UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
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TELEPANEL SYSTEMS INC.
(Name of Issuer)
Common Shares, without par value
(Title of Class of Securities)
879434
(CUSIP Number)
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Howard Kailes, Esq.
Krugman Chapnick & Grimshaw LLP
Park 80 West-Plaza Two
Saddle Brook, New Jersey 07663
(201) 845-3434
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
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April 22, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule
13D, and is filing this schedule because of Sections 13d-1(e),
240.13d-1(f) or 240.13d-1(g), check the following box.
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Note: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits.
See Section 240.13d-7 for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in
a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to
the liabilities of that section of the Act but shall be subject to
all other provisions of the Act (however, see the Notes).<PAGE>
<PAGE>
CUSIP NO. 879434
1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF
ABOVE PERSON
Electronic Retailing Systems International, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See
Instructions)
(a)
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(b)
-----
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
Not applicable
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
See Item 2(d)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
-0-
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8 SHARED VOTING POWER
-0-
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9 SOLE DISPOSITIVE POWER
-0-
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10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0-
- ------------------------------------------------------------------
<PAGE>
<PAGE>
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions)
(see footnote 1)
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
-0-
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14 TYPE OF REPORTING PERSON (See Instructions)
CO
- ----------------------------
(1) On October 29, 1997, Electronic Retailing Systems
International, Inc. and Telepanel Systems Inc. executed a
Combination Agreement dated such date, which was terminated
by agreement dated April 22, 1998.
<PAGE>
<PAGE>
INTRODUCTORY STATEMENT
----------------------
Pursuant to Reg. Section 240.13d-2, this Amendment No. 2 to
Schedule 13D discloses changes in the Statement on Schedule 13D
dated October 29, 1997, as amended by Amendment No. 1 thereto
dated March 17, 1998 (together, the "Amended Statement on Schedule
13D"), filed by Electronic Retailing Systems International, Inc.
("ERS"), and therefore does not restate the items therein in their
entirety.
Item 4. Purpose of Transaction.
----------------------
On April 22, 1998, ERS and Telepanel Systems Inc.
("Telepanel") executed a formal agreement (the "Termination
Agreement") to terminate their previously reported agreement of
October 1997 contemplating a combination of the two companies, and
executed reciprocal releases thereunder. In addition, the parties
agreed: (i) to terminate their previously reported joint
distribution agreement; (ii) that ERS would withdraw its demand
for acceleration of repayment of the outstanding working capital
advances to the joint venture created under the joint distribution
agreement (in the amount of $2,000,000); and (iii) that such
balances, which are secured by all of the assets of Telepanel
(such collateral subordinated in right to specified bank
indebtedness but prior in right to any other interest), would be
due on October 5, 1998, subject to earlier repayment from equity
or debt offerings of Telepanel. Reference is hereby made to the
full text of the Termination Agreement filed as Exhibit A to this
Amended Statement on Schedule 13D for further information with
respect to the termination accomplished thereby, which is hereby
incorporated by reference into this item and qualifies all matters
set forth herein.
Item 6. Contracts, Arrangements, Undertakings or Relationships
with Respect to Securities of the Issuer.
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- -
For information with respect to termination of the previously
reported combination agreement between ERS and Telepanel, see Item
4 herein, which is hereby incorporated by reference into this
item.
Item 7. Material to be Filed as Exhibits.
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Exhibit A - Termination Agreement dated as of April 22,
1998 between ERS and Telepanel.
<PAGE>
<PAGE>
SIGNATURE
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After reasonable inquiry and to the best of our knowledge and
belief, we certify that the information set forth in this
statement is true, complete and correct.
Dated: May 4, 1998 ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
By s/Michael B. Persky
----------------------------
Michael B. Persky
President - Chief Operating
Officer
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit A - Termination Agreement dated as of April
22, 1998 between ERS and Telepanel
EXHIBIT A
TERMINATION AGREEMENT
AGREEMENT dated as of the 22nd day of April, 1998 by and
between:
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC., a
Delaware corporation ("ERS"),
-and-
TELEPANEL SYSTEMS INC., a corporation incorporated under
the Canada Business Corporations Act ("Telepanel"),
-and-
TELEPANEL/ERS JOINT VENTURE, INC., a corporation
incorporated under the Ontario Business Corporations Act
(the "JV")
RECITALS:
(a) ERS and Telepanel entered into a combination agreement dated
as of October 29, 1997 (the "Combination Agreement") and a joint
distribution agreement dated as of February 3, 1998 (the "JDA").
(b) On and subject to the terms contained in the JDA, ERS and
Telepanel formed the JV and the JV provided to ERS a promissory
note dated February 3, 1998 (the "Note"), with performance under
the Note guaranteed by Telepanel under a guarantee dated February
3, 1998 (the "Guarantee"), with security therefor provided by the
terms of collateral security agreements dated February 3, 1998 and
given by the JV and Telepanel (collectively, the "Security").
(c) The Combination Agreement, the JDA, the Note, the Guarantee
and the Security are collectively referred to as the "Combination
Documentation".
(d) The parties desire to terminate the Combination Agreement and
the JDA as set forth below.
NOW THEREFORE IN CONSIDERATION OF THE MUTUAL PREMISES AND THE
AGREEMENTS SET FORTH BELOW, THE PARTIES AGREE AS FOLLOWS:
1. The Combination Agreement is hereby terminated in all
respects. Without limiting the generality of the foregoing
(or the provisions of Section 7 hereof), the provisions of
Sections 8.3 and 8.4 of the Combination Agreement shall have
no further force or effect; and the parties further
acknowledge that all provisions of the roadmap letter dated
August 6, 1997 executed by the parties shall similarly have
no further force and effect. Notwithstanding the foregoing,
no such termination shall affect the obligations contained in
the Confidentiality Agreement dated August 6, 1997 between
Telepanel and ERS, it being acknowledged, however, that the
"Blackout Period" thereunder has terminated. <PAGE>
<PAGE>
2. The JDA is hereby terminated, and the references thereto
contained in the Shareholders Agreement dated February 3,
1998 among the parties hereto are hereby deleted. The parties
expressly agree that, for purposes of the JDA, such agreement
shall be deemed terminated pursuant to clause (ii) of
paragraph (a) of Article V thereof, and, without limiting any
provision of paragraph (c) of Article V of the JDA, the
rights and obligations of the parties under the Note, the
Guarantee, the Security, and the provisions of the JDA
referenced therein (insofar as so referenced), without
limitation extending to the final paragraph of paragraph
(d)(i), and the provisions of paragraph (d)(ii) and (e), of
Article IV of the JDA, will survive, as modified and amended
as stipulated in sections 5 and 6 of this Agreement.
3. The JV herewith delivers to ERS the amount of U.S.$34,833.34,
by wire transfer to ERS' Account No. 9393756802 at Fleet Bank
(ABA No. 011900571), in payment of interest heretofore due
and payable on the Note through and including April 1, 1998.
The parties hereby acknowledge that payments under the Note
shall hereinafter be made by wire transfer to the foregoing
account, or in such other manner as the holder of the Note
may hereafter designate in writing to the JV.
4. ERS waives any default under the Note, the Guarantee and the
Security relating to any interest payment that would
otherwise have become due and payable under the terms of the
Note prior to the date of this Agreement, and ERS
acknowledges that the termination of the JDA as aforesaid
will not constitute an event of default within the meaning of
the Note.
5. (a) The Note, the Guarantee and the Security are collectively
amended to provide that any reference, or incorporation by
reference, to the phrase "within 180 days after the
expiration or termination of the Term" as contained in
paragraph (d)(ii) of Article IV of the JDA, shall be deemed
a reference, or incorporation by reference, as the case may
be, to "on or before October 5, 1998".
(b) The last two sentences of paragraph (d)(i) of Article IV
of the JDA are hereby deleted and shall have no further force
or effect. Clause (x) first appearing in paragraph (d)(ii) of
Article IV of the JDA is hereby deleted and shall have no
further force or effect.
(c) Paragraph (c) of Section 5.1 of the Note is hereby
amended to read as follows:
<PAGE>
<PAGE>
"if default shall be made by the Joint Venture,
Telepanel or any subsidiary of Telepanel in the
performance or observance of any of the other
covenants, agreements or conditions under the
provisions of the Joint Distribution Agreement
that remain in effect (other than the provisions
of Articles IX(a) or XI thereof), or under this
Note, the Guarantee, the Security Agreement or the
Joint Venture Documentation (as defined in the
Joint Distribution Agreement), on the date which
falls 30 days thereafter;"
6. For greater certainty, there will be no liability on the part
of ERS, Telepanel or the JV under any of the Combination
Documentation for the payment of any break-up fees including,
without limitation, any Additional Amount, within the meaning
of the JDA, and any amount in respect of any ERS or Telepanel
Competing Transaction, within the meaning of the Combination
Documentation.
7. (a) ERS hereby remises, releases and forever discharges
Telepanel, the JV, and each of its and their subsidiaries,
and their respective officers, directors, employees and
shareholders, and their respective successors and assigns
(collectively, the "Telepanel Released Parties"), of and from
any and all manner of actions and causes of action, suits,
debts, dues, accounts, bonds, covenants, contracts,
controversies, agreements, promises, judgments, claims,
damages and demands whatsoever, at law or in equity, that it
has, or at any time had, or that it hereafter can, shall or
may have against the Telepanel Released Parties, and each of
them, but only to the extent they arise solely from the
Combination Agreement, regardless of when any of the
foregoing may accrue or may have accrued. For the purposes
of clarity, the foregoing release shall have no effect on, or
release, the provisions of the Note, the Guaranty or the
Security, or the provisions of the JDA not terminated as
aforesaid.
(b) Telepanel and the JV each hereby remises, releases and
forever discharges ERS, its subsidiaries and their respective
officers, directors and employees and stockholders, and their
respective successors and assigns (collectively, the "ERS
Released Parties"), of and from any and all manner of actions
and causes of action, suits, debts, dues, accounts, bonds,
covenants, contracts, controversies, agreements, promises,
judgments, claims, damages and demands whatsoever, at law or
in equity, that it has, or at any time had, or that it
hereafter can, shall or may have against the ERS Released
Parties, and each of them, but only to the extent they arise
solely from the Combination Agreement, regardless of when any
of the foregoing may accrue or may have accrued. For the
purposes of clarity, the foregoing release shall have no
effect on, or release, the provisions of the Note, the
Guaranty or the Security, or the provisions of the JDA not
terminated as aforesaid.<PAGE>
<PAGE>
8. This Agreement may be executed in any number of counterparts,
each of which will be an original as regards any party whose
signature appears thereon and all of which together will
constitute one and the same instrument. This Agreement will
become binding when one or more counterparts hereof,
individually or taken together, will bear the signatures of
all the parties reflected hereon as signatories.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT WITH
EFFECT AS OF THE DATE FIRST ABOVE WRITTEN.
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.
By s/Norton Garfinkle
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Chairman
TELEPANEL SYSTEMS INC.
By s/Christopher Skillen
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President and Chief Executive
Officer
TELEPANEL/ERS JOINT VENTURE, INC.
By s/Christopher Skillen
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President
