for any reason, other
than a failure by NATCRI or the NATCRI Shareholders to perform
according to this Agreement or a failure of any condition to
closing set forth in Section 5.2 hereof or the failure to close
by November 1, 1996, WWATT chooses to withdraw from the merger,
WWATT shall pay to NATCRI, as liquidated damages, in lieu of any
and all claims, damages, costs and expenses incurred by NATCRI or
the NATCRI Shareholders, and not as a penalty, the sum of $25,000
to be paid within thirty (30) days after written notice of said
election to withdraw.
6.2 Breach. In the event of any breach by one or more
NATCRI Shareholders and NATCRI hereunder, including a breach of
representations and warranties, prior to the Closing, WWATT shall
have the option to (i) terminate this Agreement, (ii) close the
transactions contemplated hereby notwithstanding such breach, or
(iii) seek specific performance of this Agreement. In the event
of a breach by WWATT hereunder, including a breach of
representations and warranties, prior to the Closing, the NATCRI
Shareholders shall have the options to (I) terminate this
Agreement, (ii) close the transactions contemplated hereby
notwithstanding such breach, or (iii) seek specific performance
of this Agreement. Nothing contained in this section is intended
to preclude or limit the right of any party to seek a remedy in
damages in lieu of or in addition to any other remedy set forth
herein.
ARTICLE 7
POST-CLOSING COVENANTS
7.1 Post-Closing Covenants of WWATT. WWATT covenants from
and after the Closing as follows:
7.1.1 Registration of Shares. WWATT shall use
reasonable best efforts to cause the registration under the
Securities Act of 1933 of the WWATT Common Stock issued to the
NATCRI Shareholders at the Closing no later than twelve (12)
months after WWATT's Common Stock has been registered under
Section 12 of the Securities Exchange Act of 1934. WWATT agrees
to use reasonable best efforts to accomplish such 1934 Act
registration within twelve (12) months after the Closing.
7.2 Operation of NATCRI's Business Following the Closing.
The parties agree as follows with respect to the operation of
NATCRI's business following the Closing:
7.2.1 Location. NATCRI shall continue to conduct
its business at its present facility in Elgin, Illinois until
such time as NATCRI's Board and WWATT's Board of Directors
mutually agree that a change would be beneficial to the business
of WWATT and its subsidiaries taken as a whole.
7.3 Budgets and Business Plans. Senior management of
NATCRI shall prepare an annual operating budget and capital
budget for review by WWATT's Board of Directors at least ninety
(90) days prior to the beginning of each fiscal year which shall
exclude the first fiscal year or such period of shorter than one
year that includes the closing date. Such budgets shall be
reviewed and may be revised quarterly. Implementation of all
such budgets and revisions thereto must be approved both by
NATCRI's senior management and WWATT's Board of Directors.
Additionally, NATCRI's senior management shall prepare a
five-year business plan for review and approval by WWATT's Board of
Directors, in conjunction with the preparation and review and
approval of NATCRI's annual operating and capital budgets. The
five-year business plan shall be reviewed and may be revised
annually, with the approval of WWATT's Board of Directors.
ARTICLE 8
OTHER
8.1 Survival. The representations and warranties set forth
in Articles 2 and 3 shall survive the Closing for a period of six
(6) months. NATCRI and each NATCRI Shareholder agrees to defend,
indemnify and hold harmless WWATT and WWATT agrees to defend,
indemnify and hold harmless each NATCRI Shareholder for any
damages, losses, liabilities or claims incurred by the other as a
result of the breach by the other of such representations and
warranties made by it herein.
8.2 Miscellaneous. This Agreement may be amended only in
writing signed by the party against whom enforcement is sought.
This Agreement may not be assigned by any party hereto without
the prior written consent of the other parties. This Agreement
shall be governed and construed in accordance with the laws of
the State of Florida, without regard to principles of conflicts
of law. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original. The
headings contained in this Agreement are only for convenience and
shall not affect the meaning or interpretation of this Agreement.
The invalidity or unenforceability of any provision of this
Agreement shall not affect any other provisions of this
Agreement, which shall remain in full force and effect. Each
party agrees that the others would be irreparably harmed in the
even of any breach of this Agreement. Accordingly, the parties
agree that each shall be entitled to specific performance of this
Agreement to injunctive relief to prevent any breach of this
Agreement. In the event of any litigation arising out of or
relating to this Agreement, the prevailing party shall be
entitled to reasonable attorney's and expenses from the losing
party.
Worldwide Applied
Telecom Technology,
Inc.
North American Telecom
Cable Representatives,
Inc.
Xxxxxx X. Xxxxxxxxx,
President
Xxxxxx X. Xxxxxxxxx,
Shareholder
Xxxxxx Xxxxxxxxx,
Shareholder
(Corporate Seal)
(Corporate Seal)
Exhibit 1.1
Exchange of NATCRI Shares for WWATT Shares
NATCRI Shareholder
NATCRI Shares
WWATT Shares
Xxxxxx X. Xxxxxxxxx
500
245,000
Xxxxxx Xxxxxxxxx
500
245,000
Totals
1,000
490,000
