ASSET EXCHANGE AGREEMENT between FOUR CRYSTAL FUNDING LLC and PRO TECH COMMUNICATIONS, INC. and NCT HEARING PRODUCTS, INC.
between
FOUR
CRYSTAL FUNDING LLC
and
PRO
TECH COMMUNICATIONS, INC.
and
NCT
HEARING PRODUCTS, INC.
Dated:
May 20, 2008
This
letter hereby sets forth the intent with respect to the asset exchange between
Four Crystal Funding LLC (“FCF”), Pro Tech Communications, Inc. (“PCTU”) and NCT
Hearing Products, Inc. (“NCTH”) (collectively, these entities shall be referred
to as the “Parties”).
WHEREAS, PCTU has 300,000,000
shares of common stock authorized and 78,834,140 shares issued and
outstanding;
WHEREAS, NCTH is the holder of
64,569,954 PCTU common stock;
WHEREAS, FCF owns
$4,039,872,177 in Mexican gold backed bonds (“ASSET”) and wishes to exchange the
Asset with PCTU for PCTU stock.
NOW
THEREFORE, the Parties hereby agree that the specific terms and conditions of
the Asset Exchange Agreement are proposed and set forth as follows:
1. Terms of the
Transaction.
- FCF shall
obtain 228,818,182 shares of PCTU common stock as follows:
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a.
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NCTH
shall sell, dispose or otherwise transfer to FCF 53,354,461 shares or 85%
of its PCTU common stock.
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b.
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PCTU
shall issue 175,463,721 shares of its authorized but un-issued common
stock.
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- FCF shall
transfer the ASSET to PCTU and PCTU will issue preferred shares to FCF that have
a controlling common vote.
- PCTU
shall agree to transfer all of its existing assets to NCTH as satisfaction for
the note that PCTU is liable to NCTH for in the amount of approximately
$5,000,000.
- PCTU
shall agree to change its name to a name designated by FCF.
- Four
Crystal LLC has obtained the PCTU convertible preferred stock from a third party
and they agreed to convert the preferred shares into 18,000,000 shares of PCTU
common stock. They will convert no more than 5% of the current outstanding
preferred stock to common stock of PCTU at any one time.
- In
addition, FCF shall agree to pay $300,000 to NCTH as a commitment fee used for
operations and pay PCTU $250,000 for the outstanding professional fees to bring
PCTU up to date in its SEC filings.
2. Conduct of Business.
Prior to the closing of the Transaction, the Parties will conduct their
operations in the ordinary course consistent with past practice and will not
issue any capital stock or grant any options with respect to its capital stock,
nor will the Parties make any distributions, dividends or other payments to any
affiliate or shareholders other than those shares already committed to
outstanding options, preferred stock, debt to employees.
3. Public Announcements.
No party will make any public disclosure concerning the matters set forth
in this letter of intent or the negotiation of the proposed Transaction without
the prior written consent of the other parties. If and when any party desires to
make such public disclosure, after receiving such prior written consent, the
disclosing party will give the other party’s an opportunity to review and
comment on any such disclosure in advance of public release. Notwithstanding the
above, to the extent that any party is advised by counsel that disclosure of the
matters set forth in this letter of intent is required by applicable securities
laws or to the extent that such disclosure is ordered by a court of competent
jurisdiction or is otherwise required by law, then such disclosing party will
provide the other party’s, if reasonably possible under the circumstances, prior
notice of such disclosure as well as an opportunity to review and comment on
such disclosure in advance of the public release.
4. Exclusivity. Until
the earlier of the closing of the Transaction or termination of this letter of
intent in accordance with its terms, the Parties, their officers, directors,
employees, shareholders and other representatives will not, and will not permit
any of their respective affiliates to, directly or indirectly, solicit, discuss,
accept, approve, respond to or encourage (including by way of furnishing
information) any inquiries or proposals relating to, or engage in any
negotiations with any third party with respect to any transaction similar to the
Transaction or any transaction involving the transfer of a significant or
controlling interest in the assets or capital stock of the PCTU, including, but
not limited to, a merger, acquisition, strategic investment or similar
transaction (“Acquisition Proposal”). The Parties and its officers or their
respective affiliates will immediately notify each other of the receipt of any
third party inquiry or proposal relating to an Acquisition Proposal and will
provide copies of any such notice inquiry or proposal. Notwithstanding the
foregoing, nothing in this Section 5 will be construed as prohibiting the Board
of Directors of the Parties from (a) making any disclosure required by
applicable law to its shareholders; or (b) responding to any unsolicited
proposal or inquiry to the Parties (other than an Acquisition Proposal by a
third party) by advising the person making such proposal or inquiry of the terms
of this Section 5.
5. Best Efforts. Each
party will make their best efforts to complete the Asset Exchange Agreement as
proposed.
6. No Brokers. Each
party represents and warrants to the others that there are no brokers or finders
entitled to any compensation with respect to the Transaction, and each agrees to
indemnify and hold the other harmless from and against any expenses or damages
incurred as a result of a breach of this representation and
warranty.
7. Expenses. Each of the
parties will be responsible for its own expenses in connection with the
Transaction.
8. Choice of Law. This
Letter of Intent shall be governed by and construed in accordance with the
internal substantive laws of the State of Delaware without regard to its
conflict of laws principals.
9. Warranties.
a. FCF
represents that it has the necessary corporate authority to enter into this
Agreement.
b. PCTU
represents that it has the necessary corporate authority to enter into this
Agreement.
c. NCTH
represents that it has the necessary corporate authority to enter into this
Agreement.
10. Compliance with the
Securities Laws. The Parties acknowledge that it and its officers,
directors, shareholders and employees and other representatives may, in
connection with their consideration of the proposed Transaction, come into
possession of material non-public information. Accordingly, the Parties will use
its their best efforts to ensure that none of their officers, directors,
shareholders and employees or other representatives will trade (or cause or
encourage any third party to trade) in any of the securities which they will
receive as a result of the Transaction while in possession of any such material,
non-public information.
11.
In the event the Asset Exchange transaction defined herein is not completed by
July 31, 2008 this
agreement is terminated.
| Agreed: | |
| FOUR CRYSTAL FUNDING LLC | |
| By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |
| Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |
| Title: Member | |
| By: /s/ ▇▇ ▇. ▇▇▇▇▇▇▇ | |
| Name: ▇▇ ▇. ▇▇▇▇▇▇▇ | |
| Title: SVP/CFO | |
| By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Title: CEO & President | |
| NCT HEARING PRODUCTS, INC | |
| By: /s/ ▇▇ ▇. ▇▇▇▇▇▇▇ | |
| Name: ▇▇ ▇. ▇▇▇▇▇▇▇ | |
| Title: Treasurer | |
| By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Title: President |