Exhibit 10.5
SHARE PURCHASE AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 30th day of June, 2005
A M O N G
JAMES FAIRHEAD, STEVE KEREKES and TOM DAVIS, each individuals resident in
the Province of Ontario (hereinafter referred to as the "Vendors")
OF THE FIRST PART
- and -
TELEPLUS CONNECT CORP., a corporation incorporated under the laws of the
Province of Ontario (hereinafter referred to as the "Purchaser")
OF THE SECOND PART
- and -
1500536 ONTARIO INC., a corporation incorporated under the laws of the
Province of Ontario (hereinafter referred to as the "Corporation")
OF THE THIRD PART
WHEREAS the authorized capital of the Corporation consists of an unlimited
number of Class A, Class B and Class C common shares of which 100 Class A, 100
Class B and 100 Class C common shares have been issued and are outstanding as
fully paid and non-assessable shares, all of which are owned by the Vendors;
AND WHEREAS the Purchaser has agreed with the Vendors to purchase the 300 issued
and outstanding shares in the capital stock of the Corporation owned by the
Vendors;
THIS AGREEMENT WITNESSETH that in consideration of the covenants, agreements,
warranties and payments herein set out and provided for, the parties hereto
hereby respectively covenant and agree as follows:
1. Purchased Shares
Subject to the terms and conditions hereof, the Vendors covenant and agree
to sell, assign, and transfer to the Purchaser and the Purchaser covenants and
agrees to purchase from the Vendors all (and not less than all) of the issued
and outstanding shares in the capital stock of the Corporation owned by the
Vendors (the "Purchased Shares") for the purchase price (the "Purchase Price")
payable as set out in Article 2 hereof.
2. Purchase Price
(1) The Purchase Price shall be the sum of One Million Dollars
($1,000,000.) of lawful money of Canada.
(2) The Purchase Price shall be payable to or to the order of the
Vendors by certified cheques as follows:
(a) Three Hundred Eighty Three Thousand One Hundred Seventy Eight
Dollars ($383,178.) shall be paid to the Vendors at the Time
of Closing by certified cheque or bank draft payable to or to
the order of the Vendors at the Time of Closing as hereinafter
defined;
(b) Two Hundred Twenty Four Thousand Two Hundred Ninety Eight
Dollars and Seventy Two Cents ($224,298.72.) shall be paid to
the Vendors by certified cheque or bank draft to or to the
order of the Vendors in twenty four (24) equal principal
installments in the amount of Nine Thousand Three Hundred
Forty Five Dollars Seventy Eight Cents ($9,345.78) each
commencing August 1, 2005 to and including July 1, 2007;
(c) Two Hundred Twenty Four Thousand Two Hundred Ninety Nine
Dollars ($224,299.) shall be paid to the Vendors by certified
cheque or bank draft payable to or to the order of the Vendors
on or before July 1, 2006; and
(d) One Hundred Sixty Eight Thousand Two Hundred Twenty Four
Dollars and Twenty Eight Cents ($168,224.28) shall be paid to
the Vendors by certified cheque or bank draft payable to or to
the order of the Vendors on or before July 1, 2007.
(3) The balance of the Purchase Price not paid on closing in the amount
of Six Hundred Sixteen Thousand Eight Hundred Twenty Two Dollars
($616,822.) shall be evidenced by a promissory note authorized,
executed and delivered by the Purchaser in favour of the Vendors,
(the "Promissory Note").
(4) The obligation of the Purchaser under the Promissory Note shall be
guaranteed by the Corporation (the "Guarantee") and as security for
the Guarantee the Corporation shall in addition authorize, execute
and deliver in favour of the Vendors a general security agreement
(the "General Security Agreement") in form and content satisfactory
to the solicitors for the Vendors and in respect of which a
financing statement shall be filed pursuant to the provisions of the
Personal Property Security Act of the Province of Ontario in first
position.
(5) The Promissory Note shall be additionally secured by a pledge of the
Purchased Shares authorized, executed and delivered by the Purchaser
in favour of the Vendors in a form and content satisfactory to the
solicitors for the Vendors (the "Pledge Agreement"). The Pledge
Agreement shall stipulate that until default pursuant to the
provisions of the Promissory Note, the Purchased Shares may be voted
by the Purchaser, and any dividends authorized and issued by the
Corporation shall be directed to the Purchaser. Upon default under
the Promissory Note which remains uncured, the Purchased Shares
shall be returned to the Vendors in full satisfaction of such
default and that portion of the Purchase Price previously paid shall
be forfeited as liquidated damages and not as a penalty.
3. Closing Arrangements
(1) The closing of this transaction shall take place at 10:00 a.m.
(local time)(the "Time of Closing") at the offices of Messrs.
Purser, Dooley LLP Barristers and Solicitors, located at 151 Ferris
Lane, Suite 300, Barrie, Ontario, on or before July 8, 2005 (the
"Closing Date").
(2) On the Closing Date, upon fulfillment of all the conditions set out
herein, the Vendors shall deliver to the Purchaser the certificates
representing all the Purchased Shares duly endorsed in favour of the
Purchaser.
4. Representations and Warranties of the Vendors
The Vendors jointly and severally covenant, represent and warrant as
follows as of the date hereof and as of the Closing Date and they acknowledge
that the Purchaser is relying upon such covenants, representations and
warranties in connection with the purchase by the Purchaser of the Purchased
Shares:
(1) The Corporation is a corporation is duly incorporated, validly
existing and in good standing under the laws of the Province of
Ontario. The Corporation has all necessary corporate power and
authority to own or lease its properties, to carry on its business
as now being conducted by it, to enter into this agreement and to
perform its obligations hereunder.
(2) The authorized capital of the Corporation consists of an unlimited
number of Class A, Class B and Class C common shares of which 100
Class A, 100 Class B and 100 Class C common shares have been duly
issued for an aggregate purchase price of Three Hundred Dollars
($300.) and are outstanding as fully paid and non-assessable shares.
(3) The shareholders of record of the Corporation are as follows:
James Fairhead - 100 Class A common shares
Steve Kerekes - 100 Class B common shares
Tom Davis - 100 Class C common shares
and such shares are owned by the Vendors, are held with good and
marketable title, free and clear of all mortgages, liens, charges,
security interests, adverse claims, pledges, encumbrances and
demands whatsoever. All rights and powers to vote the Purchased
Shares are held exclusively by the Vendors. The delivery of the
Purchased Shares to the Purchaser pursuant to the provisions hereof
will transfer to the Purchaser valid title thereto, free and clear
of all encumbrances.
(4) No person, firm or corporation has any agreement or option or any
right (whether by law, pre-emptive or contractual and including
convertible securities, warrants or convertible obligations of any
nature) for the purchase or the issue of either the Purchased Shares
or any unissued shares in the capital stock of the Corporation.
(5) The entering into of this agreement and the transactions
contemplated hereby will not result in the violation of the articles
or by-laws of the Corporation or any indenture or other agreement,
written or oral, to which any of the Vendors or the Corporation may
be a party.
(6) This agreement has been duly executed and delivered by each of the
Vendors and is a valid and binding obligation of each of the Vendors
enforceable in accordance with its terms.
(7) None of the Vendors is a non-resident within the meaning of the
Income Tax Act (Canada).
(8) To the Vendors' knowledge, there are no existing or threatened legal
actions or claims against the Corporation.
(9) There are no liens, charges or encumbrances of any kind whatsoever
on the assets of the Corporation.
5. Covenants of the Vendors
The Vendors covenant and agree with the Purchaser that on or before the
Closing Date, they will do or will cause to be done the following:
(1) all necessary steps and proceedings to permit all of the Purchased
Shares to be duly and validly transferred to the Purchaser shall
have been taken by the Vendors and the Corporation; and
(2) the existing directors of the Corporation shall resign as directors
and officers of the Corporation in favour of nominees of the
Purchaser, such resignations to be effective as at the Closing Date.
6. Covenants of the Purchaser
The Purchaser covenants and agrees with the Vendors that upon closing of
the purchase and sale of the Purchased Shares contemplated by this agreement, it
shall cause the Corporation to cease using the Vendors' trade-name and
trade-mark, "One Bill".
7. Securities Law Compliance Certificates.
Each Vendor who is an officer of the Corporation agrees and covenants
that, from time to time subsequent to the Closing Date, such officer shall
provide to the Purchaser such certificates regarding the conduct of the Business
and/or financial information of the Corporation prior to the Closing as the
Purchaser may reasonably require from such officer to enable the Purchaser's
Chief Executive Officer and Chief Financial Officer (and such other executive
officers of the Purchaser) to execute and deliver such certificates (the
"Officers' Certificates") as they are required to execute and file with the
Securities Exchange Commission under Sarbanes-Oxley Act of 2002 (or such other
legislative or regulatory requirements as may be adopted) when such Officers'
Certificates include or, in whole or in part, are based upon the conduct of the
Business and/or the financial information of the Corporation prior to the
Closing. Each Vendor who is an officer of the Corporation agrees that this
Covenant shall survive for a period of six (6) years from the Closing Date or
for such longer period as may be required by applicable Law.
8. Purchaser's Condition
On or before the Closing Date, the Purchaser shall have concluded and
closed satisfactory financing arrangements to fund the transaction contemplated
by this Agreement.
9. Survival of Representations and Warranties
The representations and warranties of the Vendors and the Purchaser
contained in this agreement and contained in any document or certificate given
pursuant hereto shall survive the closing of the purchase and sale of the
Purchased Shares herein provided for, for a period of one (1) year from the
Closing Date.
10. Indemnification
The Vendors hereby jointly and severally indemnify and save the
Corporation, the Purchaser and their respective shareholders, directors,
officers, employees and agents harmless of and from any cause or claim arising
with respect to the Corporation or its activities prior to the Closing Date. The
Vendors shall remain liable to defend at their expense any such actions or
claims that may arise with respect to the Corporation or its activities,
concerning the time period prior to the Closing Date. Such indemnity is
conditional upon the Purchaser not entering into any claim or action in an
adverse position to the Vendors.
11. Notices
Any notice, direction or other instrument required or permitted to be
given to the Vendors hereunder shall be in writing and may be given by mailing
the same postage prepaid or delivering the same addressed to the Vendors at:
85 Bayfield Street, Suite 300
Barrie, Ontario L4M 3A7
Any notice, direction or other instrument required or permitted to be
given to the Purchaser or the Corporation hereunder shall be in writing and may
be given by mailing the same postage prepaid or delivering the same addressed to
the Purchaser or the Corporation at:
85 Bayfield Street, Suite 300
Barrie, Ontario L4M 3A7
Any notice, direction or other instrument aforesaid if delivered, shall be
deemed to have been given or made on the date on which it was delivered or if
mailed, shall be deemed to have been given or made on the fifth business day
following the day on which it was mailed.
12. Costs
(1) The parties hereto agree that there are no broker's or finder's fees
due or payable with respect to this transaction.
(2) Each of the parties hereto shall pay its own legal, accounting and
other costs and expenses associated with this transaction and this
agreement.
(3) The Purchaser shall be responsible for all expenses and costs in
connection with the Corporation from and after the Closing Date, and
to legal actions and claims as set forth in Section 8 hereof, for
which the Vendors have assumed liability hereunder.
13. Entire Agreement
This agreement constitutes the entire agreement between the parties
hereto. There are not and shall not be any verbal statements, representations,
warranties, undertakings or agreements between the parties hereto and this
agreement may not be amended or modified in any respect except by written
instrument signed by the parties hereto.
14. Proper Law of Contract
This agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the Province of Ontario.
Each of the parties hereto hereby irrevocably submits and attorns to the
jurisdiction of the courts of the Province of Ontario.
15. Benefit and Binding Nature of the Agreement
This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF this agreement has been executed by the parties hereto.
/S/ JAMES FAIRHEAD
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Witness JAMES FAIRHEAD
/S/ STEVE KEREKES
- ------------------- -------------------
Witness STEVE KEREKES
/S/ TOM DAVIS
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Witness TOM DAVIS
TELEPLUS CONNECT CORP.
Per: /s/ Marius Silvasan
-----------------------------------------c/s
Marius Silvasan President
I have the authority to bind the Corporation
1500536 ONTARIO INC.
Per: /s/ Tom Davis
-----------------------------------------c/s
Tom Davis - President
Per: /s/ Steve Kerekes
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Steve Kerekes - Secretary-Treasurer
We have the authority to bind the Corporation