Stock and Asset Purchase Agreement [Side Letter] - Teltran International Group Ltd., Internet Protocols Ltd. and NCT Networks Inc.
TELTRAN INTERNATIONAL GROUP, LTD.
One Penn Plaza
New York, New York 10019
February 27, 2001
NCT Networks, Inc.
20 Ketchum Street
Westport, Connecticut 06880
Re: Stock and Asset Purchase Agreement among NCT Networks, Inc.
Teltran International Group, Ltd. and Internet Protocols Ltd.
(the "Agreement") dated as of January 23, 2001
Ladies and Gentlemen:
This will set forth the agreed upon amendments to the above Agreement.
Capitalized terms used herein and not defined shall have the meanings given to
them in the Agreement.
1. The definition of "Excluded Liability in Section 1 shall be revised to
read as follows:
"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 or type of the Liability
disclosed (without a specific amount) in the footnote thereto plus
(pound)679,078.39, but in any event not including any of the Ordinary
Course Liabilities.
2. The following clause shall be added to the definition of "Ordinary
Course Liabilities," in Section 1:
"any liabilities of the Acquired Company incurred or resulting from the
actions or omissions of NCTN or its affiliates or representatives or
incurred at their request whether prior or subsequent to the date of
execution of this Agreement.
3. All reference to Stockholders' Agreement shall apply solely to any
Series A Preferred Shares that may be released by the Collateral Agent to
Teltran pursuant to a Collateral Agent Agreement among Barbara R. Mittman as
Collateral Agent, Teltran, NCTN and certain investors identified therein, dated
as of February 27, 2001 (the "Collateral Agreement").
4. The attached assumption and assignment agreement shall be executed and
replaced for assumption and assignment attached to the Agreement.
5. The full paragraph following subsection 2.2.1(c) is hereby eliminated
and existing subsection 2.1.1(d) and (e) are relettered (e) and (f) respectively
and a new subsection 2.1.1 (d) is added as follows:.
(d) Series A Preferred Shares ("Balance Shares") having a Stated Value of
(pound)1,500,000 shall be delivered to Barbara Mittman to be held as
Collateral Agent pursuant to the Collateral Agreement and a Security
Agreement among the same parties and dated the same date as the Collateral
Agreement.
6. The second sentence of the second paragraph Section 2.6 is revised in
its entirety to read as follows:
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), (c)
and (d), the DataTech Consideration and the Post Closing Consideration 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.
7. Section 2.7 is amended in its entirety to read as follows:
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 against the Balance Shares
as set forth in this Section 2.7. 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.
8. Section 5.1 shall be amended in its entirety to read as follows:
Web Factory 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 Web Factory Limited
(now known as Logical e Business Solutions Limited) in March 2000 which is
specifically reflected on the Balance Sheet or any note thereby 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.
9. Section 5.4 shall be amended by removing in the first sentence subclause
(c) in its entirety, and by placing the word "and" after subclause (a) and
before subclause and (b) in the same sentence.
10. In Section 7.5 the street address of NCTN's counsel shall be changed to
"555 Eleventh Street, N.W."
11. Except as modified herein the Agreement shall remain in full force and
effect.
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If the foregoing correctly reflects our understanding please return the
enclosed copy of this letter.
Very truly yours,
TELTRAN INTERNATIONAL GROUP, LTD.
By:
---------------------------------
INTERNET PROTOCOLS LTD.
By:_________________________________
NCT NETWORKS, INC.
By:_________________________________