EXHIBIT 10.2
AMENDMENT NO. 1 TO FIRST RESTATED CONVERTIBLE LOAN AGREEMENT
THIS AMENDMENT NO. 1 TO FIRST RESTATED CONVERTIBLE LOAN AGREEMENT (this
"Agreement") is executed as of this 11th day of December, 1998 by and among
Canmax Inc. ("Canmax"), Canmax Telecom, Inc. ("CTI" and together with Canmax
referred to as "Borrower"), and Founders Equity Group, Inc. ("Founders"), on its
own behalf and as agent for various parties (collectively, "Lenders").
R E C I T A L S :
A. Founders is the owner of 863,364 shares of common stock of Canmax, and
Canmax has the obligation to register, upon demand, such shares for resale by
Founders pursuant to an effective registration statement under the Securities
Act of 1933, as amended, as set forth in the Registration Rights Agreement dated
May 1, 1997 ("Registration Agreement").
B. Lenders, Borrower, Canmax Retail Systems, Inc. ("CRSI") and
USCommunications Services, Inc. ("USC") have previously executed the First
Restated Convertible Loan Agreement dated as of March 31, 1998 (the "Original
Agreement") providing for lending of up to $2.5 million to the borrowers
thereunder.
C. Pursuant to the Asset Purchase Agreement dated as of September 3, 1998
(the "Purchase Agreement") between Canmax, CRSI and Affiliated Computer
Services, Inc. ("ACS"), CRSI agreed to sell substantially all of its assets to
ACS for $4.0 million plus the additional consideration provided therein.
D. As a condition to the consummation of the Purchase Agreement, Lenders
were required to release their liens on the assets of CRSI transferred to ACS.
E. By Letter Agreement dated August 25, 1998 (the "Letter Agreement"),
Lenders agreed, upon the consummation of the Purchase Agreement, to release
their liens on the assets to be transferred to ACS and to accept the repayment
of approximately $1.0 million of outstanding indebtedness under the Loan
Agreement and to convert the remaining indebtedness of approximately $.5 million
into shares of Canmax common stock at a conversion price of $.50 per share.
F. Pursuant to the Original Agreement, Canmax had the obligation to
register, upon demand, any shares issued upon the conversion of indebtedness
outstanding thereunder for resale by Lenders pursuant to an effective
registration statement under the Securities Act of 1933, as amended
(collectively, with the registration obligations under the Registration
Agreement, the "Registration Obligation").
G. Borrowers and Lenders desires to amend the Registration Agreement, the
Original Agreement and the Letter Agreement, as further provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. ACKNOWLEDGMENT OF RECEIPT OF CONSIDERATION AND CONVERSION OBLIGATION.
Lender hereby acknowledges having received payment of $1.0 million principal
plus all accrued but unpaid interest through the date hereof. Further, Lenders
acknowledge that, upon the consummation of the Purchase Agreement, they were
obligated, at Canmax's request, to convert the remaining $500,000 of
1
outstanding principal under the Loan Agreement (the "Outstanding Balance")
into shares of Canmax common stock at $.50 per share.
2. DEFERRAL OF CONVERSION OBLIGATIONS. In consideration for (a) the
waiver of the Registration Obligation (as set forth in Section 4 below), (b) the
conversion price adjustment (as set forth in Section 3 below) and (c) the
agreement to convert the Outstanding Balance into shares of Canmax common stock
at the Adjusted Conversion Price upon the delivery of a written notice (a
"Conversion Notice") to Lenders by Canmax (as set forth in Section 5 below),
Canmax hereby agrees that the obligation of Lenders to convert the Outstanding
Balance shall be deferred until Lender's receipt of a Conversion Notice from
Canmax.
3. ADJUSTED CONVERSION PRICE. From and after the date hereof, the
Conversion Price for the Outstanding Balance shall be adjusted to equal the
greater of (a) $.50 per share or (b) 75% of the Closing Average (the "Adjusted
Conversion Price"). As used herein, the term "Closing Average" shall mean the
average closing price of Canmax common stock over the ten trading days preceding
the delivery of a Conversion Notice, as reported on the NASDAQ stock market, OTC
Bulletin Board or other exchange or quotation system on which shares of Canmax
common stock may be quoted or listed.
4. WAIVER OF REGISTRATION OBLIGATION. Lenders hereby waive, on their own
behalf and on behalf of any successors and assigns, any right to require Canmax
to fulfill its Registration Obligation until the earlier of (a) Canmax's
delivery of a Conversion Notice or (b) February 1, 1999.
5. CONVERSION OBLIGATION. Lenders hereby agree to convert the
Outstanding Balance at the Adjusted Conversion Price upon the receipt of a
Conversion Notice from Canmax. Nothing contained herein shall restrict Lenders'
right to convert the Outstanding Balance in accordance with the terms of the
Original Agreement at the Adjusted Conversion Price.
6. INTEREST ON OUTSTANDING BALANCE. The Outstanding Balance shall
continue to accrue interest at the rate of 9% per annum from and after the date
hereof, which amounts shall be payable at the beginning of each calendar quarter
within five days following Canmax's receipt of a statement of interest due from
Lenders.
7. EFFECT OF AMENDMENT. Except as amended hereby, the Original Agreement
shall continue in full force and effect. In the event of any conflict between
the terms of this Agreement and the Original Agreement, the terms of this
Agreement shall prevail.
8. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which, taken together, shall constitute one and the same
document. Founders is authorized to execute this Agreement on behalf of
Lenders.
9. USC AND CRSI. Lenders have previously consented to the rescission of
Canmax's acquisition of USC and the sale of substantially all of the assets of
CRSI. Therefore, Lenders acknowledge and agree that they shall have no
continuing liens upon USC or CRSI and that neither of such entities shall
continue to be a party to the Original Agreement.
10. TERMINATION OF COMMITMENT. Lenders shall have no further obligation
to advance any amounts pursuant to Loan Agreement.
11. FURTHER ASSURANCES. Borrower hereby agrees to execute any additional
documents necessary to reflect the intent of this Agreement or otherwise
required under the Original Agreement,
2
including, without limitation, the execution and recording of any financing
statements (or amendments to existing financing statements) with regard to
Canmax, CTI or any other subsidiaries of Borrower.
EXECUTED as of the date first written above.
CANMAX INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
CANMAX TELECOM, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
FOUNDERS EQUITY GROUP, INC., ON ITS
OWN BEHALF AND AS AGENT FOR LENDERS
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
3