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Exhibit (10) 40.
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT, is made and entered into on January
31 , 1997, by and between Telecom Network, Inc., a Florida corporation,
("TNI") and International TeleData Corporation, a Florida corporation,
("ITD").
WITNESSETH:
WHEREAS, TNI is engaged through one of its division in the businesses of
long distance telephone service and utility xxxx auditing ("Auditing
Division"); and
WHEREAS, ITD is a publicly owned corporation (as a result of merger with
a publicly owned "shell company") the common stock of which is expected to
begin trading in the over-the-counter market with quotations published on the
[OTC Bulletin Board] beginning _______, 1997 or, as soon thereafter as
practicable and which is engaged in the acquisition and operation of operating
businesses; and
WHEREAS, ITD desires to acquire the Auditing Division and TNI desires to
sell
the Auditing Division to ITD; and
NOW, THEREFORE, in consideration of the premises hereinbefore set forth
and the mutual promises and respective representations and warranties of the
parties, one to another made herein, and the reliance of each party upon the
other based hereon, and other good and valuable consideration, the receipt and
sufficiency of which the parties acknowledge, ITD agrees with TNI, for
purposes of consummating the within described transaction, as follows:
ARTICLE I
PRELIMINARY MATTERS
Section 1. 01. Recitals. The parties acknowledge the recitals
hereinabove set forth in the preamble are correct, and are, by this reference,
incorporated herein and are made a part of this Agreement.
Section 1. 02. Exhibits and Schedules. Exhibits and Schedules referred
to herein and annexed hereto are ' by this reference, incorporated herein and
made a part of this Agreement, as if set forth fully herein.
ARTICLE II
DEFINITIONS
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Section 2.01. Use of Words and Phrases. Natural persons may be
identified by last name, with such additional descriptors as may be desirable.
The words "herein," "hereby," "hereunder," "hereof," "hereinbefore,"
"hereinafter," and within" and other equivalent words refer to this Agreement
as a whole and not to any particular Article, Section or other subdivision
hereof. The words, terms and ,Phrases defined herein and any pronoun used
herein shall include the singular, plural and all genders. The word "and"
shall be construed as a coordinating conjunction unless the context clearly
indicates that it is intended to be construed as a copulative conjunction.
All accounting terms not otherwise defined herein shall have the meanings
assigned to them under generally accepted accounting principles obtaining in
the United States of America. All accounting terms not otherwise defined
herein shall have the meanings assigned to them under generally accepted
accounting principles unless specifically referenced to regulatory accounting
principles.
ARTICLE III
THE TRANSACTION
Section 3. 01. Transfer of Auditing Division and Payment. At Closing,
(i) TNI shall deliver to ITD a xxxx of sale to all of TNI's assets, tangible
and intangible, including without limitation customer contracts, agreements
and work in process) necessary for the continuing operation of the Audit
Division (not including records which are not needed for future operations),
an undertaking to pay all liabilities of TNI related to the operations of the
Audit Division prior to the Closing such that none of those liabilities become
a charge or lien upon the assets covered by the xxxx of sale and a letter(s)
terminating the employment of each Audit Division employee ITD desires to
employ in the ongoing operations of the Audit Division; and, (ii) ITD shall
deliver to TNI Twenty-five Thousand Dollars ($25,000) in cash (which
heretofore has been deposited with Systems Communications, Inc. ("SCI") as a
binder, and which SCI shall retain at Closing for repayment of
intercompany debt due to it from TNI) and a debenture issued by ITD to the
order of TNI in the principal amount of Five Hundred Thousand Dollars
($500,000.00) with such attributes as described in Section 3.02 ("Debenture").
With respect to the Debenture TNI shall complete and deliver to ITD, at
Closing, a subscription and investment representations for the Debenture as a
"restricted security" as defined in Rule 144 ('Rule") under the Securities Act
of 1933, as amended, ("Act"). The Debenture certificate will contain the
following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (AND IS
A "RESTRICTED SECURITY" AS DEFINED UNDER SAID ACT) OR UNDER THE SECURITIES
LAWS OF ANY STATE OR JURISDICTION. ACCORDINGLY, NEITHER THIS SECURITY NOR ANY
INTEREST THEREIN MAY BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, PLEDGED
OR HYPOTHECATED, EXCEPT BY BONA FIDE GIFT OR INHERITANCE, IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITY UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
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Section 3.02. Debenture attributes - The Debenture will be issued in
registered form, transferable on the books of ITD (in compliance with its
status as a restricted security), have a maturity date of January 31, 1999,
subject to extension by mutual agreement of the registered holder and ITD. No
interest will accrue on the Debenture unless an Event of Default occurs. ITD
may call the Debenture for prepayment in whole but not in part, upon thirty
days prior written notice to registered holder, at par, from and after 180
days after the conversion 4feature of the Debenture becomes and is in effect;
provided, that during the period between the call date and the payment date
(actual payment in full) the Registered Holder may elect to convert the
Debenture into ITD common stock. The Debenture shall be a general obligation
of ITD. The Debenture shall be convertible at the option and election of the
Registered Holder into shares of ITD common stock, the
number thereof determined by dividing the principal amount of the Debenture on
the effective date as defined in the Convertible Debenture Note by the average
of the BID-ASK price of said shares at the close of trading on the first
trading day next following the effective date of issuing of the forthcoming
(1997) registration for ITD's common stock. The option to elect conversion of
the Debenture shall not become effective until the later of: (i) ninety
calendar days after the first day on which ITD common stock is quoted by not
less than one market maker in the principal quotation medium; or (ii) the
effective date of a registration statement pursuant to the Securities Act of
1933, as amended, which covers the shares of ITD common stock issuable upon
conversion of the Debenture (which registration statement ITD shall maintain
current and in effect until the date of conversion of the Debenture) and shall
remain in effect until exercised, or until the Debenture is fully paid .
Section 3.03. Obligation to reserve and to register ITD commons stock.
ITD will reserve for issuance the number of shares of its common stock into
which the Debenture is convertible promptly upon determination of the number
of such shares and will notify TNI regarding its computation of the number of
such shares and, by a corporate secretary's certificate, certify to TNI the
resolution of its Board of Directors reserving such shares out of its
authorized but unissued shares of common stock. ITD will include in the next
registration statement it files pursuant to the Securities Act of 1993, as
amended, on Form S-1, whether before conversion of the Debenture by the
Registered Holder for issuance thereto, or after conversion, the shares of ITD
common stock issued to the Registered Holder for resale by the holder into the
public securities market. This Section shall survive the Closing.
Section 3.04. Press Releases. Press releases announcing the exchange of
stock provided in Section 3.01 shall require the approval of both TNI and
ITD's respective boards of directors.
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Section 3.05. Closing. The closing of the transaction herein
contemplated shall take place at 9: 00 o'clock a.m. on or before February 5,
1997 at the offices of SCI, Suite 300, 0000 Xxxxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxx, subject to extension by the parties and the conditions that: (i) ITD
shall have been afforded an opportunity to conduct an investigation of the
business, books, records and facilities of the Audit Division, including
interviews with key personnel; (ii) ITD shall have verified and approved to
its satisfaction the status of all vendor, customer and other material
agreements, with respect to the Audit Division, between TNI and other parties,
the status of the Audit Division's business and operation, and the status of
all litigation, if any, involving or regarding TNI; (iii) no material adverse
change shall have occurred in Audit Division's assets or business and
prospects (financial and otherwise); (iv) TNI and ITD's boards of directors
shall have approved the transaction; and (v) documentation (including the form
of the Debenture) and opinions of counsel shall be satisfactory to the parties
and their respective counsel. At Closing, each party shall deliver those
things required to be delivered by it, certificates of appropriate persons
that all the conditions required to be satisfied by it or him have been
satisfied, unless such condition has been waived in writing by the other
party, and certificates of appropriate persons that the representations and
warranties set forth in this Agreement are true and correct at Closing date .
The parties will cooperate for purposes of closing the transactions
contemplated by this Agreement. If the Closing is not completed by February
5, 1997, subject to extension by the mutual written agreement of the parties,
this Agreement shall terminate and be void and the parties shall be released
from their respective obligations hereunder and shall execute without further
consideration, upon the request of the other party, a written acknowledgment
of such termination and release; provided, that, SCI shall be entitled to
retain as its sole property the full amount of the binder deposited with SCI,
as referred to in Section 3.01.
Section 3.06. Transaction Costs. Each party shall pay its own costs incurred
by it in connection with this Agreement.
Section 3.07. Confidential Information. ITD, its directors, officers,
employees, agents and attorneys will hold in strictest confidence all
information received from TNI and SCI for purposes of satisfying Section 3.03
or otherwise in connection with this Agreement; shall not disclose same,
except to persons who have a need to know for purposes of the Agreement,
including attorneys, accountants, and potential lenders and investors (but not
the public stock market), and, in the event that the transaction contemplated
by this Agreement does not close will return all such information and copies
thereof to TNI or SCI, as the case may be; except, that this provision shall
not apply to any information that is or comes into the public domain and
disclosures required by law or court administrative order. This Section shall
survive a termination of this Agreement by the parties.
ARTICLE IV
Representations and Warranties
Section 4.01. Representations and Warranties of TNI and SCI. TNI and SCI
represent and warrant to ITD as follows:
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(a) TNI is a corporation duly incorporated and organized, validly
existing and in good standing under the laws of its state of incorporation,
has all power to carry on its business as it is now being conducted and to
own, lease and operate its properties and is not required to be qualified,
licensed or domesticated under the laws of any other state as a foreign
corporation; true and complete copies of its Articles of Incorporation, as
amended, Bylaws, as amended, recorded of proceedings of its Board of Directors
and its Stockholders, a certificate of good standing issued within thirty days
prior to Closing by its state of incorporation and copies of all material
executory contracts requiring future performance by TNI have been delivered to
ITD.
(b) The transaction contemplated by this Agreement will not result in
any adverse consequences to or breach of any agreement, mortgage, instrument,
judgment, decree, law or governmental regulation, permit or authorization by
TNI.
(c) The unaudited financial statements or records of the Audit Division
delivered to ITD are correct and complete in all material respects and shall
be certified to ITD as such by TNI's president and chief financial officer,
TNI having filed (whether on a consolidated return with TNI or otherwise), all
state and federal tax returns (including income, sales, real property,
franchise and other) which it . required to file; and there is no tax,
including withholding and social security @tsrust funds, which has not been
paid and is now due and owing, except for amounts due for the current period
which are not yet payable. Neither TNI nor SCI has received a notice of audit
and no audit is underway with respect to any such tax returns.
(d) The value of assets used in the Audit Division identified on the
Balance Sheets of TNI at the dates thereof is materially correct and all such
assets are necessary for the operation of the Audit Division's business. TNI
has good and marketable title to all of its properties and assets which are to
be conveyed to ITD by the xxxx of sale described in Section 3. 01, which
properties and assets are in good working order and condition or are suitable
to the purposes to which they are devoted.
(e) To the best knowledge of TNI and SCI, the Audit Division is in
compliance with all laws, regulations, judgments, orders and decrees which
apply to the conduct of its business -
(f) TNI will disclose to ITD all salary and compensation agreements and
arrangements with the Audit Division employees.
(g) TNI has conducted, and will conduct through Closing, the Audit
Division business in the ordinary course, and will not grant any salary or
compensation increase to any Audit Division employee or make any commitment
for capital expenditures, other than as disclosed to ITD and approved by it.
(h) TNI has not guaranteed the debts or obligation of any other person.
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(i) TNI has not, since inception, given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other
person who is, or may be, or has been in a position to help or hinder the
business of the Audit Division which might subject any of them to damage or
penalty in civil, criminal or governmental litigation or proceedings.
(j) Information delivered by TNI to ITD in contemplation of this
Agreement or with respect hereto is correct, complete and accurate.
(k) All the parties to any material contract with TNI for performance by
or for the benefit of the Audit Division are in full compliance with the
requirements of such contract and not in default or breach of performance or
observance of any performance, requirements, terms or conditions thereof, and
neither TNI nor the other party thereto have any claim against the other party
for any material default or breach thereunder.
(1) TNI is not obligated to pay any broker's or finder's fee in
connection with this Agreement.
Section 4.02. Representations and Warranties of ITD. ITD represents and
warrants to TNI, as follows:
(a) ITD is a corporation duly incorporated and organized, validly
existing and in good standing under the laws of its state of incorporation,
has all power to carry .,on its business as it is now being conducted and,
following the exchange of stock contemplated by this Agreement, to be
conducted; and to own, lease, and operate its properties (there being none at
the date hereof) and is not required to be qualified, licensed or domesticated
under the law of any other state as a foreign corporation, other than as set
forth above; true and complete copies of its Articles of Incorporation, as
amended, Bylaws, as amended, recorded of proceedings of its
Board of Directors and its stockholders, and a certificate of good standing
issued within thirty days prior to the Closing by its state of incorporation
have been delivered to TNI.
(b) The applications, registrations and reports submitted to or filed
by ITD with any quotation medium, any publisher of standard securities manuals
and any securities broker-dealers to satisfy the informational requirements of
the Rule 15c(2)-ll pursuant to the Securities, Exchange Act of 1934, as
amended, or the Securities and Exchange Commission pursuant to said Exchange
Act, copies of which have been delivered to TNI, contain full and fair
disclosure of material information about ITD (including financial statement of
ITD) as required by the forms governing the required content of such
applications, registrations and reports, and do not omit any information
which, in light of the information provided, would be necessary to make the
information provided not misleading.
(c) ITD is not obligated to pay any broker's or finder's fee in
connection with this Agreement.
(d) ITD has duly authorized, executed and delivered this Agreement and
has the full power and authority to enter into this Agreement and to perform
its obligations contemplated hereunder.
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(e) The Debenture, when issued and delivered as contemplated by this
Agreement, will be duly and validly approved and issued, and a valid, legal
and binding obligation of ITD, enforceable in accordance with its terms,
subject-with respect to collectability to insolvency and bankruptcy laws and
equitable principles of creditors' rights.
(f) ITD has made application for quotation of its common stock on , and
in good faith expects all necessary approvals for publication of quotations
for its common stock in such quotation medium to be received not later than
February 1, 1997 and will vigorously pursue such approvals.
Section 4.03. Mutual Representations. Each party has made available to
the other party the complete and accurate information and documentation
requested by such other party and as is necessary for the purposes of
evaluating the risks and merits of the acquisition of common stock of TNI, on
the one hand, and the Debenture, on the other hand.
ARTICLE V
Indemnification
Section 5.01. Mutual Indemnification. The parties shall indemnify and
hold each other harmless from and against any claim, action, costs, expense,
liability, loss, damage, injury, suit, or injury attributable to the breach of
such party's representations and warranties, including any attorney's fees and
costs incurred in connection therewith, or in the enforcement of this
provision or of the terms of this Agreement.
ARTICLE VI
NOTICES
Section 7. 01. Procedure for Sending Notices. Any and all notices or
other communications required or permitted to be given under any of the
provisions of this Agreement, shall be in writing and shall be deemed to have
been duly given when personally delivered (including receipted express courier
and overnight delivery service) or mailed by first class certified mail,
return receipt requested, showing the name of the recipient, addressed to the
parties at the addresses set forth below (or at such other address as any
party may specify by written notice to all other parties given as provided in
this Section). Copies of notices shall be given to:
As to TNI Xxxxx X. Xxxxxx, Xx., Executive Vice President Systems
Communications, Inc. Xxxxx 000
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
As to ITD Xxxxxx Xxxxxxx, Chairman
International TeleData Corporation
Suite 500
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
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ARTICLE VII
Legal and Other Costs
Section 8. 01. Partv Entitled to Recover. In the event any party
defaults in his or its obligation under this Agreement (the "Defaulting
Party") and the other party (the "Non-Defaulting Party") recovers against the
Defaulting Party then, in addition to all damages and other remedies, the
Defaulting Party shall promptly pay to the Non-Defaulting Party all costs and
expenses (including reasonable attorneys' fees and expert witness fees) paid
or incurred by the Non-Defaulting Party in connection with enforcement of its
rights and shall promptly pay interest on any money (both the amount recovered
and the costs and expenses) at the rate of 1.5% per month during the period
between the date such payment should have been made hereunder, or the date the
cost or expense was paid by the Non-Defaulting Party, and the date of payments
thereof by the Defaulting Party to the Non-Defaulting Party.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Effective Date . The effective date of this Agreement
shall be the date first above written, subject to any conditions set
forth herein and interruptions.
Section 9.02. Entire Agreement - This writing constitutes the entire
agreement of the parties with respect to the subject matter hereof,
superseding all prior agreements, understandings, representations and
warranties.
Section 9.03. Titles and Headings,,-. The section and paragraph titles and
headings contained herein are for the purpose of convenience only and are not
intended to define or limit the contents of said sections and paragraphs.
Section 9.04. Waivers. No waiver of any provision, requirement
obligation, condition, breach or default hereunder, or consent to any
departure from the provisions hereof, shall be considered valid unless in
writing and signed by the party giving such waiver, and no such waiver shall
be deemed a waiver of any subsequent breach or default of the same or similar
nature.
Section 9.05. Amendments. This Agreement may not be amended, modified
or terminated except by a written agreement specifically referring this
Agreement signed by all of the parties hereto and no amendment, modification
or alteration of 9 addition to or termination of this Agreement or any
provision of this Agreement shall be effective unless it is made in writing
and signed by the parties.
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Section 9.06. Further Assurances - Each party hereto after the Closing
and without further consideration, shall cooperate, shall take such further
action, and shall execute and deliver such further documents as may be
reasonably requested by the other party in order to carry out the provisions
and purposes of this Agreement.
Section 9.07. Construction. This Agreement has been negotiated by the
parties, section by section and no provision hereof shall be construed more
strictly against one party than against any other party by reason of such
party having drafted such provision. The order in which the provisions of
this Agreement appear are solely for convenience of organization; and later-
appearing provisions shall not be construed to control earlier-appearing
provisions.
Section 9.08. Invalidity- It is the intent of the parties that each
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law. If any provision hereof shall be
prohibited, invalid, illegal or unenforceable, in any respect, under
applicable law, such provision shall be ineffective to the extent of such
prohibition, invalidity or unenforceability only, without invalidating the
remainder of such provision or the remaining provisions of this Agreement;
and, there shall be substituted in place of such prohibited, invalid, illegal
or unenforceable provision or provision which nearly as practicable carries
out the intent of the parties with respect thereto and which is not prohibited
and is valid, legal, and enforceable.
Section 9.09. Multiple Counterparts - This Agreement may be executed in
one or more counterparts, each of which shall be an original and, taken
together, shall be deemed one and the same instrument.
Section 9. 10. Assignment, Parties and Binding Effect. This Agreement,
and the rights, duties and obligations of any party shall not be assigned
without the prior written consent of each other party. This Agreement shall
benefit solely the -,named parties and no other person shall claim, directly
or indirectly, benefit hereunder, express or implied, as a third-party
beneficiary or otherwise. Wherever in this Agreement a party is named or
referred to, the successors (including heirs and personal representatives of
individual parties) and permitted assigns of such party shall be deemed to be
included, and all agreements, promises, covenants and stipulations in this
Agreement shall be binding upon and inure to the benefit of their respective
successors and permitted assigns.
Section 9. 11. Survival of Representations and Warranties. The
representations and warranties made herein shall survive the execution and
delivery of this Agreement and full performance hereunder of the obligations
of the representing and warranting party.
Section 9.12. Arbitration. Unless a court of competent jurisdiction
shall find that a particular dispute or controversy cannot, as a matter of
law, be the subject of arbitration, andy dispute or controversy arising
hereunder, other than injunctive under Article V hereof, shall be settled by
binding arbitration in Tampa, Florida by a panel of three arbitrators in
accordance with the rules of the American Arbitration Association. Judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The parties may pursue all other remedies with respect
to any claim that is not subject to arbitration.
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Section 9.13. Jurisdiction and Venue. Any action or proceeding for
enforcement of this Agreement and the instruments and documents executed and
delivered in connection herewith which is determined by a court of competent
jurisdiction to not, as a matter of law, be subject to arbitration as provided
in Section 9.12, shall be brought and enforced in the courts of the State of
Florida in and for Pinellas County, and in the United States District Court
for the Middle District of Florida, Tampa Division. and the parties
irrevocably submit to the jurisdiction of each such court in respect of any
such action or proceeding.
Section 9.14. Applicable Law. This Agreement and all amendments thereof
shall be governed by and construed in accordance with the law of the State of
Florida applicable to contracts made and to be performed therein (not
including the choice of law rules thereof).
IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
(CORPORATE SEAL)
Systems Communications, Inc.
Attest:
/s/ Xxxxx X. Salmon_______
Xxxxx X. Xxxxxx, Xx., Secretary
/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx, President
Telecom Network, Inc.
By:/s/ Xxxxx X. Olivet____
Xxxxx X. Xxxxxx, President
(CORPORATE SEAL)
International TeleData Corporation
By: /s/ Xxxxxx Xxxxxxx
__________ , Secretary
