Exhibit 10.2
SECOND AMENDMENT TO SHARE PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO SHARE PURCHASE AGREEMENT (this "Agreement") is made and
effective as of the 30th day of June, 2006
AMONG:
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(collectively, the "Vendors")
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TELEPLUS ENTERPRISES INC.
(the "Purchaser")
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TELEPLUS CONNECT CORP.
(the "Corporation")
WHEREAS pursuant to a share purchase agreement made as of March 28, 2004 among
the Purchaser, the Vendors and the Corporation (the "Share Purchase Agreement"),
the Purchaser purchased all of the issued and outstanding common shares in the
capital of the Corporation (the "Purchased Shares") on the terms and conditions
contained therein;
AND WHEREAS the Purchaser, the Vendors and the Corporation entered into an
amending agreement dated December, 2005 to amend certain of the terms and
conditions of the Share Purchase Agreement (the "Amendment");
AND WHEREAS the Purchaser's obligations to pay the consideration for the
Purchased Shares to the Vendors in accordance with the terms of the Share
Purchase Agreement (the "Obligations") are secured by: (i) a Guarantee Agreement
(the "Guarantee") dated May 11, 2005 between the Corporation and the Vendors;
(ii) a General Security Agreement (the "GSA") dated May 11, 2005 between the
Corporation and the Vendors granting the Vendors a security interest in and to
all undertakings, property and assets of the Corporation; and (iii) a Share
Pledge Agreement (the "Pledge") dated May 11, 2005 between the Purchaser and the
Vendors pledging all of the Purchased Shares to the Vendors (collectively, the
"Security Documents" and together with the Share Purchase Agreement, the
"Documents")(the security interests, pledges and other rights created by the
Security Documents are hereinafter referred to as the "Security");
AND WHEREAS the Purchaser has proposed, and the Vendors have agreed, that in
lieu of the consideration which remains payable to them under the terms of the
Share Purchase Agreement, the Vendors accept as full and final satisfaction of
the Obligations the amount of $3,655,000 (without the payment by Purchaser of
any interest thereon) payable by the Purchaser to the Vendors in 43 equal
monthly instalments on the first day of each month commencing August 1, 2006 of
the amount of $50,000 in cash and $35,000 in shares of the Purchaser's common
stock (with said shares to be paid as provided herein) (the "Settlement
Consideration");
NOW THEREFORE in consideration of the mutual covenants and agreements herein
contained, it is agreed between the Parties as follows:
ARTICLE 5 -
INTERPRETATION
5.1 Defined Terms
Capitalized terms used in this Agreement without definition have the meanings
specified in the Share Purchase Agreement. All references herein to the Share
Purchase Agreement shall mean the Share Purchase Agreement as amended by the
Amendment.
5.2 Governing Law
This Agreement shall be governed by and interpreted and enforced in accordance
with the laws of the Province of Ontario and the laws of Canada applicable
therein.
5.3 Arbitration
All disputes in connection with or arising out of the existence, validity,
construction, interpretation, performance payments, and termination of this
Agreement (or any terms hereof), which the Parties hereto are unable to resolve
between themselves, whether in law or in equity, shall be settled in accordance
with the provisions of Article 11 of the Share Purchase Agreement.
5.4 Interpretation Not Affected by Headings
The division of this Agreement into articles, sections, subsections and other
subdivisions and the insertion of headings are for convenience of reference only
and shall not affect the construction or interpretation of this Agreement.
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5.5 Severability
If any provision hereof is held to be illegal, invalid or unenforceable in any
jurisdiction, such provision shall be deemed to be severed from the remainder of
this Agreement with respect only to such jurisdiction and the remaining
provisions of this Agreement shall not be affected thereby and shall continue in
full force and effect.
5.6 Currency
All references in the Share Purchase Agreement or this Agreement to dollars,
unless otherwise specifically indicated, are expressed in Canadian currency.
5.7 Inclusion
Where the word "including" or "includes" is used in this Agreement, it shall
mean "including (or includes) without limitation".
5.8 Accounting Terms
All accounting terms not specifically defined in this Agreement shall be
construed in accordance with GAAP.
ARTICLE 6 -
CHANGE IN PAYMENT TERMS
2.1 Change in the Payment Terms
From and after the date set forth above, the Vendors hereby agree,
notwithstanding any other provision of the Share Purchase Agreement, to accept
the Settlement Consideration as full and final consideration for the Purchased
Shares, in lieu of the Obligations which remains currently payable under the
Share Purchase Agreement. The Settlement Consideration shall be paid to the
Vendors in 43 equal monthly instalments as follows: (a) on the first business
day of each calendar month (a "Payment Date") commencing August 1, 2006 and
continuing for 42 months thereafter the amount of $50,000 in cash. In addition,
an commencing on the earlier of: (i) November 1, 2006; or (ii) the effective
date of the registration statement filed by Purchaser in connection with Section
2.3(a) below, and continuing for 42 months thereafter the amount of $35,000 in
shares of the Purchaser's common stock (each share a "Consideration Share",
collectively the "Consideration Shares"). The obligation of the Purchaser to
issue and deliver the Consideration Shares to the Vendors is hereinafter
referred to as the ("Share Payment Obligation"). Purchaser shall not pay Vendors
any interest on the Settlement Consideration or with respect to the payments set
forth in this section. Vendors expressly agree and acknowledge that, except as
set forth in this Agreement, Purchaser shall have no further payment obligations
to Vendors, including, but not limited to those obligations set forth in Article
2 of the Share Purchase Agreement.
In the event that the registration statement filed by Purchaser (as set forth
below) is not effective at the time that the first or any subsequent Share
Payment Obligation is due, Purchaser shall pay the Share Payment Obligation by
paying to the Vendors the sum of $35,000 cash.
2.2 Consideration Shares. The number of Consideration Shares to be delivered
on each Payment Date shall be the number of Consideration Shares determined by
dividing the payment amount of $35,000 per Payment Date by the average closing
bid price for the Purchaser's common stock, as quoted by NASDAQ or an equivalent
quotation system, for the five (5) trading days that immediately precede the
relevant Payment Date (the "Deemed Share Price").
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2.3 Registration Rights
(a) Following execution of this Agreement, the Purchaser will use its
best efforts and shall promptly (the "Registration Period") prepare
and file a registration statement under the Securities Act of 1993,
as amended, or any successor federal statute, and the rules and
regulations of the Securities and Exchange Commission promulgated
thereunder, all as the same shall be in effect from time to time
(the "Securities Act") on any form that will permit the registration
of up to 16,000,000 Consideration Shares, or such amount of
Consideration Shares of the Purchaser sufficient to satisfy the
Purchaser's Share Payment Obligation to the Vendors. The
aforementioned registration statement shall be effective for the
entire time period during which Purchaser owes Vendors the
Consideration Shares. In the event that said registration statement
is not effective during a time period when Purchaser owes Vendors
the Consideration Shares, then Purchaser shall pay the Share Payment
Obligation by paying to the Vendors the sum of $35,000 cash (for
each period where such a payment is due). To the extent that
Purchaser pays the Vendors in cash, such payment shall reduce the
amount of Settlement Consideration owed by the Purchaser to the
Vendors.
(b) If at anytime the Purchaser determines to file a registration
statement under the Securities Act on any form that would also
permit the registration of up to 16,000,000 Consideration Shares, or
such amount of Consideration Shares of the Purchaser sufficient to
satisfy the Purchaser's Share Payment Obligation to the Vendors,
other than by a registration in connection with an acquisition in a
manner which would not permit registration of registrable securities
for sale to the public, on Form S-8, or any successor form thereto,
or on Form S-4, or any successor form thereto, and such filing is to
be on its behalf and/or on behalf of selling holders of its
securities for general registration of common stock to be sold for
cash pursuant to a public offering, the Purchaser shall promptly
give the Vendors written notice of such determination setting forth
the date on which the Purchaser proposes to file such registration
statement, which date shall be no earlier than thirty (30) days
after the date of such notice, and advising the Vendors of their
right to have the Consideration Shares included in such
registration. Upon the written request of the Vendors received by
the Purchaser no later than ten (10) days after the date of the
Purchaser's notice (which request shall specify the registrable
securities intended to be disposed of by such holders of registrable
securities and the intended method of disposition thereof), the
Purchaser shall use its best efforts to cause to be registered under
the Securities Act and included in such public offering all of the
Consideration Shares that the Vendors have so requested to be
registered. The Vendors may only exercise the aforementioned right
once.
(c) If, in the written opinion of the managing underwriter (or, in the
case of a non-underwritten offering, in the written opinion of the
Purchaser), the total amount of such securities to be so registered,
including such Consideration Shares, will exceed the maximum amount
of the Purchaser's securities which can be marketed: (i) at a price
reasonably related to the then current market value of such
securities; or (ii) without otherwise materially and adversely
affecting the entire offering; then the Purchaser shall be entitled
to reduce the number of Consideration Shares; provided however that
in any such case the number of shares of securities to be registered
on behalf of all other selling stockholders is reduced on a pro rata
basis based on the aggregate number of securities owned by each
selling stockholder at the time of filing the registration
statement.
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(d) The Purchaser has right to designate CIBC Wood Gundy, 1250
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as the broker (the "Broker") that will sell the Consideration
Shares. Purchaser further undertakes to have the Broker sell the
Consideration Shares within ninety (90) days after the Vendors place
the Consideration Shares with the Broker (the "Share Sale Time
Period"). Vendors agree to use the Broker to sell the Consideration
Shares. In addition, the Vendors agree to place said Consideration
Shares with the Broker immediately after the issuance of the
Consideration Shares to the Vendors. In the event that said
Consideration Shares have not been sold prior to the expiration of
the Share Sale Time Period, then the Vendors may notify Purchaser
that they desire to cancel the remaining Consideration Shares and
instead request that Purchaser make cash payment(s) to Vendors with
respect to the remaining Consideration Shares. For clarity, this
provision only relates to the Consideration Shares not sold within
the Share Sale Time Period and not to future payments (which may be
made by the Purchaser with Consideration Shares)
(e) All expenses incurred by the Purchaser in connection with the
foregoing registrations, including, without limitation, all
registration, filing and qualification fees, blue sky fees and
expenses, printing expenses, fees and disbursements of counsel for
the Purchaser, expenses of any special audits incidental to or
required by such registration will be borne by the Corporation. All
selling expenses, including any and all fees, commissions, discounts
or similar payments made to any broker or dealer in connection with
the sale of any securities shall be borne by the holder of such
securities.
2.4 Other Provisions Unchanged
Except for agreements expressly made by this Agreement with respect to the
satisfaction of the Obligations through the payment of the Settlement
Consideration as herein provided, all other provisions of the Share Purchase
Agreement shall remain and continue to have full force and effect as set forth
therein.
ARTICLE 7 -
ADDITIONAL AGREEMENTS
3.1 Acknowledgements of the Purchaser
The Purchaser acknowledges and agrees that:
(a) as modified by the provisions set forth herein, the Security is
valid, binding and fully enforceable, and shall continue to be fully
enforceable, by the Vendors in accordance with the terms thereof,
and the Vendors are entitled to exercise all of their respective
rights and remedies in respect of the Obligations, including under
the Security;
(b) the Vendors are in material compliance with any obligations to it,
whether under the Documents or otherwise;
(c) except as otherwise provided herein, none of the Documents have been
released, discharged, waived, or varied, that they all remain
binding upon the Purchaser and the Corporation and are valid and
enforceable against them in accordance with the terms thereof;
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(d) it, together with the Corporation as guarantor, have jointly
requested the Vendors to accept the Settlement Consideration in lieu
of the Obligations payable to the Vendors under the terms of the
Share Purchase Agreement;
(e) it consents, following Default, to the Vendors taking such steps as
they deem necessary in their discretion to collect the Obligations
and to enforce the Documents.
3.2 Acknowledgements of the Corporation
The Corporation hereby acknowledges and agrees to and in favour of the Vendors
that:
(a) the Guarantee is in full force and effect, unamended;
(b) as modified by the provisions set forth herein, the Security is
valid, binding and fully enforceable, and shall continue to be fully
enforceable, by the Vendors in accordance with the terms thereof,
and the Vendors are entitled to exercise all of their respective
rights and remedies in respect of the Obligations, including under
the Security;
(c) it consents to the Purchaser entering into this Agreement;
(d) it has obtained such independent legal advice as it deems
appropriate in the circumstances;
(e) it together with the Purchaser have jointly requested the Vendors to
accept the Settlement Consideration in lieu of the Obligations
payable to the Vendors under the terms of the Share Purchase
Agreement;
(f) it consents, following Default, to the Vendors taking such steps as
they deem necessary in their discretion to collect the Obligations
and to enforce the Documents.
3.3 Acknowledgements of the Vendors
The Vendors acknowledges and agrees that:
(a) the Purchaser and the Corporation are in material compliance with
any obligations to them, whether under the Documents or otherwise;
(b) except as otherwise provided herein, none of the Documents have been
released, discharged, waived, or varied, that they all remain
binding upon the Vendors and are valid and enforceable against them
in accordance with the terms thereof; and
(c) the Vendors have jointly requested that the Corporation and the
Purchaser accept the Settlement Consideration in lieu of the
Obligations payable to the Vendors under the terms of the Share
Purchase Agreement.
3.3 Representations and Warranties
(a) Each of the Purchaser and the Corporation hereby represent and warrant to
the Vendors, and acknowledge that the Vendors are relying upon such
representations and warranties in entering into this Agreement, as follows:
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(1) all corporate action necessary for the authorization, execution,
delivery and performance of this Agreement by it has been duly authorized
and taken by it;
(2) this Agreement, when duly executed and delivered by it, will
constitute a legal, valid and binding obligation, enforceable against it
in accordance with its terms, except that: (a) the rights and remedies of
the Vendors hereunder may be subject to and affected by the laws relating
to bankruptcy, insolvency, reorganization and creditors' rights generally;
and (b) a court may or may not order an injunction, specific performance
or other equitable remedy with respect to any particular provision of this
Agreement; and
(3) there is no provision of any by-law, directors' or shareholders'
resolution, indenture or agreement, written or oral, of or in respect of
it or under which it is obligated and, to its knowledge, there is no
statute, rule, regulation, judgment, decree or order of any court or
agency binding on it, that would be contravened by the execution and
delivery of this Agreement, or by the performance of any provision,
condition, covenant or other term hereof.
(b) The Vendors hereby represent and warrant to the Purchaser and the
Corporation and acknowledge that the Purchaser and the Corporation are relying
upon such representations and warranties in entering into this Agreement, as
follows:
(1) all action necessary for the authorization, execution, delivery and
performance of this Agreement by them has been duly authorized and taken
by them;
(2) this Agreement, when duly executed and delivered by each Vendor, will
constitute a legal, valid and binding obligation, enforceable against them
in accordance with its terms, except that: (a) the rights and remedies of
the Purchaser and the Corporation hereunder may be subject to and affected
by the laws relating to bankruptcy, insolvency, reorganization and
creditors' rights generally; and (b) a court may or may not order an
injunction, specific performance or other equitable remedy with respect to
any particular provision of this Agreement; and
(3) there is no provision of any indenture or agreement, written or oral,
of or in respect of it or under which they are obligated and, to their
knowledge, there is no statute, rule, regulation, judgment, decree or
order of any court or agency binding on them, that would be contravened by
the execution and delivery of this Agreement, or by the performance of any
provision, condition, covenant or other term hereof.
3.4 Events of Default
There shall be a default ("Default") hereunder if Vendors provide Purchaser and
Corporation with written notice of any of the following and within five (5) days
after such notice Purchaser and/or the Corporation, as the case may be, have
failed to cure such Default:
(a) the Purchaser fails to make any payment of the Settlement
Consideration to the Vendors in accordance with the provisions
hereof;
(b) the Purchaser or the Corporation breaches or defaults in performing,
complying with or fulfilling any material covenant, agreement,
undertaking, condition or obligation in, under or pursuant to this
Agreement in any material respect;
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(c) the Purchaser applies for, consents to, or acquiesces in, the
appointment of a trustee, receiver or other custodian for it or any
of its property, or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed
for it or for any of its property, or if it makes a general
assignment for the benefit of creditors, or if a bankruptcy,
insolvency, reorganization, readjustment, arrangement, composition,
moratorium or other case or proceeding seeking similar relief, or
any dissolution, liquidation or winding-up proceeding under any
bankruptcy, insolvency, moratorium, corporate or other analogous law
or provision is commenced in respect of either it or any of its
property or, if such case or proceeding is not commenced by it, is
consented to or acquiesced in by it, or if it takes any corporate or
other action to authorize, or in furtherance of, any of the
foregoing;
(d) the Corporation is in default, after the expiration of the
applicable cure period(s), if any, under that certain Forbearance
Agreement dated July 1, 2006 entered into by and among the Telizon
Shareholders, the 15005365 Shareholders, the Corporation, Telizon,
Inc. and 15005365, Inc.
3.5 Rights of Vendors Upon Default
Notwithstanding any provision in this Agreement or any of the Documents to the
contrary, following the occurrence of any Default the Vendors shall have
immediate access to any or all of the rights and remedies available to them,
under the Documents or otherwise, including without limiting the generality of
the foregoing the immediate issuance of a receiving order pursuant to the
provisions of the Bankruptcy and Insolvency Act (Canada) with respect to all
assets and business affairs of the Corporation.
3.6 No Waiver
Nothing in this Agreement shall be deemed to be a waiver of the rights and
remedies of the Vendors under this Agreement or of any of the Documents or those
granted by applicable law, all of which rights and remedies are preserved and
remain in full force and effect subject to the terms of this Agreement.
ARTICLE 8 -
SECURITY CONTINUING AND NOT AFFECTED
8.1 Guarantee
The Corporation hereby confirms that the guarantees of the Corporation under the
terms of the Guarantee shall remain in full force and effect. For greater
certainty, the Corporation hereby guarantees to the Vendors and their successors
and assigns, forthwith upon demand, prompt and complete payment of the
Settlement Consideration (or, in the event of a Default, the Obligations).
8.2 General Security Agreement
The Corporation hereby confirms that the security interests created on its
assets pursuant to the GSA shall remain in full force and effect. For greater
certainty, the security interests thereby created shall secure the performance
by the Corporation of its obligations under the Guarantee and this Agreement.
8.3 Share Pledge Agreement
The Purchaser hereby confirms that, except as modified herein, the security
interests created on the Purchased Shares pursuant to the Pledge shall remain in
full force and effect. For greater certainty, the security interests thereby
created shall secure the payment by the Purchaser of all amounts arising in
connection with or pursuant to the Share Purchase Agreement, as modified by this
Agreement.
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8.4 Further Assurances
The Purchaser and the Corporation hereby undertake to do all such acts and
things and execute and deliver such deeds, transfers, assignments and
instruments as the Purchasers may reasonably require in connection with the
preservation of the guarantees and security interests to which reference is made
in this Article 3.
ARTICLE 9 -
GENERAL
9.1 Entire Agreement
This Agreement constitutes the entire agreement between the parties with respect
to the subject matter hereof. There are no representations, warranties, terms,
conditions, undertakings or collateral agreements, expressed, implied or
statutory, between such parties other than as expressly set forth herein. No
modification or amendment of any provision of this Agreement shall in any event
be effective, unless the same shall be in writing and duly executed by the
parties hereto or thereto and then such modification or amendment shall be
effective only in the specific instance and for the purpose for which it was
given.
9.2 Amendments
This Agreement may only be amended, modified or supplemented by a written
agreement signed by all of the parties to this Agreement.
9.3 Rights Cumulative
All rights and remedies of the Vendors set out in this Agreement and in the
Documents will be cumulative and no such right or remedy contained herein or
therein is intended to be exclusive but each will be in addition to every other
right or remedy contained herein or therein. The taking of a judgment or
judgments with respect to the Settlement Consideration or the Obligations or any
of the obligations of the Purchaser or the Corporation will not operate as a
merger of any of the covenants or representations contained in this Agreement or
the Documents.
9.4 Counterparts.
This amending agreement may be executed in counterparts, each of which, either
in original or facsimile form, shall constitute an original and all of which
taken together shall constitute one and the same instrument.
[SIGNATURES ARE ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF this amending agreement has been executed by the Parties as
of the date first above written.
TELEPLUS ENTERPRISES INC.
By: /s/ Marius Silvasan
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Marius Silvasan, Chief Executive Officer
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TELEPLUS CONNECT CORP.
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Its: CEO
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