SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: (DATE OF EARLIEST EVENT REPORTED): MAY 14, 2004
COMMISSION FILE NO. 0-49628
TELEPLUS ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 98-0045023
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(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
465 St. Jean, Suite 601, Montreal, Quebec, Canada H2Y 2R6
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(514) 344-0778
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(ISSUER TELEPHONE NUMBER)
N/A
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(FORMER NAME AND ADDRESS)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 14, 2004, Teleplus Enterprises Inc. ("TelePlus") purchased 100% of
the issued and outstanding shares of Smart Cell Ltd. ("Smart Cell"), a British
Colombia Corporation. At the time of the transaction Smart Cell had the
Following assets & Liabilities:
(a) The Accounts Receivable;
(b) The Inventory;
(c) The Prepaid Expenses and Deposits;
(d) The Computer Hardware;
(e) The Computer Software;
(f) The Leasehold Improvements;
(g) The Office Equipment and Furniture;
(h) Accounts payable; and
(i) Loans Payable;
Smart Cell used the assets in its Fido dealerships that primarily sold Fido
Products and related accessories in the greater Vancouver area of Canada.
TelePlus will work with Smart Cell's management to review and make changes to
Smart Cell's product portfolio.
TelePlus purchased Smart Cell from the following majority shareholders who
owned 100% of the issued and outstanding shares of Smart Cell's at the time of
TelePlus' purchase: Raghbir Riarh, Kanwaljit Riarh, David Sidhu, Lovely Sidhu,
and Sukhjit Sandher (collectively referred to herein as the "Seller"). Neither
TelePlus nor its affiliates, directors, officers or associates of TelePlus'
Directors or officers had a relationship with the Seller prior to the purchase.
TelePlus used its own cash and newly issued treasury stock to purchase Smart
Cell. TelePlus purchased Smart Cell on the following terms:
i) TelePlus shall issue an aggregate of 525,000 restricted shares of its
common stock, $.001 par value per share ("TelePlus Common Stock") to Seller
as follows: TelePlus shall issue 285,000 restricted shares of TelePlus
Common Stock to Seller at Closing, and, beginning 90 days from Closing, an
additional 60,000 restricted shares for the next four quarters (or an
aggregate 240,000 additional restricted shares). If the Smart Cell Stores
do not collectively generate sales of at least CDN$2,4M ("Minimum Store
Revenue") in the year immediately after Closing (for the purposes of this
calculation, the one year period for the Main Street Store and the Sixth
Store will commence for each such store on the date of their respective
opening) (the "One-Year Period"), the Stock Compensation payable to the
Seller shall be reduced. TelePlus will pay Seller in cash 60% of the value
of the Net Assets of Smart Cell on Closing.
ii) As soon as reasonably possible after Closing and no later than September 1,
2004, TelePlus will pay Seller the net amount, if any, of Smart Cell's
Accounts Receivable less Accounts Payable (the "Net Receivables") by way of
a certified check or wire transfer as directed by Seller.
iii) TelePlus will issue Seller up to an aggregate of 450,000 shares of TelePlus
Common Stock based on the Company's and Smart Cell's performance in British
Columbia, Alberta, Saskatchewan and Manitoba ("Western Canada") and through
any other stores designated by Seller and TelePlus as a "Seller Managed
Store" over a five-year period beginning six months after Closing.
The following is a summarized description of Smart Cell's business prior to
the share acquisition. TelePlus intends to capitalize on the achievements of
Smart Cell by using Smart Cell's assets to create shareholder value.
DESCRIPTION OF THE BUSINESS AND PRINCIPAL PRODUCTS
Smart Cell currently operates 5 wireless stores in the Vancouver area
selling primarily FIDO wireless products and related accessories. Prior to the
acquisition Smart Cell intended to open its 6 store also in the Vancouver area.
Smart Cell caters its marketing efforts to people who are either native to, or
have ancestry from, the country of India.
Smart Cell also sells a variety of GSM unlocked handsets. TelePlus will
work with Smart Cell and its management to evaluate Smart Cell's product
offering and introduce new products as needed to increase same store sales.
COMPETITIVE BUSINESS CONDITIONS
Smart Cell faces competition from different retail players including retail
shops that are operated by wireless carriers, large surface retailers and
specialized wireless and telephone shops.
Wireless Carriers' Shops
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Smart Cell faces competition from the wireless carriers established corporate
stores and/or dealers. In this area Smart Cell's primary competitors are the
following:
o Bell World
o Rogers AT&T
o Telus Mobility
o Fido
The above stated retailer outlets in all cases sell only the wireless products
and services of their respective carrier. In addition, these retail outlets in
all cases except Bell World do not promote any other services than wireless
products.
Large Surface Retailers
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Smart Cell also competes against large surface retailers, however, they only
promote wireless boxed products with limited customer support. The largest
players in Canada are:
o FutureShop
o Office Depot
o Best Buy
Specialized Wireless & Phone Retailers
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Smart Cell also competes against wireless specialty stores
o Wireless Wave operates 70 stores primarily in Western Canada and Toronto,
and its product line is limited to wireless products and services.
o Radio Shack operates 900 stores across Canada, and sells the wireless
services of Rogers AT&T in addition to a variety of phone products and
services.
Others
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In addition to the above-mentioned competitors, Smart Cell faces
competition from a variety of independent retailers promoting one to a few
wireless carriers' products and services. In the last year, however, wireless
carriers have been limiting their issuance of new retail licenses and some of
them have even started reducing the number of issued retail licenses to
consolidate their efforts with larger customers such as Smart Cell. This trend
is expected to continue in the coming year and it should prevent the upcoming of
additional competitors in the marketplace; thus, protecting Smart Cell's
market-share.
NO DEPENDENCE ON ONE OR A FEW CUSTOMERS
Smart Cell is currently not dependent on any one customer. It is dependent
on 1 supplier, Microcell Solutions Inc. (FIDO) which currently represents over
90% of Smart Cell's total purchases. TelePlus will work with Smart Cell's
management to review and make changes to Smart Cell's product portfolio.
PATENTS, TRADEMARKS & LICENSES
Smart Cell does not own any patents, trademarks, licenses or other intellectual
property rights.
NEED FOR GOVERNMENT APPROVAL
Smart Cell does not need any government approval.
EMPLOYEES
Smart Cell has a total of 15 employees, 10 of which are full time.
DESCRIPTION OF PROPERTY
Smart Cell currently has in place 6 leases for various properties. 5 retail
store leases and 1 lease for its head office. Smart Cell's retail stores vary in
size from 200 to 1,300 square feet. Smart Cell's head office is 800 square feet
and is located in an office building. The leases are of different length ranging
from 1 years to 5 years. Smart Cell pays an aggregate CDN $11,895 per month for
these leases.
LEGAL PROCEEDINGS
As of the date of filing of this report, Smart Cell was neither a party to
nor aware of any legal proceedings involving Smart Cell.
RELATED PARTY TRANSACTIONS
As part of the purchase transaction Smart Cell executed employment
agreements with all key company executives and managers.
RISKS:
Business Risk:
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o Limited duration of agreements in place with major wireless carriers.
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Smart Cell's current sales volumes have enabled the firm to build strong
relationships with a variety of wireless and communication partners thus,
minimizing the risks associated with the non-renewal of any of Smart Cell's
agreements.
o No product exclusivity. The current market consolidation undertaken by the
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major wireless carriers limits Smart Cell's risk associated with no product
exclusivity as new retail players can't readily get access to the products
and services offered by the firm;
o Rapid product obsolescence. The wireless and communication market place
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face rapid product obsolescence requiring Smart Cell to maintain short
inventory cycles and technically enabled sales consultants;
o Price erosion. Smart cell is faced with high price elasticity resulting in
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the erosion of its margin on certain products. Price wars oftentimes occur
in the wireless industry which could have a negative impact on Smart Cell's
profit margins.
o Issuance of a large number of wireless licenses increasing the number of
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competitors. Wireless carriers could revert to the issuance of additional
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wireless licenses which could increase the number of competitors. Such
issuance could reduce Smart Cell's same store sales and erode its profit
margins which would have a materially adverse effect on Smart Cell's
business operations.
o Smart Cell's ability to hire and retain experienced industry
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professionals. Smart Cell requires the services of skilled professionals
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which, if unavailable, Could adversely effect Smart Cell's performance.
Financial Risk:
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o Smart Cell's ability to secure competitive pricing arrangements in a market
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dominated by larger retailers with higher financial resources. Profit
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margins in the wireless industry are low. Competitors that are larger than
Smart Cell and that have more resources than Smart Cell have the ability to
reduce their prices significantly lower than current prices that would
further reduce profit margins. Should such an event occur and Smart Cell
choose not to offer competitive prices, Smart Cell could lose its market
share. If the Smart Cell chose to compete, the reduction in profit margin
would have a material adverse effect on Smart Cell's business operations
and adversely affect Smart Cell's profitability. Smart Cell's ability to
achieve economies of scale is critical to Smart Cell's long-term viability.
o Smart Cell's capacity to secure required financing. Smart Cell will require
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additional financing to growth its operations which it may or not have the
ability to secure. There can be no assurance that any new capital will be
available to Smart Cell or that additional funds, if any, will be
sufficient to fund Smart Cell's growth when needed or on terms satisfactory
to Smart Cell. Smart Cell does not have any commitments from its officers
or directors or from TelePlus to provide such additional funding. If Smart
Cell does not receive such Additional funding, it will hinder its ability
to expand its operations.
Economic Risk:
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o Uncertain growth in market demand. Current market conditions indicate a
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strong growth of wireless products in the upcoming years. Nevertheless
technological development and unstable economic growth may affect current
forecast which could adversely affect Smart Cell's revenues and
profitability.
ITEM 5. OTHER EVENTS.
As a result of the purchase of Smart Cell, Marius Silvasan, TelePlus' Chief
Executive Officer, was appointed Smart Cell's President and Chief Executive
Officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Financial Statements of Smart Cell Ltd.
(a) Financial Statements of Businesses Acquired To Be Provided
(b) Pro Forma Financial Information To Be Provided
(c) Exhibits:
10.1 Stock Purchase Agreement
Signatures
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Teleplus Enterprises, Inc.
May 20, 2004 /s/ Marius Silvasan
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Marius Silvasan
Chief Executive Officer
Exhibit 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made effective as of
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the day of May, 2004, by and among TelePlus Enterprises, Inc., a Nevada
corporation (being herein referred to as "Purchaser," "TelePlus" or the
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"Company"), and persons executing this Agreement listed on the signature page
hereto (collectively being herein referred to as the "Seller"). Purchaser and
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Seller are herein collectively referred to as the "Parties."
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PRELIMINARY STATEMENTS
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A. Smart Cell Ltd., a corporation amalgamated under the laws of the Province
of British Columbia, Canada, ("Smart Cell"), currently owns and operates five
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(5) Fido Dealerships in Western Canada and plans to open a sixth Fido Dealership
(the "Sixth Store", and together with the other five Fido Dealerships, the
"Smart Cell Stores"). Information regarding the Smart Cell Stores and Smart
Cell's executive offices is listed on Exhibit A, attached hereto.
B. Seller owns 100% of the issued and outstanding shares of common stock of
Smart Cell and is willing to sell 100% of the issued and outstanding shares of
common stock of Smart Cell (the "Common Stock").
C. Seller desires to sell the Common Stock to Purchaser, and Purchaser
desires to purchase the Common Stock from Seller, on the terms, provisions and
conditions set forth herein.
D. On Closing, TelePlus Enterprises, Inc. will possess all of the rights,
title and interest, legal and equitable, in and to the Common Stock. As such,
Smart Cell will be a wholly-owned subsidiary of TelePlus Enterprises, Inc.
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Seller, Purchaser and Smart Cell do hereby agree
as follows:
ARTICLE I
PURCHASE AND SALE OF THE COMMON STOCK
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Section 1.01. Purchase and Sale. On the Closing Date and upon the terms
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and subject to the conditions set forth herein, the Seller shall deliver 100% of
the issued and outstanding shares of Smart Cell Common Stock to the Purchaser
free and clear of all liens, and Purchaser shall purchase the Common Stock from
the Seller in accordance with Section 1.02 below.
Section 1.02. Purchase Price. The purchase price (the "Purchase Price")
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for the Common Stock shall be equal to the aggregate of and be payable as
follows:
i) Purchaser shall issue an aggregate of 525,000 restricted shares of its
common stock, $.001 par value per share ("TelePlus Common Stock") to Seller as
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follows: Purchaser shall issue 285,000 restricted shares of TelePlus Common
Stock to Seller at Closing, and, beginning 90 days from Closing, an additional
60,000 restricted shares for the next four quarters (or an aggregate 240,000
additional restricted shares). The restricted shares issued under this Section
1.02(i) are referred to as "Stock Compensation" and shall be allocated to Seller
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according to Exhibit B, Part I, attached hereto. If the Smart Cell Stores do not
collectively generate sales of at least CDN$2,400,000 ("Minimum Store Revenue")
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in the year immediately after Closing (for the purposes of this calculation, the
one year period for the Main Street Store (as defined in Exhibit A) and the
Sixth Store will commence for each such store on the date of their respective
opening) (the "One-Year Period"), the Stock Compensation payable to the Seller
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shall be reduced by an amount equal to 525,000 multiplied by one (1) minus the
ratio which actual sales generated by the Smart Cell Stores during the One-Year
Period ("Actual Sales") bears to the Minimum Store Revenue, which amount shall
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hereinafter be referred to as the "Reduced Shares". For example, if Actual
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Sales are CDN$2,000,000, Stock Compensation will be reduced by 87,500 Reduced
Shares (525,000 shares of TelePlus Common Stock multiplied by 1 minus Actual
Sales divided by Minimum Store Revenue). The Parties hereby agree that Actual
Sales will be determined by the Company's independent outside auditor. The
Seller hereby agrees to return the Reduced Shares to the Purchaser for
cancellation.
ii) Purchaser will pay Seller in cash 60% of the value of the Net Assets of
Smart Cell on Closing. "Net Assets" shall mean the value of Smart Cell's total
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assets being leasehold improvements, furniture and fixtures, equipment and
inventory and shall not include Accounts Receivable or Accounts Payable (each as
defined in subsection (iii) to be determined by mutual agreement of the Parties
or by audited financial statements provided by an auditor mutually agreed upon
by the Parties and paid for by Purchaser. 50% of the Cash Compensation (as
defined below) will be due and payable at Closing. The remaining 50% of the
Cash Compensation will be due and payable 90 days after Closing. The cash paid
under this Section 1.02(ii) is referred to as "Cash Compensation" and shall be
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allocated to Seller according to Exhibit B, Part II, attached hereto. All Cash
Compensation shall be payable by way of a certified check or wire transfer as
directed by Seller.
iii) As soon as reasonably possible after Closing and no later than
September 1, 2004, Purchaser will pay Seller the net amount, if any, of Smart
Cell's Accounts Receivable less Accounts Payable (the "Net Receivables") by way
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of a certified check or wire transfer as directed by Seller. The Net
Receivables shall be allocated to Seller according to Exhibit B, Part II,
attached hereto. The determination of the value of the Net Receivables shall be
determined by mutual agreement of the Parties or by audited financial statements
provided by an auditor mutually agreed upon by the Parties and paid for by
Purchaser. "Accounts Receivable" means all amounts received by Smart Cell on
account of receivables that arose prior to the date of Closing including without
limitation all (a) commissions received from Microcell Solutions Inc.
("Microcell"), (b) in-store rebates received from Microcell (including
activation and promotional credits), (c) value added services commissions
received from Microcell, (d) rate plan bonuses received from Microcell, (e)
hardware volume rebates, (f) RMA funds received from Microcell, (g) coop
advertising funds received from Microcell, (h) Provincial Sales Tax receivables,
and (i) Goods and Service Tax receivables. "Accounts Payable" shall include all
loans (shareholder or otherwise) made to Smart Cell and all taxes payable by
Smart Cell each as of the date of Closing.
iv) Purchaser will issue Seller up to an aggregate of 450,000 shares of
TelePlus Common Stock based on the Company's and Smart Cell's performance in
British Columbia, Alberta, Saskatchewan and Manitoba ("Western Canada") and
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through any other stores designated by Seller and Purchaser as a "Seller Managed
Store" over a five-year period beginning six months after Closing. The TelePlus
Common Stock issued under this Section 1.02(iv) is referred to as "Performance
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Shares" and shall be allocated to Seller according to Exhibit B, Part III,
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attached hereto. The Performance Shares are issuable as follows: Purchaser
shall issue one share of TelePlus Common Stock for every CDN$30 of gross revenue
generated through sales of Smart Cell or the Company in Western Canada or
through any store designated by Seller and Purchaser as a "Seller Managed Store"
and one share of TelePlus Common Stock for every CDN$7 of net profit generated
by Smart Cell or the Company in Western Canada or through any store designated
by Seller and Purchaser as a "Seller Managed Store" up to a maximum of 450,000
shares of TelePlus Common Stock. The Performance Shares will be issued on an
annual basis and will be restricted stock with a par value of $.001 per share.
For greater certainty, the Parties acknowledge that (i) the Performance Shares
are payable whether or not any of the Sellers are employed by Smart Cell or the
Purchaser and (ii) the Smart Cell Stores are Seller Managed Stores for the
purposes of this Agreement. The number of shares of TelePlus Common Stock to be
issued under this Section 1.02(iv) shall be determined by mutual agreement of
the Parties or by audited financial statements provided by an auditor mutually
agreed upon by the Parties and paid for by Purchaser.
Section 1.03. Time and Place of Closing. Subject to the satisfaction or
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waiver of the conditions herein, the closing (the "Closing") of the transactions
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contemplated by this Agreement shall take place on or before May 14, 2004,
unless extended or shortened by mutual consent of the Parties.
Section 1.04. Delivery of the Common Stock; Payment of Purchase Price. At
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Closing: (a) the Seller shall deliver to the Purchaser the certificate(s)
representing the Common Stock, duly endorsed in blank or accompanied by stock
powers duly endorsed in blank; and (b) the Purchaser shall deliver to the Seller
the Purchase Price in accordance with Section 1.02. The stock transfer forms in
respect of the Common Stock and all transfer and assignments shall be in a form
and content satisfactory to Purchaser and appropriate to effectively vest good
and marketable title to the Common Stock in Purchaser free and clear of all
liens, mortgages, pledges, encumbrances, charges, restrictions or known claims
of every kind, nature, or description whatsoever, and immediately registerable
in all places where registration of such instruments is necessary or desirable.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
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Subject to all of the terms, conditions and provisions of this Agreement,
the Seller, jointly and severally hereby represents and warrants to Purchaser,
as of the date hereof and as of the Closing, as follows:
Section 2.01. Organization and Qualification. Smart Cell is a corporation
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duly amalgamated, validly existing and in good standing under the laws of the
Province of British Columbia. Smart Cell has all requisite power and authority,
corporate or otherwise, to own, lease and operate its assets and properties and
to carry on its business as now being conducted. Smart Cell does not have any
subsidiaries.
Section 2.02. Capitalization of Smart Cell; Title to the Common Stock.
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There are an unlimited number of shares of common stock authorized of Smart
Cell, of which 100,000 shares of common stock are issued and outstanding, with
no par value per share. All of the outstanding shares of common stock have been
duly authorized and validly issued, are fully paid and nonassessable and are
free of preemptive rights. The Common Stock transferred by the Seller to
Purchaser will be free and clear of liens. There are no outstanding or
authorized subscriptions, options, warrants, calls, rights or other similar
contracts, including rights of conversion or exchange under any outstanding debt
or equity security or other contract, to which any of the Common Stock will be
subject or obligating the Seller and/or Smart Cell to issue, deliver or sell, or
cause to be issued, delivered or sold, any other shares of capital stock of
Smart Cell or any other debt or equity securities convertible into or evidencing
the right to subscribe for any such shares of capital stock or obligating the
Seller and/or Smart Cell to grant, extend or enter into any such contract.
There are no voting trusts, proxies or other contracts to which Seller and/or
Smart Cell are a party or are bound with respect to the voting of any shares of
capital stock of Smart Cell. The Seller has full legal right to sell, assign
and transfer the Common Stock to Purchaser and will, upon payment for the Common
Stock and delivery to Purchaser of a certificate or certificates representing
the Common Stock, transfer good and indefeasible title to the Common Stock to
Purchaser, free and clear of liens.
Section 2.03. Authority. The Seller has all requisite power and
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authority, corporate or otherwise, to execute and deliver this Agreement and to
consummate the transactions contemplated hereby and thereby. The Seller has
duly and validly executed and delivered this Agreement and will, on or prior to
the Closing, execute, such other documents as may be required hereunder and,
assuming the due authorization, execution and delivery of this Agreement by the
parties hereto and thereto, this Agreement constitutes, the legal, valid and
binding obligation of the Seller, as applicable, enforceable against the Seller,
as applicable, in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and general equitable
principles.
Section 2.04. No Conflict. The execution and delivery by the Seller of
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this Agreement and the consummation of the transactions contemplated hereby and
thereby, do not and will not, by the lapse of time, the giving of notice or
otherwise: (a) constitute a violation of any law; (b) constitute a breach or
violation of any provision contained in the Notice of Articles or Articles (or
other like documents) of Smart Cell; (c) constitute a breach of any provision
contained in, or a default under, any governmental approval, any writ,
injunction, order, judgment or decree of any governmental authority or any
contract (other than the leases listed in paragraphs 1, 2 and 4 of Exhibit A) to
which the Seller and/or Smart Cell are a party; or (d) result in or require the
creation of any lien upon the Common Stock.
Section 2.05. Consents and Approvals. No governmental approvals and no
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notifications, filings or registrations to or with any governmental authority or
any other person is or will be necessary for the valid execution and delivery by
the Seller of this Agreement or the consummation of the transactions
contemplated hereby or thereby, or the enforceability hereof or thereof, other
than those which have been obtained or made and are in full force and effect.
Section 2.06. Litigation. There are no claims pending or, to the
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knowledge of the Seller and Smart Cell, threatened against or affecting Smart
Cell or any of its assets and properties before or by any governmental authority
or any other person. The Seller has no knowledge of the basis for any claim,
which alone or in the aggregate: (a) could reasonably be expected to result in
any liability with respect to Smart Cell; or (b) seeks to restrain or enjoin the
execution and delivery of this Agreement or the consummation of any of the
transactions contemplated hereby or thereby. To the best of the knowledge of
the Seller, there are no judgments or outstanding orders, injunctions, decrees,
stipulations or awards against Smart Cell or any of its assets and properties.
Section 2.07. Brokers, Finders and Financial Advisors. No broker, finder
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or financial advisor has acted for Seller in connection with this Agreement or
the transactions contemplated hereby or thereby, and no broker, finder or
financial advisor is entitled to any broker's, finder's or financial advisor's
fee or other commission in respect thereof based in any way on any contract with
Seller.
Section 2.08. Disclosure. The schedules, documents, exhibits, reports,
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certificates and other written statements and information furnished by or on
behalf of Seller and identified and listed in Part I of Exhibit "D" to the
Purchaser do not contain any material misstatement of fact or, to the knowledge
of Seller, omit to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. Seller has not withheld any fact known to them which
has or is reasonably likely to have a material adverse effect with respect to
Smart Cell.
Section 2.09. Title and Related Matters. Smart Cell has good and
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marketable title to all of its properties, inventory, interest in properties,
and assets, real and personal, tangible and intangible, which are reflected in
the management prepared annual financial statements of Smart Cell Ltd. (being
one of the three companies which amalgamated to form Smart Cell) ("Original
Smart Cell") for the year ending August 31, 2003 and the interim management
statements for the period September 1, 2003 to March 31, 2004 for each of
Original Smart Cell and Power House Media Inc. or acquired after that date
(except properties, inventory, interest in properties, and assets sold or
otherwise disposed of since such date in the ordinary course of business or that
are part of the Main Street Store, 128th Street Store or the Administrative
Office (as defined in Exhibit "A")), free and clear of all liens, pledges,
charges, or encumbrances except (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will not
materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and (c) as otherwise described
in this Agreement. Except as otherwise described in this Agreement, Smart Cell
owns, free and clear of any liens, claims, encumbrances, royalty interests, or
other restrictions or limitations of any nature whatsoever, any and all products
it is currently manufacturing, including the underlying technology and data, and
all procedures, techniques, marketing plans, business plans, methods of
management, or other information utilized in connection with Smart Cell's
business. Except as otherwise described in this Agreement, no third party has
any right to, and Smart Cell has not received any notice of infringement of or
conflict with asserted rights of others with respect to any product, technology,
data, trade secrets, know-how, proprietary techniques, trademarks, service
marks, trade names, or copyrights which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
materially adverse effect on the business, operations, financial condition,
income, or business prospects of Smart Cell or any material portion of its
properties, assets, or rights.
Section 2.10. Ownership. The Seller represents and warrants that Seller
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owns 100% of the issued and outstanding shares of common stock of Smart Cell
that is subject to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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Subject to all of the terms, conditions and provisions of this Agreement,
Purchaser hereby represents and warrants to the Seller, as of the date hereof
and as of the Closing, as follows:
Section 3.01. Authority. The Purchaser has all requisite power and
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authority, corporate or otherwise, to execute and deliver this Agreement and to
consummate the transactions contemplated hereby and thereby. The Purchaser has
duly and validly executed and delivered this Agreement and will, on or prior to
the Closing, execute, such other documents as may be required hereunder and,
assuming the due authorization, execution and delivery of this Agreement by the
parties hereto and thereto, this Agreement constitutes, the legal, valid and
binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and general equitable principles.
Section 3.02. No Conflict. The execution and delivery by the Purchaser of
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this Agreement and the consummation of the transactions contemplated hereby and
thereby, do not and will not, by the lapse of time, the giving of notice or
otherwise: (a) constitute a violation of any law; (b) constitute a breach or
violation of any provision contained in the Articles of Incorporation or Bylaws
of Purchaser; (c) constitute a breach of any provision contained in, or a
default under, any governmental approval, any writ, injunction, order, judgment
or decree of any governmental authority or any contract to which the Purchaser
is a party or by which Purchaser is bound or affected.
Section 3.03. Consents and Approvals. No governmental approvals and no
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notifications, filings or registrations to or with any governmental authority or
any other person is or will be necessary for the valid execution and delivery by
Purchaser of this Agreement and the closing documents to which it is a party, or
the consummation of the transactions contemplated hereby or thereby, or the
enforceability hereof or thereof, other than those which have been obtained or
made and are in full force and effect.
Section 3.04. Litigation. There are no claims pending or, to the
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knowledge of Purchaser, threatened, and Purchaser has no knowledge of the basis
for any claim, which either alone or in the aggregate, seeks to restrain or
enjoin the execution and delivery of this Agreement or the consummation of any
of the transactions contemplated hereby or thereby. There are no judgments or
outstanding orders, injunctions, decrees, stipulations or awards against
Purchaser which prohibits or restricts, or could reasonably be expected to
result in any delay of, the consummation of the transactions contemplated by
this Agreement.
Section 3.05. Brokers, Finders and Financial Advisors. No broker, finder
---------------------------------------
or financial advisor has acted for Purchaser in connection with this Agreement
or the transactions contemplated hereby or thereby, and no broker, finder or
financial advisor is entitled to any broker's, finder's or financial advisor's
fee or other commission in respect thereof based in any way on any contract with
Purchaser.
Section 3.06. Business Development. Purchaser shall use its reasonable
--------------------
commercial efforts to open an additional seven (7) stores in Western Canada
(B.C., Alberta, Saskatchewan and Manitoba) by December 31, 2004.
Section 3.07. Issuance of TelePlus Common Stock. Upon their issuance at
---------------------------------
the times required by this Agreement, the Stock Compensation and Performance
Shares will be duly and validly, created authorized and issued and outstanding
as fully paid and non-assessable shares.
Section 3.08. Securities Compliance. TelePlus Common Stock is listed for
---------------------
trading on the NASDAQ OTCBB and is in compliance in all material respects with
the requirements of all applicable securities laws in relation to the issue and
trading of its securities and the transactions contemplated herein. TelePlus has
filed all necessary reports pursuant to the Securities Exchange Act of 1934 for
a period of at least 90 days immediately preceding the date of this Agreement.
ARTICLE IV
COVENANTS AND ACKNOWLEDGEMENTS
--------------------------------
Section 4.01. Further Assurances. Seller and Purchaser agree that, from
------------------
time to time, whether before, at or after the Closing, each of them will take
such other action and to execute, acknowledge and deliver such contracts, deeds,
or other documents (a) as may be reasonably requested and necessary or
appropriate to carry out the purposes and intent of this Agreement; or (b) to
effect or evidence the transfer to the Purchaser of the Common Stock held by or
in the name of the Seller.
Section 4.02. Conduct of Business. Except as otherwise contemplated by
-------------------
this Agreement, after the date hereof and prior to the Closing or earlier
termination of this Agreement, unless Purchaser shall otherwise agree in
writing, Seller shall take all steps necessary to ensure that Smart Cell shall
(a) not take or perform any act or refrain from taking or performing
any act which would have resulted in a breach of the representations and
warranties set forth in Article II;
(b) not enter into any agreement (other than a lease in respect of the
Main Street Store), or extend an existing agreement that will survive after the
Closing;
(c) not sell, pledge, lease, license, encumber, hypothecate, dispose of
or otherwise transfer any of their assets or properties except in the ordinary
course of business, or make any payments or distributions to Smart Cell or any
of its affiliates; and
(d) other than the repayment of loans, not make any payments or
distributions of assets or properties of Smart Cell to its shareholders.
Prior to the Closing, Seller shall ensure that Smart Cell shall exercise,
consistent with the terms and conditions of this Agreement, complete control and
supervision of its operations and shall conduct business only in the ordinary
course.
Section 4.03. Public Announcements. Except as required by law, without
--------------------
the prior written approval of the other party, neither Seller nor Purchaser will
issue, or permit any agent or affiliate thereof to issue, any press release or
otherwise make or permit any agent or affiliate thereof to make, any public
statement or announcement with respect to this Agreement or the transactions
contemplated hereby and thereby.
Section 4.04. Access to Properties and Records. For a period of at least
--------------------------------
sixty (60) days prior to the Closing Date, Seller will afford to the officers
and authorized representatives of Purchaser full access to the properties, books
and records of Smart Cell in order that Purchaser may have a full opportunity to
make such reasonable investigation as it shall desire to make of the affairs of
Smart Cell, and the Seller will furnish Purchaser with such additional financial
and operating data and other information as to the business and properties of
Smart Cell (the confidentiality of which Purchaser agrees to retain) as
Purchaser shall from time to time reasonably request. Any such investigation
and examination shall be conducted at reasonable times and under reasonable
circumstances, and each party hereto shall cooperate fully therein. No
investigation by Purchaser hereto shall, however, diminish or waive in any way
any of the representations, warranties, covenants or agreements of Purchaser
under this Agreement. In order that Purchaser may investigate as it may wish
the business affairs of Smart Cell, Seller shall furnish Purchaser during such
period with all such information and copies of such documents concerning the
affairs of Smart Cell as Purchaser may reasonably request, and cause its
officers, employees, consultants, agents, accountants, and attorneys to
cooperate fully in connection with such review and examination, and to make full
disclosure to Purchaser all material facts affecting the financial condition,
business operations, and the conduct of operations of Smart Cell.
Section 4.05. Audited Financial Statements. Purchaser must complete an
----------------------------
audit of Smart Cell's business operations and provide audited financial
statements pursuant to the Securities Act of 1933 and the Securities Exchange
Act of 1934 (Regulation S-X) within 75 days of Closing and each of David Sidhu,
Raghbir Riarh and Sukhjit Sandher (the "Executives") shall cooperate with
Purchaser in connection with performance of such audit and the preparation of
such audited financial statements.
Section 4.06. Acknowledgements Regarding Securities Matters. Seller and
---------------------------------------------
the Company acknowledge that:
(a) The shares of the TelePlus Common Stock of the Company to be issued
to Seller have not been registered under the 1933 Act, nor registered under any
state securities law, and are "restricted securities" as that term is defined in
Rule 144 under the 1933 Act. The securities may not be offered for sale, sold
or otherwise transferred except pursuant to an effective registration statement
under the 1933 Act, or pursuant to an exemption from registration under the 1933
Act. The shares to be issued to Seller will bear the following restrictive
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED WITHOUT EITHER: i)
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS, OR ii) SUBMISSION TO THE CORPORATION OF AN OPINION OF COUNSEL,
SATISFACTORY TO THE CORPORATION THAT SAID SHARES AND THE TRANSFER THEREOF ARE
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND
APPLICABLE STATE SECURITIES LAWS."
(b) The Company and the Sellers shall and do hereby acknowledge that
they will accept the opinion of David Loev, current legal counsel to the
Company, or any other legal counsel mutually agreed upon that these shares were
fully paid for on or prior to Closing and that the Company acknowledges that it
will not delay or hinder the processing of any Rule 144 opinion, provided that
such subsequent transfer complies with the rules and regulations set forth in
Rule 144.
(c) Seller hereby agrees to enter into an agreement with TelePlus
whereby each person included in the term "Seller" agrees not to collectively
sell TelePlus Common Stock in an amount that is more than 4% of the daily
trading volume of TelePlus Common Stock on any given day or more than 350,000
shares of TelePlus Common Stock in any calendar quarter, beginning one year from
the date first written above and ending sixty (60) months thereafter (the
"Lock-Up"), which agreement shall be in a form substantially similar to the
attached Exhibit C. Seller agrees to be subject to the Lock-Up with respect to
Stock Compensation, Performance Shares and shares of TelePlus Common Stock that
Seller may acquire as a result of the exercise of options, if any, that Seller
may earn pursuant to TelePlus' stock option plan.
Section 4.07. Repayment of Loans. Purchaser shall forthwith upon the
------------------
receipt by Smart Cell of Accounts Receivable, use its best efforts to cause
Smart Cell to repay, on a pari passu basis with all creditors of Smart Cell as
of the date of Closing, the loans listed in Part II of Exhibit "D".
Section 4.08. Leasehold Improvements. David Sidhu shall pay to TelePlus
----------------------
an amount equal to 40% of the leasehold improvements made to each of the Main
Street Store and the Sixth Store up to a maximum of CDN$12,000 for each store.
For greater certainty, nothing herein prevents TelePlus from making leasehold
improvements that have a cost of more than CDN$30,000 provided, however, that
David Sidhu will only be liable for 40% of the first CDN$30,000 (40% x
CDN$30,000 = CDN$12,000).
Section 4.09. Right of First Refusal to Manage Stores. TelePlus shall,
---------------------------------------
and use its best efforts to ensure that Smart Cell shall, give the right of
first refusal to either Raghbir Riarh or Sukhjit Sandher to manage any new
stores owned or operated by Smart Cell or TelePlus or any of its affiliates in
Western Canada (British Columbia, Alberta, Saskatchewan and Manitoba) provided,
however, that once each of Raghbir Riarh and Sukhjit Sandher are managing seven
stored (for a total of fourteen), the right of first refusal shall terminate.
ARTICLE V
CONDITIONS
----------
Section 5.01. Conditions to Obligations of each of the Parties. The
------------------------------------------------
respective obligations of each party to consummate the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing of the
following conditions: (a) no preliminary or permanent injunction or other order,
decree or ruling which prevents the consummation of the transactions
contemplated by this Agreement shall have been issued and remain in effect; (b)
no claim shall have been asserted, threatened or commenced and no law shall have
been enacted, promulgated or issued which would reasonably be expected to (i)
prohibit the purchase of, payment for or retention of the Common Stock by
Purchaser or the consummation of the transactions contemplated by this Agreement
or (ii) make the consummation of any such transactions illegal; and (c) all
permits, authorizations, regulatory approvals and third party consents legally
required for the consummation of the transactions contemplated by this Agreement
shall have been obtained and be in full force and effect at the Closing.
Section 5.02. Conditions to Obligations of Seller. The obligations of
-----------------------------------
Seller to consummate the transactions contemplated hereby shall be subject to
the fulfillment at or prior to the Closing Date of the following additional
conditions, except as Seller may waive in writing: (a) Purchaser shall have
complied with and performed in all material respects all of the terms,
covenants, agreements and conditions contained in this Agreement which are
required to be complied with and performed on or prior to Closing; (b) the
representations and warranties of Purchaser in this Agreement shall have been
true and correct on the date hereof or thereof, as applicable, and such
representations and warranties shall be true and correct on and at the Closing
(except those, if any, expressly stated to be true and correct at an earlier
date), with the same force and effect as though such representations and
warranties had been made on and at the Closing; (c) the Company shall have all
SEC, state and federal filings and reports current, up to date, in proper form,
and be, to the best of management's knowledge, in compliance with all state and
federal regulations governing a public company; and (d) the Purchaser has
delivered (i) the Purchase Price due and payable at Closing including share
certificates representing the Stock Compensation, (ii) duly executed employment
agreements ("Employment Agreements") between each of Smart Cell and the
Executives, substantially in the form attached as Exhibit "B", (iii) certified
copy of a resolution of the board of directors of Purchaser approving this
Agreement and the transactions contemplated under this Agreement; and (iv) an
opinion of Purchaser's counsel relating to Purchaser's compliance with US
securities laws.
Section 5.03. Conditions to Obligations of Purchaser. The obligations of
--------------------------------------
Purchaser to consummate the transactions contemplated hereby shall be subject to
the fulfillment at or prior to Closing of the following additional conditions,
except as Purchaser may waive in writing: (a) the Seller shall have complied
with and performed in all material respects all of the terms, covenants,
agreements and conditions contained in this Agreement which are required to be
complied with and performed on or prior to Closing; (b) the representations and
warranties of Seller in this Agreement shall have been true and correct on the
date hereof or thereof, as applicable, and such representations and warranties
shall be true and correct on and at the Closing (except those, if any, expressly
stated to be true and correct at an earlier date), with the same force and
effect as though such representations and warranties had been made on and at the
Closing; (c) Smart Cell shall owe no liabilities exceeding $ at the
Closing, other than those disclosed to Purchaser; and (d) Purchaser shall have
received each of the following dated as of the Closing: (i) a certificate
executed by an officer of Smart Cell, individually and in his capacity as
officer of Smart Cell, certifying as to fulfillment of the conditions specified
in Sections 5.03(a), 5.03(b) and 5.03(c); (ii) the original Articles or
Incorporation and Bylaws (or similar documents) of Smart Cell (including any
amendments thereto) and stock record and transfer books of Smart Cell,
reflecting as of the Closing the name and address of, and the number of shares
of common stock owned of record of Smart Cell; (iii) a favorable opinion of
legal counsel for Smart Cell regarding the examination and inspection of the
books and records of Smart Cell prior to Closing; (iv) the delivery no later
than at Closing of customary schedules listing Smart Cell's material contracts,
real and personal properties, pending, threatened and contemplated legal
proceedings, employee, tangible and intangible assets, and liabilities,
including contingencies and commitments; and other information reasonably
requested; (v) receipt of unaudited financial statements for Original Smart Cell
for the year ending August 31, 2003 as well as management prepared unaudited
financial statements for Original Smart Cell and Power House Media Inc. for the
interim period ended at March 31, 2004 in accordance with Canadian Generally
Accepted Accounting Principles ("GAAP") consisting of a balance sheet and
related statement of income for the period then ended which fairly presents the
financial condition of each as of their respective dates and for the periods
involved; and (vi) executed Employment Agreements.
Section 5.04. Termination, Seller's Material Breach. In the event that
-------------------------------------
Purchaser, acting in its sole discretion, is not fully satisfied with the
Conditions of Section 5.03, Purchaser, acting in its sole discretion, may
terminate this Agreement. In the event that Seller materially breaches this
Agreement, Purchaser shall be entitled to recover reasonable attorney's fees and
all out of pocket expenses resulting from the transaction contemplated by this
Agreement not being completed. In the event Purchaser terminates this Agreement
pursuant to this Section 5.04, Seller acknowledges that Seller shall have no
cause of action against Purchaser for any reason. In the event Seller brings
any action against Purchaser for terminating this Agreement pursuant to this
Section 5.04, Seller shall pay Purchaser USD$500,000 for breaching the terms of
this Agreement provided, however, that nothing in this Section 5.04 shall
diminish Seller's ability to bring an action against Purchaser for a breach of
any other provision of this Agreement.
ARTICLE VI
INDEMNIFICATION
---------------
Section 6.01. Indemnification of Seller. Subject to the terms and
-------------------------
conditions of this Article VI, Purchaser agrees to indemnify, defend and hold
harmless Seller, from and against any and all claims, liabilities and losses
which may be imposed on, incurred by or asserted against, arising out of or
resulting from, directly or indirectly:
(a) the inaccuracy of any representation or breach of any warranty of
Purchaser contained in or made pursuant to this Agreement which was not
disclosed to Seller in writing prior to the Closing; provided that no such
notification shall be deemed to waive or abrogate any right of Seller with
respect to conditions to Closing in Section 5.02;
(b) the breach of any covenant or agreement of Purchaser contained in
this Agreement; or
(c) any claim to fees or costs for alleged services by a broker, agent,
finder or other person claiming to act in a similar capacity at the request of
Purchaser in connection with this Agreement;
provided, however, that Purchaser shall not be liable for any portion of any
claims, liabilities or losses resulting from a material breach by Seller, of any
of its obligations under this Agreement or from Seller's gross negligence, fraud
or willful misconduct.
Section 6.02. Indemnification of Purchaser. Subject to the terms and
----------------------------
conditions of this Article VI, from and after the Closing, Seller, agrees to
indemnify, defend and hold harmless the Purchaser, its respective affiliates,
its respective present and former directors, officers, shareholders, employees
and agents and its respective heirs, executors, administrators, successors and
assigns (the "Purchaser Indemnified Persons"), from and against any and all
-----------------------------
claims, liabilities and losses which may be imposed on, incurred by or asserted
against any Purchaser Indemnified Person, up to a maximum of the amount received
by Seller pursuant to Section 1.02, above, arising out of or resulting from,
directly or indirectly:
(a) the inaccuracy of any representation or breach of any warranty of
the Seller or Smart Cell contained in or made pursuant to this Agreement which
was not disclosed to Purchaser in writing prior to the Closing; provided that no
such notification shall be deemed to waive or abrogate any right of Purchaser
with respect to conditions to Closing in Section 5.03;
(b) the breach of any covenant or agreement of Seller contained in this
Agreement;
(c) the failure to disclose any material liability including contingent
liabilities; or
(d) any claim to fees or costs for alleged services rendered by a
broker, agent, finder or other person claiming to act in a similar capacity at
the request of the Seller in connection with this Agreement;
provided, however, that Seller shall not be liable for any portion of any
claims, liabilities or losses resulting from a material breach by Purchaser of
its obligations under this Agreement or from a Purchaser Indemnified Person's
gross negligence, fraud or willful misconduct.
ARTICLE VII
MISCELLANEOUS
-------------
Section 7.01. No Bankruptcy and No Criminal Convictions. Each of Seller
------------------------------------------
and Purchaser represent and warrant to the other that neither they, nor their
officers, directors or affiliates, promoters, beneficial shareholders or control
persons, nor any predecessor thereof have been subject to the following:
(a) Any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the
bankruptcy or within two (2) years prior to that time;
(b) Any conviction in a criminal proceeding or being subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(c) Being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; and
(d) Being found by a court of competent jurisdiction (in a civil
action), the Securities and Exchange Commission (the "SEC") or the Commodity
Futures Trading Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended, or vacated.
Section 7.02. Notices. Any and all notices, requests or other
-------
communications hereunder shall be given in writing and delivered by: (a)
regular, overnight or registered or certified mail (return receipt requested),
with first class postage prepaid; (b) hand delivery; (c) facsimile transmission;
or (d) overnight courier service, to the parties at the following addresses or
facsimile numbers:
(i) if to Seller, to: David Sidhu
2962 Forestridge Place
Coquitlam, B.C., V6E 3M6
Canada
(ii) Copies to: Kevin Price
Fasken Martineau DuMoulin LLP
2100-1075 West Georgia Street
Vancouver, B.C., V6E 3G2
Canada
(ii) if to Purchaser, to: TelePlus Enterprises, Inc.
465 St. Jean, Suite 601
Montreal, P.Q., H2Y 2R6
Canada
(ii) Copies to: David M. Loev, Attorney at Law
2777 Allen Parkway
Suite 1000
Houston, Texas 77019
Telephone Number: (713) 524-4110
Facsimile Number: (713) 524-4122
or at such other address or number as shall be designated by any of the Parties
in a notice to any of the other parties given in accordance with this Section
7.02. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given: (A) in the case of a notice sent by
regular or registered or certified mail, three business days after it is duly
deposited in the mails; (B) in the case of a notice delivered by hand, when
personally delivered; (C) in the case of a notice sent by facsimile, upon
transmission subject to telephone confirmation of receipt; and (D) in the case
of a notice sent by overnight mail or overnight courier service, the next
business day after such notice is mailed or delivered to such courier, in each
case given or addressed as aforesaid.
Section 7.03. Benefit and Burden. This Agreement shall inure to the
------------------
benefit of, and shall be binding upon, the Parties hereto and their successors
and permitted assigns.
Section 7.04. No Third Party Rights. Nothing in this Agreement shall be
---------------------
deemed to create any right in any creditor or other person not a party hereto
(other than the Purchaser Indemnified Persons) and this Agreement shall not be
construed in any respect to be a contract in whole or in part for the benefit of
any third party (other than the Purchaser Indemnified Persons).
Section 7.05. Amendments and Waiver. No amendment, modification,
---------------------
restatement or supplement of this Agreement and any attachments hereto shall be
valid unless the same is in writing and signed by the Parties hereto. No
purported waiver by any party of any default by any other party of any term,
covenant or condition contained herein shall be deemed to be waiver of such
term, covenant or condition unless the waiver is in writing and signed by the
waiving party. No such waiver shall in any event be deemed a waiver of any
subsequent default under the same or any other term, covenant or condition
contained herein
Section 7.06. Assignments. Purchaser may assign any of its rights,
-----------
interests and obligations under this Agreement and must notify Seller in
writing.
Section 7.07. Counterparts. This Agreement may be executed in
------------
counterparts and by the different Parties in separate counterparts, each of
which when so executed shall be deemed an original and all of which taken
together shall constitute one and the same agreement.
Section 7.08. Captions and Headings. The captions and headings contained
---------------------
in this Agreement are inserted and included solely for convenience and shall not
be considered or given any effect in construing the provisions hereof if any
question of intent should arise.
Section 7.09. Construction. The Parties acknowledge that each of them has
------------
had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement with its legal counsel and that this
Agreement shall be construed as if jointly drafted by the Parties hereto.
Section 7.10. Severability. Should any clause, sentence, paragraph,
------------
subsection, Section or Article of this Agreement be judicially declared to be
invalid, unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement, and the parties agree
that the part or parts of this Agreement so held to be invalid, unenforceable or
void will be deemed to have been stricken herefrom by the parties, and the
remainder will have the same force and effectiveness as if such stricken part or
parts had never been included herein.
Section 7.11. Remedies. The Parties agree that the covenants and
--------
obligations contained in this Agreement relate to special, unique and
extraordinary matters and that a violation of any of the terms hereof or thereof
would cause irreparable injury in an amount which would be impossible to
estimate or determine and for which any remedy at law would be inadequate. As
such, the Parties agree that if either party fails or refuses to fulfill any of
its obligations under this Agreement or to make any payment or deliver any
instrument required hereunder or thereunder, then the other party shall have the
remedy of specific performance, which remedy shall be cumulative and
nonexclusive and shall be in addition to any other rights and remedies otherwise
available under any other contract or at law or in equity and to which such
party might be entitled.
Section 7.12. Applicable Law. THIS AGREEMENT AND THE RIGHTS AND
--------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE PROVINCE OF QUEBEC, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
Section 7.13. Submission to Jurisdiction. Each of the parties hereby: (a)
--------------------------
irrevocably submits to the non-exclusive personal jurisdiction of any Quebec
court, over any claim arising out of or relating to this Agreement and
irrevocably agrees that all such claims may be heard and determined in such
Quebec court; and (b) irrevocably waives, to the fullest extent permitted by
applicable law, any objection it may now or hereafter have to the laying of
venue in any proceeding brought in a Quebec court.
Section 7.14. Expenses; Prevailing Party Costs. The Seller and Purchaser
--------------------------------
shall pay their own expenses incident to this Agreement and the transactions
contemplated hereby and thereby, including all legal and accounting fees and
disbursements, and Seller shall be solely liable for any and all expenses of the
Seller which are incidental to this Agreement and the transactions contemplated
hereby and thereby (other than customary general, administrative and overhead
expenses incurred in the ordinary course of business). Notwithstanding anything
contained herein or therein to the contrary, if any party commences an action
against another party to enforce any of the terms, covenants, conditions or
provisions of this Agreement, or because of a breach by a party of its
obligations under this Agreement, the prevailing party in any such action shall
be entitled to recover its losses, including reasonable attorneys' fees,
incurred in connection with the prosecution or defense of such action, from the
losing party
Section 7.15. Entire Agreement. This Agreement, together with the
----------------
exhibits or other documents given or delivered pursuant hereto, sets forth all
of the promises, agreements, conditions, understandings, warranties and
representations among the Parties with respect to the subject matter of this
Agreement and the transactions contemplated hereby and thereby, and supersedes
all prior negotiations, agreements, arrangements and understandings between the
Parties, whether written, oral or otherwise.
Section 7.16. Faxed Signatures. For purposes of this Agreement, a
----------------
faxed signature shall constitute an original signature.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
"SELLER"
/s/ David Sidhu
----------------------
David Sidhu
19,600 Shares
-------------
/s/ Sukhjit Sandher
----------------------
Sukhjit Sandher
22,335 Shares
-------------
/s/ Raghbir Riarh
----------------------
Raghbir Riarh
19,233 Shares
-------------
/s/ Kanwaljit Riarh
----------------------
Kanwaljit Riarh
19,232 Shares
-------------
/s/ Lovely Sidhu
----------------------
Lovely Sidhu
19,600 Shares
-------------
"PURCHASER"
TelePlus Enterprises, Inc.
/s/ Marius Silvasan
----------------------
Marius Silvasan
Chief Executive Officer