EXHIBIT 10
SALE AND PURCHASE AGREEMENT
BY AND BETWEEN AFFORDABLE TELECOMMUNICATIONS
TECHNOLOGY CORPORATION AND ROY MARSH
MAY __, 2000
This Sale and Purchase Agreement ("Agreement") dated as of the ____day of
May, 2000, by and between Affordable Telecommunications Technology Corporation,
a Texas Corporation, ("Purchaser"), and ROY MARSH ("The Seller").
INTRODUCTION
The Company desires to sell and Purchaser desires to purchase all of the
outstanding stock of Beeper Boutique, Inc. ("Company") on the terms and
conditions set forth in this Agreement. In consideration of the mutual promises
of the parties in reliance on the representations, warranties, covenants, and
conditions contained in this Agreement and for other good and valuable
consideration, the parties agree as follows:
ARTICLE 1
SALE
1.01 The Seller agrees to sell, convey, transfer, assign, and deliver to
Purchaser, and Purchaser agrees to purchase or accept from The Seller, all of
the shares of stock in Beeper Boutique, Inc., and Purchaser assumes the leases
in Exhibit "1" and all accounts payable and other obligations that may become
payable.
Consideration for Sale
ATTC hereby acknowledges payment of a consulting fee of $ 25,000 to Beeper
Boutique on December 2, 1999;
ATTC hereby acknowledges the payment of an extension fee of $ 35,000 to
Beeper Boutique on December 13, 1999;
1.02 In consideration of the sale and transfer of the shares of The Company
and the representations, warranties, and covenants of The Company set forth in
this Agreement, Purchaser shall pay to The Seller:
$10,000.00 in cash, 1:00 P.M. on the date of closing;
$300,000.00 note payable, including principal and interest, accruing at 12%
per annum as follows: Beginning June 26, 2000, three (3) monthly payments of
accumulated interest only on the 26th day of each month, then beginning in the
fourth month, twenty (20) monthly payments of 6673.33 with the balance of
principle and interest due May 26, 2002.
Five hundred thousand (500,000) shares of ATTC stock to be registered
concurrent with the next registration of stock or debt instruments, such
registration to take place on or before December 31, 2000.
All notes given as part of the purchase price shall be secured by a
purchase money security interest in the assets transferred pursuant to this
Agreement in the form attached hereto as Exhibit "26", and further secured by a
security interest in the two million (2,000,000) shares of ATTC stock owned by
Steven Bethke.
Purchaser is required to pay twenty percent (20%) of any new debt or equity
issues, as principle within two (2) business days funding until the note
referred to herein is repaid in full. Also such payment will reduce the
principle obligation owed from Buyer to The Seller as set out herein.
Closing
1.03 The parties agree to use their best efforts to consummate this
transaction ("Closing"). The Closing shall take place at the offices of Timothy
C. Power, 20202 Highway 59 North, Suite 170, Humble, Texas 77338 on May 30,
2000.
ARTICLE 2
THE SELLER'S REPRESENTATIONS AND WARRANTIES
The Seller hereby represents and warrants to Purchaser that the following
facts and circumstances are and at all times up to the Closing Date will be true
and correct:
Organization
2.01 The Seller represents that Beeper Boutique, Inc. is a Corporation in
good standing to do business in the state of Texas.
Ownership of Company
2.02 The Seller is an individual with full right to sell or dispose of any
assets as The Seller may choose. No other persons or entities, have any claim,
right, title, interest, or lien in, to, or on any of the stock which is subject
of this sale agreement, except as set forth in Exhibit "3" hereto attached to
this Agreement.
Management of Company
2.03 Exhibit "4" attached to this Agreement contains a true and correct
list of all employees of The Company, and their rate of compensation.
Financial Statements
2.04 Exhibit "5" attached to this Agreement, contains the financial
statements of The Company. The financial statements consist of balance sheets
and statements of income and retained earnings for two years ending December 31,
1998, and unaudited statements for the year ending December 31, 1999 ("Financial
Statements"). The Financial Statements present fairly and accurately the
financial position, results of operations, and changes in financial position of
the Company at the dates and for the periods covered, in each case consistently
applied accounting principles. There are no known liabilities or obligations of
the Company accrued , absolute, contingent, inchoate, or otherwise that arose
out of or relate to any matter, act, or omission occurring from March 31, 2000,
to the date of this Agreement, other than liabilities or obligations incurred in
the normal course of business.
Taxes
2.05 Most federal, state, local, and foreign income, ad valorem, excise,
sales, use, payroll, unemployment, and other taxes and assessments ("Taxes")
that are due and payable by the Company have been properly computed, duly
reported, fully paid, and discharged. There are unpaid Taxes that are or could
become a lien on the property or assets of the Company or require payment by the
Company. All current Taxes not yet due and payable by the Company have been
properly accrued on the balance sheets of the Company.
Inventories
2.06 Substantially all inventories owned by the Company ("Inventories")
consist of items of a quality and quantity usable and saleable in the ordinary
course of business by the Company. No items included in the Inventories have
been pledged as collateral or are held by the Company on consignment from
others.
Except as stated in Exhibit 1 and Exhibit 3, no personal property used
by the Company In connection with its business is held under any lease, security
agreement, conditional sales agreement, conditional sale contract, or other
title retention or security agreement or is located any place other than in the
possession of the Company.
Title to Assets and Properties
2.07 The Seller has good and marketable title to all stock that are
material to this transaction. All of these assets are free and clear of
mortgages, liens, charges, encumbrances, equities, claims, easements, rights of
way, covenants, conditions, and restrictions, except for the following:
1. Those disclosed in Company's balance sheet as of March 31, 2000,
included in the Financial Statements, or in the Exhibits to this Agreement;
2. The lien of current Taxes not yet due and payable;
3. Possible minor matters that, in the aggregate, are not substantial in
amount and do not materially detract from or interfere with the present or
intended use of any of the assets and properties and will not materially impair
business operations;
4. Leases and liens disclosed in Exhibits 1 and 3.
All real property and tangible personal property of The Company are in good
operating condition and repair, ordinary wear and tear excepted. The Company is
in possession of all premises leased to The Company from others. Except as set
forth in the appropriate Exhibit listing such assets, no officer, director, or
employee of the Company, not any spouse, child, or other relative of these
persons owns or has any interest, directly or indirectly, in any of the real or
personal property owned by or leased by The Company in any copyrights, patents,
trademarks, trade names, or trade secrets licensed by The Company. The Company
does not, to its knowledge, occupy any real property in violation of any law,
regulation, or decree that would materially adversely affect its business or
future prospects.
Customers and Sale
2.08 Exhibit 8 attached to this Agreement is a correct and current list of
all customers of the Company, as of April 21, 2000. Most customers are not on
long-term contracts. Customers may cancel service at any time. A significant
number of customers cancel service each month.
Contracts
2.09 Exhibit 10 attached to this Agreement contains true and correct lists,
with copies when available, of all material oral and written contracts or
arrangements obligating The Company, including without limitation, union
contracts, which in any way affects The Company's ability to transfer the assets
being conveyed pursuant to this Agreement. Buyer is responsible for obtaining
consent or approvals required from the third party with respect to this
transaction.
Laws and Regulations
2.10 The Company, to its knowledge, is not in violation of any law,
regulation, court order, or order of any federal, state, municipal, foreign, or
other governmental department, board, agency, or instrumentality, wherever
located, that would materially adversely affect its business or future
prospects.
Litigation
2.11 Except as disclosed in Exhibit "11" attached to this Agreement, there
are no pending, outstanding, or threatened claims; legal, administrative, or
other proceedings; or suits, investigations, inquiries, complaints, notices of
violation, judgments, injunctions, orders, directives, or restrictions against
or involving The Company or any of the assets, properties, or business of The
Company or any of The Company's officers, directors, employees, or stockholders
that will materially adversely affect The Company, its assets, properties, or
business. To the best of The Company's knowledge and belief, after conducting a
due diligence investigation, there is no basis for any of these proceedings
against any of The Company's assets, properties, persons. or entities. The
Company has furnished or made available to Purchaser copies of all relevant
court papers and other documents relating to the matters set forth in Exhibit
11. Except as set forth in Exhibit 11, The Company is not presently engaged in
any legal action to recover moneys due The Company or for damages sustained by
The Company.
Fringe Benefit Plans - Employment Contracts
2.12 All employees of The Company are leased through TRENDSETTER STAFFING,
INC. and all payments to TRENDSETTER STAFFING, INC. are current.
Receivables
2.13 Exhibit 8 attached to this Agreement contains a true and correct list
of all accounts receivable of The Company.
Trade Names, Trademarks, Copyrights, and Patents
2.14 Exhibit 16 attached to this Agreement contains a true and correct list
of all trademarks, licenses, trademark registrations or applications, service
marks, trade names, copyrights, copyright registrations or applications, trade
secrets, patents, inventions, industrial models, processes, designs, formulae,
and applications for patents (collectively called "Intellectual Properties")
owned by The Company. The Company has the right and authority to use all of
these Intellectual Properties as necessary to enable The Company to conduct its
business in the manner presently conducted. The use of these Intellectual
Properties does not conflict with, infringe, or violate any patent, copyright,
or other proprietary right of any person, firm, or corporation.
Business Operations
2.15 The business operations of The Company are and have been for the past
two (2) years in material compliance with all laws, treaties, rulings,
directives, and similar regulations of all government authorities having
jurisdiction over such business insofar as failure to comply could materially
adversely affect The Company's business and future prospects.
Authority
2.16 The Seller has full power and authority to execute, deliver, and/or
consummate this Agreement, subject to the conditions to Closing set forth in
this Agreement.
Full Disclosure
2.17 No written representation, warranty, or covenant made to Purchaser in
this Agreement, nor any document, certificate, exhibit, or other information
given or delivered to Purchaser pursuant to this Agreement contains or will
contain any untrue statement of a material fact, or omits or will omit a
material fact necessary to make the statements contained in this Agreement or
the matters disclosed in the related documents, certificates, information, or
exhibits not misleading. Purchaser has performed due diligence on operation of
the Company and is aware the Company is not profitable.
Brokers
2.18 The Company has not retained, consented to, or authorized any broker,
investment banker, or third party to act on The Company's behalf, directly or
indirectly, as a broker or finder in connection with the transactions
contemplated by this Agreement.
ARTICLE 3
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants to The Company that:
Authority
3.01 Purchaser has full power and authority to execute, deliver, and
consummate this Agreement subject to the condition to Closing set forth in this
Agreement. All corporate acts, reports, and returns required to be filed by
Purchaser with any government or regulatory agency with respect to this
transaction have been or will be properly filed prior to the Closing Date. No
provisions exist in any contract, document, or other instrument to which
Purchaser is a party or by which Purchaser is bound that could be violated by
consummation of the transactions contemplated by this Agreement.
Broker
3.02 Neither Purchaser, nor any of Purchaser's officers, directors, or
employees, has retained, consented to, or authorized any broker, investment
banker, or third party to act on its behalf, directly or indirectly, as a broker
or finder in connection with the transactions contemplated by this Agreement.
ARTICLE 4
CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE
The obligation of Purchaser to Close under this Agreement is subject to
each of the following conditions (any one of which may, at the option of
Purchaser, be waived in writing by the Purchaser) existing on the Closing Date,
or such earlier date as the context may require.
Representations and Warranties
4.01 Each of the representations and warranties of The Seller in this
Agreement, the disclosures contained in the exhibits to this Agreement, and all
other written information delivered under this Agreement shall be true in all
material respects at and as of the Closing Date as though each representation,
warranty, and disclosure were made and delivered at and as of the Closing Date.
Opinion of Counsel
4.02 The Seller shall deliver to Purchaser an opinion of Timothy C. Power
addressed to Purchaser and dated as of the Closing Date in substantially the
form set forth in Exhibit "18" attached to this Agreement.
Compliance with Conditions
4.03 The Seller and Purchaser shall comply with and perform all agreements,
covenants, and conditions in this Agreement required to be performed and
complied with by each of them. All requisite action (corporate and other) in
order to consummate this Agreement shall be properly taken by The Seller and
Purchaser. The Company and Purchaser shall deliver to each other a compliance
certificate verifying and warranting The Company's and Purchaser's compliance.
Suit or Proceeding
4.04 No suit or proceeding, legal or administrative, relating to any of the
transactions contemplated by this Agreement has been overtly threatened or
commenced that, in the sole discretion of Purchaser and its counsel, or The
Seller and its counsel, would make it inadvisable for either Purchaser or The
Seller to Close this transaction.
Consents of Others
4.05 Purchaser is responsible for obtaining written consents from all
persons listed in Exhibit 10 to this Agreement.
Inventories Appraisal
4.06 Purchaser has had the opportunity to retain an appraiser or certified
public accountant satisfactory to Purchaser to conduct an appraisal of all
inventories of Company prior to closing.
ARTICLE 5
CONDITION TO THE COMPANY'S OBLIGATION TO CLOSE
The obligation of The Company to Close under this Agreement is subject to
each of the following condition (any one of which at the option of The Company
may be waived in writing by The Company) existing on the Closing Date.
Corporate Action
5.01 Purchaser shall take appropriate corporate action regarding this
transaction which shall be evidenced by resolutions of its board of directors
and shareholders and certified by Purchaser's corporate secretary, authorizing
Purchaser to enter into and complete this transaction.
Governmental Approvals
5.02 All necessary government approvals regarding this transaction shall be
received prior to the Closing Date, in substantially the form applied for and to
the reasonable satisfaction of Purchaser and its counsel.
Opinion of Counsel
5.03 Purchaser shall deliver to The Seller the opinion of Leibman &
Associates P.C. dated as of the Closing Date in substantially the form set forth
in Exhibit 23 attached to this Agreement.
ARTICLE 6
PARTIES OBLIGATIONS AT CLOSING
The Company's Obligations at the Closing
6.01 At the Closing, The Company shall execute, if appropriate, and shall
deliver to Purchaser: (1) A bill of sale in a form acceptable to Purchaser
sufficient to convey to Purchaser all rights, title, and interest in the stock
being sold to Purchaser under the terms of this Agreement; (2) All documentation
in the possession of The Company necessary to operate Beeper Boutique, Inc.
Purchaser's Obligation at Closing
6.02 At the Closing, Purchaser shall deliver to Seller against delivery of
the items specified in Paragraph 7.01 above, a certified or cashier's check in
the amount of $10,000.00 as part of the purchase price, payable to The Company
in federal funds currently available in Texas and an instrument of assumption in
form acceptable to The Company, sufficient to evidence the assumption of the
obligations and liabilities by Purchaser agreed to be assumed by Purchaser in
this Agreement, and funds equal to the balance of the account at Southwest Bank
of Texas transferred pursuant to this Agreement, and notes and Security
Agreements in a form acceptable to the Seller as described in 1.02 hereof.
ARTICLE 7
THE COMPANY'S OBLIGATION AFTER THE CLOSING
Preservation of Goodwill
7.01 Following the Closing Date, Seller will restrict its activities so
that Purchaser's reasonable expectation with respect to the goodwill, business
reputation, employee relations, and prospects connected with the assets and
properties purchased under this Agreement will not be materially impaired.
Access to Records
7.02 From and after the Closing Date, The Seller shall allow Purchaser and
its counsel, accountants, and other representatives access to records that are,
after the Closing Date, in the custody and control of The Seller. The Seller
shall give access as Purchaser reasonably requires in order to comply with its
obligations under the law or when reasonably necessary for the business
operations of The Company.
Non-Solicitation of Employees
7.03 Prior to the third anniversary of the Closing Date, The Company shall
not solicit any employee of Purchaser or any employee of The Company retained by
the Purchaser after the Closing Date to leave employment with the Purchaser.
Purchaser shall issue ATTC stock to company employees in amounts noted in
Exhibit ____.
ARTICLE 9
GENERAL PROVISIONS
Survival of Representations, Warranties, and Covenants
9.01 The representations, warranties, covenants, and agreements of the
parties contained in this Agreement or contained in any writing delivered
pursuant to this Agreement shall survive the Closing Date.
Notices
9.02 All notices that are required or that may be given pursuant to the
terms of this Agreement shall be in writing and shall be sufficient in all
respects if given in writing and delivered personally or by registered or
certified mail, return receipt requested, postage pre-paid as follows:
If to The Seller: Roy A. Marsh, III
2600 Southwest Freeway, Suite 500
Houston, TX 77098
If to Purchaser: Affordable Telecommunications Technology Corporation
6227 Southwest Freeway
Houston, TX 77074
Assignment of the Agreement
9.03 This Agreement shall be binding on and inure to the benefit of the
parties to this Agreement and their respective successors and permitted assigns.
This Agreement may not be assigned by any other party without the written
consent of all parties and any attempt to make an assignment without consent is
void.
Governing Law
9.04 This Agreement shall be construed and governed by the laws of the
state of Texas.
Amendments: Waiver
9.05 This Agreement may be amended only in writing by the mutual consent of
all of the parties, evidenced by all necessary and proper corporate authority.
No waiver of any provision of this Agreement shall arise from any action on in
action of any party, except an instrument in writing expressly waiving the
provision executed by the party entitled to the benefit of the provision.
Entire Agreement
9.06 This Agreement, together with any documents and exhibits given or
delivered pursuant to this Agreement, constitutes the entire agreement between
the parties to this Agreement. No party shall be bound by any communications
between them on the subject matter of this Agreement unless the communication is
(a) in writing, (b) bears a date contemporaneous with or subsequent to the date
of this Agreement, and (c) is agreed to by all parties to this Agreement. On
execution of this Agreement, all prior agreements or understandings between the
parties shall be null and void.
Reliance Upon Representations and Warranties
9.07 The Parties mutually agree that, notwithstanding any right of
Purchaser to fully investigate the affairs of The Company and notwithstanding
any knowledge of facts determined or determinable by Purchaser pursuant to the
investigation or right to investigate, Purchaser may fully rely upon the
representations , warranties, and covenants made to Purchaser in this Agreement
and on the accuracy of any document, certificate, or exhibit given or delivered
to Purchaser pursuant to this Agreement.
Termination of Agreement
9.08 In the event that this Agreement is not closed by May 30, 2000, then
this Agreement shall terminate on and as of that date and Purchaser shall
forfeit any interest in amounts previously paid to The Company. Any termination
shall not affect in any manner any rights and remedies that any party to this
Agreement may have at the time of termination.
Signed on ___, 2000.
ROY A. MARSH, III AFFORDABLE TELECOMMUNICATIONS TECHNOLOGY CORP.
By:___________________________ By: _______________________________
ROY MARSH, III STEVEN H. BETHKE, Its President
SELLER PURCHASER
