Exhibit 99.3
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of the 13th day of November, 2002
AMONG:
WPCS INTERNATIONAL INCORPORATED, a corporation formed pursuant
to the laws of the State of Delaware and having an office for
business located at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 00, Xxxxx,
Xxxxxxxxxxxx 00000
("WPCS")
AND:
INVISINET ACQUISITIONS INC., a body corporate formed pursuant
to the laws of the State of Delaware and a wholly owned
subsidiary of WPCS
(the "Acquirer")
AND:
INVISINET, INC., a body corporate formed pursuant to the laws
of the State of Delaware and having an office for business
located at 00 Xxxxx Xxxxx, Xxxxxxxxxx, XX 00000
("Invisinet")
AND:
X. XXXXXXX LLC, a body corporate formed pursuant to the laws
of the State of Delaware and having an office for business
located at 000 Xxxx Xxxxxxxxx Xxxx, Xxxxxxxxx 0, Xxxxx 00,
Xxxx Xxxxxxx, XX 00000
("Xxxxxxx")
AND:
X.X. XXX XXXXXXXXXX, an individual having an address at 00
Xxxxx Xxxxx, Xxxxxxxxxx, XX 00000
("von Schaumburg", and together with Xxxxxxx the "Invisinet
Shareholders")
WHEREAS:
A. Invisinet is a Delaware corporation engaged in the business of providing
fixed wireless solutions and services for internal and external fixed wireless
connectivity;
B. The Invisinet Shareholders own 1,000 Invisinet Shares, being 100% of the
presently issued and outstanding Invisinet Shares;
C. WPCS is a reporting company whose common stock is quoted on the NASD
"Bulletin Board" and which is engaged in the business of providing fixed
wireless telecommunications services;
D. The respective Boards of Directors of WPCS, Invisinet and the Acquirer deem
it advisable and in the best interests of WPCS, Invisinet and the Acquirer that
the Acquirer merge with and into Invisinet (the "Merger") pursuant to this
Agreement and the Certificate of Merger, and the applicable provisions of the
laws of the State of Delaware; and
E. It is intended that the Merger shall qualify for United States federal income
tax purposes as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
DEFINITIONS
1.1 In this Agreement the following terms will have the following meanings:
(a) "ACQUISITION SHARES" means the 1,000,000 WPCS Common Shares to
be issued to the Invisinet Shareholders at Closing pursuant to
the terms of the Merger;
(b) "AGREEMENT" means this agreement and plan of merger among
WPCS, the Acquirer, Invisinet, and the Invisinet Shareholders;
(c) "BONUS SHARE AGREEMENT" means the bonus share agreement to be
entered into on the Closing Date between WPCS and von
Schaumburg in the form attached hereto as Schedule "L";
(d) "CLOSING" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 9
hereof;
(e) "CLOSING DATE" means the day on which all conditions precedent
to the completion of the transaction as contemplated hereby
have been satisfied or waived;
(f) "COMMISSION" means the Securities and Exchange Commission;
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(g) "EFFECTIVE TIME" means the date of the filing of an
appropriate Certificate of Merger in the form required by the
State of Delaware, which certificate shall provide that the
Merger shall become effective upon such filing;
(h) "EMPLOYMENT AGREEMENT" means the employment agreement to be
entered into on the Closing Date between Invisinet and von
Schaumburg in the form attached hereto as Schedule "K";
(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended;
(j) "INVISINET ACCOUNTS PAYABLE AND LIABILITIES" means all
accounts payable and liabilities of Invisinet, due and owing
or otherwise constituting a binding obligation of Invisinet
(other than a Invisinet Material Contract) as of September 30,
2002 as set forth in Schedule "A" hereto;
(k) "INVISINET ACCOUNTS RECEIVABLE" means all accounts receivable
and other debts owing to Invisinet, as of September 30, 2002
as set forth in Schedule "B" hereto;
(l) "INVISINET ASSETS" means the undertaking and all the property
and assets of the Invisinet Business of every kind and
description wheresoever situated including, without
limitation, Invisinet Equipment, Invisinet Inventory,
Invisinet Material Contracts, Invisinet Accounts Receivable,
Invisinet Cash, Invisinet Intangible Assets and Invisinet
Goodwill, and all credit cards, charge cards and banking cards
issued to Invisinet;
(m) "INVISINET BANK ACCOUNTS" means all of the bank accounts, lock
boxes and safety deposit boxes of Invisinet or relating to the
Invisinet Business as set forth in Schedule "C" hereto;
(n) "INVISINET BUSINESS" means all aspects of the business
conducted by Invisinet;
(o) "INVISINET CASH" means all cash on hand or on deposit to the
credit of Invisinet on the Closing Date;
(p) "INVISINET DEBT TO RELATED PARTIES" means the debts owed by
Invisinet and its subsidiaries to any of the Invisinet
Shareholders or to any family member thereof, or to any
affiliate, director or officer of Invisinet or the Invisinet
Shareholders as described in Schedule "D";
(q) "INVISINET EQUIPMENT" means all machinery, equipment,
furniture, and furnishings used in the Invisinet Business,
including, without limitation, the items more particularly
described in Schedule "E" hereto;
(r) "INVISINET FINANCIAL STATEMENTS" means collectively, audited
financial statements of Invisinet for the years ended December
31, 2000 and 2001, together with an unqualified auditors'
report thereon, and the unaudited financial statements nine
month periods ended September 30, 2001 and 2002, together with
an auditor's review and engagement report thereon, all of
which are to be prepared in accordance with United States
generally accepted accounting principles and the requirements
of Item 310 of Regulation SB as promulgated by the Securities
and Exchange Commission, true copies of which are attached as
Schedule "F" hereto;
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(s) "INVISINET GOODWILL" means the goodwill of the Invisinet
Business together with the exclusive right of WPCS to
represent itself as carrying on the Invisinet Business in
succession of Invisinet subject to the terms hereof, and the
right to use any words indicating that the Invisinet Business
is so carried on including the right to use the name
"Invisinet" or "Invisinet International" or any variation
thereof as part of the name of or in connection with the
Invisinet Business or any part thereof carried on or to be
carried on by Invisinet, the right to all corporate, operating
and trade names associated with the Invisinet Business, or any
variations of such names as part of or in connection with the
Invisinet Business, all telephone listings and telephone
advertising contracts, all lists of customers, books and
records and other information relating to the Invisinet
Business, all necessary licenses and authorizations and any
other rights used in connection with the Invisinet Business;
(t) "INVISINET INSURANCE POLICIES" means the public liability
insurance and insurance against loss or damage to Invisinet
Assets and the Invisinet Business as described in Schedule "G"
hereto;
(u) "INVISINET INTANGIBLE ASSETS" means all of the intangible
assets of Invisinet, including, without limitation, Invisinet
Goodwill, all trademarks, logos, copyrights, designs, and
other intellectual and industrial property of Invisinet and
its subsidiaries;
(v) "INVISINET INVENTORY" means all inventory and supplies of the
Invisinet Business as of September 30, 2002 as set forth in
Schedule "H" hereto;
(w) "INVISINET MATERIAL CONTRACTS" means the burden and benefit of
and the right, title and interest of Invisinet in, to and
under all trade and non-trade contracts, engagements or
commitments, whether written or oral, to which Invisinet is
entitled in connection with the Invisinet Business whereunder
Invisinet is obligated to pay or entitled to receive the sum
of $10,000 or more including, without limitation, any pension
plans, profit sharing plans, bonus plans, loan agreements,
security agreements, indemnities and guarantees, any
agreements with employees, lessees, licensees, managers,
accountants, suppliers, agents, distributors, officers,
directors, attorneys or others which cannot be terminated
without liability on not more than one month's notice, and
those contracts listed in Schedule "I" hereto; and
(x) "INVISINET SHARES" means all of the issued and outstanding
shares of Invisinet's equity stock;
(y) "MERGER" means the merger, at the Effective Time, of Invisinet
and the Acquirer pursuant to this Agreement and Plan of
Merger;
(z) "MERGER CONSIDERATION" means the Acquisition Shares;
(aa) "PLACE OF CLOSING" means the offices of Xxxxxx, Price et al.
in Xxxxxxx, Xxxxxxxx 00000, or such other place as WPCS and
Invisinet may mutually agree upon;
(bb) "REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement to be entered into on the Closing Date between WPCS,
Xxxxxxx and von Schaumburg in respect of the Acquisition
Shares in the form attached hereto as Schedule "M";
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(cc) "SEC REPORTS" means all forms, reports and documents filed and
required to be filed by WPCS with the Commission under the
Exchange Act from June 7, 2002 through the date hereof;
(dd) "SECURITIES ACT" means the Securities Act of 1933, as amended;
(ee) "STATE CORPORATION LAW" means the General Corporation Law of
the State of Delaware;
(ff) "STOCKHOLDER'S AGREEMENT" means the certain Stockholder
Agreement dated as of July 10, 2000, by and among Invisinet
and X. X. xxx Xxxxxxxxxx;
(gg) "SURVIVING COMPANY" means the Acquirer following the merger
with Invisinet;
(hh) "WPCS BUSINESS" means all aspects of any business conducted by
WPCS and its subsidiaries;
(ii) "WPCS COMMON SHARES" means the shares of common stock in the
capital of WPCS; and
(jj) "WPCS FINANCIAL STATEMENTS" means, collectively, the audited
consolidated financial statements of WPCS for the fiscal years
ended April 30, 2000 and 2002, together with the unqualified
auditors' report thereon, and the unaudited financial
statements three month periods ended July 31, 2001 and 2002,
true copies of which are attached as Schedule "J" hereto.
Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
CAPTIONS AND SECTION NUMBERS
1.2 The headings and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not intended to
interpret, define or limit the scope, extent or intent of this Agreement or any
provision thereof.
SECTION REFERENCES AND SCHEDULES
1.3 Any reference to a particular "Article", "section", "paragraph", "clause" or
other subdivision is to the particular Article, section, clause or other
subdivision of this Agreement and any reference to a Schedule by letter will
mean the appropriate Schedule attached to this Agreement and by such reference
the appropriate Schedule is incorporated into and made part of this Agreement.
The Schedules to this Agreement are as follows:
Information concerning Invisinet
Schedule "A" Invisinet Accounts Payable and Liabilities
Schedule "B" Invisinet Accounts Receivable
Schedule "C" Invisinet Bank Accounts
Schedule "D" Invisinet Debts to Related Parties (including
accounts payable aging ledger)
Schedule "E" Invisinet Equipment
Schedule "F" Invisinet Financial Statements
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Schedule "G" Invisinet Insurance Policies
Schedule "H" Invisinet Inventory
Schedule "I" Invisinet Material Contracts
Information concerning WPCS
Schedule "J" WPCS Financial Statements
Agreements
Schedule "K" Form of Employment Agreement
Schedule "L" Form of Bonus Share Agreement
Schedule "M" Form of Registration Rights Agreement
SEVERABILITY OF CLAUSES
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE 2
THE MERGER
THE MERGER
2.1 At Closing, the Acquirer shall be merged with and into Invisinet pursuant to
this Agreement and Plan of Merger and the separate corporate existence of the
Acquirer shall cease and Invisinet, as it exists from and after the Closing,
shall be the Surviving Company.
EFFECT OF THE MERGER
2.2 The Merger shall have the effect provided therefor by the State Corporation
Law. Without limiting the generality of the foregoing, and subject thereto, at
Closing (i) all the rights, privileges, immunities, powers and franchises, of a
public as well as of a private nature, and all property, real, personal and
mixed, and all debts due on whatever account, including without limitation
subscriptions to shares, and all other choses in action, and all and every other
interest of or belonging to or due to Invisinet or the Acquirer, as a group,
subject to the terms hereof, shall be taken and deemed to be transferred to, and
vested in, the Surviving Company without further act or deed; and all property,
rights and privileges, immunities, powers and franchises and all and every other
interest shall be thereafter as effectually the property of the Surviving
Company, as they were of Invisinet and the Acquirer, as a group, and (ii) all
debts, liabilities, duties and obligations of Invisinet and the Acquirer, as a
group, subject to the terms hereof, shall become the debts, liabilities and
duties of the Surviving Company and the Surviving Company shall thenceforth be
responsible and liable for all debts, liabilities, duties and obligations of
Invisinet and the Acquirer, as a group, and neither the rights of creditors nor
any liens upon the property of Invisinet or the Acquirer, as a group, shall be
impaired by the Merger, and may be enforced against the Surviving Company.
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CERTIFICATE OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS
2.3 The Certificate of Incorporation of the Surviving Company from and after the
Closing shall be the Certificate of Incorporation of Invisinet until thereafter
amended in accordance with the provisions therein and as provided by the
applicable provisions of the State Corporation Law. The Bylaws of the Surviving
Company from and after the Closing shall be the Bylaws of Invisinet as in effect
immediately prior to the Closing, continuing until thereafter amended in
accordance with their terms, the Certificate of Incorporation of the Surviving
Company and as provided by the State Corporation Law. The Directors of the
Acquirer at the Effective Time shall continue to be the Directors of Invisinet.
CONVERSION OF SECURITIES
2.4 At the Effective Time, by virtue of the Merger and without any action on the
part of the Acquirer, Invisinet or the Invisinet Shareholders, the shares of
capital stock of each of Invisinet and the Acquirer shall be converted as
follows:
(a) Capital Stock of the Acquirer. Each issued and outstanding
share of the Acquirer's capital stock shall continue to be
issued and outstanding and shall be converted into one share
of validly issued, fully paid, and non-assessable common stock
of the Surviving Company. Each stock certificate of the
Acquirer evidencing ownership of any such shares shall
continue to evidence ownership of such shares of capital stock
of the Surviving Company.
(b) Conversion of Invisinet Shares. Each Invisinet Share that is
issued and outstanding at the Effective Time shall
automatically be cancelled and extinguished and converted,
without any action on the part of the holder thereof, into the
right to receive at the time and in the amounts described in
this Agreement an amount of Acquisition Shares equal to the
number of Acquisition Shares divided by the number of the
Invisinet Shares outstanding immediately prior to Closing. All
such Invisinet Shares, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the
Acquisition Shares paid in consideration therefor upon the
surrender of such certificate in accordance with this
Agreement.
ADHERENCE WITH APPLICABLE SECURITIES LAWS
2.5 The Invisinet Shareholders agree that they are acquiring the Acquisition
Shares for investment purposes and will not offer, sell or otherwise transfer,
pledge or hypothecate any of the Acquisition Shares issued to them (other than
pursuant to an effective Registration Statement under the Securities Act)
directly or indirectly unless:
(a) the sale is to WPCS;
(b) the sale is made pursuant to the exemption from registration
under the Securities Act, provided by Rule 144 thereunder; or
(c) the Acquisition Shares are sold in a transaction that does not
require registration under the Securities Act, or any
applicable United States state laws and regulations governing
the offer and sale of securities, and the vendor has furnished
to WPCS an opinion of counsel to that effect or such other
written
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opinion as may be reasonably required by WPCS.
The Invisinet Shareholders acknowledge that the certificates
representing the Acquisition Shares shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT. THEY MAY NOT BE MORTGAGED, PLEDGED, HYPOTHECATED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR
SUCH SHARES UNDER THE SECURITIES ACT OF 1933 AND OTHER APPLICABLE
SECURITIES LAWS OR AN OPINION OF COUNSEL FOR THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND OTHER APPLICABLE
SECURITIES LAWS. THE HOLDER MAY BE REQUIRED TO PROVIDE AN OPINION AT
THE HOLDER'S COST TO THE COMPANY THAT SUCH TRANSFER IS PERMITTED
WITHOUT REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS, WHICH
OPINION MUST BE ACCEPTABLE TO THE COMPANY'S COUNSEL.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF WPCS
REPRESENTATIONS AND WARRANTIES
3.1 WPCS represents and warrants in all material respects to the Invisinet
Shareholders, with the intent that Invisinet Shareholders will rely thereon in
entering into this Agreement and in approving and completing the transactions
contemplated hereby, that:
WPCS - CORPORATE STATUS AND CAPACITY
(a) Incorporation. WPCS is a corporation duly incorporated and
validly subsisting under the laws of the State of Delaware,
and is in good standing with the office of the Secretary of
State for the State of Delaware;
(b) Carrying on Business. WPCS carries on business primarily in
the Commonwealth of Pennsylvania and does not carry on any
material business activity in any other jurisdiction. WPCS has
an office in Exton, Pennsylvania and in no other locations.
The nature of the Invisinet Business does not require WPCS to
register or otherwise be qualified to carry on business in any
other jurisdiction;
(c) Corporate Capacity. WPCS has the corporate power, capacity and
authority to own its assets and to enter into and complete
this Agreement;
(d) Reporting Status; Listing. WPCS's common stock is registered
under Section 12(b) or 12(g) of the Exchange Act and WPCS is
required to file current reports with the Commission pursuant
to section 13(a) of the Exchange Act. The WPCS Common Shares
are quoted on the NASD "Bulletin Board" under the symbol
"WPCS";
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(e) SEC Reports. WPCS has timely filed all SEC Reports with the
Commission under the Exchange Act. The SEC Reports, at the
time filed, complied as to form in all material respects with
the requirements of the Exchange Act. None of the SEC Reports,
including without limitation any financial statements or
schedules included therein, contains any untrue statements of
a material fact or omits to stare a material fact necessary in
order to make the statements made, in light of the
circumstances under which they were made, not misleading;
ACQUIRER - CORPORATE STATUS AND CAPACITY
(f) Incorporation. The Acquirer is a corporation duly incorporated
and validly subsisting under the laws of the State of
Delaware, and is in good standing with the office of the
Secretary of State for the State of Delaware;
(g) Carrying on Business. Other than corporate formation and
organization, the Acquirer has not carried on business
activities to date.
(h) Corporate Capacity. The Acquirer has the corporate power,
capacity and authority to enter into and complete this
Agreement;
WPCS - CAPITALIZATION
(i) Authorized Capital. The authorized capital of WPCS consists of
30,000,000 WPCS Common Shares, $0.0001 par value and 5,000,000
shares of preferred stock. $0.0001 par value, of which
9,025,632 WPCS Common Shares and 519 shares of Series B
Convertible Preferred Stock are presently issued and
outstanding;
(j) No Option. No person, firm or corporation has any agreement or
option or any right capable of becoming an agreement or option
for the acquisition of WPCS Common Shares or for the purchase,
subscription or issuance of any of the unissued shares in the
capital of WPCS, except for an option to purchase 11,111 WPCS
Common Shares at $2.75 per share expiring April 30, 2003;
ACQUIRER - CAPITALIZATION
(k) Authorized Capital. The authorized capital of the Acquirer
consists of 100 shares of common stock, $0.0001 par value, of
which one share of common stock is presently issued and
outstanding;
(l) No Option. No person, firm or corporation has any agreement or
option or any right capable of becoming an agreement or option
for the acquisition of any common or preferred shares in
Acquirer or for the purchase, subscription or issuance of any
of the unissued shares in the capital of Acquirer;
WPCS - RECORDS AND FINANCIAL STATEMENTS
(m) Charter Documents. The charter documents of WPCS and the
Acquirer have not been altered since the incorporation of
each, respectively, except as filed in the record books of
WPCS or the Acquirer, as the case may be;
(n) Corporate Minute Books. The corporate minute books of WPCS and
its subsidiaries are complete and each of the minutes
contained therein accurately
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reflect the actions that were taken at a duly called and held
meeting or by consent without a meeting. All actions by WPCS
and its subsidiaries which required director or shareholder
approval are reflected on the corporate minute books of WPCS
and its subsidiaries. WPCS and its subsidiaries are not in
violation or breach of, or in default with respect to, any
term of their respective Certificates of Incorporation (or
other charter documents) or by-laws;
(o) WPCS Financial Statements. The WPCS Financial Statements
present fairly, in all material respects, the assets and
liabilities (whether accrued, absolute, contingent or
otherwise) of WPCS, on a consolidated basis, as of the
respective dates thereof, and the results of operations and
changes in financial position of WPCS during the periods
covered thereby, in all material respects and have been
prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods
indicated;
(p) WPCS Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of WPCS or its
subsidiaries which are not reflected in the WPCS Financial
Statements except those incurred in the ordinary course of
business since the date of the said schedule and the WPCS
Financial Statements, and neither WPCS nor its subsidiaries
have guaranteed or agreed to guarantee any debt, liability or
other obligation of any person, firm or corporation;
(q) WPCS Accounts Receivable. All the accounts receivable of WPCS
result from bona fide business transactions and services
actually rendered without, to the knowledge and belief of
WPCS, any claim by the obligor for set-off or counterclaim;
(r) No Debt to Related Parties. Neither WPCS nor its subsidiaries
are, and on Closing will not be, materially indebted to any
affiliate, director or officer of WPCS except accounts payable
on account of bona fide business transactions of WPCS incurred
in normal course of the WPCS Business, including employment
agreements, none of which are more than 30 days in arrears;
(s) No Related Party Debt to WPCS. No director or officer or
affiliate of WPCS is now indebted to or under any financial
obligation to WPCS or its subsidiaries on any account
whatsoever, except for advances on account of travel and other
expenses not exceeding $5,000 in total;
(t) No Dividends. No dividends or other distributions on any
shares in the capital of WPCS have been made, declared or
authorized since the date of WPCS Financial Statements;
(u) No Payments. No payments of any kind have been made or
authorized since the date of the WPCS Financial Statements to
or on behalf of officers, directors, shareholders or employees
of WPCS or its subsidiaries or under any management agreements
with WPCS or its subsidiaries, except payments made in the
ordinary course of business and at the regular rates of salary
or other remuneration payable to them;
(v) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation
plans affecting WPCS or its subsidiaries;
(w) No Adverse Events. Since July 31, 2002,
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(i) there has not been any material adverse change in the
properties, results of operations, financial position
or condition (financial or otherwise) of WPCS, its
subsidiaries, its assets or liabilities or any
damage, loss or other change in circumstances
materially affecting WPCS, the WPCS Business or WPCS'
right to carry on the WPCS Business, other than
changes in the ordinary course of business,
(ii) there has not been any damage, destruction, loss or
other event (whether or not covered by insurance)
materially and adversely affecting WPCS, its
subsidiaries, or the WPCS Business,
(iii) there has not been any material increase in the
compensation payable or to become payable by WPCS to
any of WPCS' officers, employees or agents or any
bonus, payment or arrangement made to or with any of
them,
(iv) the WPCS Business has been and continues to be
carried on in the ordinary course,
(v) WPCS has not waived or surrendered any right of
material value,
(vi) Neither WPCS nor its subsidiaries have discharged or
satisfied or paid any lien or encumbrance or
obligation or liability other than current
liabilities in the ordinary course of business, and
(vii) no capital expenditures in excess of $10,000
individually or $30,000 in total have been authorized
or made.
WPCS - INCOME TAX MATTERS
(x) Tax Returns. All tax returns and reports of WPCS and its
subsidiaries required by law to be filed have been filed and
are true, complete and correct, and any taxes payable in
accordance with any return filed by WPCS and its subsidiaries
or in accordance with any notice of assessment or reassessment
issued by any taxing authority have been so paid;
(y) Current Taxes. Adequate provisions have been made for taxes
payable for the current period for which tax returns are not
yet required to be filed and there are no agreements, waivers,
or other arrangements providing for an extension of time with
respect to the filing of any tax return by, or payment of, any
tax, governmental charge or deficiency by WPCS or its
subsidiaries. WPCS is not aware of any contingent tax
liabilities or any grounds which would prompt a reassessment
including aggressive treatment of income and expenses in
filing earlier tax returns;
WPCS - APPLICABLE LAWS AND LEGAL MATTERS
(z) Licenses. WPCS and its subsidiaries hold all licenses and
permits as may be requisite for carrying on the WPCS Business
in the manner in which it has heretofore been carried on,
which licenses and permits have been maintained and continue
to be in good standing except where the failure to obtain or
maintain such licenses or permits would not have a material
adverse effect on the WPCS Business;
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(aa) Applicable Laws. Neither WPCS nor its subsidiaries have been
charged with or received notice of breach of any laws,
ordinances, statutes, regulations, by-laws, orders or decrees
to which they are subject or which apply to them the violation
of which would have a material adverse effect on the WPCS
Business, and to WPCS' knowledge, neither WPCS nor its
subsidiaries are in breach of any laws, ordinances, statutes,
regulations, bylaws, orders or decrees the contravention of
which would result in a material adverse impact on the WPCS
Business;
(bb) Pending or Threatened Litigation. There is no material
litigation or administrative or governmental proceeding
pending or threatened against or relating to WPCS, its
subsidiaries, or the WPCS Business nor does WPCS have any
knowledge of any deliberate act or omission of WPCS or its
subsidiaries that would form any material basis for any such
action or proceeding;
(cc) No Bankruptcy. Neither WPCS nor its subsidiaries have made any
voluntary assignment or proposal under applicable laws
relating to insolvency and bankruptcy and no bankruptcy
petition has been filed or presented against WPCS or its
subsidiaries and no order has been made or a resolution passed
for the winding-up, dissolution or liquidation of WPCS or its
subsidiaries;
(dd) Labor Matters. Neither WPCS nor its subsidiaries are party to
any collective agreement relating to the WPCS Business with
any labor union or other association of employees and no part
of the WPCS Business has been certified as a unit appropriate
for collective bargaining or, to the knowledge of WPCS, has
made any attempt in that regard;
(ee) Finder's Fees. Neither WPCS nor its subsidiaries are party to
any agreement which provides for the payment of finder's fees,
brokerage fees, commissions or other fees or amounts which are
or may become payable to any third party in connection with
the execution and delivery of this Agreement and the
transactions contemplated herein;
EXECUTION AND PERFORMANCE OF AGREEMENT
(ff) Authorization and Enforceability. The execution and delivery
of this Agreement, and the completion of the transactions
contemplated hereby, have been duly and validly authorized by
all necessary corporate action on the part of WPCS and the
Acquirer;
(gg) No Violation or Breach. The execution and performance of this
Agreement will not:
(i) violate the charter documents of WPCS or the Acquirer
or result in any breach of, or default under, any
loan agreement, mortgage, deed of trust, or any other
agreement to which WPCS or its subsidiaries are
party,
(ii) give any person any right to terminate or cancel any
agreement or any right or rights enjoyed by WPCS or
its subsidiaries,
(iii) result in any alteration of WPCS' or its
subsidiaries' obligations under any agreement to
which WPCS or its subsidiaries are party,
12
(iv) result in the creation or imposition of any lien,
encumbrance or restriction of any nature whatsoever
in favor of a third party upon or against the assets
of WPCS,
(v) result in the imposition of any tax liability to WPCS
or its subsidiaries relating to the assets of WPCS,
or
(vi) violate any court order or decree to which either
WPCS or its subsidiaries are subject;
THE WPCS BUSINESS
(hh) Maintenance of Business. Since the date of the WPCS Financial
Statements, WPCS and its subsidiaries have not entered into
any material agreement or commitment except in the ordinary
course and except as disclosed herein;
(ii) Subsidiaries. Except for the Acquirer, WPCS does not own any
subsidiaries and does not otherwise own, directly or
indirectly, any shares or interest in any other corporation,
partnership, joint venture or firm other than WPCS
Incorporated, a Delaware corporation;
WPCS - ACQUISITION SHARES
(jj) Acquisition Shares. The Acquisition Shares when delivered to
the holders of Invisinet Shares pursuant to the Merger shall
be validly issued and outstanding as fully paid and
non-assessable shares and the Acquisition Shares shall be
transferable upon the books of WPCS, in all cases subject to
the provisions and restrictions of all applicable securities
laws; and
(kk) Securities Law Compliance. Except as set forth in the SEC
Reports, WPCS has not issued any shares of its common stock
(or securities convertible into or exercisable for shares of
common stock) since June 1, 2002. Neither WPCS nor any person
acting on its behalf has taken or will take any action
(including, without limitation, any offering of any securities
of WPCS under circumstances which would require the
integration of such offering with the offering of the
Acquisition Shares issued to the Invisinet Shareholders) which
subject the issuance or sale of such shares to the Invisinet
Shareholders to the registration requirements of Section 5 of
the Securities Act.
NON-MERGER AND SURVIVAL
3.2 The representations and warranties of WPCS contained herein will be true at
and as of Closing in all material respects as though such representations and
warranties were made as of such time. Notwithstanding the completion of the
transactions contemplated hereby, the waiver of any condition contained herein
(unless such waiver expressly releases a party from any such representation or
warranty) or any investigation made by the Invisinet Shareholders, the
representations and warranties of WPCS shall survive the Closing for a period of
two (2) years.
INDEMNITY
3.3 WPCS agrees to indemnify and save harmless the Invisinet Shareholders from
and
13
against any and all claims, demands, actions, suits, proceedings,
assessments, judgments, damages, costs, losses and expenses, including any
payment made in good faith in settlement of any claim (subject to the right of
WPCS to defend any such claim), resulting from the breach by it of any
representation or warranty made under this Agreement or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by WPCS to the Invisinet Shareholders hereunder
provided that (i) each individual claim or series of related claims exceeds
$10,000 and (ii) the amount of all such claims shall not exceed the greater of
(A) $250,000 or (B) the gross amount realized by the Invisinet Shareholders from
the sale of the Acquisition Shares.
ARTICLE 4
COVENANTS OF WPCS
COVENANTS
4.1 WPCS covenants and agrees with Invisinet that it will:
(a) Conduct of Business. Until the Closing, conduct its business
diligently and in the ordinary course consistent with the
manner in which it generally has been operated up to the
date of execution of this Agreement;
(b) Access. Until the Closing, give the Invisinet Shareholders
and their representatives full access to all of the
properties, books, contracts, commitments and records of
WPCS, and furnish to the Invisinet Shareholders and their
representatives all such information as they may reasonably
request;
(c) Procure Consents. Until the Closing, take all reasonable
steps required to obtain, prior to Closing, any and all
third party consents required to permit the Merger;
(d) Public Information. Make and keep public information
available, as those terms are understood and defined in Rule
144; and
(b) SEC Filings. File with the Commission in a timely manner,
all reports and other documents required of WPCS under the
Securities Act and the Exchange Act.
AUTHORIZATION
4.2 WPCS hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting WPCS and its subsidiaries to release any and all
information in their possession respecting WPCS and its subsidiaries to
Invisinet. WPCS shall promptly execute and deliver to Invisinet any and all
consents to the release of information and specific authorizations which
Invisinet reasonably requires to gain access to any and all such information.
REPORTS UNDER EXCHANGE ACT
4.3 With a view to making available to the Invisinet Shareholders the benefits
of Rule 144 promulgated under the Securities Act or any other similar rule or
regulation of the Commission that may at any time permit the Invisinet
Shareholders to sell securities of WPCS to the public without registration and
without imposing restrictions arising under the federal securities laws on the
purchases thereof ("Rule 144"), and provided that the 1 year holding period
imposed by paragraph d of Rule 144 has been met, WPCS agrees to furnish to each
Invisinet Shareholder, so
14
long as such Invisinet Shareholder owns WPCS Common Shares, promptly upon
request, (i) a written statement by WPCS that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy
of the most recent annual or quarterly report of WPCS and such other reports and
documents so filed by WPCS and (iii) such other information as may be reasonably
requested to permit the Invisinet Shareholders to sell such securities pursuant
to Rule 144 without registration.
SURVIVAL
4.4 The covenants set forth in this Article shall survive the Closing for the
benefit of the Invisinet Shareholders.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
THE INVISINET SHAREHOLDERS
REPRESENTATIONS AND WARRANTIES
5.1 The Invisinet Shareholders jointly and severally represent and warrant in
all material respects to WPCS, with the intent that it will rely thereon in
entering into this Agreement and in approving and completing the transactions
contemplated hereby, that:
INVISINET - CORPORATE STATUS AND CAPACITY
(a) Incorporation. Invisinet is a corporation duly incorporated
and validly subsisting under the laws of the State of
Delaware, and is in good standing with the office of the
Secretary of State for the State of Delaware;
(b) Carrying on Business. Invisinet carries on business
primarily in the States of New Jersey and Illinois and does
not carry on any material business activity in any other
jurisdiction. Invisinet has an office in Morristown, New
Jersey and Schaumburg, Illinois and in no other locations.
The nature of the Invisinet Business does not require
Invisinet to register or otherwise be qualified to carry on
business in any other jurisdiction;
(c) Corporate Capacity. Invisinet has the corporate power,
capacity and authority to own Invisinet Assets and to carry
on the Business of Invisinet and Invisinet and Xxxxxxx to
have the corporate power, capacity and authority to enter
into and complete this Agreement;
INVISINET - CAPITALIZATION
(d) Authorized Capital. The authorized capital of Invisinet
consists of 10,000 shares of common stock, $0.01 par value
per share;
(e) Ownership of Invisinet Shares. The issued and outstanding
share capital of Invisinet will on Closing consist of 1,000
common shares (being the Invisinet Shares), which shares on
Closing shall be validly issued and outstanding as fully
paid and non-assessable shares. The Invisinet Shareholders
will be at Closing the registered and beneficial owner of
1,000 Invisinet Shares. The Invisinet Shares owned by the
Invisinet Shareholders will on Closing be free and clear of
any and all liens, charges, pledges, encumbrances,
restrictions on transfer and adverse claims whatsoever;
15
(f) No Option. No person, firm or corporation has any agreement,
option, warrant, preemptive right or any other right capable
of becoming an agreement or option for the acquisition of
Invisinet Shares held by the Invisinet Shareholders or for
the purchase, subscription or issuance of any of the
unissued shares in the capital of Invisinet;
(g) No Restrictions. There are no restrictions on the transfer,
sale or other disposition of Invisinet Shares contained in
the charter documents of Invisinet or under any agreement,
other than as set forth in the Stockholder's Agreement;
INVISINET - RECORDS AND FINANCIAL STATEMENTS
(h) Charter Documents. The charter documents of Invisinet have
not been altered since its incorporation date, except as
filed in the record books of Invisinet;
(i) Corporate Minute Books. The corporate minute books of
Invisinet are complete and each of the minutes contained
therein accurately reflect the actions that were taken at a
duly called and held meeting or by consent without a
meeting. All actions by Invisinet which required director or
shareholder approval are reflected on the corporate minute
books of Invisinet. Invisinet is not in violation or breach
of, or in default with respect to, any term of its
Certificates of Incorporation (or other charter documents)
or by-laws;
(j) Invisinet Financial Statements. The Invisinet Financial
Statements present fairly, in all material respects, the
assets and liabilities (whether accrued, absolute,
contingent or otherwise) of Invisinet as of the respective
dates thereof, and the results of operations and changes in
financial position of Invisinet during the periods covered
thereby, in all material respects, and will be prepared in
accordance with generally accepted accounting principles
consistently applied throughout the periods indicated;
(k) Invisinet Accounts Payable and Liabilities. There are no
material liabilities, contingent or otherwise, of Invisinet
which are not disclosed in Schedule "A" hereto or reflected
in the Invisinet Financial Statements except those incurred
in the ordinary course of business since the date of the
said schedule and the Invisinet Financial Statements, and
Invisinet has not guaranteed or agreed to guarantee any
debt, liability or other obligation of any person, firm or
corporation. Without limiting the generality of the
foregoing, all accounts payable and liabilities of Invisinet
as of September 30, 2002 are described in Schedule "A"
hereto;
(l) Invisinet Accounts Receivable. All Invisinet Accounts
Receivable result from bona fide business transactions and
services actually rendered without, to the knowledge and
belief of Invisinet, any claim by the obligor for set-off or
counterclaim;
(m) Invisinet Bank Accounts. All of the Invisinet Bank Accounts,
their location, numbers and the authorized signatories
thereto are as set forth in Schedule "C" hereto;
(n) No Debt to Related Parties. Except as disclosed in Schedule
"D" hereto, Invisinet is not, and on Closing will not be,
materially indebted to the Invisinet Shareholders nor to any
family member thereof, nor to any affiliate, director or
16
officer of Invisinet or the Invisinet Shareholders except
accounts payable on account of bona fide business
transactions of Invisinet incurred in normal course of
Invisinet Business, including employment agreements with the
Invisinet Shareholders and attached to Schedule "D" hereto
is an accounts payable aging ledger;
(o) No Related Party Debt to Invisinet. Neither the Invisinet
Shareholders nor any director, officer or affiliate of
Invisinet are now indebted to or under any financial
obligation to Invisinet on any account whatsoever, except
for advances on account of travel and other expenses not
exceeding $5,000 in total;
(p) No Dividends. No dividends or other distributions on any
shares in the capital of Invisinet have been made, declared
or authorized since the date of the Invisinet Financial
Statements;
(q) No Payments. No payments of any kind have been made or
authorized since the date of the Invisinet Financial
Statements to or on behalf of the Invisinet Shareholders or
to or on behalf of officers, directors, shareholders or
employees of Invisinet or under any management agreements
with Invisinet, except (i) payments made in the ordinary
course of business and at the regular rates of salary or
other remuneration payable to them, and (ii) monthly
management fees payable to Wav, Inc. in an amount equal to
two percent (2%) of the monthly gross revenue of Invisinet;
(r) No Pension Plans. There are no pension, profit sharing,
group insurance or similar plans or other deferred
compensation plans affecting Invisinet;
(s) No Adverse Events. Since the date of the Invisinet Financial
Statements, except as described in Schedule "A" hereto:
(i) there has not been any material adverse change in
the properties, results of operations, financial
position or condition of Invisinet, its liabilities
or the Invisinet Assets or any damage, loss or
other change in circumstances materially affecting
Invisinet, the Invisinet Business or the Invisinet
Assets or Invisinet's right to carry on the
Invisinet Business, other than changes in the
ordinary course of business,
(ii) there has not been any damage, destruction, loss or
other event (whether or not covered by insurance)
materially and adversely affecting Invisinet, the
Invisinet Business or the Invisinet Assets,
(iii) there has not been any material increase in the
compensation payable or to become payable by
Invisinet to the Invisinet Shareholders or to any
of Invisinet's officers, employees or agents or any
bonus, payment or arrangement made to or with any
of them,
(iv) the Invisinet Business has been and continues to be
carried on in the ordinary course,
(v) Invisinet has not waived or surrendered any right
of material value,
(vi) Invisinet has not discharged or satisfied or paid
any lien or encumbrance or obligation or liability
other than current liabilities in the ordinary
course of business, and
17
(vii) no capital expenditures in excess of $10,000
individually or $30,000 in total have been
authorized or made;
INVISINET - INCOME TAX MATTERS
(t) Tax Returns. All tax returns and reports of Invisinet
required by law to be filed have been filed and are true,
complete and correct, and any taxes payable in accordance
with any return filed by Invisinet or in accordance with any
notice of assessment or reassessment issued by any taxing
authority have been so paid;
(u) Current Taxes. Adequate provisions have been made for taxes
payable for the current period for which tax returns are not
yet required to be filed and there are no agreements,
waivers, or other arrangements providing for an extension of
time with respect to the filing of any tax return by, or
payment of, any tax, governmental charge or deficiency by
Invisinet. Invisinet is not aware of any contingent tax
liabilities or any grounds which would prompt a reassessment
including aggressive treatment of income and expenses in
filing earlier tax returns;
INVISINET - APPLICABLE LAWS AND LEGAL MATTERS
(v) Licenses. Invisinet holds all licenses and permits as may be
requisite for carrying on the Invisinet Business in the
manner in which it has heretofore been carried on, which
licenses and permits have been maintained and continue to be
in good standing except where the failure to obtain or
maintain such licenses or permits would not have a material
adverse effect on the Invisinet Business;
(w) Applicable Laws. Invisinet has not been charged with or
received notice of breach of any laws, ordinances, statutes,
regulations, by-laws, orders or decrees to which it is
subject or which applies to it the violation of which would
have a material adverse effect on the Invisinet Business,
and, to Invisinet's knowledge, Invisinet is not in breach of
any laws, ordinances, statutes, regulations, by-laws, orders
or decrees the contravention of which would result in a
material adverse impact on the Invisinet Business;
(x) Pending or Threatened Litigation. Except as described in
Schedule "A" attached hereto, there is no material
litigation or administrative or governmental proceeding
pending or threatened against or relating to Invisinet, the
Invisinet Business, or any of the Invisinet Assets, nor does
Invisinet have any knowledge of any deliberate act or
omission of Invisinet that would form any material basis for
any such action or proceeding;
(y) No Bankruptcy. Invisinet has not made any voluntary
assignment or proposal under applicable laws relating to
insolvency and bankruptcy and no bankruptcy petition has
been filed or presented against Invisinet and no order has
been made or a resolution passed for the winding-up,
dissolution or liquidation of Invisinet;
(z) Labor Matters. Invisinet is not a party to any collective
agreement relating to the Invisinet Business with any labor
union or other association of employees and no part of the
Invisinet Business has been certified as a unit appropriate
for collective bargaining or, to the knowledge of Invisinet,
has made any attempt in that regard and Invisinet has no
reason to believe that any current employees
18
will leave Invisinet's employ as a result of this Merger;
(aa) Finder's Fees. Invisinet is not a party to any agreement
which provides for the payment of finder's fees, brokerage
fees, commissions or other fees or amounts which are or may
become payable to any third party in connection with the
execution and delivery of this Agreement and the
transactions contemplated herein;
EXECUTION AND PERFORMANCE OF AGREEMENT
(bb) Authorization and Enforceability. The execution and delivery
of this Agreement, and the completion of the transactions
contemplated hereby, have been duly and validly authorized
by all necessary corporate action on the part of Invisinet
and the Invisinet Shareholders;
(cc) No Violation or Breach. The execution and performance of
this Agreement will not
(i) violate the charter documents of Invisinet or
result in any breach of, or default under, any loan
agreement, mortgage, deed of trust, or any other
agreement to which Invisinet is a party,
(ii) give any person any right to terminate or cancel
any agreement including, without limitation,
Invisinet Material Contracts, or any right or
rights enjoyed by Invisinet,
(iii) result in any alteration of Invisinet's obligations
under any agreement to which Invisinet is a party
including, without limitation, the Invisinet
Material Contracts,
(iv) result in the creation or imposition of any lien,
encumbrance or restriction of any nature whatsoever
in favor of a third party upon or against the
Invisinet Assets,
(v) result in the imposition of any tax liability to
Invisinet relating to Invisinet Assets or the
Invisinet Shares, or
(vi) violate any court order or decree to which either
Invisinet is subject;
INVISINET ASSETS - OWNERSHIP AND CONDITION
(dd) Business Assets. The Invisinet Assets comprise all of the
property and assets of the Invisinet Business, and neither
the Invisinet Shareholders nor any other person, firm or
corporation owns any assets used by Invisinet in operating
the Invisinet Business, whether under a lease, rental
agreement or other arrangement, other than as disclosed in
Schedules "E" or "I" hereto;
(ee) Title. Invisinet is the legal and beneficial owner of the
Invisinet Assets, free and clear of all mortgages, liens,
charges, pledges, security interests, encumbrances or other
claims whatsoever, save and except as disclosed in Schedules
"E" or "I" hereto;
(ff) No Option. No person, firm or corporation has any agreement
or option or a right capable of becoming an agreement for
the purchase of any of the Invisinet
19
Assets;
(gg) Invisinet Insurance Policies. Invisinet maintains the public
liability insurance and insurance against loss or damage to
the Invisinet Assets and the Invisinet Business as described
in Schedule "G" hereto;
(hh) Invisinet Material Contracts. The Invisinet Material
Contracts listed in Schedule "I" constitute all of the
material contracts of Invisinet;
(ii) No Default. There has not been any default in any material
obligation of Invisinet or any other party to be performed
under any of Invisinet Material Contracts, each of which is
in good standing and in full force and effect and unamended
(except as specifically disclosed in Schedule "I"), and
Invisinet is not aware of any default in the obligations of
any other party to any of the Invisinet Material Contracts;
(jj) No Compensation on Termination. There are no agreements,
commitments or understandings relating to severance pay or
separation allowances on termination of employment of any
employee of Invisinet. Invisinet is not obliged to pay
benefits or share profits with any employee after
termination of employment except as required by law;
INVISINET ASSETS - INVISINET EQUIPMENT
(kk) Invisinet Equipment. The Invisinet Equipment has been
maintained in a manner consistent with that of a reasonably
prudent owner and such equipment is in good working
condition;
INVISINET ASSETS - INVISINET GOODWILL AND OTHER ASSETS
(ll) Invisinet Goodwill. Invisinet carries on the Invisinet
Business only under the name "Invisinet, Inc." and
variations thereof and under no other business or trade
names. Invisinet does not have any knowledge of any
infringement by Invisinet of any patent, trademark,
copyright or trade secret;
THE BUSINESS OF INVISINET
(mm) Maintenance of Business. Since the date of the Invisinet
Financial Statements, the Invisinet Business has been
carried on in the ordinary course and Invisinet has not
entered into any material agreement or commitment except in
the ordinary course; and
(nn) Subsidiaries. Invisinet does not own any subsidiaries and
does not otherwise own, directly or indirectly, any shares
or interest in any other corporation, partnership, joint
venture or firm and Invisinet does not own any subsidiary
and does not otherwise own, directly or indirectly, any
shares or interest in any other corporation, partnership,
joint venture or firm.
NON-MERGER AND SURVIVAL
5.2 The representations and warranties of the Invisinet Shareholders contained
herein will be true at and as of Closing in all material respects as though such
representations and warranties were made as of such time. Notwithstanding the
completion of the transactions contemplated hereby, the waiver of any condition
contained herein (unless such waiver expressly releases a
20
party from any such representation or warranty) or any investigation made by
WPCS, the representations and warranties of the Invisinet Shareholders shall
survive the Closing for a period of two (2) years.
INDEMNITY
5.3 The Invisinet Shareholders jointly and severally agree to indemnify and save
harmless WPCS from and against any and all claims, demands, actions, suits,
proceedings, assessments, judgments, damages, costs, losses and expenses,
including any payment made in good faith in settlement of any claim (subject to
the right of the Invisinet Shareholders to defend any such claim), resulting
from the breach by any of them of any representation or warranty of such party
made under this Agreement or from any misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished by Invisinet or the
Invisinet Shareholders to WPCS hereunder provided that (i) each individual claim
or series of related claims exceeds $10,000 and (ii) the amount of all such
claims shall not exceed the greater of (A) $250,000 or (B) the gross amount
realized by the Invisinet Shareholders from the sale of the Acquisition Shares.
ARTICLE 6
COVENANTS OF INVISINET AND
THE INVISINET SHAREHOLDERS
COVENANTS
6.1 Invisinet and the Invisinet Shareholders covenant and agree with WPCS that
they will:
(a) Conduct of Business. Until the Closing, conduct the
Invisinet Business diligently and in the ordinary course
consistent with the manner in which the Invisinet Business
generally has been operated up to the date of execution of
this Agreement;
(b) Preservation of Business. Until the Closing, use their best
efforts to preserve the Invisinet Business and the Invisinet
Assets and, without limitation, preserve for WPCS
Invisinet's relationships with their suppliers, customers
and others having business relations with them;
(c) Access. Until the Closing, give WPCS and its representatives
full access to all of the properties, books, contracts,
commitments and records of Invisinet relating to Invisinet,
the Invisinet Business and the Invisinet Assets, and furnish
to WPCS and its representatives all such information as they
may reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable
steps required to obtain, prior to Closing, any and all
third party consents required to permit the Merger and to
preserve and maintain the Invisinet Assets, including the
Invisinet Material Contracts, notwithstanding the change in
control of Invisinet arising from the Merger; and
(e) Reporting and Internal Controls. From and after the
Effective Time, forthwith take all required actions to
implement internal controls on the business of the Surviving
Company to ensure that the Surviving Company complies with
Section 13(b)(2) of the Exchange Act.
21
AUTHORIZATION
6.2 Invisinet hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting Invisinet to release any and all information in
their possession respecting Invisinet to WPCS. Invisinet shall promptly execute
and deliver to WPCS any and all consents to the release of information and
specific authorizations which WPCS reasonably require to gain access to any and
all such information.
SURVIVAL
6.3 The covenants set forth in this Article shall survive the Closing for the
benefit of WPCS.
ARTICLE 7
CONDITIONS PRECEDENT
CONDITIONS PRECEDENT IN FAVOR OF WPCS
7.1 WPCS' obligations to carry out the transactions contemplated hereby are
subject to the fulfillment of each of the following conditions precedent on or
before the Closing:
(a) all documents or copies of documents required to be
executed and delivered to WPCS hereunder will have been so
executed and delivered;
(b) all of the terms, covenants and conditions of this
Agreement to be complied with or performed by Invisinet or
the Invisinet Shareholders at or prior to the Closing will
have been complied with or performed;
(c) WPCS shall have completed its review and inspection of the
books and records of Invisinet and shall be satisfied with
same in all material respects;
(d) Xxxxxxx shall convert, as of the Closing Date, the debt
owing to it by Invisinet of $600,000, as well as all
interest accrued thereon, into equity of Invisinet through
an additional capital contribution in respect of the 850
Invisinet Shares presently held by Xxxxxxx;
(e) WAV, Inc. shall have forgiven any and all interest due to
it accrued on any accounts payable of Invisinet due to
WAV, Inc;
(f) title to the Invisinet Shares held by the Invisinet
Shareholders and to the Invisinet Assets will be free and
clear of all mortgages, liens, charges, pledges, security
interests, encumbrances or other claims whatsoever;
(g) the Certificate of Merger shall be executed by Invisinet
in form acceptable for filing with the Delaware Secretary
of State;
(h) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial
position or condition of Invisinet, its
liabilities or the Invisinet Assets or any
damage, loss or other change in circumstances
materially and adversely affecting the
22
Invisinet Business or the Invisinet Assets
or Invisinet's right to carry on the
Invisinet Business, other than (i) changes
described in the Schedule "A" hereto and
(ii) changes in the ordinary course of
business, none of which has been materially
adverse, or
(ii) any damage, destruction, loss or other event,
including changes to any laws or statutes
applicable to Invisinet or the Invisinet Business
(whether or not covered by insurance) materially
and adversely affecting Invisinet, the Invisinet
Business or the Invisinet Assets; and
(i) the transactions contemplated hereby shall have been
approved by all other regulatory authorities having
jurisdiction over the subject matter hereof, if any.
WAIVER BY WPCS
7.2 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of WPCS and any such condition may be waived in whole or
in part by WPCS at or prior to Closing by delivering to Invisinet and the
Invisinet Shareholders a written waiver to that effect signed by WPCS. In the
event that the conditions precedent set out in the preceding section are not
satisfied on or before the Closing, WPCS shall be released from all obligations
under this Agreement.
CONDITIONS PRECEDENT IN FAVOR OF INVISINET AND THE INVISINET SHAREHOLDERS
7.3 The obligations of Invisinet and the Invisinet Shareholders to carry out the
transactions contemplated hereby is subject to the fulfillment of each of the
following conditions precedent on or before the Closing:
(a) all documents or copies of documents required to be executed
and delivered to Invisinet hereunder will have been so
executed and delivered;
(b) all of the terms, covenants and conditions of this Agreement
to be complied with or performed by WPCS at or prior to the
Closing will have been complied with or performed;
(c) Invisinet shall have completed its review and inspection of
the books and records of WPCS and its subsidiaries and shall
be satisfied with same in all material respects;
(d) WPCS will have delivered the Acquisition Shares to be issued
pursuant to the terms of the Merger to the Invisinet
Shareholders at the Closing and the Acquisition Shares will
be registered on the books of WPCS in the name of the
Invisinet Shareholders at the Effective Time;
(e) title to the Acquisition Shares will be free and clear of
all mortgages, liens, charges, pledges, security interests,
encumbrances or other claims whatsoever;
(f) the Certificate of Merger shall be executed by the Acquirer
in form acceptable for filing with the Delaware Secretary of
State;
(g) subject to Article 8 hereof, there will not have occurred
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(i) any material adverse change in the financial
position or condition of WPCS, its subsidiaries,
their assets of liabilities or any damage, loss or
other change in circumstances materially and
adversely affecting WPCS or the WPCS Business or
WPCS' right to carry on the WPCS Business, other
than changes in the ordinary course of business,
none of which has been materially adverse, or
(ii) any damage, destruction, loss or other event,
including changes to any laws or statutes
applicable to WPCS or the WPCS Business (whether or
not covered by insurance) materially and adversely
affecting WPCS, its subsidiaries or its assets; and
(j) the transactions contemplated hereby shall have been
approved by all other regulatory authorities having
jurisdiction over the subject matter hereof, if any.
WAIVER BY INVISINET AND THE INVISINET SHAREHOLDERS
7.4 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of Invisinet and the Invisinet Shareholders and any such
condition may be waived in whole or in part by Invisinet or the Invisinet
Shareholders at or prior to the Closing by delivering to WPCS a written waiver
to that effect signed by Invisinet and the Invisinet Shareholders. In the event
that the conditions precedent set out in the preceding section are not satisfied
on or before the Closing Invisinet and the Invisinet Shareholders shall be
released from all obligations under this Agreement.
NATURE OF CONDITIONS PRECEDENT
7.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favor of the other party or parties set forth in this
Article.
TERMINATION
7.6 Notwithstanding any provision herein to the contrary, if the Closing does
not occur on or before November 15, 2002, this Agreement will be at an end and
will have no further force or effect, unless otherwise agreed upon by the
parties in writing.
CONFIDENTIALITY
7.7 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and that
if this Agreement is terminated pursuant to the preceding section the parties
agree to return to one another any and all financial, technical and business
documents delivered to the other party or parties in connection with the
negotiation and execution of this Agreement and shall keep the terms of this
Agreement and all information and documents received from Invisinet and WPCS and
the contents thereof confidential and not utilize nor reveal or release same,
provided, however, that WPCS may be required to issue news releases regarding
the execution and consummation of this Agreement and file a Current Report on
Form 8-K with the Securities and Exchange Commission respecting the proposed
Merger contemplated hereby together with such other documents as are required to
maintain the currency of WPCS' filings with the Securities and Exchange
Commission.
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NO-SHOP PROVISION
7.8 From the date hereof until the close of business on November 15, 2002, the
parties hereto agree that they shall not, nor will they cause their directors,
officers, employees, agents and representatives to, directly or indirectly,
solicit or entertain offers from, hold meetings or discussions with, or in any
manner encourage, accept or consider any proposal of, any other person relating
to the acquisition of Invisinet, shares of Invisinet's capital stock, securities
convertible into or exchangeable for shares of Invisinet's capital stock, or
Invisinet's assets or business, in whole or in part, whether directly or
indirectly, through purchase, merger, consolidation, original issuance, or
otherwise. Invisinet and the Invisinet Shareholders will immediately notify WPCS
in writing regarding any such contact from the date hereof until the close of
business on November 15, 2002.
ARTICLE 8
RISK
MATERIAL CHANGE IN THE BUSINESS OF INVISINET
8.1 If any material loss or damage to the Invisinet Business occurs prior to
Closing and such loss or damage, in WPCS' reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, WPCS shall, within
two (2) days following any such loss or damage, by notice in writing to
Invisinet, at its option, either:
(a) terminate this Agreement, in which case no party will be
under any further obligation to any other party; or
(b) elect to complete the Merger and the other transactions
contemplated hereby, in which case the proceeds and the
rights to receive the proceeds of all insurance covering
such loss or damage will, as a condition precedent to WPCS'
obligations to carry out the transactions contemplated
hereby, be vested in Invisinet or otherwise adequately
secured to the satisfaction of WPCS on or before the Closing
Date.
MATERIAL CHANGE IN THE WPCS BUSINESS
8.2 If any material loss or damage to the WPCS Business occurs prior to Closing
and such loss or damage, in Invisinet's reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, Invisinet shall,
within two (2) days following any such loss or damage, by notice in writing to
WPCS, at its option, either:
(a) terminate this Agreement, in which case no party will be
under any further obligation to any other party; or
(b) elect to complete the Merger and the other transactions
contemplated hereby, in which case the proceeds and the
rights to receive the proceeds of all insurance covering
such loss or damage will, as a condition precedent to
Invisinet's obligations to carry out the transactions
contemplated hereby, be vested in WPCS or otherwise
adequately secured to the satisfaction of Invisinet on or
before the Closing Date.
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ARTICLE 9
CLOSING
CLOSING
9.1 The Merger and the other transactions contemplated by this Agreement will be
closed at the Place of Closing in accordance with the closing procedure set out
in this Article.
DOCUMENTS TO BE DELIVERED BY INVISINET
9.2 On or before the Closing, Invisinet and the Invisinet Shareholders will
deliver or cause to be delivered to WPCS:
(a) the original or certified copies of the charter documents of
Invisinet and all corporate records documents and
instruments of Invisinet, the corporate seal of Invisinet
and all books and accounts of Invisinet;
(b) all reasonable consents or approvals required to be obtained
by Invisinet for the purposes of completing the Merger and
preserving and maintaining the interests of Invisinet under
any and all Invisinet Material Contracts and in relation to
Invisinet Assets;
(c) certified copies of such resolutions of the shareholders and
director of Invisinet as are required to be passed to
authorize the execution, delivery and implementation of this
Agreement;
(d) evidence satisfactory to WPCS and its counsel, acting
reasonably, that Invisinet has fully paid its auditors for
the cost of preparing, reviewing and delivering the
Invisinet Financial Statements and that the cost thereof did
not exceed $15,000;
(e) an acknowledgement from Invisinet and the Invisinet
Shareholders of the satisfaction of the conditions precedent
set forth in section 7.3 hereof;
(f) a bank draft drawn upon the Invisinet Bank Accounts for the
balance of these accounts made payable to WPCS in the amount
of not less than $130,000 and a copy of a letter of
Invisinet dated as of the Closing Date directing that the
Invisinet Bank Accounts be closed effective as of such date;
(g) the written release by all employees of Invisinet of accrued
wages and interest, if any, due to them by Invisinet;
(h) a Officer's Certificate executed by von Schaumburg stating
that the working capital of Invisinet at the Closing Date
(being current assets less current liabilities) is not less
that $130,000;
(i) the Employment Agreement, duly executed by Invisinet and von
Schaumburg;
(j) the Bonus Share Agreement, duly executed by von Schaumburg;
(k) the Registration Rights Agreement, duly executed by Xxxxxxx
and von Schaumburg;
(l) documentation acceptable to WPCS, acting reasonably,
evidencing the release by WAV, Inc. of the 2% monthly
management fee paid by Invisinet to WAV,
26
Inc.;
(m) the Certificate of Merger, duly executed by Invisinet; and
(n) such other documents as WPCS may reasonably require to give
effect to the terms and intention of this Agreement.
DOCUMENTS TO BE DELIVERED BY WPCS
9.3 On or before the Closing, WPCS shall deliver or cause to be delivered to
Invisinet and the Invisinet Shareholders:
(a) share certificates representing the Acquisition Shares duly
registered in the names of the Invisinet Shareholders;
(b) certified copies of such resolutions of the directors of
WPCS as are required to be passed to authorize the
execution, delivery and implementation of this Agreement;
(c) a certified copy of a resolution of the directors of WPCS
dated as of the Closing Date appointing Xxxx Xxxxxxxx as a
director of WPCS;
(d) a certified copy of a resolution of the directors of WPCS
dated as of the Closing Date appointing von Schaumburg as
executive Vice-President of Strategic Development of WPCS;
(e) an acknowledgement from WPCS of the satisfaction of the
conditions precedent set forth in section 7.1 hereof;
(f) the Bonus Share Agreement, duly executed by WPCS;
(g) the Registration Rights Agreement, duly executed by WPCS;
(h) the Certificate of Merger, duly executed by the Acquirer;
and
(i) such other documents as Invisinet may reasonably require to
give effect to the terms and intention of this Agreement.
ARTICLE 10
POST-CLOSING MATTERS
Forthwith after the Closing, WPCS, Invisinet and the Invisinet
Shareholders agree to use all their best efforts to:
(a) file the Certificate of Merger with Secretary of State of
the State of Delaware;
(b) remove the present directors of Invisinet from office and
appoint Xxxxxx Xxxxxxx as the sole director of Invisinet;
(c) issue a news release reporting the Closing;
(d) file a Form 8-K with the Securities and Exchange Commission
disclosing the terms of this Agreement and, not more than 60
days following the filing of such
27
Form 8-K, to file and amended Form 8-K which includes
audited financial statements of Invisinet as well as
pro forma financial information of Invisinet and WPCS
as required by Regulation SB as promulgated by the
Securities and Exchange Commission; and
(e) file reports on Form 3 (and Form 13D, where applicable) with
the Securities and Exchange Commission disclosing the
acquisition of the Acquisition Shares by the Invisinet
Shareholders.
ARTICLE 11
GENERAL PROVISIONS
ARBITRATION
11.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good negotiation fails to resolve such dispute,
controversy, difference or claim within thirty (30) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration.
Any action or proceeding seeking to enforce any provision of, or
based upon any right arising out of, this Agreement shall be settled by binding
arbitration by a panel of three (3) arbitrators in accordance with the
Commercial Arbitration Rules of the American Arbitration Association and
governed by the laws of the State of Delaware (without regard to the
choice-of-law rules or principles of that jurisdiction). Judgment upon the award
may be entered in any court located in the State of Delaware, and all the
parties hereto hereby consent to submit to the jurisdiction of such courts and
expressly waive any objections or defense based upon lack of personal
jurisdiction or venue.
Each of the plaintiff and defendant party to the arbitration shall
select one (1) arbitrator (or where multiple plaintiffs and/or defendants exist,
one (1) arbitrator shall be chosen collectively by such parties comprising the
plaintiffs and one (1) arbitrator shall be chosen collectively by those parties
comprising the defendants) and then the two (2) arbitrators shall mutually agree
upon the third arbitrator. Where no agreement can be reached on the selection of
either a third arbitrator or an arbitrator to be named by either a group of
plaintiffs or a group of defendants, any implicated party may apply to a judge
of the courts of the State of Delaware, to name an arbitrator. The location of
any arbitration shall be in the State of Delaware. Process in any such action or
proceeding may be served on any party anywhere in the world.
NOTICE
11.2 Any notice required or permitted to be given by any party will be deemed to
be given when in writing and delivered to the address for notice of the intended
recipient by personal delivery, prepaid single certified or registered mail, or
Facsimile. Any notice delivered by mail shall be deemed to have been received on
the fourth business day after and excluding the date of mailing, except in the
event of a disruption in regular postal service in which event such notice shall
be deemed to be delivered on the actual date of receipt. Any notice delivered
personally or by Facsimile shall be deemed to have been received on the actual
date of delivery.
ADDRESSES FOR SERVICE
11.3 The address for service of notice of each of the parties hereto is as
follows:
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(a) WPCS or the Acquirer:
WPCS International Incorporated
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 00
Xxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx, President
Phone: (000) 000-0000
Facsimile: (000) 000-0000
(b) Invisinet
Invisinet, Inc.
Attention: President
00 Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
(c) the Invisinet Shareholders
X. Xxxxxxx LLC
Attention: President
000 Xxxx Xxxxxxxxx Xxxx, Xxxxxxxxx 0
Xxxxx 00, Xxxx Xxxxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
X.X. xxx Xxxxxxxxxx
00 Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
CHANGE OF ADDRESS
11.4 Any party may, by notice to the other parties change its address for notice
to some other address in North America and will so change its address for notice
whenever the existing address or notice ceases to be adequate for delivery by
hand. A post office box may not be used as an address for service.
FURTHER ASSURANCES
11.5 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
TIME OF THE ESSENCE
11.6 Time is expressly declared to be the essence of this Agreement.
ENTIRE AGREEMENT
11.7 The provisions contained herein constitute the entire agreement among
Invisinet, the Invisinet Shareholders, the Acquirer and WPCS respecting the
subject matter hereof and
29
supersede all previous communications, representations and agreements, whether
verbal or written, among Invisinet, the Invisinet Shareholders, the Acquirer and
WPCS with respect to the subject matter hereof.
ENUREMENT
11.8 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
ASSIGNMENT
11.9 This Agreement is not assignable without the prior written consent of the
parties hereto.
COUNTERPARTS
11.10 This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery of
executed copies of this Agreement by Facsimile will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.
APPLICABLE LAW
11.11 This Agreement is subject to the laws of the State of Delaware.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
day and year first above written.
WPCS INTERNATIONAL
INCORPORATED
/s/ Xxxxx Xxxxxxxxxxx By: /s/ Xxxxxx Xxxxxxx
------------------------ -------------------------------
Witness Xxxxxx Xxxxxxx, President
Xxxxx Xxxxxxxxxxx
------------------------
Name
0000 X. Xxxxx
Xxxxxxx XX 00000
------------------------
Address
INVISINET ACQUISITIONS INC.
/s/ Xxxxx Xxxxxxxxxxx By: /s/ Xxxxxx Xxxxxxx
------------------------ ------------------------------
Witness Xxxxxx Xxxxxxx, President
Xxxxx Xxxxxxxxxxx
------------------------
Name
0000 X. Xxxxx
Xxxxxxx XX 00000
------------------------
Address
INVISINET, INC.
/s/ Xxxxx Xxxxxxxxxxx By: /s/ X.X. xxx Xxxxxxxxxx
------------------------ ------------------------------
Witness X.X. xxx Xxxxxxxxxx, President
Xxxxx Xxxxxxxxxxx
------------------------
Name
0000 X. Xxxxx
Xxxxxxx XX 00000
------------------------
Address
This is page 31 to the Agreement and Plan of Merger dated November 13, 2002
between WPCS International Incorporated., Invisinet Acquisitions Inc.,
Invisinet, Inc., X. Xxxxxxx LLC and X.X. xxx Xxxxxxxxxx.
31
X. XXXXXXX LLC
/s/ Xxxxx Xxxxxxxxxxx By: /s/ Xxxx Xxxxxxxx
--------------------- ------------------------------
Witness Xxxx Xxxxxxxx, President
Xxxxx Xxxxxxxxxxx
---------------------
Name
0000 X. Xxxxx
Xxxxxxx XX 00000
---------------------
Address
/s/ Xxxxx Xxxxxxxxxxx /s/ X.X. xxx Xxxxxxxxxx
--------------------- -----------------------------------
Witness X.X. XXX XXXXXXXXXX
Xxxxx Xxxxxxxxxxx
---------------------
Name
0000 X. Xxxxx
Xxxxxxx XX 00000
---------------------
Address
This is page 32 to the Agreement and Plan of Merger dated November 13, 2002
between WPCS International Incorporated., Invisinet Acquisitions Inc.,
Invisinet, Inc., X. Xxxxxxx LLC and X.X. xxx Xxxxxxxxxx.
32
