U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
----------------------------------------
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
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Date of Report (Date of earliest event reported) . . . . . . . . June 20, 1997
WORLDPORT COMMUNICATIONS, INC.
(Exact name of small business registrant as specified in its charter)
Delaware 33-32341-D 84-1127336
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(State or other (Commission File Number) (I. R. S. Employer
jurisdiction Identification Number)
of incorporation)
9601 Katy Freeway, Suite 200
Houston, Texas 77024
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(Address, including zip code of
principal executive offices)
(713) 461-4999
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(Registrant's telephone number)
<PAGE>
Item 2. Acquisition or Disposition of Assets
TNC Acquisition
On June 20, 1997, the Company completed the acquisition of substantially all of
the telecommunications assets and operations of Telenational Communications,
Limited Partnership ("TNC") pursuant to that certain Asset Purchase Agreement
dated April 23, 1997 (as amended by Amendment No. 1 to the Asset Purchase
Agreement dated June 20, 1997, collectively the "Asset Purchase Agreement"). The
acquired assets and operations will be operated through the Company's
wholly-owned subsidiary, Telenational Communications, Inc.
("Telenational").
The assets and operations of TNC were purchased in exchange for (i) 3,750,000
shares of the Company's Common Stock (of which 1,000,000 shares are being held
pursuant to an escrow agreement for a period of 18 months following the closing
subject to certain purchase price adjustments described below) and (ii) the
assumption by the Company of $4.6 million of indebtedness of TNC. The purchased
assets include a telecommunications switch and other network equipment, customer
and vendor contracts, an FCC section 214 common carrier license, an operator
services center and other assets sufficient to continue the ongoing business of
TNC. The final purchase price is subject to adjustment if (i) liabilities in
excess of $4.6 million are assumed, (ii) the Company is required to invoke
certain indemnifications by TNC, (iii) there are certain expense overruns, or
(iv) there are certain rejected contracts. In addition, certain creditors of TNC
have the option to convert all or a portion of their debt into shares of the
Company's Common Stock.
The acquired telecommunications switches and operator services platform in
Omaha, Nebraska provide enhanced services, such as global calling cards and
international prepaid debit cards to individuals, business and large corporate
customers primarily in the United States, Western Europe and Latin America.
Through its automated operator services and its live operators, Telenational
will provide multilingual customer support. The acquired U.S. switching and
operator services center enables customers in foreign countries to take
advantage of least cost routing and transmission quality for international
calls. Telenational's services are currently marketed in over 20 countries
through various distribution channels.
In conjunction with the Asset Purchase Agreement, the Company entered into a
two-year employment agreement with Mr. Bruce Burton to serve as the Company's
Executive Vice President and Chief Operating Officer. Additionally, Mr. Edmund
Blankenau, the chief executive officer of the General Partner of TNC, has agreed
to join the Board of Directors of the Company. Mr. Blankenau has also agreed to
serve as a business development consultant to the Company for a period of
eighteen (18) months.
WWC Acquisition
On July 3, 1997, the Company, through a wholly-owned subsidiary, completed a
merger with The Wallace Wade Company ("WWC") pursuant to that certain Agreement
and Plan of Merger dated April 20, 1997. WWC is a telecommunications marketing
consulting firm which produces and implements marketing strategies for clients
ranging from small companies to large corporate clients. WWC currently holds one
commission-based contract with an international long distance service provider.
Mr. John Dalton, the Company's President and Chief Executive Officer, is the
sole shareholder of WWC. In connection with the WWC transaction, the Company
<PAGE>
shall deliver to Mr. Dalton (i) 1,400,000 shares of the Company's Common Stock,
of which 500,000 shares will be held pursuant to an escrow agreement pending
delivery to the Company of certain audited Financial Statements of WWC and
900,000 shares will be held pursuant to the escrow agreement subject to certain
adjustments to the purchase price based on the Company entering into business
agreements currently being negotiated by WWC, (ii) $75,000 cash and (iii) a
Promissory Note in the amount of $175,000 payable as follows: one payment of
$50,000 payable on October 1, 1997, and two payments of $62,500 payable on
February 1, 1998 and July 1, 1998.
In conjunction with the closing of the WWC transaction, Mr. Dalton agreed to
join the Board of Directors of the Company.
Item 4. Changes in Registrant's Certifying Accountant
Upon recommendation of the Audit Committee of the Board of Directors of the
Company and upon approval of such recommendation by the Board of Directors, the
Company replaced Schumacher & Associates, Inc. ("Schumacher") as its independent
public accounting firm on June 30, 1997. Effective July 1, 1997, the Company
engaged Arthur Andersen LLP as its independent public accounting firm. The prior
accountant's report of Schumacher on the financial statements of the Company for
the years ended December 31, 1996 and 1995, respectively, and for the period
from January 6, 1989 (date of inception) to December 31, 1996 was not qualified
or modified in any manner and contained no disclaimer of opinion or adverse
opinion.
No disagreements exist between the Company and Schumacher on any matter of
accounting principle or practice, financial statement disclosure or auditing
scope or procedure related to the financial statements of the Company for the
years ended December 31, 1996 and 1995, respectively, and for the period from
January 6, 1989 (date of inception) to December 31, 1996 or for the interim
period beginning January 1, 1997 through June 30, 1997, the date of replacement.
The Company has provided Schumacher with a copy of this Form 8-K and has
requested Schumacher to furnish a letter addressed to the Securities and
Exchange Commission stating whether it agrees with the statements made herein by
the Company and, if not, stating the respects in which Schumacher does not
agree. A copy of Schumacher's response letter is attached as Exhibit 16.1
hereto.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The financial statements of TNC and WWC will be provided within 60
days of the date of the filing of this Form 8-K.
(b) Pro Forma Financial Information
The pro forma financial statements will be provided within 60 days
of the date of the filing of this Form 8-K.
<PAGE>
(c) Exhibits
Exhibit No. Description
2.1 Asset Purchase Agreement by and between the Company
and Telenational Communications Limited Partnership
dated April 23, 1997, previously filed with Form
10-QSB for the fiscal quarter ended March 31, 1997,
and incorporated herein by reference.
2.2 Amendment No. 1 to the Asset Purchase
Agreement by and between the Company and
Telenational Communications Limited Partnership,
dated June 20, 1997.
2.3 Agreement and Plan of Merger by and among
the Company, WorldPort Acquisitions, Inc.,
The Wallace Wade Company, and John W.
Dalton, dated April 20, 1997.
16.1 Letter of Schumacher & Associates, Inc.
Independent Certified Public Accountant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: July 7, 1997 WORLDPORT COMMUNICATIONS, INC.
By: /s/ W. Dean Spies
-------------------------------------
W. Dean Spies
Chief Financial Officer and Treasurer
AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT
This Amendment No. 1 to the Asset Purchase Agreement (the
"Amendment") is made and entered into this 20th day of June, 1997, by and
between WorldPort Communications, Inc., a Delaware corporation ("Buyer") and
Telenational Communications Limited Partnership, a Nebraska limited partnership
("Seller"). Buyer and Seller are collectively referred to herein as the
"Parties".
WHEREAS, the Parties have previously entered into an Asset Purchase
Agreement dated April 23, 1997 (the "Agreement"); and
WHEREAS, the Parties desire to amend the Agreement in certain
respects.
NOW, THEREFORE, the Parties hereby agree as follows:
1. The two (2) sentences following Section 1.3(h) of the Agreement,
beginning with the words "At any time until two . . ." and concluding with the
words ". . . the G.P. Note, as defined hereafter" are hereby deleted and
replaced in their entirety with the following sentence:
At any time up until sixty (60) days following Closing, the Partners to
whom amounts are owed under the Affiliate Liabilities may elect to receive
the common stock of Buyer, at $1.50 per share, as payment in lieu of cash.
2. The phrase "$4.5 million" in the third line of the final paragraph of
Section 1.3 of the Agreement is hereby deleted and replaced in its entirety with
the phrase "$4.6 million".
3. Section 1.7(b) of the Agreement is hereby deleted and replaced in
its entirety with, "(b) [intentionally omitted]".
4. The last sentence of Section 1.7 is hereby deleted in its entirety.
5. A new Section 8.6 is hereby added to the Agreement stating as
follows:
8.6. Affiliate Liabilities. Within sixty (60) days of Closing,
Buyer shall enter into payment arrangements with all the Partners to whom
money is owed under the Affiliate Liabilities.
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<PAGE>
6. Article IX of the Agreement is hereby deleted and replaced in its
entirety with the following:
ARTICLE IX
EMPLOYEES
9.1 Lease of Seller Employees. For a period of up to one
hundred eighty (180) days following the Closing (the "Leasing Period"),
Seller shall use its reasonable efforts to provide to Buyer the services
of the persons listed on Exhibit 1 hereto, who are all currently employees
of Seller (the "Leased Employees") needed to operate the Business in a
manner similar to that heretofore conducted by the Leased Employees for
Seller. All Leased Employees shall be under the administrative and
executive control of Seller. Any new positions and salary increases must
be approved by Buyer. Seller shall have sole authority for the discipline,
retention, and termination of all Leased Employees; provided, however,
Buyer shall give Seller input into the job evaluation of such Leased
Employees.
9.2 Services.
(a) During the Leasing Period, Seller shall have sole responsibility
to pay to, or on behalf of, the Leased Employees all costs related to
their employment including, but not limited to, wages and personnel
benefit plans, vacation, sick and severance pay, life and health insurance
premiums, contributions to pensions, retirement and benefit plans,
applicable federal, state and local taxes, Social Security contributions,
federal and state unemployment compensation insurance contributions,
workers' compensation insurance premiums, and all similar payments and
charges incurred by reason of Seller's applicable employment practices and
policies, contractual and statutory obligations and conditions of
employment (the "Aggregate Compensation"). Seller shall be responsible for
the withholding of all taxes and similar items and the remitting of
payments and returns to governmental agencies.
(b) Seller shall be and shall remain the employer of the Leased
Employees during the Leasing Period. During the Leasing Period, Leased
Employees shall at no time, for any purpose, be deemed the employees of
Buyer and shall not be entitled or eligible to participate in benefits or
privileges provided or extended by Buyer to Buyer's employees except as
otherwise required by law.
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<PAGE>
(c) Buyer shall have daily responsibility for supervision of the
work activities of the Leased Employees. Seller shall cause the Leased
Employees to devote their entire time, attention, and energy to the
service of Buyer. The Leased Employees shall comply with and abide by
Buyer's policies, procedures, rules and regulations including expense
reimbursement procedures.
(d) At any time during the Leasing Period, Buyer shall have the
right, but not the obligation, to offer employment to any of the Leased
Employees then employed by Seller (those employees accepting such offers
of employment being "Buyer Employees").
(e) Upon written notice to Seller, Buyer may discontinue the receipt
of services with respect to any of the Leased Employees in the event Buyer
believes it has a reasonable basis to believe that such employee (i) is
incapable of adequately carrying out his or her duties; or (ii) has
engaged in willful misconduct, disloyalty, negligence, illegal conduct or
an intentional tort with respect to such employee's services to Buyer, or
has engaged in conduct potentially harmful to any Buyer employee and
Seller shall give such Leased Employee a notice of termination consistent
with Seller's employment policies for such situations.
(f) To the extent the parties agree that additional employees should
be leased by Seller to Buyer, such employees shall be leased pursuant to
this Article IX which lease shall be effected by adding the appropriate
names to Exhibit 1 through a written acknowledgement of the parties.
9.3 Compensation. Three days prior to the end of a pay period,
Seller shall bill Buyer for the Leased Employees supplied to Buyer at an
amount equal to 100% of the anticipated Aggregate Compensation of the
Leased Employees for the periods during which such Leased Employees
provide services to Buyer. Buyer shall pay Seller the full amount of each
invoice prior to the end of each such pay period for disbursement to the
Leased Employees. Any positive difference between the amount Seller bills
to Buyer for any given pay period and the actual Aggregate Compensation
paid for such pay period shall be subtracted from the Seller's subsequent
invoice for anticipated Aggregate Compensation.
9.4 Indemnification. Seller shall indemnify and hold Buyer
harmless against any claims by any Leased Employee arising from actions
taken by Seller, relating to events or occurrences through the end of the
Leasing Period, including any severance or termination pay obligations
based upon prior policies of Seller or arising from the Closing of the
Agreement.
-3-
<PAGE>
9.5 Employee Benefits.
(a) Buyer shall not assume or be responsible for any of Seller's
retirement, 401(k), profit-sharing or similar benefit plan, or any
liabilities related thereto. Seller shall grant 100% vesting credit to all
of the Buyer Employees as of the end of the Leasing Period in any
retirement, 401(k), profit-sharing or similar benefit plan. Seller shall
cause such participants to have full rights to all distribution
alternatives available to terminated employees and shall effect such
distribution within thirty (30) days of a notice of election of any
participant.
(b) To the extent reflected on unaudited financial statements to be
prepared by Seller for the period ending on the termination or expiration
of the Leasing Period, which financial statements must be approved by
Buyer, Buyer shall provide the Buyer Employees all vacation and personal
leave accrued as employees of the Seller but not yet received as of the
end of the Leasing Period. Buyer shall require all Buyer Employees to
waive in writing a claim against Seller for accrued but unused vacation
benefits, to the extent reflected on such unaudited financial statements.
(c) As of the termination or expiration of the Leasing Period, all
Buyer Employees will cease participation in Seller's retirement and
welfare plans (within the meaning of ERISA). Welfare claims incurred but
not reported as of the termination or expiration of the Leasing Period or
other welfare claims made upon Seller's welfare plans by Buyer Employees
after such time will be treated by Seller's plans as if the covered
employees had been terminated from employment at 11:59 PM on the
termination or expiration date of the Leasing Period.
(d) This Section is not intended to, and does not, create any rights
or obligations to or for the benefit of anyone, other than Buyer and
Seller.
7. Section B of Schedule 3.6 to the Agreement is hereby amended by
deleting the phrase "Total options authorized or issued as of April 10, 1997:
605,000," at the end thereof and replacing it with the following:
Debbie Wilson 20,000 @ $1.50 (authorized in June, 1997)
Manager of Corporate Subject to vesting over next three years.
Accounting
-4-
<PAGE>
Kelly McClennahan 4,500 @ $.75 (authorized in April, 1997)
Administrative Assistant Subject to vesting over next two years.
Total options authorized and issued as of June 20, 1997: 629,500
In an effort to attract a qualified individual to act as an outside
director, in June 1997, the Board of Directors authorized the issuance of
options for 65,000 shares with an exercise price of $1.50 per share and
with vesting upon issuance. If such individual joins the Board as an
outside director, the company will issue to such individual for his
services an option to acquire 50,000 shares and an option to acquire an
additional 15,000 shares if he serves on one of the Board's committees.
8. The Parties hereby acknowledge and approve that Buyer has designated
its wholly-owned subsidiary, Telenational Communications, Inc., a Delaware
corporation, to accept, assume and receive, all right, title and interest in, to
or arising from the Purchased Assets and to accept and perform all the duties
and obligations in, to or arising from the Assumed Liabilities and Assumed
Obligations, provided however, Buyer shall be responsible for the delivery of
the Buyer's Stock at Closing.
9. Except as amended by this Amendment, the Agreement shall remain in
full force and effect.
* * *
-5-
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this Amendment
or caused this Amendment to be executed on its behalf by a duly authorized
officer, all as of the date first written above.
WORLDPORT COMMUNICATIONS, INC.
By: /s/John W. Dalton
Its: President & C.E.O
TELENATIONAL COMMUNICATIONS
LIMITED PARTNERSHIP
IMTS, INC. GENERAL PARTNER
By: /s/Edmund H. Blankenau
Its: President
The undersigned acknowledges the terms and conditions of the
Agreement and of the Amendment and agrees to be bound to their terms and
conditions.
TELENATIONAL COMMUNICATIONS, INC.
By: John W. Dalton
Its: President & C.E.O.
-6-
<PAGE>
EXHIBIT 1
LEASED EMPLOYEES
EMPLOYEE LISTING as of: 06/18/1997
<TABLE>
<CAPTION>
EMP. ID.. NAME............... JOB.TITLE................. ORG-ID DEPT. STATUS SHIFT HIRED.... SVC-YRS.
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
489543800 KAREN K COLLINS 109 EXECUTIVE ADMIN. ASST. 1 10 PT 1 09/21/1993 3.0
508565822 MARY K FINNIGAN 150 DIR. H.R. / ADMIN. SVCS 1 15 PT 1 05/04/1983 8.0
063361746 ELLYN DECESARE 156 RECEPTIONIST 1 15 PT 1 10/28/1991 5.0
507666952 KATHLEEN IVERSON 156 RECEPTIONIST 1 15 FT 1 06/04/1997 0.0
698520899 LINDA S MINARDI 220 ACCOUNTING MANAGER 1 20 FT 1 12/05/1988 6.0
508668731 TIMOTHY T TOBIN 208 BUSINESS ANALYST 1 20 FT 1 03/13/1983 7.0
506685076 DENNIS K WALSH 218 BILLING SPECIALIST 1 20 FT 1 01/16/1992 5.0
335429064 DANIEL W OCOREK 205 CONTROLLER 1 20 FT 1 06/12/1995 2.0
550294321 CHARLES R SLOAN 458 BILLING/NETWORK ADMINSTR 1 30 FT 1 10/23/1995 1.0
180507196 ALLEN TERREY 316 PROGRAMMER 1 30 PT 1 10/08/1996 0.0
505843870 LARRY L NICHOLSON 316 PROGRAMMER 1 30 PT 1 07/25/1997 0.0
506137913 THOMAS J BECERRA 312 PC SUPPORT SPECIALIST 1 30 PT 1 05/22/1997 0.0
507745533 BRUCE K WALLACE 454 SERVICE TECHNICIAN 1 45 FT 1 01/02/1996 1.0
489549931 GORDON J HART 451 NETWORK SERVICES SUP 1 45 FT 1 05/06/1996 1.0
507881585 THERESA A PETEREIT 517 CUSTOMER SUPPORT REP 1 53 PT 1 10/23/1990 6.0
498601221 NANCY L MOREFIELD 530 OPERATOR SERVICES MGR 1 53 FT 1 09/26/1991 5.0
505442616 JOHN J BUCKLIN 536 OPERATOR SVCS TEAM LDR 1 53 FT 1 01/07/1993 4.0
109544046 ROSEMARY HESS 531 OPERATOR SVCS SUPERVISOR 1 53 PT 1 03/23/1993 4.0
506524878 IRMGARD KRAMER 538 BILINGUAL OPERATOR 1 53 PT 1 06/21/1993 4.0
505626327 JUDITH A SEDLACEK 538 BILINGUAL OPERATOR 1 53 FT 1 05/19/1993 0.0
507025203 DAVID A RANDLEMAN 538 BILINGUAL OPERATOR 1 53 FT 1 07/13/1993 3.0
507686475 MARDA HULTMAN 353 CUSTOMER SERVICE SFV. 1 53 PT 1 02/12/1996 1.0
565732624 MARION LEVY 538 BILINGUAL OPERATOR 1 53 FT 1 11/23/1994 2.0
352865233 KATJA R. KUSLERKO-VAN CLE 538 BILINGUAL OPERATOR 1 53 FT 1 06/10/1995 2.0
507987693 JUSTIN R HULTNAM 536 OPERATOR SVCS TEAM LDR 1 53 FT 1 01/08/1996 1.0
508843289 MARISOL ONDAR 538 BILINGUAL OPERATOR 1 53 PT 1 05/25/1995 2.0
507251039 JOSEPHINE A DE MONTJOYS 538 BILINGUAL OPERATOR 1 53 PT 1 08/03/1995 1.0
096583866 LOURDES P WILBUR 536 BILINGUAL OPERATOR 1 53 PT 1 09/06/1995 1.0
360563282 MANERBOL KOPCKE 536 BILINGUAL OPERATOR 1 53 PT 1 09/11/1995 1.0
552335083 JEFFREY J HALL 538 BILINGUAL OPERATOR 1 53 PT 1 09/08/1995 1.0
508901118 EMILE N OLTHAX 536 OPERATOR SVCS TEAM LDR 1 53 PT 1 09/28/1995 1.0
507060892 JOHN P BRYSON 537 CUSTOMER SUPPORT REP 1 53 PT 1 12/13/1995 1.0
573044903 BRIAN J LOXE 538 BILINGUAL OPERATOR 1 53 PT 1 01/10/1996 1.0
507193943 CARLOS MARTINEZ 538 BILINGUAL OPERATOR 1 53 FT 1 03/12/1996 1.0
521703906 MOEIKA GROVES 538 BILINGUAL OPERATOR 1 53 PT 1 04/01/1996 1.0
483967346 RHEA A PETERS 539 IMS OPERATOR 1 53 PT 1 04/02/1996 1.0
484841245 JEANNE M KEMKEL-TAJVAR 538 BILINGUAL OPERATOR 1 53 PT 1 04/03/1996 1.0
508986344 JOHN HERBOLSHEIHER 538 BILINGUAL OPERATOR 1 53 FT 1 05/02/1996 1.0
548152930 DAYAMA GALICIA 538 BILINGUAL OPERATOR 1 53 PT 1 08/12/1996 0.0
058669358 LYDIA BENNETT 538 BILINGUAL OPERATOR 1 53 FT 1 08/19/1996 0.0
<PAGE>
EMPLOYEE LISTING as of: 06/18/1997
<CAPTION>
EMP. ID.. NAME............... JOB.TITLE............ ORG-ID DEPT. STATUS SHIFT HIRED..... SVC-YRS.
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
532552875 MIRELA E GOETZKE 538 BILINGUAL OPERATOR 1 53 FT 1 08/20/1996 0.0
450479521 MONICA JL HOLLRAH 539 IMS OPERATOR 1 53 PT 1 08/21/1996 0.0
506177972 KATHERINE L BURTON 539 IMS OPERATOR 1 53 PT 1 08/26/1996 0.0
507251037 JAMES D MONTJOYE 538 BILINGUAL OPERATOR 1 53 PT 1 09/04/1996 0.0
505886391 VERONICA R MYRICK 538 BILINGUAL OPERATOR 1 53 PT 1 09/10/1996 0.0
508066440 PABLO ONDAR 538 BILINGUAL OPERATOR 1 53 PT 1 10/02/1996 0.0
508785157 MARCUS S ROPER 538 BILINGUAL OPERATOR 1 53 FT 1 10/02/1996 0.0
253195972 CHRISTINA BLIFFE-DOUM 538 BILINGUAL OPERATOR 1 53 PT 1 10/05/1996 0.0
507170846 MELISSA J ANDERSON 538 BILINGUAL OPERATOR 1 53 FT 1 02/19/1997 0.0
506122579 LUZ M MONTANEL 538 BILINGUAL OPERATOR 1 53 PT 1 03/03/1997 0.0
461795167 FRANK J ALEMAN 538 BILINGUAL OPERATOR 1 53 FT 1 05/12/1997 0.0
505272331 MAGDIEL BLAIR 538 BILINGUAL OPERATOR 1 53 FT 1 06/16/1997 0.0
494864831 LISA M LOEWEY 716 MARKETING SPECIALIST 1 71 FT 1 02/21/1994 3.0
54.0 Sum
</TABLE>
Number of Observations: 53
<PAGE>
See attached.
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AGREEMENT AND PLAN OF MERGER
by and among
WORLDPORT COMMUNICATIONS, INC.
a Delaware corporation,
WORLDPORT ACQUISITIONS, INC.
a Delaware corporation,
THE WALLACE WADE COMPANY
a Texas corporation ,
and
JOHN W. DALTON
an individual and sole shareholder of The Wallace Wade Company
DATED: April 20, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
1. THE MERGER......................................................................................1
(a) Merger........................................................................1
(b) Effective Time................................................................2
(c) Certificate of Incorporation and Bylaws; Directors and Officers of
Surviving Corporation.........................................................2
(d) Conversion of Securities......................................................2
(e) Cash and Note Payment.........................................................2
(f) Delivery of Certificates of WorldPort Common Stock Into Escrow and
Conditions of Distribution....................................................2
2. REPRESENTATIONS AND WARRANTIES OF THE WWC
SHAREHOLDER.....................................................................................4
(a) Ownership of Shares...........................................................4
(b) No Transfer of WorldPort Shares...............................................4
(c) No Transfer of WWC's Shares...................................................4
(d) Authority.....................................................................4
(e) Compliance with Law...........................................................4
(f) No Litigation.................................................................4
(g) Solvency......................................................................4
(h) No Material Misstatements.....................................................5
(i) Securities Laws of Compliance.................................................5
3. REPRESENTATIONS AND WARRANTIES OF WWC...........................................................6
(a) Capitalization................................................................6
(b) Organization..................................................................6
(c) Authority.....................................................................6
(d) Financial Statements..........................................................7
(e) Subsidiaries..................................................................7
(f) Legal Proceedings.............................................................7
(g) Tax Returns...................................................................7
(h) Assets........................................................................7
(i) Conduct of Business...........................................................8
(j) Accounts Receivable...........................................................8
(k) Contracts.....................................................................8
(l) Contracts under Negotiation...................................................9
(m) Employment and Other Contracts................................................9
(n) ERISA.........................................................................9
(o) Employee Matters..............................................................9
(p) Labor Practices..............................................................10
(q) Real Property Ownership and Lease Obligations................................10
(r) Investment Company Act; Etc..................................................10
(s) Title........................................................................11
(t) Ownership of Proprietary Rights..............................................11
(u) Plans........................................................................11
(v) Permits; Authorizations......................................................11
(w) Other Obligations............................................................12
i
<PAGE>
(x) Approvals....................................................................12
(y) Untrue Statements............................................................12
(z) Availability of Documents....................................................12
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ACQUISITIONS, INC...............................12
(a) Organization, Standing and Qualification.....................................13
(b) Authority....................................................................13
(c) Compliance with Law..........................................................13
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF WORLDPORT...................................................................................13
(a) Capitalization...............................................................13
(b) Organization.................................................................13
(c) Authority....................................................................13
(d) Legal Proceedings............................................................14
(e) Tax Returns..................................................................14
(f) SEC Filings..................................................................14
(g) Assets.......................................................................14
(h) Conduct of Business..........................................................15
(i) Contracts....................................................................15
(j) Employment and Other Contracts...............................................15
(k) ERISA........................................................................16
(l) Labor Practices..............................................................16
(m) Real Property Ownership and Lease Obligations................................16
(n) Investment Company Act; Etc..................................................16
(o) Environmental Permits........................................................16
(p) Approvals....................................................................17
(q) Untrue Statements............................................................17
(r) Title........................................................................17
(s) Compliance with Law..........................................................17
(t) Capitalization of the WorldPort..............................................17
(u) Subsidiaries.................................................................17
(v) Plans........................................................................17
(w) Permits; Authorizations......................................................17
(x) Offering.....................................................................18
(y) Availability of Documents....................................................18
6. THE CLOSING....................................................................................18
(a) Closing......................................................................18
7. AGREEMENTS PENDING CLOSING.....................................................................18
(a) Agreements of The WWC Shareholder and WWC
Pending the Closing..........................................................18
(b) Agreements of WorldPort Pending the Closing..................................20
ii
<PAGE>
8. CONDITIONS PRECEDENT TO THE CLOSING............................................................21
(a) Conditions Precedent to WorldPort's Obligations..............................21
(b) Conditions Precedent to the Obligations of WWC and
The WWC Shareholder..........................................................23
9. OTHER MATTERS..................................................................................24
(a) Piggyback and Demand Registration Rights.....................................25
(b) "Market Stand-Off" Agreement.................................................25
(c) Substitution of WorldPort Into Any WWC Agreement.............................25
10. INDEMNIFICATION................................................................................25
(a) General Indemnification Obligation of WWC and The
WWC Shareholder..............................................................25
(b) General Indemnification Obligation of WorldPort..............................26
(c) Limitation of Indemnity......................................................26
(d) Method of Asserting Claims, Etc..............................................27
(e) Payment......................................................................28
11. TERMINATION AND AMENDMENT......................................................................28
(a) Termination..................................................................28
(b) Waiver.......................................................................29
12. MISCELLANEOUS..................................................................................29
(a) Brokers......................................................................29
(b) Expenses.....................................................................29
(c) Survival.....................................................................29
(d) Severability.................................................................29
(e) Notices......................................................................29
(f) Entire Agreement.............................................................30
(g) Binding Effect...............................................................30
(h) Governing Law................................................................30
(i) Press Releases...............................................................30
(j) Assignment...................................................................31
(k) Disclosure Schedule..........................................................31
(l) Counterparts; Headings.......................................................31
(m) Dispute Resolution...........................................................31
</TABLE>
iii
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is effective as of the
20th day of April, 1997, by and among WorldPort Communications, Inc., a Delaware
corporation ("WorldPort"), WorldPort Acquisitions, Inc., a Delaware corporation
and a wholly-owned subsidiary of WorldPort ("Acquisitions, Inc."), The Wallace
Wade Company a Texas corporation ("WWC"), and the sole shareholder of WWC, John
W. Dalton (the "WWC Shareholder").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of WorldPort, Acquisitions,
Inc. and WWC have approved and adopted this Agreement (or with respect to
Acquisitions, Inc., will have approved and adopted this Agreement prior to
Closing (as hereafter defined)) providing for the merger of WWC into
Acquisitions, Inc. (the "Merger"), upon the terms and subject to the conditions
set forth herein, whereby each issued and outstanding share of WWC Capital Stock
(the "WWC Shares") will be converted into shares of WorldPort Common Stock, par
value $.0001 per share, (the "WorldPort Common Stock");
WHEREAS, WWC is a telecommunications marketing and consulting firm
which produces and implements marketing strategies for clients ranging from
small companies to large corporate clients;
WHEREAS, the WWC Shareholder, as the sole shareholder of WWC, has
approved and adopted this Agreement;
WHEREAS, WorldPort, as the sole shareholder of Acquisitions, Inc., has
approved and adopted this Agreement;
WHEREAS, for income tax purposes, it is intended that the Merger shall
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code");
WHEREAS, WorldPort, Acquisitions, Inc., WWC, and the WWC Shareholder
desire to make certain representations, warranties and agreements in connection
with the Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
1. THE MERGER.
(a) Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the Delaware General Corporation Law
(the "Act"), WWC shall be merged with and into Acquisitions, Inc. at
the Effective Time (as defined below). Following the Merger, the
separate corporate existence of WWC shall cease and Acquisition, Inc.
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shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and
obligations of WWC in accordance with the Act.
(b) Effective Time. The Merger shall become effective when (i)
the Certificate of Merger executed in accordance with the relevant
provisions of the Act, is filed with the Division of Corporation in the
Department of State of the State of Delaware and (ii) when the Articles
of Merger executed in accordance with the relevant provisions of the
Texas Business Corporation Act, are filed with the Secretary of State
of the State of Texas (the "Effective Time").
(c) Certificate of Incorporation and Bylaws; Directors and
Officers of Surviving Corporation.
(i) The Certificate of Incorporation and Bylaws of
Acquisitions, Inc., as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation and
Bylaws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
(ii) The directors of Acquisitions, Inc. at the
Effective Time shall be the directors of the Surviving
Corporation and will hold office from the Effective Time until
their respective successors are duly elected or appointed and
qualified. The officers of Acquisitions, Inc. at the Effective
Time shall be the initial officers of the Surviving
Corporation.
(d) Conversion of Securities. As of the Effective Time, by
virtue of the Merger and without any action on the part of the WWC
Shareholder and subject to the provisions of Section 1(f) hereof, all
WWC Shares issued and outstanding immediately prior to the Effective
Time shall be converted into 1,400,000 shares of validly issued, fully
paid and nonassessable shares of WorldPort Common Stock. All WWC
Shares, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and each holder of a stock
certificate representing any WWC Shares shall cease to have any rights
with respect thereto, except the right to receive WorldPort Common
Stock and the Cash and Note Payment described below, and any cash,
without interest, in lieu of fractional shares to be issued or paid in
consideration therefor upon the surrender of such stock certificate.
(e) Cash and Note Payment. In addition to receipt of the
WorldPort Common Stock as described herein, the WWC Shareholder shall
also receive a cash payment in the total aggregate amount of TWO
HUNDRED FIFTY THOUSAND DOLLARS ($250,000) payable as follows: (i)
$75,000 to be delivered at Closing (as defined in Section 6) in the
form of a corporate check payable to the WWC Shareholder and (ii)
$175,000 pursuant to the terms of the promissory note (the "Note")
attached hereto as Exhibit B and incorporated herein by reference (the
"Cash and Note Payment").
(f) Delivery of Certificates of WorldPort Common Stock Into
Escrow and Conditions of Distribution. As soon as practicable after the
Effective Time, WorldPort shall prepare for the benefit of the WWC
Shareholder a certificate or certificates representing 1,400,000 shares
of WorldPort Common Stock. WorldPort shall deliver the 1,400,000 shares
2
<PAGE>
of WorldPort Common Stock to OTC Stock Transfer, Inc. as escrow agent
(the "Escrow Agent") at Closing, to be held in escrow and released to
the WWC Shareholder upon the occurrence of certain conditions and
performance objectives as set forth below and in the Escrow Agreement
attached hereto as Exhibit C and incorporated herein by reference (the
"Escrow Agreement"):
(i) WWC Financial Statements. As soon as practicable
after the Closing, but in any event not later than forty five
(45) days after the Closing, the WWC Shareholder will deliver
to WorldPort audited financial statements of WWC for the years
ending March 31, 1996 and 1997, together with the notes
thereto (the "WWC Financial Statements"), audited by Arthur
Andersen LLP ("Arthur Andersen"). Upon delivery to WorldPort
of the WWC Financial Statements the Escrow Agent shall deliver
to the WWC Shareholder a certificate or certificates
representing 500,000 shares of WorldPort Common Stock. In the
event the WWC Financial Statements are not delivered to
WorldPort within forty five (45) days after the Closing, the
Escrow Agent shall return 500,000 shares of the WorldPort
Common Stock to WorldPort for cancellation.
(1) Expenses. The fees and expenses of
Arthur Andersen in connection with the audit of the
WWC Financial Statements shall be borne one-third
(1/3) by the WWC Shareholder and two-thirds (2/3)by
WorldPort.
(ii) Business Relationship Agreement. Upon delivery
to WorldPort of a binding, executed agreement establishing a
formal business relationship, acceptable to WorldPort, between
Acquisitions, Inc. (or WorldPort) and an international
telecommunications network operator that provides customers
with voice and data services such as managed data network
services, virtual private networks, electronic commerce,
transaction processing transmission, VSAT, X.25, and frame
delay ("Business Relationship Entity"), including, but not
limited to, those entities set forth in the disclosure
schedule attached as Exhibit E hereto (the "Disclosure
Schedule"), the Escrow Agent shall deliver to the WWC
Shareholder a certificate or certificates representing 700,000
shares of WorldPort Common Stock. In the event that WorldPort
does not enter into an acceptable business relationship with a
Business Relationship Entity by December 31, 1997, the Escrow
Agent shall return 700,000 shares of WorldPort Common Stock to
WorldPort for cancellation.
(iii) New Business Development. Upon delivery to
WorldPort of a binding executed agreement(s) establishing
formal business relationships, acceptable to WorldPort,
between Acquisitions, Inc. (or WorldPort) and one or more
debit card/pre- paid calling card distribution networks, or
one or more long distance carriers or resellers, that results
in commitments to WorldPort of (a) consolidated gross revenues
in excess of $700,000 per month or (b) gross margins of
$50,000 per month, the Escrow Agent shall deliver to the WWC
Shareholder a certificate or certificates representing 200,000
shares of WorldPort Common Stock. In the event a formal
business relationship which is approved and acceptable to
WorldPort's Board of Directors, with one or more debit
card/pre-paid calling card distribution networks, or one or
more long distance service carriers or resellers, as described
3
<PAGE>
above is not entered into by December 31, 1997, the Escrow
Agent shall return 200,000 shares of WorldPort Common Stock
to WorldPort for cancellation.
2. REPRESENTATIONS AND WARRANTIES OF THE WWC SHAREHOLDER.
To induce WorldPort and Acquisitions, Inc. to enter into this Agreement, the WWC
Shareholder represents and warrants to WorldPort and Acquisitions, Inc. that the
following statements are true, correct and complete as of the date hereof, and
will be true, correct and complete as of the date of Closing.
(a) Ownership of Shares. The WWC Shareholder owns,
beneficially and of record, the one hundred percent (100%) of WWC
Shares, free and clear of any lien, security interest, pledge, claim,
demand or encumbrance or restriction of any kind or character
whatsoever, and the Shares represent all the issued and outstanding
shares of capital stock and equity securities of WWC. All such Shares
are duly authorized, validly issued, fully paid and nonassessable and
have, all the rights, privileges and preferences ordinarily accorded to
capital stock or equity securities.
(b) No Transfer of WorldPort Shares. The WWC Shareholder
represents and warrants that he has no present plan, intention or
arrangement to sell, transfer or otherwise dispose of any shares of
WorldPort Common Stock to be received in the Merger.
(c) No Transfer of WWC's Shares. The WWC Shareholder agrees
that prior to the Effective Time of the Merger, he will not sell,
transfer or otherwise dispose of any WWC Common Stock.
(d) Authority. The WWC Shareholder now has and will have, at
the Closing, full power, authority and legal right to enter into this
Agreement. This Agreement is the valid and binding obligation of the
WWC Shareholder.
(e) Compliance with Law. To the best knowledge of the WWC
Shareholder, the consummation of the transactions contemplated hereby
will be in compliance with all applicable laws, rules, regulations and
requirements of all Federal, state and local governmental authorities
without the necessity for any license or permit or other action or
permission in the nature thereof, or any registration with, or consent
of, any such governmental authority.
(f) No Litigation. There are no suits or proceedings at law or
in equity, or before or by any governmental agency or arbitrator,
pending, or to the best knowledge of the WWC Shareholder, threatened,
anticipated or contemplated, which in any way affect the consummation
of the transaction contemplated hereby or, if valid, would constitute
or result in a breach of any representation, warranty or Agreement set
forth herein.
(g) Solvency. The WWC Shareholder is not bankrupt nor
insolvent nor has the WWC shareholder assigned its estate for the
benefit of creditors, entered into any scheme or arrangement with
creditors, nor has any present intention to file a petition in
bankruptcy, assign its estate for the benefit of creditors, or enter
into any scheme or arrangement with creditors. The WWC Shareholder has
no knowledge of any basis for the filing by any other person of an
involuntary petition in bankruptcy with respect to any WWC Shareholder
or WWC.
4
<PAGE>
(h) No Material Misstatements. The WWC Shareholder has not
made any material misstatement of fact or omitted to state any material
fact necessary or desirable to make complete, accurate and not
misleading every representation, warranty and Agreement set forth
herein.
(i) Securities Laws of Compliance. The WWC Shareholder:
(i) Has been represented by such legal and tax
counsel and others, each of whom has been personally selected
by such WWC Shareholder, as the WWC Shareholder has found
necessary to consult concerning this transaction, and such
representation has included an examination of applicable
documents, and an analysis of all tax, financial, and
securities law aspects. The WWC Shareholder, his/her counsel
and advisors, and such other persons with whom the WWC
Shareholder has found it necessary to consult, have sufficient
knowledge and experience in business and financial matters to
evaluate the above information, and the merits and risks of
the share exchange contemplated by this Agreement, and to make
an informed investment decision with respect thereto;
(ii) WorldPort has made available to the WWC
Shareholder, his/her counsel and advisors, prior to the date
hereof, the opportunity to ask questions of, and to receive
answers from, WorldPort and its representatives, concerning
the terms and conditions of the Merger and access to obtain
any information, documents, financial statements, records and
books (A) relative to WorldPort, the business and an
investment in WorldPort, and (B) necessary to verify the
accuracy of any information furnished to the WWC Shareholder.
All materials and information requested by the WWC
Shareholder, his/her counsel and advisors, or others
representing the WWC Shareholder, including any information
requested to verify any information furnished to the WWC
Shareholder, have been made available and examined.
(iii) The WWC Shareholder is acquiring the WorldPort
Common Stock for his own account and not as a fiduciary for
any other person and for investment purposes only and not with
a view to or for the transfer, assignment, resale, or
distribution thereof, in whole or in part. The WWC Shareholder
understands the meaning and legal consequences of the
foregoing representations and warranties. The WWC Shareholder
is not an "underwriter" of the securities, as that term is
defined in Section 2(11) of the Securities Act of 1933
("Securities Act"), and the WWC Shareholder will not take or
cause to be taken any action that would cause either the WWC
Shareholder or WorldPort to be deemed an "underwriter" of the
securities.
(iv) The WWC Shareholder understands that the
WorldPort Common Stock has not been registered under the
Securities Act nor pursuant to the provisions of the
securities or other laws of any applicable jurisdictions. The
WWC Shareholder further understands that the WorldPort Common
Stock cannot be sold, assigned, pledged, transformed or
otherwise disposed of until such shares are registered or an
exemption from registration is available.
5
<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF WWC. To further induce WorldPort
and Acquisitions, Inc. to enter into this Agreement, WWC and the WWC Shareholder
jointly and severally represent and warrant the following statements concerning
the affairs of WWC are true, correct and complete as of the date hereof, and
will be true, correct and complete as of the date of Closing.
(a) Capitalization. The WWC Capital Stock is duly authorized,
validly issued and fully paid and nonassessable. The WWC Capital Stock
was issued in compliance with all state and federal laws, including all
securities laws. There are no outstanding subscriptions, warrants,
options, preemptive rights, or other agreements or rights of any kind
to purchase or otherwise receive or be issued, or securities or
obligations of any kind convertible into, any shares of capital stock
of WWC.
(b) Organization. WWC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas, and
has full power and authority, corporate and otherwise, to carry on its
business as it is now being conducted and to own, or hold under lease,
and use its properties and assets in the manner in which and in the
places where such properties and assets are now owned or held and used,
and is qualified to do business and is in good standing in each other
jurisdiction where the nature or character of its business so requires
such qualification. WWC has delivered to WorldPort true copies of its
Articles of Incorporation and Bylaws, as are in full force and effect
as of the date of this Agreement.
(c) Authority. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been
duly authorized by the Board of Directors of WWC and by the WWC
Shareholder. WWC has the corporate power and authority, to execute and
deliver this Agreement and, at Closing, will have the corporate power
and authority, and all requisite authority, respectively, to consummate
the transactions and perform the obligations contemplated hereby. This
Agreement constitutes the valid and binding obligation of WWC and is
enforceable against WWC in accordance with its terms. All persons who
have executed or will execute this Agreement on behalf of WWC have been
duly authorized to do so by all necessary corporate or other action.
Neither the execution and delivery of this Agreement by WWC nor the
consummation of the transactions contemplated by this Agreement, will,
with or without the giving of notice or the passage of time, or both,
violate, conflict with, result in the breach or termination of, or
constitute a default under (by WWC or any other entity by way of
substitution, novation or otherwise), or result in the acceleration of,
or entitle any party to terminate, any Agreement or instrument to which
WWC is a party or by which any of its property or business may be
bound, or accelerate any obligation under, or confer upon any other
person any interest or right (including any right of termination or
cancellation) in or with respect to any part of the property of WWC,
pursuant to (i) any provision of the Articles of Incorporation or
Bylaws of WWC, (ii) any provision of any judgment, order, injunction,
decree or award against or binding upon WWC or upon the securities,
property or business of WWC, (iii) any provision of any mortgage, lien,
lease, Agreement, license, contract, understanding, permit, instrument,
order, writ, award, judgment or decree to which WWC is a party or by
which it is bound or to which its properties or business are subject,
or (iv) any federal, state or local law, statute, ordinance, rule or
regulation of any jurisdiction applicable to WWC or to the securities,
property or business of WWC.
6
<PAGE>
(d) Financial Statements. WWC shall provide to WorldPort true
and correct copies of WWC's audited financial statements for the
periods ending March 31, 1996 and 1997 (the "WWC Financial Statements")
on or before forty-five (45) days after Closing. The WWC Financial
Statements shall fairly present WWC's financial condition and the
results of its operations on a consolidated basis at the relevant dates
thereof and for the periods covered thereby, and shall be prepared in
accordance with generally accepted accounting principles, consistently
applied.
(e) Subsidiaries. WWC has no subsidiaries.
(f) Legal Proceedings. Except as set forth in the disclosure
schedule, attached as Exhibit E hereto (the "Disclosure Schedule"),
there are no Legal Proceedings (defined below) pending or, to the
knowledge of WWC's directors or officers, threatened, nor, to the
knowledge of WWC's directors or officers, is there any basis for any
claim, cause of action or regulatory initiative which would give rise
to any contingent liability. To the knowledge of the directors and
officers of WWC, WWC has been and is operating its business in all
material respects in conformity with applicable laws, ordinances and
regulations to which WWC is subject. No notice of violations against or
affecting WWC's business has been received by WWC from any department
or agency of any federal, state or local government. Since its
organization, WWC has not been charged in any proceeding to which it
has been named as a party and served with process with any violation of
any existing statute, law, ordinance, rule, regulation, policy,
guideline, judgment, order or decree; and compliance with existing
statutes, laws, ordinances, rules, regulations, policies, guidelines,
judgments, orders or decrees in effect as of the date of this Agreement
has not had a material adverse effect on the business and operations of
WWC. For purposes of this Agreement, "Legal Proceedings" means all
suits, actions, administrative, arbitration, regulatory or other
similar proceedings (including proceedings concerning health or safety
violations, labor disputes or grievances, civil rights discrimination
cases and affirmative action proceedings) and all governmental
investigations or audits pending or, to the knowledge of a party,
threatened, and each judgment, order, injunction, decree or award
(whether rendered by a court, administrative agency, or by arbitration
pursuant to a grievance or other procedure) to which a party or by
which its properties or business are bound, which is unsatisfied or
requires continuing compliance therewith.
(g) Tax Returns. WWC has timely and correctly filed all
federal, state and local tax returns, whether relating to income,
sales, franchise, real or personal property or other types of taxes,
which have been required to be filed, and has paid all taxes as shown
on such returns and all assessments received by WWC to the extent such
assessments have become due.
(h) Assets. WWC owns, possesses and controls and has good and
marketable title to all of its assets, free and clear of any mortgage,
lien, claim, defect, charge, encumbrance and right of third parties.
Such assets are in good operating condition and repair, ordinary wear
and tear excepted, and conform to applicable ordinances, regulations,
building, zoning and other laws and directives.
7
<PAGE>
(i) Conduct of Business. Since March 31, 1997, WWC has
conducted its business in the ordinary course, consistent with past
practices, and has not (i) experienced any material adverse change in
its business, property, financial condition, net worth, or results of
operation or prospects, (ii) amended its Articles of Incorporation or
Bylaws, (iii) issued, transferred, sold or contracted to sell any WWC
Capital Stock or any bonds, warrants, options or other corporate
securities or obligations convertible into WWC Capital Stock, (iv)
declared or made any payment or distribution to its shareholders
(except for the payment of salaries at then existing rates and the
reimbursement of reasonable expenses to any of its shareholders), (v)
purchased options or purchased or redeemed any WWC Capital Stock, (vi)
incurred any obligation or liability, absolute or contingent, except
obligations and liabilities incurred in the ordinary course of the
operation of its business, (vii) cancelled, without payment in full,
any notes, loans or other obligations receivable from any officer,
director or shareholder or any member of the families of any officer,
director or shareholder, or from any corporation, partnership, or other
entity in which any officer, director or shareholder, or any member of
their families then had any direct or indirect interest, (viii)
mortgaged, pledged or subjected to lien any of its assets, (ix) sold,
assigned, or transferred any of its assets, or cancelled any debts or
claims held by it, except for fair market value in the ordinary course
of its business as carried on, at and prior to March 31, 1997, (x)
sold, assigned, transferred, mortgaged, pledged or subjected to lien or
permitted to lapse copyrights, trademarks, trade names, patents,
licenses or other intangible assets or rights to use such intangible
assets, (xi) increased the compensation payable, or to become payable
to its officers, directors or shareholders, or employees (the term
"compensation" to include salaries, bonuses, fringe benefits, pensions,
profit participations and payments or benefits of any kind whatsoever),
(xii) to the knowledge of its directors and officers, performed any act
which will make it liable for, or incurred any liability for, direct or
consequential damages not fully covered by insurance, or (xiii) made
any change in its method of accounting or accounting practices.
(j) Accounts Receivable. The accounts and notes receivable
shown in the WWC Financial Statements and all accounts and notes
receivable thereafter acquired by WWC prior to the Closing have been
collected or are reasonably expected to be collectible in the full
amounts therefor.
(k) Contracts. Except as set forth on the Disclosure Schedule,
WWC has no material obligation, contract, Agreement, lease, sublease,
commitment or understanding of any kind, nature or description, oral or
written, fixed or contingent, due or to become due, existing or
inchoate which involves an obligation in excess of $1,000 (the
"Material Contracts"). All Material Contracts set forth on the
Disclosure Schedule are, in full force and effect and are valid,
binding and enforceable in accordance with their respective terms; all
parties to such Material Contracts have complied in all material
respects with the provisions thereof; no such party is to the best of
WWC's or the WWC Shareholder's knowledge, in default in any respect
under any term thereof and to the best of WWC's and the WWC
Shareholder's knowledge, no event has occurred that with the passage of
time and/or giving of notice would constitute a material default by any
party under any provision thereof. No consent, approval or
authorization of any third party is required in connection with the
consummation of the transactions contemplated hereunder.
8
<PAGE>
(l) Contracts under Negotiation. WWC has developed certain
business relationships with (i) an international telecommunications
network operator that provides customers with voice and data services
such as managed data network services, virtual private networks,
electronic commerce, transaction processing transmission, VSAT, X.25,
and frame delay, including, but not limited to, those entities set
forth on Disclosure Schedule 1(f)(ii), and (ii) one or more debit
card/pre-paid calling card distribution networks, long distance
carriers or resellers, which will result in significant business
opportunities for Acquisitions, Inc. and/or WorldPort, including
favorable access to a global telecommunications network with
transmission facilities in over 200 countries worldwide.
(m) Employment and Other Contracts. Except as set forth on the
Disclosure Schedule, WWC is not, directly or indirectly, a party to any
written or oral (i) employment contract with any directors, officers or
employees having a term expiring after the Closing, (ii) sales
representation, agency or distribution contract or Agreement, (iii)
expense reimbursement plan or arrangement which will result in unpaid
obligations of WWC after the Closing, (iv) management, employment,
consulting, agency or other Agreement for personal services to be
rendered by any person (including, but not limited to, any investment
advisor, distributor, sales representative or agency, or advertiser),
or (v) contract with any shareholder or any person affiliated with any
shareholder.
(n) ERISA. WWC has not had since its organization, and
will not have at any time between the date of this Agreement and the
Closing, any ERISA Plan or Multi-Employer Plan.
(o) Employee Matters. Except as set forth on the
Disclosure Schedule, or as otherwise provided in this Agreement:
(i) All legally enforceable obligations of WWC,
whether arising by operation of law, contract, Agreement or
otherwise, for salaries, wages, vacation and holiday pay, sick
pay, incentive compensation, deferred compensation, sales
compensation and bonuses or other forms of compensation or
benefits which are, or may become, payable to its current or
former employees, directors, officers, agents or any other
individual (or any of their respective dependents, heirs,
legatees, beneficiaries or legal representatives) with respect
to periods ending on or before the Closing, have been paid, if
due, or adequate accruals, if accruals are required, in
accordance with generally accepted accounting principles, for
such payments will be made prior to the Closing.
(ii) WWC does not have any plan, program,
arrangement, Agreement or obligation to provide benefits in
the form of bonus, incentive, deferred compensation, dental,
stock options, medical, disability, hospitalization,
insurance, death benefits or any other employee benefits of
any kind whatsoever, which requires WWC to provide benefits to
its employees, directors, officers, agents or any other
individuals (or any of their respective dependents, heirs,
legatees, beneficiaries or legal representatives).
(iii) WWC has complied, and through the Closing will
continue to comply, with the provisions of the Consolidated
9
<PAGE>
Omnibus Reconciliation Act of 1985, as amended ("COBRA"),
relating to the continuation of insurance coverage for former
employees and their dependents.
(iv) WWC has complied with all material requirements
of the Code, ERISA and other applicable federal and state
laws, and the regulations promulgated thereunder, which relate
to any employees, former employees or beneficiaries of such
employees, or to any salary, bonus, incentive compensation,
deferred compensation, sales compensation, ERISA Plans or
other employee benefit plan or similar arrangement binding
upon WWC (whether or not existing on the date hereof or at the
Closing).
(v) WWC has no policies, plans or agreements with
respect to payments of severance pay to employees which could
require any payments or severance pay to any employees
terminated subsequent to the Closing. No employee terminated
by WWC on or prior to the Closing has or will have any right
to severance pay.
(vi) Neither the execution or delivery of this
Agreement, nor the consummation of the transactions
contemplated hereby, will (1) result in any payment, including
severance, unemployment compensation, golden parachute or
otherwise, becoming due under any employee benefit plan or
otherwise, (2) increase any benefits otherwise payable under
any such employee benefit plan, or (3) result in the
acceleration of the time of payment or vesting of any benefits
thereunder.
(p) Labor Practices. WWC is not a party to any collective
bargaining Agreement, and no union or group is seeking to become the
collective bargaining representative for any unit of the employees of
WWC. There are no pending (i) unfair labor practice complaints against,
(ii) arbitration proceedings or grievances involving, (iii) OSHA
citations, wage and hour complaints or EEO charges against, (iv) NIOSH
health hazard evaluation determinations against, or (v) findings of
noncompliance with respect to affirmative action requirements against
WWC, and there is no pending labor strike nor, to the knowledge of the
Directors and officers of WWC, has any such complaint, proceeding,
citation, charge, determination, finding or strike been threatened. WWC
has not experienced any material strike or work stoppage during the
three years prior to the date hereof. WWC is not engaged in any unfair
labor practices.
(q) Real Property Ownership and Lease Obligations. Except as
set forth in the Disclosure Schedule, WWC does not, as of the date of
this Agreement, and will not, between the date hereof and the Closing,
own any real estate interests or leasehold interests. All leases to
which WWC is a party are valid and in full force and effect, all rental
and other payments under such leases have been paid when due, and there
exists no default, or event which with the passage of time or notice or
both would constitute a default, under any such lease. The transaction
contemplated by this Agreement will not cause any of the leases to
terminate.
(r) Investment Company Act; Etc. WWC is not (i) an
"investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended, (ii) a "holding company" or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a
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"subsidiary company" of a "holding company," as such terms are defined
in the Public Utility Holding Company Act of 1935, as amended, or (iii)
a "public utility," as such term is defined in the Federal Power Act,
as amended.
(s) Title. Upon delivery of the WWC Capital Stock, WorldPort
will have good and marketable title thereto, free and clear of all
liens, encumbrances, preemptive rights, and other restrictions
whatsoever;
(t) Ownership of Proprietary Rights. WWC owns or has the right
to use all patents, trademarks, service marks, trade names, trade
secrets, business names, other source or business identifiers,
copyrights, designs, and other intellectual property; and all
proprietary techniques, processes, methods of production and
commercialization, specifications and know-how; and all licenses,
rights and rights of way, whether from private or governmental sources
(collectively "proprietary rights") pertaining to or useful in relation
to its business as now conducted or proposed to be conducted as
contemplated by WorldPort. No director, officer, shareholder, or key
employee has an interest, whether direct or indirect, in any business
which is a competitor of WWC;
(u) Plans. The Disclosure Schedule sets forth a true and
complete list of (1) each employment, profit sharing, deferred
compensation, bonus, stock option, stock purchase, pension, retainer,
consulting, retirement, health, welfare, or incentive plan or contract
to which WWC is a party; and (2) each plan or Agreement under which
"fringe benefits" (including, but not limited to, vacation plans or
programs, sick leave plans or programs, dental or medical plans or
programs, severance plans or programs and related or similar benefits)
are afforded to employees of WWC. WWC is not in default with respect to
any material term of any such Agreement, plan, program or contract;
(v) Permits; Authorizations. WWC has all permits, licenses and
other authorizations necessary to the conduct of its business, and no
permits, licenses or other authorizations have been, or are required to
be, obtained or maintained, or will be required to be obtained or
maintained upon consummation of the transactions contemplated hereby,
and no governmental authority or agency with jurisdiction over WWC has
asserted or, to the best of the WWC Shareholder's and WWC's knowledge,
is likely to assert that any permits, licenses or other authorizations
have been, or are required to be, obtained or maintained by WWC, or
will be required to be obtained or maintained upon consummation of the
transactions contemplated hereby, other than those which WWC has
already obtained, with respect to the operation of WWC's business under
any law or any regulations in effect on the date hereof, including, but
not limited to, laws relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals, or
industrial or hazardous substances or wastes into the environment
(including, without limitation, ambient air, surface water, ground
water, land surfaces or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals
or industrial toxic or hazardous substances or wastes (collectively,
the "Environmental Laws"). Except as noted in the Disclosure Schedule,
to the best of the WWC Shareholder's and WWC's knowledge, WWC is in
substantial compliance, and upon consummation of the transactions
contemplated hereby will continue in substantial compliance, with all
material limitations,
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restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in all laws applicable
to WWC (including all Environmental Laws) or contained in any
regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder,
unless the failure to so comply would not have a material and adverse
effect on the business of WWC. No events, conditions, activities,
practices, incidents, actions or plans of action taken or to be taken
by WWC or, to the best of the WWC Shareholder's and WWC's knowledge,
any predecessor in interest, are reasonably likely to interfere with or
prevent substantial compliance or continued compliance with, to the
extent any are applicable, all laws (including the Environmental Laws)
or with any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or
approved thereunder;
(w) Other Obligations. Except as and to the extent
specifically reflected or reserved against in the WWC Financial
Statements, and non-material items arising in the ordinary course of
business thereafter, WWC has no liabilities or obligations, whether
absolute, accrued, contingent or otherwise, whether due or to become
due (including, without limitation, any liability for taxes), which are
individually or in the aggregate, material to the WWC Shareholder's
condition (financial or otherwise) or the prospects of its business;
(x) Approvals. Except as set forth in this Agreement and
except as to matters for which WWC is responsible hereunder, to the
knowledge of WWC's directors and officers, no authorization, consent,
order, permit or approval of, or filing with, any federal, state, local
or foreign government or governmental agency or any other authority,
private person or entity, is necessary for the consummation by WWC of
the transactions contemplated by this Agreement.
(y) Untrue Statements. The representations or warranties of
WWC contained in this Agreement or any written certificate furnished to
WorldPort by or on behalf of WWC in connection herewith or in
connection with the transactions contemplated herein do not contain and
will not contain any untrue statement of a material fact and do not
omit and will not omit to state any material fact required to be stated
herein or therein or otherwise necessary to make the statements
contained herein or therein not false or misleading. All of the
representations and warranties made by WWC in this Agreement shall be
true and correct on the Closing with the same effect as if they had
been made on the Closing.
(z) Availability of Documents. The WWC Shareholder and WWC
have made available to WorldPort copies of all documents, including
without limitation all agreements, contracts, commitments, insurance
policies, leases, plans, instruments, undertakings, authorizations,
permits, licenses, rights of way, patents, trademarks, tradenames,
service marks, copyrights and applications therefor, referred to
herein. Such copies are true and complete and include all amendments,
supplements and modifications thereto or waivers currently in effect
thereunder.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
ACQUISITIONS, INC. To induce WWC and the WWC Shareholder to enter into this
Agreement, Acquisitions, Inc. represents and warrants that the following
statements will be true, correct and complete as of the day of Closing:
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(a) Organization, Standing and Qualification. As of Closing,
Acquisitions, Inc. shall be duly organized and validly existing and in
good standing under the laws of the State of Delaware, and shall be
authorized and qualified to own and operate its properties and assets
and conduct its business in all jurisdictions where such properties and
assets are owned and operated and such business conducted.
(b) Authority. As of Closing, Acquisitions, Inc. shall
have the full right, power and authority to execute, deliver and
perform the terms of this Agreement. This Agreement shall have been
duly authorized by Acquisitions, Inc. and constitutes a binding
obligation of Acquisitions, Inc., enforceable in accordance with its
terms.
(c) Compliance with Law. Neither the execution and delivery of
this Agreement nor consummation of the transactions contemplated hereby
will conflict with or result in a breach of or constitute a default
under any provision of Acquisitions, Inc.'s Certificate of
Incorporation or Bylaws or any indenture, loan Agreement or other
material obligation or liability to which it is a party or by which it
is bound.
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
WORLDPORT. To induce WWC and the WWC Shareholder to enter into this Agreement,
WorldPort represents and warrants that the following statements are true,
correct and complete as of the date hereof, and will be true, correct and
complete as of the date of Closing:
(a) Capitalization. The WorldPort Capital Stock is duly
authorized, validly issued and fully paid and nonassessable. The
WorldPort Capital Stock was issued in compliance with all state and
federal laws, including all securities laws. Except as is set forth in
the Disclosure Schedule, there are no outstanding subscriptions,
warrants, options, preemptive rights, or other agreements or rights of
any kind to purchase or otherwise receive or be issued, or securities
or obligations of any kind convertible into, any shares of capital
stock of WorldPort.
(b) Organization. WorldPort is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, has full power and authority, corporate and otherwise, to
carry on its business as presently conducted and to own, or hold under
lease, and use its properties and assets in the manner in which and in
the places where such properties and assets are now owned or held and
used. WorldPort is duly qualified to do business and is in good
standing in each other jurisdiction in which it is required to qualify,
except where the failure to so qualify would not have a material
adverse effect on WorldPort's business. WorldPort has delivered to WWC
true copies of its Certificate of Incorporation and Bylaws, as are in
full force and effect as of the date of this Agreement.
(c) Authority. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been
duly authorized by the Board of Directors of WorldPort. WorldPort has
the corporate power and authority to execute and deliver this Agreement
and, at the Closing will have the corporate power and authority to
consummate the transactions and perform the obligations contemplated
hereby. This Agreement constitutes the valid and binding obligation of
WorldPort enforceable against WorldPort in accordance with its terms.
All persons who have executed or will execute this Agreement on behalf
of WorldPort have been duly authorized to do so by all necessary
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<PAGE>
corporate action of WorldPort. Neither the execution and delivery of
this Agreement by WorldPort, nor the consummation of the transactions
contemplated by this Agreement, will, with or without the giving of
notice or the passage of time, or both, violate, conflict with, result
in the breach or termination of, or constitute a default under (by
WorldPort or any other entity by way of substitution, novation or
otherwise), or result in the acceleration of, or entitle any party to
terminate, any Agreement or instrument to which WorldPort is a party or
by which any of its property or business may be bound, or accelerate
any obligation under, or confer upon any other person any interest or
right (including any right of termination or cancellation) in or with
respect to any part of the property of WorldPort, pursuant to (i) any
provision of the Certificate of Incorporation or Bylaws of WorldPort,
(ii) any provision of any judgment, order, injunction, decree or award
against or binding upon WorldPort or upon the securities, property or
business of WorldPort, (iii) any provision of any mortgage, lien,
lease, Agreement, license, contract, understanding, permit, instrument,
order, writ, award, judgment or decree to which WorldPort is a party or
by which it is bound or to which its properties or business are
subject, or (iv) any federal, state or local law, statute, ordinance,
rule or regulation of any jurisdiction applicable to WorldPort or to
the securities, property or business of WorldPort.
(d) Legal Proceedings. Except as set forth in the Disclosure
Schedule, there are no Legal Proceedings pending or, to the knowledge
of WorldPort's directors or officers, threatened, nor, to the knowledge
of WorldPort's directors or officers, is there any basis for any claim,
cause of action or regulatory initiative which would give rise to any
contingent liability. To the knowledge of the directors and officers of
WorldPort, WorldPort has been and is operating its business in all
material respects in conformity with applicable laws, ordinances and
regulations to which WorldPort is subject. No notice of violations
against or affecting WorldPort's business has been received by
WorldPort from any department or agency of any federal, state or local
government. Since its organization, WorldPort has not been charged in
any proceeding to which it has been named as a party and served with
process with any violation of any existing statute, law, ordinance,
rule, regulation, policy, guideline, judgment, order or decree; and
compliance with existing statutes, laws, ordinances, rules,
regulations, policies, guidelines, judgments, orders or decrees in
effect as of the date of this Agreement has not had a material adverse
effect on the business and operations of WorldPort.
(e) Tax Returns. WorldPort has timely and correctly filed all
federal, state and local tax returns, whether relating to income,
sales, franchise, real or personal property or other types of taxes,
which have been required to be filed, and has paid all taxes as shown
on such returns and all assessments received by WorldPort to the extent
such assessments have become due.
(f) SEC Filings. In the last twelve (12) months, WorldPort has
filed all reports required to be filed pursuant to the Securities Act
of 1933 and the Securities Exchange Act of 1934, and the rules and
regulations promulgated thereunder.
(g) Assets. WorldPort owns, possesses and controls and has
good and marketable title to all of its assets, free and clear of any
mortgage, lien, claim, defect, charge, encumbrance and right of third
parties. Such assets are in good operating condition and repair,
ordinary wear and tear excepted, and conform to applicable ordinances,
regulations, building, zoning and other laws and directives.
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(h) Conduct of Business. Except as set forth in the Disclosure
Schedule, since March 31, 1997, or as otherwise disclosed in any of the
Company's filings with the Securities and Exchange Commission,
WorldPort has conducted its business in the ordinary course and has not
(i) experienced any material adverse change in its business, property,
financial condition, net worth, or results of operation or prospects,
(ii) amended its Certificate of Incorporation or Bylaws, (iii) except
for a contemplated private placement offering of up to $5,000,000 under
Regulation D of 1,666,667 shares of Series A Preferred Stock at $3.00
per share, issued, transferred, sold or contracted to sell any of
WorldPort's Capital Stock or any bonds, warrants, options or other
corporate securities or obligations convertible into WorldPort's
Capital Stock, (iv) declared or made any payment or distribution to its
shareholders (except for the payment of salaries at then existing rates
and the reimbursement of reasonable expenses to any of its
shareholders), (v) purchased options or purchased or redeemed any
WorldPort's Capital Stock, (vi) incurred any obligation or liability,
absolute or contingent, except obligations and liabilities incurred in
the ordinary course of the operation of its business, (vii) cancelled,
without payment in full, any notes, loans or other obligations
receivable from any officer, director or shareholder or any member of
the families of any officer, director or shareholder, or from any
corporation, partnership, or other entity in which any officer,
director or shareholder, or any member of their families then had any
direct or indirect interest, (viii) mortgaged, pledged or subjected to
lien any of its assets, (ix) sold, assigned, or transferred any of its
assets, or cancelled any debts or claims held by it, except for fair
market value in the ordinary course of its business as carried on, at
and prior to March 31, 1997, (x) sold, assigned, transferred,
mortgaged, pledged or subjected to lien or permitted to lapse
copyrights, trademarks, trade names, patents, licenses or other
intangible assets or rights to use such intangible assets, (xi)
increased the compensation payable, or to become payable to its
officers, directors or shareholders, or employees (the term
"compensation" to include salaries, bonuses, fringe benefits, pensions,
profit participations and payments or benefits of any kind whatsoever),
(xii) to the knowledge of its directors and officers, performed any act
which will make it liable for, or incurred any liability for, direct or
consequential damages not fully covered by insurance, or (xiii) made
any change in its method of accounting or accounting practices.
(i) Contracts. Except as set forth on the Disclosure Schedule,
WorldPort does not have any material obligation, contract, Agreement,
lease, sublease, commitment or understanding of any kind, nature or
description, oral or written, fixed or contingent, due or to become
due, existing or inchoate which involves an obligation in excess of
$25,000. All Material Contracts set forth on the Disclosure Schedule
are, in full force and effect and are valid, binding and enforceable in
accordance with their respective terms; all parties to such Material
Contracts have complied in all material respects with the provisions
thereof; no such party is to the best of WorldPort's knowledge, in
default in any respect under any term thereof and to the best of
WorldPort's knowledge, no event has occurred that with the passage of
time and/or giving of notice would constitute a material default by any
party under any provision thereof. No consent, approval or
authorization of any third party is required in connection with the
consummation of the transactions contemplated hereunder.
(j) Employment and Other Contracts. Except as set forth in
the Disclosure Schedule, WorldPort is not, directly or indirectly, a
party to any written or oral ( i ) employment
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contract with any directors, officers or employees having a term
expiring after the Closing, (ii) sales representation, agency or
distribution contract or Agreement, (iii) expense reimbursement plan or
arrangement which will result in unpaid obligations of WorldPort after
the Closing, (iv) management, employment, consulting, agency or other
Agreement for personal services to be rendered by any person
(including, but not limited to, any investment advisor, distributor,
sales representative or agency, or advertiser), or (v) contract with
any shareholder or any person affiliated with any shareholder.
(k) ERISA. Except as set forth in the Disclosure Schedule,
WorldPort has not had since its organization, and will not have at any
time between the date of this Agreement and the Closing, any ERISA Plan
or Multi-Employer Plan.
(l) Labor Practices. WorldPort is not and has not ever been a
party to any collective bargaining Agreement, and no union or group is
seeking to become the collective bargaining representative for any unit
of the employees of WorldPort. There are no pending (i) unfair labor
practice complaints against, (ii) arbitration proceedings or grievances
involving, (iii) OSHA citations, wage and hour complaints or EEO
charges against, (iv) NIOSH health hazard evaluation determinations
against, or (v) findings of noncompliance with respect to affirmative
action requirements against WorldPort, and there is no pending labor
strike nor, to the knowledge of the directors and officers of
WorldPort, has any such complaint, proceeding, citation, charge,
determination, finding or strike been threatened. WorldPort has not
experienced any material strike or work stoppage during the three years
prior to the date hereof. WorldPort is not engaged in any unfair labor
practices.
(m) Real Property Ownership and Lease Obligations. Except as
set forth in the Disclosure Schedule, WorldPort does not, as of the
date of this Agreement, and will not, between the date hereof and the
Closing, own any real estate interests or leasehold interests and
WorldPort is not a party to any lease and has no obligation to make any
rental or other payments.
(n) Investment Company Act; Etc. WorldPort is not (i) an
"investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended, (ii) a "holding company" or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," as such terms are defined
in the Public Utility Holding Company Act of 1935, as amended, or (iii)
a "public utility," as such term is defined in the Federal Power Act,
as amended.
(o) Environmental Permits. WorldPort does not engage in or
conduct any business which requires any permits, licenses or other
authorizations which are required under federal, state and local laws
relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants or hazardous or toxic materials or wastes into
ambient air, surface water, ground water or land, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants or
hazardous or toxic materials or wastes.
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<PAGE>
(p) Approvals. To the knowledge of WorldPort's directors and
officers, no authorization, consent, order, permit or approval of, or
filing with, any federal, state, local or foreign government or
governmental agency or any other authority, private person or entity,
is necessary for the consummation by WorldPort of the transactions
contemplated by this Agreement.
(q) Untrue Statements. The representations or warranties of
WorldPort contained in this Agreement or any written certificate
furnished to WWC by or on behalf of WorldPort in connection herewith or
in connection with the transactions contemplated herein do not contain
and will not contain any untrue statement of a material fact and do not
omit and will not omit to state any material fact required to be stated
herein or therein or otherwise necessary to make the statements
contained herein or therein not false or misleading. All of the
representations and warranties made by WorldPort in this Agreement
shall be true and correct on the Closing with the same effect as if
they had been made on the Closing.
(r) Title. Upon issuance of the WorldPort's Capital Stock, the
WWC Shareholder will have good and marketable title thereto, free and
clear of all liens, encumbrances, preemptive rights, and other
restrictions, other than the conditions set forth therein;
(s) Compliance with Law. WorldPort has no knowledge and has
not received any notice from any federal, state or local governmental
authority that its business does not comply, in all material respects,
with any applicable codes, laws, ordinances, rules, and regulations,
and no proceedings in respect thereto are pending or, to the knowledge
of WorldPort, threatened;
(t) Capitalization of the WorldPort. The authorized capital
stock of the WorldPort consists of 65,000,000 shares of Common Stock,
par value $.0001 per share, of which 10,883,333 shares are issued and
outstanding as of April 20, 1997; and 10,000,000 shares of Preferred
Stock, par value $.0001 per share, of which no shares are issued and
outstanding.
(u) Subsidiaries. Other than Acquisitions, Inc., WorldPort
has no subsidiaries and no other investment in any person or entity;
(v) Plans. Except as set forth in the Disclosure Schedule,
WorldPort has no employment, profit sharing, deferred compensation,
bonus, stock option, stock purchase, pension, retirement, health,
welfare, or incentive plans for employees;
(w) Permits; Authorizations. No permits, licenses or other
authorizations have been, and no governmental authority or agency with
jurisdiction over WorldPort has asserted or, to the best of WorldPort's
knowledge, is likely to assert that any permits, licenses or other
authorizations have been required to be obtained or maintained by
WorldPort. To the best of WorldPort's knowledge, WorldPort is in
substantial compliance, and upon consummation of the transactions
contemplated hereby will continue in substantial compliance, with all
material limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in all laws applicable to WorldPort or contained in any
regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder,
unless the failure to so comply would not have a material and adverse
effect on the business of WorldPort. No events, conditions, activities,
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practices, incidents, actions or plans of action taken or to be taken
by WorldPort or, to the best of WorldPort's knowledge, any predecessor
in interest, are reasonably likely to interfere with or prevent
substantial compliance or continued compliance with, to the extent any
are applicable, all laws or with any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder;
(x) Offering. Subject to the accuracy of the WWC Shareholder's
representations on Exhibit F hereof, the offer and sale of WorldPort's
Stock constitute transactions exempt from the registration requirements
of Section 5 of the Securities Act of 1933, as amended and any
applicable state Blue Sky Laws;
(y) Availability of Documents. WorldPort has made available to
the WWC Shareholder copies of all documents, including without
limitation all agreements, contracts, commitments, insurance policies,
leases, plans, instruments, undertakings, authorizations, permits,
licenses, patents, trademarks, tradenames, service marks, copyrights
and applications therefor, referred to herein. Such copies are true and
complete and include all amendments, supplements and modifications
thereto or waivers currently in effect thereunder.
6. THE CLOSING.
(a) Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place on or before July 18,
1997, at the offices of WorldPort, or on such other date and time as
may be mutually agreed upon in writing by WorldPort and the WWC
Shareholder;
7. AGREEMENTS PENDING CLOSING.
(a) Agreements of The WWC Shareholder and WWC Pending the
Closing. The WWC Shareholder and WWC covenant and agree that, from the
date hereof through the Closing and except as otherwise agreed to in
writing by WorldPort:
(i) Ordinary Course. The WWC Shareholder shall cause
the business of WWC to be, and the business of WWC shall be,
conducted solely in the ordinary course consistent with past
practice, with no changes in methods of management, operation
or accounting;
(ii) Maintenance of Assets. The WWC Shareholder shall
cause WWC to, and WWC will, continue to maintain and service
the physical assets used in the conduct of its business in
good working order and condition and in the same manner as has
been its consistent past practice;
(iii) Employees. The WWC Shareholder shall cause WWC
to, and WWC will, use reasonable efforts to keep available the
services of the present employees and agents of its business
and to maintain the relations and goodwill with material
suppliers, customers, distributors and any others having
material business relations with WWC;
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(iv) Consents. WWC shall obtain all consents from
third parties necessitated by the terms of any contract to
which WWC is a party;
(v) Compliance with Law. WWC shall comply with all
laws, ordinances, rules, regulations and orders applicable to
WWC;
(vi) Performance of Obligations. WWC shall have
performed its obligations under all contracts and leases to
which it is subject, to the extent such performance is
required prior to the Closing.
(vii) Further Disclosure. The WWC Shareholder and WWC
shall promptly disclose to WorldPort in writing any
information contained in its representations and warranties or
the Exhibits which, is incomplete or is no longer correct as
of all times, commencing on the date hereof until the Closing.
To the extent that such disclosures are acceptable to
WorldPort, such disclosures shall be deemed to modify, amend
and supplement the representations and warranties of the WWC
Shareholder and WWC and/or the Exhibits for all purposes;
(viii) Sale and Transfer. The WWC Shareholder and WWC
shall not, directly or indirectly, sell or transfer all or any
part its assets, other than in the ordinary course of business
consistent with past practice, nor shall the WWC Shareholder
or WWC further encumber all or any part of their assets (other
than purchase money security interests) or initiate or
participate in any discussions or negotiations with respect to
a sale of its assets, a merger or consolidation of it with
another entity or enter into any Agreement to do any of the
foregoing. The WWC Shareholder and WWC shall not provide any
confidential information concerning WWC's business or its
properties or assets to any third party other than in the
ordinary course of business;
(ix) Amendments to Leases and Contracts. WWC shall
not amend any leases or material contracts to which it is a
party without the written consent of WorldPort;
(x) Access to Information. The WWC Shareholder and
WWC shall give to WorldPort's officers, employees, counsel,
accountants and other representatives free and full access to
and the right to inspect, during normal business hours, all of
the properties, assets, records, contracts and other documents
relating to WWC's business and shall permit them to consult
with the officers, employees, accountants, counsel and agents
of WWC for the purpose of making such investigation of WWC as
WorldPort shall desire to make, provided that such
investigation shall not unreasonably interfere with WWC's
business operations. Furthermore, The WWC Shareholder and WWC
shall furnish to WorldPort all documents, records and
information in The WWC Shareholder's or WWC's possession with
respect to the affairs of WWC's business and copies of any
working papers relating thereto, as WorldPort shall from time
to time reasonably request;
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(xi) Public Announcement. Upon execution of this
Agreement, WorldPort and the WWC Shareholder may agree on and
issue a joint press release describing the transactions set
forth in this Agreement for immediate release to the public.
(xii) Confidential Information. The WWC Shareholder
and WWC will hold, and shall cause all others, including The
WWC Shareholder's and WWC's counsel, independent certified
public accountants, appraisers and investment bankers to hold,
in confidence any confidential data or information made
available to the WWC Shareholder or WWC in connection with
this Agreement or with respect to WorldPort's business, using
the same standard of care to protect such confidential data or
information as would be used by a prudent and reasonable
business person in similar circumstances. If the transactions
contemplated by this Agreement are not consummated, The WWC
Shareholder agrees that it shall return or cause to be
returned to WorldPort all written materials and all copies
thereof that were supplied to the WWC Shareholder by WorldPort
and that contain any such confidential data or information,
and that the WWC Shareholder will continue to hold in
confidence any such information which it has in its
possession; and
(xiii) Action; Cooperation. The WWC Shareholder will
not knowingly take any action which would result in a breach
of any of its representations and warranties hereunder.
Furthermore, the WWC Shareholder shall cooperate with
WorldPort and use its best efforts to cause all of the
conditions to the obligations of the WWC Shareholder and
WorldPort under this Agreement to be satisfied on or prior to
the Closing.
(b) Agreements of WorldPort Pending the Closing. WorldPort
covenants and agrees that, from the date hereof through the Closing,
and except as otherwise agreed to in writing by the WWC Shareholder:
(i) Ordinary Course. WorldPort shall conduct its
business solely in the ordinary course consistent with past
practice, with no changes in methods of management, operation
or accounting;
(ii) Maintenance of Assets. WorldPort shall continue
to maintain and service its assets in the same manner as has
been its consistent past practice;
(iii) Compliance with Law. WorldPort shall comply
with all laws, ordinances, rules, regulations and orders
applicable to WorldPort;
(iv) Performance of Obligations. WorldPort shall
have performed its obligations under all contracts and leases
to which it is subject, to the extent such performance is
required prior to the Closing;
(v) Further Disclosure. WorldPort shall promptly
disclose to the WWC Shareholder in writing any information
contained in its representations and warranties or the
Exhibits which, is incomplete or is no longer correct as of
all times, commencing on the date hereof until the Closing. To
the extent that such disclosures are acceptable
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<PAGE>
to the WWC Shareholder, such disclosures shall be deemed to
modify, amend and supplement the representations and
warranties of WorldPort and/or the Exhibits for all purposes;
(vi) Access to Information. WorldPort shall give to
the WWC Shareholder and to WWC's officers, employees, counsel,
accountants and other representatives free and full access to
and the right to inspect, during normal business hours, any
assets, records, contracts and other documents relating to
WorldPort and shall permit them to consult with the officers,
employees, accountants, counsel and agents of WorldPort for
the purpose of making such investigation of WorldPort as the
WWC Shareholder shall desire to make. Furthermore, WorldPort
shall furnish to the WWC Shareholder all documents, records
and information in WorldPort's possession with respect to its
business and copies of any working papers relating thereto in
WorldPort's possession as the WWC Shareholder shall from time
to time reasonably request;
(vii) Action; Cooperation. WorldPort will not
knowingly take any action which would result in a breach of
any of its representations and warranties hereunder.
Furthermore, WorldPort shall cooperate with the WWC
Shareholder and use its best efforts to cause all of the
conditions to the obligations of WorldPort and the WWC
Shareholder under this Agreement to be satisfied on or prior
to the Closing;
(viii) Confidential Information. WorldPort will hold,
and shall cause all others, including WorldPort's counsel,
independent certified public accountants, appraisers and
investment bankers to hold, in confidence any confidential
data or information made available to WorldPort in connection
with this Agreement or with respect to the WWC Shareholder's
business, using the same standard of care to protect such
confidential data or information as would be used by a prudent
and reasonable business person in similar circumstances;
provided that WorldPort may disclose such data and information
to potential investors and lenders. If the transactions
contemplated by this Agreement are not consummated, WorldPort
agrees that it shall return or cause to be returned to the WWC
Shareholder all written materials and all copies thereof that
were supplied to WorldPort by the WWC Shareholder and that
contain any such confidential data or information, and that
WorldPort will continue to hold in confidence any such
information which it has in its possession; and
(ix) Public Announcement. Upon execution of this
Agreement, WorldPort and the WWC Shareholder may agree on and
issue a joint press release describing the transactions set
forth in this Agreement for immediate release to the public.
8. CONDITIONS PRECEDENT TO THE CLOSING.
(a) Conditions Precedent to WorldPort's Obligations. All
obligations of WorldPort under this Agreement are subject to the
fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent (any or all of which may be waived by
WorldPort):
(i) Representations and Warranties True as of the
Closing. The representations and warranties of WWC and the WWC
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<PAGE>
Shareholder contained in this Agreement or in any Exhibit,
certificate or document delivered by WWC and the WWC
Shareholder to WorldPort pursuant to the provisions hereof
shall have been true on the date hereof and shall be true on
the Closing, with the same effect as though such
representations and warranties were made as of such date;
(ii) Compliance with this Agreement. WWC and the WWC
Shareholder shall have performed and complied with all
agreements and conditions required by this Agreement to be
performed or complied with by WWC and the WWC Shareholder
prior to or at the Closing;
(iii) Consents. WWC and the WWC Shareholder shall
have obtained all necessary consents from third parties as
contemplated by Section 7(a)(iv), above.
(iv) No Action. At the Closing date, no governmental
agency or body, or other person or entity, shall have
instituted or threatened any action to restrain or prohibit
any of the transactions contemplated by this Agreement;
(v) Approval of Counsel. All proceedings taken in
connection with the transactions contemplated herein and all
instruments and documents required in connection therewith or
incident thereto shall be satisfactory in form to legal
counsel for WorldPort;
(vi) Escrow Agreement. WWC and the WWC Shareholder
shall have executed an escrow Agreement in substantially the
form of Exhibit C;
(vii) Legal Proceedings. Except as set forth in the
Disclosure Schedule, no Legal Proceedings shall have been
filed, shall be pending or, to the knowledge of WWC and the
WWC Shareholder, threatened before any court or governmental
body to restrain or prohibit, or to obtain substantial damages
in respect of, this Agreement, or the consummation of the
transactions contemplated hereby, and there shall be no Legal
Proceedings filed, pending or threatened that, either
separately or in the aggregate, could materially and adversely
affect the business, operations or condition, financial or
otherwise, of WWC.
(viii) Resolutions. WorldPort shall have received
from WWC certified copies of resolutions duly adopted by the
Shareholder of WWC and by the Board of Directors of WWC
approving this Agreement.
(ix) Articles of Incorporation. WorldPort shall have
received a current copy of the Articles of Incorporation of
WWC, and any amendments thereto, certified as of a date not
more than five business days before the Closing by the Texas
Secretary of State, and a current copy of the Bylaws of WWC,
certified as of the Closing by WWC's Secretary.
(x) Good Standing. WorldPort shall have received a
certificate, issued by the Texas Secretary of State, as of a
date not more than five business days before the Closing,
stating that WWC is in good standing in the State of Texas.
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<PAGE>
(xi) Incumbency of Officers. WorldPort shall have
received an incumbency certificate or certificates, dated the
Closing, certifying the incumbency of all officers of WWC who
have executed this Agreement.
(xii) Investment Representation. The WWC Shareholder
shall have executed an investment representation letter in
substantially the form of Exhibit F hereto;
(xiii) Execution of Other Agreements. WWC and the WWC
Shareholder shall have performed and complied with all
material agreements and conditions required to be performed or
complied with by it prior to or at the Closing;
(b) Conditions Precedent to the Obligations of WWC and The WWC
Shareholder. All obligations of WWC and the WWC Shareholder under this
Agreement are subject to the fulfillment or satisfaction, prior to or
at the Closing, of each of the following conditions precedent (any or
all of which may be waived by WWC and/or the WWC Shareholder):
(i) Representations and Warranties True as of the
Closing. The representations and warranties of WorldPort and
Acquisitions, Inc. contained in this Agreement or in any list,
certificate or document delivered by WorldPort or
Acquisitions, Inc. to WWC or the WWC Shareholder pursuant to
the provisions hereof shall be true on the Closing with the
same effect as though such representations and warranties were
made as of such date;
(ii) Incorporation of WorldPort Acquisitions, Inc.
WorldPort shall have filed all required documents with the
State of Delaware to incorporate Acquisitions, Inc. as a
wholly-owned subsidiary and shall have caused the appropriate
officers of Acquisition to have executed this Agreement;
(iii) Compliance with this Agreement. WorldPort shall
have performed and complied with all agreements and conditions
required by this Agreement to be performed or complied with by
WorldPort prior to or at the Closing;
(iv) Board of Directors Appointment. Mr. John Dalton
shall be appointed to the Board of Directors of WorldPort and
Acquisitions, Inc. effective as of the Closing.
(v) No Action. At the Closing date, no governmental
agency or body, or other person or entity, shall have
instituted or threatened any action to restrain or prohibit
any of the transactions contemplated by this Agreement;
(vi) Approval by WWC and The WWC Shareholder. All
documents and proceedings of WorldPort in connection with the
transactions contemplated hereby shall have been approved as
to form and substance by WWC and the WWC Shareholder and their
respective legal counsel, which approval will not unreasonably
be withheld.
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<PAGE>
(vii) Legal Proceedings. Except as set forth on the
Disclosure Schedule, no Legal Proceedings have been filed,
shall be pending or, to the knowledge of WorldPort, threatened
before any court or governmental body to restrain or prohibit,
or to obtain substantial damages in respect of, this
Agreement, or the consummation of the transactions
contemplated hereby, and there shall be no Legal Proceedings
filed, pending or threatened that, either separately or in the
aggregate, could materially and adversely affect the business,
operations or condition, financial or otherwise, of WorldPort.
(viii) Resolutions. The WWC Shareholder shall have
received from WorldPort a certified copy of the resolution
duly adopted by the Board of Directors of WorldPort approving
this Agreement.
(ix) Certificate of Incorporation. The WWC
Shareholder shall have received a current copy of the
Certificate of Incorporation of WorldPort and Acquisitions,
Inc. and any amendments thereto certified as of a date not
more than five business days before the Closing by Delaware
Secretary of State, and a current copy of the Bylaws of
WorldPort and Acquisitions, Inc., certified as of the Closing
by the respective corporate Secretary.
(x) Good Standing. The WWC Shareholder shall have
received certificates, issued by the Delaware Secretary of
State, as of a date not more than five business days before
the Closing, stating that both WorldPort and Acquisitions,
Inc. are in good standing in the State of Delaware.
(xi) Incumbency of Officers. The WWC Shareholder
shall have received an incumbency certificate or certificates,
dated as of Closing, certifying the incumbency of all officers
of WorldPort who have executed this Agreement.
(xii) Escrow Agreement. WorldPort shall have executed
an escrow Agreement in substantially the form of Exhibit C.
(xiii) Promissory Note. WorldPort shall have executed
a promissory note in substantially the form of Exhibit B.
(xiv) Registration Rights Agreement. WorldPort and
the WWC Shareholder shall have executed a registration rights
Agreement in substantially the form of Exhibit D.
(xv) Execution of Other Agreements. WorldPort shall
have performed and complied with all agreements and conditions
required by this Agreement to be performed or complied with by
it prior to or at the Closing.
9. OTHER MATTERS.
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<PAGE>
(a) Piggyback and Demand Registration Rights. The WWC
Shareholder shall have piggyback registration rights and a one time
demand registration right with regard to the WorldPort Common Stock
received hereunder. These rights may be exercised pursuant to the
Registration Rights Agreement attached hereto as Exhibit D, and
incorporated herein by reference.
(b) "Market Stand-Off" Agreement. The WWC Shareholder hereby
agrees that, if requested by WorldPort and any underwriter of common
stock (or other securities of WorldPort) in connection with a public
offering of the securities of WorldPort pursuant to a registration
statement filed with the United States Securities and Exchange
Commission, the WWC Shareholder will not sell or otherwise transfer or
dispose of any shares of common stock of WorldPort (or other
securities) held by such the WWC Shareholder during the period
beginning seven (7) days prior to and ending one hundred eighty (180)
days following the date of the final prospectus of WorldPort as filed
under the Securities Act of 1933. The WWC Shareholder further agrees to
execute any Agreement requested by WorldPort and such underwriter with
respect to this paragraph, in a form satisfactory to WorldPort and such
underwriter. WorldPort may impose "stop-transfer" instructions with
respect to the common stock (or other securities) subject to the
foregoing restriction until the end of such 180 day period.
(c) Substitution of WorldPort Into Any WWC Agreement. Prior to
the Closing of this Agreement, WorldPort shall have the right, in the
place of WWC, to enter into any and all agreements, transactions or
other relationships that WWC has the right to enter.
10. INDEMNIFICATION.
(a) General Indemnification Obligation of WWC and The WWC
Shareholder. Subject to the limitations hereinafter provided, from and
after the Closing, WWC and The WWC Shareholder will indemnify and hold
harmless WorldPort and its successors and assigns (an "Indemnified
WorldPort Party") against and in respect of:
(i) Damages. Any and all damages, losses,
deficiencies, liabilities, costs and expenses (collectively,
"Damages") incurred or suffered by the Indemnified WorldPort
Party that result from, relate to or arise out of:
(1) Any and all liabilities and obligations
of WWC of any nature whatsoever, in existence as of
the Closing, except for those liabilities and
obligations of WWC set forth in the WWC Financial
Statements or disclosed in the schedules to this
Agreement;
(2) Any and all actions, suits, claims or
legal, administrative, arbitration, governmental or
other proceedings or investigations against an
Indemnified WorldPort Party that relate to the WWC
Shareholder or WWC to the extent that the event
giving rise thereto occurred prior to the Closing or
which result from or arise out of any action or
inaction prior to the Closing of the WWC Shareholder,
WWC, or any director, officer, employee, agent,
25
<PAGE>
representative or subcontractor of WWC, except for
those set forth in the WWC Financial Statements or
schedules to this Agreement; or
(3) Any misrepresentation, breach of
warranty or nonfulfillment of any Agreement or
covenant on the part of the WWC Shareholder under
this Agreement, or from any misrepresentation in or
omission from any certificate, schedule, statement,
document or instrument furnished to WorldPort
pursuant hereto (collectively, a "misrepresentation
or breach of warranty"). In determining the amount of
any Damages incurred as a result of any
misrepresentation or breach of warranty for purposes
of this subsection, any reference to "materiality" in
any representation, warranty or covenant contained in
this Agreement shall be ignored.
(ii) Actions. Any and all actions, suits, claims,
proceedings, investigations, demands, assessments, fines,
judgments, costs and other expenses (including, without
limitation, reasonable legal fees and expenses) (collectively,
"Actions") incident to any of the foregoing.
(b) General Indemnification Obligation of WorldPort. Subject
to the limitations hereinafter provided, from and after the Closing,
WorldPort will reimburse, indemnify and hold harmless WWC and the WWC
Shareholder and their successors and assigns (an "Indemnified WWC
Party") against and in respect of:
(i) Damages. Any and all damages incurred or suffered
by any Indemnified WWC Party that result from, relate to or
arise out of any misrepresentation, breach of warranty or
non-fulfillment of any Agreement or covenant on the part of
WorldPort under this Agreement or any other document delivered
by WorldPort pursuant to this Agreement, or from any
misrepresentation in or omission from any certificate,
schedule, statement, document or instrument furnished to WWC
or the WWC Shareholder pursuant hereto or thereto; and
(ii) Actions. Any and all Actions incident to any
of the foregoing or to the enforcement of this subsection 10.
(b)(ii).
(c) Limitation of Indemnity. Notwithstanding any provision in
this Agreement to the contrary, an Indemnifying Party (as hereinafter
defined) shall not be liable to an Indemnified Party (as hereinafter
defined) for indemnification under this Section 10 for:
(i) Dollar Amounts Limitations.
(1) Threshold Limitation. Neither WorldPort
nor the WWC Shareholder shall be liable for damages
or actions in an amount less than $5,000 in
connection with any claim hereunder relating to a
single occurrence or event, or for the first $25,000
of aggregate Damages or Actions in connection with
all claims hereunder; PROVIDED, HOWEVER, the
limitation herein provided shall not apply to any
claim by the WWC Shareholder against WorldPort for
failure to pay the full amount of the
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<PAGE>
purchase price (including, without limitation, the
distribution of WorldPort common stock as provided in
the Escrow Agreement).
(2) Ceiling Limitation. Except with respect
to claims relating to "Intentional
Misrepresentations" (as said term is hereinafter
defined), no party shall be liable for damages or
actions in excess of $1,000,000 in the aggregate;
PROVIDED, HOWEVER, the limitation herein provided
shall not apply to any claim by the WWC Shareholder
against WorldPort for failure to pay the full amount
of the purchase price (including, without limitation,
the distribution of WorldPort common stock as
provided in the Escrow Agreement).
(3) Definitions. For purposes of Subsection
10.(c)(i)(2), hereof, the term "Intentional
Misrepresentation" shall mean the making of any
representation or warranty by WWC or the WWC
Shareholder which to WWC or the WWC Shareholder's
knowledge at the time of making such representation
or warranty is false or inaccurate in any material
respects.
(ii) Time Limitation. It is the intention hereof that
all obligations of the parties to indemnify pursuant to this
Section 10 shall terminate on December 31, 1999 (the
"Indemnification Termination Date") with respect to all claims
for Damages and Actions, except those for which a Claim Notice
(as defined below) has been received on or before the
Indemnification Termination Date; and
(iii) Insurance. Neither WorldPort nor the WWC
Shareholder shall be liable for any claim hereunder to the
extent such claim is paid by any insurer.
(d) Method of Asserting Claims, Etc. In the event that any
claim or demand is asserted against or sought to be collected from an
Indemnified WorldPort Party or Indemnified WWC Party (an "Indemnified
Party") by a third party, the Indemnified Party shall promptly notify
the party from which indemnification is sought pursuant to paragraphs
10(a) and 10(b) above (the "Indemnifying Party") of such claim or
demand, specifying the nature of such claim or demand and the amount or
the estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such claim and
demand) (the "Claim Notice"). The Indemnifying Party shall have twenty
(20) days from its receipt of the Claim Notice (the "Notice Period") to
notify the Indemnified Party, (i) whether or not the Indemnifying Party
disputes its liability to the Indemnified Party hereunder with respect
to such claim or demand and (ii) notwithstanding any such dispute,
whether or not the Indemnifying Party desires, at its sole cost and
expense, to defend the Indemnified Party against such claim or demand.
(i) Dispute of Liability. If the Indemnifying Party
disputes its liability with respect to such claim or demand or
the amount thereof (whether or not the Indemnifying Party
desires to defend the Indemnified Party against such claim or
demand as provided herein), such dispute shall be resolved in
accordance with section 12(m) hereof. Pending the resolution
of any dispute by the Indemnifying Party of its
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<PAGE>
liability with respect to any claim or demand, such claim or
demand shall not be settled without the prior written consent
of the Indemnified Party.
(ii) Defense. In the event that the Indemnifying
Party notifies the Indemnified Party within the Notice Period
that it desires to defend the Indemnified Party against such
claims or demand, then, provided: (i) that the Indemnifying
Party acknowledges that it is liable to indemnify the
Indemnified Party with respect to a particular claim; and (ii)
the Indemnifying Party has financial resources which are
reasonably adequate to pay the amount of the claim, except as
hereinafter provided, the Indemnifying Party shall have the
right to defend the Indemnified Party by appropriate
proceedings, which proceedings shall be promptly settled or
prosecuted by the Indemnifying Party to a final conclusion in
such a manner as to avoid any risk of the Indemnified Party
becoming subject to liability with respect thereto. If any
Indemnified Party desires to participate in, but not control,
any such defense or settlement, it may do so at its sole cost
and expense.
(iii) Indemnifying Party Liability. (1) If the
Indemnifying Party elects not to defend the Indemnified Party
against such claim or demand, whether by not giving the
Indemnified Party timely notice as provided above or
otherwise, then the amount of any such claim or demand, or if
the same be defended by the Indemnifying Party or by the
Indemnified Party (but no Indemnified Party shall have any
obligation to defendant any such claim or demand), then that
portion thereof as to which such defense is unsuccessful, in
each case shall be conclusively deemed to be a liability of
the Indemnifying Party hereunder, unless the Indemnifying
Party shall have disputed its liability to the Indemnified
Party hereunder, as provided herein, in which event such
dispute shall be resolved in accordance with the dispute
resolution provisions set forth in Section 12(m) hereof; (2)
In the event an Indemnified Party should have a claim against
the Indemnifying Party hereunder that does not involve a claim
or demand being asserted against or sought to be collected
from it by a third party, the Indemnified Party shall promptly
send a Claim Notice with respect to such claim to the
Indemnifying Party. If the Indemnifying Party disputes its
liability with respect to such claim or demand, such dispute
shall be resolved in accordance with Section 12(m) hereof; if
the Indemnifying Party does not notify the Indemnified Party
within the Notice Period that it disputes such claim, the
amount of such claim shall be conclusively deemed a liability
of the Indemnifying Party hereunder.
(e) Payment. Upon determination of liability hereunder, the
appropriate party shall pay to the other, as the case may be, within
twenty (20) days after such determination, the amount of any claim for
indemnification made hereunder. Upon the payment in full of any claim
hereunder, then entity making payment shall be subrogated to the right
of the indemnified party against any person, firm or corporation with
respect to the subject matter of such claim.
11. TERMINATION AND AMENDMENT.
(a) Termination. This Agreement may be terminated by
WorldPort or the WWC Shareholder at any time prior to Closing upon
written notice to the other party if:
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(i) the representations, warranties and agreements or
conditions of this Agreement to be complied with or performed
by WWC or the WWC Shareholder (in the case of WorldPort) or
WorldPort (in the case of WWC or the WWC Shareholder) on or
before the Closing shall not have then been complied with or
performed in some material respect and such material
noncompliance or nonperformance shall not have been waived by
the party giving notice of termination or shall not have been
cured by the defaulting party, or cure thereof commenced and
diligently prosecuted thereafter by such party within five (5)
days after written notice of such material noncompliance or
nonperformance is given by the non-defaulting party;
(ii) any governmental action is commenced to prevent
the consummation of the transactions contemplated hereby; or
(iii) the Parties agree to terminate by mutual
consent.
(b) Waiver. Any representations, warranties, agreements or
conditions of this Agreement may be waived at any time by the party
entitled to the benefit thereof by action taken and evidenced by a
written waiver executed by any such party.
12. MISCELLANEOUS.
(a) Brokers. The parties hereby represent and warrant, each to
the other, that, the parties have not dealt with any brokers in
connection with the transactions contemplated hereby, and that no
brokerage fees or commissions are owed to any party. In the event of
any allegation of any broker to the contrary, the party against which
liability is sought to be imposed by such broker shall defend the same
at its expense;
(b) Expenses. Each of the parties hereto will bear its own
legal fees and other expenses in connection with the transactions
contemplated by this Agreement;
(c) Survival. All parties agree that the representations,
warranties and agreements contained in this Agreement shall survive the
Closing and shall thereafter remain in full force and effect, for one
year from the date of Closing;
(d) Severability. If any term or provision of this Agreement,
including the exhibits hereto, or the application thereof to any
person, property or circumstances, shall to any extent be invalid or
unenforceable, the remainder of this Agreement, including the exhibits
or the application of such term or provision to persons, property or
circumstances other than those as to which it is invalid and
unenforceable, shall not be affected thereby, and each term and
provision of this Agreement and the exhibits shall be valid and
enforced to the fullest extent permitted by law;
(e) Notices. Any notices, requests or consents hereunder shall
be deemed given, and any instrument delivered, two days after they have
been mailed by first class mail, postage prepaid, or upon receipt if
delivered personally or by facsimile transmission, as follows:
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<PAGE>
To WWC or The WWC Shareholder: John W. Dalton
326 5th Avenue
Sealy, Texas 77474
Tel: (409) 885-2622
With a copy to: Andrew Shebay III
One Riverway, Suite 1400
Houston, TX 77056
To WorldPort or Acquisitions: WorldPort Communications, Inc.
9601 Katy Freeway, Suite 200
Houston, Texas 77024
Attention: W. Dean Spies
Tel: (713) 461-4999
Fax : (713) 461-8098
With a copy to: William C. Gibbs
Snell & Wilmer L.L.P.
111 East Broadway, Suite 900
Salt Lake City, UT 84111
except that any of the foregoing may from time to time by written
notice to the other designate another address which shall thereupon
become its effective address for the purposes of this paragraph.
(f) Entire Agreement. This Agreement, including the exhibits
and documents referred to herein which are a part hereof, contains the
entire understanding of the parties hereto with respect to the subject
matter contained herein and may be amended only by a written instrument
executed by all parties hereto or their respective successors or
assigns. There are no restrictions, promises, warranties, covenants, or
undertakings other than those expressly set forth or referred to
herein. Any paragraph headings or table of contents contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement;
(g) Binding Effect. This Agreement shall inure to the benefit
of and be binding upon all parties hereto and their respective
successors, but shall not inure to the benefit of anyone other than the
parties signing this Agreement and their respective successors;
(h) Governing Law. This Agreement shall be governed by the
laws of the State of Delaware.
(i) Press Releases. Each party agrees that, unless approved by
the other parties hereto in advance and in writing, such party will not
make any public announcement, issue any press release or publicly
confirm any statements by third parties concerning the transactions
contemplated hereby, except as otherwise required by law. Further,
nothing contained herein shall prevent any shareholders which are
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<PAGE>
corporations or partnerships from disclosing such information as they
deem necessary and advisable to their respective shareholders or
partners (whether general or limited), as the case may be.
(j) Assignment. This Agreement may not be assigned by any
party.
(k) Disclosure Schedule. The Disclosure Schedule referred to
in this Agreement is hereby incorporated in and made a part of this
Agreement.
(l) Counterparts; Headings. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this
Agreement.
(m) Dispute Resolution. Any and all disputes arising under or
involving this Agreement, directly or indirectly, or the interpretation
or performance thereof, or touching upon the rights or obligations of
any party hereunder, shall, if not settled by negotiation, be resolved
in the manner provided below.
(i) Mediation Prior to submitting any matter to
binding arbitration as provided herein, each party agrees to
first try in good faith to resolve any dispute by mediation
under the Procedures for Mediation of Business Disputes of the
Center for Public Resources, Inc.
(ii) Mediation Procedures. A demand for mediation
shall be made in writing and served upon the other party in
the same manner as otherwise provided for notice in this
Agreement. Within thirty (30) days of receipt of the demand
for mediation, the parties shall confer and select a mediator.
The site of any mediation session shall be within the State of
Texas. If (i) the parties are unable to agree upon the
mediator to use within fifteen (15) days after receipt of the
demand for mediation, (ii) the mediation is not undertaken in
a meaningful way within thirty (30) days after such notice, or
(iii) any unresolved dispute remains after mediation, then any
party may institute arbitration under this Section m(iii)
below. In any mediation, the fees and costs of the mediator
shall be borne equally by the parties to the mediation and
shall be payable upon invoice from the mediator. Each party
shall bear the fees and costs of its own legal counsel and
witnesses.
(iii) Binding Arbitration. All disputes not resolved
by negotiation or mediation as provided herein, shall at the
written request of any party be arbitrated pursuant to the
then prevailing Commercial Arbitration Rules of the American
Arbitration Association. The Arbitrator shall be agreed upon
by the parties or, if the parties cannot agree on the
arbitrator within ten (10) business day after either party
shall have requested such arbitration, the arbitrator shall be
appointed by the American Arbitration Association in
accordance with such Rules. The arbitration shall take place
in Texas. The arbitrator shall have the right to award or
include in his award any relief which he deems proper in the
circumstances, including, without limitation, specific
performance and injunctive relief, provided that the
arbitrator may not award exemplary or punitive damages. The
parties agree that the award of the arbitrator shall
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<PAGE>
be final and binding upon the parties; shall be the sole and
exclusive remedy between them regarding any claims,
counterclaims, issues, or accountings presented or pled to the
arbitrator; that it shall be made and shall promptly be
payable in U.S. dollars free of any tax, deduction or offset
(with respect to monetary awards) and that any costs, fees, or
taxes incident to enforcing the award shall, to the maximum
extent permitted by law, be charged against the party
resisting such enforcement. The award shall include interest
from the date of any damages incurred for breach or other
violation of this Agreement, and from the date of the award
until paid in full, at a rate to be fixed by the arbitrator.
The costs of any such arbitration, including without
limitation the administrative fee, arbitrator's fee,
attorneys' fees, fees of expert witnesses, and travel expenses
shall be borne by the losing party. Judgment upon the award of
the arbitrator may be entered in any court of competent
jurisdiction, or application may be made to such court for a
judicial acceptance of the award or an order of enforcement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement effective as of the date set forth below.
WORLDPORT COMMUNICATIONS, INC.
By: /s/Dean Spies Date: April 20, 1997
-----------------------------------
Its: Chief Executive Officer
-----------------------------------
The WWC Shareholder:
/s/ John W. Dalton Date: April 20, 1997
- --------------------------------------
John W. Dalton
THE WALLACE WADE COMPANY
By: /s/ John W. Dalton Date: April 20, 1997
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Its: President
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WORLDPORT ACQUISITIONS, INC.
By: /s/ W. Dean Spies Date: July 1, 1997
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Its: Chief Financial Officer
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EXHIBIT A
WORLDPORT'S
COMMON SHARES
PERCENT ISSUED IN
OWNERSHIP OF WWC EXCHANGE FOR
NAME COMMON SHARES COMMON SHARES WWC SHARES
John W. Dalton 1,000 100% 1,400,000
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EXHIBIT B
PROMISSORY NOTE
$175,000 Houston, Texas
July 1, 1997
FOR VALUE RECEIVED, the undersigned, WORLDPORT COMMUNICATIONS, INC.
("WorldPort") promises to pay to JOHN W. DALTON ("Dalton"), or order, at 326 5th
Avenue, Sealy, Texas 77474, or at such other place as may be designated in
writing by Dalton, the principal sum of ONE HUNDRED SEVENTY FIVE THOUSAND and
00/100 DOLLARS ($175,000.00) in lawful money of the United States, on the
following terms and conditions.
Payment shall be made as follows:
1. One payment of $50,000 payable ninety days after the Closing of the
Agreement and Plan of Merger by and between WorldPort, WorldPort
Acquisitions, Inc., The Wallace Wade Company and Dalton ("Merger
Agreement"); and
2. Two payments of $62,500 payable at the end of each of the 7th and
12th months after the Closing of the Merger Agreement.
Upon failure to make any payment as herein provided within ten (10) days
of the date due, WorldPort shall pay a late charge of $50 to compensate Dalton
for the expense of handling the delinquency for any payment, regardless of any
notice and cure periods ("Late Charges"). Upon the expiration of said ten (10)
day period, Dalton may give WorldPort written notice of said failure to pay. If
WorldPort fails to pay the unpaid installment and late fee within ten (10) days
from the date of said notice, the unpaid principal balance hereof, at the option
of the Dalton, shall at once become due and payable, and all past due
installments and unpaid late fees shall thereafter bear interest at the rate of
eighteen percent (18%) per annum, until paid ("Default Interest Rate"). The
amounts specified in this paragraph are in addition to costs of enforcement and
collection may be due and payable under this Note.
WorldPort shall have the right to prepay all, or any portion, of the
indebtedness owing under the Note at any time without penalty. Any prepayment
hereunder shall be credited first to Late Charges and Default Interest, with the
remainder of such payment being credited against the principal balance of the
Note.
If an attorney is engaged or other action taken by Dalton to enforce any
provision of this Note, or as a consequence of any default, with or without the
filing of any legal action or proceeding, then WorldPort shall immediately pay,
on demand, all attorneys' fees and all other costs incurred by Dalton, together
with interest thereon from the date of such demand until paid at the Default
Interest Rate specified above.
The acceptance of any sum less than a full installment shall not be
construed as a waiver of the default in the payment of such full installment. In
addition, no previous waiver and no failure or delay by Dalton in acting with
respect to the terms of this Note shall constitute a waiver of any breach,
default or failure of condition under this Note.
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Unless otherwise required hereunder, WorldPort hereby waives the
following: presentment; demand; notice of dishonor; notice of default or
delinquency; notice of protest and nonpayment; notice of cost; expenses or
losses and interest therein; notice of late charges; and diligence in taking any
action to collect any sums owing under this Note.
This Note shall be construed and enforced in accordance with the laws of
the State of Texas, and all persons and entities in any manner obligated under
this Note consent to the jurisdiction of any federal or state court within the
State of Texas having proper venue and also consent to service of process by any
means authorized by Texas or federal law.
All terms and conditions of this Note shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
assigns.
WORLDPORT COMMUNICATIONS, INC.
By /s/Dean Spies
----------------------------------
Its Chief Financial Officer
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EXHIBIT C
ESCROW AGREEMENT
DATED: July 1, 1997
PARTIES: WorldPort Communications, Inc. ("WorldPort"), John W. Dalton (the
"WWC Shareholder") and OTC Stock Transfer, Inc. (Escrow Agent")
RECITALS
WHEREAS, WorldPort and the WWC Shareholder have entered into that certain
Agreement and Plan of Merger dated April 20, 1997 (the "Merger Agreement").
WHEREAS, to facilitate the performance of the Merger Agreement, WorldPort
shall deliver 1,400,000 shares of WorldPort's Common Stock (the "Escrowed
Shares") into escrow to be held by the Escrow Agent. The Escrow Agent has agreed
to hold and distribute the Escrowed Shares pursuant to the terms and conditions
set forth in this Escrow Agreement (the "Agreement"). Any term used herein not
otherwise defined shall have the meaning set forth in the Merger Agreement.
WHEREAS, WorldPort and the WWC Shareholder desire to enter into this
Agreement upon the terms and conditions hereinafter contained.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and obligations set forth herein, it is agreed as follows:
1. ESCROW AGENT. WorldPort and the WWC Shareholder hereby appoint and
designate OTC Stock Transfer, Inc. as Escrow Agent for the purposes set forth
herein and the Escrow Agent accepts such appointment and designation.
2. DELIVERY OF ESCROWED SHARES. Simultaneously with the execution of this
Agreement by all the parties, WorldPort shall deliver to the Escrow Agent the
Escrowed Shares. During the term of this Agreement, the Escrow Agent shall take
no action with respect to the Escrowed Shares inconsistent with the terms of
this Agreement, and shall deliver the Escrowed Shares as follows:
a. As soon as practicable after the Closing, but in any event not
later than forty five (45) days after the Closing, the WWC
Shareholder will deliver to WorldPort the audited financial
statements of The Wallace Wade Company for the years ending March
31, 1996, and March 31, 1997, together with the notes thereto (the
"WWC Financial Statements"). Upon the WWC Shareholder's delivery to
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WorldPort of the WWC Financial Statements, and notice of the
delivery given to the Escrow Agent by WorldPort, 500,000 shares of
the Escrowed Shares shall be delivered to the WWC Shareholder. In
the event the WWC Financial Statements are not delivered to
WorldPort within forty five (45) days after the Closing, the Escrow
Agent shall return 500,000 shares of the Escrowed Shares to
WorldPort for cancellation.
b. In the event WorldPort enters into a formal business relationship
with EQUANT which is approved and acceptable to WorldPort's Board of
Directors, Escrow Agent shall, upon notice from WorldPort, deliver
700,000 shares of the Escrowed Shares to the WWC Shareholder. If
WorldPort does not enter into such a formal business relationship
identified in this Section 2(b) by December 31, 1997, the Escrow
Agent shall return 700,000 shares of the Escrowed Shares to
WorldPort for cancellation.
c. In the event WorldPort enters into a formal business relationship
with one or more debit card/pre-paid calling card service providers,
or one or more long distance service carriers or resellers, that
results in commitments to WorldPort of (i) gross revenues in excess
of $700,000 per month or (ii) gross margins of $50,000 per month,
Escrow Agent shall, upon notice from WorldPort, deliver 200,000
shares of the Escrowed Shares to the WWC Shareholder. If WorldPort
does not enter into such a formal business relationship identified
in this Section 2(c) by December 31, 1997, the Escrow Agent shall
return 200,000 shares of the Escrowed Shares to WorldPort for
cancellation.
3. INSTRUCTIONS TO ESCROW AGENT REGARDING RELEASE OF ESCROWED SHARES.
Escrow Agent shall release the Escrowed Shares to the WWC Shareholder upon
receipt of written instructions from WorldPort that the conditions contained
above have been satisfied.
4. VOTING OF SHARES. So long as the Escrowed Shares are held in Escrow,
the WWC Shareholder shall not be entitled to exercise any rights of ownership
with respect to the Escrowed Shares.
5. ESCROW AGENT'S COMPENSATION AND EXPENSES. For its services hereunder,
the Escrow Agent shall be entitled to be reimbursed for all out of pocket
expenses incurred by it in connection with the performance of its duties under
this Agreement. The expenses of the Escrow Agent shall be paid by the WWC
Shareholder.
6. ESCROW AGENT'S LIABILITY. The Escrow Agent shall not be liable for any
error of judgment or for any act done or omitted by it in good faith, or for
anything which the Escrow Agent may in good faith do or refrain from doing in
connection herewith, or for any negligence other than its gross negligence; no
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liability shall be incurred by the Escrow Agent, if, in the event of any dispute
or question as to its duties or obligations hereunder, it acts in accordance
with Paragraph 7. The Escrow Agent is authorized to act upon any document
believed by it to be genuine and to be signed by the proper parties and shall
incur no liability in so acting. WorldPort and the WWC Shareholder shall jointly
and severally indemnify, defend and hold the Escrow Agent harmless from any and
all loss, damage, or liability, and all expenses (including without limitation,
reasonable legal costs and fees) except to the extent arising out of the gross
negligence or bad faith of the Escrow Agent, incurred, arising out of, or in
connection with, its entering into or performing its duties pursuant to this
Agreement.
7. DISPUTES. In the event of a dispute concerning the subject matter of
this Agreement such that the Escrow Agent deems it necessary for its protection,
the Escrow Agent may (i) deposit the Escrowed Shares, together with any notices
received by it, into a court of competent jurisdiction until such time as a
civil action shall have been finally concluded determining any rights hereunder,
(ii) appoint a new escrow agent, or (iii) at its discretion at any time,
commence a civil action to interplead any conflicting demands to a court of
competent jurisdiction to determine its rights and the rights of WorldPort and
the WWC Shareholder.
8. NOTICES. All notices, requests, demands and other communications
pursuant to this Agreement shall be in writing and shall be given to the Escrow
Agent at 231 East 2100 South, Suite 3, Salt Lake City, Utah 84115, fax (801)
486-0562, Attention: Carolyn Simpson. All notices, requests, demands, other
communications and deliveries pursuant to this Agreement shall be made as
follows:
If to WorldPort: WorldPort Communications, Inc.
9601 Katy Freeway, Suite 200
Houston, Texas 77024
Attention: W. Dean Spies
Tel: (713) 461-4999
Fax: (713) 461-8098
If to the WWC Shareholder:
John W. Dalton
326 5th Avenue
Sealy, Texas 77474
Tel: (409) 885-2622
or to such other address as a party may have furnished to the others in
writing. Communications shall be effective only when received.
9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which together shall constitute one instrument.
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10. BINDING EFFECT; GOVERNING LAW. This agreement shall be governed
by and construed in accordance with the laws of the State of Texas, and shall be
binding upon and inure to the benefit of the parties and their successors and
assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date hereof.
WORLDPORT COMMUNICATIONS, INC.
By: /s/Dean Spies
Its: Chief Financial Officer
JOHN W. DALTON
By: /s/John W.Dalton
Its: President
ESCROW AGENT
OTC Stock Transfer, Inc.
By: /s/Carolyn Simpson
Its: President
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EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
July 1, 1997, is entered into by and among WORLDPORT COMMUNICATIONS, INC., a
Delaware corporation (the "Company"), and JOHN W. DALTON, an individual (the
"Holder").
R E C I T A L S:
A. Simultaneously with the execution and delivery of this
Agreement, the Holder is acquiring up to 1,400,000 shares of the Company's
Common Stock, $ .0001 par value per share (the "Shares"), pursuant to the
provisions, terms, and conditions contained in that certain Agreement and Plan
of Merger dated April 20, 1997 by and among WorldPort Communications, Inc.,
WorldPort Acquisitions, Inc., John W. Dalton, and The Wallace Wade Company (the
"Merger Agreement"); and
B. The Company desires to grant to the Holder certain registration
rights as set forth herein with respect to the Shares.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Registration Rights.
1.1 Piggyback Registration. If at any time after receipt of
shares by Holder the Company shall propose to file with the Securities and
Exchange Commission (the "Commission") on behalf of the Company or any other
stockholder a registration statement under the Securities Act of 1933, as
amended (the "Act"), with respect to any class of security (as defined in
Section 3(a)(10) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than a registration statement approved by the Board of
Directors on Form S-4 or S-8, or such amended or alternative form for Form S-4
or S-8 as the Commission may from time to time require, the Company shall in
each case timely notify Holder and include in such registration statement any or
all of the Shares Holder has received as Holder may request within twenty (20)
days after the Company's giving of such notice, subject to the conditions set
forth herein.
1.2 One-Time Demand Registration on Form S-3. The Company shall
use its best efforts to qualify for registration on Form S-3 or any comparable
or successor form or forms. After the Company has qualified for the use of Form
S-3, in addition to the rights contained above in Section 2(a), the Stockholder
shall have the one time right, commencing eighteen (18) months from the date of
Closing of the Merger Agreement, to request a registration on Form S-3 (such
requests shall be in writing and shall state the number of Shares to be disposed
of and the intended methods of disposition of such Shares), provided, however,
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that the Company shall not be obligated to effect any such registration if (i) a
Form S-3 registration is unavailable, (ii) the Stockholder, together with the
Holder of any other securities of the Company entitled to inclusion in such
registration, propose to sell Shares (if any) on Form S-3 at an aggregate price
to the public of less than $3.00; (iii) there has been more than two
registrations by the Company on Form S-3 in the previous 12-month period; or
(iv) the Board of Directors of the Company determines that such Form S-3
registration would be seriously detrimental to the Company, in which case such
registration may be delayed for a period not to exceed 60 days. The rights of
the Stockholder to demand registration under this paragraph shall expire upon
the filing of the S-3 Registration Statement by the Company after the initial
demand made by the Stockholder.
1.3 Registration Procedures. If, pursuant to Sections 1.1 or
1.2 hereof, the Company is required to include any Shares in a registration
statement proposed to be filed, the Company will, as expeditiously as possible:
(a) prepare and file such registration statement under the Act on an appropriate
form and use its best efforts to cause such registration statement to become
effective; (b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Act and the
Exchange Act with respect to the offer of the securities covered by such
registration statement during the period required for distribution of such
securities; (c) furnish to the Holder such number of copies of such registration
statement and all amendments thereto and of such prospectus (including each
preliminary, amended or supplemental prospectus) as such Holder may reasonably
request in order to facilitate the sale or transfer of the securities covered by
such registration statement; (d) use its best efforts to register or qualify the
securities covered by any such registration statement in such jurisdictions as
such Holder may reasonably request; (e) furnish, at the request of Holder, on
the date that such Shares are delivered to the underwriters for sale pursuant to
such registration or, if such Shares are not being sold through underwriters, on
the date such registration statement becomes effective (i) an opinion, dated
such date, in a form customary to such transactions, of the independent counsel
representing the Company for the purposes of such registration, addressed to the
underwriters, if any, and to Holder making such request, reasonably acceptable
in form and substance to such underwriter and Holder and (ii) a letter, dated
such date, from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and Holder, stating that they are
independent certified public accountants within the meaning of the Act and that
in the opinion of such accountants, the financial statements and other financial
data of the Company included in the registration statement or the prospectus, or
any amendment or supplement thereto (including, in each case, documents
incorporated by reference thereto), comply as to form in all material respects
with the applicable accounting requirements of the Act; such opinion of counsel
shall additionally cover such other legal matters with respect to the
registration statement and the Company as the underwriters, if any, or Holder
may reasonably request; and such letter from the independent certified public
accountants shall additionally cover such other financial matters (including
information as to the period ending not more than five (5) business days prior
to the date of such letter) with respect to the registration statement and the
Company as the underwriters, if any, or Holder may reasonably request; (f) use
its best efforts to keep such registration and qualification effective until all
exercises, sales and distributions contemplated by the requests made pursuant
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to Section 1.1 or 1.2 hereof shall have been completed, but not in any event for
a period in excess of nine (9) months; and (g) pay all expenses incurred by
Holder and the Company in complying with this Section 1.3, including without
limitation (i) all registration and filing fees; (ii) all printing expenses;
(iii) all fees and disbursements of counsel and independent public accountants
for the Company and Holder; (iv) all Blue Sky fees and expenses (including fees
and expenses of counsel in connection with Blue Sky surveys); and (v) the entire
expense of any special audits incident to or required by any such registration.
1.4 Certain Conditions to Registration. The right of Holder to
have any Registrable Shares included in any registration statement pursuant to
the provisions of Section 1.1 or Section 1.2 hereof shall be subject to the
following further conditions: (a) should the request for registration be
pursuant to Section 1.1, and should the registration statement proposed by the
Company relate to an underwritten offering of securities of the Company, and
should the managing underwriter for the Company render an opinion to the effect
that such registration of all or a part of the Shares would materially impair
the Company's ability to sell the securities being registered by the Company,
then Holder shall be entitled to participate pro rata with all other stockholder
entitled to registration rights ("Other Stockholder") based upon the number of
shares owned by or issuable to Holder and each Other Stockholder in the maximum
amount of shares that such underwriter determines may be sold without such
impairment; (b) Holder shall furnish to the Company in writing such information
and documents as, in the opinion of counsel to the Company, may be reasonably
required to properly prepare and file such registration statement in accordance
with applicable provisions of the Act; and (c) if Holder desires to sell and
distribute securities over a period of time, or from time to time at the
prevailing market prices pursuant to a registration statement to be filed by the
Company under the Act, then Holder shall execute and deliver to the Company such
written undertakings as the Company and its counsel may reasonably require in
order to assure full compliance with relevant provisions of the Act and the
Exchange Act.
1.5 Notices of Registration Statements, etc. The Company shall
not file any registration statement under the Act covering any debt or equity
securities unless it shall first have given Holder written notice thereof.
1.6 Indemnity.
(a) The Company agrees to indemnify and hold harmless Holder as
seller of Shares, each underwriter (within the meaning of the Act) of
such securities and each person, if any, who controls (within the
meaning of either Section 15 of the Act or Section 20 of the Exchange
Act) any such seller, controlling person or underwriter, from and
against any losses, claims, damages or liabilities, joint or several,
that any such seller, underwriter or controlling person may incur or
to which any such seller, underwriter or controlling person may
become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged
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untrue statement of any material fact contained in any preliminary
prospectus, or contained, on the effective date thereof, in any
registration statement or final or summary prospectus included
therein, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse
each such seller, underwriter or controlling person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action, whether or not resulting in liability; provided, however, the
Company will not be liable in any case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, such
preliminary, final or summary prospectus or such amendment or
supplement in reliance upon and in conformity with written
information furnished by or on behalf of any such seller specifically
for use in the preparation thereof.
(b) Holder, as seller of Shares, will indemnify and hold
harmless the Company, each of its directors, each of its officers who
sign or have signed said registration statement, each underwriter,
each other seller and each person, if any, who controls the Company
or such underwriter or seller (within the meaning of either Section
15 of the Act or Section 20 of the Exchange Act), to the same extent
as the foregoing indemnity from the Company to such seller, but only
with reference to written information furnished by or omitted to be
furnished by or on behalf of such seller, for use in the preparation
of such registration statement, such preliminary, final or summary
prospectus or such amendment or supplement, and will reimburse the
Company or any such director, officer, underwriter or controlling
person for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim,
damage, liability or action, whether or not resulting in liability.
(c) Promptly after receipt by an indemnified party of notice of
the commencement of any legal action against such indemnified party
in respect of which indemnity or reimbursement may be sought against
the indemnifying party under this Agreement, such indemnified party
shall notify the indemnifying party in writing of the commencement
thereof, and, subject to the provisions hereinafter stated, the
indemnifying party shall assume the defense of such action
(including, the employment of counsel, who shall be counsel
satisfactory to such indemnified party, and the payment of expenses
in connection therewith). To the extent the Company and the
indemnified party believe it prudent or necessary, in their good
faith discretion, such indemnified party shall, in addition to the
foregoing, have the right to employ separate counsel in any such
action and to participate in the defense thereof, and the fees and
expenses of such counsel shall be at the expense of the indemnifying
party. The indemnifying party shall not be liable to indemnify any
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person for any settlement of any such action effected without the
consent of the indemnifying party.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for above is due
in accordance with its terms but is held by a court to be unavailable
on grounds of policy or otherwise, the person or persons
(individually, an "Indemnitor" and collectively, the "Indemnitors")
who would otherwise have been required to indemnify any other person
(the "Indemnitee") hereunder, shall contribute to the aggregate
losses, claims, damages, liabilities and expenses to which any such
Indemnitee may be subject in such proportion so that such Indemnitor
is or such Indemnitors, collectively, are responsible for that
portion represented by the percentage that the aggregate public
offering price of the shares sold by such Indemnitor or Indemnitors
bears to the aggregate public offering price of all shares sold in
such registered offering; provided, however, that no person adjudged
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) by a court of competent jurisdiction, in a final
judgment, shall be entitled to contribution from any person who was
not adjudged guilty of such fraudulent misrepresentation. Any party
entitled to contribution shall, promptly after receipt of notice of
the commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against
another person hereunder, notify such other person, but the omission
to so notify another person shall not relieve such person from any
other obligation it may have hereunder or otherwise.
(e) The indemnification of underwriters provided for in this
Section shall be on such other terms and conditions as are at the
time customary and reasonably required by such underwriters.
2. Expenses. Except for underwritten discounts and commissions,
the Company shall pay any and all registration expenses.
3. Reports Under the Exchange Act. With a view to making available to
Holder the benefits of Rule 144 promulgated under the Act, the Company agrees to
use its best efforts: (i) to register under Section 12 of the Exchange Act, not
later than ninety (90) days after the end of the fiscal year in which the first
registration statement under the Act filed by the Company is declared effective,
(ii) to file with the Commission in a timely manner all reports and other
documents required to be filed by an issuer of securities registered under the
Act or the Exchange Act and (iii) so long as Holder owns any of the Shares, to
furnish in writing upon Holder's request the following information:
(A) The Company's name, address and telephone number;
(B) The Company's Internal Revenue Service identification
number;
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(C) The Company's Commission file number;
(D) The number of shares of Common Stock outstanding as shown
by the most recent report or statement published by the Company; and
(E) Whether the Company has filed all reports required to be
filed by Sections 13 or 15(d) of the Exchange Act during the preceding twelve
(12) months. With respect to a rule or regulation of the Commission (other than
Rule 144) that may at any time permit Holder to sell Shares to the public
without registration, the Company agrees to take such action as is reasonable to
enable utilization of such rule.
4. Transfer of Registration Rights. The registration rights granted
hereunder may not be assigned by Holder.
5. Termination of Registration Rights. The registration rights
granted pursuant to this Agreement shall terminate and be of no force and effect
upon (a) the closing of an underwritten public offering of the Company's Common
Stock at a per share public offering price of not less than $5.00 with aggregate
net proceeds to the Company of not less than $10,000,000 or (b) the expiration
of five (5) years from the date hereof.
6. "Market Standoff" Agreement. Holder agrees that if requested by
the Company and an underwriter of Common Stock (or other securities) of the
Company, he will not sell or otherwise transfer or dispose of any Common Stock
(or other securities) of the Company held by Holder during the period beginning
seven (7) days prior to and ending one hundred eighty (180) days following the
effective date of a registration statement of the Company filed under the Act,
provided that such agreement shall be in writing in a form satisfactory to the
Company and such underwriter and provided, further, that notwithstanding the
foregoing Holder shall be entitled to transfer such Common Stock or other
securities to immediate family members or to a family trust. The Company may
impose stop-transfer instructions with respect to the Common Stock (or other
securities) subject to the foregoing restriction until the end of said one
hundred eighty (180) day period.
7. Modification and Waiver. The parties may amend, modify or
supplement this Agreement in such manner as may be agreed upon by them in
writing at any time. Any party may by an instrument in writing extend the time
for or waive the performance of any of the obligations of another party or waive
compliance by another party with any of the provisions contained herein. The
failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect such party's right at a later date to
enforce the same. No waiver by any party of a breach of this Agreement, whether
by conduct or otherwise, in any one or more instances shall be, or shall be
deemed to be, a further or continuing waiver of such breach or a waiver of any
condition or of any other breach of this Agreement.
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8. Notices. Any notices or other communications required or permitted
hereunder shall be deemed to have been duly given when delivered personally or
sent by registered or certified mail, postage prepaid (return receipt
requested), to the party to whom such notice or communication is addressed at
the following addresses (or at such other address for a party as shall be
specified by like notice):
To the Company: WorldPort Communications, Inc.
9601 Katy Freeway, Suite 200
Houston, Texas 77024
Tel: (713) 461-4999
Fax: (713) 461-8098
With a copy to: Snell & Wilmer L.L.P.
Attn: Mr. William C. Gibbs, Esq.
111 East Broadway, Suite 900
Salt Lake City, Utah 84111
Tel: (801) 237-1900
Fax: (801) 237-1950
To the Holder: Mr. John W. Dalton
326 5th Avenue
Sealy, Texas 77474
Tel: (409) 885-2622
With a copy to: Andrew G. Shebay, III, P.C.
Attn: Mr. Andrew G. Shebay
One Riverway, Suite 1400
Houston, Texas 77027
Tel: (713) 623-6200
9. Gender and Number, Etc. All words or terms used in this Agreement,
regardless of the number or gender in which they are used, shall be deemed to
include any other number and any other gender as the context may require.
"Hereof," "herein," and "hereunder" and words of similar import shall be
construed to refer to this Agreement as a whole, and not to any particular
paragraph or provisions, unless expressly so stated.
10. Successors and Assigns. This Agreement shall not be assignable by
any party without the prior written consent of all other parties hereto. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit
of the respective successors and assigns of the parties hereto.
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11. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon the same instrument.
12. Entire Agreement and Captions. This Agreement and the Merger
Agreement set forth the entire understanding of the parties hereto and supersede
all prior agreements, arrangements and communications, whether oral or written,
between or among the parties with respect to the subject matter hereof. Captions
appearing in this Agreement are for convenience of reference only and shall not
be deemed to explain, limit or amplify the provisions hereof.
13. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
14. Severability. If any provisions contained in this Agreement shall
for any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not invalidate the entire
Agreement. Such provision shall be deemed to be modified to the extent necessary
to render it valid and enforceable and if no such modification shall render it
valid and enforceable then the Agreement shall be construed as if not containing
such provision.
15. No Third Party Beneficiaries. Nothing herein expressed or implied
is intended to confer upon any person, other than the parties hereto or their
respective permitted assigns, successors, heirs and legal representatives, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
16. No Partnership or Joint Venture. Notwithstanding anything to the
contrary contained herein, nothing contained herein shall be construed as
creating a partnership or joint venture relationship between the parties hereto,
and the parties hereto shall be deemed to have made any elections necessary
under any applicable law, rule or regulation to prevent their being considered
or deemed to be a partnership or joint venture.
17. No Impairment. The Company will not take any action, or fail to
take any action, avoid or seem to avoid the observance or performance of any of
the terms to be performed by the Company hereunder and the Company will at all
times act in good faith to assist Holder in the carrying out of the provisions
of this Agreement as may be necessary to preserve and protect the registration
rights of Holder under this Agreement.
8
<PAGE>
EXECUTED and delivered on the day and year first above written.
WORLDPORT COMMUNICATIONS, INC.
By: /s/Dean Spies
Its: Chief Financial Officer
HOLDER
By: /s/John W. Dalton
John W. Dalton
9
<PAGE>
EXHIBIT E
DISCLOSURE SCHEDULE
Schedule 1(f)(ii) Business Relationship Agreement
Schedule 3(f) Schedule of Legal Proceedings
Schedule 3(k) Contracts
Schedule 3(m) Employment and Other Contracts
Schedule 3(o) Employee Matters
Schedule 3(q) Real Property Ownership and Lease Obligations
Schedule 3(u) Plans
Schedule 3(v) Permits and Authorizations
Schedule 5(a) Schedule of Outstanding Subscriptions, Warrants,
Options, Preemptive Rights, or Other Agreements
Schedule 5(d) Legal Proceedings
Schedule 5(h) Conduct of Business
Schedule 5(i) Contracts
Schedule 5(j) Employment and Other Contracts
Schedule 5(k) ERISA
Schedule 5(m) Real Property Ownership and Lease Obligations
Schedule 5(v) Plans
<PAGE>
EXHIBIT F
SELLERS' REPRESENTATION LETTER
John W. Dalton ("Dalton") hereby represents and warrants to WorldPort
Communications, Inc., a Delaware corporation, ("WorldPort") in connection with
that certain Agreement and Plan of Merger of even date herewith for which
WorldPort and Dalton are parties, as follows:
(a) Current Public Information. Dalton acknowledges that he has
been furnished with or has acquired copies of WorldPort's most recent
audited annual reports, and other publicly available documents;
(b) Independent Investigation; Access. Dalton acknowledges that he,
in making the decision to acquire WorldPort's Stock, has relied upon
independent investigations made by him and his representatives, if any,
and Dalton and such representative, if any, have, prior to any exchange to
WorldPort, been given access and the opportunity to examine all material
books and records of WorldPort, all material contracts and documents
relating to this exchange and an opportunity to ask questions of, and to
receive answers from WorldPort or any person acting on its behalf
concerning the terms and conditions of this exchange. Dalton and his
advisors, if any, have been furnished with access to all publicly
available materials relating to the business, finances and operations of
WorldPort and materials relating to the exchange of WorldPort's Stock
which have been requested. Dalton and his advisors, if any, have received
complete and satisfactory answers to any such inquiries;
(c) No Government Recommendation or Approval. Dalton understands
that no federal or state agency has passed on or made any recommendation
or endorsement of WorldPort's Stock into which it is convertible.
JOHN W. DALTON
July, 1 1997 /s/ John W. Dalton
- ------------- ------------------------------------------------
Date By: John W. Dalton
SCHUMACHER & ASSOCIATES, INC.
Certified Public Accountants
12835 East Arapahoe Road, Tower II, Suite 110-B
Englewood, CO 80112
(303)-792-2466 FAX (303)-792-2467
July 2, 1997
Securities and Exchange Commission
Washington D.C. 20549
Re: WorldPort Communications, Inc.
Form 8-K
June 20, 1997
Dear Madam/Sir:
We agree with the representations made in "Item 4, Change in Registrant's
Certifying Accountant".
If we can provide you any additional information please do not hesitate to let
us know.
Sincerely
/s/Mick Schumacher
Mick Schumacher
President
