Exhibit 10.4
S H A R E P L E D G E A G R E E M E N T
PLEDGOR: TELEPLUS CONNECT CORP.
SECURED PARTIES: JAMES R. FAIRHEAD IN TRUST
TOM HARDS IN TRUST
STEVE KEREKES IN TRUST
PAUL CHAPMAN IN TRUST
JACQUES PILON IN TRUST
TOM DAVIS IN TRUST
ALAN R. PURSER IN TRUST
ARNOLD McAULEY IN TRUST
CORPORATION: TELIZON INC.
ESCROW AGENT: PURSER, DOOLEY LLP
SHARE PLEDGE AGREEMENT
PARTIES
Pledgor:
Name: TELEPLUS CONNECT CORP.
Address: 465 St-Jean, Suite 601
Montreal, Quebec H2Y 2R6
Facsimile: 905-947-8234
Secured Parties:
Name: JAMES R. FAIRHEAD IN TRUST
TOM HARDS IN TRUST
STEVE KEREKES IN TRUST
PAUL CHAPMAN IN TRUST
JACQUES PILON IN TRUST
TOM DAVIS IN TRUST
ALAN R. PURSER IN TRUST
ARNOLD McAULEY IN TRUST
Address: c/o Purser, Dooley LLP
151 Ferris Lane, Suite 300
Barrie, Ontario L4M 6C1
Facsimile: 705-792-6911
Corporation:
Name: TELIZON INC.
Address: 85 Bayfield Street, Suite 300
Barrie, Ontario L4M 3A7
Facsimile: 705-725-7045
Escrow Agent:
Name: PURSER, DOOLEY LLP
Address: 151 Ferris Lane, Suite 300
Barrie, Ontario L4M 6C1
Facsimile: 705-792-6911
EFFECTIVE DATE
as of July , 2005
WHEREAS:
a) pursuant to the provisions of a certain share purchase agreement
dated as of the 30th day of June, 2005 between the Secured Parties
as vendors and the Pledgor (the "Agreement"), the Pledgor acquired
nine (9) common shares, being all of the issued and outstanding
common shares in the Corporation (the "Shares");
b) as part of the consideration to be paid for the Purchased Shares,
the Pledgor has authorized, executed and delivered in favour of the
Secured Parties a certain promissory note (the "Promissory Note")
dated July , 2005 in the principal amount of Five Million Nine
Hundred Eighty Three Thousand One Hundred Seventy Eight Dollars
($5,983,178.);
c) the Secured Parties and the Pledgor have agreed to enter into this
Agreement to provide the Secured Parties with a remedy should the
Pledgor not honour its obligations pursuant to the provisions of the
Promissory Note by having the Shares deposited with the Escrow Agent
and dealt with as provided in this Agreement; and
d) Escrow Agent, as escrow agent, is agreeable to maintaining in escrow
the Purchased Shares and to make them or the proceeds thereof
available to the parties hereto under the terms and conditions of
this agreement.
1. Grant of Security Interest
For valuable consideration (the receipt and sufficiency of which each of
the parties hereto hereby acknowledges) the Pledgor hereby grants to the Secured
Parties security interests (to which the Personal Property Security Act
(Ontario), R.S.O. 1990 c.P.10, as amended from time to time (the "PPSA")
applies) in and grants, mortgages and charges and by way of a fixed and specific
mortgage and charge to and in favour of the Secured Parties, all of the
Pledgor's right, title and interest in and to the Shares, all pursuant to and in
accordance with the provisions of this Agreement.
2. Secured Obligations
The security interests, mortgages and charges granted hereby secure the
payment to the Secured Parties of all obligations, debts and liabilities
pursuant to the Promissory Note, (the "Obligations").
Upon payment in full of all amounts due and owing pursuant to the
Promissory Note, the Escrow Agent shall forthwith deliver the Shares to the
Pledgor.
3. Attachment
Each of the parties acknowledges and confirms that it intends that the
security interests, mortgages and charges granted hereby shall attach forthwith
upon the Effective Date with respect to the Shares.
For greater certainty, without in any way limiting the above, the parties
acknowledge and confirm that they have not agreed to postpone the time for
attachment of the said security interests, mortgages and charges.
4. Perfection
Subject to the last paragraph in this Section 4, in furtherance of the
security interests, mortgages and charges hereby granted to the Secured Parties,
the Pledgor agrees that contemporaneously with the execution of this Agreement,
it shall deliver the following to the Escrow Agent upon the terms hereof
(collectively the "Share Documents"):
(a) the relevant share certificate(s) representing all of the Shares,
duly registered in the name of the Pledgor, and duly endorsed in
blank for transfer hereunder or accompanied by a duly executed stock
transfer power of attorney and noting conspicuously on the face
thereof that they are subject to this Agreement;
(b) a transfer in blank of the Shares duly executed by the Pledgor, the
Pledgor hereby giving the Secured Parties the authority to complete
the said transfer on its behalf upon the occurrence of an Event of
Default (defined below), so long as such Event of Default is
continuing;
(c) a blank share transfer power of attorney; and
(d) certified copies of resolutions of the directors of the Corporation
approving the hypothecation and pledge of the Shares to the Secured
Parties, the notation of the Secured Parties interest on the
relevant share certificate(s) and in the shareholder ledgers of the
Corporation, any further transfers of the Shares made pursuant to
this Agreement, and the recording of same in the books and records
of the Corporation.
The Escrow Agent acknowledges and agrees that it shall hold the Shares hereby
delivered to it solely in accordance with the terms of this Agreement and that
it will not at any time dispose, encumber, deal with or take any action with
respect to the Shares except as provided in this Agreement.
5. Right to Vote
So long as no Event of Default has occurred hereunder and is continuing,
the Pledgor shall be entitled to remain as shareholder of record of the Shares
and to exercise all voting rights in respect of the Shares.
6. Right to Dividends, Etc.
So long as no Event of Default has occurred hereunder and is continuing,
the Pledgor shall be entitled to receive all dividends and other distributions
paid or payable in respect of the Shares. In the event that the Pledgor receives
any dividend or other distribution contrary to the foregoing it shall stand
possessed of same in trust solely for the Secured Parties and shall forthwith
pay or deliver the same to the Secured Parties to be applied in accordance with
paragraph 14.
7. Pledgor's Warranties
The Pledgor hereby represents and warrants to and covenants with the
Secured Parties as follows and acknowledges that the Secured Parties are, in
part, relying upon such representations, warranties and covenants in accepting
the security interest granted upon the terms of this Agreement:
(a) Ownership of Shares: The Pledgor is the absolute and beneficial
owner of the Shares and none of the Shares are held in the name of
any person other than the Pledgor, whether as agent, trustee or
other nominee for the Pledgor, the Shares are recorded in the name
of the Pledgor in the shareholder ledgers and registers in the
Corporation's minute book.
(b) No Encumbrances: The Shares are owned by the Pledgor with good and
marketable title thereto and they are and shall at all times be kept
free and clear of any and all mortgages, hypothecs, pledges, claims,
adverse claims, demands, liens, charges, security interests,
encumbrances, agreements, rights and equities of any kind whatsoever
other than those given by the Pledgor to or in favour of the Secured
Parties.
(c) Right to Grant: The Pledgor has and shall at all relevant times have
the full right, power and authority to enter into and perform its
obligations under this Agreement and to grant the security interest
as herein provided.
(d) No Agreements or Options: No person, firm or corporation, other than
the Secured Parties, has any agreement or option (whether written or
oral) or any right or privilege (whether by law, pre-emptive or
contractual) capable of becoming an agreement or option for the
purchase of the Shares or any interests therein or rights thereto.
(e) No Litigation: There is not pending any suit, action or other legal
proceeding of any sort either to restrain or otherwise prevent in
any manner the Pledgor from effectually and legally hypothecating
and pledging the Shares to the Secured Parties free and clear of any
and all mortgages, hypothecs, pledges, claims, adverse claims,
demands, liens, charges, security interests, encumbrances,
agreements, rights and equities of any kind whatsoever or any suit,
action or proceeding the effect of which would be to cause a lien to
attach to the Shares or to divest title to the Shares in any manner
whatsoever.
(f) Release of Shares for Merger and Acquisition Transactions:
Notwithstanding the provisions hereof, but subject to the provisions
of Subsection 8(b), the Secured Parties will not unreasonably delay,
condition or withhold the release of the Shares in the event the
Pledgor requests that the Secured Parties release such Shares in
connection with a sale, merger, reorganization, or other similar
event of the Pledgor (or its affiliated companies) and the Pledgor
or a third party agrees to provide the Secured Parties with fair
consideration for such release.
8. Covenants of the Pledgor and the Corporation
The Pledgor and the Corporation covenant and agree with the Secured
Parties that:
(a) No Transfers or Encumbrances: The Pledgor shall not either directly
or indirectly (including by way of corporate reorganization,
amalgamation or otherwise) sell, transfer, convey, assign, exchange,
convert or in any manner dispose of, pledge or in any manner
encumber any of the Shares without the prior written consent of the
Secured Parties, except as expressly permitted or required elsewhere
herein.
(b) Substituted or Additional Shares: In the event any substituted or
additional shares in the capital of the Corporation are received or
acquired (directly or indirectly) by or on behalf of the Pledgor,
whether as a result of a share issuance, subdivision, consolidation,
conversion, reclassification, stock dividend, transfer, sale,
reorganization, amalgamation or otherwise (the "Substituted or
Additional Shares"), the Pledgor shall stand possessed of the
Substituted or Additional Shares in trust for the Secured Parties
and shall forthwith deliver to the Secured Parties the certificate
or certificates representing the Substituted or Additional Shares
together with certified copies of the resolutions of the directors
of the Corporation approving the hypothecation and pledge thereof to
the Secured Parties whereupon the Secured Parties shall hold and
deal with the Substituted or Additional Shares and the certificate
or certificates evidencing the same as the Shares.
(c) No Additional Shares Issued: During the currency of this Agreement,
the Corporation shall not, without the prior written consent of the
Secured Parties, issue any additional shares of any class (other
than the Shares) in the capital of the Corporation whether by way of
a share issuance, subdivision, consolidation, conversion,
reclassification, stock dividend, transfer, sale, reorganization,
amalgamation or otherwise.
9. Escrow Agent
(a) Escrow Agent shall keep the Shares in a safe place on premises owned
or leased by it in the City of Barrie and shall deal with the Shares
only in accordance with the terms and conditions of this Agreement.
(b) Escrow Agent shall not, by reason of its signing this Agreement,
assume any responsibility or liability for any transaction between
Pledgor and the Secured Parties other than the performance of its
obligations in accordance with this Agreement. In no event shall
Escrow Agent be liable to Pledgor and the Secured Parties, or to any
other party for consequential, special or incidental damages. The
party on whose behalf, or pursuant to whose direction Escrow Agent
acts, shall indemnify and hold harmless Escrow Agent from any and
all liability, damages, costs or expenses, including reasonable fees
that shall be sustained or incurred by Escrow Agent as a result of
taking such action except for damages, costs or expenses resulting
from the gross negligence of the Escrow Agent. Pledgor shall also
indemnify and hold harmless Escrow Agent from any and all liability,
damages, costs or expenses, including reasonable fees, incurred by
Escrow Agent as a result of a third party claiming that Escrow Agent
is in wrongful possession of the Shares.
(c) Escrow Agent may retain such independent counsel or other advisor as
it may reasonably require for the purpose of discharging its duties
hereunder, and may act on the advice or opinion so obtained. The
reasonable fees, expenses or disbursements for any such counsel or
other advisors so retained shall be borne equally by Pledgor and the
Secured Parties.
(d) In the exercise of its rights, duties and obligations hereunder,
Escrow Agent may rely as to the truth of the statements and the
accuracy of the opinions expressed therein and shall be protected in
acting upon any resolution, direction, statutory declaration,
opinion, report, notice, certificate or other paper or document
reasonably believed by it to have been signed, sent or presented by
or on behalf of the proper parties. However, Escrow Agent may in its
discretion require reasonable evidence of the due execution thereof
before acting or relying thereon.
(e) Upon receipt of a statutory declaration of one or more of the
Secured Parties confirming that an Event of Default has occurred,
the Escrow Agent shall deliver to the Secured Parties the Share
Documents.
10. Rights and Remedies - PPSA
In the event the Pledgor fails to make payment of principal or interest
pursuant to the Promissory Note after five (5) business days notice of default
is provided to the Pledgor (an "Event of Default"), the security interests,
mortgages and charges granted herein shall be enforceable and the Pledgor and
the Secured Parties shall have, in addition to any other rights and remedies
provided by law, the rights and remedies of a debtor and a secured party
respectively under the PPSA and those provided by this Agreement.
11. Additional Rights and Remedies
In addition and without limitation, upon an Event of Default that is
continuing, the Secured Parties shall be entitled to possession and beneficial
ownership of the Shares and shall be entitled to retransfer the Shares into
their own names and enjoy all of the benefits associated with ownership of the
Shares. The Secured Parties shall also thereupon be entitled to retain the
portion of the purchase price for the Shares heretofore received by them and the
Pledgor shall be fully released and discharged from any and all liability or
payment of the remaining Obligations as evidenced by the Promissory Note.
12. Expenses
The reasonable costs and expenses expressly provided for in the PPSA in
respect of the enforcement of the Obligations, including taking possession,
custody, holding, preserving, protecting, repairing, using or operating,
collecting, realizing, processing, preparing for disposition and disposing of
the Shares (collectively, the "Expenses") shall be payable by the Pledgor to the
Secured Parties forthwith upon demand.
13. Mode of Disposition - PPSA
The Secured Parties may dispose of the Shares by a private sale or public
auction or tender at any place and time whatsoever and in such manner and at
such price as the Secured Parties may reasonably determine, either for cash or
on credit, or for part cash and part credit. The Secured Parties may postpone
any sale prior to the date thereof and may sell the Shares as a whole or in
parcels and if in parcels in such order and manner as the Secured Parties may
reasonably determine.
14. Proceeds of Disposition
Any proceeds of any disposition of any of the Shares shall be applied by
the Secured Parties firstly on account of the Expenses, and any balance of such
proceeds shall be applied by the Secured Parties on account of the Obligations
(other than the Expenses) in such order of application as the Secured Parties
may from time to time effect and the same shall not be subject to dispute by the
Pledgor.
15. General Provisions
(a) Discharge: The security interests, mortgages and charges granted
hereby shall be released upon the full payment and performance of
the Obligations, at which time the Secured Parties shall, at no cost
to the Pledgor, deliver to the Pledgor the relevant share
certificate(s) representing all of the Shares duly endorsed in blank
for transfer, all other documents held by the Secured Parties
pursuant to this Agreement, and all necessary discharges and
releases of the security interests, mortgages and charges granted
hereby.
(b) Waiver, etc.: No failure or delay on the part of the Secured Parties
to exercise any right provided for in or contemplated by this
Agreement and no waiver as to an Event of Default hereunder shall
operate as a waiver thereof unless made in writing and signed by the
Secured Parties and, in that event, such waiver shall operate only
as a waiver of the right or Event of Default expressly referred to
therein. Nothing in this Agreement and nothing referred to in the
Obligations shall preclude any other remedy by action or otherwise
for the enforcement of this Agreement or the payment and performance
in full of the Obligations.
(c) Entire Agreement: This Agreement sets forth the entire intent and
understanding of the parties relating to the subject-matter hereof
and supersedes and replaces all prior agreements and commitments,
whether written or oral, made between the parties and all earlier
discussions and negotiations between them. The parties are not
relying upon and there are no collateral or other representations,
warranties, agreements, or covenants made by any of the parties
hereto which are not contained herein.
(d) No Amendment: This Agreement may not be amended, altered or
qualified except by a memorandum in writing signed by all of the
parties hereto and any amendment, alteration or qualification hereof
shall be null and void and shall not be binding upon any party who
has not signed such memorandum.
(e) Further Assurances: Each of the parties hereto shall and will, from
time to time and at all times hereafter upon every reasonable
written request so to do, cause such meetings to be held,
resolutions passed and by-laws enacted, exercise its vote and
influence, make, do, execute and deliver, or cause to be made, done,
executed and delivered, all such further papers, acts, deeds,
assurances and things as may be necessary or desirable in the
opinion of any party or counsel for any party, acting reasonably,
for implementing and carrying out more effectually the true intent
and meaning of this Agreement including, without limitation, to
perfect or better perfect the security interests, mortgages and
charges of the Secured Parties in the Shares or any part thereof.
(f) Headings: All headings and titles in this Agreement are for
convenience of reference only and shall not affect the
interpretation of the terms hereof.
(g) Gender, etc.: In construing this Agreement, all words and personal
pronouns relating thereto shall be read and construed as the number
and gender of the party or parties referred to in each case require,
and the verb agreeing therewith shall be construed as agreeing with
the required word and pronoun. Words such as "hereunder", "hereto",
"hereof", "herein", and other words commencing with "here", shall
unless the context clearly indicates the contrary, refer to the
whole of this Agreement and not to any particular paragraph or part
thereof.
(h) Severability: In the event that any covenant or provision contained
in this Agreement is held to be invalid, illegal or unenforceable in
whole or in part, the validity, legality and enforceability of the
remaining covenants and provisions shall not be affected or impaired
thereby and all such remaining covenants and provisions shall
continue in full force and effect. All covenants and provisions
hereof are declared to be separate and distinct covenants or
provisions, as the case may be.
(i) Time of Essence: Time shall be strictly of the essence of this
Agreement and of every part thereof and no extension or variation of
this Agreement shall operate as a waiver of this provision.
(j) Governing Law: This Agreement shall be governed in all respects
exclusively by the laws of the Province of Ontario, and the laws of
Canada, as applicable.
(k) Notice: Any notice required or desired to be given hereunder or
under any instrument supplemental hereto shall be in writing and may
be given by personal delivery, by facsimile or other means of
electronic communication or by sending the same by registered mail,
postage prepaid, to the Pledgor, Secured Parties, Corporation or to
the Escrow Agent at their respective addresses set out above and, in
the case of electronic communication, to the facsimile numbers set
out above. Any notice so delivered shall be conclusively deemed
given when personally delivered and any notice sent by facsimile or
other means of electronic transmission shall be deemed to have been
delivered on the Business Day following the sending of the notice,
and any notice so mailed shall be conclusively deemed given on the
third Business Day following the day of mailing, provided that in
the event of a known disruption of postal service, notice shall not
be given by mail. Any address for notice or payments herein referred
to may be changed by notice in writing given pursuant hereto.
Notwithstanding the foregoing, if the PPSA requires that notice be
given in a special manner, then such notice or communication shall
be given in such manner.
(l) Pledgor's Receipt: The Pledgor hereby acknowledges receipt of a
fully signed copy of this Agreement.
This Agreement shall become effective when it is signed by the Pledgor.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF the Pledgor has executed this Agreement under its seal
and agrees to be bound thereby as of the Effective Date set out above.
Executed by Pledgor on July , 2005
TELEPLUS CONNECT CORP.
/s/ Marius Silvasan
Per:
------------------------------
Name: Marius Silvasan
Title: President
Executed by Secured Parties on July , 2005
Alan R. Purser In Trust Arnold McAuley In Trust
/s/ Alan R. Purser /s/ Arnold McAuley
Per: Per:
- ------------------------------------ -------------------------------
Alan R. Purser Arnold McAuley
Jacques Pilon In Trust James R. Fairhead In Trust
/s/ Jacques Pilon /s/ James R. Fairhead
Per: Per:
- ------------------------------------ -------------------------------
Jacques Pilon James R. Fairhead
Paul Chapman In Trust Steve Kerekes In Trust
/s/ Paul Chapman /s/ Steve Kerekes
Per: Per:
- ------------------------------------ -------------------------------
Paul Chapman Steve Kerekes
Tom Davis In Trust Tom Hards In Trust
/s/ Tom Davis /s/ Tom Hards
Per: Per:
- ------------------------------------ -------------------------------
Tom Davis Tom Hards
The undersigned acknowledges the execution of the within agreement by the
Pledgor and agrees to give full force and effect to the terms thereof.
IN WITNESS WHEREOF the undersigned has executed this Agreement under its
seal and agrees to be bound thereby as of the Effective Date set out above.
TELIZON INC.
/s/ Marius Silvasan
Per:_______________________c/s
Name: Marius Silvasan
Title: Chief Executive Officer
The undersigned Escrow Agent has executed this Agreement and
agrees to be bound thereby.
PURSER, DOOLEY LLP
/s/ Alan R. Purser
Per:___________________________
Alan R. Purser