UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 31,1997
SYSTEMS COMMUNICATIONS, INC.
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(Exact name of Registrant as specified in its charter)
FLORIDA 000-26668 65-0036344
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(State or other jurisdiction (Commission (I.R.S Employer
of incorporation or organization) file Number) Identification No.)
4707 140th Avenue North,Suite 107,CLEARWATER, FLORIDA 33762
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (813)530-4800
<PAGE> 2
SYSTEMS COMMUNICATIONS, INC.
Item 2. Acquisition or Disposition of Assets
On January 31,1997, the Company sold (i) the long-distance customer base
of Telcom Network, Inc. (TNI) and the existing customer receivables
of TNI for $76,000 in cash to Tel-Save Holdings, Inc. and (ii) the
customer base, agreements and work-in-process of TNI's utility audit
division for $25,000 in cash and a $500,000 convertible debenture issued
by the acquiring company (International TeleData Corporation). The
convertible debenture is due on January 31,1999 and bears interest at 8%
per annum beginning April 2, 1997 and through the date of conversion.
Such conversion is at the average bid and ask prices of the acquiring
company's common stock on the effective date of a registration statement
covering the shares issuable upon conversion of the convertible
debenture or, if converted upon maturity, at the average bid and ask
prices of the acquiring company's common stock on the maturity date.
On May 21, 1997, the Company entered into a rescission agreement with
Ameristar Telecommunications, Inc. (ATI) and the former shareholders
of ATI (Messrs. Armstrong and Woodward). The rescission agreement
provides for the return of all of the ATI stock acquired by the Company
in the August 1994 acquisition of ATI to the former shareholders of ATI
in return for approximately 685,000 shares of the Company's common stock
held by the former shareholders of ATI. The agreement also provides that
the former shareholders of ATI resign from the Board of Director's of
the Company and that the former shareholders of ATI execute a promissory
note in favor of the Company for the amount of ATI debt guaranteed by
the Company.
On June 9, 1997 the Company completed the spin-off of Health Management
Technologies, Inc. (HMT) to the former shareholders of HMT. The spin-
off of HMT allowed the Company to recover the inter-company debt it had
with HMT (approximately $450,000) and relieved the Company from a
contractual obligation to provide financing to HMT in excess of $1.0
million. Under the terms of the Agreement, the Company returned all of
the HMT stock acquired by the Company in the March 1996 acquisition of
HMT to the former shareholders of HMT in exchange for the shares of the
Company's common stock (309,837 shares) issued in connection with the
acquisition.
The Company and HMT also entered into a Cooperative Marketing and Option
Agreement, effective June 9, 1997. Under the Agreement SCI and HMT
granted each other for a period of five (5) years a non-exclusive right
to market each other's services and products. The agreement also granted
SCI a non-transferable option to purchase 667 shares of non-voting
common stock of HMT at a purchase price of $67.50 per share. The option
expires eighteen months from the effective date of the Agreement.
<PAGE> 3
After the sale, in January 1997, of substantially all of the assets of
TNI (excluding the award in arbitration against GE Capital
Communications Services Corporation (GECCS) and New Enterprise
Wholesale Services, LP (News), acquired by the Company in July 1995,
the rescission in May 1997 of the August 1994 acquisition of ATI and the
June 1997 spin-off of HMT, which was acquired by the Company in March
1996, the Company's remaining operations consist of National Solutions
Corporation (NSC). For the year ended December 31, 1996, NSC had net
revenues of $1,574,825 (unaudited) and an operating loss of $2,041,335
(unaudited), before adjustments, if any, which may be required to
reflect an impairment, if any, in the carrying value of NSC's assets,
consisting principally of intangibles. Under Statement of Financial
Accounting Standards No. 121, Accounting for Long-lived Assets and for
Long-Lived Assets to be Disposed of, the Company is required to review
the recoverability of long-lived assets and identifiable intangibles for
impairment and has engaged a third-party appraisal company to conduct an
independent appraisal of NSC's assets. Upon completion of the
independent appraisal, the Company believes that it will be in a
position to make the required adjustments, if any, to its financial
statements for the year ended December 31, 1996, file its Annual Report
on Form 10-K for the year ended December 31, 1996 and bring its
Quarterly Reports on Form 10-Q to a current status. See Item 5. below.
It is uncertain whether or not NSC's operating activities will generate
profitable operations in the future.
Item 5. Other Events
The Company has not filed its Annual Report on Form 10-K for the year
ended December 31,1996 or its Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997 and June 30, 1997. The reason for the
delay in filing these reports is to give the Company an opportunity to
obtain an independent appraisal of the carrying of NSC's assets and make
a determination as to any impairment loss that management believes may
be required to be recognized in the 1996 financial statements. The
Company acquired NSC, in October 1995, in a stock and cash transaction
valued at $10.5 million and has incurred significant operating losses
related to that business since that time. As of December 31, 1996, NSC
had total assets of $15,187,596 (before adjustments, if any, which may
be required to reflect an impairment, if any, in the carrying value of
those assets).
The Company is unable to predict when the appraisal of NSC's assets will
be completed or when the late filings with the SEC under the 1934 Act
will be completed but is pursuing resolution of these matters.
Effective June 18, 1997, the Department of the Army, Academy of Health
Services, Fort Sam Houston, agreed to renew the Cooperative Research and
Development Agreement (CRDA) with the Company (and NSC) for one
additional year. Under the CRDA renewal, the Company, with prior
approval of the Department of the Army, may utilize the licensed
software and CHAMPUS database to perform evaluation and analysis of
health care benefits for companies outside of the Automotive Industry
and their downline vendors in the United States.
<PAGE> 4
As discussed in Item 2. above, the Company is reorganizing its
corporate structure due to cash flow difficulties and is attempting to
raise additional capital in order to fund ongoing operations and market
the recently completed healthcare claims database and software analysis
products of NSC. The Company is experiencing cash flow difficulties due
to continuing operating losses and is not able to meet all of it's
short-term or long-term obligations as they become due (including those
required to enable the Company to meet all of its filing requirements
under the Securities Exchange Act of 1934).
Recent Management Changes
In January 1997, the founders and management of NSC (the Retiring
Management)resigned in a negotiated agreement between the Company and
Retiring Management. The material features of the agreement include (i)
the waiver by Retiring Management of (a) all accrued and unpaid bonuses
($695,214) and (b) $2,000,000 of the Company's common stock which was to
be issued to Retiring Management pursuant to the NSC acquisition
agreement and (ii) an undertaking by the Company to negotiate a license
agreement with Retiring Management for the exclusive use of NSC's
software and technology to service state governments west of the
Mississippi River(excluding Utah), Mexico and Central and South America,
subject to minimum performance standards, in consideration for a royalty
fee of one-half of one percent of all revenues derived by Retiring
Management from such license agreement. The license agreement is to
provide for (i) the sharing on a 50-50 basis, of the net profits (to be
defined) earned by NSC from the States of New York and New Jersey and by
Retiring Management from Mexico and (ii) a requirement that Retiring
Management use at a reasonable fee NSC as its sole supplier of data
processing services to process work derived from the license agreement
for a period of two years.
The Company is currently evaluating NSC's management structure and
reorganization thereof and in July 1997 appointed Mr. Hugh M. Gibbins,
Jr. as an Executive Vice President of the Company (responsible for the
sales and marketing activities of NSC). For the last five years Mr.
Gibbons has served as President of Gibbons Health Plan Recoveries,
Inc., President of and Principal of Health Plan Audit Services, Inc.,
President of H.M. Gibbons & Associates, Inc. and Executive Vice
President of HMG Health Care Auditing, Inc. Mr Gibbons has over 34
years of healthcare cost containment experience and has a Doctor of
Jurisprudence Degree from the University of Baltimore School of Law.
Prior to the appointment of Mr. Gibbons as Executive Vice President of
the Company, Lawrence A. Perin, MD, Vice President of Medical Affairs
since February 1996, together with corporate management, managed the
operations of NSC. Dr. Perin resigned as Vice President of Medical
Affairs in June 1997. In February 1997, the Board of Directors accepted
the resignation of Mr. Robert A. Alexander as the Company's Chief
Operating Officer.
<PAGE> 5
In April 1997, the Board of Directors accepted the resignations of Mr.
Stephen Williams, President and Chief Executive Officer, and Mr. Edwin
B. Salmon, Executive Vice President. Mr. Salmon continues to serve as
Chairman of the Board of Directors. In July 1997, Mr. Williams also
resigned from the Board of Directors (see Item 6.). Mr. Williams was
replaced as the Company's President and Chief Executive Officer, on a
temporary basis, until his resignation in June 1997, by Mr. Douglas
Drumwright, a partner in the turnaround firm of Alpha Partners.
In April 1997, Mr. Richard A. Sweet was added to the Company's Board of
Directors. For the past five years, Mr. Sweet has been a Branch Manager
for Insurance Adjustors and Services Corporation of Tampa, Florida and
from 1960 to 1986 was Branch Manager and Supervisor of Claims for
Indiana Insurance Co.
In May 1997, Mr. Larry R. Snapp was elected to the Company's Board of
Directors. For the last five years, Mr. Snapp was Vice President of
National City Bank of Indiana, a position he recently retired from.
In late June and early July 1997, several other changes in management
occurred. In addition to the resignations of Mr. Drumwright, the acting
President and CEO of the Company and Dr. Perin, Vice President of
Medical Affairs of NSC, the Board of directors accepted the resignation
of Mr. Robert Thompson, the Company's Chief Financial Officer since
February 1996, and the resignations of certain other non-officer
employees, named James T. Kowalczyk as President and a Director of the
Company, named Mr. Salmon as the Gibbons as Executive Vice President of
the Company (responsible for the sales and marketing activities of NSC).
Mr. Kowalczyk, for the past 30 years, was a co-founder, director and
franchiser in Pittsburgh, Pennsylvania with Budget Marketing, Inc. and
was a co-founder and senior officer of 2001/VIP Clubs of America.
<PAGE> 6
Legal Proceedings
The award in binding arbitration proceeding between and among TNI, GECCS
and News was entered in favor of TNI on October 10, 1996 for $1,250,000.
GECCS appealed the award to the U.S. Northern District Court of Georgia
on October 10, 1996 (Case No. 96-OV-2819JEC) on the grounds that the
arbitrators exceeded their powers by awarding TNI damages under the
contract between and among TNI, GECCS and News. The Company cannot
predict when the appeal will be heard but, has been advised by its
counsel that there is substantial likelihood the award will be upheld.
In May 1996, the Company informed the principals of Coast
Communications, Inc. ("CCI") that the Company was canceling the
acquisition of CCI and terminating all of the related acquisition
documents. The principals filed suit to enforce promissory notes
($300,000) which were issued by the Company. The notes and associated
documentation call for a return of CCI shares in the event of non-
payment. This matter has been referred by court order to mandatory
arbitration in the State of Florida. On May 21, 1997, the principals of
CCI filed a demand for arbitration with the American Arbitration
Association. The Company is in the process of filing a response to the
American Arbitration Association in connection with CCI's demand for
arbitration. The Company believes this action is without merit and
intends to vigorously defend the action.
The Company and its subsidiaries and Messrs. Williams and Salmon are
also parties in various administrative actions and legal proceedings,
including actions arising in connection with sales of the Company's
securities. These legal proceedings and administrative actions could
have an adverse impact on determine the impact of resolution of these
matters on its financial position or results of operations. Following
is a brief description of such administrative actions and legal
proceedings.
On April 15, 1997, Mr. Ken Lame', as Plaintiff, filed an action in the
United States District Court, District Court of Utah, Central Division
(Case No. 2:97CV0292W) against the Company and NSC, as Defendants. This
action arises from a consulting contract between Mr. Lame' and the
Company. The action seeks approximately $250,000, plus interest for
payments due under the consulting agreement. The Company believes this
action to be without merit and intends to vigorously defend the action.
On January 10, 1997, Mr. James Gary May, as Plaintiff, filed an action
in the Circuit Court of the Tenth Judicial Circuit in and for Polk
County, Florida (Case No. GC-G-97-80-Section 07) against the Company and
NSC, as Defendants. This action arises out of a loan agreement entered
into between NSC and Mr. May. The principal amount of the loan
agreement is $100,000 and is in default. This action seeks a judgment
for the principal amount of the loan, plus interest and attorney's fees.
The Company is pursuing settlement of this action.
<PAGE> 7
On January 21, 1997, Mr. Telford Walker, as Plaintiff, filed an action
in the Superior Court in the State of California in and for the County
of Orange (Case No. 774312) against the Company, Mr. Steve Williams and
Mr. Ed Salmon, as Defendants. This action arises from a loan agreement
between the Company and Mr. Telford Walker. The principal amount of the
loan agreement is $200,000 and is in default. This action also alleges
that Messrs. Williams and Salmon made inaccurate representations to Mr.
Walker in the course of negotiating the loan agreement. The Company is
pursuing settlement of this action.
On May 1, 1997, Mr. John Jassy, as Plaintiff, filed an action in the
Circuit Court of the Sixth Judicial Circuit in and for Pinellas County,
Fl., Civil Division (Case No. 97-3103-CI-20) against the Company, Mr.
Steve Williams and Mr. Ed Salmon, as Defendants. This action alleges
that numerous misrepresentations and deceptive statements were made to
Mr. Jassy and certain family members of Mr. Jassy to induce them to
purchase the Company's securities. The action seeks rescission of those
security purchases, payment of compensation due Mr. Jassy during his
employ by the Company as an executive officer and repayment of a loan
made to Mr. Williams by Mr. Jassy. This action seeks approximately
$450,000, plus interest and attorney's fees. The Company believes this
action to be without merit and intends to vigorously defend the action.
On May 21, 1997, Mr. Jeff Good, as Plaintiff, filed an action in the
United States District Court, Southern District of Iowa, Davenport
Division (Case No. 3-97-CV-80085) against the Company for amounts due
Mr. Good under an employment agreement between Mr. Good and one of the
Company's subsidiaries (which is no longer conducting business). This
action seeks compensation and benefits under the employment agreement in
excess of $200,000. The Company believes this action to be without
merit and intends to vigorously defend the action.
Mr. John Looney, a former principal and executive officer of NSC, has
filed an action with the Texas Employment Commission (Claim No. 97-
004016-1) against SCI and NSC for unpaid salary, bonuses and benefits.
The Company believes this action is without merit and intends to
vigorously defend the action. The total amount claimed by Mr. Looney is
in excess of $700,000.
Item 6.
Stephen E. Williams and David J. Olivet resigned as Directors of Systems
Communications, Inc., effective July 2, 1997 and June 27, 1997,
respectively.
Both Messrs. Williams and Olivet notified the registrant in their
respective resignation letters to the Board of Directors that each had
certain disagreements with the registrant on matters relating to the
registrants operating policies and practices. Both Messrs. Williams and
Olivet alleged that the Company's Board of Directors was interfering
with the efforts of management to reverse the registrant's operation
losses, that the Board has disregarded the interests of creditors,
shareholders and management and that certain Board members have taken
actions without prior approval or full consideration of the Board.
<PAGE> 8
Both Messrs. Williams (until his resignation as President & CEO of the
Company in April 1997 and as Director in July 1997) and Olivet (until
his resignation as President of TNI in February, 1997 and as Director in
June 1997) were executive officers of the Company or a subsidiary of the
Company and, in such capacities, had day-to-day influence over the
operating policies and practices of the Company. Both Messrs. Williams
and Olivet also made operating decisions that, as a matter of formality,
were subsequently submitted to the Board for ratification. Each of
Messrs. Williams and Olivet appear to be confused about the
responsibilities of a member of the Board of Directors versus those of
an executive officer.
Mr. Williams also alleges that the Company has no Operational or
Business Plan. This is false. Mr. Williams was present at the May 27,
1997 meeting of the Board of Directors at which meeting management
presented a Business Plan to the Board. The Company is pursuing
implementation of that plan and is recruiting personnel to carry-out the
plan.
Mr. Williams also refers to a special Board meeting of June 18, 1997.
The meeting of June 18, 1997 was not a meeting of the Board. At the
meeting, three (3) of five (5) directors were present, including Mr.
Williams. Notice was neither given nor waived and a director's meeting
was not convened. Several creditors were also present.
As a general comment, management has sought written proposals from
persons, including individual directors, who have been critical of the
Company's operations. To date, no plan has been submitted by any such
person or group of persons.
<PAGE> 9
Item 7. Financial Statements And Exhibits
(c)Exhibits
(10) 7. Employment Contracts
(j) Karen Wolfe
(k) James W. Wolfe
(l) Eric R. Wolfe
(10) 35. Heads of Agreement for change in Management of National
Solutions Corporation.
(10) 36. Rescission Agreement, dated May 21, 1997 by and between the
Company, Ameristar Telecommunications, Inc., Mark Woodward
and Russell Armstrong.
(10) 37. Promissory note dated May 21, 1997 between ATI and the
Company.
(10) 38. Agreement dated as of June 9,1997 by and among the Company,
Karen Wolfe and Eric Wolfe, Eric Wolfe, on behalf of his
infant son, Tyler Wolfe, and Lori Wolfe, wife of Eric
Wolfe, on behalf of herself and her infant son Tyler Wolfe.
(10) 39. Cooperative Marketing and Option Agreement dated June 9,
1997 between HMT and the Company.
(10) 40. Purchase and Sale Agreement between TNI and International
TeleData Corporation dated January 31, 1997.
(10) 41. Form of Convertible Debenture in the amount of $500,000
between International TeleData Corporation and TNI.
(10) 42. Memorandum dated June 16, 1997 from the Department of the
Army regarding renewal of the Cooperative Research and
Development Agreement between the Company and the
Department of the Army.
(17) 1. Resignation Letter of Stephen Williams.
(17) 2. Resignation Letter of David J. Olivet
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYSTEMS COMMUNICATIONS, INC. Date: July 25, 1997
By /s/ Edwin B. Salmon, Jr.
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Edwin B. Salmon, Jr
Secretary
<PAGE> 11
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
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(10) 7. Employment Contracts
(j) Karen Wolfe
(k) James W. Wolfe
(l) Eric R. Wolfe
(10) 35. Heads of Agreement for change in Management of National
Solutions Corporation.
(10) 36. Rescission Agreement, dated May 21, 1997 by and between the
Company, Ameristar Telecommunications, Inc., Mark Woodward
and Russell Armstrong.
(10) 37. Promissory note dated May 21, 1997 between ATI and the
Company.
(10) 38. Agreement dated as of June 9,1997 by and among the Company,
Karen Wolfe and Eric Wolfe, Eric Wolfe, on behalf of his
infant son, Tyler Wolfe, and Lori Wolfe, wife of Eric
Wolfe, on behalf of herself and her infant son Tyler Wolfe.
(10) 39. Cooperative Marketing and Option Agreement dated June 9,
1997 between HMT and the Company.
(10) 40. Purchase and Sale Agreement between TNI and International
TeleData Corporation dated January 31, 1997.
(10) 41. Form of Convertible Debenture in the amount of $500,000
between International TeleData Corporation and TNI.
(10) 42. Memorandum dated June 16, 1997 from the Department of the
Army regarding renewal of the Cooperative Research and
Development Agreement between the Company and the
Department of the Army.
(17) 1. Resignation Letter of Stephen Williams.
(17) 2. Resignation Letter of David J. Olivet
<PAGE> 12
Karen Wolfe Employment Agreement
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this 12th
day of March, 1996 by and between SYSTEMS COMMUNICATIONS, INC., a Florida
corporation, located at Suite 300, 2575 Ulmerton Road, Clearwater, FL 34622
(hereinafter called "SCI") and HEALTH MANAGEMENT TECHNOLOGIES, INC., a
California corporation, located at 1150 Moraga Way, Suite 150, Moraga, CA 94556
(hereinafter called "HMT") and KAREN WOLFE (hereinafter called "Employee").
WHEREAS, SCI has acquired HMT as a wholly owned subsidiary of SCI; and
WHEREAS, SCI and HMT desire to retain Employee in the position of
President of HMT; and
WHEREAS, SCI, HMT and Employee desire to enter into this Agreement to
assure HMT of the services of Employee for the benefit of HMT and to set forth
the respective rights and duties or the parties hereto;
WHEREAS, HMT is in the business of developing and implementing software to
track and analyze healthcare provided to individuals for use by employers and
insurance companies throughout the United States (hereinafter called the
"Business");
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
terms and conditions set forth herein, SCI, HMT and Employee agree as follows:
ARTICLE I
Employment
1.1 Employment and Title. HMT hereby employs Employee, and Employee
hereby accepts such employment as the President of HMT, all upon the terms and
conditions set forth herein.
1.2 Description of Services to be Performed.
(a) The duties to be performed by Employee are : Develop business plan and
financial proforma, Strategic product development and individual product
design, write specifications for product design, review and negotiate Software
License and other Agreements, assist in marketing plan and execution, respond
to RFP's, assist in sales and exhibiting shows, supervise client services and
training, professional speaking presentations, consulting and training
services, managing user and training manuals, product quality and testing,
supervise bookkeeping and accounting, supervise client and prospect
communications, supervise development advertising and marketing materials,
supervise client services personnel.
<PAGE> 13
(b) During the terms (as hereinafter defined) hereof, Employee agrees to
perform diligently and in good faith such duties and services for HMT as are
consistent with the position held by Employee under the direction of the Board
of Directors of SCI (the "Board of Directors"). Employee agrees to devote her
best efforts and all of her full business time, energies and abilities to the
services to be performed hereunder and for the exclusive benefit of the HMT.
Employee shall be vested with such authority as is generally concomitant with
the position to which she is appointed.
(c)Employee shall communicate and report to SCI or its Board of Directors, on a
periodic (monthly as minimum) basis as to the operations, sales activity,
industry developments and prospects for the Business of HMT.
1.3 Location. The principal place of employment and the location of
Employee's principal office and ordinary place of work shall be in Moraga,
California, provided, however, Employee shall, when requested by the SCI or the
Board of Directors, or may, if she determines it to be reasonably necessary,
temporarily perform services outside said area as are reasonably required for
the proper performance of her duties under this Agreement.
1.4 Representations. Each party represents and warrants to the other that
she/it has full power and authority to enter into and perform this Agreement
and this her/its execution and performance of her Agreement shall not
constitute a default under or breach of any of the terms of any agreement to
which she/it is a party or under which she/it is bound. Each party represents
that no consent or approval of any third party is required for her or its
execution, delivery and performance of this Agreement or that all consents or
approvals of any third party required for her or its execution, delivery and
performance of this Agreement have been obtained.
ARTICLE II
2.1 Term. The term of Employee's employment hereunder (the "Term") shall
commence as of the date hereof (the "Commencement Date") and shall continue
from the date hereof for a period of three (3) years unless earlier terminated
by HMT or SCI's Board of Directors or Employee pursuant to the provisions of
this Agreement.
ARTICLE III
Compensation
3.1 Base Salary. As compensation for the services to be rendered by Employee,
HMT shall pay Employee, during the term of this Agreement, an annual base
salary of $110,000.00 which base salary shall (prorated for periods less than a
month) be paid in equal monthly installments. If the Employee is successful in
increasing the total revenue of HMT as outlined in Exhibits A-1, A-2 and A-3
attached hereto she will earn the performance bonus as outlined therein on each
anniversary of the commencement date herein.
<PAGE> 14
3.2 Benefits. Employee shall be entitled, during the Terms hereof, to the
same medical, hospital, dental and life insurance coverage as are available to
SCI's senior executive officers on the Commencement Date and shall receive
additional benefits (now being developed) as shall be made available to persons
of comparable salary and position in other subsidiaries of SCI.
Employee shall be entitled to four (4) weeks of fully paid vacation per year
during the term of this Agreement. Employee shall not be entitled to receive
monetary or other valuable consideration for vacation time to which he is
entitled but does not take. The timing of vacation periods shall be within the
discretion of HMT, reasonably exercised so as not to unnecessarily
inconvenience the Employee.
3.3 Withholding. Any and all amounts payable under this Agreement, including,
without limitation, amounts payable in the event of the termination hereof
under Article V hereof, are subject to withholding for such federal, state and
local taxes as HMT in its reasonable judgment determines to be required to any
applicable law, rule or regulation.
ARTICLE IV
Working Facilities, Expenses and Insurance
4.1 Working Facilities and Expenses. Employee shall be furnished with an
office at the principal office of HMT, or at such other working facilities and
secretarial and other assistance suitable to her position and adequate for the
performance of her duties hereunder. HMT shall reimburse Employee for all of
Employee's reasonable expenses incurred while employed and performing her
duties under and in accordance with the terms and conditions of the Agreement,
subject to Employee's full and appropriate documentation, including, without
limitation, receipts for all such expenses in the manner required pursuant to
HMT's policies and procedures and the Internal Revenue Code as in effect from
time to time.
4.2 Insurance. HMT or SCI may secure in its own name or otherwise, and at its
own expense, life, disability and other "key man" type insurance covering
Employee or Employee or others, and Employee shall not have any right, title
or interest in or to such insurance other than as expressly provided herein.
Employee agrees to assist in procuring such insurance by submitting to the
usual and customary medical and other examination to be conducted by such
physician(s) as the Board of Directors or such insurance company may designate
and by signing such applications and other written instruments as may be
required by the insurance companies to which application is made for such
insurance.
<PAGE> 15
ARTICLE V
Termination
5.1 Termination. This Agreement and the employment of Employee may be
terminated only as follows:
(a) at the election of the Employee;
(b) on the Scheduled Termination Date; or
(c) for cause as set forth on Paragraph 5.2.
5.2 Termination for Cause. "Employee shall be deemed to have been terminated
for cause by HMT if she is terminated because she has committed any material
act of dishonesty, has disclosed confidential information to third parties
without authority, has breached any of her obligations hereunder, is guilty of
gross carelessness or misconduct, has unjustifiably neglected her duties under
this Agreement, or has conducted herself in a manner substantially detrimental
to HMT or SCI. If employee is terminated for cause, she shall be entitled to
no severance pay and shall be entitled to no payment(s) that might otherwise be
owed to her even if she worked for the entire year. In addition, Employee
shall be entitled to receive any benefits which are, at the time of the
termination, vested pursuant to Paragraph 3.2 herein.
5.3 Effect of Termination. If the Employee voluntarily terminates his
employment, or in the event the employment is terminated upon death or
disability of the Employee:
(a) Salary shall be paid through the date of voluntary resignation or
termination.
(b) Employee shall be entitled to reimbursement for expenses accrued through
the date of termination in accordance with the provisions of Section 3.1
hereof.
(c) Employee shall receive such other benefits as may be provided under the
terms hereof and the benefit plans mentioned in Paragraphs 3.1 and 3.2 herein.
<PAGE> 16
ARTICLE VI
Covenant Not to Compete
6.1 Covenant Not to Compete. Upon termination of this Agreement by either the
voluntary resignation of Employee or a termination for cause by HMT or SCI,
Employee shall not directly or indirectly, (within any of the metropolitan
areas within the United States of America in which HMT at the time of such
termination is conducting Business, and also all metropolitan areas within the
United States of America in which Employee knows that HMT intends to extend and
carry on Business by expansion of its activities) enter into or engage in any
business in competition with the Business of HMT, as it now exists or may exist
at the time of termination of employment under this Agreement, either as an
individual on her own account, or as a partner, joint venture, employee, agent,
or salesperson for any person, or as an officer, director or stockholder of a
corporation, or otherwise for a period of three (3) years after the date of
termination of employment hereunder. It is agreed by the parties that this
covenant on the part of the Employee may be enforced against Employee by HMT or
SCI by injunction, as well as by all other legal remedies available to HMT or
SCI. It is agreed by the parties hereto that if any portion of this covenant
not to compete is held to be unreasonable, arbitrary or against public policy,
the covenant herein shall be considered divisible both as to time and
geographic area so that a lesser period of time or geographical areas shall
remain effective so long as the same is not unreasonable, arbitrary, or against
public policy. The parties hereto agree that, in the event any Court
determines the specified time period or the specified geographical area to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined by the courts to be reasonable,
non-arbitrary and not against public policy may be enforced against Employee by
injunction, as well as by all other legal remedies available to HMT or SCI.
6.2 Solicitation of Employees. For a period of three years after she is no
longer employed by HMT, the Employee will not, directly, or indirectly, either
as an individual, proprietor, stockholder, partner, officer, director, employee
or otherwise, solicit any officer, director, employee or other individual:
(A) To leave his or her employment or position with HMT;
(B) To compete with the Business of HMT or SCI; or
(C) To violate the terms of any employment; non-competition or similar
agreement with HMT or SCI.
For purposes of this paragraph, references to the Business of HMT or SCI shall
include the business of any subsidiary or affiliate of HMT or SCI.
<PAGE> 17
6.3 (a) Employee agrees that in the event of a breach of any term of this
Agreement, and more particularly, in the event of the breach of any of the
terms and provisions of this Article VI, HMT shall be entitled to secure an
order in any suit brought for that purpose to enjoin Employee from violating
any of the provisions of this Agreement and that, pending the hearing and the
decision on the application for such order, HMT shall be entitled to a
temporary restraining order without prejudice to any other remedy available to
HMT, all at expense of Employee. EMPLOYEE UNDERSTANDS THAT THE COVENANTS OF
THIS PARAGRAPH ARE THE ESSENCE OF THIS EMPLOYMENT AGREEMENT, WITHOUT WHICH NO
EMPLOYMENT AGREEMENT WOULD BE ENTERED INTO BY HMT AND/OR SCI.
(b) The provisions of Article VI shall in no event be construed to be an
exclusive remedy, and such remedy shall be held and construed to be cumulative
and not exclusive of any rights or remedies, whether in law or equity,
otherwise available under the terms of this Agreement or under the laws of the
United States or any state.
ARTICLE VII
Confidentiality and Intellectual
Property Rights
7.1 Confidentiality. The Employee will not at any time during or after her
employment by HMT, directly or indirectly, divulge, disclose or communicate to
any person, firm or corporation in any manner whatsoever, other than in the
normal course of performing her duties for HMT, any information concerning any
matter affecting or relating to HMT or the Business of HMT. While engaged as
an employee of HMT, the Employee may only use information concerning any
matters affecting or relating to HMT or the Business of HMT for a purpose which
is necessary to the carrying out of the Employee's duties as an employee of
HMT, and the Employee may not make use of any information of HMT after she is
no longer an employee of HMT. The Employee agrees to the above without regard
to whether all of the above matters will be deemed confidential, material or
important, it being stipulated by the parties that all information, whether
written or otherwise, regarding HMT's Business, including but not limited to,
Information regarding customers, customer lists, employees, employee salaries,
costs, prices, earnings, and any financial or cost accounting reports,
products, services, formulae, compositions, machines, equipment, apparatus,
systems, manufacturing procedures, operations, potential acquisitions, new
location plans, prospective and executed contracts and other business
arrangements, and sources of supply, is presumed to be important, material and
confidential information of HMT for purposes of this Agreement, except to the
extent that such information may be otherwise lawfully and readily available to
the general public. Employee agrees that all of this information is a trade
secret owned exclusively by HMT which shall at all times be kept confidential.
The Employee further agrees that she will, upon termination of her employment
with HMT, return to HMT all books, records, lists and other written, typed or
printed materials, whether furnished by HMT or prepared by the Employee, which
contain any information relating to HMT's Business, and the Employee agrees
that she will neither make nor retain any copies of such materials after
termination of employment. For purposes of this Article VII, references to the
Business or information of or relating to HMT shall include the information or
business of HMT, SCI and any subsidiary or affiliate of HMT or SCI, including
but not limited to, National Solutions Corporation.
<PAGE> 18
7.2 Business Opportunities and Patentable Devices. Employee will make full
and prompt written disclosure to HMT, SCI or their nominee of:
(A) Any business opportunity of which she becomes aware and which relates to
the Business of HMT, SCI or any of its subsidiaries or affiliates; and
(B) Any patentable device, apparatus, method, process or improvement which she
may invent or discover, either solely or jointly with any other person or
persons, resulting from or in the course of any work done by her as an employee
of HMT, or relating to the work or duties she was employed or assigned to
perform or actually does perform for HMT, or relating to any phase of HMT's
business or fields of interest in each case whether or not a patentable device,
apparatus, method, process or improvement is:
(1) Related to the project to which she is so assigned;
(2) Made with a contribution by HMT or the use of HMT or HMT-held
facilities, equipment, materials, allocated funds, proprietary
information, or services of HMT or SCI employees or associated
persons;
(3) Made during working hours; or
<PAGE> 19
(4) Made before, during or within a period of three years after the
period of Employee's employment pursuant to this Agreement.
7.3 Assignment of Intellectual Property Rights. The Employee assigns to HMT
and/or SCI the entire right, title and interest for the entire world in and to
all work performed, writing(s), formula(s), design(s), model(s), drawing(s),
software, photograph(s), design invention(s) and other invention(s) made,
conceived or reduced to practice or authored by Employee, either solely or
jointly with others, during the performance on this Agreement or with the use
of information, materials or facilities of HMT received or used by Employee
during the period Employee is retained by HMT under this Agreement or any
extensions or renewals thereof.
The Employee shall sign, execute and acknowledge or cause to be signed,
executed and acknowledged without cost, but at the expense of HMT, any and all
documents and to perform the acts as may be necessary, useful or convenient for
the purpose of securing to HMT and/or SCI or its nominees trade secret,
patent, trademark, or copyright protection throughout the world upon all such
work(s), writing(s), photograph(s), software, design invention(s), other
invention(s) and processes, title to which HMT may acquire in accordance with
the provisions of this clause.
7.4 Nonassertion of Rights by Consultant or Others. During and after the
term of this Agreement, Employee shall not assert or permit any other party to
assert against HMT and/or SCI, its subsidiaries, vendors and customers, mediate
and immediate, any patent or other rights with respect to which Employee has
the right to assert or license at the termination or expiration of this
Agreement because of the practice of any process or the development, use or
sale of any saleable or licensable product arising out of the subject matter of
this Agreement.
ARTICLE VIII
Miscellaneous
8.1 No Waivers. The failure of either party to enforce any provision of this
Agreement shall not be construed as a waiver of any such provision, nor prevent
such party thereafter from enforcing such provision or any other provision of
this Agreement.
8.2 Notices. Any notice to be given to the HMT, SCI and the Employee under
the terms of this Agreement may be delivered personally, by telecopy, telex or
other form of written electronic transmission, or by registered or certified
mail, postage prepaid, and shall be addressed as follows:
If to SCI: Systems Communications, Inc.
2575 Ulmerton Road
Suite 300
Clearwater, FL 34622
<PAGE> 20
If to HMT: Health Management Technologies, Inc.
1150 Moraga Way
Suite 150
Moraga, CA 94556
If to the Employee: Karen Wolfe
1150 Moraga Way
Suite 150
Moraga, CA 94556
Either party may hereafter notify the other in writing of any change in
address. Any notice shall be deemed duly given (i) when personally delivered,
(ii)when telecopied, telexed or transmitted by other form of written electronic
transmission, or (iii) on the day after it is mail by registered mail or
certified mail, postage prepaid, as provided herein.
<PAGE>
8.3 Severability. The provisions of this Agreement are severable and if any
provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provision, or
enforceable parts thereof, shall not be affected thereby.
8.4 Successors and Assigns. The rights and obligations of the HMT or SCI
under this agreement shall inure to the benefit of and be binding upon the
successors and assigns of HMT and/or SCI, including the survivor upon any
merger, consolidation or combination of HMT or SCI with any other entity.
Employee shall not have the right to assign, delegate or otherwise transfer any
duty or obligation to be performed by him hereunder to any person or entity.
8.5 Entire Agreement. This Agreement supersedes all prior agreements and
understandings between the parties hereto, oral or written, and may not be
modified or terminated orally. No modification, termination, or attempted
waiver shall be valid unless in writing, signed by the party against whom such
modification, termination or waiver is sought to be enforced. This Agreement
was the subject of negotiation by the parties hereto and their counsel. The
parties agree that no prior drafts of this Agreement shall be admissible as
evidence in any proceeding which involves the interpretation of any provision
accordance with the internal laws of the State of Florida without reference to
the conflict of law thereof.
8.7 Section Headlines. The section headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said sections.
8.8 Further Assurances. Each party hereto shall cooperate and shall take such
further action and shall execute and deliver such further documents as may be
reasonably requested by any other party in order to carry out the provisions
and purposes of this Agreement.
<PAGE> 21
8.9 Gender. Whenever the pronouns "her" or "hers" are used herein they shall
also be deemed to mean "she" or "hers" or "it" or "its" whenever applicable.
Words in the singular shall be read and construed as though in the plural and
words in the plural shall be read and construed as though in the singular in
all cases where they would apply.
8.10 Counterparts. This Agreement may be executed in counterparts, all of
which taken together shall be deemed one original.
8.11 Attorney's Fees. In the event that either party is required to engage
the services of legal counsel to enforce the terms and conditions of this
Agreement against the other party, regardless of whether such action results in
litigation, the prevailing party shall be entitled to reasonable attorneys'
fees, costs of legal assistants, and other costs from the other party, which
shall include any fees or costs incurred at trial or any appellate proceeding,
and expenses and other cost, including any accounting expenses incurred.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date first above written.
Attest: SYSTEMS COMMUNICATIONS, INC.
("SCI")
/s/Edwin B. Salmon___________ By:/s/ Stephen E.Williams_______
Its ___President & CEO__________
/s/ Susan Johnson Cox_______
Witness
Attest: HEALTH MANAGEMENT
TECHNOLOGIES, INC.
("HMT")
_____________________________ By: /s/ James W. Wolfe___________
Its Secretary___________________
_____________________________
Witness
"Employee"
_____________________________ /s/ Karen Wolfe_____________
Witness KAREN WOLFE
<PAGE> 22
Exhibit A-1
Incentive Compensation. In order to provide an incentive for the Employee to
manage the Employer's business in a manner expected to achieve the operation
performance and results set forth in the HMT Financial Projections for 1996
attached hereto as Exhibit B, the Employee will be entitled to receive
additional compensation in the form of shares of common stock of the
Employer's parent company, Systems Communications, Inc., as follows:
Equal To Or Exceeding
Total Revenues $2,854,440
Net Profit Before Income Tax $ 567,696
Value of Incentive Compensation $1,250,000
In the event either total revenues or net profit before income taxes are less
than the projected amount thereof, but not less in each case than seventy
percent thereof, the value of the incentive compensation shall be reduced to
an amount determined by the arithmetic average of the product derived from
multiplying $1,250,000 by the quotient of actual total revenues (but not more
than $2,854,440) divided by $2,854,440 and the product derived from
multiplying $1,250,000 by the quotient of the actual net profit before income
tax (but not more than $567,696) divided by $567,696. In the event either
total revenues or net profit before income taxes is less than seventy percent
of the projected amount, then no incentive compensation shall be paid. The
Employer's total revenues and net profit before income tax shall be
conclusively determined from the audited financial statements of the Employer
or, if only financial statements of the parent consolidate
<PAGE> 23
Exhibit A-2
Incentive Compensation. In order to provide an incentive for the Employee to
manage the Employer's business in a manner expected to achieve the operation
performance and results set forth in the HMT Financial Projections for 1996
attached hereto as Exhibit B, the Employee will be entitled to receive
additional compensation in the form of shares of common stock of the
Employer's parent company, Systems Communications, Inc., as follows:
Equal To Or Exceeding
Total Revenues $4,846,942
Net Profit Before Income Tax 1,204,552
Value of incentive Compensation 1,250,000
In the event either total revenues or net profit before income taxes are less
than the projected amount thereof, but not less in each case than seventy
percent thereof, the value of the incentive compensation shall be reduced to
an amount determined by the arithmetic average of the product derived from
multiplying $1,250,000 by the quotient of actual total revenues (but not more
than $4,846,942) divided by $4,846,942 and the product derived from
multiplying $1,250,000 by the quotient of the actual net profit before income
tax (but not more than $1,204,552) divided by $1,204,552. In the event either
total revenues or net profit before income taxes is less than seventy percent
of the projected amount, then no incentive compensation shall be paid. The
Employer's total revenues and net profit before income tax shall be
conclusively determined from the audited financial statements of the Employer
or, if only financial statements of the parent consolidated are audited, then
from the component thereof contributed by the Employer. The number of shares
of common stock issuable to the Employee as incentive compensation under this
Section shall be determined by dividing the less of $1,250,000 or such lesser
value of incentive compensation determined as provided herein by the average
of the high and low bid price quotations for such common stock in the primary
public market where such common stock is quoted or traded on the last day of
December 1996 for which such price quotations are available. The common stock
may be either registered under the Securities Act of 1933 or with transfer
thereof restricted under said Act subject to piggy-back registration
rights.
<PAGE> 24
Exhibit A-3
Incentive Compensation. In order to provide an incentive for the Employee to
manage the Employer's business in a manner expected to achieve the operation
performance and results set forth in the HMT Financial Projections for 1996
attached hereto as Exhibit B, the Employee will be entitled to receive
additional compensation in the form of shares of common stock of the
Employer's parent company, Systems Communications, Inc., as follows:
Equal To Or Exceeding
Total Revenues $8,000,682
Net Profit Before Income Tax 2,942,720
Value of incentive Compensation 1,500,000
In the event either total revenues or net profit before income taxes are less
than the projected amount thereof, but not less in each case than seventy
percent thereof, the value of the incentive compensation shall be reduced to
an amount determined by the arithmetic average of the product derived from
multiplying $1,500,000 by the quotient of actual total revenues (but not more
than $8,000,682) divided by $8,000,682 and the product derived from
multiplying $1,250,000 by the quotient of the actual net profit before income
tax (but not more than $2,942,720) divided by $2,942,720. In the event either
total revenues or net profit before income taxes is less than seventy percent
of the projected amount, then no incentive compensation shall be paid. The
Employer's total revenues and net profit before income tax shall be
conclusively determined from the audited financial statements of the Employer
or, if only financial statements of the parent consolidated are audited, then
from component thereof contributed by the Employer. The number of shares of
common stock issuable to the Employee as incentive compensation under this
Section shall be determined by dividing the less of $1,500,000 or such lesser
value of incentive compensation determined as provided herein by the average
of the high and low bid price quotations for such common stock in the primary
public market where such common stock is quoted or traded on the last day of
December 1996 for which such price quotations are available. The common stock
may be either registered under the Securities Act of 1933 or with transfer
thereof restricted under said Act subject to piggy-back registration
rights.
James W. Wolfe Employment Agreement
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this 12th
day of March, 1996 by and between SYSTEMS COMMUNICATIONS, INC., a Florida
corporation, located at Suite 300, 2575 Ulmerton Road, Clearwater, FL 34622
(hereinafter called "SCI") and HEALTH MANAGEMENT TECHNOLOGIES, INC., a
California corporation, located at 1150 Moraga Way, Suite 150, Moraga, CA 94556
(hereinafter called "HMT") and JAMES WOLFE (hereinafter called "Employee").
WHEREAS, SCI has acquired HMT as a wholly owned subsidiary of SCI; and
WHEREAS, SCI and HMT desire to retain Employee in the position of
Vice-President of HMT; and
WHEREAS, SCI, HMT and Employee desire to enter into this Agreement to assure
HMT of the services of Employee for the benefit of HMT and to set forth the
respective rights and duties or the parties hereto;
WHEREAS, HMT is in the business of developing and implementing software to
track and analyze healthcare provided to individuals for use by employers and
insurance companies throughout the United States (hereinafter called the
"Business");
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
terms and conditions set forth herein, SCI, HMT and Employee agree as follows:
ARTICLE I
Employment
1.1 Employment and Title. HMT hereby employs Employee, and Employee hereby
accepts such employment as the Vice-President of HMT, all upon the terms and
conditions set forth herein.
1.2 Description of Services to be Performed.
(a) The duties to be performed by Employee are: Develop and execute marketing
plan, sales, manage marketing and sales personnel, manage exhibit shows,
supervise accounting, manage receivables and payables.
During the terms (as hereinafter defined) hereof, Employee agrees to perform
diligently and in good faith such duties and services for HMT as are
consistent with the position held by Employee under the direction of the Board
of Directors of SCI (the "Board of Directors"). Employee agrees to devote his
best efforts and all of his full business time, energies and abilities to the
services to be performed hereunder and for the exclusive benefit of the HMT.
Employee shall be vested with such authority as is generally concomitant with
the position to which he is appointed.
<PAGE> 26
(c) Employee shall assist the President of HMT in communication and reports to
SCI, on a periodic (monthly as minimum) basis as to the operations, sales
activity, industry developments and prospects for the Business of HMT.
1.3 Location. The principal place of employment and the location of
Employee's principal office and ordinary place of work shall be in Moraga,
California,
provided, however, Employee shall, when requested by the SCI or the Board of
Directors, or may, if he determines it to be reasonably necessary, temporarily
perform services outside said area as are reasonably required for the proper
performance of his duties under this Agreement.
<PAGE>
1.4 Representations. Each party represents and warrants to the other that
he/it has full power and authority to enter into and perform this Agreement
and this his/its execution and performance of his Agreement shall not
constitute a default under or breach of any of the terms of any agreement to
which he/it is a party or under which he/it is bound. Each party represents
that no consent or approval of any third party is required for his or its
execution, delivery and performance of this Agreement or that all consents or
approvals of any third party required for his or its execution, delivery and
performance of this Agreement have been obtained.
ARTICLE II
2.1 Term. The term of Employee's employment hereunder (the "Term") shall
commence as of the date hereof (the "Commencement Date") and shall continue
from the date hereof for a period of three (3) years unless earlier terminated
by HMT or SCI's Board of Directors or Employee pursuant to the provisions of
this Agreement.
ARTICLE III
Compensation
3.1 Base Salary. As compensation for the services to be rendered by Employee,
HMT shall pay Employee, during the term of this Agreement, an annual base
salary of $60,000.00 which base salary shall (prorated for periods less than a
month) be paid in equal monthly installments. See Exhibit A.
3.2 Benefits. Employee shall be entitled, during the Terms hereof, to the
same medical, hospital, dental and life insurance coverage as are available to
SCI's senior executive officers on the Commencement Date and shall receive
additional benefits (now being developed) as shall be made available to persons
of comparable salary and position in other subsidiaries of SCI.
<PAGE> 27
Employee shall be entitled to four (4) weeks of fully paid vacation per year
during the term of this Agreement. Employee shall not be entitled to receive
monetary or other valuable consideration for vacation time to which he is
entitled but does not take. The timing of vacation periods shall be within
the discretion of HMT, reasonably exercised so as not to unnecessarily
inconvenience the Employee.
3.3 Withholding. Any and all amounts payable under this Agreement, including,
without limitation, amounts payable in the event of the termination hereof
under Article V hereof, are subject to withholding for such federal, state and
local taxes as HMT in its reasonable judgment determines to be required to any
applicable law, rule or regulation.
ARTICLE IV
Working Facilities, Expenses and Insurance
4.1 Working Facilities and Expenses. Employee shall be furnished with an
office at the principal office of HMT, or at such other working facilities and
secretarial and other assistance suitable to his position and adequate for the
performance of his duties hereunder. HMT shall reimburse Employee for all of
Employee's reasonable expenses incurred while employed and performing his
duties under and in accordance with the terms and conditions of the Agreement,
subject to Employee's full and appropriate documentation, including, without
limitation, receipts for all such expenses in the manner required pursuant to
HMT's policies and procedures and the Internal Revenue Code as in effect from
time to time.
<PAGE>
4.2 Insurance. HMT or SCI may secure in its own name or otherwise, and at its
own expense, life, disability and other "key man" type insurance covering
Employee or Employee or others, and Employee shall not have any right, title
or interest in or to such insurance other than as expressly provided herein.
Employee agrees to assist in procuring such insurance by submitting to the
usual and customary medical and other examination to be conducted by such
physician(s) as the Board of Directors or such insurance company may designate
and by signing such applications and other written instruments as may be
required by the insurance companies to which application is made for such
insurance.
<PAGE> 28
ARTICLE V
Termination
5.1 Termination. This Agreement and the employment of Employee may be
terminated only as follows:
(a) at the election of the Employee;
(b) on the Scheduled Termination Date; or
(c) for cause as set forth on Paragraph 5.2.
5.2 Termination for Cause. "Employee shall be deemed to have been terminated
for cause by HMT if he has committed any material act of dishonesty, has
disclosed confidential information to third parties without authority, has
breached any of his obligations hereunder, is guilty of gross carelessness or
misconduct, has unjustifiably neglected his duties under this Agreement, or has
conducted himself in a manner substantially detrimental to HMT or SCI. If
employee is terminated for cause, he shall be entitled to no severance pay and
shall be entitled to no payment(s) that might otherwise be owed to him even if
he worked for the entire year. In addition, Employee shall be entitled to
receive any benefits which are, at the time of the termination, vested pursuant
to Paragraph 3.2 herein.
5.3 Effect of Termination. If the Employee voluntarily terminates his
employment, or in the event the employment is terminated upon death or
disability of the Employee:
(a) Salary shall be paid through the date of voluntary resignation or
termination.
(b) Employee shall be entitled to reimbursement for expenses accrued through
the date of termination in accordance with the provisions of Section 3.1
hereof.
(c) Employee shall receive such other benefits as may be provided under the
terms hereof and the benefit plans mentioned in Paragraphs 3.1 and 3.2 herein.
<PAGE> 29
ARTICLE VI
Covenant Not to Compete
6.1 Covenant Not to Compete. Upon termination of this Agreement by either the
voluntary resignation of Employee or a termination for cause by HMT or SCI,
Employee shall not directly or indirectly, (within any of the metropolitan
areas within the United States of America in which HMT at the time of such
termination is conducting Business, and also all metropolitan areas within the
United States of America in which Employee knows that HMT intends to extend
and carry on Business by expansion of its activities) enter into or engage in
any business in competition with the Business of HMT, as it now exists or may
exist at the time of termination of employment under this Agreement, either as
<PAGE>
an individual on his own account, or as a partner, joint venture, employee,
agent, or salesperson for any person, or as an officer, director or stockholder
of a corporation, or otherwise for a period of three (3) years after the date
of termination of employment hereunder. It is agreed by the parties that this
covenant on the part of the Employee may be enforced against Employee by HMT or
SCI by injunction, as well as by all other legal remedies available to HMT or
SCI. It is agreed by the parties hereto that if any portion of this covenant
not to compete is held to be unreasonable, arbitrary or against public policy,
the covenant herein shall be considered divisible both as to time and
geographic area so that a lesser period of time or geographical areas shall
remain effective so long as the same is not unreasonable, arbitrary, or against
public policy. The parties hereto agree that, in the event any Court
determines the specified time period or the specified geographical area to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined by the courts to be reasonable,
non-arbitrary and not against public policy may be enforced against Employee by
injunction, as well as by all other legal remedies available to HMT or SCI.
6.2 Solicitation of Employees. For a period of three years after he is no
longer employed by HMT, the Employee will not, directly, or indirectly, either
as an individual, proprietor, stockholder, partner, officer, director, employee
or otherwise, solicit any officer, director, employee or other individual:
(A) To leave his or her employment or position with HMT;
(B) To compete with the Business of HMT or SCI; or
(C) To violate the terms of any employment; noncompetition or similar
agreement with HMT or SCI.
For purposes of this paragraph, references to the Business of HMT or SCI shall
include the business of any subsidiary or affiliate of HMT or SCI.
<PAGE> 30
6.3 (a) Employee agrees that in the event of a breach of any term of this
Agreement, and more particularly, in the event of the breach of any of the
terms and provisions of this Article VI, HMT shall be entitled to secure an
order in any suit brought for that purpose to enjoin Employee from violating
any of the provisions of this Agreement and that, pending the hearing and the
decision on the application for such order, HMT shall be entitled to a
temporary restraining order without prejudice to any other remedy available to
HMT, all at expense of Employee. EMPLOYEE UNDERSTANDS THAT THE COVENANTS OF
THIS PARAGRAPH ARE THE ESSENCE OF THIS EMPLOYMENT AGREEMENT, WITHOUT WHICH NO
EMPLOYMENT AGREEMENT WOULD BE ENTERED INTO BY HMT AND/OR SCI.
(b) The provisions of Article VI shall in no event be construed to be an
exclusive remedy, and such remedy shall be held and construed to be cumulative
and not exclusive of any rights or remedies, whether in law or equity,
otherwise available under the terms of this Agreement or under the laws of the
United States or any state.
<PAGE> 31
ARTICLE VII
Confidentiality and Intellectual
Property Rights
7.1 Confidentiality. The Employee will not at any time during or after his
employment by HMT, directly or indirectly, divulge, disclose or communicate to
any person, firm or corporation in any manner whatsoever, other than in the
normal course of performing his duties for HMT, any information concerning any
matter affecting or relating to HMT or the Business of HMT. While engaged as
an employee of HMT, the Employee may only use information concerning any
matters affecting or relating to HMT or the Business of HMT for a purpose which
is necessary to the carrying out of the Employee's duties as an employee of
HMT, and the Employee may not make use of any information of HMT after he is no
longer an employee of HMT. The Employee agrees to the above without regard to
whether all of the above matters will be deemed confidential, material or
important, it being stipulated by the parties that all information, whether
written or otherwise, regarding HMT's Business, including but not limited to,
information regarding customers, customer lists, employees, employee salaries,
costs, prices, earnings, and any financial or cost accounting reports,
products, services, formulae, compositions, machines, equipment, apparatus,
systems, manufacturing procedures, operations, potential acquisitions, new
location plans, prospective and executed contracts and other business
arrangements,and sources of supply, is presumed to be important, material and
confidential information of HMT for purposes of this Agreement, except to the
extent that such information may be otherwise lawfully and readily available to
the general public. Employee agrees that all of this information is a trade
secret owned exclusively by HMT which shall at all times be kept confidential.
The Employee further agrees that he will, upon termination of his employment
with HMT, return to HMT all books, records, lists and other written, typed or
printed materials, whether furnished by HMT or prepared by the Employee, which
contain any information relating to HMT's Business, and the Employee agrees that
he will neither make nor retain any copies of such materials after termination
of employment. For purposes of this Article VII, references to the Business
or information of or relating to HMT shall include the information or
business of HMT, SCI and any subsidiary or affiliate of HMT or SCI, including
but not limited to, National Solutions Corporation.
<PAGE> 32
7.2 Business Opportunities and Patentable Devices. Employee will make full
and prompt written disclosure to HMT, SCI or their nominee of:
(A) Any business opportunity of which he becomes aware and which relates to
the Business of HMT, SCI or any of its subsidiaries or affiliates; and
(B) Any patentable device, apparatus, method, process or improvement which he
may invent or discover, either solely or jointly with any other person or
persons, resulting from or in the course of any work done by him as an employee
of HMT, or relating to the work or duties he was employed or assigned to
perform or actually does perform for HMT, or relating to any phase of HMT's
business or fields of interest in each case whether or not a patentable device,
apparatus, method, process or improvement is:
(1) Related to the project to which he is so assigned;
(2) Made with a contribution by HMT or the use of HMT or HMT-held
facilities, equipment, materials, allocated funds, proprietary
information, or services of HMT or SCI employees or associated
persons;
(3) Made during working hours; or
(4) Made before, during or within a period of three years after the
period of Employee's employment pursuant to this Agreement.
7.3 Assignment of Intellectual Property Rights. The Employee assigns to HMT
and/or SCI the entire right, title and interest for the entire world in and to
all work performed, writing(s), formula(s), design(s), model(s), drawing(s),
software, photograph(s), design invention(s) and other invention(s) made,
conceived or reduced to practice or authored by Employee, either solely or
jointly with others, during the performance on this Agreement or with the use
of information, materials or facilities of HMT received or used by Employee
during the period Employee is retained by HMT under this Agreement or any
extensions or renewals thereof.
The Employee shall sign, execute and acknowledge or cause to be signed,
executed and acknowledged without cost, but at the expense of HMT, any and all
documents and to perform the acts as may be necessary, useful or convenient for
the purpose of securing to HMT and/or SCI or its nominees trade secret, patent,
trademark, or copyright protection throughout the world upon all such work(s),
writing(s), photograph(s), software, design invention(s), other invention(s)
and processes, title to which HMT may acquire in accordance with the provisions
of this clause.
7.4 Nonassertion of Rights by Consultant or Others. During and after the term
of this Agreement, Employee shall not assert or permit any other party to
assert against HMT and/or SCI, its subsidiaries, vendors and customers, mediate
and immediate, any patent or other rights with respect to which Employee has
the right to assert or license at the termination or expiration of this
Agreement because of the practice of any process or the development, use or
sale of any saleable or licensable product arising out of the subject matter of
this Agreement.
<PAGE> 33
ARTICLE VIII
Miscellaneous
8.1 No Waivers. The failure of either party to enforce any provision of this
Agreement shall not be construed as a waiver of any such provision, nor prevent
such party thereafter from enforcing such provision or any other provision of
this Agreement.
8.2 Notices. Any notice to be given to the HMT, SCI and the Employee under
the terms of this Agreement may be delivered personally, by telecopy, telex or
other form of written electronic transmission, or by registered or certified
mail, postage prepaid, and shall be addressed as follows:
If to SCI: Systems Communications, Inc.
2575 Ulmerton Road
Suite 300
Clearwater, FL 34622
If to HMT: Health Management Technologies, Inc.
1150 Moraga Way
Suite 150
Moraga, CA 94556
If to the Employee: James Wolfe
1150 Moraga Way
Suite 150
Moraga, CA 94556
Either party may hereafter notify the other in writing of any change in
address. Any notice shall be deemed duly given (i) when personally delivered,
(ii) when telecopied, telexed or transmitted by other form of written
electronic transmission, or (iii) on the their day after it is mail by
registered mail or certified mail, postage prepaid, as provided herein.
<PAGE>
8.3 Severability. The provisions of this Agreement are severable and if any
provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provision, or
enforceable parts thereof, shall not be affected thereby.
8.4 Successors and Assigns. The rights and obligations of the HMT or SCI
under this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of HMT and/or SCI, including the survivor upon any
merger, consolidation or combination of HMT or SCI with any other entity.
Employee shall not have the right to assign, delegate or otherwise transfer any
duty or obligation to be performed by him hereunder to any person or entity.
<PAGE> 34
8.5 Entire Agreement. This Agreement supersedes all prior agreements and
understandings between the parties hereto, oral or written, and may not be
modified or terminated orally. No modification, termination, or attempted
waiver shall be valid unless in writing, signed by the party against whom such
modification, termination or waiver is sought to be enforced. This Agreement
was the subject of negotiation by the parties hereto and their counsel. The
parties agree that no prior drafts of this Agreement shall be admissible as
evidence in any proceeding which involves the interpretation of any provision
of this Agreement.
8.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida without reference to
the conflict of law thereof.
8.7 Section Headlines. The section headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said sections.
8.8 Further Assurances. Each party hereto shall cooperate and shall take such
further action and shall execute and deliver such further documents as may be
reasonably requested by any other party in order to carry out the provisions
and purposes of this Agreement.
8.9 Gender. Whenever the pronouns "he" or "his" are used herein they shall
also be deemed to mean "him" or "his" or "it" or "its" whenever applicable.
Words in the singular shall be read and construed as though in the plural and
words in the plural shall be read and construed as though in the singular in
all cases where they would apply.
8.10 Counterparts. This Agreement may be executed in counterparts, all of
which taken together shall be deemed one original.
8.11 Attorney's Fees. In the event that either party is required to engage
the services of legal counsel to enforce the terms and conditions of this
Agreement against the other party, regardless of whether such action results in
litigation, the prevailing party shall be entitled to reasonable attorneys'
fees, costs of legal assistants, and other costs from the other party, which
shall include any fees or costs incurred at trial or any appellate proceeding,
and expenses and other cost, including any accounting expenses incurred.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date first above written.
Attest: SYSTEMS COMMUNICATIONS, INC.
("SCI")
/s/ Edwin B. Salmon__________ By:/s/ Stephen Williams_________
Its President & CEO_____________
/s/ Susan Johnson Cox________
Witness
<PAGE> 35
Attest: HEALTH MANAGEMENT
TECHNOLOGIES, INC.
("HMT")
_____________________________ By:/s/ Karen Wolfe______________
Its President___________________
_____________________________
Witness
"Employee"
_____________________________ /s/ James W. Wolfe__________
Witness JAMES WOLFE
Exhibit A
In the event Karen Wolfe's employment by HMT should be terminated because of
her death or disability prior to the end of 1996, 1997, or 1998, if the total
revenue and profitability of HMT nevertheless reach the goals set forth in
exhibits A-1, A-2, A-3 for any of those years, then Employee's contribution to
the achievement of those goals shall be rewarded by payment to Employee of 75%
of the amount of the performance bonus set forth on the relevant Exhibit.
<PAGE> 36
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this 12th
day of March, 1996 by and between SYSTEMS COMMUNICATIONS, INC., a Florida
corporation, located at Suite 300, 2575 Ulmerton Road, Clearwater, FL 34622
(hereinafter called "SCI") and HEALTH MANAGEMENT TECHNOLOGIES, INC., a
California corporation, located at 1150 Moraga Way, Suite 150, Moraga, CA
94556 (hereinafter called "HMT") and ERIC R. WOLFE (hereinafter called
"Employee").
WHEREAS, SCI has acquired HMT as a wholly owned subsidiary of SCI; and
WHEREAS, SCI and HMT desire to retain Employee in the position of Senior
Vice- President, Client Services for HMT; and
WHEREAS, SCI, HMT and Employee desire to enter into this Agreement to assure
HMT of the services of Employee for the benefit of HMT and to set forth the
respective rights and duties or the parties hereto;
WHEREAS, HMT is in the business of developing and implementing software to
track and analyze healthcare provided to individuals for use by employers and
insurance companies throughout the United States (hereinafter called the
"Business");
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
terms and conditions set forth herein, SCI, HMT and Employee agree as follows:
ARTICLE I
Employment
1.1 Employment and Title. HMT hereby employs Employee, and Employee hereby
accepts such employment as the Senior Vice-President, Client Services of HMT,
all upon the terms and conditions set forth herein.
1.2 Description of Services to be Performed.
(a) The duties to be performed by Employee are: Plan all software product
development and programming, manage technical programming staff (9),
hire and manage technical consultants as necessary, programming, product
quality assurance, supervise technical equipment acquisition and
maintenance, supervise payroll.
<PAGE> 37
(b) During the terms (as hereinafter defined) hereof, Employee agrees to
perform diligently and in good faith such duties and services for HMT
as are consistent with the position held by Employee under the direction
of the Board of Directors of SCI (the "Board of Directors"). Employee
agrees to devote his best efforts and all of his full business time,
energies and abilities to the services to be performed hereunder and for
the exclusive benefit of the HMT. Employee shall be vested with such
authority as is generally concomitant with the position to which he is
appointed.
(c) Employee shall assist the President of HMT in communication and reports
to SCI, on a periodic (monthly as minimum) basis as to the operations,
sales activity, industry developments and prospects for the Business of
HMT.
<PAGE>
1.3 Location. The principal place of employment and the location of
Employee's principal office and ordinary place of work shall be in Moraga,
California, provided, however, Employee shall, when requested by the SCI or the
Board of Directors, or may, if he determines it to be reasonably necessary,
temporarily perform services outside said area as are reasonably required for
the proper performance of his duties under this Agreement.
1.4 Representations. Each party represents and warrants to the other that
he/it has full power and authority to enter into and perform this Agreement and
this his/its execution and performance of his Agreement shall not constitute a
default under or breach of any of the terms of any agreement to which he/it is
a party or under which he/it is bound. Each party represents that no consent
or approval of any third party is required for his or its execution, delivery
and performance of this Agreement or that all consents or approvals of any
third party required for his or its execution, delivery and performance of this
Agreement have been obtained.
ARTICLE II
2.1 Term. The term of Employee's employment hereunder (the "Term") shall
commence as of the date hereof (the "Commencement Date") and shall continue
from the date hereof for a period of three (3) years unless earlier terminated
by HMT or SCI's Board of Directors or Employee pursuant to the provisions of
this Agreement.
<PAGE> 38
ARTICLE III
Compensation
3.1 Base Salary. As compensation for the services to be rendered by Employee,
HMT shall pay Employee, during the term of this Agreement, an annual base
salary of $100,000.00 which base salary shall (prorated for periods less than a
month) be paid in equal monthly installments. See Exhibit A.
3.2 Benefits. Employee shall be entitled, during the Terms hereof, to the
same medical, hospital, dental and life insurance coverage as are available to
SCI's senior executive officers on the Commencement Date and shall receive
additional benefits (now being developed) as shall be made available to persons
of comparable salary and position in other subsidiaries of SCI.
Employee shall be entitled to four (4) weeks of fully paid vacation per year
during the term of this Agreement. Employee shall not be entitled to receive
monetary or other valuable consideration for vacation time to which he is
entitled but does not take. The timing of vacation periods shall be within the
discretion of HMT, reasonably exercised so as not to unnecessarily
inconvenience the Employee.
3.3 Withholding. Any and all amounts payable under this Agreement, including,
without limitation, amounts payable in the event of the termination hereof
under Article V hereof, are subject to withholding for such federal, state and
local taxes as HMT in its reasonable judgment determines to be required to any
applicable law, rule or regulation.
<PAGE> 39
ARTICLE IV
Working Facilities, Expenses and Insurance
4.1 Working Facilities and Expenses. Employee shall be furnished with an
office at the principal office of HMT, or at such other working facilities and
secretarial and other assistance suitable to his position and adequate for the
performance of his duties hereunder. HMT shall reimburse Employee for all of
Employee's reasonable expenses incurred while employed and performing his
duties under and in accordance with the terms and conditions of the Agreement,
subject to Employee's full and appropriate documentation, including, without
limitation, receipts for all such expenses in the manner required pursuant to
HMT's policies and procedures and the Internal Revenue Code as in effect from
time to time.
4.2 Insurance. HMT or SCI may secure in its own name or otherwise, and at its
own expense, life, disability and other "key man" type insurance covering
Employee or Employee or others, and Employee shall not have any right, title or
interest in or to such insurance other than as expressly provided herein.
Employee agrees to assist in procuring such insurance by submitting to the
usual and customary medical and other examination to be conducted by such
physician(s) as the Board of Directors or such insurance company may designate
and by signing such applications and other written instruments as may be
required by the insurance companies to which application is made for such
insurance.
<PAGE> 40
ARTICLE V
Termination
5.1 Termination. This Agreement and the employment of Employee may be
terminated only as follows:
(a) at the election of the Employee;
(b) on the Scheduled Termination Date; or
(c) for cause as set forth on Paragraph 5.2.
5.2 Termination for Cause. "Employee shall be deemed to have been terminated
for cause by HMT if he has committed any material act of dishonesty, has
disclosed confidential information to third parties without authority, has
breached any of his obligations hereunder, is guilty of gross carelessness or
misconduct, has unjustifiably neglected his duties under this Agreement, or has
conducted himself in a manner substantially detrimental to HMT or SCI. If
employee is terminated for cause, he shall be entitled to no severance pay and
shall be entitled to no payment(s) that might otherwise be owed to him even if
he worked for the entire year. In addition, Employee shall be entitled to
receive any benefits which are, at the time of the termination, vested
pursuant to Paragraph 3.2 herein.
5.3 Effect of Termination. If the Employee voluntarily terminates his
employment, or in the event the employment is terminated upon death or
disability of the Employee:
(a) Salary shall be paid through the date of voluntary
resignation or termination.
(b) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with the
provisions of Section 3.1 hereof.
(c) Employee shall receive such other benefits as may be provided
under the terms hereof and the benefit plans mentioned in
Paragraphs 3.1 and 3.2 herein.
<PAGE> 41
ARTICLE VI
Covenant Not to Compete
6.1 Covenant Not to Compete. Upon termination of this Agreement by either the
voluntary resignation of Employee or a termination for cause by HMT or SCI,
Employee shall not directly or indirectly, (within any of the metropolitan
areas within the United States of America in which HMT at the time of such
termination is conducting Business, and also all metropolitan areas within the
United States of America in which Employee knows that HMT intends to extend and
carry on Business by expansion of its activities) enter into or engage in any
business in competition with the Business of HMT, as it now exists or may exist
at the time of termination of employment under this Agreement, either as an
individual on his own account, or as a partner, joint venture, employee, agent,
or salesperson for any person, or as an officer, director or stockholder of a
corporation, or otherwise for a period of three (3) years after the date of
termination of employment hereunder. It is agreed by the parties that this
covenant on the part of the Employee may be enforced against Employee by HMT or
SCI by injunction, as well as by all other legal remedies available to HMT or
SCI. It is agreed by the parties hereto that if any portion of this covenant
not to compete is held to be unreasonable, arbitrary or against public policy,
the covenant herein shall be considered divisible both as to time and
geographic area so that a lesser period of time or geographical areas shall
remain effective so long as the same is not unreasonable, arbitrary, or against
public policy. The parties hereto agree that, in the event any Court
determines the specified time period or the specified geographical area to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined by the courts to be reasonable,
non-arbitrary and not against public policy may be enforced against Employee by
injunction, as well as by all other legal remedies available to HMT or SCI.
6.2 Solicitation of Employees. For a period of three years after he is no
longer employed by HMT, the Employee will not, directly, or indirectly, either
as an individual, proprietor, stockholder, partner, officer, director, employee
or otherwise, solicit any officer, director, employee or other individual:
(A) To leave his or her employment or position with HMT;
(B) To compete with the Business of HMT or SCI; or
(C) To violate the terms of any employment; noncompetition or similar
agreement with HMT or SCI.
For purposes of this paragraph, references to the Business of HMT or SCI shall
include the business of any subsidiary or affiliate of HMT or SCI.
6.3 (a) Employee agrees that in the event of a breach of any term of this
Agreement, and more particularly, in the event of the breach of any of the
terms and provisions of this Article VI, HMT shall be entitled to secure an
order in any suit brought for that purpose to enjoin Employee from violating
any of the provisions of this Agreement and that, pending the hearing and the
decision on the application for such order, HMT shall be entitled to a
temporary restraining order without prejudice to any other remedy available to
HMT, all at expense of Employee. EMPLOYEE UNDERSTANDS THAT THE COVENANTS OF
THIS PARAGRAPH ARE THE ESSENCE OF THIS EMPLOYMENT AGREEMENT, WITHOUT WHICH NO
EMPLOYMENT AGREEMENT WOULD BE ENTERED INTO BY HMT AND/OR SCI.
<PAGE> 42
(b) The provisions of Article VI shall in no event be construed to be an
exclusive remedy, and such remedy shall be held and construed to be cumulative
and not exclusive of any rights or remedies, whether in law or equity,
otherwise available under the terms of this Agreement or under the laws of the
United States or any state.
ARTICLE VII
Confidentiality and Intellectual
Property Rights
7.1 Confidentiality. The Employee will not at any time during or after his
employment by HMT, directly or indirectly, divulge, disclose or communicate to
any person, firm or corporation in any manner whatsoever, other than in the
normal course of performing his duties for HMT, any information concerning any
matter affecting or relating to HMT or the Business of HMT. While engaged as
an employee of HMT, the Employee may only use information concerning any
matters affecting or relating to HMT or the Business of HMT for a purpose which
is necessary to the carrying out of the Employee's duties as an employee of
HMT, and the Employee may not make use of any information of HMT after he is no
longer an employee of HMT. The Employee agrees to the above without regard to
whether all of the above matters will be deemed confidential, material or
important, it being stipulated by the parties that all information, whether
written or otherwise, regarding HMT's Business, including but not limited to,
information regarding customers, customer lists, employees, employee salaries,
costs, prices, earnings, and any financial or cost accounting reports,
products, services, formulae, compositions, machines, equipment, apparatus,
systems, manufacturing procedures, operations, potential acquisitions, new
location plans, prospective and executed contracts and other business
arrangements, and sources of supply, is presumed to be important, material and
confidential information of HMT for purposes of this Agreement, except to the
extent that such information may be otherwise lawfully and readily available to
the general public. Employee agrees that all of this information is a trade
secret owned exclusively by HMT which shall at all times be kept confidential.
The Employee further agrees that he will, upon termination of his employment
with HMT, return to HMT all books, records, lists and other written, typed or
printed materials, whether furnished by HMT or prepared by the Employee, which
contain any information relating to HMT's Business, and the Employee agrees
that he will neither make nor retain any copies of such materials after
termination of employment. For purposes of this Article VII, references to the
Business or information of or relating to HMT shall include the information or
business of HMT, SCI and any subsidiary or affiliate of HMT or SCI, including
but not limited to, National Solutions Corporation.
<PAGE> 43
7.2 Business Opportunities and Patentable Devices. Employee will make full
and prompt written disclosure to HMT, SCI or their nominee of:
(A) Any business opportunity of which he becomes aware and which relates
to the Business of HMT, SCI or any of its subsidiaries or affiliates;
and
(B) Any patentable device, apparatus, method, process or improvement
which he may invent or discover, either solely or jointly with any
other person or persons, resulting from or in the course of any work
done by him as an employee of HMT, or relating to the work or duties
he was employed or assigned to perform or actually does perform for
HMT, or relating to any phase of HMT's business or fields of interest
in each case whether or not a patentable device, apparatus, method,
process or improvement is:
(1) Related to the project to which he is so assigned;
(2) Made with a contribution by HMT or the use of HMT or HMT-held
facilities, equipment, materials, allocated funds, proprietary
information, or services of HMT or SCI employees or associated
persons;
(3) Made during working hours; or
(4) Made before, during or within a period of three years after the
period of Employee's employment pursuant to this Agreement.
7.3 Assignment of Intellectual Property Rights. The Employee assigns to HMT
and/or SCI the entire right, title and interest for the entire world in and to
all work performed, writing(s), formula(s), design(s), model(s), drawing(s),
software, photograph(s), design invention(s) and other invention(s) made,
conceived or reduced to practice or authored by Employee, either solely or
jointly with others, during the performance on this Agreement or with the use
of information, materials or facilities of HMT received or used by Employee
during the period Employee is retained by HMT under this Agreement or any
extensions or renewals thereof.
The Employee shall sign, execute and acknowledge or cause to be signed,
executed and acknowledged without cost, but at the expense of HMT, any and all
documents and to perform the acts as may be necessary, useful or convenient for
the purpose of securing to HMT and/or SCI or its nominees trade secret, patent,
trademark, or copyright protection throughout the world upon all such work(s),
writing(s), photograph(s), software, design invention(s), other invention(s)
and processes, title to which HMT may acquire in accordance with the provisions
of this clause.
7.4 Nonassertion of Rights by Consultant or Others. During and after the
term of this Agreement, Employee shall not assert or permit any other party to
assert against HMT and/or SCI, its subsidiaries, vendors and customers, mediate
and immediate, any patent or other rights with respect to which Employee has
the right to assert or license at the termination or expiration of this
Agreement because of the practice of any process or the development, use or
sale of any saleable or licensable product arising out of the subject matter of
this Agreement.
<PAGE> 44
ARTICLE VIII
Miscellaneous
8.1 No Waivers. The failure of either party to enforce any provision of this
Agreement shall not be construed as a waiver of any such provision, nor prevent
such party thereafter from enforcing such provision or any other provision of
this Agreement.
8.2 Notices. Any notice to be given to the HMT, SCI and the Employee under
the terms of this Agreement may be delivered personally, by telecopy, telex or
other form of written electronic transmission, or by registered or certified
mail, postage prepaid, and shall be addressed as follows:
If to SCI: Systems Communications, Inc.
2575 Ulmerton Road
Suite 300
Clearwater, FL 34622
If to HMT: Health Management Technologies, Inc.
1150 Moraga Way
Suite 150
Moraga, CA 94556
If to the Employee: Eric Wolfe
1150 Moraga Way
Suite 150
Moraga, CA 94556
Either party may hereafter notify the other in writing of any change in
address. Any notice shall be deemed duly given (i) when personally delivered,
(ii) when telecopied, telexed or transmitted by other form of written
electronic transmission, or (iii) on the their day after it is mail by
registered mail or certified mail, postage prepaid, as provided herein.
8.3 Severability. The provisions of this Agreement are severable and if any
provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provision, or
enforceable parts thereof, shall not be affected thereby.
8.4 Successors and Assigns. The rights and obligations of the HMT or SCI
under this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of HMT and/or SCI, including the survivor upon any
merger, consolidation or combination of HMT or SCI with any other entity.
Employee shall not have the right to assign, delegate or otherwise transfer any
duty or obligation to be performed by him hereunder to any person or entity.
<PAGE> 45
8.5 Entire Agreement. This Agreement supersedes all prior agreements and
understandings between the parties hereto, oral or written, and may not be
modified or terminated orally. No modification, termination, or attempted
waiver shall be valid unless in writing, signed by the party against
whom such modification, termination or waiver is sought to be enforced. This
Agreement was the subject of negotiation by the parties hereto and their
counsel. The parties agree that no prior drafts of this Agreement shall be
admissible as evidence in any proceeding which involves the interpretation of
any provision of this Agreement.
8.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida without reference to
the conflict of law thereof.
8.7 Section Headlines. The section headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said sections.
8.8 Further Assurances. Each party hereto shall cooperate and shall take such
further action and shall execute and deliver such further documents as may be
reasonably requested by any other party in order to carry out the provisions
and purposes of this Agreement.
8.9 Gender. Whenever the pronouns "he" or "his" are used herein they shall
also be deemed to mean "him" or "his" or "it" or "its" whenever applicable.
Words in the singular shall be read and construed as though in the plural and
words in the plural shall be read and construed as though in the singular in
all cases where they would apply.
8.10 Counterparts. This Agreement may be executed in counterparts, all of
which taken together shall be deemed one original.
<PAGE> 46
8.11 Attorney's Fees. In the event that either party is required to engage
the services of legal counsel to enforce the terms and conditions of this
Agreement against the other party, regardless of whether such action results in
litigation, the prevailing party shall be entitled to reasonable attorneys'
fees, costs of legal assistants, and other costs from the other party, which
shall include any fees or costs incurred at trial or any appellate proceeding,
and expenses and other cost, including any accounting expenses incurred.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date first above written.
Attest: SYSTEMS COMMUNICATIONS, INC.
("SCI")
/s/ Edwin B. Salmon__________ By: /s/ Stephen E. Williams ____
Its_President___________________
/s/ Susan Johnson Cox________
Witness
Attest: HEALTH MANAGEMENT
TECHNOLOGIES, INC.
("HMT")
_____________________________ By: /s/ Karen Wolfe______________
Its President____________________
_____________________________
Witness
"Employee"
_____________________________ /s/ Eric R. Wolfe______________
Witness ERIC R. WOLFE
EXHIBIT A
In the event Karen Wolfe's employment by HMT should be terminated because of
her death or disability prior to the end of 1996, 1997, or 1998, if the total
revenue and profitability of HMT nevertheless reach the goals set forth in
exhibits A-1, A-2, A-3 for any of those years, then Employee's contribution to
the achievement of those goals shall be rewarded by payment to Employee of 25%
of the amount of the performance bonus set forth on the relevant Exhibit.
<PAGE> 47
HEADS OF AGREEMENT FOR CHANGE IN MANAGEMENT OF NATIONAL SOLUTIONS CORPORATION
HEADS OF AGREEMENT entered into on January 9, 1997 in consideration of the
mutual agreements set forth herein by and between Systems Communications, Inc.
(SCI) as the stockholder of National Solutions Corporation (NSC) and John
Looney, James Tolley and John Paolicelli (collectively, the Retiring
Management). The parties agree as follows:
1. SCI will include in the current S-1 registration it is preparing for
filing all shares of SCI common stock now registered in the names of Retiring
Management and issued under 2 below with a limitation on sales by each of
Retiring Management pursuant to the registration statement of 5,000 shares per
month as a means of protecting the integrity of the public market for SCI's
common stock such restriction to remain in effect until three years have
passed from the date of original issue of the shares of SCI's common stock
registered in the names of Retiring Management, after which period there shall
be no limitation on the number of shares Retiring Management can sell each
month; provided, that with the Company's approval each of Retiring Management
may margin up to seventy percent of their respective shares, which approval
cannot be unreasonably withheld with reasonableness to be determined by the
impact on the Company or stock price.
2. SCI's common stock (3,018 shares) earned by each of Retiring Management in
the acquisition of Health Management Technologies will be issued to Retiring
Management immediately. SCI shall place 200,000 shares of its common stock in
escrow to be released to Retiring Management upon NSC's collection of net
operating revenues, exclusive of subcontractors' fees and charges, of
$2,000,000 from a transaction, fee based agreement within the automotive
industry produced by NOVA which is acceptable to and for performance by NSC.
3. Retiring Management, and each of them individually, waives all accrued
bonuses, including stock bonuses and deferred stock under the SCI-NSC
acquisition agreement.
<PAGE> 48
4. NSC, under the direction of SCI, and Retiring Management shall negotiate
in good faith a license agreement between NSC and a new company (NOVA) to be
organized by Retiring Management pursuant to which NSC will license, in
consideration for a royalty payment of one-half of one percent of NOVA's
revenues derived from use of the licensed software, NSC software technology
under the NSC-CREDA agreement such that NOVA will be able to engage in the
business of servicing exclusively state governments west of the Mississippi
River, excluding Utah, and Mexico, Central and South America, with minimum
performance standards to be negotiated. Net profits (to be more specifically
defined) earned by NSC from New York and New Jersey and net profits earned by
NOVA from Mexico under the license agreement will be subject to a 50-50 net
profit sharing between NOVA and NSC. The license agreement shall provide that
NOVA shall use NSC as its exclusive data center for two years, to the extent
that NSC has the capacity to service NOVA, for processing work under the
license agreement and shall require NSC to make its data center available to
service NOVA's work for three additional years. Territorial exclusivity shall
be subject to performance and productions standards to be developed in the
license agreement. Services provided to NOVA by NSC's data center shall be at
fair market value to be negotiated on a contract by contract basis.
5. NSC releases Retiring Management from their respective non-compete and
confidentiality agreements under their employment agreements and the SCI-NSC
acquisition agreement as necessary for Retiring Management to conduct the
business of NOVA under the license agreement provided in 4, above.
6. Retiring Management, or such of them as appropriate or through NOVA, will
provide consulting services with respect to the Chrysler/BCBSM/NSC contract
and extensions and the retrospective Medicare COB services in the future for
Ford Motor Company and with other existing NSC clients and identifying new
opportunities as requested by NSC and accepted by Retiring Management, with
the compensation for such services to be negotiated in good faith with respect
to each engagement for consulting services.
<PAGE> 49
7. NSC will pay its current American Express account and will reimburse James
Tolley for any payments on such account which he is required to make, in
either case from the first revenues received (after payment of all accrued
subcontractor fees and costs) from Blue Cross/Blue Shield under the agreement
with Ford Motor Company. SCI will indemnify Tolley in the event NSC is unable
to make payment in accordance with this paragraph.
8. NSC will pay the accrued salaries through January 9, 1997 as funds from
operations or other sources become available.
9. Retiring Management will submit letters of resignation from all positions
which they have held at NSC and acknowledge that all salary and benefits
(subject to COBRA rights) from NSC are terminated effective immediately.
10. Retiring Management will assist SCI as needed in the transition to new
executive management of NSC, including advice to employees of NSC to cooperate
with new management of NSC and deliver all property of NSC in their possession
which is at locations not under the control of NSC.
11. Provided that all terms hereunder are performed, the parties will enter
into a mutual general release of all claims of every nature.
12. Retiring Management waives all conflict which the law firm of Holland &
Knight may have in representing SCI in capital raising activities which
conflict arises from that firm's prior representation of Retiring Management.
Retiring Management will execute such form of waiver as may be required by
that firm.
IN WITNESS WHEREOF, the undersigned have executed this Heads of Agreement the
date first above written.
(Corporate Seal) Systems Communications, Inc.
On its behalf and as the sole
stockholder of NSC
Attest:
By: Steven E. Williams____________
/s/ Edwin B. Salmon_______ Stephen E. Williams, President
Secretary
/s/ John Looney___________ /s/ James Tolly___________________
John Looney James Tolley
John Paolicelli___________
John Paolicelli
<PAGE> 50
Exhibit (10) 36.
RESCISSION AGREEMENT
Agreement made this 21st day of May, 1997, by and between SYSTEMS
COMMUNICATIONS, INC., a Florida corporation, hereinafter called "SCI";
AMERISTAR TELECOMMUNICATIONS, INC., hereinafter called "ATI";
MARK WOORWARD and RUSSELL ARMSTRONG.
WHEREAS, in August of 1994 SCI acquired all of the stock of ATI and ATI
became a wholly owned subsidiary, and
WHEREAS, as part of that acquisition, SCI issued to WOODWARD and
ARMSTRONG shares of stock in SCI and warrants for additional shares of SCI
stock; and
WHEREAS SCI, its Board of Directors, ATI, WOODWARD and ARMSTRONG desire
to rescind the August 1994 acquisition of ATI by SCI; and
WHEREAS, the Parties recognize that it is in their best interests to
reduce to writing the following terms as an expression of the intentions of
the parties.
Now, therefore, in consideration of the mutual promises herein provided,
the parties agree as follows:
ARTICLE I
Return of Stock and Promissory Notes
1.1 That the WHEREAS clauses hereinabove set forth are not mere
recitals and are an integral part of this agreement.
1.2 WOODWARD and ARMSTRONG shall retain a total of 100,000 shares of
SCI common stock which 100,000 shares shall include any SCI stock pledged to
any banks or financial institutions as security for any loans or other forms
of consideration. WOODWARD and ARMSTRONG shall, upon the execution of this
Agreement, return to SCI all other shares of common stock, preferred stock and
warrants which they obtained from SCI in connection with or as a result of the
August 1994 acquisition (exclusive of any shares previously sold in the
market.). WOODWARD and ARMSTRONG (i) have the legal authority to transfer the
common stock, preferred stock and warrants and (ii) will properly endorse for
transfer all of the common stock, preferred stock and warrants to be returned
to SCI.
1.3 ATI shall, upon the execution of this Agreement, return to SCI
the promissory note totaling $500,000.00 between SCI and WOODWARD and
ARMSTRONG which Promissory Note shall be marked Paid in Full or Canceled
and such notation shall be signed and dated by WOODWARD and ARMSTRONG. In
addition, SCI shall forgive all inter-company debts between SCI and ATI.
<PAGE> 51
1.4 Upon the execution of this Agreement, SCI shall return to WOODWARD
and ARMSTRONG all of the shares of ATI stock which were acquired by SCI in the
August1994 acquisition of ATI. SCI (i) has the legal authority to transfer
the ATI stock and (ii) will properly endorse for transfer all of the ATI STOCK
to be returned to WOODWARD and ARMSTRONG.
1.5 SCI shall return to ATI all books and records relating to the
business of ATI. SCI shall, upon written request from Skylink, return all
information and videotapes relating to Skylink directly to Skylink and SCI
will provide written confirmation to ATI that the materials have been returned
to directly to Skylink. SCI may retain a copy of the books and records
relating to the business of ATI.
ARTICLE II
Release of SCI as Guarantor on Sun Financial leases
2.1 The Parties acknowledge that, as of March 31, 1997 SCI was and is
a guarantor on financing amounts which have been advanced to ATI by Sun
Financial for the purchase of pay-per-view equipment which amounts are equal
to all future minimum lease payments executed by ATI and total approximately
$180,000.00. ATI shall make arrangements with Sun Financial to either release
SCI as the guarantor from any liability under the Sun Financial leases or make
arrangements for ATI to pay Sun Financial the amounts owed under the subject
leases.
2.2 Notwithstanding the foregoing, upon the execution of this
Agreement, ATI shall execute and deliver to SCI a Promissory Note payable to
SCI in the amount of $180,000.00. The sums set forth in the Promissory Note
shall only become due and payable upon ATI's default of any payment
obligations relating to the Sun Financial leases and then only in the amount
of the payment obligations still owing to Sun Financial. In addition, ATI
shall correct any inconsistencies or inaccuracies regarding the lock-box
agreements called for under the Sun Financial lease agreements. ATI shall
also maintain ongoing compliance with the terms of said lock-box agreements
and shall take any and all necessary steps to obtain compliance with those
lock-box agreements with any ATI customers and suppliers.
2.3 ARMSTRONG and WOODWARD specifically acknowledge and agree
that Promissory Note called for under this Article II shall be and is secured
by all office equipment, pay-per-view and telecommunications equipment covered
by leases. ATI shall not sell, transfer, convey, abandon or otherwise impair
any of the identified assets without the prior written consent of SCI.
<PAGE> 52
ARTICLE III
Release and Indemnification
3.1 Release. In consideration of the mutual promises and covenants
contained herein ATI, WOODWARD and ARMSTRONG hereby release SCI, its officers,
and agents from any and all claims, actions, suits, or proceedings arising in
any way out of the business operations of ATI from the beginning of time until
the present and into the future which have been or may be brought against SCI,
ATI or any subsidiaries of SCI. This release applies to all such claims,
suits, actions, or proceedings whether known or unknown, discovered or
undiscovered and regardless of whether any such claims are or were capable of
being discovered by either SCI, ATI, ARMSTRONG or WOODWARD. In addition,
SCI hereby releases ATI, WOODWARD, ARMSTRONG and ATI'S officers, directors
and agents from any and all claims, actions, suits, or proceedings arising in
any way out of the business operations of SCI, excluding those business
operations relating to ATI up to the date of this Agreement, from the
beginning of time until the present and into the future which have been or may
be brought against SCI, ATI, WOODWARD, ARMSTRONG and any officers or directors
of ATI or any subsidiaries of SCI.
The Parties specifically agree that this release is not intended to and
does not apply to any personal liability of ARMSTRONG or WOODWARD imposed or
sought to be imposed by third parties and growing or arising out of any
actions they engaged in while acting in their capacity as a member of SCI's
Board of Directors .
THE PARTIES FURTHER SPECIFICALLY AGREE THAT THE RELEASES CONTAINED IN
THIS PARAGRAPH ARE THE ESSENCE OF THIS AGREEMENT AND WITHOUT WHICH NO
AGREEMENT WOULD BE ENTERED INTO BY SCI, ATI, WOODWARD or ARMSTRONG.
3.2 Indemnification. ATI, ARMSTRONG and WOODWARD hereby agree to
indemnify SCI and to hold SCI harmless from any and all damage, loss,
liability, expense (including without limitation, reasonable out-of-pocket
expenses of investigation and reasonable attorneys' fees and expenses in
connection with any claim, action, suit, or proceeding brought against the
other) and for any other costs incurred by SCI arising in any way out of the
business operations of ATI from August 1994 until the present and into the
future which have been or may be brought against SCI, ATI or any subsidiaries
of SCI by third parties. Similarly, SCI agrees to indemnify ATI, ARMSTRONG
and WOODWARD and to hold ATI, ARMSTRONG and WOODWARD harmless from any and
all damage, loss, liability, expense (including without limitation, reasonable
out-of-pocket expenses of investigation and reasonable attorneys' fees and
expenses in connection with any claim, action, suit, or proceeding brought
against the other) and for any other costs incurred by ATI, ARMSTRONG and
WOODWARD arising out of or hereunder with respect to any business operations
of SCI, excluding those business operations relating to ATI brought by third
parties, from August 1994 until the present and into the future which have
been or may be brought against SCI, ATI or any subsidiaries of SCI by third
parties.
<PAGE> 53
The Parties specifically agree that this indemnification provision
is not intended to and does not apply to any personal liability of ARMSTRONG
or WOODWARD imposed or sought to be imposed by third parties and growing or
arising out of any actions they engaged in while acting in their capacity as a
member of SCI's Board of Directors. Any issues regarding the indemnification
of ARMSTRONG or WOODWARD growing or arising out of any actions they engaged in
while acting in their capacity as a member of SCI's Board of Directors shall
be governed by the provisions contained in the By-Laws of SCI.
ARTICLE IV
Resignation
4.1 If not already provided by the time of the execution of this
Agreement, then upon the execution of this Agreement, ARMSTRONG and WOODWARD
shall submit their written resignations from SCI's Board of Directors,
effective immediately, and by signing this Rescission Agreement ARMSTRONG and
WOODWARD hereby voluntarily terminate their Employment Agreements with SCI
dated October 15, 1994. ARMSTRONG and WOODWARD hereby specifically agree to
waive and acknowledge their voluntary waiver of any and all salary and
benefits from SCI, whether accrued or unaccrued, currently due and owing or to
become due in the future. SCI shall not be obligated in any way whatsoever to
provide or continue to provide any benefits of employment to ARMSTRONG and/or
WOODWARD as of May 21, 1997, including but not limited to, health insurance,
life insurance, bonuses, stock options or any other similar benefit.
ARTICLE V
No Contact with Customers or Vendors
5.1 None of the parties hereto will contact the vendors or customers
of the other or disparage the other party to such customers or vendors.
ARTICLE VI
Miscellaneous
6.1 No Waivers. The failure of either party to enforce any provision
of this Agreement shall not be construed as a waiver of any such provision,
nor prevent such party thereafter from enforcing such provision or any other
provision of this Agreement.
6.2 Notices. Any notice to be given to SCI and ATI, WOODWARD and/or
ARMSTRONG under the terms of this Agreement may be delivered personally, by
telecopy, telex or other form of written electronic transmission, or by
registered or certified mail, postage prepaid, and shall be addressed as
follows:
If to SCI: Systems Communications, Inc.
2575 Ulmerton Road
Suite 300
Clearwater, FL 34622
<PAGE> 54
If to the ATI or
WOODWARD and ARMSTRONG: Ameristar Telecommunications, Inc.
1151 Old McHenry Road, Suite 204
Buffalo Grove, IL 60089
Either party may hereafter notify the other in writing of any change in
address. Any notice shall be deemed duly given (i) when personally delivered,
(ii) when telecopied, telexed or transmitted by other form of written
electronic transmission, or (iii) on the their day after it is mail by
registered mail or certified mail, postage prepaid, as provided herein.
6.3 Severability. The provisions of this Agreement are severable and
if any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provision, or
enforceable parts thereof, shall not be affected thereby.
6.4 Successors and Assigns. The rights and obligations of all of the
parties under this agreement shall inure to the benefit of and be binding upon
their successors and assigns, including the survivor upon any merger,
acquisition, consolidation or combination of SCI with any other entity. The
parties shall not have the right to assign, delegate or otherwise transfer any
duty or obligation to be performed by him/it hereunder to any person or entity
without the prior written consent of the other parties to this Agreement.
6.5 Entire Agreement. This Agreement supersedes all prior agreements
and understandings between the parties hereto, oral or written, and may not be
modified or terminated orally. No modification, termination, or attempted
waiver shall be valid unless in writing, signed by the party against whom such
modification, termination or waiver is sought to be enforced. The parties
agree that no prior drafts of this Agreement shall be admissible as evidence
in any proceeding which involves the interpretation of any provision of this
Agreement.
6.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Florida.
6.7 Section Headlines. The section headings contained herein are for
the purposes of convenience only and are not intended to define or limit the
contents of said sections.
6.8 Counterparts. This Agreement may be executed in counterparts, all
of which taken together shall be deemed one original.
6.9 Continued Cooperation. The Parties to this Agreement specifically
agree to continue to cooperate in any additional action required to affect the
rescission of SCI's acquisition of ATI and that they shall, when called upon,
execute any necessary documents to complete this rescission or to provide any
information required by any local, state, municipal or federal governmental
agency, including but not limited to the Securities and Exchange Commission.
<PAGE> 55
6.10 Attorney's Fees. In the event that either party is required to
engage the services of legal counsel to enforce the terms and conditions of
this Agreement against the other party, regardless of whether such action
results in litigation, the prevailing party shall be entitled to reasonable
attorneys' fees, costs of legal assistants, and other costs from the other
party, which shall include any fees or costs incurred at trial or any
appellate proceeding, and expenses and other cost, including any accounting
expenses incurred.
IN WITNESS WHEREOF, the parties hereto have executed this Rescission
Agreement as of the date first above written.
SYSTEMS COMMUNICATIONS, INC.
("SCI")
By: /s/ Edwin B. Salmon
Edwin Salmon
Chairman of the Board
/s/ Stephen E. Williams
Stephen E. Williams
Director
/s/ David J. Olivet
David J. Olivet
Director
/s/ Richard Sweet
Richard Sweet
Director
/s/Mark Woodward
Mark Woodward
/s/Russell Armstrong
Russell Armstrong
Ameristar Telecommunications, Inc.
By: /s/ Mark Woodward
Its: President
<PAGE> 56
Exhibit (10) 37.
PROMISSORY NOTE
AMOUNT OF INDEBTEDNESS: $180,000.00 DATE: May 21,1997
For VALUE RECEIVED, the undersigned, AMERISTAR TELECOMMUNICAITONS
INC. promises to pay to the order of Systems Communications, Inc.(SCI), or
its assigns, at 2575 Ulmerton Road, Suite 300, Clearwater, FL 34622 or such
other place as Holders hereof may designate in writing, the sum of $180,000 in
lawful money of the United States at the rate of 10% interest annually, said
sum payable as follows:
All outstanding principal together with all accrued interest in full upon
Ameristar Telecommunications, Inc.'s (ATI) default under any of the
provisions of the Sun Financial leases of which SCI is a guarantor. Upon
receipt of any notice of ATI's default from either ATI or from Sun Financial,
this Promissory Note shall become immediately due and payable.
The sums set forth in the Promissory Note shall only become due and
payable upon ATI's default of any payment obligations relating to the Sun
Financial leases and then only in the amount of the payment obligations still
owing to Sun Financial.
Time being of the essence, if any sum of money herein required to be paid
is not paid within thirty (30) days after the same becomes due, or if maker
defaults in the performance of any of the agreements contained herein, then
the entire principal sum and accrued interest shall both bear interest from
the date of default of Eighteen percent (18%). Failure to exercise this
option shall not constitute a waiver of the right to exercise the same in the
event of any subsequent default.
In addition to the foregoing, the undersigned shall have the right at any
time to make per-payments on the principal in whole or in part without penalty
or premium.
This Promissory Note is secured by all office equipment, pay-per-view and
telecommunications equipment covered by leases and ATI shall not sell,
transfer, convey, abandon or otherwise impair any of the identified assets
without the prior written consent of SCI.
All makers and endorsers now or that hereafter may become liable hereon,
jointly and severally, waive demand, presentment, notice of nonpayment and
protest, and agree, that if this Note becomes in default and is delivered to
an attorney for collection to pay all costs, including reasonable attorneys
fees whether suit be brought or not, including fees for appellate proceedings
and that the Holder may extend the time for payment from tine to time, or
forebear to enforce payment without obtaining the consent for such makers or
endorsers and without discharge or affecting their liability thereon.
The terms and provisions of this Promissory Note are to be governed and
construed by the laws of the State of Florida.
AMERISTAR TELECOMMUNICATIONS, INC.
BY: /s/ Russ Armstrong_____
Its Secretary
<PAGE> 57
Exhibit (10) 38.
AGREEMENT
This Agreement ("Agreement") is entered into as of June 9, 1997 by
and among SYSTEMS COMMUNICATIONS, INC. ("SCI"), a Florida corporation, KAREN
WOLFE and ERIC WOLFE ("the Wolfes"), ERIC WOLFE, on behalf of his infant son,
TYLER WOLFE, and LORI WOLFE, wife of Eric Wolfe, on behalf of herself and her
infant son, Tyler Wolfe. By their execution of this Agreement, Lori Wolfe, on
behalf of herself and her son, Tyler Wolfe, and Eric Wolfe, on behalf of his
son, Tyler Wolfe, authorize the Wolfes to act on their behalf and in their
name, place and stead, to receive on their behalf any stock or other items to
be received pursuant to this Agreement and to execute any documents to be
executed pursuant to this Agreement. References to the Wolfes also will
include Lori and Tyler Wolfe unless the context otherwise requires.
RECITALS
A. The Wolfes (Karen and Eric only) previously owned 100% of the
issued and outstanding stock of Health Management Technologies, Inc. ("HMT"),
a California corporation;
B. On or about March 12, 1996, SCI acquired from the Wolfes (Karen
and Eric only) all of the issued and outstanding stock of HMT (6000 shares of
common stock) (the "HMT Stock") in exchange for 309,837 shares of the issued
and outstanding common stock of SCI (the "SCI Stock"). The Wolfes (Karen and
Eric) have given a total of 7142 shares of such SCI Stock to Lori Wolfe and
Tyler Wolfe;
C. Between March 12, 1996 and the date hereof, SCI has contributed or
loaned to HMT a net amount of $450,000; and
D. The parties desire and intend to return each other to the
positions each party occupied before SCI's acquisition of the HMT stock.
WHEREFORE, in consideration of the promises, representations and
warranties and other valuable consideration hereinafter set forth and subject
to the terms and conditions of this Agreement, the parties agree as follows:
1.0 Accuracy of Recitals
The parties agree that the recitals are true and correct.
<PAGE> 58
2.0 Return to Prior Position
On the basis of the representations contained herein, and subject
to the terms and conditions set forth below, the parties agree to return each
other to the position each party occupied before SCI's acquisition of HMT as
follows:
2.1 SCI. Immediately upon execution of this Agreement, SCI will
deposit with Titchell, Maltzman, Mark, Bass, Ohleyer & Mishel, A Professional
Corporation, counsel to the Wolfes and the "depository" for purposes of this
Agreement, the executed Agreement, the HMT Stock, which constitutes all of the
issued and outstanding stock of HMT, together with fully executed stock
powers, fully executed corporate resolutions certified by SCI's corporate
secretary authorizing all the transactions contemplated by this Agreement,
executed resignations of members of the Board of Directors of HMT, if any,
except Karen Wolfe, Eric Wolfe and James Wolfe, effective on passage of title
of the HMT stock to the Wolfes pursuant to the terms of this Agreement, all
books and records of HMT that it may possess, and releases, in the form
attached hereto as Exhibit 1, of any obligations the Wolfes or James Wolfe may
have to SCI under their employment agreements, including but not limited to
no-compete provisions.
2.2 The Wolfes. Immediately upon execution of this Agreement,
the Wolfes will deposit or cause to be deposited with the depository the
executed Agreement, the SCI stock, together with fully executed stock powers,
$450,000, and releases, in the forms attached hereto as Exhibit 2, executed by
Karen Wolfe, James Wolfe and Eric Wolfe removing and releasing SCI as a party
to the employment agreements of such individuals with HMT and acknowledging
that SCI shall not be liable for any benefits provided thereunder as of the
passage of title of the HMT Stock to the Wolfes pursuant to the terms of this
Agreement.
3.0 Representations and Warranties of SCI
SCI represents and warrants as follows:
3.1 Corporate Existence and Good Standing. SCI is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Florida.
<PAGE> 59
3.2 Power, Authority and Binding Nature. SCI has all requisite
power, capacity and authority to enter into this Agreement and the
transactions contemplated hereby. SCI has taken all corporate action required
to duly authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby. This Agreement
has been duly executed and delivered to the Wolfes by SCI, the person
executing it and each of the documents made pursuant hereto is an authorized
signatory and, upon execution of the Agreement by the Wolfes and delivery
thereof to SCI, the Agreement constitutes the legal, valid and binding
obligation of SCI, enforceable against it in accordance with its terms. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not: (i) violate any provision of
any applicable law, rule or regulation of any governmental body having
jurisdiction over SCI or HMT; (ii) violate or result in the breach of any
provision of (a) the Articles of Incorporation or By-Laws of SCI or HMT, (b)
any agreement to which SCI or HMT is a party or by which either may be bound
or (c) any order, judgment or decree applicable to SCI or HMT; (iii) result in
the creation of any security interest, claim, lien, charge or encumbrance upon
the HMT stock or any of the property or assets of HMT; (iv) accelerate or
permit the acceleration of, terminate or result in termination of, any
agreement of SCI or HMT other than unwinding the transaction whereby SCI
purchased the stock of HMT; or (v) in any way effect or violate the terms or
conditions of, or result in the cancellation, modification, revocation or
suspension of any license, approval, certificate, permit or authorization that
SCI or, to the best of SCI's knowledge, HMT may have to conduct its business
or the business of any of SCI's subsidiaries.
3.3 Title to HMT Stock. The HMT Stock being returned by SCI to
the Wolfes is, and will constitute at the time of passage of title thereof to
the Wolfes pursuant to the terms of this Agreement, all of the issued and
outstanding stock of HMT, and SCI has and will transfer to the Wolfes good and
marketable title to the HMT Stock free and clear of any security interests,
claims, liens, pledges, options, encumbrances, charges, agreements, voting
trusts or other arrangements or restrictions (other than any restrictions on
transfer under federal and state securities laws). There are no
subscriptions, warrants, options, conversion rights or agreements or other
rights of any kind outstanding to purchase or otherwise to acquire any shares
of stock of HMT or other securities of HMT, and there are no securities or
obligations of any kind convertible into any shares of stock of HMT or other
securities of HMT. The certificates being returned are the original
certificates transferred by the Wolfes to SCI. No new certificates ever were
issued to SCI.
<PAGE> 60
3.4 Tax Representations. SCI represents and warrants:
3.4.1 The exchange of the HMT Stock for the SCI Stock
pursuant to this Agreement (the "Exchange") and HMT's repayment of SCI's
$450,000 contribution/loan contemplated by this Agreement are intended to
return the parties to this Agreement to the positions they occupied before
SCI's acquisition of the HMT Stock.
3.4.2 Unless otherwise requested by the Wolfes, SCI will
treat and report its acquisition of the HMT Stock (the "Acquisition") for
federal and state income tax purposes as having been retroactively annulled by
the Exchange.
3.4.3 If the Exchange is treated as a separate transaction
for tax purposes, it will qualify as a tax-free exchange under IRC '355 to the
extent of the factors known to or within the control of SCI and, if requested
by the Wolfes, SCI will treat and report the Exchange as a tax-free exchange
under IRC '355.
3.4.4 SCI agrees to indemnify and hold the Wolfes and HMT
harmless from any tax cost suffered by the Wolfes or HMT as a result of the
Exchange or as a result of HMT being part of a consolidated group of
corporations owned by SCI, but not for any loss of HMT's S election.
3.4.5 SCI will not treat HMT as part of its consolidated
group or file a tax return on behalf of HMT for 1996, unless requested to do
so by HMT, in which case it will comply with such request.
3.4.6 SCI agrees to provide HMT and the Wolfes with any
information they request to establish the proper tax treatment of the
Acquisition and the Exchange and the tax attributes and liabilities of HMT as
of the date of the Exchange.
3.4.7 Cooperation -- S Election Termination. SCI agrees to
cooperate with any request for information made by HMT for relief from
inadvertent termination of its S election and to sign any consents required by
the Internal Revenue Service as a condition of such relief.
<PAGE> 61
3.5 Conduct of HMT's Business. Except as set forth in the books
and records of HMT delivered by SCI to the depository or in the possession of
HMT at its offices, HMT has not, and SCI has not on behalf of HMT, (i) created
or incurred any liability (absolute or contingent) of HMT (ii) mortgaged,
pledged, or subjected to any lien or otherwise encumbered any of HMT's assets,
tangible or intangible; (iii) suffered any losses or any other event or
condition of any character adverse to HMT's business, or waived any rights
with respect to HMT's business or assets; (iv) sold or otherwise disposed of
any of HMT's assets, tangible or intangible, or cancelled any debts to or
claims of HMT; (v) declared or paid any dividends, or made any other
distribution on or in respect of, or directly or indirectly purchased, issued,
transferred or exchanged or otherwise acquired or disposed of any shares of
HMT's capital stock, (except the acquisition of the HMT Stock from the Wolfes,
which is being unwound pursuant to this Agreement); (vi) made or become a
party to any contract or commitment for or on behalf of HMT or renewed,
extended, amended or modified any contract or commitment on behalf of HMT
(except for entering into this Agreement and the transactions contemplated
hereby); (vii) issued or sold or agreed to issue or sell any shares of HMT's
capital stock; (viii) agreed on behalf of HMT to pay conditionally or
otherwise, any bonus, extra compensation, pension or severance pay to any
person, other than the employment agreements of the Wolfes and James Wolfe,
whether under any existing profit sharing, pension or other plan or otherwise;
or (ix) guaranteed any obligation, liability or debt of SCI or any other
person.
3.6 Obligations of HMT to SCI. The only obligations which HMT
has to SCI are to return the $450,000 referred to in Recital C and Section
3.4.1 above, and to provide information to SCI under Section 4.5 below. The
$450,000 includes any amounts of principal or interest due on the promissory
note from HMT to SCI dated February 5, 1996 in the amount of $150,000. Said
promissory note and the pledge agreement securing such promissory note dated
as of February 5, 1996 and signed on March 12, 1996 are cancelled on payment
of the $450,000. SCI has not perfected its security interest or filed a UCC
financing statement in connection therewith and has not assigned or
transferred the promissory note or pledge agreement. SCI will return the
cancelled promissory note and pledge agreement to the depository prior to
Closing or furnish a representation by means of a sworn declaration that it
has conducted a diligent search and that it cannot locate the original of such
promissory note and pledge agreement, and that if it does locate them it will
immediately return them to HMT. Upon receipt of said $450,000, SCI releases
HMT from any and all obligations, claims or liabilities that may exist from
HMT to SCI, including but not limited to the aforesaid promissory note and
pledge agreement, whether known or unknown, absolute or contingent, except for
the obligation to furnish certain information set forth in Section 4.5 below.
<PAGE> 62
3.7 Litigation. There are no actions, suits or proceedings
pending, or, to the best of SCI's knowledge, threatened against or affecting
HMT, the HMT Stock being returned to the Wolfes hereby or HMT's assets or
business.
3.8 Directors of HMT. SCI has not elected or appointed any
members to the Board of Directors of HMT since the Acquisition and has not
changed or directed the change of any officers of HMT since the Acquisition.
SCI hereby approves and ratifies the actions of the Wolfes as officers and
directors of HMT and approves and ratifies the actions of James Wolfe as an
officer and director of HMT and the actions of any other officers or directors
of HMT from the date of the Acquisition through the Closing of this Agreement.
3.9 Knowledge of HMT. SCI, as the owner of all of the
outstanding stock of HMT up to the date of passage of title of the HMT Stock
to the Wolfes pursuant to this Agreement, acknowledges that it is extremely
knowledgeable with respect to HMT's business and has done its own thorough
investigation of HMT's business. It has had access to all material books and
records of HMT, all material contracts and documents relating to the proposed
transaction; and an opportunity to ask questions of HMT's executive officers
and employees and receive satisfactory answers to those questions. It has
received answers to all questions which SCI deems material to this transaction
and this Agreement. No representations have been made to SCI by the Wolfes,
any person representing the Wolfes or any director or employee of HMT other
than the representations of the Wolfes set forth in this Agreement. SCI is
relying on its own investigation and is not relying on any representations by
any persons, other than the representations and warranties set forth in this
Agreement. SCI is knowledgeable and experienced in acquiring and disposing of
businesses and has sufficient knowledge and experience in such matters and in
the transaction contemplated by this Agreement to protect its own interests.
3.10 No Payments. No principal, officer, director, employee,
agent, consultant or affiliate of SCI has or will receive either from SCI or
HMT any bonus, commission, compensation or other payment relating to or
arising out of the transaction contemplated by this Agreement.
4.0 Representation and Warranties of the Wolfes
The Wolfes represent and warrant as follows:
4.1 Title to SCI Stock. The Wolfes have and will transfer to
SCI good and marketable title to the SCI stock subject to the conditions of
Closing set forth in this Agreement, free and clear of any security interests,
claims, liens, pledges, options, encumbrances, charges, agreements, voting
trusts or other arrangements or restrictions (other than any restrictions on
transfer under federal and state securities laws).
<PAGE> 63
4.2 Officers and Directors of HMT. The Wolfes (Karen and Eric
only) and James Wolfe, husband of Karen Wolfe, have been officers of HMT since
the Acquisition. Although the by-laws of HMT provide for only one director,
Karen Wolfe, Eric Wolfe and James Wolfe (husband of Karen Wolfe) were acting
as Directors of HMT at the time of the Acquisition and have not been removed
as Directors by SCI.
4.3 License Agreements. To the best of the knowledge of the
Wolfes, Exhibit 3 attached hereto represents actual license agreements of HMT
executed from January 1, 1997 through May 31, 1997, license agreements in
negotiation by HMT that are expected to be consummated in June or July 1997,
and other license agreements sent out by HMT from January 1, 1997 through May
31, 1997. This does not constitute a representation that the agreements in
negotiation will be consummated, or that if consummated, the amounts listed
will be the actual amounts. If consummated, the amounts may be more or less.
It also does not constitute a representation that HMT will not send out or
enter into other license agreements.
4.4 Reporting of Acquisition. The Wolfes will treat and report
the Acquisition for state and federal income tax purposes as having been
retroactively annulled by the Exchange, or will advise SCI if they intend to
treat and report it otherwise, and will cooperate with SCI so there is
consistent tax treatment by SCI and the Wolfes.
4.5 Furnishing Information. The Wolfes agree to cause HMT to
provide SCI with any information it reasonably requests to establish the
proper tax treatment of the Acquisition and the Exchange and the tax
attributes and liabilities of HMT as of the date of the Exchange. Further,
the Wolfes will cause HMT to provide SCI with any documentation and
information for the period up to the Exchange it reasonably requests in order
to prepare and file SCI's quarterly and/or annual reports covering the period
up to the Exchange pursuant to any applicable securities law or regulation.
SCI will treat the Acquisition and Exchange for tax accounting purposes in its
SEC filings consistent with this Agreement. This requirement to provide SCI
with documentation and information shall survive and exist beyond the Closing
of this Agreement.
5.0 Closing
5.1 Closing. Subject to the conditions of Closing set forth
below, the consummation of the transactions contemplated by this Agreement
(the "Closing") shall take place at 10:00 a.m. on June 9, 1997 at the offices
of Titchell, Maltzman, Mark, Bass, Ohleyer & Mishel, A Professional
Corporation, 650 California Street, Suite 2900, San Francisco, California,
94108, or as soon thereafter as practicable; provided that if this Agreement
does not close by 5:00 p.m. Pacific standard time on Monday, June 9, 1997, it
will be deemed terminated and of no further force and effect, and the
depository will return all documents and funds to the respective parties,
unless otherwise agreed in writing by the parties.
<PAGE> 64
5.2 Notice of Developments. Each party will notify the other of
any development causing a breach of any of its own representations and
warranties contained herein. Prior to Closing, each party's sole remedy for
another's breach of representations or warranties is not to close.
5.3 Title to the HMT and SCI Stock. Subject to the terms and
conditions set forth in this Agreement, including the conditions of Closing,
upon execution by each party and delivery of this Agreement to each other and
the depository, and deposit of all documents, funds and other items required
to be deposited with the depository, title to the HMT Stock will pass to the
Wolfes and title to the SCI Stock will pass to SCI.
5.4 Payment. Immediately after title to the HMT stock passes to
the Wolfes, the Wolfes will cause HMT to repay $450,000 to SCI. HMT, through
the depository, will disburse the $450,000 to SCI pursuant to written
instructions furnished by SCI. Any payments made pursuant to such
instructions, whether or not directly to SCI, will be deemed made to SCI in
satisfaction of HMT's obligation to pay the $450,000 to SCI.
5.5 Completion of Closing. Thereafter, the depository will
deliver the HMT stock to the Wolfes, the SCI stock to SCI and other documents
and items deposited to the parties in accordance with this Agreement, execute
a closing certificate in the form attached hereto as Exhibit 4 and the
transaction will be deemed closed.
5.6 Effect of Closing on Obligations Under Prior Agreements.
The parties agree that effective on passage of title of the HMT and SCI stock
to the Wolfes and SCI respectively, pursuant to the terms of this Agreement,
the following will be deemed to occurred: SCI releases the Wolfes and James
Wolfe from any obligations either of them may have to SCI under their
respective employment agreements, including the no compete provision; the
Wolfes (Karen and Eric only) release SCI from any obligations SCI may have to
either of them under their respective employment agreements; the Wolfes agree
that SCI does not have any obligation or owe any benefits to James Wolfe under
his employment agreement; and SCI and the Wolfes release each other from any
and all obligations they may have to each other pursuant to the Stock Purchase
Agreement made and entered into by and between them on March 12, 1996.
5.7 Notice to Paychex. Immediately after Closing SCI will
submit a written notice to Paychex Business Solutions ("Paychex") advising
Paychex that HMT is no longer part of SCI's consolidated group, and the Wolfes
hereby agree that SCI is not responsible for wages and/or benefits owed to
HMT's employees. SCI will cooperate with the Wolfes and HMT in transferring
any employee benefits owed by Paychex to HMT's employees, including but not
limited to funds held in a 401(k) Plan for the benefit of certain HMT
employees.
<PAGE> 66
6.0 Survival of Representations and Warranties
The representations and warranties of the parties hereto shall
survive the consummation of the transactions contemplated hereby.
7.0 Indemnification
Without limiting any other rights or remedies the parties may
have, SCI shall indemnify and hold harmless the Wolfes, and the Wolfes shall
indemnify and hold harmless SCI, from all loss, costs, claims, damages,
liabilities or expenses, including reasonable attorneys' fees and costs of
suit incurred by the indemnified party, from or as a result of the inaccuracy
or falsity of any representation or warranty made by the other, or the breach
by either of them of any provision of this Agreement, or any claim, action,
suit or proceeding filed or threatened against the indemnified party incident
to or as a result of the foregoing. Such indemnification obligations shall
survive the Closing of this Agreement.
8.0 Further Assurances
After the execution of this Agreement, each party hereto shall
execute such additional documents and take such action as the other party may
reasonably request for the purpose of carrying out or evidencing the
transactions contemplated hereby.
9.0 Duties of the Depository
The parties understand that Titchell, Maltzman, Mark, Bass,
Ohleyer & Mishel, A Professional Corporation, the depository, is counsel to
the Wolfes. The depository will not receive any fee or commission for acting
as depository. The depository will not be liable or responsible to any party
other than for willful misconduct.
10.0 General
10.1 Non-Assignment. This Agreement and the rights of the
parties hereto may not be assigned without the written consent of the parties
which may be withheld in their respective absolute discretion.
10.2 Binding Effect. Subject to any restrictions stated in any
other provision of this Agreement restricting transfers, this Agreement shall
be binding on and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
10.3 Entire Agreement. This Agreement, and the documents
delivered and to be delivered pursuant hereto, constitute the entire Agreement
and understanding between the parties and supersede any prior oral or written
agreement and understanding related to the subject matter of this Agreement.
<PAGE> 67
10.4 Amendment. This Agreement may be modified or amended only
by a written instrument executed by the Wolfes and SCI.
10.5 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
10.6 No Brokers or Finders. The parties represent to each other
that no broker or finder has been employed in connection with this Agreement
or the transactions contemplated hereunder. Each party agrees to indemnify
and hold the other harmless against all loss, cost, liability, damage or
expense arising out of claims for fees or commissions of brokers or finders
employed or alleged to have been employed by such party.
10.7 Payment of Fees and Costs. Whether or not the transactions
herein contemplated shall be consummated, each party will pay its own fees,
expenses and disbursements and those of its own agents, representatives,
accountants and counsel incurred in connection with the subject matter of this
Agreement and any amendments thereto.
10.8 Interpretation. The parties agree that each has
participated in the drafting of this Agreement. The parties further agree
that California Civil Code Section 1654 shall have no application to this
Agreement.
10.9 Severability. If any provision of this Agreement is held
invalid or unenforceable as the result of any claim made by any party hereto,
the remainder of this Agreement shall nevertheless remain in full force and
effect, to the extent permitted under applicable law. If any provision is
held invalid or unenforceable with respect to particular circumstances, it
shall nevertheless remain in full force and effect in all other circumstances.
If any provision of the Agreement is unenforceable under the law prevailing on
the date hereof, but is enforceable under the law prevailing at a subsequent
time, then such originally unenforceable provision shall be deemed to take an
effect at the time when it becomes enforceable. As used herein, the term
"unenforceable" is used in its broadest and most comprehensive sense, and
includes the concepts of void or voidable.
10.10 Notices. All notices and other communications required or
permitted to be delivered under this Agreement shall be in writing and shall
be hand-delivered, sent by a reputable, overnight mail service or by certified
or registered mail, postage pre-paid, return receipt requested, addressed to
the appropriate party at its address set forth on a signature page hereof or
such other address as that party may indicate to the other in writing. Notice
shall be deemed to have been given on the day of receipt or the date receipt
is refused, whichever first occurs.
<PAGE> 68
10.11 Attorney's Fees. Should suit be instituted to enforce or
interpret the provisions of this Agreement, the prevailing party in such
litigation shall recover from the non-prevailing party a reasonable sum to be
fixed by the Court for and on account of its attorney's fees and costs
incurred as a result of such litigation.
10.12 Waiver. Any party's failure to enforce any provision of
this Agreement shall not in any way be construed as a waiver of any such
provision, or prevent that party thereafter from enforcing each and every
other provision of this Agreement.
10.13 Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of California, without
regard to its laws with respect to conflicts of laws.
10.14 Dispute Location. Any action to interpret or enforce the
provisions of this Agreement shall be in the Municipal or the Superior Court
of Contra Costa County, California, depending on the amount involved, or if
over a matter of exclusive federal jurisdiction, in the Federal District Court
for the Northern District of California.
10.15 Titles and Headings. Titles and headings to sections and
paragraphs in this Agreement are for the purpose of reference only and shall
in no way limit, define, or otherwise affect the construction of this
Agreement.
10.16 Indemnities and Hold Harmless/--Attorneys' Fees. Each
indemnity and hold harmless in this Agreement shall be deemed to cover and be
an obligation to pay reasonable attorneys' fees of the indemnified party
incurred in connection with the matter indemnified, except that this paragraph
shall not apply to any indemnification required under Section 3.4 of this
Agreement. Each indemnity and hold harmless in this Agreement shall survive
the Closing.
10.17 Survival of Obligations. Each obligation under this
Agreement which by its terms requires performance after the Closing shall
survive the Closing.
10.18 Number and Gender. Whenever appropriate in this Agreement,
terms in the singular form shall include the plural (and vice versa) and any
gender form shall include all others.
10.19 Exhibits. Each exhibit referred to in the Agreement is by
that reference specifically incorporated in this Agreement.
<PAGE> 69
10.20 Remedies Not Exclusive and Waiver. Except as otherwise
specified in this Agreement, no remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy
and each remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise. The election of any one or more remedies shall not
constitute a waiver of the right to pursue other available remedies. Any
party hereto may waive any covenant, condition or provision of this Agreement
intended for its benefit, provided such waiver is in writing and is delivered
to the other party or parties on or prior to the date of performance for such
covenant, condition or provision.
10.21 Facsimile Signature. A party may agree to accept facsimile
signatures as an original on any document, provided that the party delivering
signature by facsimile shall promptly send to the depository a copy of the
signature page of such document with the original manual signature applied
thereto and the depository will send it to the appropriate party. The failure
of the depository or other party to receive the same in no way shall void the
signature received by facsimile, and such party sending by facsimile may re-
execute, at a later date, an original of the document under the date of the
facsimile signature without need or requirement to disclose that such re-
execution was on any other date.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
the case of SCI, by its officer or officers duly authorized as of the day and
year first above written.
SYSTEMS COMMUNICATIONS, INC.,
a Florida corporation,
By: /S/ Stephen E. Williams Signature
It's: Director
By: /S/ Robert A. Thompson Signature
It's: CFO
THE WOLFES
/s/ Karen Wolfe
/s/ Eric Wolfe
By /S/ Eric Wolfe
on behalf of his infant son, Tyler Wolfe
By /S/ Lori Wolfe,
wife of Eric Wolfe, on behalf of herself and her infant son, Tyler Wolfe
<PAGE> 70
EXHIBIT (10) 39.
COOPERATIVE MARKETING AND OPTION AGREEMENT
This Agreement ("Agreement") is entered into as of June 9, 1997 by
and among SYSTEMS COMMUNICATIONS, INC. ("SCI"), a Florida corporation, and
HEALTH MANAGEMENT TECHNOLOGIES ("HMT"), a California corporation, and consists
of the following terms and conditions:
1.0 Cooperative Marketing Agreement
HMT and SCI hereby grant each other for a period of five (5) years
next following the execution of this Agreement the non-exclusive right to
market the other's products and services to potential new clients, and to
receive fees or compensation for services and products of the other marketed
hereunder upon purchase of those services or products by a client. Within
seven (7) business days hereof, this Agreement shall be set forth and
memorialized and shall incorporate the provisions set forth on Exhibit A
attached hereto.
2.0 Option
2.1 Grant. HMT hereby grants to SCI a non-transferable option
("option"), exercisable for eighteen months from the date hereof, to purchase
667 shares of non-voting common stock of HMT (to be authorized) at a purchase
price of $67.50 per share, as adjusted for stock splits, reverse stock splits,
stock dividends, reclassifications, reorganizations, consolidations or
mergers. The shares of non-voting stock, when authorized and issued, will
have the same rights as the common stock, except that they will be non-voting.
The shares of non-voting common stock, if and when issued, will be convertible
into voting common stock at any time at the option of HMT.
2.2 Exercise. The option is exercisable in whole or in part by
written notice to HMT and payment in cash (lawful money of the United States)
at the time described below. The option is non-transferable.
2.3 Fractional Shares. No fractional shares or stock
representing fractional shares shall be issued on exercise of the option.
2.4 Non-shareholder. SCI, as holder of the option, shall not be
entitled to any rights of a stockholder in HMT, either at law or equity, until
it exercises the option in whole or in part, HMT does not exercise its right
to pay cash in lieu of issuing HMT non-voting common stock, and SCI pays the
exercise price. Its rights as a non-voting shareholder then only will be with
respect to the shares purchased on such exercise.
<PAGE> 71
2.5 Securities Law. It is intended that the option and the
underlying shares are and will be issued pursuant to exemptions from
registration under federal securities laws, and state securities law, if
applicable.
3.0 Repurchase of Option Rights or Shares
3.1 Repurchase of Option Right. Upon notice of exercise by SCI,
HMT shall have the right, in lieu of issuing shares of HMT non-voting stock,
to pay SCI an amount equal to the fair market value of the shares. HMT shall
notify SCI within thirty (30) days from notice of exercise of the option by
SCI whether HMT wishes to exercise this right. If HMT does not exercise this
right, SCI must pay for the HMT shares within five (5) days of the notice from
HMT.
3.2 Determination of Fair Market Value. If HMT desires to
exercise such right, the procedure for determining the fair market value shall
be as follows: At such time as HMT notifies SCI that it desires to exercise
its right to pay for the shares, HMT and SCI shall, within thirty (30) days
after SCI's receipt of such notice, attempt to agree on a fair market value.
If HMT and SCI are unable to agree on a fair market value, they shall each
appoint an appraiser with at least five (5) years' experience in evaluating
securities to determine the fair market value of the shares. The appraisers
will have fifteen (15) days to determine a fair market value. If the
appraisals are within ten (10%) of each other, the fair market value shall be
the average of the two prices. If the difference is more than ten percent
(10%), both appraisers shall select a third appraiser who has at least five
(5) years' experience in evaluating securities. Said appraiser, within
fifteen (15) days of appointment, shall submit an appraisal of fair market
value. The fair market value will then be the average price between the two
closest appraisals. If the appraisers are unable to select a third appraiser
within ten (10) days of being notified that they are to do so, the Presiding
Judge of the Superior Court of Contra Costa County, California, shall select
the third appraiser. The determination of the appraisers shall be binding
upon HMT and SCI. The cost of each of the first two appraisals will be paid
by the respective party appointing the appraiser, and the cost of the third
appraisal shall be divided equally between HMT and SCI. Upon determination of
fair market value, the appraisers will notify the parties.
3.3 Additional Buyout Right. If HMT does not exercise its right
to pay the fair market value of the shares underlying the option at the time
of SCI's exercise of the option, HMT or its designee will have the right to
buy back the HMT shares issued on exercise at any time during the eighteen
(18) months following exercise of the option at fair market value as
determined pursuant to Section 3.2 on written notice to SCI.
<PAGE> 72
3.4 Payment. In the case of repurchase of the option right or
repurchase of the HMT shares after exercise, payment will be due within five
(5) days of the notice of determination of fair market value.
3.5 Amendment of HMT Articles. The parties understand that HMT
does not have authorized non-voting common stock and that HMT will have to
amend its Articles of Incorporation to authorize the issuance of non-voting
common stock. HMT will proceed with reasonable diligence to amend its
Articles of Incorporation to authorize non-voting common stock.
4.0 Representations and Warranties of SCI
SCI represents and warrants as follows:
4.1 SCI understands that an investment in HMT is highly
speculative. SCI has substantial experience in evaluating and investing in
private placement issuances of securities, particularly companies such as HMT
and HMT in particular, such that SCI is capable of evaluating the merits and
risks of the investment in the option and in HMT stock. SCI has the capacity
to protect its own interest and to bear the economic risk of the investment in
the HMT stock for an indefinite period. SCI is aware of the several and
various risks presented to a business such as HMT and of the risks associated
with HMT in particular.
<PAGE> 73
4.2 Knowledge of HMT and Access to Information. SCI, as the
owner of all of the outstanding stock of HMT up to the date of this Agreement,
acknowledges that it is extremely knowledgeable with respect to HMT and its
business and has done its own thorough investigation of HMT and its business.
SCI has had access to all material books and records of HMT, all material
contracts and documents relating to the proposed transaction, has discussed
HMT's business, management and financial affairs with the officers, directors,
and employees of HMT, has reviewed HMT's books and records and has obtained
such information as SCI has considered relevant, important and material in
making a decision to acquire the option. SCI has had an opportunity to ask
questions of the officers and directors of HMT about the terms and conditions
of the offering and to obtain any additional information which HMT possesses
or can acquire without unreasonable effort or expense that was necessary to
verify the accuracy of information furnished to SCI, and all of its questions
have been answered to SCI's complete and full satisfaction. SCI has received
answers to all questions which SCI deems material to this transaction and this
Agreement. No representations have been made to SCI by HMT, Karen, Eric or
James Wolfe, or any person representing HMT, other than the representations of
HMT set forth in this Agreement. SCI is relying on its own investigation and
is not relying on any representations by any persons other than the
representations and warranties set forth in this Agreement. SCI understands
that it will have a similar opportunity at the time it determines to exercise
an option to purchase the HMT stock prior to the consummation of the
transaction, if HMT does not exercise its purchase rights under Section 3.1.
4.3 Investment Representation. SCI is acquiring the option and
upon exercise of the option will acquire the HMT stock for investment purposes
for SCI's own account, not as a nominee or agent, and not with a view to, or
for resale in connection with, any distribution thereof. SCI understands that
neither the option nor the stock has been or will be registered under the
Securities Act of 1933, as amended (Securities Act) by reason of an exemption
from the registration requirements, the availability of which exemption
depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of SCI's representations and warranties as expressed
herein or as otherwise provided or represented to HMT. SCI understands,
acknowledges and agrees that similar exemptions from registration are being
and will be relied upon by HMT under applicable state "Blue Sky" laws, rules
and regulations, if such laws, rules and regulations are applicable.
4.4 Restricted Securities. SCI acknowledges that the shares of
stock, upon issuance, will be "restricted securities" (as that term is defined
under the Securities Act) and, therefore, must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
registration is then available. SCI further understands that HMT is not
obligated to register the option or the shares, that there is no public market
for the shares and that no public market may ever develop for the shares.
<PAGE> 74
4.5 Restrictive Legend. Any certificate representing the HMT
stock issued on exercise of the option or upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event shall
(unless otherwise permitted by applicable law) be stamped or otherwise
imprinted with a legend in substantially the following form (in addition to
any legend(s) required under applicable state securities or "blue sky" laws,
rules, or regulations): THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF THE COMPANY'S COUNSEL
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
5.0 Representation and Warranties of HMT
HMT represents and warrants as follows:
5.1 Title to HMT Stock. HMT will transfer to SCI, on its
exercise of its option under Section 2 of this Agreement, good and marketable
title to the HMT stock underlying the option subject to the provisions of
Section 3 of this Agreement, free and clear of any other claims, security
interests, liens, pledges, options, encumbrances, charges, agreements, voting
trusts or other arrangements or restrictions (other than any restrictions on
transfer under federal and state securities laws).
5.2 As of the grant of option in Section 2.1 of this Agreement,
there are 6,100 shares of HMT voting common stock issued and outstanding, and
an additional 3,900 shares of voting common stock issuable on conversion of
outstanding debt. In addition there is a contingent option exercisable after
January 1, 1998, until eighteen (18) months from the date hereof, to purchase
up to 2,245 shares of HMT voting common stock from HMT at a price of $200.45
per share (the "HMT Option"). The HMT Option is only exercisable if Karen
Wolfe or Eric Wolfe breach their agreement to sell to the holder of the HMT
Option 1,100 shares of HMT voting common stock (a number of shares sufficient
to give the holder of the HMT Option 51% of the outstanding voting common
stock on a fully diluted basis, i.e., after conversion of the outstanding
convertible debt), for a total price of $450,000 ($409.09091 per share),
pursuant to an option exercisable by the holder of the HMT Option after
January 1, 1998 until eighteen months after the date hereof.
6.0 Survival of Representations and Warranties
The representations and warranties of the parties hereto shall
survive the consummation of the transactions contemplated hereby.
<PAGE> 75
7.0 Indemnification
Without limiting any other rights or remedies the parties may
have, SCI shall indemnify and hold harmless HMT, and HMT shall indemnify and
hold harmless SCI, from all loss, costs, claims, damages, liabilities or
expenses, including reasonable attorneys' fees and costs of suit incurred by
the indemnified party, from or as a result of the inaccuracy or falsity of any
representation or warranty made by the other, or the breach by either of them
of any provision of this Agreement, or any claim, action, suit or proceeding
filed or threatened against the indemnified party incident to or as a result
of the foregoing. This indemnification shall survive the consummation of the
transactions contemplated hereby.
8.0 General
8.1 Non-Assignment. The option is not assignable. This
Agreement and the rights of the parties hereto may not be assigned without the
written consent of the parties which may be withheld in their respective
absolute discretion.
8.2 Binding Effect. Subject to any restrictions stated in any
other provision of this Agreement restricting transfers, this Agreement shall
be binding on and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
8.3 Entire Agreement. This Agreement, and the documents
delivered and to be delivered pursuant hereto, constitute the entire Agreement
and understanding between the parties and supersede any prior oral or written
agreement and understanding related to the subject matter of this Agreement.
8.4 Amendment. This Agreement may be modified or amended only
by a written instrument executed by HMT and SCI.
8.5 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
8.6 No Brokers or Finders. The parties represent to each other
that no broker or finder has been employed in connection with this Agreement
or the transactions contemplated hereunder. Each party agrees to indemnify
and hold the other harmless against all loss, cost, liability, damage or
expense arising out of claims for fees or commissions of brokers or finders
employed or alleged to have been employed by such party.
8.7 Payment of Fees and Costs. Whether or not the transactions
herein contemplated shall be consummated, each party will pay its own fees,
expenses and disbursements and those of its own agents, representatives,
accountants and counsel incurred in connection with the subject matter of this
Agreement and any amendments thereto.
<PAGE> 76
8.8 Interpretation. The parties agree that each has
participated in the drafting of this Agreement. The parties further agree
that California Civil Code
Section 1654 shall have no application to this Agreement.
8.9 Severability. If any provision of this Agreement is held
invalid or unenforceable as the result of any claim made by any party hereto,
the remainder of this Agreement shall nevertheless remain in full force and
effect, to the extent permitted under applicable law. If any provision is
held invalid or unenforceable with respect to particular circumstances, it
shall nevertheless remain in full force and effect in all other circumstances.
If any provision of the Agreement is unenforceable under the law prevailing on
the date hereof, but is enforceable under the law prevailing at a subsequent
time, then such originally unenforceable provision shall be deemed to take
effect at the time when it becomes enforceable. As used herein, the term
"unenforceable" is used in its broadest and most comprehensive sense, and
includes the concepts of void or voidable.
8.10 Notices. All notices and other communications required or
permitted to be delivered under this Agreement shall be in writing and shall
be hand-delivered, sent by a reputable, overnight mail service or by certified
or registered mail, postage pre-paid, return receipt requested, addressed to
the appropriate party at its address set forth on a signature page hereof or
such other address as that party may indicate to the other in writing. Notice
shall be deemed to have been given on the day of receipt or the date receipt
is refused, whichever first occurs.
8.11 Attorney's Fees. Should suit be instituted to enforce or
interpret the provisions of this Agreement, the prevailing party in such
litigation shall recover from the non-prevailing party a reasonable sum to be
fixed by the Court for and on account of its attorney's fees and costs
incurred as a result of such litigation.
8.12 Waiver. Any party's failure to enforce any provision of
this Agreement shall not in any way be construed as a waiver of any such
provision, or prevent that party thereafter from enforcing each and every
other provision of this Agreement.
8.13 Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of California, without
regard to its laws with respect to conflicts of laws.
<PAGE> 77
8.14 Dispute Resolutions: Arbitration. In the event that any
dispute, claim or controversy between the Parties (except as provided below)
should arise in connection with this Agreement, such dispute, claim or
controversy shall be resolved by arbitration in the County of Contra Costa,
State of California, by a panel of three arbitrators appointed pursuant to the
commercial rules then in force of the American Arbitration Association. If
any arbitration proceedings are necessary to enforce or interpret the terms of
this Agreement, the prevailing party, if any, shall be entitled to recover its
reasonable attorney's fees, costs and necessary out-of-pocket disbursements
from the opposing party, in addition to any other relief to which it may be
entitled, including without limitation any fees and cost incurred in pursuing
injunctive relief.
It is specifically acknowledged by the Parties that any
confidentiality, intellectual property, trade secret or proprietary
information claims may be litigated in law and/or in equity in the appropriate
courts, in Contra Costa County, California or, if a question of exclusive
federal jurisdiction, in the United States District Court for the Northern
District of California, and that arbitration shall not be the method of
resolution for these claims unless provided for in a separate writing executed
by the parties. In any legal proceedings involving such claims, the
prevailing party, if any, shall be entitled to recover its reasonable
attorney's fees, costs and necessary out-of-pocket disbursements
from the opposing party, in addition to any other relief to which it may be
entitled, including without limitation any fees and costs incurred in pursuing
injunctive relief.
8.15 Titles and Headings. Titles and headings to sections and
paragraphs in this Agreement are for the purpose of reference only and shall
in no way limit, define, or otherwise affect the construction of this
Agreement.
8.16 Indemnities and Hold Harmless/--Attorneys' Fees. Each
indemnity and hold harmless in this Agreement shall be deemed to cover and be
an obligation to pay reasonable attorneys' fees of the indemnified party
incurred in connection with the matter indemnified.
8.17 Number and Gender. Whenever appropriate in this Agreement,
terms in the singular form shall include the plural (and vice versa) and any
gender form shall include all others.
8.18 Exhibits. Each exhibit referred to in the Agreement is by
that reference specifically incorporated in this Agreement.
<PAGE> 78
8.19 Remedies Not Exclusive and Waiver. Except as otherwise
specified in this Agreement, no remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy
and each remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise. The election of any one or more remedies shall not
constitute a waiver of the right to pursue other available remedies. Any
party hereto may waive any covenant, condition or provision of this
Agreement intended for its benefit, provided such waiver is in writing and is
delivered to the other party or parties on or prior to the date of performance
for such covenant, condition or provision.
8.20 Facsimile Signature. A party may agree to accept facsimile
signatures as an original on any document, provided that the party delivering
signature by facsimile shall promptly send to the other a copy of the
signature page of such document with the original manual signature applied
thereto. The failure of the other party to receive the same in no way shall
void the signature received by facsimile, and such party sending by facsimile
may re-execute, at a later date, an original of the document under the date of
the facsimile signature without need or requirement to disclose that such re-
execution was on any other date.
IN WITNESS WHEREOF, each of the parties hereto have executed this
Agreement by its officer or officers duly authorized as of the day and year
first above written.
SYSTEMS COMMUNICATIONS, INC.,
a Florida corporation,
By:
Its: HEALTH MANAGEMENT
TECHNOLOGIES,
a California corporation
By:
Its:
<PAGE> 79
Exhibit (10) 40.
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT, is made and entered into on January
31 , 1997, by and between Telecom Network, Inc., a Florida corporation,
("TNI") and International TeleData Corporation, a Florida corporation,
("ITD").
WITNESSETH:
WHEREAS, TNI is engaged through one of its division in the businesses of
long distance telephone service and utility bill auditing ("Auditing
Division"); and
WHEREAS, ITD is a publicly owned corporation (as a result of merger with
a publicly owned "shell company") the common stock of which is expected to
begin trading in the over-the-counter market with quotations published on the
[OTC Bulletin Board] beginning _______, 1997 or, as soon thereafter as
practicable and which is engaged in the acquisition and operation of operating
businesses; and
WHEREAS, ITD desires to acquire the Auditing Division and TNI desires to
sell
the Auditing Division to ITD; and
NOW, THEREFORE, in consideration of the premises hereinbefore set forth
and the mutual promises and respective representations and warranties of the
parties, one to another made herein, and the reliance of each party upon the
other based hereon, and other good and valuable consideration, the receipt and
sufficiency of which the parties acknowledge, ITD agrees with TNI, for
purposes of consummating the within described transaction, as follows:
ARTICLE I
PRELIMINARY MATTERS
Section 1. 01. Recitals. The parties acknowledge the recitals
hereinabove set forth in the preamble are correct, and are, by this reference,
incorporated herein and are made a part of this Agreement.
Section 1. 02. Exhibits and Schedules. Exhibits and Schedules referred
to herein and annexed hereto are ' by this reference, incorporated herein and
made a part of this Agreement, as if set forth fully herein.
ARTICLE II
DEFINITIONS
<PAGE> 80
Section 2.01. Use of Words and Phrases. Natural persons may be
identified by last name, with such additional descriptors as may be desirable.
The words "herein," "hereby," "hereunder," "hereof," "hereinbefore,"
"hereinafter," and within" and other equivalent words refer to this Agreement
as a whole and not to any particular Article, Section or other subdivision
hereof. The words, terms and ,Phrases defined herein and any pronoun used
herein shall include the singular, plural and all genders. The word "and"
shall be construed as a coordinating conjunction unless the context clearly
indicates that it is intended to be construed as a copulative conjunction.
All accounting terms not otherwise defined herein shall have the meanings
assigned to them under generally accepted accounting principles obtaining in
the United States of America. All accounting terms not otherwise defined
herein shall have the meanings assigned to them under generally accepted
accounting principles unless specifically referenced to regulatory accounting
principles.
ARTICLE III
THE TRANSACTION
Section 3. 01. Transfer of Auditing Division and Payment. At Closing,
(i) TNI shall deliver to ITD a bill of sale to all of TNI's assets, tangible
and intangible, including without limitation customer contracts, agreements
and work in process) necessary for the continuing operation of the Audit
Division (not including records which are not needed for future operations),
an undertaking to pay all liabilities of TNI related to the operations of the
Audit Division prior to the Closing such that none of those liabilities become
a charge or lien upon the assets covered by the bill of sale and a letter(s)
terminating the employment of each Audit Division employee ITD desires to
employ in the ongoing operations of the Audit Division; and, (ii) ITD shall
deliver to TNI Twenty-five Thousand Dollars ($25,000) in cash (which
heretofore has been deposited with Systems Communications, Inc. ("SCI") as a
binder, and which SCI shall retain at Closing for repayment of
intercompany debt due to it from TNI) and a debenture issued by ITD to the
order of TNI in the principal amount of Five Hundred Thousand Dollars
($500,000.00) with such attributes as described in Section 3.02 ("Debenture").
With respect to the Debenture TNI shall complete and deliver to ITD, at
Closing, a subscription and investment representations for the Debenture as a
"restricted security" as defined in Rule 144 ('Rule") under the Securities Act
of 1933, as amended, ("Act"). The Debenture certificate will contain the
following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (AND IS
A "RESTRICTED SECURITY" AS DEFINED UNDER SAID ACT) OR UNDER THE SECURITIES
LAWS OF ANY STATE OR JURISDICTION. ACCORDINGLY, NEITHER THIS SECURITY NOR ANY
INTEREST THEREIN MAY BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, PLEDGED
OR HYPOTHECATED, EXCEPT BY BONA FIDE GIFT OR INHERITANCE, IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITY UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
<PAGE> 81
Section 3.02. Debenture attributes - The Debenture will be issued in
registered form, transferable on the books of ITD (in compliance with its
status as a restricted security), have a maturity date of January 31, 1999,
subject to extension by mutual agreement of the registered holder and ITD. No
interest will accrue on the Debenture unless an Event of Default occurs. ITD
may call the Debenture for prepayment in whole but not in part, upon thirty
days prior written notice to registered holder, at par, from and after 180
days after the conversion 4feature of the Debenture becomes and is in effect;
provided, that during the period between the call date and the payment date
(actual payment in full) the Registered Holder may elect to convert the
Debenture into ITD common stock. The Debenture shall be a general obligation
of ITD. The Debenture shall be convertible at the option and election of the
Registered Holder into shares of ITD common stock, the
number thereof determined by dividing the principal amount of the Debenture on
the effective date as defined in the Convertible Debenture Note by the average
of the BID-ASK price of said shares at the close of trading on the first
trading day next following the effective date of issuing of the forthcoming
(1997) registration for ITD's common stock. The option to elect conversion of
the Debenture shall not become effective until the later of: (i) ninety
calendar days after the first day on which ITD common stock is quoted by not
less than one market maker in the principal quotation medium; or (ii) the
effective date of a registration statement pursuant to the Securities Act of
1933, as amended, which covers the shares of ITD common stock issuable upon
conversion of the Debenture (which registration statement ITD shall maintain
current and in effect until the date of conversion of the Debenture) and shall
remain in effect until exercised, or until the Debenture is fully paid .
Section 3.03. Obligation to reserve and to register ITD commons stock.
ITD will reserve for issuance the number of shares of its common stock into
which the Debenture is convertible promptly upon determination of the number
of such shares and will notify TNI regarding its computation of the number of
such shares and, by a corporate secretary's certificate, certify to TNI the
resolution of its Board of Directors reserving such shares out of its
authorized but unissued shares of common stock. ITD will include in the next
registration statement it files pursuant to the Securities Act of 1993, as
amended, on Form S-1, whether before conversion of the Debenture by the
Registered Holder for issuance thereto, or after conversion, the shares of ITD
common stock issued to the Registered Holder for resale by the holder into the
public securities market. This Section shall survive the Closing.
Section 3.04. Press Releases. Press releases announcing the exchange of
stock provided in Section 3.01 shall require the approval of both TNI and
ITD's respective boards of directors.
<PAGE> 82
Section 3.05. Closing. The closing of the transaction herein
contemplated shall take place at 9: 00 o'clock a.m. on or before February 5,
1997 at the offices of SCI, Suite 300, 2575 Ulmerton Road, Clearwater,
Florida, subject to extension by the parties and the conditions that: (i) ITD
shall have been afforded an opportunity to conduct an investigation of the
business, books, records and facilities of the Audit Division, including
interviews with key personnel; (ii) ITD shall have verified and approved to
its satisfaction the status of all vendor, customer and other material
agreements, with respect to the Audit Division, between TNI and other parties,
the status of the Audit Division's business and operation, and the status of
all litigation, if any, involving or regarding TNI; (iii) no material adverse
change shall have occurred in Audit Division's assets or business and
prospects (financial and otherwise); (iv) TNI and ITD's boards of directors
shall have approved the transaction; and (v) documentation (including the form
of the Debenture) and opinions of counsel shall be satisfactory to the parties
and their respective counsel. At Closing, each party shall deliver those
things required to be delivered by it, certificates of appropriate persons
that all the conditions required to be satisfied by it or him have been
satisfied, unless such condition has been waived in writing by the other
party, and certificates of appropriate persons that the representations and
warranties set forth in this Agreement are true and correct at Closing date .
The parties will cooperate for purposes of closing the transactions
contemplated by this Agreement. If the Closing is not completed by February
5, 1997, subject to extension by the mutual written agreement of the parties,
this Agreement shall terminate and be void and the parties shall be released
from their respective obligations hereunder and shall execute without further
consideration, upon the request of the other party, a written acknowledgment
of such termination and release; provided, that, SCI shall be entitled to
retain as its sole property the full amount of the binder deposited with SCI,
as referred to in Section 3.01.
Section 3.06. Transaction Costs. Each party shall pay its own costs incurred
by it in connection with this Agreement.
Section 3.07. Confidential Information. ITD, its directors, officers,
employees, agents and attorneys will hold in strictest confidence all
information received from TNI and SCI for purposes of satisfying Section 3.03
or otherwise in connection with this Agreement; shall not disclose same,
except to persons who have a need to know for purposes of the Agreement,
including attorneys, accountants, and potential lenders and investors (but not
the public stock market), and, in the event that the transaction contemplated
by this Agreement does not close will return all such information and copies
thereof to TNI or SCI, as the case may be; except, that this provision shall
not apply to any information that is or comes into the public domain and
disclosures required by law or court administrative order. This Section shall
survive a termination of this Agreement by the parties.
ARTICLE IV
Representations and Warranties
Section 4.01. Representations and Warranties of TNI and SCI. TNI and SCI
represent and warrant to ITD as follows:
<PAGE> 83
(a) TNI is a corporation duly incorporated and organized, validly
existing and in good standing under the laws of its state of incorporation,
has all power to carry on its business as it is now being conducted and to
own, lease and operate its properties and is not required to be qualified,
licensed or domesticated under the laws of any other state as a foreign
corporation; true and complete copies of its Articles of Incorporation, as
amended, Bylaws, as amended, recorded of proceedings of its Board of Directors
and its Stockholders, a certificate of good standing issued within thirty days
prior to Closing by its state of incorporation and copies of all material
executory contracts requiring future performance by TNI have been delivered to
ITD.
(b) The transaction contemplated by this Agreement will not result in
any adverse consequences to or breach of any agreement, mortgage, instrument,
judgment, decree, law or governmental regulation, permit or authorization by
TNI.
(c) The unaudited financial statements or records of the Audit Division
delivered to ITD are correct and complete in all material respects and shall
be certified to ITD as such by TNI's president and chief financial officer,
TNI having filed (whether on a consolidated return with TNI or otherwise), all
state and federal tax returns (including income, sales, real property,
franchise and other) which it . required to file; and there is no tax,
including withholding and social security @tsrust funds, which has not been
paid and is now due and owing, except for amounts due for the current period
which are not yet payable. Neither TNI nor SCI has received a notice of audit
and no audit is underway with respect to any such tax returns.
(d) The value of assets used in the Audit Division identified on the
Balance Sheets of TNI at the dates thereof is materially correct and all such
assets are necessary for the operation of the Audit Division's business. TNI
has good and marketable title to all of its properties and assets which are to
be conveyed to ITD by the bill of sale described in Section 3. 01, which
properties and assets are in good working order and condition or are suitable
to the purposes to which they are devoted.
(e) To the best knowledge of TNI and SCI, the Audit Division is in
compliance with all laws, regulations, judgments, orders and decrees which
apply to the conduct of its business -
(f) TNI will disclose to ITD all salary and compensation agreements and
arrangements with the Audit Division employees.
(g) TNI has conducted, and will conduct through Closing, the Audit
Division business in the ordinary course, and will not grant any salary or
compensation increase to any Audit Division employee or make any commitment
for capital expenditures, other than as disclosed to ITD and approved by it.
(h) TNI has not guaranteed the debts or obligation of any other person.
<PAGE> 84
(i) TNI has not, since inception, given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other
person who is, or may be, or has been in a position to help or hinder the
business of the Audit Division which might subject any of them to damage or
penalty in civil, criminal or governmental litigation or proceedings.
(j) Information delivered by TNI to ITD in contemplation of this
Agreement or with respect hereto is correct, complete and accurate.
(k) All the parties to any material contract with TNI for performance by
or for the benefit of the Audit Division are in full compliance with the
requirements of such contract and not in default or breach of performance or
observance of any performance, requirements, terms or conditions thereof, and
neither TNI nor the other party thereto have any claim against the other party
for any material default or breach thereunder.
(1) TNI is not obligated to pay any broker's or finder's fee in
connection with this Agreement.
Section 4.02. Representations and Warranties of ITD. ITD represents and
warrants to TNI, as follows:
(a) ITD is a corporation duly incorporated and organized, validly
existing and in good standing under the laws of its state of incorporation,
has all power to carry .,on its business as it is now being conducted and,
following the exchange of stock contemplated by this Agreement, to be
conducted; and to own, lease, and operate its properties (there being none at
the date hereof) and is not required to be qualified, licensed or domesticated
under the law of any other state as a foreign corporation, other than as set
forth above; true and complete copies of its Articles of Incorporation, as
amended, Bylaws, as amended, recorded of proceedings of its
Board of Directors and its stockholders, and a certificate of good standing
issued within thirty days prior to the Closing by its state of incorporation
have been delivered to TNI.
(b) The applications, registrations and reports submitted to or filed
by ITD with any quotation medium, any publisher of standard securities manuals
and any securities broker-dealers to satisfy the informational requirements of
the Rule 15c(2)-ll pursuant to the Securities, Exchange Act of 1934, as
amended, or the Securities and Exchange Commission pursuant to said Exchange
Act, copies of which have been delivered to TNI, contain full and fair
disclosure of material information about ITD (including financial statement of
ITD) as required by the forms governing the required content of such
applications, registrations and reports, and do not omit any information
which, in light of the information provided, would be necessary to make the
information provided not misleading.
(c) ITD is not obligated to pay any broker's or finder's fee in
connection with this Agreement.
(d) ITD has duly authorized, executed and delivered this Agreement and
has the full power and authority to enter into this Agreement and to perform
its obligations contemplated hereunder.
<PAGE> 85
(e) The Debenture, when issued and delivered as contemplated by this
Agreement, will be duly and validly approved and issued, and a valid, legal
and binding obligation of ITD, enforceable in accordance with its terms,
subject-with respect to collectability to insolvency and bankruptcy laws and
equitable principles of creditors' rights.
(f) ITD has made application for quotation of its common stock on , and
in good faith expects all necessary approvals for publication of quotations
for its common stock in such quotation medium to be received not later than
February 1, 1997 and will vigorously pursue such approvals.
Section 4.03. Mutual Representations. Each party has made available to
the other party the complete and accurate information and documentation
requested by such other party and as is necessary for the purposes of
evaluating the risks and merits of the acquisition of common stock of TNI, on
the one hand, and the Debenture, on the other hand.
ARTICLE V
Indemnification
Section 5.01. Mutual Indemnification. The parties shall indemnify and
hold each other harmless from and against any claim, action, costs, expense,
liability, loss, damage, injury, suit, or injury attributable to the breach of
such party's representations and warranties, including any attorney's fees and
costs incurred in connection therewith, or in the enforcement of this
provision or of the terms of this Agreement.
ARTICLE VI
NOTICES
Section 7. 01. Procedure for Sending Notices. Any and all notices or
other communications required or permitted to be given under any of the
provisions of this Agreement, shall be in writing and shall be deemed to have
been duly given when personally delivered (including receipted express courier
and overnight delivery service) or mailed by first class certified mail,
return receipt requested, showing the name of the recipient, addressed to the
parties at the addresses set forth below (or at such other address as any
party may specify by written notice to all other parties given as provided in
this Section). Copies of notices shall be given to:
As to TNI Edwin B. Salmon, Jr., Executive Vice President Systems
Communications, Inc. Suite 300
2575 Ulmerton Road
Clearwater, Florida 34622
As to ITD Ronald Stewart, Chairman
International TeleData Corporation
Suite 500
3825 Henderson Boulevard
Tampa, Florida 33609
<PAGE> 86
ARTICLE VII
Legal and Other Costs
Section 8. 01. Partv Entitled to Recover. In the event any party
defaults in his or its obligation under this Agreement (the "Defaulting
Party") and the other party (the "Non-Defaulting Party") recovers against the
Defaulting Party then, in addition to all damages and other remedies, the
Defaulting Party shall promptly pay to the Non-Defaulting Party all costs and
expenses (including reasonable attorneys' fees and expert witness fees) paid
or incurred by the Non-Defaulting Party in connection with enforcement of its
rights and shall promptly pay interest on any money (both the amount recovered
and the costs and expenses) at the rate of 1.5% per month during the period
between the date such payment should have been made hereunder, or the date the
cost or expense was paid by the Non-Defaulting Party, and the date of payments
thereof by the Defaulting Party to the Non-Defaulting Party.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Effective Date . The effective date of this Agreement
shall be the date first above written, subject to any conditions set
forth herein and interruptions.
Section 9.02. Entire Agreement - This writing constitutes the entire
agreement of the parties with respect to the subject matter hereof,
superseding all prior agreements, understandings, representations and
warranties.
Section 9.03. Titles and Headings,,-. The section and paragraph titles and
headings contained herein are for the purpose of convenience only and are not
intended to define or limit the contents of said sections and paragraphs.
Section 9.04. Waivers. No waiver of any provision, requirement
obligation, condition, breach or default hereunder, or consent to any
departure from the provisions hereof, shall be considered valid unless in
writing and signed by the party giving such waiver, and no such waiver shall
be deemed a waiver of any subsequent breach or default of the same or similar
nature.
Section 9.05. Amendments. This Agreement may not be amended, modified
or terminated except by a written agreement specifically referring this
Agreement signed by all of the parties hereto and no amendment, modification
or alteration of 9 addition to or termination of this Agreement or any
provision of this Agreement shall be effective unless it is made in writing
and signed by the parties.
<PAGE> 87
Section 9.06. Further Assurances - Each party hereto after the Closing
and without further consideration, shall cooperate, shall take such further
action, and shall execute and deliver such further documents as may be
reasonably requested by the other party in order to carry out the provisions
and purposes of this Agreement.
Section 9.07. Construction. This Agreement has been negotiated by the
parties, section by section and no provision hereof shall be construed more
strictly against one party than against any other party by reason of such
party having drafted such provision. The order in which the provisions of
this Agreement appear are solely for convenience of organization; and later-
appearing provisions shall not be construed to control earlier-appearing
provisions.
Section 9.08. Invalidity- It is the intent of the parties that each
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law. If any provision hereof shall be
prohibited, invalid, illegal or unenforceable, in any respect, under
applicable law, such provision shall be ineffective to the extent of such
prohibition, invalidity or unenforceability only, without invalidating the
remainder of such provision or the remaining provisions of this Agreement;
and, there shall be substituted in place of such prohibited, invalid, illegal
or unenforceable provision or provision which nearly as practicable carries
out the intent of the parties with respect thereto and which is not prohibited
and is valid, legal, and enforceable.
Section 9.09. Multiple Counterparts - This Agreement may be executed in
one or more counterparts, each of which shall be an original and, taken
together, shall be deemed one and the same instrument.
Section 9. 10. Assignment, Parties and Binding Effect. This Agreement,
and the rights, duties and obligations of any party shall not be assigned
without the prior written consent of each other party. This Agreement shall
benefit solely the -,named parties and no other person shall claim, directly
or indirectly, benefit hereunder, express or implied, as a third-party
beneficiary or otherwise. Wherever in this Agreement a party is named or
referred to, the successors (including heirs and personal representatives of
individual parties) and permitted assigns of such party shall be deemed to be
included, and all agreements, promises, covenants and stipulations in this
Agreement shall be binding upon and inure to the benefit of their respective
successors and permitted assigns.
Section 9. 11. Survival of Representations and Warranties. The
representations and warranties made herein shall survive the execution and
delivery of this Agreement and full performance hereunder of the obligations
of the representing and warranting party.
Section 9.12. Arbitration. Unless a court of competent jurisdiction
shall find that a particular dispute or controversy cannot, as a matter of
law, be the subject of arbitration, andy dispute or controversy arising
hereunder, other than injunctive under Article V hereof, shall be settled by
binding arbitration in Tampa, Florida by a panel of three arbitrators in
accordance with the rules of the American Arbitration Association. Judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The parties may pursue all other remedies with respect
to any claim that is not subject to arbitration.
<PAGE> 88
Section 9.13. Jurisdiction and Venue. Any action or proceeding for
enforcement of this Agreement and the instruments and documents executed and
delivered in connection herewith which is determined by a court of competent
jurisdiction to not, as a matter of law, be subject to arbitration as provided
in Section 9.12, shall be brought and enforced in the courts of the State of
Florida in and for Pinellas County, and in the United States District Court
for the Middle District of Florida, Tampa Division. and the parties
irrevocably submit to the jurisdiction of each such court in respect of any
such action or proceeding.
Section 9.14. Applicable Law. This Agreement and all amendments thereof
shall be governed by and construed in accordance with the law of the State of
Florida applicable to contracts made and to be performed therein (not
including the choice of law rules thereof).
IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
(CORPORATE SEAL)
Systems Communications, Inc.
Attest:
/s/ Edwin B. Salmon_______
Edwin B. Salmon, Jr., Secretary
/s/ Stephen E. Williams
Stephen E. Williams, President
Telecom Network, Inc.
By:/s/ David J. Olivet____
David J. Olivet, President
(CORPORATE SEAL)
International TeleData Corporation
By: /s/ Ronald Stewart
__________ , Secretary
<PAGE> 89
Exhibit (10) 41.
THIS SECURITY (AND THE UNDERLYING SECURITY, IF ANY) HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (AND IS A "RESTRICTED SECURITY" AS DEFINED
UNDER SAID ACT) OR UNDER THE SECURITIES LAWS OF ANY STATE OR JURISDICTION.
CONVERTIBLE DEBENTURE NOTE
$500,000-00 This 31 day of January, 1997
Tampa, Florida
FOR VALUE RECEIVED, INTERNATIONAL TELEDATA CORPORATION, a New York
corporation, authorized to conduct business in Florida (hereinafter called
"BORROWER"), promises to pay TELECOM NETWORK, INC., or registered assigns
(hereinafter called "REGISTERED HOLDER"), the sum of FIVE HUNDRED THOUSAND
DOLLARS AND NO/100THS ($500,000.00). This obligation matures on the 365th day
following the date hereof and is due and payable in full on that date.
Failure to pay the obligation in full on that date shall be an Event of
Default. Upon such Event of Default, BORROWER shall pay to REGISTERED HOLDER
interest on the outstanding principal amount of this Note at the highest rate
of interest allowable by law from the date of such Event of Default until such
Event of Default shall be cured or waived, or until this Note, with interest
thereon, is fully paid as otherwise provided herein.
Said obligation shall be payable at the principal office of BORROWER by
hand delivery or deposit of shares of BORROWER's Common Stock and as provided
below, in the U.S. Mail, first class postage prepaid, addressed to REGISTERED
HOLDER at its address registered on the books of the BORROWER or at such other
address as REGISTERED HOLDER may designate from time to time.
PRINCIPAL AND INTEREST PAID BY CONVERSION:
The number of shares of BORROWER's Common Stock by which this Note shall
be automatically repaid and into which this Note shall be converted
automatically shall be determined by dividing the principal outstanding on the
effective date set forth below by the average of the BID-ASK price of said
shares at the close of trading on the first trading day next following the
effective date of issuing of the forthcoming (1997) registration statement for
BORROWER's Common Stock which is the "EFFECTIVE DATE". The certificates for
such shares of Common Stock shall be delivered as of the EFFECTIVE DATE. The
date of such repayment and automatic conversion of the principal ($500,000.00)
shall be the effective date of BORROWER's first registration statement after
the date hereof pursuant to the Securities Act of 1933, as amended, for the
sale of Common Stock to be issued by the BORROWER.
<PAGE> 90
BORROWER does hereby: (a) agree that no course of dealing or delay or
omission or forbearance on the part of REGISTERED HOLDER in exercising or
enforcing any of REGISTERED HOLDER's rights or remedies hereunder, or under
,,.any instrument with respect to this Note, or under any other instrument
executed in connection with the loan evidenced by this Note, shall impair or
prejudice any of REGISTERED HOLDER's rights and remedies hereunder or the
enforcement hereof, and that REGISTERED HOLDER may extend or renew this Note
for any term (whether or not longer than the original one (1) year term of
this Note), and may extend, modify or postpone the time and manner of payment
arid performance of this Note; and (b) waive notice of acceptance of this
Note, notice of the occurrence of any default under this Note, and
presentment, demand, protest, notice of dishonor and notice of protest.
The happening of any of the following events shall constitute a default
hereunder:
(a) default in the payment of any principal on this Note as and when the
same shall become due and payable; or
(b) breach, failure or default on the part of BORROWER in the
performance or observance of any covenant, condition or agreement of BORROWER
under this Note for a period of thirty (30) days following written notice
thereof unless such breach, failure or default shall have been cured within
such thirty (30) day period; or
(c) a receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator, regulatory authority (or other similar official), shall take
possession of BORROWER or its property or business, or exercise control
thereof or thereover,, without its consent; or a court of competent
juridiction shall enter a decree or order for relief in respect of BORROWER in
a involuntary case under any applicable bankruptcy, insolvency or other
similar laws now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, conservator, sequestrator, regulatory authority
(or other similar official) of BORROWER or for the property or business
thereof, or ordering the winding-up or liquidation of its affairs and such
decree or order shall continue unstayed and in effect for a period of thirty
(30) consecutive days; or BORROWER shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator, regulatory authority (or other similar official),
of BORROWER or of any substantial part of its property or business; or shall
make any general assignment for the benefit of creditors, or shall take any
corporate action in furtherance of any of the foregoing.
<PAGE> 91
If a default occurs hereunder, then at the option of REGISTERED HOLDER:
(a) the entire principal amount then remaining unpaid shall immediately
become due and payable without notice or demand; (b) the unpaid principal
amount shall accrue interest at the highest rate of interest allowable by
Florida law; and (c) all other liabilities of BORROWER to REGISTERED HOLDER
(notwithstanding any provisions thereof), shall immediately become due and
payable without notice or demand (but with such adjustments, if any, with
respect to any interest or other charges as may be provided for in this Note
or other writing evidencing such liability). Failure to exercise this option
shall not constitute a waiver of the right to exercise the same in the event
of any subsequent default.
BORROWER agrees to pay to REGISTERED HOLDER reasonable attorneys' fees
,pnd costs, whether or not an action be brought, for the services of counsel
employed . after maturity or default to collect this Note, or to protect the
security, if any, or enforce the performance of any other agreement contained
in this Note or in any instrument of security as aforesaid, including costs or
attorneys' fees on appeal, in bankruptcy matters, or post judgment relief.
BORROWER shall have no right of set-off against REGISTERED HOLDER under
this Note. REGISTERED HOLDER shall have the right, however, immediately and
without further action or notice by it, to set-off against this Note all money
owed by REGISTERED HOLDER in any capacity to BORROWER, whether or not due, and
also to set-off against all other liabilities of REGISTERED HOLDER to BORROWER
all money owed by REGISTERED HOLDER in that capacity to BORROWER.
This Note is executed under seal, constitutes a contract under the law
of the State of Florida, and shall be enforceable in a court of competent
jurisdiction in said State, without regard to the place in-which this Note is
executed.
Signed and sealed this 31 day of January, 1997.
(CORPORATE SEAL)
Attest:
/s/ Ronald Stewart
Secretary
INTERNATIONAL TELEDATA
CORPORATION
By: /s/ David Bell
David Bell
Printed name
Its: President
<PAGE> 92
Exhibit (10) 42.
DEPARTMENT OF THE ARMY
ACADEMY OF HEALTH SCIENCES, UNITED STATES ARMY
FORT SAM HOUSTON, TEXAS 78234-6100
REPLY TO THE ATTENTION OF JUNE 16,1997
Memorandum For Systems Communication, Inc./National Solutions Corporation,
4707 140th. Ave North, Clearwater, Fla. 33762
Subject: Renewal of Cooperative Research and Development Agreement (CRDA)
The U.S. Army Medical Department Center and School, Center for Healthcare
Education and Studies will renew the current CRDA with Systems Communication
inc. for one additional year. This agreement is effective on June 18, 1997.
The following changes and stipulations are to be mutually honored and agreed
to by both Developer and Collaborator in this agreement:
Field of Use Addition
Para 5.1.1 The Collaborator may, with prior written approval of the
Developer, utilize the TCSDP software and related architecture to perform
evaluation and analysis of health care benefits for individual companies,
corporations or business entities outside of the Automotive Industry and their
downline vendors in the United States of America. The terms and conditions of
this Agreement shall apply to any such additional company, corporation or
business entity were included in the original Approved Field of Use contained
in contained in this Agreement.
Computer Charges
This agreement is contingent upon the payment of computer charges incurred by
then National Solutions Corporation for the period October - December 1995 in
the amount of $45,363.81. A statement of these charges has been provided to
you. We trust this issue can be resolved, through payment, so we can address
SCI's immediate computer support and processing needs.
Address for Royalty Income
DFAS-RI-OPLOC
Attn: DFAS-RI-FD
Bldg 68
Rock Island, Ill 61299-8300
If these terms are agreeable please sign below and return to this activity for
further processing.
/s/ Edwin B. Salmon /s/ Martha Spinks
For: Systems Communications, Inc. For Center for Healthcare Education
and Studies
Martha K. Spinks, LTC, MS
Office of Technology Research Advancement
(ORTA) -- Negotiator
<PAGE> 93
Exhibit (17) 1.
Stephen E. Williams
130 Marina Del Ray Court
Clearwater, Florida 33767
813 593-3029 Home
813 593-7661 Office
813 593-7662 Fax
813 580-7503 Cell
The Board of Directors July 2, 1997
c/o Edwin B. Salmon, Jr. Chairman
Systems Communications, Inc.
4707 140th Ave. Nth Suite 107
Clearwater, FL 34672
Gentlemen:
Effective today, Friday, June 27th. I hereby submit my resignation as a member
of the Board of Directors of Systems Communications, Inc. (SCI).
During the course of the last several months, there have been numerous
communications with various Directors from creditors, shareholders and sitting
management expressing with insistance that a change in the Board of Directors
was essential to the survivability of SCI.
On June 18, 1997, a special meeting was held between members of management and
(3) three members of the Board of Directors of SCI, myself included, and (2)
two major creditors/shareholders. The purpose of the meeting which was called
by the management and creditor/shareholder representatives, was to put to vote
a proposal that the Chairman of the Board of Directors immediately step down
and subsequently a new Board of Directors slate be set forth for shareholder
approval. Although a quorum of the attendees supported the motion for removal
(my vote in support thereof), the motion was rebuked by the Chairman of the
Board of Directors. Subsequently the next day, Thursday, June 20th. In a
vote of no confidence all of the SCI corporate management and staff at the
corporate headquarters in Clearwater, Florida tendered their resignations.
This staff included the Chief Executive Officer, Chief Financial Officer,
Controller, Staff Accountant and the In House Corporate Counsel.
I have expressed my disagreement at several meetings between management
members and members of the Board of Directors concerning the efforts of
certain members of the Board of Directors to micro manage the company,
thereby interfering with the efforts of management to turn SCI into a
profitable company. The role of the Board of Directors is to determine
policy, set forth standards and measures, and monitor management's operating
results. To my knowledge, the Board of Directors has not developed an
operating plan, nor put new management in place for the purpose of turning SCI
into a profitable company.
<PAGE> 94
I believe that recent actions taken by certain members of the Board of
Directors, without Board approval, are inconsistent with the duties of the
Board of Directors as to their responsibility to the company's creditors and
shareholders. Therefor and inconsideration of the facts set forth, I have
resigned as a member of the Board of Directors of Systems Communications, Inc.
SCI. I request that the points of concern that I express in this
resignation letter be disclosed pursuant to Item (6)a of Form 8-K, the form
required for current reports under the Securities and Exchange Act of 1934.
Item 6 of Form 8-K requires SCI to file a Form 8-K and to attach a copy of
this letter as an exhibit to the Form 8-K.
Yours truly,
/s/ Stephen E. Williams
cc to All Board of Directors Members
<PAGE> 95
Exhibit (17) 2.
David J. Olivet 11982 Avenida Consentido San Diego, CA 92128
Phone 619 485-6121 Fax 619 485-1390
The Board of Directors June 27, 1997
c/o Edwin B. Salmon, Jr. Chairman
Systems Communications, Inc.
4707 140th Ave. Nth Suite 107
Clearwater, FL 34672
Gentlemen:
I hereby resign as a member of the Board of Directors of Systems
Communications, Inc. (SCI) effective immediately because of a disagreement
with certain policies and practices of SCI as followed by the SCI Board of
Directors. I request that the disagreements that I express in this letter be
disclosed pursuant to Item (6)a of Form 8-K, the form required for current
reports under the Securities and Exchange Act of 1934. Item 6 of Form 8-K
requires SCI to file a Form 8-K and to attach a copy of this letter as an
exhibit to the Form 8-K.
During the past year and particularly the last several months, members
of the Board of Directors of SCI have been taking action in the name of the
Board of Directors without obtaining prior approval from the Board of
Directors. Instead, these members after taking such actions, request the
Board of Directors to ratify their actions. This practice is not in the best
interest of the shareholders of SCI and I am unable to perform my duties as a
member of the Board of Directors of SCI under these circumstances. Actions
which are material to SCI and which are outside of the ordinary course of
Business require approval by the Board of Directors. The Board of Directors
should only act at properly called meetings of the Board of Directors or by
written consents. Written consents require unanimous written consent of the
members of the Board of Directors to be effective.
One of the fundamental purposes of a board of Directors is to consider,
as a group, actions to be taken. This purpose is frustrated when the Board
members take action and then ask the Board to ratify the actions. The Board
of Directors is made up of numerous persons so that different viewpoints can
be offered, considered and acted upon. Because members of the Board of
Directors have taken action without prior approval, I did not have an
opportunity to be heard, and therefor, my views could not be considered prior
to the action being taken.
I have expressed my disagreement at several meeting of the Board of
Directors concerning the efforts of certain members of the Board of Directors
to micro manage the company, thereby interfering with the efforts of
management to turn SCI into a profitable company. I believe that the role of
the Board of Directors is to set overall strategy and policy. To my
knowledge, the Board of Directors has not developed a comprehensive strategy
for turning SCI into a profitable company.
<PAGE> 97
When a company is in financial distress, the Board of Directors has a
duty not only to Shareholders, but to creditors. I believe that actions have
been taken by certain members of the Board of Directors, without Board
approval, that are inconsistent with the duties of the Board of Directors to
the company's creditors.
For the forgoing reasons, I have resigned as a member of the Board of
Directors of SCI. According to the Securities Exchange act of 1934, SCI is
required to file a Form 8-K pertaining to my resignation within 5 business
days after receipt of this letter.
Very truly yours,
/s/ David J. Olivet
