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Sample Business Contracts

Stock and Asset Purchase Agreement - Teltran International Group Ltd., Internet Protocols Ltd. and NCT Networks Inc.

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                       STOCK AND ASSET PURCHASE AGREEMENT

     This STOCK AND ASSET PURCHASE  AGREEMENT  ("Agreement")  made as of January
23, 2001, by and among TELTRAN INTERNATIONAL GROUP, LTD., a Delaware corporation
("Teltran"),  INTERNET  PROTOCOLS LTD. ("IPL"),  a corporation  formed under the
laws of  England  and Wales  and NCT  NETWORKS,  INC.,  a  Delaware  corporation
("NCTN").

                                  INTRODUCTION

     WHEREAS, Teltran is engaged in the telecommunication and internet business;

     WHEREAS,  Teltran owns all the capital stock of Teltran Web Factory Limited
(the "Acquired Company") and IPL;

     WHEREAS, the Acquired Company and IPL are engaged in the internet business;

     WHEREAS,  NCTN  desires to acquire  all the  shares  the  Acquired  Company
("Acquired Company Shares") and certain assets of IPL, and;

     WHEREAS, Teltran, IPL and NCTN desire to effect the aforesaid transactions;

     NOW, THEREFORE,  in consideration of the premises, and the representations,
warranties  and  covenants  hereinafter  set forth the parties  hereby  agree as
follows:

ARTICLE I.

                                   DEFINITIONS

1.1 "Defined  Terms" As used in this  Agreement,  the following terms shall have
the meanings indicated below:

     "Assignment  and  Assumption  Agreement"  shall  mean that  Assignment  and
Assumption  Agreement  dated no less than one day prior to the  Closing  Date by
which  the   Acquired   Company   shall   assign  and   Teltran  and  IPL  shall
unconditionally  assume,  and indemnify and hold the Acquired  Company  harmless
from, the Excluded Liabilities in the form attached hereto as Exhibit A.

     "Acquired  Assets" or "Assets" shall mean those assets of IPL  specifically
identified  on Schedule 1 attached  hereto,  and such  assets  shall be free and
clear of any Liabilities  associated  therewith whether arising in contract,  by
operation of law or otherwise.

     "Balance  Sheet"  shall  refer  to the  Balance  Sheet  of the  assets  and
liabilities of the Acquired Company dated December 20, 2000, including any notes
thereto.

     "Certificate   of   Designations"   shall  refer  to  the   Certificate  of
Designations  setting forth the terms of the Preferred Stock hereinafter defined
and filed with the  Secretary of the State of Delaware no later than the Closing
Date (as herein defined).

     "Closing  Date" shall be that date on which the closing  occurs as provided
in Section 2.1 herein.

     "Consents"  shall  refer to the  consents  or  approval  of any third party
including any governmental agency or registered securities  association or stock
exchange required in connection with the Transactions including, but not limited
to, any consent required in connection with the transfer of the Acquired Company
Shares  or  resulting  from a change in  beneficial  ownership  of the  Acquired
Company.

     "Enforceability  Exceptions" shall mean the extent to which  enforceability
of  an  obligation  may  be  limited  by  applicable   bankruptcy,   insolvency,
re-organization  or other similar laws  affecting the  enforcement of creditors'
rights  generally  and by principles of equity  regarding  the  availability  of
remedies.

     "Exchange  Rate" shall mean for purposes of comparing the relative value of
one U.S. dollar to one British pound sterling, the value of one dollar and fifty
cents ($1.50) to one pound sterling ((pound)1.00).

     "Excluded  Liabilities"  shall mean subject to the provision of Section 5.4
all Liabilities of the Acquired  Company not  specifically  reflected,  noted or
specifically reserved against on the Balance Sheet, including without limitation
any  Liabilities of the Acquired  Company that together with the  Liabilities so
specifically reflected,  noted or specifically reserved against would exceed the
sum of the  amount of the  Liability  disclosed  in the  footnote  thereto  plus
(pound)679,078.39,  but in any event not  including  any of the Ordinary  Course
Liabilities.

     "GAAP" shall refer to generally accepted  accounting  principles as applied
in the United States or the United Kingdom as the case may be.

     "Laws" shall mean all laws,  common laws, rules,  regulations,  ordinances,
codes, judgments,  injunctions, orders, decrees, permits, published policies and
other   requirements   of  the  United  States  or  United   Kingdom  and  other
jurisdictions to which Teltran, IPL or the Acquired Company, as applicable,  are
subject,  including  all  foreign and local  governments  and all  agencies  and
instrumentalities    thereof,   including   any   administrative   agencies   or
administrative body created by any such government.

     "Liabilities" shall mean any indebtedness,  liability, claim, loss, damage,
deficiency, obligation or responsibility,  fixed or unfixed, choate or inchoate,
liquidated or unliquidated,  secured or unsecured, accrued, absolute, contingent
or otherwise, whether or not of a kind required by generally accepted accounting
principles to be set forth on a financial statement including the notes thereto.

     "Lien" means any mortgage, pledge, lien, encumbrance, charge, adverse claim
or  restriction  of any kind  affecting  title or  resulting  in an  encumbrance
against  property,  real or  personal,  tangible  or  intangible,  or a security
interest of any kind  (including any  conditional  sale or other title retention
agreement,  any lease in the nature  thereof,  any third  party  option or other
agreement  to sell  and any  filing  of or  agreement  to  give,  any  financing
statement  under the  Uniform  Commercial  Code (or  equivalent  statute) of any
jurisdiction).

     "Material  Adverse  Effect" or "Material  Adverse Change" with respect to a
party or the Acquired  Company means a change which would in the aggregate  have
material adverse effect on the assets,  liabilities (whether absolute,  accrued,
contingent  or  otherwise),  condition  (financial  or  otherwise),  results  of
operations, business or future business or financial condition on a consolidated
or combined basis of such party.

     "Ordinary Course  Liabilities" shall mean those Liabilities of the Acquired
Company  that have arisen  since the date of the Balance  Sheet in the  ordinary
course  of the  Acquired  Company's  business  and  consistent  with  reasonable
commercial  practices,  other  than  Liabilities  for any  advances  made on the
Purchase  Price by  Buyer,  or other  Liabilities  that  may  have  arisen  from
indebtedness for borrowed money.

     "Preferred  Stock" or "Series A Preferred Shares" shall refer to the Series
A  Preferred  Stock  of NCTN  convertible  as set  forth in the  Certificate  of
Designations.

     "Person"  shall  mean  any  natural  person,  corporation,  division  of  a
corporation,  partnership,  trust, joint venture, association,  company, estate,
unincorporated organization or governmental entity.

     "Release"  shall mean that  document  in  substantially  the form  attached
hereto as  Exhibit B by which the  parties  intend to release  all  intracompany
receivables,  payables,  loans and advances as of the closing date among Teltran
and IPL on the one hand, and the Acquired Company on the other.

     "Stated  Value" shall refer to the $1,000 in stated value of the  Preferred
Stock as hereinabove defined.

     "Stockholders'  Agreement" shall be a Standstill and Stockholders Agreement
containing  terms set forth in Exhibit C attached  hereto among NCTN, NCT Group,
Inc.  and each of the holders of the Series A Preferred  Shares,  which shall be
reasonably acceptable to NCTN's and Teltran's counsel.

     "Subsidiary"  shall refer to any corporation,  company,  partnership  joint
venture,  business trust or other entity in which a Person has a equity interest
or which is otherwise controlled by such Person.

     "Transactions"  shall mean, in respect of any party,  all  transactions set
forth in or  contemplated  by this Agreement  that involve,  relate to or affect
such party, including, without limitation, all transactions and undertakings set
forth in such documents,  agreements,  instruments of title or certificates that
such party may deliver to another party pursuant to this Agreement.

     "Working  Capital" as reflected on any balance  sheet of the Company as may
be referred to herein or prepared  and  adjusted as set forth in Section 2.5 and
Schedule 2.5 hereto shall mean current assets less current liabilities.

ARTICLE II.
                                   THE CLOSING

2.1 The  Transactions.  The closing  ("Closing") of the Transactions  under this
Agreement  shall occur as soon as reasonably  practical  after the execution and
delivery hereof by all parties,  and promptly  following final agreement between
Teltran  and NCTN and their  respective  counsel as to the  precise  form of the
Certificate  of  Designations.  Such  Closing  shall be deemed to be held at the
offices of NCTN at 20 Ketchum  Street,  Westport CT,  U.S.A.  effective at 10:00
a.m. local time on such date as the Closing shall occur (the "Closing Date").

2.2 The  Closing.  At the  Closing  the  parties  shall  deliver  the  following
agreements, documents, instruments of title, certificates and other materials as
contemplated by the Transactions:

2.2.1 NCTN Deliveries.  NCTN shall deliver by wire transfer of same day funds to
Teltran the sum of One Hundred  Thousand U.S.  Dollars  ($100,000) (the "Initial
Cash  Price") to an account  at a U.S.  bank  designated  in  writing,  less any
advances of the Purchase  Price made by NCTN to Teltran or the Acquired  Company
prior to the Closing Date set forth on Schedule 2.2.1. The advances set forth on
Schedule 2.2.1 shall not reflect any cash advances made to the Acquired  Company
to pay  Ordinary  Course  Liabilities.  In  addition,  NCTN shall  issue for the
benefit  of  Teltran  and IPL to the  following  persons  and  parties  Series A
Preferred Shares, free and clear of all Liens:

     (a) to John  Chalfin,  Series A  Preferred  Shares  having  a value,  after
applying the Exchange Rate to the Stated Value, of (pound)750,000;

     (b) to the finders (Cook and Pittsburg), Series A Preferred Shares having a
value, after applying the Exchange Rate to the Stated Value, of (pound)425,810;

     (c) to a  collateral  or  escrow  agent  designated  by  Teltran,  Series A
Preferred  Shares  having a Stated Value of up to  (pound)2,264,190.  If Teltran
instructs  NCTN to deliver  Series A Preferred  Shares  having a Stated Value of
less than  (pound)2,264,190  to a collateral  agent or escrow agent,  NCTN shall
deliver  the  remaining  Series A  Preferred  Shares  directly to Teltran or its
counsel;

NCTN may in its sole  discretion  round up or down the total  number of Series A
Preferred  Shares to be issued at the Closing to the nearest  Stated  Value of a
single share of Series A Preferred Stock to avoid issuing  fractional shares. In
addition, NCTN shall make the following deliveries to Teltran and IPL:

     (d) a release of the  personal  guarantee  of Byron  Lerner of the advances
referenced on Schedule 2.2.1; and if applicable referred to in Section 2.10;

     (e) an opinion of NCTN's  counsel as reasonably  requested by Teltran's and
IPL `s counsel; and

     (f) such other  documents  and  certificates  as Teltran or its counsel may
reasonably request.

2.2.2 Teltran Deliveries. Teltran shall deliver to NCTN:

     (a) one or  more  certificates  representing  all of the  Acquired  Company
Shares  with all tax  stamps,  endorsements  and proof of other liens or charges
arising in connection with the transfer and sale of the Acquired  Company Shares
having been paid by Teltran  based upon  reasonable  assumptions  as to the fair
market  value of the Series A Preferred  Shares to be  delivered  at Closing and
pursuant to Section 2.6 herein,  with such stock  transfer  powers duly endorsed
over to NCTN as may be required by applicable  Law to more fully  consummate the
Transactions contemplated hereby;

     (b) an executed and delivered  original of the  Assignment  and  Assumption
Agreement date no less than one day prior to the Closing Date;

     (c) executed originals of all Consents relating to the Acquired Company and
its assets;

     (d) a Release of the Acquired  Company in respect of all  Liabilities  that
may be owed by the Acquired  Company to Teltran and its  Subsidiaries  in a form
reasonably acceptable to NCTN and its counsel;

     (e) certified  resolutions of the Teltran Board of Directors approving this
Agreement,  the  Assignment  and  Assumption  Agreement,  the  Release  and  the
Transactions;

     (f) the  Stockholders'  Agreement  with  NCTN in  respect  of the  Series A
Preferred Shares to be issued for the benefit of Teltran and IPL hereunder;

     (g) an officer's certificate signed by two officers or directors of Teltran
as may be  designated  and  in the  form  requested  by  NCTN  as to the  truth,
completeness  and  accuracy of the  representations  and  warranties  of Teltran
contained in this  Agreement,  the  Assignment  and  Assumption  Agreement,  the
Stockholders' Agreement and the fair presentation of the Balance Sheet;

     (h) an opinion of Teltran  and IPL's  counsel as  reasonably  requested  by
NCTN's counsel; and

     (i) such other  documents,  instruments,  certificates  and undertakings as
NCTN and its counsel may reasonably request.

2.2.3 IPL Deliveries. IPL shall deliver to NCTN as follows:

     (a) an  executed  original  of such  instruments  of title to the  Acquired
Assets as counsel for NCTN may reasonably  request to best confer free and clear
title thereto in the name of NCTN;

     (b) certified  resolutions  of the Board of Directors of IPL approving this
Agreement,  the  Assignment  and  Assumption  Agreement,  the  Release  and  the
Transactions;

     (c) a Release of the Acquired  Company in respect of all  Liabilities  that
may be owed by the  Acquired  Company  to IPL  and  its  Subsidiaries  in a form
reasonably acceptable to NCTN and its counsel;

     (d) executed originals of all Consents relating to the Acquired Assets;

     (e) an officer's  certificate signed by two officers or directors of IPL as
may be  designated  by NCTN in a form  reasonably  requested  by NCTN's  counsel
attesting  as to  the  accuracy  and  completeness  of the  representations  and
warranties  of  IPL  set  forth  herein  and in the  Assignment  and  Assumption
Agreement;

     (f) an executed original of the Assignment and Assumption Agreement; and

     (g) such other  documents,  instruments,  certificates  and undertakings as
NCTN or its counsel may reasonably request.

2.2.4 Acquired Company  Deliveries.  Teltran shall cause the Acquired Company to
deliver to NCTN:

     (a) a  certified  long  form  copy  of  its  Articles  of  Association  and
Memorandum of Association;

     (b) all minute books and corporate  records of the Acquired Company and the
Acquired Company's seal;

     (c) written  resignations  of all  officers  and  directors of the Acquired
Company effective on the Closing Date;

     (d) certified resolutions of the board of directors of the Acquired Company
authorizing the  Transactions,  and appointing  nominees of NCTN as directors as
well as the managing  director and other officers of Acquired Company  effective
on the Closing Date;

     (e) a Release to the Teltran and IPL Liabilities owed by Teltran and IPL to
the Acquired Company in an amount not to exceed(pound)375,388.87; and

     (f) such other documents as NCTN or its counsel may reasonably request.

2.2.5 Companies House Filings.  Promptly after the Closing NCTN and the Acquired
Company shall make all necessary and appropriate filings with Companies House of
the United  Kingdom to report and  record the  Transactions,  the newly  elected
directors  and officers of the Acquired  Company,  and the ownership of the NCTN
Acquired Shares as of the Closing Date.

2.3  Ordinary  Course  Liabilities;  DataTech  Settlement.  NCTN agrees that the
Acquired  Company  shall remain  obligated  to pay,  perform and  discharge  the
Ordinary Course Liabilities. NCTN further agrees that the Acquired Company shall
be solely  responsible  for payments to be negotiated,  settled by NCTN and paid
(the  "DataTech  Settlement")  by the Acquired  Company in  connection  with all
claims made by DataTech  Limited  and  Logical e business  Solutions  Limited in
connection  with the Debenture of the Acquired  Company dated March 15, 2000, to
the  benefit  of The Web  Factory  Limited  (now  known as  Logical  e  business
Solutions Limited), (the "DataTech Debenture").

2.4 DataTech Settlement  Consideration.  No later than three business days after
the execution and delivery of one or more agreements evidencing all terms of the
DataTech  Settlement,  NCTN shall pay to Teltran in same day funds  $100,000  by
wire transfer (the "DataTech Consideration").

2.5  Adjustment.  Promptly  following  the Closing NCTN shall cause the Acquired
Company to prepare a balance sheet of its assets and  liabilities  in accordance
with GAAP based upon the Balance Sheet (without customary footnotes and year-end
adjustments)  dated the Closing Date (the "Closing  Balance  Sheet"),  and shall
deliver to Teltran a copy of the Closing Balance Sheet together with a completed
Schedule 2.5 attached hereto that reflects  certain  adjustments as set forth on
such  Schedule  to a "Pro Forma  Balance  Sheet at 12/20"  and a "Final  Closing
Balance  Sheet." If the  adjusted  Closing Net Working  Capital of the  Acquired
Company,  reflected on the Final Closing  Balance Sheet as adjusted  pursuant to
Schedule 2.5, is less than the adjusted net Working Capital reflected on the Pro
Forma  Balance  Sheet at 12/20 as adjusted  pursuant to Schedule  2.5,  then the
absolute  difference  (the  "Adjustment")  shall be deducted from the total post
closing  consideration  referenced in Section 2.6 herein,  and NCTN shall offset
such deduction  against any payments of cash or in respect of delivery of Series
A Preferred  Shares (which for this purpose  shall be dollar for dollar  against
the stated  value)  that it may owe to  Teltran  as set forth in Section  2.4 or
Section  2.6 herein;  provided  that  Teltran  shall have the right to object in
writing  within ten  business  days of receipt to NCTN's  final  compilation  of
Schedule 2.5, the Pro Forma Balance Sheet at 12/20 and the Final Closing Balance
Sheet.  If the  parties  are  unable  to  resolve  their  differences  within an
additional  ten business days,  they shall jointly engage a neutral  independent
accounting  firm (the "Firm")  within ten  business  days  thereafter  and whose
review and  determination  of the  merits of  Teltran's  objections  to the NCTN
compilation  of  Schedule  2.5 and the  Final  Closing  Balance  Sheet  shall be
determinative  final and binding on the parties,  absent  manifest error. If one
party  substantially  prevails as to its  objections or  compilation of Schedule
2.5, the Pro Forma Balance Sheet at 12/20 and the Final Closing  Balance  Sheet,
the other party shall pay the fees and expenses of such Firm.  If neither  party
substantially prevails,  Teltran and NCTN shall share equally in the pay of such
fees and expenses,  with the Firm determining which, if any, party substantially
prevailed.

2.6 Post Closing  Consideration.  Subject to NCTN's right of offset for breaches
of   representations   and   warranties  of  Teltran  and  IPL  and  claims  for
indemnification  as set forth in  Section  2.7  below,  and the right of NCTN to
deduct the Adjustment against payments of cash or issuance of Preferred Stock as
set forth in Section 2.5 above,  following the Closing NCTN shall pay to Teltran
$150,000  in same day funds on or prior to the 60th day  following  the  Closing
Date or if such 60th day is not a business day in either  London or New York the
next business day  thereafter  (the "Post Closing  Consideration").  The parties
shall endeavor to move up the day of payment of this Post Closing  Consideration
by reaching full agreement on the Adjustment, if any, pursuant to Section 2.5.

NCTN shall further issue and deliver on such date to Teltran or its designees on
behalf of Teltran and IPL Series A  Preferred  Shares  having a stated  value of
(pound)1,500,000,  (the "Final  Shares") less any amounts of the Adjustment that
were not deducted,  or Excluded  Liabilities that were not offset as provided in
Section 2.8, offset by the DataTech Settlement Consideration or the Post Closing
Consideration.  The value of the Initial Cash Consideration, the stated value of
the Series A Preferred  Shares issued at Closing  pursuant to Section  2.2.1(a),
(b) and (c), the DataTech  Consideration  and the stated value Final Shares when
added together shall equal the sum of the $350,000 and Preferred Shares having a
stated value equivalent to (pound)4,940,000 (the "Purchase Amount"),  subject to
deduction  of the  Adjustment  as  provided  in  Section  2.5 and any  offset as
provided in Section 2.7.

2.7 Offsets.  If NCTN or its stockholders or Subsidiaries  incur any Liabilities
relating to any breach of  representations  and warranties of Teltran and IPL or
breach of any covenants,  obligations or  undertakings  of Teltran and/or IPL in
this Agreement or the Assignment and Assumption Agreement,  then NCTN shall have
the right to offset  such  Liabilities  against  the  obligation  to  deliver to
Teltran  the   DataTech   Consideration   in  Section   2.4,  the  Post  Closing
Consideration  or to issue the Final  Shares as  provided  in Section  2.6.  For
purposes of any offsets against shares of Preferred Stock, such offsets shall be
dollar for dollar against the stated value of the Preferred Stock.

2.8 Allocation.  Teltran and IPL shall provide to NCTN an intended allocation of
the total  Purchase  Price between them for the Acquired  Company Shares and the
Acquired  Assets no later than five  business  days  following the Closing Date.
NCTN shall have five  business days  thereafter to propose any changes  thereto,
and if  reasonably  acceptable  to Teltran and IPL, the parties shall adopt such
allocation  for all purposes in connection  with the  Transactions  contemplated
hereby.

2.9 Certain Matters.  Notwithstanding any other provision of this Agreement, the
parties have agreed to handle certain  employment  and other matters  concerning
the Acquired Company as set forth on Schedule 2.9. Such matters are addressed in
their  entirety in Schedule  2.9. and shall not be the basis for any increase or
decrease in the Adjustment or in  determination  of the Excluded  Liabilities or
the Ordinary Course Liabilities.

2.10 Certain Pre-Closing Advances.  Notwithstanding any other provisions of this
Agreement,  any advance made by NCTN or its  affiliates  for  operations  in the
normal  course of  business  of  Acquired  Company  shall not be  included as an
Excluded  Liabilities in the Agreement or Assignment  and Assumption  Agreement,
subject to any  indemnity or included as a liability for any  calculation  under
Section 2.5 and any guaranties  thereof shall be released.  If the Closing shall
not occur, the Acquired Company shall remain liable to NCTN for such advance and
any such guaranty shall remain in effect.


ARTICLE III.
                REPRESENTATIONS AND WARRANTIES OF TELTRAN and IPL

     Except as set forth in the Acquired Company  Disclosure  Schedule,  Teltran
and IPL jointly and  severally  represent  and warrant to NCTN as follows on the
date hereof and on the Closing Date with the  knowledge and  understanding  that
NCTN is relying materially upon such representations and warranties.

3.1  Organization  and Standing of Acquired  Company.  The Acquired Company is a
corporation  duly  organized,  validly  existing and in good standing  under the
corporate  laws of England and Wales.  The  Acquired  Company has the  corporate
power to carry on its  business  as now  conducted  and to own its assets and is
duly  qualified  to  transact   business  as  a  foreign   corporation  in  each
jurisdiction  where such  qualification is necessary except where the failure to
qualify will not have a Material Adverse Effect. The copies of the Memorandum of
Association  and Articles of Association  of the Acquired  Company as amended to
date,  and made  available  to  NCTN,  are true  and  complete  copies  of those
documents as now in effect ("Corporate Documents").

3.2 Capitalization. The authorized capital stock of the Acquired Company, as set
forth in  Corporate  Documents  to be exchanged  hereunder  constitutes  all the
issued and  outstanding  Shares of the Acquired  Company  except as set forth in
Schedule 4.2, the shares of common stock of the Acquired Company that are issued
and outstanding are duly authorized,  validly issued and outstanding, fully paid
and  non-assessable  (not  subject  to further  charge),  and were not issued in
violation of the preemptive  rights of any person.  There are no outstanding (a)
options,  warrants or rights to purchase or subscribe for any equity securities,
or other  ownership  interests of the Acquired  Company,  (b) obligations of the
Acquired Company, whether absolute or contingent,  to issue any shares of equity
securities or other ownership interests,  (c) debt or equity securities directly
or indirectly  convertible into any equity securities of the Acquired Company or
(d) any  stockholder  agreements,  options,  rights  of first  refusal  or other
similar  rights with  respect to the capital  stock of the  Acquired  Company to
which the Acquired Company is a party.

3.3 Share  Ownership.  Teltran  represents  that it is the record and beneficial
owner of all  shares  of  Acquired  Company  Shares  free and clear of all Liens
except such Liens as shall be  satisfied  at  Closing.  Upon  execution  of this
Agreement and  deliveries at closing of the  certificates  for Acquired  Company
Shares, NCTN shall receive marketable title to such Acquired Company Shares free
and clear of all Liens and encumbrances and claims of third parties.

3.4 Authority.  Teltran and IPL are corporations  duly formed,  validly existing
and in good standing in the  jurisdiction of their  incorporation  or formation.
The execution,  delivery and performance of this  Agreement,  the Assignment and
Assumption  Agreement,  the  Stockholders'  Agreement  and the Releases will not
conflict  with,  violate  or cause a default  under,  their  respective  charter
documents,  or  any  note,  credit  agreement,  indenture,  pledge  or  security
agreement,  or other instrument  relating to indebtedness for borrowed money, or
any material  contracts to which they or the Acquired Company may be a party, or
by which they,  their assets or the Acquired  Assets are bound.  Teltran and IPL
have all the requisite corporate power and authority to execute and delivery and
perform its  obligations  under this Agreement and all related  transactions  as
provided  hereunder  and  upon  execution  and  delivery,  the  Agreement,   the
Assignment  and  Assumption  Agreement,  the  Stockholders'  Agreement  and  the
Releases to be  delivered  hereunder  are valid,  binding,  enforceable  against
Teltran  and IPL in  accordance  with  their  respective  terms  subject  to the
Enforceability Exceptions.

3.5  Investment  Intent.  Teltran  and IPL are  acquiring  the  Preferred  Stock
herewith to be issued hereunder for investment,  for their own account,  and not
with a view to any public distribution thereof. In such connection, each further
represents and warrants that they  understand that NCTN is issuing the Preferred
Stock for the benefit of Teltran and IPL in reliance upon an exemption  from the
registration  requirements  pursuant to Section 5 of the Securities Act of 1933,
as amended (the "Act") and the rules and regulations thereunder.  Such Preferred
Stock any common  stock of NCTN that may be issued upon the  conversion  thereof
(the "Conversion Shares") may not be sold, transferred,  pledged,  hypothecated,
assigned or otherwise  disposed of by any holder  thereof unless NCTN shall have
been  supplied  with  evidence  satisfactory  to it and its  counsel  that  such
transfer is not in violation  of the Act.  Teltran and IPL  understand  that the
certificates  for the Preferred  Stock and the  Conversion  Shares shall bear an
appropriate  restrictive  legend to reflect the foregoing  restrictions and that
stop  transfer  instructions  will be placed  against  the  Preferred  Stock and
Conversion  Shares with respect thereto.  Teltran and IPL consent to the placing
of such legend on the certificates for the Preferred Stock.

3.6  Infringement.  The Acquired  Company is not  violating or  infringing,  the
rights of others in any trademark, trade name, service mark, copyright,  patent,
trade secret, know-how or intangible asset.

3.7  Assets.  IPL  has  good  and  marketable  title  to all of the  assets  and
properties  constituting  the Assets free and clear of all Liens.  The  Acquired
Company has good and marketable title to all of the assets it purports to own or
which are  reflected  on the  balance  sheet,  and has a valid  and  enforceable
leasehold  interest in the assets and  properties it purports to lease,  subject
only to such Liens that have been previously disclosed to NCTN.

3.8 Compliance  with Laws. The Acquired  Company is in compliance  with all Laws
that may be  applicable  to it and to its asset and  lines of  business,  except
where  noncompliance  would not have a Material  Adverse  Effect on its  current
working capital to be reflected on the Closing Balance Sheet.

3.9  Employees.  The Acquired  Company has only those persons listed on Schedule
3.9 as employees,  and has no other  employment  obligations  or  Liabilities in
respect  thereof,  whether  past,  present or in the future to any other person.
Schedule  3.9  accurately  sets  forth the  maximum  annual  salary  obligations
currently owed to its employees.

3.10 Balance Sheet. The Balance Sheet fairly presents the assets and Liabilities
of the Acquired  Company as of the date thereon,  and was prepared in accordance
with GAAP (except for customary footnotes and year-end adjustments) from records
accurately and fairly maintained by the Acquired  Company.  The Acquired Company
has not  incurred  or  suffered  any  Liability  not in the  ordinary  course of
business since the date of the Balance Sheet. The assets of the Acquired Company
are free and  clear of all  Liens,  subject  only to such  Liens  that have been
previously  disclosed  to NCTN.  The  Acquired  Company  has no  obligations  of
indebtedness for borrowed money,  except for such advances as may have been made
by NCTN on or prior to the Closing Date.

3.11 Full  Disclosure.  Neither  Teltran,  IPL,  the  Acquired  Company or their
respective  officers,  directors,  employees and  representatives  have made any
untrue  statements of material fact or omitted to disclose any material facts to
make any  statements  not  misleading  to NCTN,  NCT  Group,  Inc.,  a  Delaware
corporation  and the  parent of NCTN,  or their  respective  representatives  in
connection with the Transactions or the representations and warranties contained
in this Agreement or the  Assignment  and Assumption  Agreement or the schedules
and documents delivered hereunder.

ARTICLE IV.
                     REPRESENTATIONS AND WARRANTIES OF NCTN

     NCTN  represents  and  warrants to and agrees with Teltran as follows as of
the date hereof and the Closing Date with the knowledge and  understanding  that
Teltran is relying materially upon such representations and warrants:

4.1  Organization  and Standing of NCTN.  NCTN is a corporation  duly organized,
validly existing and in good standing under the laws of the State of Delaware ad
has the corporate power to carry on its business as now conducted and to own its
assets and is duly  qualified to transact  business as a foreign  corporation in
each state where such  qualification  is  necessary  except where the failure to
qualify will not have a Material Adverse Effect.

4.2  Governmental  Approval:   Consents.  No  authorization,   license,  permit,
franchise,  approval,  order or consent of and no  registration,  declaration or
filing by NCTN with any governmental  authority,  domestic or foreign,  federal,
state or local,  is required in  connection  with NCTN  execution,  delivery and
performance of this Agreement and consummation of the  transaction.  No Consents
of any other  parties  are  required to be received by or on the part of NCTN to
enable Teltran to enter into and carry out this Agreement.

4.3 Authority. This Agreement constitutes, and all other agreements contemplated
hereby will  constitute,  when  executed  and  delivered  by NCTN in  accordance
herewith,  the valid and binding  obligations of NCTN  enforceable in accordance
with their respective terms, subject to the Enforceability Exceptions.

4.4 Share  Issuance.  The shares of Preferred Stock to be issued hereby are, and
the shares of common  stock to be issued upon  conversion  or  exchange  thereof
shall be, duly and validly issued, fully paid and non-assessable.

4.5  Capitalization.  The  authorized  capital stock of the NCTN is set forth in
Schedule 4.5. Except as set forth in such schedule, no other shares of Preferred
Stock of the Acquired Company are issued and outstanding.  There are no plans to
issue outstanding shares of Preferred Stock except as disclosed in Schedule 4.5.
There are no (a) options,  warrants,  convertible  securities or other rights to
purchase or subscribe for any equity securities, or other ownership interests of
NCTN  outstanding,  or  (b)  other  obligations  of  NCTN  whether  absolute  or
contingent,  to issue  any  shares  of  equity  securities  or  other  ownership
interests, except as disclosed on Schedule 4.5.

ARTICLE V.
                                    INDEMNITY

5.1 WebFactory Indebtedness. NCTN shall indemnify and hold harmless Teltran from
liability,  costs and expense of any description of the Acquired Company as well
as any guaranty of any  indebtedness  of the  Acquired  Company,  including  any
indebtedness  incurred  in  connection  with the  acquisition  of  assets by the
Acquired  Company from the  WebFactory  Limited (now known as Logical e Business
Solutions  Limited) in March 2000,  which is specifically  reflected or noted on
the Balance Sheet, and if not so reflected,  NCTN shall have no  indemnification
or hold harmless obligation to Teltran in respect thereof.  NCTN shall cause the
Acquired Company to indemnify and hold Teltran harmless from the Ordinary Course
Liabilities.

5.2 IPL Shareholders.  Teltran and IPL shall jointly and severally indemnify and
hold NCTN harmless from any and all claims of the IPL  shareholders  and any IPL
creditors  with respect to the transfer of the Acquired  Assets.  IPL represents
and warrant to NCTN that it is  receiving  fair  consideration  for the Acquired
Assets  pursuant to the  allocation  of the Purchase  Price as  contemplated  by
Section 2.8 herein.

5.3  Brokers'  Fees.  Except  for fees paid to the  Finder as set forth  herein,
Teltran and the Acquired Company shall save and hold the other harmless from any
claims made  against the other on account of their acts or alleged acts from any
person for any other agent's, broker's or finder's fee or commission incurred in
connection with the Transactions.

5.4 Teltran Indemnity. Teltran and IPL jointly and severally shall indemnify and
hold  harmless  the  Acquired  Company  and  NCTN and its  officers,  directors,
representatives,  stockholders and affiliates (the "NCTN  Indemnitees") from and
against (a) the Excluded Liabilities, (b) any breach of representation, warranty
or  covenant  made by them in this  Agreement,  the  Assignment  and  Assumption
Agreement or in connection with the Transactions, and (c) any Liabilities of the
Acquired  Company  as of the  Closing  Date  (other  than  the  Ordinary  Course
Liabilities).  For purposes of clarity and without  limitation on the aforesaid,
neither  Teltran nor IPL shall have any obligation to indemnify or hold harmless
the Acquired  Company,  NCTN or any of the NCTN  Indemnitees from or against the
Ordinary Course Liabilities,  the DataTech Settlement,  or such claims as may be
asserted by DataTech  and Logical e business  Solutions or any  indebtedness  in
connection with the DataTech Debenture,  any advance made by NCTN (other then an
advance of Initial Cash Price hereunder) any item listed in Schedule 2.9 (except
as otherwise  provided  therein),  nor shall any such item be deemed an Excluded
Liability  or a liability  assumed  pursuant to the  assignment  and  Assumption
Agreement. In the event any liability was satisfied under any other provision of
this  Agreement,  including  Section 2.5,  neither Teltran nor IPL shall have no
further obligation therefore.

ARTICLE VI.
                              POST CLOSING MATTERS

6.1 Non Solicitation. Teltran further undertakes and agrees that during the term
of the Agreement  and, for the one year period after  termination,  it will not,
directly or indirectly employ,  cause to be employed,  or solicit for employment
any of the Acquired Company's employees.

6.2 Non-Disclosure of Information.

(i) Teltran shall (i) never,  directly or indirectly,  disclose to any person or
entity for any reason,  or use for his own personal  benefit,  any "Confidential
Information" (as hereinafter  defined) either during his employment with Teltran
and its affiliates or following  termination  of that  employment for any reason
(ii) at all  times  take all  precautions  necessary  to  protect  from  loss or
disclosure  by it of any and all  documents  or  other  information  containing,
referring or relating to such Confidential Information.

(ii)  Notwithstanding  any  provision to the contrary in this Section 6.2,  this
paragraph  shall not apply to information  which Teltran is called upon by legal
process  regular on its face  (including,  without  limitation,  by  subpoena or
discovery  requirement)  to disclose or to information  which has become part of
the public domain or is otherwise  publicly disclosed through no fault or action
of Teltran.

(iii) For  purposes  of this  Agreement,  "Confidential  Information"  means any
information  relating in any way to the business of the Acquired  Company  which
consists of technical and non-technical information about the Acquired Company's
products, processes,  programs, concepts, forms, business methods, data, any and
all financial and accounting  data,  marketing,  customers,  customer lists, and
services and information  corresponding thereto.  Confidential Information shall
not include any of such items which are published or are  otherwise  part of the
public  domain,  or freely  available  from trade  sources or otherwise  without
breach of any obligation of confidentiality.

6.3 Injunctive  Relief.  The parties hereto agree that the remedy at law for any
breach of the  provisions of this  paragraph 7 will be  inadequate  and that the
Company or any of its  subsidiaries  or other  successors  or  assigns  shall be
entitled to injunctive  relief without bond. Such injunctive relief shall not be
exclusive,  but shall be in addition to any other rights and remedies Company or
any of its  subsidiaries  or their  successors  or  assigns  might have for such
breach.

6.4 Access. From and after the Closing Date, NCTN and the Acquired Company shall
give Teltran and its accountants  such reasonable  access as Teltran may request
to the Acquired Company's books and records and financial personnel for purposes
of reviewing  NCTN's  compilation  of Schedule 2 as provided in Section 2.5, and
for preparation of Teltran's  consolidated tax returns and financial  statements
and related disclosures as may be required by applicable law.

ARTICLE VII.
                                  MISCELLANEOUS

7.1 Expenses.  Except as otherwise provided herein,  the Acquired Company,  NCTN
and  Teltran  shall each pay their own  expenses  incident  to the  negotiation,
preparation, and carrying out of this Agreement, including all fees and expenses
of  its  counsel  and  accountants  for  all  activities  of  such  counsel  and
accountants  undertaken  pursuant to this Agreement,  irrespective of whether or
not the transactions contemplated hereby are consummated.

7.2  Survival of  Representations,  Warranties  and  Covenants.  All  statements
contained in this Agreement or in any  certificate  delivered by or on behalf of
NCTN, IPL or Teltran  pursuant  hereto,  or in connection with the  transactions
contemplated hereby shall be deemed representations, warranties and covenants by
the parties as the case may be, hereunder. All representations,  warranties, and
covenants  made by the  parties in this  Agreement,  or pursuant  hereto,  shall
survive the Closing, but shall terminate two years from the Closing Date.

7.3 Succession and Assignments;  Third Party  Beneficiaries.  This Agreement may
not be  assigned  (either  voluntarily  or  involuntarily)  by any party  hereto
without the express written consent of the other party. Any attempted assignment
in violation of this Section  shall be void and  ineffective  for all  purposes.
This Agreement shall be binding upon the successors and permitted assigns of the
parties  hereto.  Except as expressly set forth in this Section 7.3, there shall
be no third party beneficiaries of this Agreement.

7.4 Accuracy of Documents. All documents delivered by the Acquired Company, NCTN
to Teltran,  and by Teltran to NCTN,  as  photocopies  faithfully  reproduce the
originals  thereof,  and such  originals  are  authentic and were, to the extent
execution was required, duly executed.

7.5 Notices.  All  notices,  requests,  demands,  or other  communications  with
respect to this Agreement shall be in writing and shall be (i) sent by facsimile
transmission, (ii) or with respect of notices from the United States sent by the
United  States Postal  Service,  registered or certified  mail,  return  receipt
requested,  (iii)  personally  delivered  by  a  nationally  recognized  express
overnight courier service,  charges prepaid, to the following addresses (or such
other  addresses as the parties may specify from time to time in accordance with
this Section):

            To Teltran, and IPI:

            (1)   Teltran International Group, Inc.
                  One Penn Plaza, Suite 3632
                  New York, New York 10119
                  Fax:  (212) 643-1997

            With a copy to:

                  Parker Duryee Rosoff & Haft
                  529 Fifth Avenue
                  New York, New York 10017
                  Attn:  Michael DiGiovanna, Esq.
                  Fax:  (212) 972-9487

            (2)   To NCTN:

                  Cy Hammond
                  NCT Group Inc.
                  40 Ketchum Street
                  Westport, CT 06880
                  Fax:  (203) 226-4338

            With a copy to:

                  William P. O'Neill
                  Latham & Watkins
                  1001 Pennsylvania Avenue, N.W.
                  Washington, D.C.  20004
                  Fax:  (202) 637-2201

     All  such  notices  shall,  when  sent in  accordance  with  the  preceding
sentence,  be deemed to have been given and  received on the earliest of (i) the
day delivered to such address or sent by facsimile transmission,  (ii) the fifth
business day following the date deposited with the United States Postal Service,
or (iii) the next business day after shipment by such courier service.

7.6  Construction.  This Agreement shall be construed and enforced in accordance
with the internal  laws of the State of New York (US) without  giving  effect to
the principles of conflicts of law thereof.

7.7  Counterparts.  This Agreement may be executed in two or more  counterparts,
each of which  shall be  deemed an  original,  but all of which  shall  together
constitute one and the same Agreement.

7.8 No Implied Waiver;  Remedies. No failure or delay on the part of the parties
hereto to  exercise  any  right,  power,  or  privilege  hereunder  or under any
instrument  executed  pursuant  hereto  shall  operate as a waiver nor shall any
single or partial exercise of any right,  power, or privilege preclude any other
or further  exercise  thereof or the  exercise  of any other  right,  power,  or
privilege.  All  rights,  powers,  and  privileges  granted  herein  shall be in
addition  to other  rights and  remedies to which the parties may be entitled at
law or in equity.

7.9 Entire  Agreement.  This  Agreement,  including any exhibits and  Disclosure
Schedules attached hereto,  sets forth the entire  understandings of the parties
with respect to the subject matter hereof,  and it  incorporates  and merges any
and all  previous  communications,  understandings,  oral or  written  as to the
subject  matter  hereof,  and cannot be  amended,  waived or  changed  except in
writing, signed by the party to be bound thereby.

7.10 Headings.  The headings of the Sections of this Agreement,  where employed,
are for the  convenience  of reference only and do not form a part hereof and in
no way modify, interpret or construe the meanings of the parties.

7.11  Severability.  To the extent that any provision of this Agreement shall be
invalid  or  unenforceable,  it  shall  be  considered  deleted  hereof  and the
remainder of such provision and of this Agreement  shall be unaffected and shall
continue in full force and effect.
<PAGE>

     IN WITNESS WHEREOF, the parties have executed this agreement as of the date
hereof.

                                    TELTRAN INTERNATIONAL GROUP, LTD.


                                    By:
                                       ---------------------------------------



                                    INTERNET PROTOCOLS, LTD.


                                    By:
                                       ---------------------------------------



                                    NCT NETWORKS, INC.


                                    By:
                                       ---------------------------------------

<PAGE>


                                  Schedule 2.8

                                    Certain Matters

1.   The  Acquired  Company  shall  negotiate  and settle  all claims  with Mike
     Nevell, at the direction of NCTN, and NCTN and the Acquired Company will be
     solely  responsible for any payments to be made to Mr. Nevell,  without any
     Adjustment  to the  Balance  Sheet at  December  20,  2000 or to the  Final
     Closing Balance Sheet included in Schedule 2.5.

2.   Teltran shall be responsible for reaching  settlements with Patricia Morris
     and Alan Harvey.  Once such settlement is made and the Acquired  Company is
     fully  and  unconditionally  released  from  such  claims,  NCTN  shall pay
     one-half of the settlement  amount to Teltran,  which payment by NCTN shall
     not  exceed(pound)15,822.  Any settlement amount in excess  of(pound)31,644
     shall be the sole  responsibility of Teltran.  Teltran shall be responsible
     for the other half of such settlement. Teltran agrees, upon receipt of such
     payment by NCTN, to indemnify and hold harmless the Acquired Company,  NCTN
     and their respective  officers,  directors and affiliates from such claims,
     including  reasonable  attorneys'  fees, if it is ever  necessary to defend
     against such claims.  The  settlement  with Ms. Morris and Mr. Harvey shall
     not cause any increase or decrease in the  Adjustment  or the Balance Sheet
     at December  20, 2000 or to the Final  Closing  Balance  Sheet  included in
     Schedule 2.5.

3.   Any claims by Cook  and/or  Miller-Brazil  are the sole  responsibility  of
     Teltran and such claims shall be discharged in full at the Closing from the
     consideration  to be  delivered  at the Closing  hereunder  or otherwise as
     arranged by Teltran.



<PAGE>


                                    EXHIBIT C


                        Terms of Stockholders' Agreement


1.   The holders of the  Preferred  Stock shall agree to vote their common stock
     of NCTN to be issued upon  conversion of the Preferred Stock as recommended
     by a majority of the Board of Directors of NCTN to the common stockholders,
     including with respect to the election of Directors.

2.   The holders of the Preferred Stock agree not to acquire  additional  shares
     of NCTN common stock or securities  convertible  into or  exchangeable  for
     NCTN common stock without the permission of the NCTN Board of Directors.

3.   Points 1 and 2 above shall be binding  upon such  holders'  successors  and
     assigns  if such  holders'  Preferred  Stock or shares of common  stock are
     transferred  privately  to any  third  party,  and not so  binding  if sold
     through  any market on which  NCTN  common  stock is listed for  trading in
     public transactions.

4.   The holders of the Preferred  Stock shall be free to transfer any shares of
     NCTN common stock issued to them upon  conversion  of the  Preferred  Stock
     through  any market on which  NCTN  common  stock is listed for  trading in
     public transactions, without restriction under the Stockholders' Agreement.


<PAGE>


                                 Legal Opinions

1.   Teltran  Counsel:   The  Purchase  Agreement,   Assignment  and  Assumption
     Agreement, Releases, and Stockholders' Agreement have been duly approved by
     all  necessary  corporate  action for execution and deliver by Teltrans and
     IPL and (a) do not conflict with any charter documents,  and (b) are valid,
     binding and  enforceable  against  Teltran and IPL,  and the holders of the
     Preferred Stock (where applicable), subject to standard exceptions.

2.   NCTN  Counsel:  The  Purchase  Agreement  has  been  duly  approved  by all
     necessary  corporate action for execution and delivery by NCTN and (a) does
     not  conflict  with any charter  documents,  and (b) is valid,  binding and
     enforceable  against NCTN  subject to standard  exceptions.  The  Preferred
     Stock  and the  NCTN  Common  Stock  when  issued  upon  conversion  of the
     Preferred Stock, has been or will be duly authorized, validly issued, fully
     paid and non-assessable.