SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT made the 8th day of July, 1999 BY and
AMONG;
INTERNET CABLE CORPORATION, a corporation incorporated under the
laws of the State of Nevada (hereinafter referred to as
"Purchaser")
OF THE FIRST PART
1291973 ONTARIO LIMITED, a corporation incorporated under the laws
of the Province of Ontario (hereinafter referred to as "1291973")
OF THE SECOND PART
XXXXXX XXXXXX, of the Town of Whitchurch-Stouffville in the
Regional Municipality of York, Province of Ontario (hereinafter
referred to as "Xxxxxx")
OF THE THIRD PART
XXXXXX XXXXXXXX, of the Town of Markham in the Regional
Municipality of York, Province of Ontario (hereinafter referred to
as "Xxxxxx")
OF THE FOURTH PART
ONTARIO CABLE AND CONTRACTING INCORPORATED, a corporation
incorporated under the laws of the Province of Ontario
(hereinafter referred to as "Ontario Cable")
OF THE FIFTH PART
XXXXX HOLDINGS INC., a corporation incorporated under the laws of
the Province of Ontario (hereinafter referred to as "Xxxxx")
OF THE SIXTH PART
RYVON FUTURE INC., a corporation incorporated under the laws of
the Province of Ontario (hereinafter referred to as "Ryvon")
OF THE SEVENTH PART
XXXXX XXXXXXXX, of the Town of Markham in the Regional
Municipality of York, Province of Ontario (hereinafter referred to
as "Xxxxx")
OF THE EIGHTH PART
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XXXXXX XXXXXXXX, IN TRUST, of the Province of Ontario (hereinafter
referred to as "the Trustee")
OF THE NINTH PART
CABLE SYSTEMS TECHNICAL SERVICES INC., a corporation incorporated
under the laws of the Province of Ontario (hereinafter referred to
as "Cable Systems")
OF THE TENTH PART
WHEREAS the Purchaser desires to purchase all of the issued and
outstanding shares in the capital of Cable Systems;
NOW THEREFORE in consideration of the premises and the respective
covenants and agreements of the Parties herein contained, the sum of one dollar
now paid by each Party hereto to each of the other Parties hereto and other good
and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged by all of the Parties hereto), the Parties hereto covenant and
agree as follows:
ARTICLE 1
1.1 DEFINITIONS
Whenever used in this Agreement, unless there is something in the
subject matter or context inconsistent therewith, the following words and terms
shall have the respective meanings ascribed to them as follows:
"Accounts Receivable" mean any and all accounts receivable, trade
receivables, notes receivable and other receivables arising out of
the Business and operations of Cable Systems.
"Affiliate" of any Person means any corporation, proprietorship,
partnership or business entity which directly or indirectly owns
or controls, is under common ownership or control with, or is
owned or controlled by, such Person.
"Agreement" means this share purchase agreement, including all
Schedules and Exhibits hereto and all instruments supplemental
hereto or in amendment or confirmation hereof or thereof.
"Applicable Law" means any domestic or foreign law, statute,
regulation, rule, policy, guideline, ordinance, by-law (including,
without limitation, any Environmental Law)
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applicable to the Purchaser, the Vendors, the Business or
operation of Cable Systems, the Assets of Cable Systems or the
Purchased Shares.
"Assets of Cable Systems" means all of the assets of Cable Systems
used in the Business of Cable Systems and the Subsidiaries of
Cable Systems and shall have the same meaning as "Cable Systems
Assets".
"Business" means the engineering, planning, construction and
installation services in connection with the building, maintaining
and upgrading of cable telecommunications systems presently
carried on by Cable Systems and the Subsidiaries of Cable Systems.
"Business Day" means any day other than a Saturday, Sunday or
holiday on which the Canadian chartered banks located at Markham,
Ontario are open for business.
"Cable Systems" means Cable Systems Technical Services Inc., a
corporation incorporated under the laws of the Province of
Ontario.
"Cable Systems USA" means Cable Systems Technical Services, Inc. a
corporation incorporated under the laws of the State of Delaware.
"Canadian Tax Act" shall mean the Income Tax Act (Canada) as
amended and the Regulations made pursuant thereto.
"Closing" means the completion of the sale to and purchase by the
Purchaser of the Purchased Shares hereunder by the transfer and
delivery of documents of title thereto and the payment of the
Purchase Price therefor as contemplated herein.
"Closing Date" means the 19th day of September, 1999, or such
other date as the Parties may agree or as may be extended by the
Purchaser as the date upon which the Closing shall take place.
"Closing Time" means 1:00 o'clock p.m. Eastern Standard time, on
the Closing Date or such other time on such date as the Parties
may agree as the time at which the Closing shall take place.
"Deposit" has the meaning ascribed in Section 2.2 hereof.
"Dollar" and "$" means lawful money of the United States of
America.
"Effective Date" means the date of execution of this Agreement.
"Encumbrance" means any encumbrance of any kind, including,
without limitation, any option, pledge, security interest, lien,
hypothec, charge, encumbrance, mortgage,
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hypothecation, trust, deemed trust, trust deed, easement, lease,
sub-lease, claim, right of way, covenant, condition or restriction
(whether on sale, transfer or disposition or otherwise), whether
imposed by agreement, law or otherwise, whether of record or
otherwise.
"Environmental Law" means any law, statute, regulation, rule,
policy, guideline, order, consent decree, settlement agreement or
governmental requirement of Canada or any province, territory or
local government or any agency thereof, which relates to or
otherwise imposes liability or standards of conduct concerning
discharges, releases or threatened releases of noises, odours or
any pollutants, contaminants or hazardous or toxic wastes,
substances or materials into ambient air, water or land, or
otherwise relating to the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, clean-up,
transport or handling of pollutants, contaminants or hazardous or
toxic wastes, substances or materials.
"Environmental Permit" shall mean any Permit required by or
pursuant to any applicable Environmental Law.
"Financial Statements of Cable Systems" means the audited
financial statements of Cable Systems for the fiscal year ended
December 31, 1998, consisting of a balance sheet and the
statements of income, retained earnings, source and application of
funds and changes in financial position and all notes thereto as
reported upon by Ernst & Young.
"Financial Statements of Cable Systems USA" means the audited
financial statements for Cable Systems USA for the fiscal year
ended December 31, 1998 consisting of a balance sheet and the
statements of income, retained earnings, source and application of
funds and changes in financial position and all notes thereto as
reported upon by Ernst & Young.
"GAAP" shall mean generally accepted accounting principles from
time to time approved by the Canadian Institute of Chartered
Accountants or any successor Institute applicable as of the date
on which any calculation or determination is required to be made
in accordance with generally accepted accounting principles, and
where the Canadian Institute of Chartered Accountants includes a
recommendation in its Handbook concerning the treatment of any
accounting matter, such recommendation shall be regarded as the
only generally accepted accounting principle applicable to the
circumstance that it covers.
"Governmental Authority" means the government of Canada or the
government of the United States of America or any province, xxxxx,
xxxxxxxxx, xxxxxx, xxxxxxxxxxxx, locality or other political
sub-division thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of
or pertaining to government, as the case may be.
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"Interim Financial Statements" means the interim unaudited
financial statements of Cable Systems and Cable Systems USA for
the Period ended March 31, 1999, consisting of a balance sheet and
the statements of income, retained earnings, source and
application of funds and changes in financial position and all
notes thereto as reported upon by Xxxx XxxXxxxxx, C.A.
"Key Employees" means the senior employees and officers of Cable
Systems and the Subsidiaries of Cable Systems as set out in this
Agreement and the Schedules attached hereto.
"Leased Properties" means all of the lands, buildings, facilities,
installations, fixtures, structures and improvements leased to
Cable Systems.
"Losses" means all liabilities (including, without limitation, all
liabilities relating to Taxes), losses, costs, damages,
deficiencies, penalties or expenses (including, without
limitation, solicitors' and accountants' fees and expenses in
costs of investigation and litigation and any judgement,
settlement or compromise relating thereto and interest, penalties
or other amounts paid in respect of judgements, settlements or
compromises).
"Material Adverse Effect" means a negative change in, or effect on
the operations, affairs, financial condition, results of
operations assets, liabilities, reserves or any other aspect of
the corporation of the business of the corporation that results in
a negative adverse effect on or a negative adverse change in any
such aspect of the corporation or the business of the corporation.
"Material Contract" means any contract entered into by Cable
Systems or a Subsidiary of Cable Systems having an annual Dollar
value greater than twenty-five thousand Dollars ($25,000.00) or a
term in excess of twenty-four months, excepting therefrom all
financing agreements and Encumbrances.
"Parties" means the Purchaser, 1291973, Eugene, Joseph, Ontario
Cable, Xxxxx, Ryvon, Xxxxx, The Trustee and Cable Systems
collectively, and "Party" means any one of them.
"Permits" means all of the permits, licenses, consents, approval,
certificates, variances, interim permits, permit applications or
other authorization required by or pursuant to Applicable Law.
"Permitted Assignee" shall mean Genesis Construction &
Developments Corp. or its successor.
"Person" means any individual, corporation, partnership, trustee
or trust or unincorporated association, and pronouns have a
similarly extended meaning.
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"Purchaser's Counsel" means Xxxxxxx, Savage & Xxxxxxxxx, LLP, 000
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention Xxx
Xxxxxxxxx (000) 000-0000, fax (000) 000-0000.
"Purchase Price" means the purchase price to be paid by the
Purchaser for the Purchased Shares as provided in Article 2
hereof.
"Purchased Shares" means 692 issued and outstanding common shares
in the capital of Cable Systems.
"Subsidiaries of Cable Systems" means the corporations listed in
Schedule 3.5 attached hereto, the majority of which issued and
outstanding securities of which, as shown on the said Schedule,
are beneficially owned and controlled directly by Cable Systems or
indirectly by a Subsidiary of Cable Systems.
"Taxes" means all taxes, charges, fees, duties, levies or other
assessments, including (without limitation) income, gross
receipts, net proceeds, ad valorem, turnover, real and personal
(tangible and intangible), sales, use, franchise, excise, value
added, goods and services, stamp, leasing, lease, user, transfer,
fuel, excess profits, payroll, occupation, interest, equalization,
windfall profits, severance and employees' withholding,
unemployment, employer health and social security taxes which are
imposed by Canada or any province, xxxxx, xxxxxxxxx, xxxxxx,
xxxxxxxxxxxx or local or foreign government or any agency thereof,
and such term shall include any interest, penalties or additions
to tax attributable to such Taxes.
"Vendors' Counsel" means the law firm of Xxxxxxx & Associate, of
00 Xxxx Xxxxxx Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx X0X 0X0, counsel to
Cable Systems.
"Vendors" means 1291973, Eugene, Joseph, Ontario Cable, Xxxxx,
Ryvon, Xxxxx and the Trustee and "Vendor" means any one of them.
"Stock Options" means stock options in the capital of the
Purchaser or its successor; provided that in the event this
Agreement is assigned by the Purchaser to the Permitted Assignee
that "Stock Options" shall mean stock options in the capital of
the Permitted Assignee or its successor.
Terms defined in the preamble to this Agreement shall have the same meanings
herein as are ascribed thereto in the preamble.
1.2 GENDER AND NUMBER
Words importing the singular include the plural and vice versa;
words importing gender include all genders.
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1.3 ENTIRE AGREEMENT
This Agreement, including the Schedules and Exhibits hereto,
together with the agreements and other documents to be delivered pursuant
hereto, constitute the entire agreement between the Parties pertaining to the
subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties and there
are no warranties, representations or other agreements between the Parties in
connection with the subject matter hereof except as specifically set forth
herein and therein.
1.4 WAIVERS, ETC.
No supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the Party to be bound
thereby. No waiver of any of the provisions of this Agreement, in whole or in
part, shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
1.5 OTHER WORDS AND PHRASES
In this Agreement, unless otherwise expressly provided (i) the
words "hereof", "herein", "hereto" and "hereunder" and words of similar import
refer to this Agreement as a whole and not to any particular Article, Section,
Subsection, paragraph or other subdivision, and (ii) all references to
designated "Articles", "Sections", Subsections", "paragraphs" or other
subdivisions are to the designated Articles, Sections, Subsections, paragraphs
and other subdivisions of this Agreement.
1.6 HEADINGS
The Article and Sections headings contained herein are included
solely for convenience of reference, are not intended to be full or accurate
descriptions of the content thereof and shall not be considered part of this
Agreement.
1.7 GOVERNING LAW
This Agreement and the rights, obligations and relations of the
Parties shall be governed by and construed in accordance with the laws of the
Province of Ontario and the federal laws of Canada applicable therein, and the
courts of Ontario shall have exclusive jurisdiction to entertain any action in
connection with this Agreement.
1.8 CURRENCY
Unless otherwise specified, all reference to currency herein are
deemed to mean lawful money of the United States of America, and all amounts to
be paid or calculated pursuant to this
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Agreement are to be paid or calculated in lawful money of the United States of
America.
ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE PRICE
Subject to the terms and conditions set forth in this Agreement,
at the Closing, the Vendors shall sell, assign and transfer to the Purchaser and
the Purchaser shall purchase, accept and acquire the Purchased Shares listed
opposite the Vendors' names on Schedule 2.1 attached hereto. The Purchase Price
for the Purchased Shares shall be three million, nine hundred thousand Dollars
($3,900,000.00) together with seventy five thousand (75,000) two year Stock
Options exercisable at $2.50 per option from the Closing Date, to be in the form
attached hereto as Schedule 2.1.
2.2 DEPOSIT
The Purchaser shall immediately upon execution of this Agreement
deliver to the Vendors' Counsel a Deposit in the amount of one hundred thousand
Dollars, together with the Stock Options. The Deposit shall be held in trust by
the Vendors' Counsel, pending the completion or termination of the transactions
contemplated herein. The Deposit may be invested by the Vendor's Counsel in an
interest bearing account, any such interest accruing shall be for the account
and benefit of the party entitled to the deposit upon the Closing or otherwise
termination of this Agreement. The parties acknowledge receipt of TWENTY-FIVE
THOUSAND ($25,000.00) Dollars prior to the execution of this Agreement. A
further deposit of SEVENTY-FIVE THOUSAND ($75,000.00) Dollars shall be made upon
execution. Should the Purchaser fail to close the purchase for any reason other
than the vendors and Cable Systems failing to meet their obligations under this
agreement, then the Deposit held by the vendors counsel in trust, will be
considered liquidated damages and the deposit will be forfeited. Should the
representations and warranties on the part of the vendors and Cable Systems not
be fulfilled prior to the Closing Date, then the transaction shall be at an end
and the deposit returned to the Purchaser with interest and without deduction
except for the cost incurred by Cable Systems to prepare audited financial
statements for the fiscal year ended December 31, 1998, to a maximum of
$6,000.00 (six thousand dollars).
2.3 ACTION BY VENDORS AND PURCHASER AT THE CLOSING TIME
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At the Closing, each of the Vendors and the Purchaser shall take
the following action:
(a) DELIVERY OF CERTIFICATES, ETC. - The Vendors shall
transfer and deliver to the Purchaser at the Closing share
certificates representing the Purchased Shares duly
endorsed in blank for transfer or accompanied by
irrevocable security transfer powers of attorney duly
executed in blank, in either case by the holders of
records
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thereof. The Vendors shall take such steps as shall be
necessary to cause Cable Systems to, and Cable Systems
shall, enter the Purchaser or its nominee upon the books
of Cable Systems as the holder of the Purchased Shares and
to issue one or more share certificate to the Purchaser or
its nominee representing the Purchased Shares;
(b) PAYMENT TO THE VENDORS - The Purchaser shall pay the sum
of three million, eight hundred thousand Dollars
($3,800,000.00) to or to the order of the Vendors as
follows:
(i) by certified cheque or bank draft in accordance
with the direction of the Vendors in the amount
of two million, eight hundred thousand Dollars
($2,800,000.00);
(ii) by certified cheque or bank draft in the
principal amount of one million dollars
($1,000,000.00) (the "2nd Instalment") made
payable to Xxxxxxx & Associate, in trust, which
shall be held in accordance with the terms of
paragraph 2.4.
(c) PAYMENT OF SHAREHOLDER LOANS - The Purchaser shall cause Cable
Systems to discharge all outstanding shareholder loans to Cable
Systems and the Subsidiaries of Cable Systems listed on Schedule
2.3(c) attached hereto.
(d) REMOVAL OF PERSONAL GUARANTEES - The Purchaser shall cause to
be discharged all personal guarantees of the debts and other
obligations of Cable Systems and the Subsidiaries of Cable Systems
made by any of the Vendors and listed on Schedule 2.3(d) attached
hereto, on or before the Closing Date.
(e) REDEMPTION OF CLASS A PREFERENCE SHARE - The Purchaser shall
cause Cable Systems to redeem and retract on the Closing Date all
issued and outstanding Class A Preference Shares.
(f) INDEMNITY TO XXXXXX XXXXXXXX - The Purchaser shall deliver to
Xxxxxx Xxxxxxxx, a Vendor herein, an agreement to indemnify him
for all acts done on behalf of Cable Systems and the Subsidiaries
of Cable Systems to secure the financial obligations of Cable
Systems and the Subsidiaries of Cable Systems prior to the Closing
Date.
2.4 PAYMENT OF THE 2ND INSTALLMENT
The 2nd Installment shall be held in trust by the Vendors' Counsel
after Closing, and shall be released to the Vendors at the expiry of six weeks
from the Closing Date; provided the Purchaser cannot demonstrate the following:
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(a) any warranty, representation or covenant of the Vendors is
found to be materially incorrect on Closing;
(b) any warranty, representation or covenant of Cable Systems is
found to be materially incorrect as of the Closing Date; and
(c) Cable Systems, the Cable Systems Business or the Assets of
Cable Systems are affected by a Material Adverse Effect;
in which case the 2nd Installment will be released in part in accordance with
the following procedure. Written notice of any material issue which arises shall
be given to Xxxxxx Xxxxxxxx and the Vendors' Counsel. After discussion of the
issue, a reasonable reserve shall be decided on by the parties. If the parties
cannot agree upon the amount of the reserve, then Ernst & Young, as auditors of
Cable Systems, shall be requested to determine the amount of the reserve and
their decision shall bind all parties. In the event that more than one material
issue arises, the above procedure shall apply to each instance. At the end of
six weeks from the Closing Date the total of all reserves so determined shall be
deducted from the 2nd Installment, and the balance of the 2nd Installment shall
be paid to the Vendors. The reserve, or total reserves, shall be held in trust
by the Vendors' Counsel until the material issue or issues are resolved to the
satisfaction of the parties, at which time the reserve or reserves shall be paid
out as appropriate.
2.5 PLACE OF CLOSING
The Closing shall take place at the Closing Time at a location in
Markham, Ontario as may be agreed upon by the Vendors and the Purchaser.
2.6 EXTENSION OF CLOSING
The Purchaser may extend the Closing by 30 days up to three times,
for a maximum extension of 90 days. The Purchaser Price shall be increased by
Forty Thousand U.S. Dollars ($40,000.00) for each extension of the Closing
required by the Purchaser. The Purchaser shall give the Vendors at least
fourteen (14) days prior written notice in the case of the first extension and
at least five (5) days prior written notice in the case of the second and third
extension, should they be required. Upon each such notice being given, the
Purchaser shall deliver to the Vendors, together with the notice, a cheque in
the amount of forty thousand Dollars ($40,000.00) being the increase to the
Purchase Price, which shall be held in trust by the Vendors' Counsel, pending
the completion of the transactions contemplated herein. This increase to the
Purchase Price shall be an increase to the Deposit and shall be treated in a
like manner with respect to the provisions of Section 2.2 herein.
2.7 TENDER
Any tender of documents or money hereunder may be made upon the
Parties or their
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respective counsel, and money may be tendered by official bank draft drawn upon
a Canadian chartered bank or by negotiable cheque and certified by a Canadian
chartered bank.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE VENDORS, CABLE SYSTEMS
AND CABLE SYSTEMS USA
The Vendors and Cable Systems jointly and severally represent to
the Purchaser as follows:
3.1 ORGANIZATION AND VALID EXISTENCE: CABLE SYSTEMS AND CABLE SYSTEMS USA
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Cable Systems is a corporation duly incorporated, organized and
validly existing under the laws of the Province of Ontario. Cable Systems USA is
a corporation duly incorporated, organized and validly existing under the law of
the State of Delaware. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereunder have been or shall by
the Closing Date be duly authorized by all necessary corporate action on the
part of Cable Systems. Attached herewith as Schedule 3.1 is a copy of the
articles of incorporation of each of Cable Systems and the Subsidiaries of Cable
Systems.
3.2 ENFORCEABILITY OF OBLIGATIONS
This Agreement constitutes a valid and binding obligation of each
of the Vendors and Cable Systems enforceable against each of them in accordance
with its terms, subject to limitations with respect to enforcement imposed by
law in connection with bankruptcy or similar proceedings and to the extent that
equitable remedies such as specific performance and injunction are in the
discretion of the court from which they are sought. The execution, delivery and
performance of this Agreement and all other agreements, instruments,
certificates and documents contemplated hereby by each of the Vendors and Cable
Systems do not, on the date hereof, and will not, on the Closing Date:
(i) violate any Applicable Laws;
(ii) except as set forth on Schedule 3.2 attached hereto, violate
or conflict, or result in a breach of, or constitute a
default (or event, which with or without notice or lapse of
time or both, would constitute a default) under, or permit
cancellation of, or result in the creation of any
Encumbrance upon any of the Cable Systems Assets, the assets
used by Cable Systems in the Business, any requisite
licenses, permits or authorizations held by Cable Systems to
conduct its Business or own its Assets, or the Purchased
Shares under any of the terms, conditions or provisions of
any contract or agreement to which any of the Vendors is a
party
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or by which any of them or any of the Cable Systems
Assets, the assets used in the Cable Systems Business or
the Purchased Shares are bound, or would result in a
breach of, or default under any order of any court,
Governmental Authority or regulatory body;
(iii) cause the acceleration of the maturity of any indebtedness
of Cable Systems or any indebtedness secured by the Cable
Systems Assets or the assets of the Cable Systems Business
of the Purchased Shares, save and except a small business
loan (SBL), the total of which is less than $100,000.00;
(iv) violate or conflict with any provisions of the articles of
by-laws of Cable Systems or Cable Systems USA or any
director's or shareholder's resolutions of either Cable
Systems or Cable Systems USA.
3.3 RIGHT TO SELL - THE VENDORS
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(i) are the sole and beneficial owner of the Purchased Shares as
set out in Schedule 2.1, which shares constitute all the
issued and outstanding shares in the capital of Cable
Systems;
(ii) has the exclusive right to dispose of the Purchased Shares
as herein provide and such disposition will not violate,
contravene, breach or offend against o result in any default
under any indenture, mortgage, lease, agreement, instrument
charter or by-law provision or Applicable Law to which any
of the Vendors or by which any of the Vendors is bound o
affected;
(iii) is the holder of record of all the Purchased Shares, free
and clear of Encumbrances or rights of others (othe than the
rights of the Purchaser hereunder) and no person (other than
the Purchaser hereunder) has any agreement, option or any
rights capabl of becoming an agreement or option for the
acquisition of the Purchased Shares;
(iv) upon transfer to the Purchaser at Closing of certificates
representing such Purchased Shares, the Purchaser shall
receive full title to the Purchased Shares free and clear of
all Encumbrances;
(v) has been duly authorized by all requisite action of the
shareholders and directors of any Vendor which is a
corporation.
3.4 LICENSES, REGISTRATIONS AND COMPLIANCE
Cable Systems and the Subsidiaries of Cable Systems are
registered, licensed or otherwise qualified as corporations to do business in
each jurisdiction in which the nature of their
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businesses or the property owned or leased by them makes such registrations,
licensing or other qualification necessary, and such registrations, licenses or
qualifications (as the case may be) are in good standing. Neither Cable Systems
nor the Subsidiaries of Cable systems are in violation of any Applicable Law,
which violation could have a Material Adverse Effect, and, without limiting the
generality of the foregoing, neither Cable Systems of the Subsidiaries of Cable
Systems are in breach of any Environmental Law. Each jurisdiction in which Cable
Systems or a subsidiary of Cable Systems carries on business and a brief
description of the nature of such operations and each jurisdiction in which
tangible assets owned or used by Cable Systems or the Subsidiaries of Cable
Systems are located is set forth in Schedule 3.4 attached hereto opposite the
name of the relevant corporation.
3.5 SUBSIDIARIES OF CABLE SYSTEMS
Save as set forth in Schedule 3.5 attached hereto, Cable Systems
has no other subsidiaries. Each such Subsidiary of Cable Systems is duly
incorporated or continued and organized and validly exists under the laws of its
jurisdiction of incorporation or continuance, as the case may be. The respective
jurisdictions of incorporation or continuance, as the case may be, and the
shares in the capital of such Subsidiaries of Cable Systems issued, optioned or
otherwise agreed to be issued to or in favour of Cable Systems are as set out in
Schedule 3.5. All such shares have been duly and validly issued, are outstanding
as fully paid and non-assessable in the capital of the respective Subsidiaries
of Cable Systems and are owned and beneficially owned and of record by Cable
Systems, free and clear of any Encumbrances or rights of others. No options,
warrants or other rights to purchase shares or other securities of any of the
Subsidiaries of Cable Systems have been authorized or agreed to be issued or are
outstanding.
3.6 CAPITALIZATION
The authorized and issued share capital of each of Cable Systems
and the Subsidiaries of Cable Systems is set forth in Schedule 3.6 attached
hereto. All such issued share capital has been duly and validly issued and is
outstanding as fully paid and non-assessable shares in the capital of Cable
Systems and Cable Systems USA. Save and except as set out in Schedule 3.6
herein, no options, warrants or other rights to purchase shares or other
securities of either Cable Systems or Cable Systems USA or other rights to
purchase shares or other securities of either Cable Systems or Cable Systems USA
have been authorized or agreed to be issued or are outstanding. Neither Cable
Systems nor Cable Systems USA is subject to any obligations (contingent or
otherwise) to re- purchase or other wise retire or acquire any of its shares.
3.7 FINANCIAL STATEMENTS
(a) The Financial Statements of Cable Systems prepared by Ernst
& Young, are true and correct and have been prepared in
accordance with GAAP applied on a basis consistent with that
of the preceding period. The Financial Statements of Cable
Systems present a true and complete statement of the
consolidated financial
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condition and assets and liabilities of Cable Systems as
at December 31, 1998 and the other statements comprising
the Financial Statements of Cable Systems accurately set
forth the results of the operations of Cable Systems on a
consolidated basis and the source and application of the
funds thereof throughout the period covered thereby.
(b) The Financial Statements of Cable Systems USA prepared by
Ernst & Young, are true and correct and have been prepared
in accordance with GAAP applied on a basis consistent with
that of the preceding period. The Financial Statements of
Cable Systems USA present a true and complete statement of
the consolidated financial condition and assets and
liabilities of Cable Systems USA as at December 31, 1998 and
the other statements comprising the Financial Statements of
Cable Systems USA accurately set forth the results of the
operations of Cable Systems USA on a consolidated basis and
the source and application of the funds thereof throughout
the period covered thereby.
3.8 ABSENCE OF UNDISCLOSED LIABILITIES
(a) Cable Systems: Except to the extent reflected or reserved
against in the Financial Statements of Cable Systems
(including the notes thereto) or incurred subsequent to the
date thereof and disclosed either in this Agreement or in
Schedule 3.8 and except as incurred in the ordinary and
usual course of business or insured against, Cable Systems
has no outstanding indebtedness or any liabilities or
obligations (whether known or unknown, accrued, absolute,
contingent or otherwise) of a nature customarily reflected
or reserved against in a balance sheet (including the notes
thereto) prepared in accordance with GAAP.
(b) Cable Systems USA: Except to the exten reflected or reserved
against in the Financial Statements of Cable Systems USA
(including the notes thereto) or incurred subsequent to the
date thereof and disclosed in Schedule 3.8 and except as
incurred in the ordinary and usual course of business or
insured against, Cable Systems USA has no outstanding
indebtedness or any liabilities or obligations (whether
known or unknown, accrued, absolute, contingent or
otherwise) of a nature customarily reflected or reserved
against in a balance sheet (including the notes thereto)
prepared in accordance with GAAP.
3.9 TAX MATTERS
(a) Cable Systems has duly and timely file all federal,
provincial and local income, franchise, capital, sales or
use, goods and services, excise, fuel, payroll, property or
other tax returns required by any Applicable Law to be filed
by it and all liabilities required to be paid by Cable
Systems on account of Taxes prior to the date hereof have
been duly paid.
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(b) Cable Systems USA has duly and timely filed all federal,
state and local income, franchise, capital, sales or use,
goods and services, excise, fuel, payroll, property or other
tax returns required by any Applicable Law to be filed by it
and all liabilities required to be paid by Cable Systems USA
on account of Taxes prior to the date hereof have been duly
paid.
(c) Neither Cable Systems nor Cable System USA have received
from any Governmental Authority any assessment,
re-assessment or notice of underpayment of any Taxes or
other charges and no such notice is reasonably expected.
(d) There are no actions, suits, proceedings, investigations or
claims now threatened or pending against Cable Systems or
Cable Systems USA in respect of Taxes, governmental charges
or assessments, or any matters under discussion with any
Governmental Authority relating to Taxes, governmental
charges or assessments asserted by such authority.
(e) No agreements, consent or other arrangements extending or
waiving the time limited for the filing of any tax return
by, or the payment of any Taxes, governmental charge or
deficiency against Cable Systems or Cable Systems USA or the
re-assessment of any Taxes, or any statutes of limitations
related thereto have been filed with respect to Cable
Systems for any fiscal year.
(f) Cable Systems and Cable Systems USA ha withheld from each
payment made to any of its officers, directors, former
directors and employees, the full amount of all Taxes and
other deductions (including without limitation, income
taxes, unemployment, disability, and other required taxes
and contributions) required to be withheld and has paid the
same together with the employer's share of same, if any (to
the extent required to be paid so no such amount is past
due), to the proper tax or other receiving officers within
the prescribed times and has filed, in complete and accurate
form, all information and other returns required pursuant to
any applicable legislation within the prescribed times.
(g) None of Cable Systems or any of the Subsidiaries of Cable
Systems has been and is currently required to file any
returns, elections or designations with any tax authority of
any jurisdiction outside Canada or outside the Province of
Ontario. Cable Systems and the Subsidiaries of Cable Systems
are not required to pay and owe no Taxes or any other like
amount to any Governmental Authority located in any
jurisdiction outside Canada.
(h) Cable Systems has paid, collected and remitted all Taxes
which are due and payable, collectible or remittable, as
applicable, by it on or before the date hereof. Adequate
provision has been made in the Financial Statements of Cable
Systems
-16-
and Interim Financial Statements for all Taxes for the
periods covered by the Financial Statements of Cable
Systems and Interim Financial Statements, respectively.
Cable Systems has no liability for Taxes other than those
provided for in the Financial Statements of Cable Systems
and those arising in the ordinary course of business since
December 31, 1998.
(i) Canadian federal and provincial income tax assessments have
been issued to Cable Systems covering all past periods up to
and including December 31, 1998. There are no actions,
suits, proceedings, investigations, enquiries or claims now
pending or made or, to the best of the Vendors' knowledge,
threatened against Cable Systems in respect of taxes.
(j) Cable Systems is a Canadian-controlled private corporation,
as defined in the Canadian Tax Act, and has been one since
its incorporation.
(k) No debt or other obligation of Cable Systems has been or
will be settled or extinguished on or prior to the Closing
Date such that the provisions of Section 80 of the Canadian
Tax Act applies or would apply thereto.
3.10 ABSENCE OF CHANGES
Since the respective dates of the Interim Financial Statements of
Cable Systems and Cable Systems USA there has not been:
(a) any material changes in the condition or operations of the
Cable Systems Business, the Cable Systems Assets or the
financial condition of Cable Systems other than changes in
the ordinary and normal course of business, none of which
has or would be expected to have a Material Adverse Effect;
or
(b) any damage, destruction or loss, labou troubles or other
event, development or condition of any character (whether or
not covered by insurance) affecting the Cable Systems
Business, the Cable Systems Assets or the properties or
future prospects of Cable Systems which has or would be
expected to have a Material Adverse Effect.
3.11 ABSENCE OF UNUSUAL TRANSACTIONS
(a) Since the date of the Interim Financia Statements of Cable
Systems, Cable Systems has not:
(i) transferred, assigned, sold, leased or otherwise disposed of
any of the Cable Systems Assets or canceled any debts or
claims except in the ordinary and usual course of business;
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(ii) incurred or assumed any obligation or liability (fixed or
contingent), except those listed in Schedule 3.11(a)
attached hereto and except unsecured current obligations and
liabilities incurred in the ordinary and normal course of
business and consistent with past practice;
(iii) except as disclosed in Schedule 3.11(a), issued or sold any
shares in its capital or any warrants, bonds, debentures or
other securities of Cable Systems or issued, granted or
delivered and right, option or other commitment for the
issuance of any such or other securities;
(iv) discharged or paid any Encumbrance, or paid any obligation
or liability (fixed or contingent) other than liabilities
incurred since the date of the Financial Statements of Cable
Systems in the ordinary and normal course of business;
(v) declared or made any payment of any dividend or other
distribution in respect of any shares in its capital or
purchased or redeemed any such shares thereof or effected
any subdivision, consolidation or reclassification of any
such shares;
(vi) suffered any damage, destruction, operating loss or any
extraordinary loss, or waived, cancelled or written off any
rights of substantial value, or entered into any commitment
or transaction not in the ordinary and usual course of
business where such loss, rights, commitment or transaction
is or would have a Material Adverse Effect on Cable Systems;
(vii) except those listed in Schedule 3.11(a), amended or changed
or taken any action to amend or change its articles or
by-laws;
(viii) made any general wage or salary increases in respect of
personnel which it employs, other than increases in the
ordinary and normal course of business or as provided for in
the collective labour agreements referred to in Schedule
3.18 attached hereto;
(ix) mortgaged, pledged, subjected to Encumbrance or otherwise
encumbered any of the Cable Systems Assets or property,
whether tangible or intangible except in the ordinary and
normal course of business; or
(x) authorized or agreed or otherwise become committed to do any
of the foregoing.
(b) Since the date of the Interim Financia Statements of Cable
Systems USA, Cable
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Systems USA has not:
(i) transferred, assigned, sold, leased or otherwise disposed of
any of the Cable Systems USA Assets or cancelled any debts
or claims except in the ordinary and usual course of
business;
(ii) incurred or assumed any obligation or liability (fixed or
contingent), except those listed in Schedule 3.11(b)
attached hereto and except unsecured current obligations and
liabilities incurred in the ordinary and normal course of
business and consistent with past practice;
(iii) except as disclosed in Schedule 3.11(b), issued or sold any
shares in its capital or any warrants, bonds, debentures or
other securities of Cable Systems USA or issued, granted or
delivered and right, option or other commitment for the
issuance of any such or other securities;
(iv) discharged or paid any Encumbrance, or paid any obligation
or liability (fixed or contingent) other than liabilities
incurred since the date of the Interim Financial Statements
of Cable Systems USA in the ordinary and normal course of
business;
(v) declared or made any payment of any dividend or other
distribution in respect of any shares in its capital or
purchased or redeemed any such shares thereof or effected
any subdivision, consolidation or reclassification of any
such shares;
(vi) suffered any damage, destruction, operating loss or any
extraordinary loss, or waived, cancelled or written off any
rights of substantial value, or entered into any commitment
or transaction not in the ordinary and usual course of
business where such loss, rights, commitment or transaction
is or would have a Material Adverse Effect on Cable Systems
USA;
(vii) except those listed in Schedule 3.11(b), amended or changed
or taken any action to amend or change its articles or
by-laws;
(viii) made any general wage or salary increases in respect of
personnel which it employs, other than increases in the
ordinary and normal course of business or as provided for in
the collective labour agreements referred to in Schedule
3.18 attached hereto;
(ix) mortgaged, pledged, subjected to Encumbrance or otherwise
encumbered any of the Cable Systems USA Assets or property,
whether tangible or
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intangible except in the ordinary and normal course of
business; or
(x) authorized or agreed or otherwise become committed to do any
of the foregoing.
3.12 LEASED EQUIPMENT
Schedule 3.12 attached hereto sets forth a true and substantially
complete list of all equipment, other personal property and fixtures in the
possession or custody of Cable Systems and/or the Subsidiaries of Cable Systems,
which, as of May 15, 1999, is leased or held under license or similar
arrangement and of the leases, licenses, agreements and other documentation
relating thereto. Additional equipment has been or may be leased in the ordinary
course of business after May 15, 1999.
3.13 COLLECTABILITY OF ACCOUNTS RECEIVABLE
The accounts receivable as shown on the Financial Statements and
Interim Financial Statements of Cable Systems and Cable Systems USA are
collectible to within the full amount less the reserve shown on the Financial
Statements and Interim Financial Statements..
3.14 LEASES OF REAL PROPERTY
All leases of real property and all interests held by Cable
Systems and the Subsidiaries of Cable Systems as lessees under real property
leases are reduced to writing and are recorded on the books of Cable Systems
and/or the Subsidiaries of Cable Systems.
All rental and other payments required to be paid by Cable Systems
or any Subsidiaries of Cable Systems as lessees are paid on a timely basis.
Such leases are in full force and effect without amendment thereto
and neither Cable Systems nor any Subsidiary of Cable Systems, nor the other
party thereto, is otherwise in default in meeting its obligations contained in
any such lease.
3.15 REAL PROPERTY
Neither Cable Systems nor the Subsidiaries of Cable Systems own
any real property in fee simple.
3.16 USE
The use by Cable Systems and the Subsidiaries of Cable Systems of
the buildings and improvements located on the leased real property referred to
in Section 3.14, the operation and maintenance thereof as now operated and
maintained by Cable Systems and the Subsidiaries of
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Cable Systems, and the purposes for which they are presently being used, are not
in breach in any material respect of any Applicable Law and there are no
restrictive covenants or Applicable Laws which in any way restrict or prohibit
the use of the said buildings, improvements and real property for the purposes
for which they are presently being used.
Cable Systems and the Subsidiaries of Cable Systems are not aware
of any buildings and other structures located on the leased real property
referred to in Section 3.14 being or ever having been insulated with urea
formaldehyde foam insulation, nor are they aware of such buildings or structures
contain any aluminum wiring or friable asbestos or any other substance
containing a type of asbestos or asbestos product which is a hazardous product,
toxic or priority substance or any other substance deemed hazardous or regulated
by any laws or regulations of Canada or the Province of Ontario in force at the
date hereof.
3.17 CONDITION OF ASSETS
All Cable Systems Assets and all material tangible assets of the
Subsidiaries of Cable Systems used in or in connection with the Cable Systems
Business are in good condition, repair and (where applicable) proper working
order, reasonable wear and tear excepted.
3.18 EMPLOYMENT CONTRACTS
Except as set out in Schedule 3.18 attached hereto, neither Cable
Systems nor the Subsidiaries of Cable Systems have any union or collective
labour, pension, deferred profit sharing, stock option or other similar
agreement nor do they have any written contracts of employment with any
employees or any oral contracts of employment which are not terminable on the
giving of reasonable notice in accordance with applicable law. There is not now
any circumstances or conduct which could result in the filing of an unfair
labour practice complaint, and there exists no event or condition which with the
giving of notice or the passage of time would constitute a breach or default
thereunder by any party thereto.
3.19 MATERIAL CONTRACTS
All Material Contracts of Cable Systems and the Subsidiaries of
Cable Systems have been reduced to writing and are recorded on the books of
Cable Systems and/or the Subsidiaries of Cable Systems. The Material Contracts
are all in full force and effect without amendment thereto and no material
default exists in respect thereof on the part of any of the parties thereto.
Such contracts and agreements include all the presently outstanding material
contracts entered into by Cable Systems and the Subsidiaries of Cable Systems in
the course of carrying on their respective businesses and all quotations, orders
or tenders for such contracts which remain open for acceptance. To the best of
the knowledge, information and belief of the Vendors, Cable Systems and the
Subsidiaries of Cable Systems have the capacity, including the necessary
personnel, equipment and supplies, to perform all their obligations thereunder.
-21-
3.20 PENSION PLANS
There are no pension plans established by or for Cable Systems or
the Subsidiaries of Cable Systems for its or their employees.
3.21 ABSENCE OF GUARANTEES
Except as disclosed in Schedule 3.21 attached hereto, neither
Cable Systems nor any Subsidiary of Cable Systems has given or agreed to give,
or is a party or bound by, any guarantee of indebtedness or other obligations of
third parties or any other commitment by which Cable Systems or such Subsidiary
of Cable Systems is, or is contingently, responsible for such indebtedness or
other obligation.
3.22 LITIGATION
Except as disclosed in Schedule 3.22 attached hereto, there is no
suit, action, litigation, arbitration proceeding or governmental proceeding,
hearing before an administrative tribunal, including appeals and applications
for review, in progress, pending or, to the best of the knowledge, information
and belief (after due enquiry) of the senior officers of Cable Systems and the
Subsidiaries of Cable Systems, threatened against or relating to Cable Systems
or the Subsidiaries of Cable Systems or affecting its or their properties or
business which, if determined adversely to Cable Systems or the Subsidiaries of
Cable Systems, individually or in the aggregate, might have a Material Adverse
Effect on the properties, business, future prospects or financial condition of
Cable Systems or the Subsidiaries of Cable Systems. Except as shown in the said
Schedule, there is not presently outstanding against Cable Systems or any
Subsidiary of Cable Systems, any judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency, instrumentality or
arbitrator.
3.23 EMPLOYEES
Cable Systems and each Subsidiary of Cable Systems shall after the
execution of this Agreement deliver to the Purchaser a list of all personnel
employed or engaged thereby whose annual rate of remuneration exceeds
$50,000.00.
3.24 RESIDENCE OF VENDORS, ETC.
The Vendors are not non-residents of Canada for the purposes of
the Canadian Tax Act. Cable Systems is a Canadian-controlled private corporation
for the purposes of the Canadian Tax Act.
3.25 INSURANCE
Cable Systems and each Subsidiary of Cable Systems has, since
their incorporation,
-22-
maintained and currently maintains such policies of insurance, issued by
responsible insurers, as are appropriate to the Cable Systems Business, the
Cable Systems USA business, the property and Cable Systems Assets and the
property and assets of the Subsidiaries of Cable Systems, in such amounts and
against such risks as are customarily carried and insured against by owners of
comparable businesses, properties and assets; all such policies of insurance are
in full force and effect and neither Cable Systems nor any Subsidiary of Cable
Systems is in default, whether as to the payment of premium or otherwise, under
the terms of any such policy.
3.26 VEHICULAR EQUIPMENT
Schedule 3.26 attached hereto contains a list of all vehicular
equipment owned or leased by Cable Systems and the Subsidiaries of Cable Systems
as of May 15, 1999. Such vehicular equipment is in roadworthy condition and is
capable of satisfying the inspection requirements and performance standards
prescribed by the Highway Traffic Act (Ontario) and the Regulations thereto, as
may be amended from time to time, for its particular type or class. Additional
vehicles have been or may be leased in the ordinary course of business after May
15, 1999.
3.27 COPIES OF AGREEMENTS, ETC.
True, correct and complete copies of all mortgages, leases,
agreements, instruments and other documents listed in Schedules hereto, and of
the policies of insurance referred to herein are located at the head office
location of Cable Systems and full and complete copies of which shall be made
available to the Purchaser after the execution of this Agreement.
3.28 CORPORATE RECORDS
Other than as set out in Schedule 3.28 attached hereto, the
corporate records and minute books of Cable Systems and each of the Subsidiaries
of Cable Systems contain complete and accurate copies of all by-laws of Cable
Systems, and the Subsidiaries of Cable Systems respectively, minutes of all
meetings and resolutions of the directors and shareholders of such corporations;
all such meetings were duly called and held, all such by-laws and resolutions
were duly passed and the share certificate books, registers of shareholders,
registers of transfers and registers of directors of Cable Systems and each of
the Subsidiaries of Cable Systems are complete and accurate in all material
respects.
3.29 BOOKS OF ACCOUNT
The books and records of account of Cable Systems and the
Subsidiaries of Cable Systems, fairly and correctly set out and disclose in all
material respects and in accordance with generally accepted accounting
principals, consistently applied, the financial positions of Cable Systems and
the Subsidiaries of Cable Systems as of the date hereof and all material
financial transactions of Cable Systems and the Subsidiaries of Cable Systems
respectively have been accurately recorded in such books and records.
-23-
3.30 COMPLIANCE WITH ENVIRONMENTAL LAWS
With respect to the properties leased by Cable Systems or the
Subsidiaries of Cable Systems, since the commencement date of these leases,
Cable Systems, the Subsidiaries of Cable Systems and the Cable Systems Business
are in compliance with and have always been in compliance with all Environmental
Laws.
3.31 EMPLOYMENT EQUITY
None of Cable Systems or the Subsidiaries of Cable Systems have
received notice of any proposed or pending compliance review in respect of
employment equity, know of the basis for the assertion of the same and no
sanctions have been imposed on any of them for failing to honour their
commitment to employment equity.
3.32 FAMILY LAW ACT
No order has been given under the Family Law Act (Ontario) which
would or does affect the Purchased Shares in any manner whatsoever nor is there
any application threatened or pending under the Family Law Act by any of the
Vendors.
3.33 ASSETS SUFFICIENT FOR CONDUCT OF CABLE SYSTEMS BUSINESS AND CABLE
------------------------------------------------------------------
SYSTEMS USA BUSINESS
--------------------
(a) Cable Systems Assets constitute all of the assets and
properties required for the operation of Cable System's
business as it is presently operated; and
(b) The assets of Cable Systems USA constitute all of the assets
and properties required for the operation of Cable Systems
USA's Business at it is presently operated.
3.34 BROKER
Other than the business brokering agreement was entered into by
Cable Systems in September 1998, neither the Vendors, Cable Systems nor Cable
Systems USA have entered into any brokerage or similar agreement. The herein
Agreement and the transactions contemplated herein are being completed as a
result of the September 1998 brokering agreement. The business broker or finder
is entitled to a brokerage fee or other commission based on the business
brokering agreement, such commission or fee as outlined in the brokering
agreement to be paid by Cable Systems.
3.35 CRIMINAL CODE
Neither Cable Systems nor any director, officer or shareholder of
Cable Systems has been
-24-
found guilty of any offence under the Criminal Code (Canada).
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Vendors as
follows:
4.1 ORGANIZATION AND VALID EXISTENCE
The Purchaser is a corporation duly incorporated and organized and
is validly existing under the laws of the State of Nevada and has all necessary
corporate power, authority and capacity to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereunder have
been or by the Closing Date will be duly authorized by all necessary corporate
action on the part of the Purchaser.
4.2 ENFORCEABILITY OF OBLIGATIONS
This Agreement constitutes a valid and binding obligation of the
Purchaser enforceable against it in accordance with its terms, subject, however,
to limitations with respect to enforcement imposed by law in connection with
bankruptcy or similar proceedings and to the extent that equitable remedies such
as specific performance and injunction are in the discretion of the court from
which they are sought. THE PURCHASER SPECIFICALLY WARRANTS THAT IT HAS THE
FINANCIAL RESOURCES AND ABILITY TO COMPLETE THE PURCHASE CONTEMPLATED BY THIS
AGREEMENT.
4.3 ABSENCE OF CONFLICTING AGREEMENTS
The Purchaser is not a party to, bound or affected by or subject
to any indenture, mortgage, lease, agreement, instrument, charter or by-law
provision, statute, regulation, order, judgment, decree or law which would be
violated, contravened or breached by, or under which any default would occur, as
a result of the execution and delivery of this Agreement or the consummation of
any of the transactions provided for herein.
4.4 RESIDENCE OF THE PURCHASER
The Purchaser is a non-Canadian within the meaning of the
INVESTMENT CANADA ACT. This transaction is exempt from the operation of the
statue because the Purchase Price is less than One Hundred Million
($100,000,000.00) Dollars.
-25-
4.5 LITIGATION
There is no suit, action, litigation, arbitration proceeding or
governmental proceeding, including appeals and applications for review, in
progress, pending or, to the best of the knowledge, information and belief
(after due enquiry) of the senior officers of the Purchaser, threatened against
or involving the Purchaser or any judgment, decree, injunction, rule or order of
any Court, governmental department, commission, agency, instrumentality or
arbitrator which, in any such case, might adversely affect the ability of the
Purchaser to enter into this Agreement or to consummate the transactions
contemplated hereby. The Purchaser is not aware of any existing ground on which
any such action, suit or proceeding may be commenced with any reasonable
likelihood of success.
4.6 KEY EMPLOYEE AGREEMENTS
The Purchaser shall, prior to the Closing Date, negotiate
employment agreements with the Key Employees of Cable Systems and the
Subsidiaries of Cable Systems. Such agreements shall be executed on or before
the Closing Date.
4.7 EMPLOYEE STOCK OPTIONS
The Purchaser is authorized to issue to the employees of Cable
Systems and the Subsidiaries of Cable Systems 100,000 Stock Options, exercisable
after Closing at a strike price of $2.50 per each option, to be divided between
the employees of Cable Systems and the Subsidiaries of Cable Systems in a manner
to be determined. Neither the options, nor the shares issued upon exercise of
these options have been registered under United States securities laws. The
employees shall be entitled to exercise a maximum of one-third of the Stock
Options in each of the three years following the Closing Date. In the event that
the Purchaser assigns this Agreement in accordance with Section 10.6 hereto, the
Permitted Assignee shall be authorized to and shall issue to the employees of
Cable Systems and its Subsidiaries 120,000 Stock Options as above with a strike
price of $2.50 per each option.
4.8 DUE DILIGENCE
Following the execution of this Agreement, the Purchaser shall
conduct its due diligence subject to the following limitations. The Purchaser
shall not copy any of the Vendor's or Cable Systems' or Cable Systems USA's
private documents without prior written consent of the appropriate party. All
examinations of documents shall take place at the offices of Cable Systems in
Markham, Ontario, or such other place as the parties may agree to, all under
supervision of Cable Systems' personnel. In the event that this Agreement is not
completed for any reason whatsoever, the Purchaser shall not use the information
about the Vendors to compete with Cable Systems or Cable Systems USA, nor shall
the Purchaser solicit the employment of any employee or subcontractor of Cable
Systems or Cable Systems USA or otherwise interfere in the business of Cable
Systems or Cable Systems USA
-26-
ARTICLE 5
CONDITIONS PRECEDENT TO THE PERFORMANCE
BY THE PURCHASER OF ITS OBLIGATIONS UNDER THIS AGREEMENT
The obligations of the Purchaser to complete the purchase of the
Purchased Shares hereunder shall be subject to the satisfaction of, or
compliance with, in all material respects, at or before the Closing Time, each
of the following conditions precedent (each of which is hereby acknowledged to
be inserted for the exclusive benefit of the Purchaser any may be waived by it
in whole or in part);
5.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF VENDOR AT THE CLOSING
TIME
All of the representations and warranties of each of the Vendors,
Cable Systems and Cable Systems USA made in or pursuant to this Agreement,
including, without limitation, the representations and warranties made and set
forth in Article 3 hereof, shall be materially true and correct as at the
Closing Time and with the same effect as if made at and as of the Closing Time
(except as such representations and warranties may be affected by the occurrence
of events or transactions expressly contemplated and permitted hereby or by
transactions in the ordinary and normal course of business), and the Purchaser
shall have received a certificate from the President or other person exercising
the functions of chief executive officer of each of the Vendors, Cable Systems
and Cable Systems USA and a certificate from the Vendors confirming, to the best
of his knowledge, information and belief (after due enquiry) the truth and
correctness of the representations and warranties of each of Cable Systems,
Cable Systems USA and each of the Vendors.
5.2 PERFORMANCE OF OBLIGATIONS
Each of Cable Systems, Cable Systems USA and each of the Vendors
shall have performed or complied with, in all respects, the Vendors, Cable
Systems and Cable Systems USA, all of its obligations, covenants and agreements
hereunder.
5.3 RECEIPT OF CLOSING DOCUMENTATION
All documentation relating to the due authorization and completion
of the sale and purchase hereunder of the Purchased Shares and all actions and
proceedings taken on or prior to the Closing in connection with the performance
by any of Cable Systems, Cable Systems USA or the Vendors of their obligations
under this Agreement shall be satisfactory to the Purchaser and the Purchaser's
counsel, acting reasonably, and the Purchaser shall have received copies of all
such documentation or other evidence as it may reasonably request in order to
establish the consummation of the transactions contemplated hereby and the
taking of all corporate proceedings in connection therewith in compliance with
these conditions, in form (as to certification and otherwise) and substance
satisfactory to the Purchaser and the Purchaser's Counsel.
-27-
5.4 NO FIRE DAMAGE
No substantial damage by fire or other hazard to the Assets of
Cable Systems shall have occurred from the Effective Date to the Closing Date
which is not adequately insured against or which has caused a cessation of
business for more than seven (7) days if insured against.
5.5 LITIGATION
On the Closing Date, there shall be no litigation, governmental
investigation or proceeding pending or threatened for the purpose of enjoining
or preventing the consummation of any of the transactions contemplated by this
Agreement or otherwise claiming that such consummation is improper.
5.6 MATERIAL CHANGE
Since the Effective Date there shall have been no:
(a) Nothing shall have occurred that has or could cause a
Material Adverse Effect;
(b) Material loss or damage not covered by insurance to any of
the Assets of Cable Systems and the Subsidiaries of Cable
Systems.
5.7 DUE DILIGENCE REVIEW
The Purchaser shall no later than 55 days after the Effective Date
have completed their due diligence review having been satisfied with the results
of its investigation and review of the business, operations, assets,
liabilities, result of operations, cash flows, conditions (financial and
otherwise) and prospects of, and other matters relating to Cable Systems and the
Subsidiaries of Cable Systems, delivered to the Vendors' Counsel a certificate
evidencing the Purchaser's satisfaction.
5.8 CERTIFICATES
The Vendors shall have delivered to the Purchaser share
certificates representing all of the Purchased Shares, which share certificates
shall have been duly endorsed in blank for transfer or accompanied by duly
executed stock powers.
5.9 KEY EMPLOYEES
The Key Employees shall have entered into the Employment
Agreements referred to in Section 4.6 herein.
-28-
ARTICLE 6
CONDITIONS PRECEDENT TO THE PERFORMANCE BY
THE VENDORS OF THE OBLIGATIONS UNDER THIS AGREEMENT
The obligations of the Vendors to complete the sale of the
Purchased Shares hereunder shall be subject to the satisfaction of or compliance
with, at or before the Closing Time, each of the following conditions precedent
(each of which is hereby acknowledged to be inserted for the exclusive benefit
of the Vendors and may be waived by each of them in whole or in part);
6.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF PURCHASER AT CLOSING TIME
All of the representations and warranties of the Purchaser made in
or pursuant to this Agreement, including without limitation the representations
and warranties made by the Purchaser and set forth in Article 4 hereof, shall be
true and correct as at the Closing Time and with the same effect as if made at
and as of the Closing Time and the Vendors shall each have received a
certificate from a duly authorized senior officer of the Purchaser confirming,
to the best of his knowledge, information and belief (after due enquiry), the
truth and correctness of the representations and warranties of the Purchaser
contained herein;
6.2 PERFORMANCE OF OBLIGATIONS
The Purchaser shall have performed or complied with, in all
respects, all of its obligations, covenants and agreements hereunder.
6.3 RECEIPT OF CLOSING DOCUMENTATION
All documentation relating to the due authorization and completion
of the sale and purchase hereunder of the Purchased Shares and all actions and
proceedings taken on or prior to the Closing in connection with the performance
by the Purchaser of its obligations under this Agreement shall be satisfactory
to the Vendors and Vendor's Counsel and the Vendors shall have received copies
of all such documentation or other evidence as they may reasonably request in
order to establish the consummation of the transactions contemplated hereby and
the taking of all corporate proceedings in connection therewith in compliance
with these conditions, in form (as to certification and otherwise) and substance
satisfactory to the Vendors and Vendors' Counsel.
6.4 LITIGATION
On the Closing Date, there shall be no litigation, governmental
investigation or proceeding pending or threatened for the purposes of enjoining
or presenting the consummation of any of the transactions contemplated by this
Agreement or otherwise claiming that such consummation is improper.
-29-
6.5 SATISFACTION WITH DUE DILIGENCE
No later than 55 days after the Effective Date, the Purchaser
shall deliver to the Vendors' Counsel a certificate evidencing the Purchaser's
completion of their due diligence review and the Purchaser's satisfaction with
the same.
6.6 RELEASE OF PERSONAL GUARANTEES
On or before the Closing Date, the Vendors shall be released from
any and all guarantees of indebtedness or other obligations of third parties or
any other commitment by which Cable Systems or the Subsidiaries of Cable Systems
are, or are contingently, responsible for such indebtedness or other obligation.
6.7 KEY EMPLOYEES UNDER CONTRACT
On the Closing Date, the Key Employees of Cable Systems and the
Subsidiaries of Cable Systems shall have executed employment agreements with the
Purchaser satisfactory to the parties thereto.
6.8 ISSUANCE OF STOCK OPTIONS
On the Closing Date, the Purchaser or the Permitted Assignee shall
deliver to the Key Employees the Stock Options described in Section 4.7.
ARTICLE 7
OTHER COVENANTS OF THE PARTIES
7.1 FROM OFFER TO CLOSING DATE
During the period from the date of the Effective Date to the
Closing Time, Cable Systems and the Subsidiaries of Cable Systems shall:
(a) except as otherwise contemplated or permitted by this
Agreement, conducted their respective businesses in the
ordinary and normal course thereof and have not, without the
prior written consent of the Purchaser, entered into any
transaction which if effected before the date of this
Agreement, would constitute a material breach of the
representations, warranties or agreements contained herein;
(b) continued in force all existing policies of insurance
presently maintained by Cable Systems and the Subsidiaries
of Cable Systems;
-30-
(c) complied with all Applicable laws affecting the operation of
the Business and the Cable Systems Business and paid all
required Taxes and tax installments;
(d) not, without the prior written consent of the Purchaser
taken any of the actions, done any of the things or
performed any of the acts described in paragraphs (a)(i) to
(x) inclusive and paragraphs (b)(i) to (x) inclusive of
Section 3.11.
7.2 ACTIONS TO SATISFY CLOSING CONDITIONS
Each of the Parties hereby agrees to take all such actions as are
within its power to control, and to use its best efforts to cause other actions
to be taken which are not within its power to control, so as to ensure
compliance with any conditions set forth herein which are for the benefit of any
other Party.
7.3 TERMINATION FOR CAUSE
In the event of a material issue, which arises following the
execution of this Agreement, but prior to the Closing Date, the parties shall
take all reasonable actions to remedy the issue and close the transaction,
including, without limitation, making use of the dispute resolution procedure
set out in Article 9 hereof. Neither party shall terminate this Agreement
without first attempting, in good faith, to remedy any material issue. In the
event any party wishes to terminate this Agreement for cause, following attempts
to remedy the issue, such party shall notify all other parties in writing as to
the nature of the issue and the reason for termination prior to terminating this
Agreement.
ARTICLE 8
SURVIVAL AND REMEDY: INDEMNIFICATION
8.1 SURVIVAL
All representations and warranties of the parties hereto shall
survive the Closing and shall expire as of 11:59 p.m. Eastern Standard time on
the date which is ninety days after the Closing Date.
8.2 INDEMNIFICATION BY VENDORS
The Vendors, Cable Systems and Cable Systems USA agree to
indemnify the Purchaser
-31-
and agree to hold it harmless from any Losses incurred or suffered by the
Purchaser arising from any breach of or any inaccuracy in any representation or
warranty made by the Vendors, Cable Systems and Cable Systems USA pursuant to
this Agreement and any breach of or failure by the Vendors, Cable Systems and
Cable Systems USA to perform any covenant or obligation of the Vendors, Cable
Systems and Cable Systems USA set out in this Agreement.
8.3 INDEMNIFICATION BY PURCHASER
The Purchaser agrees to indemnify the Vendors, Cable Systems and
Cable Systems USA against and agrees to hold them harmless from any Losses
incurred and suffered by any of the Vendors, Cable Systems and Cable Systems USA
or any of their respective Affiliates (or any combination thereof) arising from
any breach of or any inaccuracy in any representation or warranty made by the
Purchaser pursuant to this Agreement and any breach of or failure by the
Purchaser to perform any covenant or obligation of the Purchaser set out in this
Agreement.
8.4 NOTICE OF CLAIMS: ASSUMPTION OF DEFENSE
The indemnified party shall give prompt notice to the indemnifying
party in accordance with the terms of Section 10.4 of the assertion of any claim
or the commencement of any suit proceeding by any party in respect of which
indemnity may be sought hereunder, specifying with reasonable particularity the
basis therefore and giving the indemnifying party such information with respect
thereto as the indemnifying party may reasonably request (but the giving of such
notice shall not be conditioned precedent to indemnification hereunder). The
indemnifying party may, at its own expense:
(a) participate in; and
(b) upon notice to the indemnified party and the indemnifying
party's written agreement that the indemnified party is
entitled to indemnification pursuant to Section 8.2 or
Section 8.3 for Losses arising out of such claim, suit,
action or proceeding, at any time during the course of any
such claim, suit, action or proceeding, assume the defense
thereof; provided that:
(i) the indemnifying party's counsel is reasonably satisfactory
to the indemnified party;
(ii) the indemnifying party shall thereafter consult with the
indemnified party upon the indemnified party's reasonable
request for consultation from time to time with respect to
such claim, suit, action or proceeding; and
(iii) in the case of a claim arisin from a breach of the
warranties contained in Section 3.9 hereof for which the
Vendors, Cable Systems and Cable Systems USA have, pursuant
to this section 8.4 assumed the defense
-32-
thereof, if the action of the Vendors, Cable Systems and
Cable Systems USA may adversely affect the Purchaser or
Cable Systems tax obligations for periods ending after the
Closing Date, none of the Vendors, Cable Systems and Cable
Systems USA shall enter into a settlement agreement, file
and amended tax return or seek a refund of Taxes with
respect to the operations of Cable Systems without the prior
written consent of the Purchaser, which consent shall not be
unreasonably withheld. If the indemnifying party assumes
such defense, the indemnified party shall have the right
(but not the duty) to participate in the defense thereof and
to employ counsel, at its own expense, separate from the
counsel employed by the indemnifying party. Whether or not
the indemnifying party chooses to defend or prosecute any
such claim, suit, action or proceeding, all of the Parties
hereto shall cooperate in the defense or prosecution
thereof.
8.5 SETTLEMENT OR COMPROMISE
Any settlement or compromise made or caused to be made by the
indemnified party or the indemnifying party, as the case may be, of any such
claim, suit, action or proceeding of the kind referred to in Section 8.4 shall
also be binding upon the indemnifying party or the indemnified party, as the
case may be, in the same manner as if a final judgment or decree was entered by
a court of competent jurisdiction in the amount of such settlement or
compromise. No party shall settle or compromise any claim, suit, action or
proceeding without the prior written consent of the other parties hereto, which
consent shall not be unreasonably withheld.
8.6 FAILURE OF INDEMNIFYING PARTY TO ACT
In the event the indemnifying party does not elect to assume the
defense of any claim, suit, action or proceeding, then any failure of the
indemnified party to defend or to participate in the defense of any such claim,
suit, action or proceeding or to cause same to be done, shall not relieve the
indemnifying party of its obligations hereunder, provided that the indemnified
party gives the indemnifying party at least thirty (30) days' notice of its
proposed intention not to defend or participate and affords the indemnifying
party the opportunity to assume the defense thereof.
8.7 PAYMENT OF INDEMNIFYING PARTY
Contemporaneously with any compromise or settlement the
indemnifying party shall pay or cause to be paid to the indemnified party or as
they may direct, the amount owing under this indemnity with respect to such
matter being provided further that:
(a) the indemnifying party shall provide further security to the
indemnified party in respect of any cost of damages arising
in connection with any litigation; and
-33-
(b) the indemnifying party shall agree to reimburse the
indemnified party promptly in respect of all out of pocket
expenses incurred by indemnified party in connection with
such litigation or pending litigation.
8.8 LIMITATION RE INDEMNIFICATION BY THE VENDORS, CABLE SYSTEMS AND
---------------------------------------------------------------
CABLE SYSTEMS USA
-----------------
Notwithstanding anything contained in Section 8.2 hereof, the
Vendors, Cable Systems and Cable Systems USA shall only be required to pay to
the Purchaser, an amount in respect of Losses for indemnification under the
Section 8.2 to the extent by which the amount of such Losses exceeds, in the
aggregate, $25,000.
ARTICLE 9
DISPUTE RESOLUTION
9.1 NEGOTIATION - Subject to the provisions of this Agreement, the Vendors and
the Purchaser will attempt to resolve any controversy relating to the Agreement
by negotiation between representatives of the parties who have authority to
settle the controversy. The disputing Party will give the other Parties written
notice of the dispute. Within five (5) business days of receiving such notice,
the receiving Parties will submit to the other Parties a written response. The
notice and response shall not exceed three (3) pages. The representatives shall
meet at a mutually acceptable time and place within five (5) business days of
the date of the responding Party's notice.
9.2 MEDIATION
If the matter has not been resolved within five (5) business days
of the responding Party's notice, or if either Party will not meet, the dispute
will be submitted to mediation as set out below. The mediator will have no power
to bind the Parties. The mediation will be confidential. The mediation process
will be conducted as follows:
(a) SELECTION OF MEDIATOR - The Vendors and the Purchaser will
have three (3) business days from the end of the time for
negotiation to agree upon a mutually acceptable mediator
(the "Mediator"). If no Mediator has been selected within
that time, the Vendors and the Purchaser agree jointly to
request that Cable System's financial advisors supply,
within two (2) business days, a list of three (3) potential
mediators. Within two (2) business days of receipt of the
list, Vendors and Purchaser will independently rank the
proposed candidates, will simultaneously exchange rankings,
and will agree to select as the Mediator the individual
receiving the highest combined ranking who is available. If
either Party does not rank and provide a copy of the ranking
to the other Party, the Party who does rank will be able to
select the Mediator from the list;
-34-
(b) TIME AND PLACE FOR MEDIATION - In consultation with the
Mediator, the Vendors and the Purchaser will designate a
mutually convenient time and place for the mediation (and
unless circumstances require otherwise, the date should be
no later than five (5) business days after the selection of
the Mediator);
(c) SUMMARY OF VIEWS - Two (2) days prior to the mediation, each
Party will deliver to the Mediator and to the other Parties
a written summary of its views of the dispute, such summary
not to exceed three (3) pages;
(d) FEES OF MEDIATOR - The fees of the Mediator will be shared
equally by Vendor and Purchaser; and
(e) TERMINATION OF PROCEDURE - The Vendors and the Purchaser
agree to participate in the mediation for at least four (4)
hours (unless terminated earlier by the Mediator). After
that time, either the Vendors or the Purchaser may leave the
mediation at any time. If the mediation does not yield a
settlement, the Vendors and the Purchaser agree not to take
any action (other than good faith attempts to negotiate a
settlement to the dispute) prior to the conclusion of a five
(5) day post-mediation period that commences on the day
after the conclusion of the mediation process.
9.3 ARBITRATION
After the expiry of the five (5) day moratorium period referred to
in the paragraph above, if either Party will not participate in the mediation,
the dispute will be finally settled by arbitration in accordance with the
provisions of the ARBITRATION ACT, R.S.O. 1990, c. A-24, as amended from time to
time. The following rules will apply to the arbitration:
(a) APPOINTMENT OF ARBITRATOR - The arbitration tribunal will
consist of one arbitrator (the "Arbitrator"). The Vendors
and the Purchaser will have five (5) business days from the
end of the five (5) day post-mediation period to agree on
the Arbitrator. If they cannot agree, either Party may
request that Cable System's financial advisors supply,
within two (2) business days a list of five (5) qualified
arbitrators. Within two (2) business days of the receipt of
the list, the Vendors and the Purchaser will independently
rank the proposed arbitrators, will simultaneously exchange
rankings, and will agree to select as the Arbitrator the
individual receiving the highest combined ranking who is
available. If either Party does not rank and provide a copy
of the ranking to the other party, the Party who does rank
will be able to select the Arbitrator;
(b) RULES OF ARBITRATION - The Vendors and the Purchaser shall
agree, in consultation with the Arbitrator, on the rules for
the arbitration. Absent agreement to the
-35-
contrary, the following rules, designed to save time and
expense for the Parties, will apply:
(i) Pleadings shall be exchanged within twenty (20) days of the
selection of the Arbitrator, and shall be no more than five
(5) pages in length;
(ii) Each Party shall provide to the other access to any
documents in their possession which may be relevant to the
arbitration. Each Party shall also provide to the other two
(2) days before the arbitration hearing, lists and copies of
the documents that the Party intends to rely on at the
arbitration;
(iii) Each Party shall be entitled to oral discovery of the other
Party if it deems it appropriate. Any questions refused
shall be put to the Arbitrator for the Arbitrator's
determination as to whether the questions are appropriate
and relevant. Oral discovery shall take place within thirty
(30) days of the delivery of the conclusion of the exchange
of pleadings;
(iv) The arbitration shall take place within three (3) months of
the selection of the Arbitrator;
(v) At the Arbitration hearing, opening argument will be limited
to one half hour per party;
(vi) Each Party may produce up to two witnesses for direct
examination. The total time permitted for direct examination
(whether one or two witnesses is produced) will be two
hours. Total time for cross-examination will also be two
hours for each Party;
(vii) All evidence is admissible and its weight will be determined
by the Arbitrator;
(viii) Each Party may introduce any of its 15 documents;
(ix) Closing argument will be limited to (1) one hour for each
Party; and
(x) The Arbitrator shall be instructed to produce a decision
within seven (7) calendar days of the conclusion of the
arbitration, and written reasons within one (1) month of the
arbitration.
(c) The arbitration will be conducted in English and will take
place in the Town of Markham;
(d) The arbitration awards will be given in writing and will be
final, not subject to
-36-
any appeal, and will deal with the question of costs of
the arbitration. In the award of costs, the Arbitrator may
consider each Party's efforts to make any settlement
offer. If either Party refuses to participate in the
negotiation or mediation, there will be a presumption that
costs on a solicitor and client basis will be awarded
against the Party refusing to participate, regardless of
the outcome of the arbitration;
(e) Judgement upon the arbitration award may be entered into any
court having jurisdiction, or application may be made to
such court for judicial recognition of the award; and
(f) The Arbitrator will not award punitive or special damages.
9.4 LIMITED PROCEDURE FOR SETTLING DISPUTES
The Parties hereto mutually agree that the procedure specified in
the Agreement are the only procedures available for the resolution of any
controversies or disputes arising out of or relating to this Part, or the
breach, termination or validity of it, or any other related agreement between
the Vendors and the Purchaser. If any Party attempts to have issues resolved in
court that should property be resolved pursuant to this Part, the Parties agree
that this section can be used to stay any such proceedings. However, before or
during the time that the Vendor and the Purchaser follow these procedures,
either one can go to the appropriate court to get an injunction if the party
reasonably believes that such a step is necessary to avoid irreparable damage or
harm. Even if any Party takes such action, the Parties will continue to
participate in good faith in the procedures set out in this Part.
ARTICLE 10
OTHER MATTERS
10.1 POWER OF ATTORNEY
The Vendors, or any of them, may act by Attorney. Power of
Attorney shall be given to Xxxxxx Xxxxxxxx. The Attorney, Xxxxxxxx, shall, upon
request, produce a copy of the Power of Attorney authorizing him to sign all
documents including this Agreement, on behalf of the Vendors. Each Vendor shall,
unless unable to act on his/her or its own behalf, execute the share transfer in
favour of the Purchaser herein.
10.2 EXPENSES
The Purchaser shall pay all taxes, assessments, charges and fees,
imposed by Canada or any province or political subdivision thereof required to
be paid in connection with the transfer and sale of the Purchased Shares.
-37-
10.3 TIME
Time shall be of the essence hereof.
10.4 NOTICES
Any notice, direction or other document required to be given
hereunder or for the purposes hereof (hereinafter in this Section 9.3 called a
"notice") to any Party shall be in writing and shall be sufficiently given if
delivered personally, or if sent by prepaid registered mail or if transmitted by
facsimile or other form of recorded communication tested prior to transmission
to such Party:
(a) in the case of a notice to the Vendors at:
000 Xxxxxxx Xxxxx, Xxxx 0
Xxxxxxx, Xxxxxxx X0X 0X0
with a facsimile number of (000) 000-0000
Attention: as applicable
with a copy to the Vendors' Counsel at:
Xxxxxxx & Associate
00 Xxxx Xxxxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
with a facsimile number of (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
(b) in the case of a notice to the Purchaser at:
000 Xxxx Xxxxxx 0xx Xxxxx
Xxxxxxxxxx, XX 00000
with a facsimile number of (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
-38-
with a copy to the Purchaser's Counsel at:
Xxxxxxx, Savage & Xxxxxxxxx, LLP
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000
with a facsimile number of (000) 000-0000
Attention: Xxx Xxxxxxxxx (000) 000-0000
or at such other address as the Party to whom such writing is to be given shall
have last notified the Party giving the same in the manner provided in this
section. Any notice delivered to the Party to whom it is addressed as
hereinbefore provided shall be deemed to have been given and received on the day
it is so delivered at such address, provided that if such day is not a Business
Day then the notice shall be deemed to have been given and received on the first
Business Day next following such day. Any notice mailed as aforesaid shall be
deemed to have been given and received on the fifth Business Day following the
date of its mailing. Any notice transmitted by facsimile or other form of
recorded communication shall be deemed given and received on the first Business
Day after its transmission. Failure to transmit timely or adequate notice to
Vendor's Counsel or to Purchaser's Counsel, as the case may be, shall not
invalidate, nullify or otherwise detrimentally affect the provision of same to a
Party.
10.5 AMENDMENT
This Agreement may be amended, modified or supplemented but only
in writing signed by all of the Parties hereto.
10.6 ASSIGNMENT
Neither this Agreement nor any rights or obligations hereunder
shall be assignable by any Party without the prior written consent of the other
Parties hereto; provided that the Purchaser shall be entitled to assign this
Agreement to the Permitted Assignee. In the event that this Agreement is
assigned to the Permitted Assignee, the Permitted Assignee shall execute an
Addendum to this Agreement confirming its terms and the obligations of the
Permitted Assignee to be bound thereto prior to the Permitted Assignee being
entitled to the benefit of this Agreement hereof.
10.7 TAX MATTERS
The Vendors and Purchaser shall treat and report the transactions
contemplated by this Agreement in all respects consistently for the purposes of
the Canadian Tax Act and any other federal, provincial, xxxxx, xxxxxxxxxxx,
xxxxxxxx, xxxxxxxxx, local or foreign taxing statute. The Parties hereto shall
not take any actions or positions inconsistent with the obligations set forth
herein.
-39-
10.8 FURTHER ASSURANCES
The Parties hereto shall with reasonable diligence do all such
things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated hereby, and each Party shall provide
such further documents or instruments required by any other Party as may be
reasonably necessary or desirable to effect the purpose of this Agreement and
carry out its provisions, whether before or after the Closing.
10.9 SEVERABILITY
If any covenant or provision of this Agreement is prohibited in
whole or in part in any jurisdiction, such covenant or provision shall, as to
such jurisdiction, be ineffective to the extent of such jurisdiction without
invalidating the remaining covenants and provisions hereof and shall, as to such
jurisdiction, be deemed to be severed from this Agreement to the extent of such
prohibition.
10.10 COUNTERPARTS
This Agreement may be executed by the Parties in separate
counterparts each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
10.11 PUBLIC NOTICES
Except for disclosures required by Applicable Law, all public
notices to third parties and all other publicity concerning the transactions
contemplated herein shall be jointly planned and coordinated by the Vendors and
the Purchaser and no Party shall act unilaterally in this regard without the
prior approval of every other Party, such approval not to be unreasonably
withheld.
IN WITNESS WHEREOF the Parties have hereunto duly executed this
Agreement.
SIGNED, SEALED AND DELIVERED )
In the Presence of: ) INTERNET CABLE CORPORATION
)
)
) PER:____________________________
) A.S.O.
)
)
) ----------------------------
) XXXXXX XXXXXX
)
)
-40-
) ----------------------------
) XXXXXX XXXXXXXX
)
)
) 1291973 ONTARIO LIMITED
)
)
) PER:________________________
) A.S.O.
)
) ONTARIO CABLE AND
) CONTRACTING INCORPORATED
)
)
) PER:________________________
) A.S.O.
)
) XXXXX HOLDINGS INC.
)
)
) PER:________________________
) A.S.O.
)
) RYVON FUTURE INC.
)
)
) PER:________________________
) A.S.O.
)
)
) ----------------------------
) XXXXX XXXXXXXX
)
)
) ------------------------
) XXXXXX XXXXXXXX, IN TRUST
)
) CABLE SYSTEMS TECHNICAL
) SERVICES INC.
)
)
) PER:________________________
) A.S.O.
-41-
SCHEDULE 2.1
LIST OF SHAREHOLDERS
Ryvon Future Inc. 114 Common Shares
Xxxxxx Xxxxxx 98 Common Shares
Xxxxx Holdings Inc. 26 Common Shares
Ontario Cable and Contracting Inc. 103 Common Shares
1291973 Ontario Limited 98 Common Shares
Xxxxxx Xxxxxxxx 114 Common Shares
Xxxxx Xxxxxxxx 114 Common Shares
Ryvon Future Inc., in trust 25 Common Shares
Xxxxx Xxxxxx 50 Class "A" Preference Shares
-42-
SCHEDULE 2.3(C)
OUTSTANDING SHAREHOLDER LOANS TO CABLE SYSTEMS AND THE SUBSIDIARIES OF
CABLE SYSTEMS
(i) Fifty thousand Canadian dollars (CAN$50,000.00) to Cable Systems by Xxxxx
Xxxxxx, represented by all issued and outstanding Class A Preference Shares of
Cable Systems;
-43-
SCHEDULE 2.3(D)
PERSONAL GUARANTEES OF THE DEBTS AND OTHER OBLIGATIONS OF CABLE SYSTEMS AND THE
SUBSIDIARIES OF CABLE SYSTEMS
(i) personal guarantees by Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxxx of
the debts and obligations of Cable Systems and the Subsidiaries of Cable Systems
to the Canadian Imperial Bank of Commerce (CIBC);
(ii) personal guarantees by Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxxx of
the debts and obligations of Cable Systems and the Subsidiaries of Cable Systems
to the Business Development Bank of Canada (BDC); and
(iii) personal guarantees by Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxxx of
the debts and obligations of Cable Systems and the Subsidiaries of Cable Systems
to the Bank of Nova Scotia;
-44-
SCHEDULE 3.1
COPY OF ARTICLES OF INCORPORATION
Cable Systems Technical Services, Inc. (Deleware)
Cable Systems Technical Services Inc. (Ontario)
Articles of Amendment to Ontario Corporation
-45-
SCHEDULE 3.2
OBLIGATIONS
NONE
-46-
SCHEDULE 3.5
SUBSIDIARIES
Name: Cable Systems Technical Services Inc.
Jurisdiction of Incorporation: State of Delaware
Issued Shares Cable Systems Technical Services
Inc. (Ontario) 700 Common Shares
Xxxx Xxxxxxxxxx 100 Common Shares
Xxxxxxx Xxxxxxxxxxx 100 Common Shares
Optional Shares: None
-47-
SCHEDULE 3.6
CAPITALIZATION
(iii) CABLE SYSTEMS TECHNICAL SERVICES INC. (Ontario)
-------------------------------------
TYPE OF SHARES AND AUTHORIZED NUMBER NO. OF SHARES ISSUED
------------------------------------ --------------------
Unlimited Common Shares 692 Common Shares
10,000 Class "A" Preference Shares 50 Class "A" Preference
10,000 Class "B" Preference Shares None
(iv) CABLE SYSTEMS TECHNICAL SERVICES INC. (U.S.A.)
-------------------------------------
TYPE OF SHARES AND AUTHORIZED NUMBER
3,000 Common Shares 900 Common Shares
-48-
SCHEDULE 3.8
UNDISCLOSED LIABILITIES
NONE
-49-
SCHEDULE 3.11
UNUSUAL TRANSACTIONS
NONE
-50-
SCHEDULE 3.12
LEASED EQUIPMENT
-51-
SCHEDULE 3.18
EMPLOYMENT CONTRACTS
NONE
-52-
SCHEDULE 3.21
GUARANTEES
Cable Systems and Cable Systems USA have guaranteed the results and actions of
their subcontractors in their day to day roles on behalf of both companies to
the customers of Cable Systems and Cable Systems USA.
-53-
SCHEDULE 3.22
LITIGATION
NONE
-54-
SCHEDULE 3.23
EMPLOYEES OFFICES HELD
Xxxxxx Xxxxxxxx Director; President, C.E.O and Treasurer
Xxxxx Xxxxxx
Xxx Xxxxx
Xxxxxx Xxxxxx Director and Secretary
Xxxxxx Xxxxxx
-55-
SCHEDULE 3.26
VEHICULAR EQUIPMENT
-56-
SCHEDULE 3.28
CORPORATE RECORDS
NONE
-57-
SCHEDULE 4.6
KEY EMPLOYEES
Xxxxxx Xxxxxxxx - President and CEO
Xxxxx Xxxxxx - Vice President, Engineering
Xxxxxx Xxxxxx - Secretary and Director
