Exhibit 10.1
SHARE PURCHASE AGREEMENT AMENDING AGREEMENT
THIS SHARE PURCHASE AGREEMENT AMENDING AGREEMENT is made as of the 16 day of
December, 2005
AMONG:
XXXXX XXXXXXX
XXXXXXX XXXXXXX
XXX XXXXXX
XXXXX XXXXXXXXXXXX
XXX XXXXXX
XXXXXX XXXXXX
XXX XXXXX
XXXX XXXXX
(collectively, the "Vendors")
- and -
TELEPLUS ENTERPRISES INC.
(the "Purchaser")
- and -
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 on the terms and conditions contained therein;
AND WHEREAS the Purchaser and the Vendors now wish to amend certain of the terms
and conditions of the Agreement, and have agreed to enter into this amending
agreement to give effect to such amendments.
NOW THEREFORE in consideration of the mutual covenants and agreements herein
contained, it is agreed between the Parties as follows:
ARTICLE 1 -
INTERPRETATION
1.1 Governing Law
This amending 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.
1.2 Arbitration
All disputes in connection with or arising out of the existence, validity,
construction, interpretation, performance payments, and termination of this
amending agreement (or any terms hereof), which the Parties hereto are unable to
resolve between themselves, whether in law or in equity, shall be settled by
arbitration in accordance with the provisions of Article 11 of the Share
Purchase Agreement.
1.3 Interpretation Not Affected by Headings
The division of this amending 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
amending agreement.
1.4 Severability
Each of the provisions contained in this amending agreement is distinct and
severable and a declaration of invalidity or unenforceability of any such
provision or part thereof by a court of competent jurisdiction shall not affect
the validity or enforceability of any other provision hereof.
1.5 Currency
All references in the Share Purchase Agreement, this amending agreement or any
Ancillary Agreement to dollars, unless otherwise specifically indicated, are
expressed in Canadian currency.
1.6 Inclusion
Where the word "including" or "includes" is used in this amending agreement, it
shall mean "including (or includes) without limitation".
1.7 Accounting Terms
All accounting terms not specifically defined in this amending agreement shall
be construed in accordance with GAAP.
ARTICLE 2 -
AMENDMENTS TO AGREEMENT
2.1 Amendments to Share Purchase Agreement
The Parties agree that the Share Purchase Agreement is hereby amended as
follows:
(a) The following definitions shall be added before the definition of
"Affiliate" in Section 1.01 of the Share Purchase Agreement:
""Adjusted EBITDA" means the sum of: (i) the EBITDA of the
Corporation not attributed to the Telizon Business; and (ii) sixty
percent (60%) of the EBITDA attributed to the Telizon Business, for
the first $200,000 of the EBITDA of the Telizon Business following
the acquisition of Telizon Inc. by the Corporation and 100% of the
EBITDA attributed to the Telizon Business exceeding $200,000;".
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(b) The definition of "Agreement" set forth in Section 1.01 of the Share
Purchase Agreement shall be deleted and replaced with the following:
""Agreement" means the Share Purchase Agreement, as amended by that
certain amendment agreement made as of December 16, 2005 among the
Purchaser, the Vendors and the Corporation and all schedules and
instruments in amendment or confirmation of it; "hereof", "hereto"
and "hereunder" and similar expressions mean and refer to this
Agreement and not to any particular Article, Section, Subsection or
other subdivision; "Article", "Section", "Subsection" or other
subdivision of this Agreement followed by a number means and refers
to the specified Article, Section, Subsection or other subdivision
of this Agreement;".
(c) The definition of "Distributable Net Income" set forth in Section 1.01 of
the Share Purchase Agreement shall be deleted and replaced with the
following:
""Distributable Net Income" means: eighty per cent (80%) of the sum
of net income of the Corporation plus depreciation and amortization;
less a reasonable allowance for future capital requirements of the
Corporation including all payments of consideration for existing
acquisitions but excluding from deduction for the purposes of
calculating such Distributable Net Income, the following items:
(i) all intercorporate fees, charges, payments or other costs of any
nature levied, accrued or otherwise charged in any manner by the
Purchaser or any of its Affiliates
(ii) the lump sum payments due on July 1, 2006 and July 1, 2007 in
connection with the purchase of Telizon Inc.
(d) The definition of "EBITDA" set forth in Section 1.01 of the Share Purchase
Agreement shall be deleted and replaced with the following:
""EBITDA" means earnings before interest, taxes, depreciation
and amortization, all in accordance with Canadian generally accepted
accounting principles (including, for the purposes of calculating such
EBITDA, all revenue items including penalties and interest on late
payments but excluding all intercorporate fees, charges, payments or other
costs of any nature levied, accrued or otherwise charged in any manner by
the Purchaser or any of its Affiliates to the Corporation or any of its
Affiliates);".
(e) The following definition shall be added after the definition of "Tax" in
Section 1.03 of the Share Purchase Agreement:
""Telizon Business" means the business carried on by Telizon
Inc.;".
(f) Section 2.02 of the Share Purchase Agreement shall be deleted and replaced
with the following paragraph:
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"The consideration payable by the Purchaser to the Vendors for
the Purchased Shares shall be up to $20,800,000 and shall be allocated and
paid as set forth in Section 2.03. The Vendors acknowledge and agree that
the Purchaser may satisfy all or a portion of the consideration for the
Purchased Shares by issuing shares of the Purchaser's common stock to the
Vendors, in which event the Vendors hereby irrevocably, jointly and
severally, authorize and direct the Purchaser to sell said shares in the
public market, and provided in any event that said shares shall be sold by
the Purchaser and provided further that, after giving effect to such sale,
the Purchaser shall have paid to the Vendors an aggregate amount not to
exceed $20,800,000 in cash as set forth in Section 2.03. In order to give
effect to the foregoing, the Vendors authorize the Purchaser to deliver
any such shares to a broker to be chosen by the Purchaser at its sole
discretion. For all shares held by the aforementioned broker, the broker
shall act only upon the direction of the Purchaser. The Vendors hereby
irrevocably, jointly and severally, authorize and direct the Purchaser, at
the Purchaser's sole discretion, to instruct the aforementioned broker in
connection with all actions to be taken with respect to the deposited
shares. For greater certainty, the Purchaser may direct the aforementioned
broker as to the time and manner in which to sell any of the deposited
shares in the public market, at which time the proceeds of sale will be
remitted to the Vendors. For greater certainty, the Purchaser's obligation
is to pay the consideration for the Purchased Shares to the Vendors in
cash and the Purchaser acknowledges that in the event that it chooses to
satisfy a portion of such consideration through the issuance and resale of
shares as hereinbefore provided, the Purchaser's payment obligations
hereunder shall survive until the Purchaser shall have paid to the
Vendors, in cash, the amounts as determined under the terms of Section
2.03".
(d) Section 2.03 of the Share Purchase Agreement shall be deleted and replaced
with the following paragraphs:
"The consideration payable to the Vendors for the Purchased Shares
shall be allocated, paid and satisfied by payment to the Vendors by
the Purchaser of an amount payable upon the Corporation achieving
each $25,000 increment in monthly Adjusted EBITDA (an "EBITDA
Target") until the earlier of: (a) the Corporation has achieved
$400,000 in monthly Adjusted EBITDA; or (b) 51 months have passed
from the date of the Share Purchase Agreement. The amount payable
(the "Purchase Price Instalment Payment") upon the Corporation
achieving each EBITDA Target shall be $1,300,000, as more
particularly illustrated in Schedule 2.03. In the event that the
Purchase Price Instalment Payment based on monthly Adjusted EBITDA
of $400,000 has not been earned by the Vendors prior to the date
which is 51 months from the Closing Date, the Purchaser shall pay to
the Vendors a pro rated portion of any balance of consideration
payable, if any, based on the monthly Adjusted EBITDA for the 51st
month following the Closing Date.
Each Purchase Price Instalment Payment payable pursuant to this
Section 2.03 shall be paid as follows:
(iii) a minimum of thirty per cent (30%) of the Purchase Price
Instalment Payment shall be paid to the Vendors on or before
the date which is fifteen (15) calendar days following the end
of the month in which any EBITDA Target is satisfied; and
(iv) the balance of the applicable Purchase Price Instalment
Payment shall be paid within six (6) months from the end of
the month in which any EBITDA Target is satisfied.
The Purchaser hereby covenants and agrees to cause the Corporation
to satisfy any shortfall in the amounts due under paragraphs 2.03
(i) and 2.03(ii) by making monthly distributions to the Vendors out
of the Distributable Net Income of the Corporation. In the event the
amounts due under the foregoing paragraphs 2.03(i) and 2.03(ii) are
not paid and received by the Vendors when due, interest shall accrue
and be payable monthly at a rate of six per cent (6%) per annum on
the overdue amount(s).
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If during the first 6 months of any payment period of a
Purchase Price Instalment Payment the average Adjusted EBITDA of the
Corporation for such 6 months falls below 70% of the EBITDA Target
associated with such Purchase Price Instalment Payment, the amount of
consideration payable applicable to such period shall be adjusted to be
such amount multiplied by the percentage of the Adjusted EBITDA Target
achieved on average.".
(e) Schedule 2.03 to the Agreement shall be deleted and replaced with Schedule
2.03 attached hereto.
(f) Section 2.04 of the Share Purchase Agreement shall be deleted and replaced
with the following:
"The Purchaser and the Vendors have agreed to the financing contribution
schedule set forth in Schedule 2.04(a). The Purchaser hereby agrees, and
shall be required, to provide financing to the Corporation following
Closing in accordance with such financing contribution schedule, to a
maximum amount of $8,343,000, to be contributed by up to $3,921,500 in
shares of the Purchaser and the balance in cash, provided that the
Corporation has at all times achieved and maintained 70% or more of the
then applicable Adjusted EBITDA Target as set out in Schedule 2.04(b). For
greater certainty, in the event that the Corporation's Adjusted EBITDA is
at any time less than 70% of the then applicable Adjusted EBITDA Target as
set out in Schedule 2.04(b), the Purchaser will have no obligation to
provide the Corporation with financing as required under this Agreement.
The Corporation shall have a 90 day period in which to cure any failure to
achieve and maintain 70% or more of the then applicable Adjusted EBITDA
target and, in the event that the Corporation cures such failure to
thereafter achieve and maintain 70% or more of the then applicable
Adjusted EBITDA target during such time, the Purchaser's obligation to
provide financing to the Corporation in accordance with Schedule 2.04(a)
shall be renewed."
(g) Schedule 2.04(b) to the Share Purchase Agreement shall be deleted and
replaced with Schedule 2.04(b) attached hereto.
2.3 All Other Provisions Unchanged
Except for the changes expressly made by this amending agreement, all other
provisions of the Share Purchase Agreement shall remain and continue to have
full force and effect as set forth therein.
ARTICLE 3 -
SECURITY CONTINUING AND NOT AFFECTED
3.1 Guarantee
The Corporation hereby confirms that the guarantees of the Corporation under the
terms of the guarantee agreement made as of the 11th of May, 2005, by the
Corporation in favour of the Vendors 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
amounts arising in connection with or pursuant to Sections 2.03, 2.04 and 2.05
of the Agreement.
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3.2 General Security Agreement
The Corporation hereby confirms that the security interests created on its
assets pursuant to a general security agreement made as of the 11th day of May,
2005, by the Corporation in favour of the Vendors shall remain in full force and
effect. For greater certainty, the security interests thereby created shall
secure the performance by the Corporation of its obligation under the guarantee
agreement to which reference is made in Section 3.1 to pay all amounts arising
from the Purchaser to the Vendors in connection with or pursuant to Sections
2.03, 2.04 and 2.05 of the Agreement.
3.3 Share Pledge Agreement
The Purchaser hereby confirms that the security interests created on the
Purchased Shares pursuant to a share pledge agreement dated as of May 11, 2005,
by the Purchaser in favour of the Vendors 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 Sections 2.03, 2.04 and 2.05 of the Agreement.
3.4 Further Acts
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 4 -
GENERAL
4.1 Entire Agreement
The Share Purchase Agreement and this amending agreement together with the
Ancillary Agreements constitute the entire agreement between the Parties
pertaining to the subject matter thereof and hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties. There are no representations, warranties, conditions or
other agreements, express or implied, statutory or otherwise, between the
Parties in connection with the subject matter of the Share Purchase Agreement,
the Ancillary Agreements and this amending agreement, except as specifically set
forth therein and herein. If there is any conflict between the provisions of the
Share Purchase Agreement and this amending agreement, on the one hand, and the
provisions of any Ancillary Agreement, on the other hand, the provisions of the
Share Purchase Agreement and this amending agreement shall govern.
4.2 Amendments to Ancillary Agreements
The Parties covenant and agree to make the necessary amendments to any Ancillary
Agreements as required to give effect to the amendments to the Share Purchase
Agreement made pursuant to this amending agreement.
4.3 Amendments
The Share Purchase Agreement, this amending agreement and any Ancillary
Agreement may only be amended, modified or supplemented by a written agreement
signed by all of the parties to such agreement
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4.4 Waiver
No waiver of any of the provisions of the Share Purchase Agreement, this
amending agreement or any Ancillary Agreement shall be deemed to constitute a
waiver of any other provision (whether or not similar), nor shall such waiver
constitute a waiver or continuing waiver unless otherwise expressly provided in
writing duly executed by the party to be bound thereby.
4.5 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.
IN WITNESS WHEREOF this amending agreement has been executed by the Parties as
of the date first above written.
TELEPLUS ENTERPRISES INC.
Per: /s/ Marius Silvasan
---------------------------
Authorized Signing Officer
/s/ Xxxxx Xxxxxxx
----------------------------------- ------------------------------------
Witness: Xxxxx Xxxxxxx
/s/ Xxx Xxxxxx
----------------------------------- ------------------------------------
Witness: Xxx Xxxxxx
/s/ Xxx Xxxxxx
----------------------------------- ------------------------------------
Witness: Xxx Xxxxxx
/s/ Xxxxxxx Xxxxxxx
----------------------------------- ------------------------------------
Witness: Xxxxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxxxxxxx
----------------------------------- ------------------------------------
Witness: Xxxxx Xxxxxxxxxxxx
/s/ Xxxxxx Xxxxxx
----------------------------------- ------------------------------------
Witness: Xxxxxx Xxxxxx
/s/ Xxx Xxxxx
----------------------------------- ------------------------------------
Witness: Xxx Xxxxx
/s/ Xxxx Xxxxx
----------------------------------- ------------------------------------
Witness: Xxxx Xxxxx
TELEPLUS CONNECT CORP.
Per: /s/ Xxx Xxxxx
---------------------------
Authorized Signing Officer
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SCHEDULE 2.03
PAYMENT OF CONSIDERATION
----------------------------------------------------------------------------------------------------------------------
Adjusted EBITDA Formula Purchase Price Installment Payment
----------------------------------------------------------------------------------------------------------------------
$25,000 $25,000 x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$50,000 $(50,000 - 25,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$75,000 $(75,000 - 50,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$100,000 $(100,000 - 75,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$125,000 $(125,000 - 100,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$150,000 $(150,000 - 125,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$175,000 $(175,000 - 150,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$200,000 $(200,000 - 175,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$225,000 $(225,000 - 200,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$250,000 $(250,000 - 225,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$275,000 $(275,000 - 250,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$300,000 $(300,000 - 275,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$325,000 $(325,000 - 300,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$350,000 $(350,000 - 325,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$375,000 $(375,000 - 350,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
$400,000 $(400,000 - 375,000) x 12 x 4.3333 $1,300,000
----------------------------------------------------------------------------------------------------------------------
TOTAL $20,800,000
----------------------------------------------------------------------------------------------------------------------
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SCHEDULE 2.04(b)
PAYMENT OF CONSIDERATION
FINANCING CONTRIBUTION - ADJUSTED EBITDA TARGETS
The Adjusted EBITDA Targets for the purposes of determining the Purchaser's
obligations to provide financing to the Corporation in accordance with the
provisions of this Agreement are as follows:
Month Following Adjusted EBITDA Target
the Closing Date ($000's)
---------------- ----------------------
1 n/a
2 n/a
3 n/a
4 n/a
5 n/a
6 n/a
7 n/a
8 n/a
9 $35
10 $51
11 $55
12 $70
13 $71
14 $75
15 $116
16 $119
17 $121
18 $146
19 $166
20 $169
21 $172
22 $230
23 $238
24 $244
25 $302
26 $310
27 $308
28 $308
29 $293
30 $292
31 $316
32 $315
33 $316
34 $400
35 $400
36 $400
37 $400
38 $400
39 $400
40 $400
41 $400
42 $400
43 $400
44 $400
45 $400
46 $400
47 $400
48 $400
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