| 1.1 |
In
this Agreement the following terms will have the following
meanings:
|
| (a) |
“Acquisition
Shares”
means the 2,486,000 WPCS Common Shares to be issued to the Walker
Shareholders or at their direction at Closing pursuant to the Merger
and
the terms of this Agreement;
|
| (b) |
“Agreement”
means this Agreement and Plan of Merger among WPCS, the Acquirer,
Walker,
and the Walker Shareholders;
|
| (c) |
“CGCL”
means the California General Corporation
Law;
|
| (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;
|
| (g) |
“DGCL”
means the General Corporation Law of the State of
Delaware;
|
| (h) |
“Effective
Time”
means the date of the filing of an appropriate Certificate of Merger
in
the form required by the State of Delaware and the State of California,
which provide that the Merger shall become effective upon such
filings;
|
| (i) |
“Employment
Agreements”
means the employment agreements to be entered into on the Closing
Date
between Walker and D. Walker and Walker and G. Walker in the forms
attached hereto as Exhibit “A”;
|
| (j) |
“Exchange
Act”
means the Securities Exchange Act of 1934, as
amended;
|
| (k) |
“Merger”
means the merger, at the Effective Time, of Walker and the Acquirer
pursuant to this Agreement and Plan of
Merger;
|
| (l) |
“Place
of Closing”
means the offices of Sichenzia Ross Friedman Ference LLP, 1065 Avenue
of
the Americas, New York, New York 10018, or such other place as WPCS
and
Walker may mutually agree upon;
|
| (m) |
“Registration
Rights Agreement”
means the Registration Rights Agreement to be entered into on the
Closing
Date between WPCS and the Walker Shareholders in respect of the
Acquisition Shares in the form attached hereto as Exhibit
“B”;
|
| (n) |
“SEC
Reports”
means all forms, reports and documents filed and required to be filed
by
WPCS with the Commission under the Exchange
Act;
|
| (o) |
“Securities
Act”
means the Securities Act of 1933, as amended;
|
| (p) |
“Surviving
Company”
means Walker following the Merger with the
Acquirer;
|
| (q) |
“Walker
Accounts Payable and Liabilities”
means all accounts payable and liabilities of Walker, due and owing
or
otherwise constituting a binding obligation of Walker (other than
a Walker
Material Contract) as of October 31, 2002 as set forth in Schedule
“A”
hereto;
|
| (r) |
“Walker
Accounts Receivable”
means all accounts receivable and other debts owing to Walker, as
of
October 31, 2002 as set forth in Schedule “B”
hereto;
|
| (s) |
“Walker
Assets”
means all the property and assets of the Walker Business of every
kind and
description wheresoever situated including, without limitation, Walker
Equipment, Walker Material Contracts, Walker Accounts Receivable,
Walker
Cash, Walker Intangible Assets, Walker Goodwill, Walker Unlisted
Inventory, and all credit cards, charge cards and banking cards issued
to
Walker;
|
| (t) |
“Walker
Bank Accounts”
means all of the bank accounts, lock boxes and safety deposit boxes
of
Walker or relating to the Walker Business as set forth in Schedule
“C”
hereto;
|
| (u) |
“Walker
Business”
means all aspects of the business conducted by
Walker;
|
| (v) |
“Walker
Cash”
means all cash on hand or on deposit to the credit of Walker on the
Closing Date;
|
| (w) |
“Walker
Debt to Related Parties”
means the debts owed by Walker and its subsidiaries to any of the
Walker
Shareholders or to any family member thereof, or to any affiliate,
director or officer of Walker or the Walker Shareholders as described
in
Schedule “D”;
|
| (x) |
“Walker
Equipment”
means all machinery, equipment, furniture, and furnishings used in
the
Walker Business, including, without limitation, the items more
particularly described in Schedule “E”
hereto;
|
| (y) |
“Walker
Financial Statements”
means collectively, the financial statements of Walker for the years
ended
December 31, 2000 and 2001, and the ten months ended October 31,
2002, all
of which were prepared on an accrual
basis in accordance with United States generally accepted accounting
principles (other than the treatment of the Walker Unlisted Inventory),
true copies of which are attached as Schedule “F”
hereto;
|
| (z) |
“Walker
Goodwill”
means the goodwill of the Walker Business together with the exclusive
right of WPCS to represent itself as carrying on the Walker Business
in
succession of Walker subject to the terms hereof, and the right to
use any
words indicating that the Walker Business is so carried on including
the
right to use the name "Walker” or “Walker International" or any variation
thereof as part of the name of or in connection with the Walker Business
or any part thereof carried on or to be carried on by Walker, the
right to
all corporate, operating and trade names associated with the Walker
Business, or any variations of such names as part of or in connection
with
the Walker Business, all telephone listings and telephone advertising
contracts, all lists of customers, books and records and other information
relating to the Walker Business, all necessary licenses and authorizations
and any other rights used in connection with the Walker
Business;
|
| (aa) |
“Walker
Insurance Policies”
means the public liability insurance and insurance against loss or
damage
to Walker Assets and the Walker Business as described in Schedule
“G”
hereto;
|
| (bb) |
“Walker
Intangible Assets”
means all of the intangible assets of Walker, including, without
limitation, Walker Goodwill, all trademarks, logos, copyrights, designs,
and other intellectual and industrial property of Walker and its
subsidiaries;
|
| (cc) |
“Walker
Material Contracts”
means the burden and benefit of and the right, title and interest
of
Walker in, to and under all trade and non-trade contracts, engagements
or
commitments, whether written or oral, to which Walker is entitled
in
connection with the Walker Business whereunder Walker 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
|
| (dd) |
“Walker
Shares”
means all of the issued and outstanding shares of Walker's equity
stock;
|
| (ee) |
“Walker
Unlisted Inventory”
means the inventory listed on Schedule I hereto, which does not appear
on
the Walker Financial Statements.
|
| (ff) |
“WPCS
Business”
means all aspects of any business conducted by WPCS and its
subsidiaries;
|
| (gg) |
“WPCS
Common Shares”
means the Common Stock, $0.0001 par value per share, of WPCS;
and
|
| (hh) |
“WPCS
Financial Statements”
means, collectively, the audited consolidated financial statements
of WPCS
for the fiscal years ended April 30, 2001 and 2002, together with
the
unqualified auditors’ report thereon, and the unaudited financial
statements six month periods ended October 31, 2001 and 2002, true
copies
of which are attached as Schedule “K”
hereto.
|
| Schedule | “A” | Walker Accounts Payable and Liabilities |
| Schedule | “B” | Walker Accounts Receivable |
| Schedule | “C” | Walker Bank Accounts |
| Schedule | “D” |
Walker
Debts to Related Parties (including accounts payable aging
ledger)
|
| Schedule | “E” | Walker Equipment |
| Schedule | “F” | Walker Financial Statements |
| Schedule | “G” | Walker Insurance Policies |
| Schedule | “H” | Walker Material Contracts |
| Schedule | “I” | Walker Unlisted Inventory |
| Schedule | “J” | Walker Unlisted Tools |
| Schedule | “K” | Financial Statements |
| Exhibit | “A” | Form of Employment Agreements |
| Exhibit | “B” | Form of Registration Rights Agreement |
| Exhibit | “C” | Form of Security Agreement and UCC-1 |
| Exhibit | “D” | Form of Indemnification Agreement |
| Exhibit | “E” | Form of Assumption Agreement |
| (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 Walker Shares.
Each Walker 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 Walker Shares outstanding immediately prior to
Closing.
All such Walker 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. Notwithstanding
the
foregoing, the Walker Shareholders direct WPCS to deliver 74,580
Acquisition Shares to Crader & Associates, Inc., and 24,860
Acquisition Shares to Ray Helterline (collectively, the “Crader
Shares”).
Such Crader Shares shall be deducted pro rata from the Acquisition
Shares
otherwise deliverable to the Walker
Shareholders.
|
| (a) |
On
the Closing Date, WPCS shall pay the Walker Shareholders an aggregate
of
$500,000 by certified check, bank check or wire transfer. Such amount
shall be paid to the Walker Shareholders in proportion to their ownership
of Walker immediately prior to the
Merger.
|
| (b) |
The
$500,000 of remaining Cash Consideration shall be paid through quarterly
distributions equal to 75% of the net income of Walker (i) after
the
elimination of all expenses related to (y) services provided to Walker
by
WPCS or any affiliate thereof and (z) transactions between Walker
and WPCS
or any affiliate thereof, and (ii) prior to the deduction of interest,
taxes, depreciation and amortization (“Walker
Earn-Out Payment”),
provided, however, that if either D. Walker or G. Walker are (A)
terminated without cause, or (B) terminate their respective Employment
Agreements for Good Reason (as defined therein), prior to the completion
of the terms of their respective Employment Agreements, WPCS shall
immediately pay the unpaid balance of the Cash Consideration. Commencing
with each fiscal quarter of WPCS occurring after the Closing Date,
WPCS
shall pay, or cause Walker to pay, the Walker Shareholders an amount
equal
to the Walker Earn-Out Payment within five business days after the
earlier
of (i) the filing with the SEC of a WPCS quarterly report on Form
10-QSB
(or Form 10-Q), or the annual report on Form 10-KSB (or Form 10-K),
whichever SEC form is required to be filed after the applicable fiscal
period, or (ii) the final date on which such reports are required
to be
filed, taking into consideration any permitted automatic extension
of time
to file such reports. Such amounts shall be paid to the Walker
Shareholders in proportion to their ownership of Walker immediately
prior
to the Merger. Such payments will be made until an aggregate of $500,000
shall have been paid to the Walker Shareholders pursuant to this
Section
2.5(b). In order to secure the timely payment of all monies due to
be paid
for Cash Consideration pursuant to this Agreement, WPCS, Walker and
the
Walker Shareholders shall enter into a Security Agreement in substantially
the form of Exhibit C attached hereto and shall execute and file
an
appropriate form UCC-1.
|
| 2.6 |
The
Walker 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 seller has furnished to WPCS
an
opinion of counsel to that effect or such other written opinion as
may be
reasonably required by WPCS.
|
| (a) |
Incorporation.
WPCS and each of its subsidiaries is a corporation duly organized,
validly
existing and in good standing under the laws of the state of its
incorporation, has the corporate power and authority to own, operate
and
lease its properties and to carry on its business as now conducted
or as
proposed to be conducted, and is qualified as a foreign corporation
in
each jurisdiction in which a failure to be so qualified could reasonably
be expected to have a material adverse effect on its present or expected
operations or financial condition.
|
| (b) |
Power
and Capacity.
Each of WPCS and Acquirer has the right, power, legal capacity and
authority to enter into and perform its obligations under this Agreement,
and all agreements to which WPCS and/or Acquirer is or will be a
party
that are required to be executed pursuant to this Agreement (the
“WPCS
Ancillary Agreements”).
The execution, delivery and performance of this Agreement and the
WPCS
Ancillary Agreements have been duly and validly approved and authorized
by
the respective Boards of Directors of WPCS and Acquirer, and the
stockholder of Acquirer, as required by applicable law and their
respective certificates of incorporation and
bylaws.
|
| (c) |
No
Filings.
No filing, authorization or approval, governmental or otherwise,
is
necessary to enable WPCS and Acquirer to enter into, and to perform
their
respective obligations under, this Agreement and the WPCS Ancillary
Agreements, except for (a) the filing of the Agreement of Merger with
the Delaware and California Secretaries of State, the recording of
the
Agreement of Merger in the office of the Recorder of the Delaware
county
in which WPCS’s registered office is located, and the filing of
appropriate documents with the relevant authorities of other states
in
which WPCS is qualified to do business, if any, and (b) such filings
as may be required to comply with federal and state securities
laws.
|
| (d) |
Binding
Obligation.
This Agreement and the WPCS Ancillary Agreements are, or when executed
by
WPCS and/or Acquirer (as applicable) will be, valid and binding
obligations of WPCS and Acquirer enforceable in accordance with their
respective terms, except as to the effect, if any, of (a) applicable
bankruptcy and other similar laws affecting the rights of creditors
generally, and (b) rules of law governing specific performance, injunctive
relief and other equitable remedies
|
| (e) |
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”;
|
| (f) |
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 state a material fact necessary in order to make
the
statements made, in light of the circumstances under which they were
made,
not misleading;
|
| (g) |
Carrying
on Business.
Other than corporate formation and organization, the Acquirer has
not
carried on any business activities to
date.
|
| (h) |
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 10,592,844 WPCS Common Shares, no shares of Series
B
Convertible Preferred Stock and 1,000 shares of Series C Convertible
Preferred Stock are presently issued and outstanding;
|
| (i) |
No
Option.
No person, firm or corporation has any agreement, warrant or option
or any
right capable of becoming an agreement, warrant or option for the
acquisition of any capital stock or equity interest in WPCS, except
for an
option to purchase 11,111 WPCS Common Shares at $2.75 per share expiring
April 30, 2003, no shares of Series B Convertible Preferred Stock
and
1,000 shares of Series C Convertible Preferred
Stock;
|
| (j) |
Agreements
Concerning WPCS Capital Stock.
There are no restrictions on the transfer, sale or other disposition
of
any capital stock of WPCS contained in the charter documents of WPCS
or
under any other agreements. There are no stockholder agreements,
investor
rights agreements, co-sale agreements, right of first refusal agreements,
voting agreements, registration rights agreements or any other similar
type of agreement to which WPCS, any subsidiary of WPCS or any officer
or
director of WPCS (or any subsidiary of WPCS) is a party.
|
| (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, warrant or option
or any
right capable of becoming an agreement, warrant or option for the
acquisition of any capital stock or equity interest in
Acquirer;
|
| (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, copies of which
have
been provided to Walker;
|
| (n) |
Corporate
Minute Books.
The corporate minute books of WPCS and its subsidiaries 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 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,
except where such breach or default would not have a material adverse
effect upon WPCS or such subsidiary,
respectively;
|
| (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 statement of cash flows
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,
and
are reflected in the WPCS Financial
Statements;
|
| (r) |
Certain
Transactions and Agreements.
None of the officers of WPCS or any subsidiary, nor any member of
their
immediate families, has any direct or indirect ownership interest
in any
firm or corporation that competes with WPCS (except with respect
to any
interest in less than one percent of the stock of any corporation
whose
stock is publicly traded). None of said officers or directors, or
any
member of their immediate families, is directly or indirectly interested
in any contract or informal arrangement with WPCS or any subsidiary,
except for normal compensation for services as an officer, director
or
employee thereof. None of said officers or directors or family members
has
any interest in any property, real or personal, tangible or intangible,
including inventions, patents, copyrights, trademarks or trade names
or
trade secrets, used in or pertaining to the business of WPCS or any
subsidiary, except for the normal rights of a
stockholder;
|
| (s) |
Interested
Party Transactions.
No officer or director of WPCS or any “affiliate” or “associate” (as those
terms are defined in Rule 405 promulgated under the Securities Act)
of any such person has had, either directory or indirectly, a material
interest in: (i) any person or entity which purchases from or sells,
licenses or furnishes to WPCS or any subsidiary any goods, property,
technology or intellectual or other property rights or services;
or
(ii) any contract or agreement to which WPCS or any subsidiary is a
party or by which it may be bound or
affected;
|
| (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 October 31, 2002,
|
| (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.
|
| (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;
|
| (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;
|
| (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;
|
| (ff) |
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,
|
| (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;
|
| (gg) |
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 or in the WPCS SEC
Reports;
|
| (hh) |
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 and Invisinet, Inc., a Delaware
corporation;
|
| (ii) |
Acquisition
Shares.
The Acquisition Shares when delivered to the holders of Walker Shares
or
as directed thereby 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
|
| (jj) |
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 Walker Shareholders) which subject
the issuance or sale of such shares to the Walker Shareholders to
the
registration requirements of Section 5 of the Securities
Act.
|
| (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 Walker Shareholders and their representatives
full access to all of the properties, books, contracts, commitments
and
records of WPCS, and furnish to the Walker Shareholders and their
representatives all such information as they may reasonably
request;
|
| (c) |
Procure
Consents.
Take all reasonable steps required to obtain, prior to Closing, any
and
all third party consents required to permit the
Merger;
|
| (d) |
Public
Information.
Until such time that the Walker Shareholders have sold all of the
Acquisition Shares, make and keep public information available, as
those
terms are understood and defined in Rule 144;
and
|
| (e) | SEC Filings. Until such time that the Walker Shareholders have sold all of the Acquisition Shares, file with the Commission in a timely manner, all reports and other documents required of WPCS under the Securities Act and the Exchange Act. |
| (f) | Appointment of Officer and Director. On the Closing Date, WPCS and Walker will enter into the Employment Agreements with D. Walker and G. Walker. In addition, on the Closing Date WPCS will appoint D. Walker as Executive Vice President, Project Services Division and will appoint G. Walker as a member of the WPCS Board of Directors. |
| (g) | Payment of Audit Fees. Within ten days after the Closing Date, WPCS will engage the services of an independent certified public accountant to audit the financial statements of Walker for the two fiscal years ended December 31, 2001, and to review the financial statements of Walker for the ten months ended October 31, 2002. WPCS shall be solely responsible for the payment of all fees related to the foregoing. |
| (h) |
Delivery
of Registration Rights Agreement.
On the Closing Date, WPCS will deliver the executed Registration
Rights
Agreement to the Walker
Shareholders.
|
| (i) |
Employment
Agreement.
On the Closing Date, WPCS shall execute and shall cause the Surviving
Company to execute and deliver the Employment Agreements to D. Walker
and
G. Walker.
|
| (j) |
Intercompany
Transactions.
Until such time that the Walker Shareholders have received all of
the Cash
Consideration, WPCS shall not, without the prior written consent
of D.
Walker and G. Walker, cause the Surviving Company to (i) amend the
Articles of Incorporation of the Surviving Company, or (ii) merge
or
consolidate with any other entity, dissolve, reorganize, or undergo
any
fundamental corporate change.
|
| (a) |
Incorporation.
Walker is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, has the
corporate power and authority to own, operate and lease its properties
and
to carry on its business as now conducted or as proposed to be conducted,
and is qualified as a foreign corporation in each jurisdiction in
which a
failure to be so qualified could reasonably be expected to have a
material
adverse effect on its present or expected operations or financial
condition.
|
| (b) |
Power
and Capacity.
Walker has the right, power, legal capacity and authority to enter
into
and perform its obligations under this Agreement, and all agreements
to
which Walker is or will be a party that are required to be executed
pursuant to this Agreement (the “Walker
Ancillary Agreements”).
The execution, delivery and performance of this Agreement and the
Walker
Ancillary Agreements has been duly and validly approved and authorized
by
the Board of Directors and stockholders of Walker, as required by
applicable law and its articles of incorporation and
bylaws.
|
| (c) |
No
Filings.
No filing, authorization or approval, governmental or otherwise,
is
necessary to enable Walker to enter into, and to perform its obligations
under, this Agreement and the Walker Ancillary Agreements, except
for
(a) the filing of the Agreement of Merger with the Delaware and
California Secretaries of State, the recording of the Agreement of
Merger
in the office of the Recorder of the Delaware county in which WPCS’s
registered office is located, and the filing of appropriate documents
with
the relevant authorities of other states in which Walker is qualified
to
do business, if any, (b) such filings as may be required to comply
with federal and state securities laws, and (c) certain third-party
consents, which have been disclosed in Walker’s Disclsoure
Letter.
|
| (d) |
Binding
Obligation.
This Agreement and the Walker Ancillary Agreements are, or when executed
by Walker will be, valid and binding obligations of Walker enforceable
in
accordance with their respective terms, except as to the effect,
if any,
of (a) applicable bankruptcy and other similar laws affecting the
rights
of creditors generally, and (b) rules of law governing specific
performance, injunctive relief and other equitable
remedies.
|
| (e) |
Authorized
Capital.
The authorized capital of Walker consists of 1,000 shares of common
stock,
no par value per share;
|
| (f) |
Ownership
of Walker Shares.
The issued and outstanding share capital of Walker will on Closing
consist
of 100 shares of common stock (being the Walker Shares), which shares
on
Closing shall be validly issued and outstanding as fully paid and
non-assessable shares. The Walker Shareholders will be at Closing
the
registered and beneficial owner of the Walker Shares. The Walker
Shares
owned by the Walker Shareholders will on Closing be free and clear
of any
and all liens, charges, pledges, encumbrances, restrictions on transfer
and adverse claims whatsoever;
|
| (g) |
No
Option.
No person, firm or corporation has any agreement, warrant or option
or any
right capable of becoming an agreement, warrant or option for the
acquisition of any capital stock or equity interest in
Acquirer;
|
| (h) |
No
Restrictions.
There are no restrictions on the transfer, sale or other disposition
of
Walker Shares contained in the charter documents of Walker or under
any
agreement;
|
| (i) |
Charter
Documents.
The charter documents of Walker have not been altered since its
incorporation date, except as filed in the record books of
Walker;
|
| (j) |
Corporate
Minute Books. The
corporate minute books of Walker 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
Walker which required director or shareholder approval are reflected
on
the corporate minute books of Walker. Walker is not in violation
or breach
of, or in default with respect to, any term of its ^Articles of
Incorporation (or other charter documents) or by-laws, except where
such
breach or default would not have a material adverse effect upon
Walker;
|
| (k) |
Walker
Financial Statements.
The Walker Financial Statements present fairly, in all material respects,
the assets and liabilities (whether accrued, absolute, contingent
or
otherwise) of Walker as of the respective dates thereof, and the
results
of operations and statement of cash flows of Walker during the periods
covered thereby, in all material respects, and were prepared on an
accrual
basis in accordance with generally accepted accounting principles
consistently applied throughout the periods indicated, except for
the
treatment of the Walker Unlisted
Inventory;
|
| (l) |
Walker
Accounts Payable and Liabilities.
There are no material liabilities, contingent or otherwise, of Walker
which are not disclosed in Schedule “A” hereto or reflected in the Walker
Financial Statements except those incurred in the ordinary course
of
business since the date of the said schedule and the Walker Financial
Statements, and Walker 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 Walker as of October 31, 2002 are described in Schedule
“A”
hereto;
|
| (m) |
Walker
Accounts Receivable.
All Walker Accounts Receivable result from bona fide business transactions
and services actually rendered without, to the knowledge and belief
of
Walker, any claim by the obligor for set-off or
counterclaim;
|
| (n) |
Walker
Bank Accounts.
All of the Walker Bank Accounts, their location, numbers and the
authorized signatories thereto are as set forth in Schedule “C”
hereto;
|
| (o) |
No
Debt to Related Parties.
Walker is not, and on Closing will not be, materially indebted to
the
Walker Shareholders nor to any family member thereof, nor to any
affiliate, director or officer of Walker or the Walker Shareholders
except
accounts payable on account of bona fide business transactions of
Walker
incurred in normal course of Walker Business, including employment
agreements with the Walker Shareholders and attached to Schedule
“D”
hereto is an accounts payable aging
ledger;
|
| (p) |
No
Related Party Debt to Walker.
Neither the Walker Shareholders nor any director, officer or affiliate
of
Walker are now indebted to or under any financial obligation to Walker
on
any account whatsoever, except for advances on account of travel
and other
expenses not exceeding $5,000 in
total;
|
| (q) |
No
Dividends.
No dividends or other distributions on any shares in the capital
of Walker
have been made, declared or authorized since the date of the Walker
Financial Statements;
|
| (r) |
No
Payments.
No payments of any kind have been made or authorized since the date
of the
Walker Financial Statements to or on behalf of the Walker Shareholders
or
to or on behalf of officers, directors, shareholders or employees
of
Walker, except payments made in the ordinary course of business and
at the
regular rates of salary or other remuneration payable to
them;
|
| (s) |
No
Pension Plans.
There are no pension, profit sharing, group insurance or similar
plans or
other deferred compensation plans affecting
Walker;
|
| (t) |
No
Adverse Events.
Since the date of the Walker Financial Statements, except as described
in
the Walker Disclosure Letter:
|
| (i) |
there
has not been any material adverse change in the properties, results
of
operations, financial position or condition of Walker, its liabilities
or
the Walker Assets or any damage, loss or other change in circumstances
materially affecting Walker, the Walker Business or the Walker Assets
or
Walker’s right to carry on the Walker 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 Walker,
the
Walker Business or the Walker
Assets,
|
| (iii) |
there
has not been any material increase in the compensation payable or
to
become payable by Walker to the Walker Shareholders or to any of
Walker's
officers, employees or agents or any bonus, payment or arrangement
made to
or with any of them,
|
| (iv) |
the
Walker Business has been and continues to be carried on in the ordinary
course,
|
| (v) |
Walker
has not waived or surrendered any right of material
value,
|
| (vi) |
Walker
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
|
| (vii) |
no
capital expenditures in excess of $10,000 individually or $30,000
in total
have been authorized or made;
|
| (u) |
Tax
Returns.
All tax returns and reports of Walker required by law to be filed
have
been filed based on a cash
basis, and are true, complete and correct, and any taxes payable
in
accordance with any return filed by Walker or in accordance with
any
notice of assessment or reassessment issued by any taxing authority
have
been so paid;
|
| (v) |
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 Walker.
Walker
is not aware of any contingent tax liabilities or any grounds which
would
prompt a reassessment;
|
| (w) |
Licenses.
Walker holds all licenses and permits as may be requisite for carrying
on
the Walker 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 Walker
Business;
|
| (x) |
Applicable
Laws.
Walker 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 Walker Business, and, to Walker’s
knowledge, Walker 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 Walker Business;
|
| (y) |
Pending
or Threatened Litigation.
There is no material litigation or administrative or governmental
proceeding pending or threatened against or relating to Walker, the
Walker
Business, or any of the Walker Assets, nor does Walker have any knowledge
of any deliberate act or omission of Walker that would form any material
basis for any such action or
proceeding;
|
| (z) |
No
Bankruptcy.
Walker 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 Walker and no order has been made
or a
resolution passed for the winding-up, dissolution or liquidation
of
Walker;
|
| (aa) |
Labor
Matters.
Walker is not a party to any collective agreement relating to the
Walker
Business with any labor union or other association of employees and
no
part of the Walker Business has been certified as a unit appropriate
for
collective bargaining or, to the knowledge of Walker, has made any
attempt
in that regard and Walker has no reason to believe that any current
employees will leave Walker's employ as a result of this
Merger;
|
| (bb) |
Finder's
Fees.
Walker 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, except for certain amounts owed to Crader & Associates, Inc.,
of which (i) WPCS shall issue 74,560 WPCS Common Shares to Crader
&
Associates, Inc. at the Closing, (ii) WPCS shall issue 24,860 shares
to
Ray Helterline at the Closing, and (iii) the remainder shall be paid
by
the Walker Shareholders;
|
| (cc) |
No
Violation or Breach.
The execution and performance of this Agreement will
not
|
| (i) |
violate
the charter documents of Walker or result in any breach of, or default
under, any loan agreement, mortgage, deed of trust, or any other
agreement
to which Walker is a party,
|
| (ii) |
give
any person any right to terminate or cancel any agreement including,
without limitation, Walker Material Contracts, or any right or rights
enjoyed by Walker,
|
| (iii) |
result
in any alteration of Walker's obligations under any agreement to
which
Walker is a party including, without limitation, the Walker 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
Walker
Assets,
|
| (v) |
result
in the imposition of any tax liability to Walker relating to Walker
Assets
or the Walker Shares, or
|
| (vi) |
violate
any court order or decree to which either Walker is subject;
|
| (dd) |
Business
Assets.
The Walker Assets comprise all of the property and assets of the
Walker
Business, and neither the Walker Shareholders nor any other person,
firm
or corporation owns any assets used by Walker in operating the Walker
Business, whether under a lease, rental agreement or other
arrangement;
|
| (ee) |
Title.
Walker is the legal and beneficial owner of the Walker Assets, free
and
clear of all mortgages, liens, charges, pledges, security interests,
encumbrances or other claims
whatsoever;
|
| (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 Walker
Assets;
|
| (gg) |
Walker
Insurance Policies.
Walker maintains the public liability insurance and insurance against
loss
or damage to the Walker Assets and the Walker Business as described
in
Schedule “G” hereto;
|
| (hh) |
Walker
Material Contracts.
The Walker Material Contracts listed in Schedule “H” constitute all of the
material contracts of Walker;
|
| (ii) |
No
Default.
There has not been any default in any material obligation of Walker
or to
the knowledge of Walker any other party to be performed under any
of
Walker Material Contracts, each of which to the knowledge of Walker
is in
good standing and in full force and effect and unamended, and Walker
is
not aware of any default in the obligations of any other party to
any of
the Walker 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 Walker. Walker is not obliged to pay benefits or share
profits
with any employee after termination of employment except as required
by
law;
|
| (kk) |
Walker
Equipment.
The Walker Equipment has been maintained in a manner consistent with
that
of a reasonably prudent owner and to the knowledge of Walker such
equipment is in good working
condition;
|
| (ll) |
Walker
Goodwill.
Walker carries on the Walker Business only under the name "Walker
Comm,
Inc." and variations thereof and under no other business or trade
names.
Walker does not have any knowledge of any infringement by Walker
of any
patent, trademark, copyright or trade
secret;
|
| (mm) |
Maintenance
of Business.
Since the date of the Walker Financial Statements, the Walker Business
has
been carried on in the ordinary course and Walker has not entered
into any
material agreement or commitment except in the ordinary course;
and
|
| (nn) |
Subsidiaries.
Walker 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 Walker 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.
|
| (a) |
Conduct
of Business.
Until the Closing, conduct the Walker Business diligently and in
the
ordinary course consistent with the manner in which the Walker 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 Walker
Business
and the Walker Assets and, without limitation, preserve for WPCS
Walker’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 Walker
relating to Walker, the Walker Business and the Walker 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 Walker Assets, including the Walker
Material Contracts, notwithstanding the change in control of Walker
arising from the Merger; and
|
| (e) |
Employment
Agreement.
On the Closing Date, D. Walker and G. Walker will deliver the executed
Employment Agreements to WPCS.
|
| (a) |
all
documents or copies of documents required to be executed and delivered
to
WPCS by Walker or the Walker Shareholders under Section 9.2 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 Walker or the Walker 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
Walker and shall be satisfied with same in all material
respects;
|
| (d) |
title
to the Walker Shares held by the Walker Shareholders and to the Walker
Assets will be free and clear of all mortgages, liens, charges, pledges,
security interests, encumbrances or other claims
whatsoever;
|
| (e) |
the
Certificates of Merger shall be executed by Walker in form acceptable
for
filing with the Delaware and California Secretaries of
State;
|
| (f) |
subject
to Article 8 hereof, there will not have
occurred
|
| (i) |
any
material adverse change in the financial position or condition of
Walker,
its liabilities or the Walker Assets or any damage, loss or other
change
in circumstances materially and adversely affecting the Walker Business
or
the Walker Assets or Walker's right to carry on the Walker 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 Walker or the Walker Business (whether or
not
covered by insurance) materially and adversely affecting Walker,
the
Walker Business or the Walker Assets;
and
|
| (g) |
the
transactions contemplated hereby shall have been approved by all
other
regulatory authorities having jurisdiction over the subject matter
hereof,
if any.
|
| (a) |
all
documents or copies of documents required to be executed and delivered
to
Walker or the Walker Shareholder by WPCS or Acquirer under Section
9.3
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) |
Walker
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 Walker Shareholders at the Closing and
the
Acquisition Shares will be registered on the books of WPCS in the
name of
the Walker Shareholders at the Effective
Time;
|
| (e) |
WPCS
shall have delivered 74,580 WPCS Shares to Crader & Associates, Inc.,
and 24,860 WPCS Shares to Ray
Helterline;
|
| (f) |
title
to the Acquisition Shares and the Crader Shares will be free and
clear of
all mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever;
|
| (g) |
payment
of the Cash Consideration required to be paid as of the Closing Date
shall
have been made;
|
| (h) |
payment
to the Walker Shareholders of the amount of working capital of Walker
(as
described in Section 9.2(e)) in excess of $1,200,000, if not previously
withdrawn;
|
| (i) |
WPCS
shall have executed agreements to assume (i) all leases for real
and
personal property used by the Walker Business, and (ii) all bonding
company indemnification agreements that D. Walker and/or G. Walker
have
entered into on behalf of Walker, if
any.
|
| (j) |
the
Certificate of Merger shall be executed by the Acquirer in form acceptable
for filing with the Delaware and California Secretaries of State;
|
| (k) |
subject
to Article 8 hereof, there will not have
occurred
|
| (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
|
| (h) |
the
transactions contemplated hereby shall have been approved by all
other
regulatory authorities having jurisdiction over the subject matter
hereof,
if any.
|
| (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 Walker or otherwise adequately secured to the satisfaction
of
WPCS on or before the Closing Date.
|
| (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
Walker's obligations to carry out the transactions contemplated hereby,
be
vested in WPCS or otherwise adequately secured to the satisfaction
of
Walker on or before the Closing
Date.
|
| (a) |
the
original or certified copies of the charter documents of Walker and
all
corporate records documents and instruments of Walker, the corporate
seal
of Walker and all books and accounts of
Walker;
|
| (b) |
all
reasonable consents or approvals required to be obtained by Walker
for the
purposes of completing the Merger and preserving and maintaining
the
interests of Walker under any and all Walker Material Contracts and
in
relation to Walker Assets;
|
| (c) |
certified
copies of such resolutions of the shareholders and directors of Walker
as
are required to be passed to authorize the execution, delivery and
implementation of this Agreement;
|
| (d) |
an
acknowledgement from Walker and the Walker Shareholders of the
satisfaction of the conditions precedent set forth in section 7.3
hereof;
|
| (e) |
an
Officer’s Certificate executed by a duly authorized officer of Walker
stating that the working capital of Walker at the Closing Date (being
cash, all accounts receivable net of bad debt reserve, employee
receivables, workmen's compensation refunds receivable for the 2002
fiscal
year, costs in excess of billings, less accounts payable, accrued
expenses
(short term liabilities as listed on the Walker Financial Statement
as of
Oct. 31, 2002), other than Section 125 Plan liabilities, dental trust
fund
payable, notes payable - autos (ST), state income tax liability calculated
on a cash-basis taxable income, and billings in excess of costs )
is not
less that $1,200,000, provided, however, that the Walker Shareholders
shall be entitled to withdraw any working capital of Walker in excess
of
$1,200,000;
|
| (f) |
the
Employment Agreements, duly executed by Walker, D. Walker and G.
Walker;
|
| (g) |
the
Certificates of Merger, duly executed by Walker;
|
| (h) |
the
Registration Rights Agreement, duly executed by the Walker Shareholders;
and
|
| (i) |
such
other documents as WPCS may reasonably require to give effect to
the terms
and intention of this Agreement.
|
| (a) |
share
certificates representing the Acquisition Shares duly registered
in the
names of the Walker Shareholders;
|
| (b) |
the
Cash Consideration due to be paid on the Closing
Date;
|
| (c) |
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;
|
| (d) |
a
certified copy of a resolution of the directors of WPCS dated as
of the
Closing Date appointing G. Walker as a director of
WPCS;
|
| (e) |
a
certified copy of a resolution of the directors of Walker dated as
of the
Closing Date, approving the Employment
Agreements;
|
| (f) |
an
acknowledgement from WPCS of the satisfaction of the conditions precedent
set forth in section 7.1 hereof;
|
| (g) |
the
Employment Agreements, duly executed by WPCS:
|
| (h) |
the
Registration Rights Agreement, duly executed by WPCS;
|
| (i) |
the
Certificates of Merger, duly executed by the
Acquirer;
|
| (j) |
the
Indemnification Agreements between WPCS and D. Walker and G. Walker,
in
substantially the form attached hereto as Exhibit
D;
|
| (k) |
the
Assumption Agreement, duly executed by
WPCS;
|
| (l) |
the
Security Agreement between WPCS, Walker and the Walker Shareholders
in
substantially the form attached hereto as Schedule M;
and
|
| (m) |
such
other documents as Walker may reasonably require to give effect to
the
terms and intention of this
Agreement.
|
| (a) |
file
the Certificates of Merger with Secretaries of State of Delaware
and
California;
|
| (b) |
cause
the directors of Walker to be D. Walker, G. Walker, Andrew Hidalgo,
E.J.
von Schaumburg and Andrew Shoffner;
|
| (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 Form 8-K, to file and amended Form 8-K which includes audited
financial statements of Walker as well as pro forma financial information
of Walker 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 Walker Shareholders.
|
| (a) |
WPCS
or the Acquirer:
|
|
WPCS
International Incorporated
140
South Village Avenue, Suite 20
Exton,
Pennsylvania 19341
Attn:
Andrew Hidalgo, President
Phone:
(610) 903-0400
Facsimile:
(610) 903-0401
|
|
Copy
to:
|
|
Marc
J. Ross, Esq.
Thomas
A. Rose, Esq.
Sichenzia
Ross Friedman Ference LLP
1065
Avenue of the Americas
New
York, New York 10018
Phone:
(212) 930-9700
Facsimile:
(212) 930-9725
|
| (b) |
Walker
or the Walker Shareholders
|
|
WPCS
INTERNATIONAL INCORPORATED
|
||
| |
|
|
| By: | /s/ ANDREW HIDALGO | |
|
Andrew Hidalgo, President |
||
| Witness | ||
|
Name
|
||
| Address | ||
|
WALKER
COMM MERGER
CORP.
|
||
| |
|
|
| By: | /s/ ANDREW HIDALGO | |
|
Andrew Hidalgo, President |
||
| Witness | ||
|
Name
|
||
|
Address
|
||
| WALKER COMM, INC | ||
| |
|
|
| By: | /s/ DONALD C. WALKER | |
|
Donald C. Walker, President |
||
| Witness | ||
|
Name
|
||
| Address | ||
|
Witness
|
/s/ DONALD C. WALKER
DONALD
C. WALKER
|
|
Name
|
|
|
Address
|
|
|
Witness
|
/s/ GARY R. WALKER
GARY
R. WALKER
|
|
Name
|
|
| Address | |
|
Witness
|
/s/
TANYA D. SANCEZ
TANYA
D. SANCHEZ
|
| Name | |
|
Address
|
|