FIRST AMENDMENT TO PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AGREEMENT (this "Amendment") is made
and entered into as of the 15th day of April, 1999 by and among TELEDATA WORLD
SERVICES, INC., a Nevada corporation (the "Purchaser") and SECURFONE AMERICA,
INC., a Delaware corporation (the "Seller").
RECITALS
WHEREAS, the Purchaser and Seller made and entered into that certain
Purchase Agreement (as further amended, modified, supplemented or restated from
time to time, the "Purchase Agreement"); and
WHEREAS, Purchaser and Seller wish to amend certain provisions of the
Purchase Agreement and have agreed to such proposed amendments;
NOW, THEREFORE, for and in consideration of the foregoing and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
Article I
Amendments
1.1 The first recital to the Purchase Agreement is hereby amended
to delete the words "SecurFone, Inc., formerly known as SecurFone America, Inc."
and insert in lieu thereof the words "SecurFone, Inc., a Delaware corporation
and wholly-owned subsidiary of SecurFone Services, Inc., a Delaware corporation
formerly known as SecurFone Inc. and formerly known as SecurFone America, Inc."
1.2 Paragraph 2(a) of the Purchase Agreement is hereby amended to
delete the first sentence thereof and clauses (i) through (iv) thereof and
substitute in lieu thereof the following:
(a) $627,537.96 cash (of which $129,537.96 represents the
payment by Purchaser of various costs of Seller or
its affiliates) payable as follows:
i) Previously paid on the following dates:
1. $65,000.00 paid on October 26, 1998;
2. $50,000.00 paid on November 19, 1998;
3. $40,000.00 paid on December 2, 1998;
4. $35,000.00 paid on December 14, 1998;
5. $8,000.00 paid on December 30, 1998;
6. $50,000.00 paid on February 1, 1999;
7. $55,671.84 paid on February 8, 1999;
8. $62,580.99 paid on March 31, 1999;
9. $5,671.84 paid on April 2, 1999;
10. $7,708.04 paid on April 5, 1999;
11. $66,961.44 paid on April 9, 1999;
12. $6,578.04 paid on April 12, 1999; and
ii) $167,243.94 to be paid at closing;
iii) Pre-closing advances in the amount of
$298,000 shall be the subject of a
Promissory Note from Seller to Purchaser
secured by a Security Agreement of even date
herewith, pledging all assets of Seller as
Collateral for the Promissory Note. The
Promissory Note and Security Agreement shall
be cancelled upon closing. If the
transaction does not close for any reason
whatsoever, the Promissory Note shall be due
and payable on April 15, 1999.
1.3 Paragraph 2(b)(ii) of the Purchase Agreement is hereby amended
to delete the reference therein to "paragraph 12" and substitute in lieu thereof
"paragraph 11."
1.4 Paragraph 2(b) of the Purchase Agreement is hereby deleted in
its entirety and substituted in lieu thereof is the following:
(a) 600,000 shares of the Common Stock of Purchaser (the
"Shares") delivered at Closing subject to the terms of the true-up
provisions contained in paragraph 12 hereof and the "Make-Whole"
provisions of Section 1.3(c);
i) All shares issued under this Agreement will
be restricted pursuant to provisions of Rule
144 of the Securities and Exchange
Commission and will bear a restricted stock
legend in substantially the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") OR THE SECURITIES LAW OF
ANY OTHER STATE AND ARE ISSUED AND SOLD IN
RELIANCE UPON CERTAIN EXEMPTIVE PROVISIONS.
SAID SECURITIES CANNOT BE SOLD, OFFERED FOR
SALE OR OTHERWISE TRANSFERRED) EXCEPT
PURSUANT TO EITHER AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN
EXEMPTION THEREFROM UPON THE RECEIPT BY THE
COMPANY OF AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE
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COMPANY AND ITS COUNSEL THAT SUCH
TRANSFER DOES NOT REQUIRE REGISTRATION
UNDER ANY APPLICABLE LAWS."
ii) Purchaser represents and warrants that under
Rule 144 the holding period for the shares
issued or issuable by Purchaser under this
Agreement will commence on the Closing Date.
1.5 The Purchase Agreement is hereby amended to add the following
new paragraph 1.3 (c):
On the first anniversary of the Closing Date (the
"Determination Date"), the fair market value of the Shares on
such date shall be calculated by multiplying the number of
Shares (adjusted for any stock splits or combination and
including any Shares transferred to Purchaser in satisfaction
of Seller's Indemnification obligations under Paragraph 11) by
the Market Price per share. If the fair market value is less
than $1,500,000 then Purchaser, at its election, shall within
five business days thereafter (i) pay to Seller in cash the
sum arrived at by subtracting the Fair Market Value of the
Shares on the Determination Date from $1,500,000 (the "Make
Whole Amount") or (ii) if the average daily trading volume of
the Common Stock for the five trading days immediately
preceding the Determination Date is at least 50,000 shares,
issue to the Seller such number of shares of Common Stock
determined by dividing the Make Whole Amount by the Market
Price per share.
1.6 Paragraph 3 of the Purchase Agreement is hereby amended to
delete the date "April 1, 1999": and insert in lieu thereof "April 15, 1999 or
such other date as the parties may mutually agree".
1.7 Paragraph 5(c) of the Purchase Agreement is hereby amended to
insert immediately preceding the words "Common Shares" the number "3,000" and to
insert immediately preceding the words "per share" the following dollar amount:
"$0.01".
1.8 Paragraph 5(w) of the Purchase Agreement is hereby deleted in
its entirety and substituted in lieu thereof is the following:
(w) Letters of Credit. The Company currently has letters
of credit posted on its behalf to support the Carrier
Reseller Agreements described on Exhibit "F", in the
amount of $650,000.00, as more specifically described
on Exhibit "G" hereof . True and correct copies of
such Letters of Credit shall be delivered to
Purchaser at Closing. None of these Letters of Credit
are in default. The Letters of Credit will remain in
place until at least April 1, 2000, provided
Purchaser pays $4,875.00 per month or such lesser
amount as may be due thereunder to the issuers or
obligors on the Letters of Credit (such issuers or
obligors hereinafter collectively, the "LOC Issuers"
and individually, a "LOC Issuer"). The Seller further
represents that it has caused the LOC Issuers to
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issue such letters or extend the term of such Letters
of Credit through until April 1, 2000 and that such
Letters of Credit may not be revoked except pursuant
to the conditions set forth therein, if any, and
herein. Such Letters of Credit may not be terminated
by Seller and Seller will take no action to cause any
LOC Issuer to terminate such Letters of Credit so
long as Purchaser:
(i) Purchaser continues to pay the carrying
charges of $4,875.00 (the "Carrying
Charges") per month to Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇") who has provided collateral (in
the form of one-year certificates of
deposit) to the LOC Issuers or their
successors or assigns;
(ii) Purchaser has paid any and all bank
extension fees, which fees are set forth on
Exhibit "H"; and
(iii) No claim arising after the Closing Date (as
defined below) is made on the Letters of
Credit in excess of the LOC Security.
Purchaser shall deposit as soon as practicable
following the Closing Date the sum of $162,500.00
(the "LOC Security") into an escrow account under an
escrow agreement substantially in the form attached
as Exhibit "I" hereto to fulfill its obligations to
secure the reimbursement obligations of Seller under
the Letters of Credit, but only from and to the
extent the Letters of Credit are drawn upon by one or
more Carriers as a result of Purchaser's failure to
pay such Carriers under the Carrier Reseller
Agreements for services rendered after April 15, 1999
or such later date as the purchase of the stock of
the Company contemplated by the Agreement and this
Amendment shall occur (such date hereinafter the
"Closing Date"). Purchaser's obligations to finish
and maintain the LOC Security shall terminate:
(1) if the Letters of Credit are drawn
upon with respect to (a) any
obligations of Seller, the Company,
SecurFone Services, Inc. or any of
their Affiliates, arising prior to
the Closing Date, or (b) any
obligations of SecurFone America,
Inc., SecurFone Services, Inc. or
any of their Affiliates arising
after the Closing Date; or
(2) if an LOC Issuer is presented with a
drawing which complies with all of
the terms and conditions of the
applicable letter of credit and such
drawing is not honored or paid in
full for any reason whatsoever.
If, subsequent to the Closing Date,
Purchaser and Seller agree in writing to any
reduction in the LOC Amount, then the LOC Security
shall be
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reduced by $0.25 for each $1.00 reduction in the LOC
Amount and Purchaser and Seller shall cause the
excess and all earnings thereon to be returned to
Purchaser.
Notwithstanding anything above to the
contrary, and so long as there shall not have been a
draw on such Letters of Credit with respect to
obligations of the Company to Carriers arising after
the Closing Date, Purchaser shall be relieved of its
obligation to deposit the LOC Amount in the Escrow
Account and shall be entitled to withdraw all the LOC
Security and all earnings thereon from the Escrow
Account if Purchaser shall have established "lock
box" agreements with each of the Carriers to which
the Letters of Credit relate pursuant to which all or
substantially all of (a) the amounts paid to
Purchaser by its customers utilizing the applicable
Carrier's network or services or (b) Purchaser's
obligations to such Carriers are to be deposited
pursuant to a lock box arrangement with, or in favor
of, such Carrier over which such Carrier (or a
servicing agent unaffiliated with the Purchaser or
the Seller) may exercise custody and control of the
funds deposited therein if an event of default shall
occur under the applicable Carrier agreement. The
lock box agreements shall contain such other terms
which are acceptable to the applicable Carrier and if
the terms of the lock box are agreed to by the
applicable Carrier, then such terms shall
conclusively be deemed acceptable to Seller in
connection with Purchaser's satisfaction of its right
hereunder to establish such lock box agreements to
obtain the release of the LOC Security.
In the event Purchaser is able to establish lock box agreements with
some, but not all, of the Carriers, the LOC Security shall be reduced in
proportion to the accounts to which the Letters of Credit relate. Similarly, if
Letters of Credit have been drawn on to pay some Carriers and if lock box
agreements have been established with respect to Carriers as to whose accounts
no Letters of Credit have been drawn, the LOC Security shall be reduced to
reflect such lock box agreements and returned to Purchaser but in no event shall
the LOC Security be reduced below an amount equal to the aggregate amounts drawn
under the Letters of Credit for which LOC Security has been deposited into the
Escrow Account unless and until such amounts have been reimbursed by payment by
the Company to the LOC Issuer or by application of some or all of the LOC
Security. Notwithstanding any reduction or cancellation in the LOC Security,
Purchaser will pay the Carrying Charges to ▇▇▇▇▇▇▇▇ through April 1, 2000 unless
▇▇▇▇▇▇▇▇ elects to liquidate the certificates of deposit currently securing the
Letters of Credit.
1.9 Paragraph 5 of the Purchase Agreement is hereby amended to add
the following additional representations and warranties:
z) There are no Liabilities against, relating to or
affecting the Company or any of its Assets.
(aa) Authority. Each of the Seller, SecurFone Services,
Inc. and the Company
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had full corporate power and authority to effect the
transfer of the Assets of SecurFone Services, Inc. to
the Company and to perform its obligations in
connection therewith and to consummate the
transactions contemplated hereby and such transfer of
the Assets of SecurFone Services, Inc. to the Company
was duly and validly authorized by the Board of
Directors of Seller, SecurFone Services, Inc. and the
Company and, except as set forth below, no other
corporate action of the part of Seller, SecurFone
Services, Inc. or the Company or any class or series
of its security holders (equity or debt) was
necessary and the Board of Directors of each of the
Seller, SecurFone Services, Inc. and the Company
concluded that the consideration to be received by
their respective corporations upon consummation of
such transactions was fair from a financial point of
view; PROVIDED, HOWEVER, that although the
transactions contemplated hereby have been approved
in an action by written consent by Montpilier
Holdings, Inc., a holder of at least a majority of
the issued and outstanding capital stock of Seller
entitled to vote on such transactions, the
stockholders of the Seller as a whole have not been
informed of the action by written consent. Seller
agrees to furnish notice of such action by written
consent as soon as is reasonably practicable after
the Closing Date. The asset transfer agreements have
been duly and validly executed and delivered by
Seller, SecurFone Services, Inc. and the Company and
constitute legal, valid and binding obligations of
Seller, SecurFone Services, Inc. and the Company
enforceable in accordance with their respective
terms.
(bb) No Conflicts or Approvals Required. The execution and
delivery by the Agreement whereby the Assets of
SecurFone Services, Inc. were transferred to the
Company did not and, on and immediately after the
Closing Date, will not:
(i) conflict with or result in a violation or
breach of any of the terms, conditions or
provisions of the respective Certification
of Incorporation and by-laws of the Seller,
SecurFone Services, Inc. and the Company;
(ii) conflict with or result in a material
violation or material breach of any term or
provision of any law, order or judgment
applicable to Seller, SecurFone Services,
Inc, or the Company or any of their
respective Assets and Properties;
(iii) (A) conflict with or result in a violation
or material breach of, (B) constitute (with
or without notice or lapse of time or both)
a default under, (C) require Seller,
SecurFone Services, Inc. or the Company to
obtain any consent, approval or action of,
make any filing with or give any notice to
any person or entity as a result or under
the terms of, (D) result in or give to any
person or entity any right of
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termination, cancellation, acceleration or
modification in or with respect to, (E)
result in or give to any person or entity
any additional rights or entitlement to
increased, additional, accelerated or
guaranteed payments under, or (F) result in
the creation or imposition of any lien upon
the Company or any of its Assets under, any
contract or license to which Seller,
SecurFone Services, Inc. or the Company is a
party or by which any of their respective
Assets are bound; or
(iv) require any consent, approval or action of,
filing with or notice to any governmental or
regulatory authority or any other person or
entity (including, without limitation, any
Carrier or LOC Issuer on the part of Seller,
SecurFone Services, Inc. or the Company in
connection with the execution, delivery and
performance of the transfer of the Assets of
SecurFone Services, Inc. to the Company, or
of this Agreement or the consummation of the
transactions contemplated hereby or thereby,
other than the filing of an information
statement with the Securities and Exchange
Commission.
(cc) Legal Proceedings. (i) there are no actions, suits,
proceedings, arbitrations or governmental or
regulatory investigations or audits (individually and
collectively, "Actions") pending or, threatened
against, relating to or affecting Seller, SecurFone
Services, Inc. or the Company or any of their
respective Assets which (1) could result in the
issuance of an order restraining, enjoining or
otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated
by this Agreement or the transfer of assets by
SecurFone Services, Inc. to the Company or otherwise
result in a diminution of the benefits contemplated
by this Agreement to Purchaser or the transfer of
assets by SecurFone Services, Inc. to the Company, or
(2) if determined adversely to Seller, SecurFone
Services, Inc. or the Company, could be expected to
result in (x) any injunction or other equitable
relief against the Company that would interfere with
its business or operations or (y) require the return
or transfer of assets by the Company or result in an
equitable or constructive trust being placed upon its
assets; and (ii) there are no facts or circumstances
known to Seller that could reasonably be expected to
give rise to any Action that would be required to be
disclosed pursuant to clause (i) above; and (iii)
there are no orders or judgments outstanding against
Seller, SecurFone Services, Inc. or the Company with
respect to the matters contemplated by clauses (i)
and (ii) above.
(dd) No Fraudulent Conveyance. The transfer of assets by
SecurFone, Inc. to the Company was not made with the
intent to impede, hinder or defraud the creditors of
the Seller and was made for adequate consideration.
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1.10 Paragraph 6 of the Purchase Agreement is hereby amended to add
the following new subparagraphs (e) and (f):
(e) Market. Purchaser agrees to use its reasonable best
efforts to maintain the listing of the Common Stock
on the Nasdaq Over the-Counter Bulletin Board System,
the Nasdaq Small Cap Market System, the Nasdaq
National Market System or any principal national
stock exchange, for a period of two years following
the Closing Date or until such earlier date as Seller
shall no longer own any of the Shares.
(f) Purchaser has furnished Seller draft financial
statements for the year ended December 31, 1997 and
the nine months ended September 30, 1998. To the
knowledge of Purchaser such draft financial
statements are materially complete and materially
accurate as of the dates thereof; except that
Purchaser makes no representation or warranty as to
the value of the capital stock of Worldwide Cellular,
Inc. ("WWC") or the underlying assets of WWC acquired
in connection therewith as of the respective dates of
such draft financial statements and informs the
Seller that Purchaser currently believes that such
WWC stock and underlying assets have little or no
value as of the date of this Agreement and Purchaser
further believes that any audit of its financial
statements for the year ended December 31, 1998 would
contain a going concern qualification. Purchaser
further makes no representation or warranty with
respect to the assets, financial condition or results
of operation of Purchaser since the respective dates
of such draft financial statements.
1.11 Paragraph 11 of the Purchase Agreement is hereby amended by
deleting such paragraph in its entirety and substituting the following in lieu
thereof:
11. Indemnification and True-Up. The Seller shall
indemnify the Purchaser, its successors and assigns
(the "Indemnities"), in respect of (a) all
liabilities of Seller, SecurFone Services, Inc. and
the Company of any nature, whether accrued, absolute,
contingent, or otherwise, existing at closing, to the
extent not reflected on Exhibit "A" hereof; (b) any
damage or deficiency resulting from any
misrepresentation, breach of warranty, or
non-fulfillment of any agreement on the part of the
Seller, under this Agreement, or from any
misrepresentation in or omission from any certificate
or other instrument furnished or to be furnished to
the Purchaser hereunder; and (c) all actions, suits,
proceedings, demands, assessments, judgments, costs,
and expenses incident to any of the foregoing
(collectively, "Indemnified Losses").
Upon notice by Purchaser to Seller of the
amount of Purchaser's Indemnified Losses, Seller
shall pay such losses first, from the Shares by
redelivering such number of Shares which is equal to
the Indemnified Losses in order to compensate
Purchaser for its damages as stated above. To the
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extent the Indemnified Losses cannot be satisfied by
repayment of the Shares, Seller shall pay the
Indemnified losses in cash. The total amount of
Indemnified Loss payable by Seller under this
Agreement shall not exceed $2,186,037.96. For
purposes of this Section 11, the value of the Shares
will be equal to the greater of $2.50 per share of
the fair market value of the Shares calculated, as of
the business day immediately preceding the date on
which such payment is to be made by multiplying the
number of shares to be redelivered to Purchaser by
the Market Price of such Shares. For example, if the
Indemnified Losses are determined by Purchaser to be
$150,000.00 and the Market Price for the Purchaser's
Stock is $3.00 per share, the parties agree that the
Seller shall return 50,000 Shares to the Purchaser.
Conversely, if the Market Price is $2.00 per share,
then the Seller would return 60,000 shares ($150,000
/ $2.50 = $60,000).
1.12 The Purchase Agreement is hereby amended to add the following
new paragraph 20:
Certain Definitions. For purposes of this Agreement,
the following terms shall have the meaning ascribed to them
below:
"Affiliate" means any person or entity that directly, or
indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the person or
entity specified. For purposes of this definition, control of
a person or entity means the power, direct or indirect, to
direct or cause the direction of the management and policies
of such person or entity whether by contract or otherwise and,
in any event and without limitation of the previous sentence,
any person or entity owning ten percent (10%) or more of the
voting securities of another person or entity shall be deemed
to control that person or entity.
"Assets" means all assets and properties of every kind,
nature, character and description (whether real, personal or
mixed, whether tangible or intangible, whether absolute,
accrued, contingent, fixed or otherwise and wherever
situated), including the goodwill related thereto, operated,
owned or leased by the Company, including, without limitation,
cash, cash equivalents, stocks, securities, evidences of
indebtedness owing to the Company, accounts and notes
receivable, chattel paper, documents, instruments, general
intangibles, real estate, equipment, inventory, goods and
intellectual property.
"Common Stock" means the common stock of TeleData World
Services, Inc., par value $.001 per share or any successor
security thereto.
"Liabilities" means all obligations of any person or entity
(i) for borrowed money, (ii) evidenced by notes, bonds,
debentures or similar instruments, (iii) for the deferred
purchase price of goods or services (including trade payables
and other accruals incurred in the ordinary course of
business, (iv) under capital leases, (v) in the nature of
guarantees of the obligations described in clauses (i) through
(iv) above
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of any other person or entity, and (g) any other obligations
and other liabilities of the person or entity (including,
without limitation, as a successor to any person or entity,
and, in the case of each of the clauses (i) through (vi)
above, whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"Market Price" shall be determined on the basis of: (i) the
average sale price of the Purchaser's Common Stock over the
ten (10) trading days prior to the applicable calculation date
on the principal stock exchange, or the National Association
of Securities Dealers' Automated Quotation National Market
System ("NASDAQ/NMS"), as the case may be, on which such
Common Stock is then listed or admitted to trading, (ii) if
the Common Stock is not then listed or admitted to trading on
any stock exchange or the NASDAQ/NMS, as the case may be, the
average of the last reported closing bid and asked prices on
such day in the over-the-counter market, as furnished by the
NASDAQ system or the National Quotation Bureau, Inc., (iii) if
neither such corporation at the time is engaged in the
business of reporting such prices, as furnished by any similar
firm then engaged in such business, or (iv) if there is no
such firm, as furnished by any member of the National
Association of Securities Dealers ("NASD") selected by the
Purchaser which is not an Affiliate of the Purchaser or the
Seller.
1.13 The Purchase Agreement is hereby amended to add the following
new paragraph 21:
Assignment: Seller may assign its obligations to sell the
stock of SecurFone, Inc. to SecurFone Services, Inc., PROVIDED
THAT all references herein to the other obligations of Seller
shall be the joint and several obligations of SecurFone
America, Inc. and SecurFone Services, Inc.
1.14 Exhibit "G" to the Purchase Agreement is hereby deleted in its
entirety and such Exhibit "G" is replaced with Exhibit "G" attached to this
Agreement.
Article 2
Miscellaneous
2.1 EFFECTIVE DATE. The effective date the amendments to the
Purchase Agreement set forth in this Amendment shall become effective as of the
date first written above.
2.2 FEES AND EXPENSES. Each party hereto shall bear their own fees
in connection with the preparation and execution of this Amendment.
2.3 NO OTHER CHANGES. Except as expressly amended hereby, all
representations, warranties, terms, covenants and conditions of the Purchase
Agreement and the other ancillary agreements contemplated thereby shall remain
unamended and unwaived and shall continue in full force and effect.
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2.4 SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
(Signatures begin on next page)
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WITNESS the hand and seal of each of the undersigned as of the date
first written above.
SECURFONE AMERICA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
SECURFONE SERVICES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
TELEDATA WORLD SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
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