-----------------------------
SHARE PURCHASE AGREEMENT
between
BRITISH COLUMBIA RAILWAY COMPANY
and
RSL COM HOLDINGS CANADA INC.
Dated June 24, 1998
-----------------------------
TABLE OF CONTENTS
ARTICLE I INTERPRETATION................................................................2
1.1 Definitions............................................................................2
1.2 Other Terms...........................................................................11
1.3 Gender and Number.....................................................................12
1.4 Currency..............................................................................12
1.5 Schedules.............................................................................12
1.6 Tender................................................................................12
1.7 Performance on Holidays...............................................................13
ARTICLE II PURCHASE AND SALE OF SHARES..................................................13
2.1 Purchase and Sale of Shares...........................................................13
2.2 Determination of Working Capital......................................................13
2.3 Purchase Price Adjustment.............................................................14
2.4 Disputes..............................................................................14
2.5 Closing...............................................................................14
2.6 Transfers and Payment.................................................................14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BCR........................................15
3.1 Representations and warranties of BCR.................................................15
(a) Incorporation and Qualification.......................................................15
(b) Capitalization........................................................................15
(c) Authority, Filings, Consents and Approvals............................................15
(d) Conduct of Business - Changes.........................................................16
(e) Financial Statements..................................................................17
(f) Absence of Undisclosed Liabilities....................................................18
(g) No Conflict...........................................................................18
(h) Compliance............................................................................19
(i) Litigation............................................................................19
(j) Employees.............................................................................19
(k) Benefit Plans.........................................................................20
(l) Assets................................................................................24
(m) Tax Returns...........................................................................24
(n) Payment of Taxes......................................................................24
(o) Reassessments.........................................................................25
(p) Withholdings..........................................................................25
(q) Tax Status............................................................................25
(r) Contracts.............................................................................25
(s) Licences..............................................................................26
(t) Environmental Matters.................................................................26
(u) Brokers and Finders...................................................................27
(v) Books and Records.....................................................................27
(w) Absence of Guarantees.................................................................28
(x) Restrictions on Business..............................................................28
(y) Condition of Assets...................................................................28
(z) Insurance.............................................................................28
(aa) Intellectual Property Rights..........................................................29
(bb) Occupational Health and Safety........................................................29
(cc) Workers' Compensation.................................................................29
(dd) Leases................................................................................29
(ee) No Expropriation......................................................................30
(ff) Major Suppliers and Customers.........................................................30
(gg) Year 2000.............................................................................30
(hh) Credit Facilities.....................................................................31
(ii) Copies of Documents etc...............................................................31
(jj) Pension Plan Administration...........................................................31
(kk) Vacation Pay..........................................................................31
3.2 No Other Presentations or Warranties..................................................31
3.3 Survival of Representations and Warranties............................................31
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER......................................32
4.1 Representations and Warranties of Buyer...............................................32
(a) Incorporation and Qualification.......................................................32
(b) Authority; Filings, Consents and Approvals............................................32
(c) No Conflict...........................................................................33
(d) Brokers and Finders...................................................................33
(e) Financial Capability..................................................................33
(f) Securities Act........................................................................33
4.2 No Other Representations or Warranties................................................34
4.3 Survival of Representations and Warranties............................................34
ARTICLE V COVENANTS AND AGREEMENTS OF BCR AND BUYER....................................34
5.1 Access and Information................................................................34
5.2 Registrations, Filings and Consents; Proceedings......................................35
5.3 Operation of Business.................................................................36
5.4 Retention of Books and Records........................................................37
5.5 Closing Date Financial Information....................................................38
5.6 Telecommunications Services Agreement.................................................38
5.7 Non-Competition Agreement.............................................................38
5.8 Capitalization of Inter-corporate Debt................................................38
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5.9 Further Assurances....................................................................38
5.10 Continue Insurance....................................................................39
5.11 Comply with Laws......................................................................39
5.12 Brokerage Fees........................................................................39
5.13 Disclosure of Breaches................................................................39
5.14 Pension Plan..........................................................................39
5.15 Value Allocation Schedule.............................................................39
5.16 Transfer of Telecommunication Assets..................................................39
5.17 Permitted Transfers...................................................................40
5.18 Permitted Retention Bonuses and Permitted Severance Arrangements......................40
ARTICLE VI CONDITIONS TO CLOSING........................................................40
6.1 Conditions for the Benefit of Buyer...................................................40
6.2 Conditions for the Benefit of BCR.....................................................43
6.3 Termination if Conditions Not Met.....................................................44
ARTICLE VII INDEMNIFICATION.......................................................................44
7.1 Definitions...........................................................................44
7.2 Indemnification by BCR................................................................45
7.3 Indemnification by the Buyer..........................................................46
7.4 Agency for Representatives............................................................46
7.5 Notice of Third Party Claims..........................................................46
7.6 Defence of Third Party Claims.........................................................46
7.7 Assistance for Third Party Claims.....................................................47
7.8 Settlement of Third Party Claims......................................................47
7.9 Direct Claims.........................................................................48
7.10 Failure to Give Timely Notice.........................................................48
7.11 Limitation............................................................................48
ARTICLE VIII ARBITRATION...........................................................................49
8.1 Arbitration...........................................................................49
8.2 Location of Arbitration...............................................................49
8.3 Applicable Law........................................................................49
ARTICLE IX MISCELLANEOUS................................................................49
9.1 Amendment and Modification; Waiver....................................................49
9.2 Return of Information.................................................................49
9.3 Expenses..............................................................................49
9.4 Public Disclosure.....................................................................50
9.5 Assignment............................................................................50
9.6 Entire Agreement......................................................................50
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9.7 Fulfillment of Obligations............................................................50
9.8 Parties in Interest; No Third Party Beneficiaries.....................................50
9.9 Schedules.............................................................................50
9.10 Counterparts..........................................................................51
9.11 Section Headings......................................................................51
9.12 Notices...............................................................................51
9.13 Governing Law, Submission to Jurisdiction; Selection of Forum.........................52
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SHARE PURCHASE AGREEMENT
THIS AGREEMENT made the 24"' of June, 0000
XXXXXXX:
XXXXXXX XXXXXXXX RAILWAY COMPANY, a corporation
incorporated under the British Columbia Railway Act,
(hereinafter called "BCR"),
OF THE FIRST PART,
- and -
RSL COM HOLDINGS CANADA INC., a corporation, incorporated
under the laws of Canada
(hereinafter called "Buyer"),
OF THE SECOND PART.
WHEREAS, BCR owns all of the issued and outstanding shares in
the capital of Westel Telecommunications Ltd., a corporation incorporated under
the Company Act of British Columbia ("Westel"); and
WHEREAS, BCR desires to sell and transfer to Buyer, and Buyer
desires to purchase from BCR, all of the issued and outstanding shares in the
capital of Westel, as more if specifically provided herein; and
WHEREAS as soon as practicable after the purchase of such
shares, the Buyer intends to sell the telecommunication facilities assets of
Westel to MK Telecom Network Inc., a "Canadian Carrier" within the meaning of
the Telecommunications Act (Canada) and the Regulations thereto.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein. set forth, the parties hereto agree as follows:
ARTICLE I
INTERPRETATION
1.1 Definitions. Unless otherwise specifically provided or the context
otherwise requires, where used in this Agreement and in the Schedules hereto,
the following terms shall have the meanings set forth or as referenced below
(a) "Accounts Receivable" means the accounts receivable of
Westel.
(b) "Adjustment Date" means the tenth Business Day after the
final Working Capital calculation is delivered by the
Buyer's auditor to each party in accordance with Section
2.3 or is settled by arbitration pursuant to Section 2.4,
whichever shall last occur.
(c) "Affiliate"
(i) in the case of BCR means a subsidiary of BCR as
defined at the date hereof in subsections 2(3)
through 2(5) of the Canada Business Corporations Act
and also includes any Person other than a body
corporate which is controlled by BCR in any manner
whatsoever that results in control in fact by BCR;
and
(ii) in the case of the Buyer has the meaning ascribed to
it at the date hereof in subsections 2(2) through
2(5) of the Canada Business Corporations Act.
(d) "Agreement" means this agreement, the recitals hereto and
all schedules attached to this Agreement, in each case, as
they may be amended or supplemented from time to time, and
the expressions "hereof", "herein", "hereto", "hereunder",
"hereby", and similar expressions, when used in this
Agreement, refer to this Agreement as a whole and not to
any particular provision of this Agreement; and unless
otherwise indicated, references to Articles and Sections
are to Articles and Sections in this Agreement.
(e) "Applicable Law" means any domestic or foreign statute, law
(including the common law), ordinance, regulation, by-law
(zoning or otherwise), or Order that applies to BCR or
Westel.
(g) "Assets" means all of the assets, real and personal,
tangible and intangible, and undertaking of Westel,
including those tangible assets listed in Schedule 1.1(g).
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(h) "Audited Financial Information" has the meaning set forth
in Section 3.1 (e).
(i) "BC Rail" means the partnership between BC Rail Ltd., BCR
Properties Ltd. and British Columbia Railway Company formed
pursuant to a partnership agreement executed 15 December,
1997,
(j) "Benefit Plans" means all bonus, deferred compensation,
incentive compensation, share purchase, share appreciation
and share option, severance or termination pay,
hospitalization or other medical benefits, life or other
insurance, dental, disability, salary continuation,
vacation, supplemental unemployment benefits, profit
sharing, mortgage assistance, employee loan, employee
assistance, pension, retirement or supplemental retirement
plan or agreement (including any defined benefit or defined
contribution pension plan and any group registered
retirement savings plan), and each other employee benefit
plan or agreement (whether oral or written, formal or
informal, funded or unfunded) sponsored, maintained or
contributed to or required to be contributed to by Westel
for the benefit of any of its employees, whether or not
insured and whether or not subject to any Applicable Law,
except that the term "Benefit Plans" shall not include any
statutory plans with which Westel is required to comply,
including the Canada/Quebec Pension Plan or plans
administered pursuant to applicable provincial health tax,
workers' compensation and employment insurance legislation.
(k) "Business" means the business carried on by Westel of
providing and reselling telecommunication services,
including voice services, data services, private line
services, LAN management services and system design
services.
(l) "Business Day" means any day other than a Saturday, a
Sunday or a day on which banks in Vancouver, British
Columbia are authorized or obligated by law to close.
(m) "Buyer" means RSL COM Holdings Canada Inc.
(n) "Canadian Carrier" means MK Telecom Network Inc., a
corporation incorporated under the laws of Canada.
(o) "Closing" has the meaning set forth in Section 2.5.
3
(p) "Closing Date" has the meaning set forth in Section 2.5.
(q) "Closing Working Capital" means the Working Capital of
Westel as of the close of business on the day preceding the
Closing Date, as determined pursuant to Section 2.2.
(r) "Collective Agreement" means any collective agreement,
letters of understanding, letters of intent or other
written communication with any trade union or association
which may qualify as a trade union, which would cover any
employees.
(s) "Competition Act" means the Competition Act (Canada) R.S.,
1985, c.C- 34, as amended.
(t) "Competition Act Approval" means either:
(i) the issuance of an advance ruling certificate by the
Director under Section 102(l) of the Competition Act
to the effect that he is satisfied that he would not
have sufficient grounds upon which to apply to the
Competition Tribunal for an order under section 92
of the Competition Act with respect to the
transactions contemplated by this Agreement; or
(ii) the expiration of the waiting period under section
123 of the Competition Act with neither the Buyer
nor BCR having been advised in writing by the
Director that the Director has determined to make,
is threatening to make or has made an application
for an order under section 92 or 100 of the
Competition Act in respect (of the transactions
contemplated by this Agreement.
(u) "Condition of the Business" means the condition of Westel
including the Assets, liabilities, operations, activities,
earnings, affairs and financial position of Westel.
(v) "Confidentiality Agreement" has the meaning set forth
in Section 5.1(c).
(w) "Continuing Affiliate" means an Affiliate of BCR
other than Westel.
(x) "Copyright" means all copyright of Westel, whether
registered or not.
4
(y) "Current Assets" of Westel at any time means the current
assets of Westel determined in accordance with Generally
Accepted Accounting Principles, consistently applied except
that
(iii) all capital assets and work in progress which become
assets of Westel after April 30, 1998 as a result of
Permitted Capital Expenditures (other than the lease
of radios from Royal Bank of Canada or any assets
financed by way of indebtedness to a party other
than BCR or its Affiliates) shall be regarded as
current assets for the purposes of this definition
and their value shall be equal to the amount of the
Permitted Capital Expenditures made in respect
thereof, and
(iv) any cash, accounts receivable or other proceeds of
the Permitted Transfers shall not be regarded as
current assets for the purposes of this definition.
(z) "Current Liabilities" of Westel at any time, means the
current liabilities of Westel determined in accordance with
Generally Accepted Accounting Principles, consistently
applied and for greater certainty includes
(i) all accounts payable and accrued liabilities,
including income taxes and current year's bonuses
for all employees of Westel,
(ii) any overdraft in Westel's bank accounts at that
time, except that Inter- corporate Debt shall not be
included in such; determination;
(aa) "Director" means the Director of Investigation and Research
appointed under the Competition Act.
(bb) "Disposal" means any disposal by any means, including
discharging, dumping, incineration, spraying, pumping,
injecting, depositing or burying.
(cc) "Encumbrance" means any encumbrance of any kind whatever
and includes a security interest, mortgage, lien, hypothec,
pledge, hypothecation, assignment, charge, security under
Section 426 or Xxxxxxx 000 xx xxx Xxxx Xxx (Xxxxxx), trust
or deemed trust (whether contractual, statutory or
otherwise arising), a voting trust or pooling agreement
with respect to securities, an adverse claim or any other
right, option or claim of others of any kind whatever
affecting the Assets or the Shares, any covenant or other
agreement, restriction or limitation on the transfer of the
Shares, a deposit
5
by way of security and an easement, restrictive covenant,
agreement or right of way (registered or unregistered),
restriction, encroachment, burden or title reservation of
any kind with respect to real property.
(dd) "Environmental Compliance Review" includes all
environmental audits, environmental assessments and all
environmental studies or evaluations related in any way to
Westel or the Business or Assets;
(ee) "Environmental Laws" includes all federal, provincial,
municipal or local statutes, regulations, by-laws or rules,
and Orders of any Governmental Authority and the common
law, relating in whole or in part to the environment and
includes those laws relating to the storage, generation,
use, handling, manufacture, processing, transportation,
import, export, treatment, Release or Disposal of any
Hazardous Substance and any laws relating to asbestos or
asbestos-containing materials in the workplace environment.
(ff) "Environmental Permits" includes all permits, certificates,
approvals, consents, authorizations, registrations, and
licenses issued, granted, conferred, created or required by
any Governmental Authority pursuant to any Environmental
Laws;
(gg) "Expired Leases" means those real property leases,
statutory rights of way, rights of occupancy and licenses
of occupancy to which Westel, or BCR on Westel's behalf is
a party and which have expired or are expected by Westel to
expire during the period from the date hereof to the
Closing Date listed in Part II of Schedule 3.1(dd) hereto.
(hh) "Financial Statements" has the meaning set forth in
Section 3.1(e).
(ii) "Generally Accepted Accounting Principles" means generally
accepted accounting principles from time to time approved
by the Canadian Institute of Chartered Accountants, or any
successor institute, applicable as at the date on which any
calculation or determination is required to be made in
accordance with generally accepted accounting principles.
(jj) "Governmental Authority" means any domestic or foreign
government whether federal, provincial, or municipal and
any governmental agency, governmental authority,
governmental tribunal or governmental commission of any
kind whatever
6
(kk) "Hazardous Substance" means any waste, hazardous substance,
hazardous material, toxic substance, dangerous substance or
dangerous good or contaminant as defined in any
Environmental Law.
(ll) "including" means "including" and the term "including"
shall not be construed to limit any general statement which
it follows to the specific or similar items or matters
immediately following it;
(mm) "Indemnified Party" has the meaning set forth in
Section 7.1.
(nn) "Indemnifier" has the meaning set forth In Section 7.1.
(oo) "Intellectual Property Rights" means:
(A) (i) the Trade Marks; and
(ii) the Copyrights;
set forth on Schedule 3.1(aa); and
(B) (i) all trade secrets and confidential
information of Westel;
(ii) all computer software and related manuals
owned by or licensed to Westel;
(iii) all know-how of the Business including
(x) all information of a scientific,
technical or business nature
whether in oral, written, graphic,
machine readable, electronic or
physical form; and
(y) all patterns, plans, designs,
research data, research plans,
trade secrets and other proprietary
know-how, processes, formulas,
drawings, technology, unpatented
blue prints, flow sheets, equipment
and parts lists, instructions,
manuals, records and procedures.
7
(pp) "Inter-corporate Debt" at any time means all indebtedness
owing by Westel to BCR or any Affiliate of BCR or to any
other Person with whom BCR does not deal at arm's length
(within the meaning of the Income Tax Act (Canada)) at that
time, other than trade payables arising in the ordinary
course of business;
(qq) "Leases" means the real property leases, statutory rights
of way, rights of occupancy and licenses of occupancy to
which Westel, or BCR on Westel's behalf, is a party, listed
in Part I of Schedule 3.1(dd) but does not include the
Expired Leases.
(rr) "Liabilities" has the meaning set forth in Section 3.1(f).
(ss) "Lenders" means those lenders listed in Schedule 1.1(ss).
(tt) "March 31 Working Capital" means the Working Capital of
Westel as of the close of business on March 31, 1998, as
determined pursuant to Section 2.2.
(uu) "Material" means having an actual or potential economic
impact on Westel of at least $50,000.
(vv) "Material Adverse Effect" means an effect which is or would
reasonably be expected to be Materially adverse to Westel
or to the Condition of the Business.
(ww) "Non-Competition Agreement" means the non-competition
agreement to be entered into between BCF, the Buyer, the
Canadian Carrier and Westel at the Closing Time in the form
attached hereto as Schedule 6.1(h).
(xx) "Notice Period" has the meaning set forth in Section 7.6.
(yy) "Order" means any order, judgment, injunction, decree,
award or writ of any court, tribunal, arbitrator,
Governmental Authority, or other Person who is authorized
to make legally binding determinations.
(zz) "ordinary course" when used in relation to the conduct of
the Business means any transaction which constitutes an
ordinary business activity of Westel conducted in a
commercially reasonable and businesslike manner consistent
with Westel's past practices.
8
(aaa) "Pension Plan" means each of the Benefit Plans that is a
"registered pension plan" as that term is defined in
subsection 248(l) of the Income Tax Act (Canada).
(bbb) "Permitted Capital Expenditures" means those capital
expenditures listed in Schedule 5.3(g)(1) and any others
mutually agreed to in writing by Buyer and BCR.
(ccc) "Permitted Retention Bonuses" means the stay bonuses,
retention payments, success fees or similar compensation
payable to the employees of Westel listed in Schedule
3.1(d)(v)(D) hereto.
(ddd) "Permitted Severance Arrangements" means the severance
arrangements applicable to the employees of Westel listed
in Schedule 3. 1 (d)(v)(D) hereto.
(eee) "Permitted Encumbrances" means the Encumbrances listed in
Schedule 1.1(eee) hereto and any easement, restrictive
covenant, agreement or right of way (registered or
unregistered), restriction, encroachment, burden or title
reservation of any kind with respect to real property or
Leases which will not individually or in the aggregate have
a Material Adverse Effect on the value of the Assets or the
Business or the ability of Westel to carry on the Business
as it has in the past.
(fff) "Permitted Transfers" means the transfers of Assets listed
in Schedule 3.1(d)(v)(A) hereto by Westel to BC Rail
provided the transfers take place as described in Section
5.17.
(ggg) "Person" means any individual, corporation, partnership,
firm, joint venture, association, joint-share company,
trust, unincorporated organization, governmental or
regulatory body or other entity.
(hhh) "Prime Rate" for any day means the rate of interest
expressed as a rate per annum that Bank of Montreal
establishes at its head office in Toronto as the reference
rate of interest that it will charge on that day for
Canadian dollar demand loans to its customers in Canada and
which it at present refers to as its prime rate.
(iii) "Purchase Price" has the meaning set forth in Section 2.1.
9
(jjj) "Quarterly Financial Information" has the meaning set forth
in Section 3.1(e).
(kkk) "Release" includes releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting,
migrating, escaping, leaching, disposing, dumping,
depositing, spraying, burying, abandoning, incinerating,
seeping or placing, or any similar action defined in any
Environmental Law.
(lll) "Rules of Procedure" mean the British Columbia
International Commercial Arbitration Centre's rules of
procedure for arbitration.
(mmm) "Securities Act" means the Securities Act, R.S.B.C. 1996,
chapter 418, as amended.
(nnn) "Shares" means the 41,000,000 common shares in the capital
of Westel owned by BCR and any other shares of Westel
issued to BCR after the date hereof pursuant to Section
5.8.
(ooo) "Taxes" means all taxes and similar governmental charges,
including:
(i) Canadian federal, provincial, municipal and local,
foreign or other income, franchise, capital, real
property, personal property, withholding, payroll,
employer health, transfer, sales, use, excise, goods
and services, consumption, anti-dumping, countervail
and value added taxes, all other taxes of any kind
for which Westel may have any liability imposed by
Canada or any province, municipality, country or
foreign government or subdivision or agency thereof,
whether disputed or not;
(ii) assessments, charges, duties, fees, imposts, levies
or other governmental charges and interest,
penalties or additions associated therewith; and
(iii) all Canada Pension Plan contributions and employment
insurance premiums.
(ppp) "Tax Returns" means all reports, returns and other
documents filed or required to be filed by Westel in
respect of Taxes or in respect of or pursuant to any
domestic or foreign federal, provincial, state, municipal,
territorial or other taxing statute.
10
(qqq) "Termination Assets" means those tangible telecommunication
Assets of Westel which are required to be sold in order for
Westel not to be a "telecommunications common carrier"
within the meaning of the Telecommunications Act (Canada).
(rrr) "Telecommunications Services Agreement" means the Agreement
to be entered into between BC Rail and Westel on the
Closing, in the form attached hereto as Schedule 1.1(rrr).
(sss) "Telecommunications Warranties" has the meaning set out in
Section 5.16.
(ttt) "Time of Closing" means 10:00 a.m. Vancouver time on the
Closing Date or such other time on that date as the parties
agree in writing that the Closing shall take place;
(uuu) "Trade Marks" means the trade-marks. trade names, designs,
graphics, logos and other commercial symbols of or relating
to the Business, whether registered or not, which are
listed in Schedule 3.1(aa).
(vvv) "Transaction Documents" means:
(i) this Agreement;
(ii) the Non-Competition Agreement;
(iii) the Telecommunications Services Agreement; and
(iv) the documents and agreements to be delivered by each
party hereto to the other at the Time of Closing.
(www) "Value Allocation Schedule" means Schedule l.l.
(xxx) "Working Capital" of Westel at any time means an amount
equal to the Current Assets minus the Current Liabilities,
at that time.
1.2 Other Terms. Other terms may be defined elsewhere in the text of this
Agreement and, unless otherwise indicated, shall have such meaning throughout
this Agreement.
11
1.3 Gender and Number. The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa and words importing
gender include all genders.
1.4 Currency. The terms "dollars" and "S" shall mean Canadian Dollars.
1.5 Schedules. The following are the Schedules which form part of this
Agreement and which have been delivered concurrently with execution of this
Agreement. Schedule 3.1(d)(v)(D) - Permitted Retention Bonuses and Permitted
Severance Arrangements has been delivered separately to the Buyer on a
confidential basis:
Schedule 1.1(g) Assets
Schedule 1.1(ss) Lenders
Schedule 1.1(eee) Permitted Encumbrances
Schedule 1.1(rrr) Telecommunications Services Agreement
Schedule 1.1(vvv) Value Allocation Schedule
Schedule 3.1(c) BCR's Consents and Approvals
Schedule 3.1(d)(v)(A) Permitted Transfers
Schedule 3.1(d)(v)(D) Permitted Retention Bonuses and Permitted
Severance Arrangements
Schedule 3.1(e) Financial Statements
Schedule 3.1(f) Material Liabilities
Schedule 3.1(i) Litigation
Schedule 3.1(j) Labour and Employment Relations
Schedule 3.1(k) Benefit Plans
Schedule 3.1(r) Contracts
Schedule 3.1(t) Environmental Matters
Schedule 3.1(z) Insurance
Schedule 3.1(aa) Intellectual Property Rights, including
Trade Marks
Schedule 3.1(dd) Leases and Expired Leases
Schedule 3.1(ff) Major Suppliers and Customers
Schedule 3.1(gg) Millennium Compliant programme
Schedule 4.1(b) Buyer's Consents and Approvals
Schedule 5.3)(g)(i) Permitted Capital Expenditures
Schedule 6.1(g) Resigning Officers
Schedule 6.1(h) Non-Competition Agreement
1.6 Tender. Any tender of documents or money hereunder may be made upon the
parties or their respective counsel and money shall be tendered by official
bank draft drawn upon a Canadian chartered bank by negotiable cheque payable in
Canadian funds and
12
certified by a Canadian chartered bank or by wire transfer of funds to a bank
account designated by the payee at least two days prior to the date the payment
is to be made.
1.7 Performance on Holidays If any action is required to be taken pursuant to
this Agreement on or by a specified date which is not a Business Day, then such
action shall be valid if taken on or by the next succeeding Business Day.
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of Shares. Buyer shall purchase from BCR, and BCR shall
sell to Buyer, the Shares, for an aggregate purchase price in cash of
$55,000,000 as at the Closing Date (the "Purchase Price") subject to an
adjustment as hereinafter provided.
2.2 Determination of Working Capital.
(a) Forthwith following the Closing, Buyer shall cause its
auditor to prepare a calculation of the March 31 Working
Capital and the Closing Working Capital. Such calculations
shall be prepared in accordance with Generally Accepted
Accounting Principles, consistently applied, except as
otherwise specifically provided herein. The Closing Working
Capital shall be calculated on the basis that Westel shall
claim capital cost allowance to the maximum extent
permitted under the Income Tax Act which is necessary to
minimize Westel's income tax liabilities prior to the
Closing Date.
(b) The Buyer shall ensure that its auditor cooperates with the
BCR's auditor in preparing such calculations. Copies of all
working papers of the Buyer's auditor shall be made
available to BCR's auditor for review. Representatives of
BCR or BCR's auditor shall be permitted to be present at
and to participate in any procedures taken in order to make
the calculation of Closing Working Capital. A copy of the
draft calculations of March 31 Working Capital and the
Closing Working Capital shall be delivered to each party
within thirty days (30) days of the Closing Date. The Buyer
shall, and shall cause its auditor to, meet with BCR and
BCR's auditor forthwith thereafter to review such draft
calculations so that the parties can agree on the
calculations of March 31 Working Capital and the Closing
Working, Capital by the fortieth day after the Closing
Date. Failing agreement by such time, the Buyer's auditor
shall deliver the final calculations of March 31 Working
Capital and the Closing Working Capital on the fortieth day
after the Closing Date and any dispenses relating to such
calculations shall be resolved pursuant to Section 2.4.
13
2.3 Purchase Price Adjustment. On the Adjustment Date the Purchase Price
shall be adjusted on a dollar for dollar basis as follows:
(a) if the Closing Working Capital exceeds the March 31 Working
Capital, the amount of such excess shall be added to the
Purchase Price; and
(b) if the Closing Working Capital is less than the March 31
Working Capital, the amount of such deficiency shall be
deducted from the Purchase Price.
Any amount to be paid by one party to the other pursuant to this Section 2.3 as
an increase to or a reduction of the Purchase Price, shall be paid on the
Adjustment Date together with interest, compounded monthly, at the Prime Rate
from the Closing Date to the date of payment.
2.4 Disputes. If either BCR or the Buyer disputes any item in the calculation
of the March 31 Working Capital or the Closing Working Capital which could
result in an adjustment to the Purchase Price, it shall give notice to the
other of such dispute on or before the 10th Business Day following the delivery
of the final calculation of the Closing Working Capital. In such event, the
matter in dispute shall be referred to arbitration as provided in Article VIII
and payment of the respective balance due, if any, will be made forthwith after
completion of the arbitration proceedings. Interest shall accrue on any net
amount to be paid pursuant to Section 2.3 from the Closing Date until the date
of payment at the Prime Rate.
2.5 Closing. The completion of the sale and purchase of the Shares by the
transfer and delivery of documents of title thereto and the payment of the
Purchase Price (the "Closing") shall take place at the offices of Xxxxxx Xxxxx,
1200 Waterfront Centre, 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx at
10:00 A.M. local time (the "Time of Closing"), on the date which is five
Business Days after the date on which the conditions of closing set forth in
Article VI have been satisfied or waived by the parties or at such other time
and place as the parties hereto may mutually agree. The date on which the
Closing occurs is called the "Closing Date" and the transaction shall take
effect from the opening of business on the Closing Date.
2.6 Transfers and Payment. At the Time of Closing, upon fulfillment of all the
conditions set out in Article VI that have not been waived in writing by BCR or
Buyer as the case may be, BCR shall deliver to Buyer certificates representing
the Shares, duly endorsed and in form suitable for transfer and free and clear
of all Encumbrances and will cooperate with Buyer in having the Shares
transferred to Buyer or its nominee and in changing the directors to
individuals nominated by Buyer, whereupon, subject to all other terms and
conditions hereof being complied with, Buyer shall pay to BCR the slim of
$55,000,000.
14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BCR
3.1 Representations and warranties of BCR. BCR represents and warrants to Buyer
as of the date hereof and as of the Closing Date (except that representations
and warranties that are made as of a specific date need be true only as of such
date) as follows:
(a) Incorporation and Qualification. Westel is a corporation duly
incorporated, organized and validly subsisting under the laws
of British Columbia. Westel has all requisite corporate power
and authority to own, lease and operate its properties and to
carry on its business as now being conducted and is duly
registered, licensed or qualified to carry on business in
each jurisdiction in which the nature of the business as now
being conducted by it or the property owned or leased by it
makes such registration, licensing or qualification necessary
where the failure to be so registered or qualified would have
a Material Adverse Effect on the Business.
(b) Capitalization. The authorized capital of Westel consists of
100,000,000 Common shares without par value of which only the
Shares are issued and outstanding. The Shares are duly
authorized, validly issued, fully paid and nonassessable and
are owned of record and beneficially by BCR. BCR has good and
valid title to the Shares free and clear of all Encumbrances
other than restrictions on transfer set out in the articles
of Westel and, upon consummation of the transactions
contemplated in this Agreement, shall have transferred such
title to the Shares to Buyer pursuant to the terms of this
Agreement, free and clear of all Encumbrances, other than
such Encumbrances which were incurred by Buyer or caused to
be incurred by Westel by Buyer as a result of the
transactions contemplated by this Agreement. There are not
now, and at the Closing Date there will not be, any
outstanding options, warrants or rights to purchase or
acquire, or securities convertible into or exchangeable for
or which carry an obligation to purchase or otherwise
acquire, any shares or securities in the capital of Westel
and there are no contracts, commitments, agreements,
understandings, arrangements or restrictions which require
Westel to issue, sell or deliver any of its shares or
securities. Other than those set forth in the articles of
Westel, there are no restrictions on the transfer of the
Shares. Westel has no subsidiaries.
(c) Authority, Filings, Consents and Approvals. BCR is a
corporation duly incorporated, organized and validly
subsisting under the laws of British Columbia. BCR has the
corporate power and authority to enter into this
15
Agreement and the Transaction Documents and, subject to the
receipt of the approvals, consents and authorizations
contemplated in this Agreement and the Transaction Documents,
to carry out the transactions contemplated hereby. This
Agreement and the Transaction Documents have been duly
authorized, executed and delivered by BCR and constitute
legal, valid and binding obligations of BCR, enforceable in
accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or
affecting, creditors' rights and to general equity
principles. No other proceedings on the part of' BCR are
necessary to authorize this Agreement and the Transaction
Documents and the consummation of the transactions
contemplated hereby.
Except as set forth in Schedule 3.1(c) or as required by the
Competition Act, the execution, delivery and performance of
this Agreement and the Transaction Documents will not require
BCR or Westel to obtain any consent, waiver, authorization or
approval of, or make any filing with or give notice to, any
Person, except for such consents, waivers, authorizations or
approvals which the failure to obtain would not be reasonably
likely to have a Material Adverse Effect or would not be
reasonably likely to prohibit or materially delay BCR's
ability to perform its obligations under this Agreement.
(d) Conduct of Business - Changes. Since March 31, 1998:
(i) Westel has conducted the Business in the ordinary
course and has used its best efforts to preserve the
Business and the Assets;
(ii) there has not been any change in the Condition of
the Business other than changes in the ordinary
course of business, and such changes have not,
either individually or in the aggregate, been
materially adverse and have not had a material
adverse effect on the Condition of the Business;
(iii) there has not been any damage, destruction, loss,
labour dispute or other event, development or
condition of any character (whether or not covered
by insurance) which has had a material adverse
effect on Westel or the Condition of the Business;
(iv) there has not been any change in the accounting
principles, policies, practices or procedures of
Westel or their application to Westel;
16
(v) Westel has not:
(A) transferred, assigned, sold or otherwise
disposed of or created any Encumbrance on
any of the Assets other than in the
ordinary course of business and other than
Permitted Encumbrances and Permitted
Transfers,
(B) made any change in the method of billing
customers or the credit terms made
available by the Business to customers,
except in the ordinary course of business
with a view to the best interests of
Westel;
(C) made any change with respect to any method
of management or operations in respect of
the Business, except in the ordinary course
of business with a view to the best
interests of Westel;
(D) increased the compensation paid or payable
to any employees or increased the benefits
to which such employees are entitled under
any Benefit Plan of the BCR or Westel or
created any new Benefit Plan for any such
employees other than consistent with past
practice and other than Permitted Retention
Bonuses and Permitted Severance
Arrangements;
(E) modified, amended or terminated any
contract to which it is or was a party,
except (x) as provided in the
Telecommunications Services Agreement and
(y) in the ordinary course of business with
a view to the best interests of Westel; or
(F) declared or paid any dividend or other
distribution in respect of any shares,
warrants, rights or similar securities or
purchased or redeemed any such shares,
warrants, rights or similar securities.
(e) Financial Statements. Attached hereto as Schedule 3.1(e) is
a copy of:
(i) the audited balance sheet of Westel as at December
31, 1997 and the statements of operations,
shareholder's equity and cash flows for the fiscal
years ended December 31, 1996 and December 31, 1997
(collectively, with the notes thereto, the "Audited
Financial Information");
17
(ii) a copy of the unaudited balance sheet of Westel as
at March 31, 1998 (the "Balance Sheet") and the
related statement of operations, shareholder's
equity and cash flows for the three months then
ended (collectively, with the notes thereto, the
"Quarterly Financial Information"); and
The Audited Financial Information and the Quarterly Financial
Information have been prepared in accordance with Generally
Accepted Accounting Principles applied on a consistent basis
(except as may be noted therein), and the Audited Financial
Information and the Quarterly Financial Information
(collectively the "Financial Statements") present fairly the
financial position of Westel as at December 31, 1997 and
March 31, 1998 respectively and the results of their
operations for the periods then ended.
(f) Absence of Undisclosed Liabilities. Except as disclosed in
Schedule 3.1(f) Westel does not have any liabilities or
obligations of any nature, whether absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, due or to
become due, including any liability for Taxes (collectively,
"Liabilities"), which, either individually or in the
aggregate, are Materially in excess of the Liabilities
reflected or reserved against in the Financial Statements,
except those incurred in the ordinary course of business and
consistent with past practice since the respective dates as
of which the Financial Statements were prepared.
(g) No Conflict. Subject to the receipt of the Lenders',
governmental and regulatory approvals referred to in this
Agreement or disclosed in Schedule 3.1(c), the execution and
delivery of this Agreement by BCR does not, and the
performance of this Agreement by BCR and the consummation by
it of the transactions contemplated by this Agreement shall
not:
(i) conflict with or violate the memorandum or articles
or equivalent organizational documents of BCR or
Westel or any resolution of their directors or
shareholders;
(ii) conflict with or violate any law, rule, regulation,
permit, order, judgment or decree applicable to BCR
or Westel or by which any of their respective
properties is bound or affected, the conflict with
which or violation of which would have a material
adverse effect or would prohibit or materially delay
BCR's ability to perform its obligations under this
Agreement; or
18
(iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both
would become a default) under, or give to others any
rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an
Encumbrance on any of the Assets pursuant to, any
note, bond, mortgage, indenture, contract,
agreement, lease, licence, permit, franchise or
other instrument or obligation to which Westel is a
party or by which Westel is bound or affected,
which, in any such case, would have a material
adverse effect or would prohibit or materially delay
BCR's ability to perform its obligations under this
Agreement.
(h) Compliance. Except for any conflicts, defaults or violations
which would not, individually or in the aggregate, have a
material adverse effect, Westel is not in conflict with, or
in default or violation of, (i) its memorandum or articles,
(ii) any Applicable Law applicable to Westel or by which any
one of its Assets is bound or affected. Except for any
conflicts, defaults or violations which would not,
individually or in the aggregate, have a Material Adverse
Effect, Westel is not in conflict with, or in default or
violation of, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other
instrument or obligation to which Westel is a party or by
which Westel is bound or affected.
(i) Litigation. Except as disclosed in Schedule 3.1(i), there are
no claims, actions, proceedings, suits, investigations or
reviews pending or, to the knowledge of BCR, threatened
against Westel before any court, arbitrator or
administrative, governmental or regulatory authority or body,
domestic or foreign, that, individually or in the aggregate,
if adversely determined, would have a Material Adverse
Effect. As at the date hereof, Westel is not subject to any
judgment, order or decree which has or will have a Material
Adverse Effect, except as disclosed in Schedule 3.1(1).
(j) Employees. Schedule 3.1(j) contains:
(i) the names and titles of all employees of Westel
together with the location of their employment;
(ii) the date each employee was hired,
(iii) a list of any written employment contracts between
Westel and its employees;
19
(iv) the rate of annual remuneration of each employee at
the date hereof and any bonuses paid since the end
of the last completed financial year in respect of
that year; and
(v) the names of each employee on long term disability,
workers compensation or leave of absence, whether
paid or unpaid.
Westel does not have any formal written short term disability plan. No
employee is employed under a contract which cannot be terminated by
Westel with or without notice, including those employees who are
employed on indefinite hirings requiring reasonable notice of
termination by Applicable Law. Westel is not a party, either directly
or by operation of law, to any Collective Agreement. No trade union,
council of trade unions, employee bargaining agency or affiliated
bargaining agent holds bargaining rights with respect to any of the
employees by way of certification, interim certification, voluntary
recognition, or successor rights. To the knowledge of BCR, there are
no threatened or pending union organizing activities involving the
employees. There are no pending or, to the knowledge of Westel, any
threatened labour disputes or work stoppages which might have a
material adverse effect on the operations of the Business or lead to
an interruption of operations.
(k) Benefit Plans.
(i) Except as set forth in Schedule 3.1(k), Westel is
not a party to or bound by, nor does Westel have any
liability or contingent liability with respect to,
any Benefit Plans that are material to the Business
and that impose any binding legal obligation on
Westel. Schedule 3.1(k) contains a true and complete
list of each Benefit Plan. Schedule 3.1(k) also
identifies each of the Benefit Plans that is a
Pension Plan. Westel has no formal plan or
commitment, whether legally binding or not, to
create any additional Benefit Plan or to modify or
change any existing Benefit Plan that would affect
any employee or former employee of Westel, except
such modification or amendment as may be required to
be made to secure the continued registration of any
existing Benefit Plan with each applicable
Governmental Authority. At the Time of Closing the
pension plan reciprocal agreement identified in
Schedule 3.1(k) shall be terminated.
(ii) Schedule 3.1(k) sets out a list of each of the
following:
(A) each Benefit Plan (including, all amendments
thereto);
20
(B) all general written communications to all
employees relating to the Benefit Plan,
whether or not such communications have
been, or are required to be, filed with any
applicable Governmental Authority;
(C) if the Benefit Plan is funded through a
trust or any third party funding
arrangement, the trust or other funding
agreement (including all amendments
thereto) and the latest financial
statements thereof;
(D) all insurance contracts, investment
management agreements, subscription and
participation agreements and record keeping
agreements relating to the Benefit Plans
and all other contracts relating to the
Benefit Plans with respect to which Westel
may have any Material liability;
(E) the annual information return filed in
respect of the Pension Plan with any
applicable Governmental Authority for 1995
and 1996;
(F) the two most recently completed actuarial
reports filed in respect of the Pension
Plan with any applicable Governmental
Authority;
(G) the most recent financial statements filed
in respect of each Pension Plan with any
Governmental Authority;
(H) the most recent letter of confirmation of
registration of the Pension Plan pursuant
to the applicable pension legislation and
the Income Tax Act (Canada); and
(I) any statement of investment policies and
goals prepared in respect of the Pension
Plan, whether or not such statement has
been filed with any applicable Governmental
Authority.
(iii) None of the Pension Plans is a multi-employer
pension plan as defined under the provisions of any
Applicable Law.
21
(iv) No Benefit Plan provides benefits, including death
or medical benefits (whether or not insured), with
respect to Employees or former employees of Westel
beyond retirement or other termination of service,
other than:
(A) coverage required by applicable law,
(B) death or retirement benefits under any
Pension Plan,
(C) deferred compensation benefits accrued as
liabilities in the Financial Statements,
(D) other than benefits under the Medical
Services Plan and Extended Health Benefit,
particulars of the retired employees
entitled to such benefits are set forth in
Tab 7 of Schedule 3.1(k), or
(E) benefits the full cost of which is borne by
the Employee or former employee (or his
beneficiary),
(v) There are no pending or (to the knowledge of BCR)
threatened claims by or on behalf of any of the
Benefit Plans, including claims by or on behalf of
any of the Benefit Plans against any Person (other
than routine claims for benefits).
(vi) With respect to each Benefit Plan that is funded
wholly or partially through an insurance policy,
there will be no liability of Westel as of the
Closing Date, under any such insurance policy or
ancillary agreement with respect to such insurance
policy in the nature of a retroactive rate
adjustment, loss sharing arrangement or other actual
or contingent liability arising wholly or partially
out of events occurring prior to the Closing. Except
as disclosed in Schedule 3.1(k), with respect to
each Benefit Plan not funded through an insurance
policy, Westel has either fully funded such Benefit
Plan through a trust or has made appropriate
provision for Westel's liability thereunder in the
Financial Statements, except for the Permitted
Retention Bonuses and Permitted Severance
Arrangements and vacation pay and except as
disclosed in the audited financial statements of the
pension plan as at December 31, 1997.
22
(vii) The Pension Plan and all of the amendments thereto
have been accepted for registration by the
Department of National Revenue and any Governmental
Authority having jurisdiction over such Pension
Plans, except for the office of the Superintendent
of Financial Institutions, which registration has
been applied for and with respect to which the
management of Westel responsible for such
registration are not aware of any reason such
registration will not be accepted. Each Pension Plan
remains duly registered and in good standing under,
and has been administered in compliance in all
material respects with, all applicable statutory and
regulatory requirements.
(viii) With respect to each Pension Plan that is a defined
benefit plan, all contributions required to the date
hereof in order for such Pension Plans to comply
with the minimum funding standards imposed by
applicable statutory and regulatory requirements
have been made or properly accrued, and each such
Pension Plan is fully funded on both a "going
concern" and "solvency" or "termination" basis, as
determined in accordance with the actuarial
assumptions and methods used in the most recent
actuarial report filed with (and accepted for filing
by) the applicable Governmental Agencies in respect
of each such Pension Plan, except as disclosed in
the audited financial statements of the pension plan
as at December 31, 1997. All employer contributions
required to the date hereof have been made or
properly accrued. All employee contributions to the
Pension Plans to the date hereof have been properly
withheld by Westel and have been fully paid into the
funding arrangements for the respective Pension Plan
or will be paid in the normal course of business.
(ix) There has been no withdrawal by Westel of assets
from any Pension Plan and no application for
approval of a withdrawal of assets has been made to
any Governmental Authority. Any application of
surplus assets in any of the Pension Plans to offset
required employer contributions to such Pension
Plans has been permitted by law and was permitted
under the terms of the relevant Pension Plan and
associated funding agreement.
(x) BCR is not aware of any occurrence which would
result in the revocation of the registration of any
Pension Plan under the Income Tax Act, Canada and
any applicable pension legislation. BCR is not aware
of any basis on which amounts paid by Westel under
the
23
provisions of the Pension Plans would not be
deductible for income tax purposes.
(l) Assets. Westel has good title to all of its Assets, in each
case subject to no Encumbrance except:
(i) for Permitted Encumbrances; and
(ii) as is reflected in the balance sheets forming part
of the Financial Statements of Westel.
Those Assets listed in Schedule 1.1(g) which have a net book
value in excess of $100,000 as at December 31, 1997 or which
are otherwise material to the Business are accurately
described in that Schedule. The Assets constitute all of the
assets which are material to the conduct of the Business as
now conducted by Westel. Since December 31, 1997, Westel has
not transferred, assigned, sold or otherwise disposed of or
created any Encumbrance on any of the Assets other than in
the ordinary course of business and other than Permitted
Encumbrances and Permitted Transfers. Westel does not own any
fee simple absolute interest in land or real property.
(m) Tax Returns. Westel has prepared and filed all Tax Returns on
time and with all appropriate Governmental Authorities for
all fiscal periods ending prior to the date hereof except for
the income tax return with respect to the fiscal period
ending on December 31, 1997, which will be filed on or before
June 30, 1998. Each such Tax Return was correct and complete
in all material respects. True copies of all Tax Returns
prepared and filed by Westel during the past five years have
been given to the Buyer on or before the date hereof.
(n) Payment of Taxes. Westel has paid all Taxes due and payable
and has paid all assessments and reassessments it has
received in respect of Taxes. The provisions for Taxes
reflected in the Financial Statements are sufficient to cover
all liabilities for Taxes that have been assessed against
Westel or that are accruing in respect of the Business, its
operations and property during the periods covered by the
Financial Statements and all prior periods. Except to the
extent provided for in the Quarterly Financial Information,
Westel was not liable for any Taxes at the date thereof or
for the payment of any instalment in respect of Taxes due in
respect of its current taxation year and, except as
aforesaid, no such Taxes were required to be provided for.
24
(o) Reassessments. There are no reassessments of Taxes that have
been issued and are outstanding. BCR is not aware of any
pending or threatened assessment or reassessment for Taxes.
Westel has not executed or filed with any Governmental
Authority any agreement extending the period for assessment,
reassessment or collection of any Taxes. Assessments under
the Income Tax Act (Canada) and the Corporations Capital Tax
Act (British Columbia) have been made with respect to Westel
covering all past periods through the Fiscal year ended
December 31, 1996.
(p) Withholdings. Westel has withheld from each payment made to
any of its employees or former employees, officers and
directors, and to all persons who are non-residents of Canada
for the purposes of the Income Tax Act (Canada) all amounts
required by law and will continue to do so until the Closing
and has remitted or will remit, such withheld amounts within
the prescribed periods to the appropriate Governmental
Authority. Westel has or will have remitted to the proper
Governmental Authority within the time required by Applicable
Law, all Canada Pension Plan contributions, employment
insurance premiums, employers health taxes and other Taxes
payable by it in respect of its employees. Westel has charged
and collected and has remitted or will remit on a timely
basis all Taxes as required by Applicable Law on any sale,
supply or delivery whatsoever, made by Westel.
(q) Tax Status. BCR is not a nonresident of Canada, as defined in
the Income Tax Act (Canada). Westel is exempt from income tax
pursuant to section 149(l)(d) of the Income Tax Act (Canada),
which exemption shall cease to apply upon the date hereof,
after which Westel shall be subject to the provisions of
section 149(10) of the Income Tax Act (Canada). Westel is a
registrant for the purposes of the goods and services tax
provided for under the Excise Tax Act and its registration
number is 898772447RT0001.
(r) Contracts. Westel is not a party to, or bound by, any
contract, agreement or commitment of any kind which is to be
performed or as to which Westel may have any right or
obligation after the Closing Date other than
(i) those listed in Part I of Schedule 3.1(r) or
Schedule 3.1(dd);
(ii) those entered into by Westel in connection with this
Agreement and the transactions contemplated hereby;
(iii) those pursuant to which Westel is or would be
obligated to expend, or entitled to receive, less
than $50,000 in any 12-month period; and
25
(iv) those contracts which cannot be disclosed to the
Buyer before the Time of Closing because of
confidentiality obligations but, except as indicated
in Part II of Schedule 3.1(r),
(A) contain any minimum commitments on the part
of Westel which are for more than 1/3 of
Westel's normal expected volume
requirements for products or services of
the nature covered by the contracts; or
(B) require that Westel deal with the other
party on an exclusive basis; or
(C) contain any shortfall charge or other
penalty for the failure to use the services
of the other party to such contract; or
(D) none of which in the opinion of BCR, acting
reasonably, is onerous or outside the
ordinary course of the Business.
All contracts to which Westel is a party are in full force
and effect, except for such contracts the invalidity or
unenforceability of which alone or in the aggregate would not
be reasonably likely to have a Material Adverse Effect. There
is not any pending or, to the knowledge of BCR, threatened
cancellation, existing default, or event under any such
contract which, after notice or lapse of time, or both, would
constitute a default, except for such pending or threatened
cancellations, existing defaults or events which, alone or in
the aggregate, would not be reasonably likely to have a
Material Adverse Effect. Except for the contracts referred to
in subparagraph (iv) above, Schedule 3.1(r) specifically
identifies all contracts and agreements containing
confidentiality provisions which could prohibit or restrict
disclosure of information to the Buyer.
(s) Licences. Westel owns, possesses. or has obtained and is in
compliance with, all material governmental licences, permits,
certificates, consents, orders, grants and other
authorizations necessary to conduct its business as now
conducted.
(t) Environmental Matters. Except as disclosed in Schedule
3.1(t), Westel: (i) is in compliance in all material respects
with applicable Environmental Laws and the Environmental
Permits; (ii) has not received any written notices from any
Governmental Authority having jurisdiction alleging the
violation of, or any claim or liability under any applicable
Environmental Law; (iii) is
26
not the subject of any Order arising under any Environmental
Law, and (iv) has obtained all Environmental Permits which
are required in order to carry on the Business and operations
as presently conducted under all applicable Environmental
Laws, where non-compliance or failure to obtain the same
would have individually or in the aggregate a material
adverse effect. Neither BCR nor Westel has at any time given
any written undertakings with respect to remedying any breach
of Environmental Laws which have not been duly performed in
accordance with the terms of such undertakings. BCR is not
aware of any situation in which any of the Assets has been
used as or is a landfill, waste disposal site or contaminated
site under the Waste Management Act (British Columbia).
Westel has provided all reports and information to the
appropriate Governmental Authority as required by such
Governmental Authority pursuant to all applicable
Environmental Laws except where a failure to do so is not
expected to give rise to Material liabilities. Copies of such
reports and the Environmental Compliance Reviews in the
possession of Westel are set out in Schedule 3.1(t) and BCR
is not aware of the existence of any others. Except in
compliance with Environmental Laws and except as disclosed in
the Environmental Compliance Reviews, Westel has not caused
or permitted, and BCR has no knowledge of, any Release or
Disposal of any Hazardous Substance on or from any premises
owned or occupied by Westel or of any Release or Disposal of
any Hazardous Substance from a facility owned or operated by
Westel or any Affiliate of or tenant from Westel for which
Westel may have liability except as disclosed in Schedule
3.1(t). All Hazardous Substances generated, handled, stored,
treated, processed, transported or disposed of by or (to its
knowledge) on behalf of Westel have been generated, handled,
stored, treated, processed, transported or disposed of in all
material respects, in compliance with applicable
Environmental Laws and the Environmental Permits.
(u) Brokers and Finders. Other than Xxxxxxx Xxxxx, BCR and Westel
have not employed any broker, finder, consultant or
intermediary in connection with the transactions contemplated
by this Agreement who would be entitled to a broker's,
finder's or similar fee or commission in connection therewith
or upon the consummation thereof, or if the Closing does not
occur.
(v) Books and Records. The corporate records and minute books of
Westel are maintained in all material respects in accordance
with Applicable Law.
27
(w) Absence of Guarantees. Westel has not given nor agreed to
give, and is not a party to or bound by, any guarantee of
indebtedness or other obligations of BCR, any Affiliate or
other third parties nor any other commitment by which Westel
is, or is contingently, responsible for such indebtedness or
other obligations.
(x) Restrictions on Business. Westel is not a party to any
agreement, lease, mortgage, security document, obligation or
negotiable instrument, or subject to any restriction in the
memorandum or its articles or its directors' or shareholders'
resolutions or subject to any restriction imposed by any
Governmental Authority which could materially restrict or
interfere with the conduct of the Business as currently
carried on or the use of the Assets by Westel as currently
used, other than restrictions of general application to the
Business, including general restrictions under the
Telecommunications Act (Canada) and restrictions pursuant to
licenses of occupation relating to lands held by the Crown.
(y) Condition of Assets. All tangible Assets having a book value
in excess of $100,000 or which are otherwise material to the
Business, are in working condition, have been properly
maintained in the ordinary course of business and are
suitable for the operation of the Business as now operated by
Westel.
(z) Insurance. Westel is insured by reputable insurers against
liability, loss and damage in such amounts and against such
risks as are customarily carried and insured against by
owners of comparable businesses, properties and assets, and
such insurance coverage will be continued in full force and
effect to but not including the Closing Date. Schedule 3.1(z)
is a true and complete list of all insurance policies
(specifying the amount of coverage, the type of insurance and
any pending claims thereunder) maintained by Westel in
respect of the Assets and the Business as of the date hereof.
Westel is not in default with respect to any of the
provisions contained in any such insurance policy. For any
current claim that has not been settled or finally
determined, Westel has not failed to give any notice or
present any claim under any such insurance policy in a due
and timely fashion such that the insurer would be entitled to
terminate coverage or deny liability on any such claim. All
such policies of insurance are in full force and effect and
Westel is not in default, whether as to the payment of
premium or otherwise, under the terms of any such policy. The
Buyer acknowledges that to the extent that this insurance is
with BCR Captive Insurance Co. Ltd., it will cease at the
Time of Closing. Except as disclosed in Schedule 3.1(z), BCR,
having made inquiry of its
28
manager of risk management and insurance, is not aware of any
events or occurrences which could reasonably form the basis
for a claim under Westel's policies of insurance.
(aa) Intellectual Property Rights. Schedule 3.1(aa) sets forth a
true and complete list of all trade marks which are all trade
marks owned by or licensed to Westel and used in the
Business. The Intellectual Property Rights are owned by
Westel or validly licensed to it. All registrations and
filings necessary to preserve the rights of Westel in and to
the Intellectual Property Rights in Canada have been made.
Except as described in Schedule 3.1(aa) BCR is not aware of
any infringement of, passing-off related to, or other
interference with the Intellectual Property Rights by third
parties or any claim by any Person that any of the
Intellectual Property Rights are, or may be, invalid or
unenforceable or that the Intellectual Property Rights
infringe or are alleged to infringe the intellectual property
rights of any other Person. Westel is not a party to any
claim, or, to BCR's knowledge, subject to any liability,
contingent or otherwise, for trademark, trade name,
industrial design, patent or copyright infringements as to
any products manufactured, produced, used or sold by Westel,
either as plaintiffs or as defendant or any other claims or
liability relating to trademarks, trade names, industrial
designs, patents or copyrights owned or licensed by Westel.
(bb) Occupational Health and Safety. BCR has provided the Buyer
with all inspection reports under all applicable occupational
health and safety laws and there are no outstanding
inspection orders or charges made under such laws. The
Business complies with all occupational health and safety
rules and regulations in all material respects and to the
knowledge of BCR, there are no outstanding violations of such
rules and regulations.
(cc) Workers' Compensation. There are no notices of reassessment
or penalty assessment (collectively, "Assessments") or any
other communications related thereto which Westel has
received from any workers' compensation board or similar
authorities in any jurisdictions where the Business is
carried on and there are no assessments which are unpaid on
the date hereof.
(dd) Leases. Part I of Schedule 3.1(dd) sets forth a true and
complete list of the Leases. Except as disclosed in such
Schedule:
(i) Each of the Leases is unamended (except for
amendments made in the ordinary course of Business)
and is in full force and effect.
29
(ii) All payments required to be paid by Westel pursuant
to the Leases have been paid when due and Westel is
not otherwise in material default in meeting its
obligations under any of the Leases.
(iii) No material default exists under, and no event
exists which, but for the passing of time or the
giving of notice, or both, would constitute a
material default, on the part of Westel, or, to the
knowledge of BCR, on the part of any of the other
parties to any of the Leases.
Part II of Schedule 3.1(dd) sets forth a true and
complete list of the Expired Leases. BCR has no
reason to believe that (i) its occupation of any
premises under the Expired Leases will be
terminated; and (ii) the Expired Leases will not be
renewed by the Lessor on normal commercial terms in
the course of usual practices of the lessor or other
party to the Expired Leases.
(ee) No Expropriation. Westel has not received any notice of
expropriation of all or any of the Assets and BCR is not
aware of any expropriation proceeding pending or threatened
against or affecting the Assets nor of any discussions or
negotiations which could lead to any such expropriation.
(ff) Major Suppliers and Customers. BCR has disclosed to the Buyer
on Schedule 3.1(ff), a list of Westel's top 10 customers by
value and Westel's top 10 suppliers by value, for the 31 day
period ending May 31, 1998. To the knowledge of BCR, there is
no Material dispute between Westel and any such supplier or
customer. Westel is not aware of any intention of any such
supplier or customer to change any Material terms upon which
it will conduct business with Westel.
(gg) Year 2000. Schedule 3.1(gg) describes Westel's Millennium
Compliant programme. Except as provided in Schedule 3.1(gg),
all costs known to BCR in carrying out such programme have
been estimated by Westel and included in its budgets, copies
of which have been provided to the Buyer. BCR is not aware of
any Millennium Compliant issues under Westel's control other
than those identified in Schedule 3.1(gg) and it is not aware
of any fact or circumstance which would prevent such
programme from making the software under Westel's control
Millennium Compliant by December 31, 1999. For the purpose of
this paragraph "Millennium Compliant" means the ability of
software to deal with all date information whether before,
during or after January 1, 2000 including, but not limited
to, accepting date input, providing accurate date output and
performing accurate calculations
30
involving dates or portions of dates with the same degree of
accuracy as it could before January 1, 2000.
(hh) Credit Facilities. The only credit facilities or similar
arrangements with any lender to which Westel is a party are
as described in Schedule 1.1(ss) and except as disclosed in
that Schedule there are no obligations of Westel which are
guaranteed by BCR.
(ii) Copies of Documents etc. True and complete copies of the
documents and agreements listed in the Schedules hereto which
are in writing, have been made available to the Buyer or its
solicitors for review.
(jj) Pension Plan Administration. BCR has no reason to believe
that Xxxx X. Xxxx, Superannuation Commissioner for the
Province of British Columbia, as administrator of the Westel
pension plan will not act as indicated in the letter from
such administrator attached hereto in Schedule 3.1(k).
(kk) Vacation Pay. As at December 31, 1997, the only outstanding
vacation entitlement for employees of Westel related to 1997
vacations. One of Westel's published employment policies
provides that vacation entitlement can only be carried
forward
(i) for one year; and
(ii) with the concurrence of the company
and expires if not used in that carry forward period.
3.2 No Other Presentations or Warranties. Except for the representations and
warranties contained in this Article III, neither BCR, Westel nor any other
Person makes any other express or implied representation or warranty on behalf
of BCR or Westel.
3.3 Survival of Representations and Warranties. All representations and
warranties made by BCR in this Agreement shall survive the Closing for a period
of 2 years after the Closing Date except for:
(a) the representations and warranties set forth in Sections
3.1(a) and (b) and the first three sentences of Section
3.1(c), which shall survive without time limit;
(b) the representation is and warranties set forth in Section
3.1(t) which shall survive for a period of 5 years after the
Closing Date; and
31
(c) the representations and warranties set forth in Sections
3.1(m), 3.1(n) and 3.1(o) which shall survive until the
expiry of the last day upon which any Governmental Authority
may, (in the absence of fraud or any misrepresentation that
is attributable to neglect, carelessness or wilful default,
in which case the representation shall survive without time
limit), issue an assessment for Taxes owing by Westel in
respect of a period ending on or prior to the Time of
Closing.
After the expiration of such time periods, BCR shall have no further liability
hereunder with respect to such representations and warranties except (i) with
respect to claims properly made within such time periods and (ii) for claims
based on fraud.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Representations and Warranties of Buyer. Buyer represents and warrants to
BCR as of the date hereof and as of the Closing Date (except that
representations and warranties that are made as of a specific date need be true
only as of such date) as follows:
(a) Incorporation and Qualification. Buyer is a corporation duly
incorporated, organized and is validly subsisting under the
laws of Canada.
(b) Authority; Filings, Consents and Approvals. Buyer has the
corporate power and authority to enter into this Agreement
and, subject to the receipt of the approvals, consents and
authorizations contemplated in this Agreement, to carry out
the transactions contemplated hereby. This Agreement has been
duly authorized, executed and delivered by Buyer and
constitutes a legal, valid and binding obligation of Buyer,
enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity
principles, and no other proceedings on the part of Buyer are
necessary to authorize this Agreement and the consummation of
the transactions contemplated hereby.
Except as set forth in Schedule 4.1(b) or as required by the
Competition Act or the filing of appropriate notices with the
relevant share exchanges, material change reports and press
releases, the execution, delivery and performance of this
Agreement will not require Buyer or any of its subsidiaries
to obtain any consent, waiver, authorization or approval of,
or make any filing with or give notice to, any Person, except
for such consents, waivers, authorizations or approvals which
the failure to obtain would not be reasonably likely to
32
prohibit or materially delay Buyer's ability to perform its
obligations under this Agreement.
(c) No Conflict. Subject to the receipt of the governmental and
regulatory approvals referred to in this Agreement, the
execution and delivery of this Agreement by Buyer does not,
and the performance of this Agreement by Buyer and the
consummation by it of the transactions contemplated by this
Agreement shall not:
(i) conflict with or violate the articles or by-laws of
the Buyer;
(ii) conflict with or violate any law, rule, regulation,
permit, order, judgment or decree applicable to
Buyer or by which its properties are bound or
affected, the conflict with which or violation of
which would prohibit or materially delay Buyer's
ability to perform its obligations under this
Agreement; or
(iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both
would become a default) under, or give to others any
rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an
Encumbrance on any of the Assets of Buyer or its
subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation
to which Buyer is a party or by which Buyer or any
of its properties is bound or affected, which, in
any such case, would prohibit or materially delay
Buyer's ability to perform its obligations under
this Agreement.
(d) Brokers and Finders. Buyer has not employed any broker,
finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement who would be
entitled to a broker's, finder's or similar fee or commission
in connection therewith or upon the consummation thereof, or
if the Closing does not occur.
(e) Financial Capability. On the Closing Date, Buyer will have
sufficient funds to purchase the Shares on the terms and
conditions contemplated by this Agreement.
(f) Securities Act. Buyer is acquiring the Shares solely for the
purpose of investment and not with a view to, or for sale in
connection with, any distribution thereof in violation of the
Securities Act. Buyer acknowledges
33
that the Shares are not registered under the Securities Act
or any other applicable securities law, and that such Shares
may not be transferred or sold except pursuant to the
registration provisions of such Securities Act or pursuant to
an applicable exemption therefrom and pursuant to other
applicable securities laws and regulations as applicable.
4.2 No Other Representations or Warranties. Except for the representations and
warranties contained in this Article IV, neither Buyer nor any other Person
makes any other express or implied representation or warranty on behalf of
Buyer.
4.3 Survival of Representations and Warranties. All representations and
warranties made by the Buyer in this Agreement shall survive the Closing for a
period of 2 years after the Closing Date. After the expiration of such time
period, the Buyer shall have no further liability hereunder with respect to
such representations and warranties except (i) with respect to claims properly
made within such time periods and (ii) for claims based on fraud.
ARTICLE V
COVENANTS AND AGREEMENTS OF BCR AND BUYER
5.1 Access and Information.
(a) BCR shall permit Buyer and its representatives after the date
of execution of this Agreement to have reasonable access,
during regular business hours and upon reasonable advance
notice, to the Assets owned or leased by Westel and to the
officers of Westel, subject to BCR's reasonable rules and
regulations, and shall furnish, or cause to be furnished, to
Buyer any financial and operating data or other information
that is available with respect to the Business and Assets of
Westel in order to permit Buyer to complete its due diligence
or as Buyer shall from time to time otherwise reasonably
request, provided that the foregoing shall not require BCR to
permit any inspection, or to disclose any information, that
in its reasonable judgment would result in the disclosure of
any trade secrets of third parties or violate any of BCR's or
Westel's obligations with respect to confidentiality if BCR
shall have used its reasonable best efforts to obtain the
consent of any such third party to such inspection or
disclosure. The Buyer shall also have right to meet with
groups of employees of Westel or otherwise provide to
employees of Westel information regarding the Buyer and its
Affiliates, on reasonable prior notice to BCR in order to
provide information to such employees about the Buyer and its
plans for Westel and the Business including the Buyer meeting
with the members of the Westel management team prior to the
Closing Date for
34
the purposes of discussing continued employment terms with
Westel. In the event of the termination of this Agreement,
the Buyer hereby covenants that it shall not, nor shall it
cause its Affiliates not to for one year thereafter, directly
or indirectly, induce any individual who to its knowledge is
then employed on a full time or substantially full time basis
in the Business by Westel, to leave the employ of Westel,
without the prior written consent of Westel, provided however
that this covenant shall not apply to advertisements or
solicitations made generally to the public.
(b) In the event of the termination of this Agreement, Buyer at
its own expense shall promptly deliver (without retaining any
copies thereof) to BCR, or (at BCR's option) confirm in
writing to BCR that it has destroyed all information
furnished to Buyer, any of its Affiliates or its
representatives by BCR, Westel or any of their respective
agents, employees or representatives as a result hereof or in
connection herewith, whether so furnished before or after the
execution hereof. Buyer shall destroy all analyses,
compilations, forecasts, studies or other documents prepared
by Buyer or its representatives which contain or reflect any
such information. Buyer shall at all times prior to the
Closing Date, and in the event of termination of this
Agreement, cause any information so obtained to be kept
confidential and will not use, or permit the use of, such
information in its business or in any other manner or for any
other purpose except as contemplated hereby.
(c) In the event of the termination of this Agreement, all
information provided or obtained pursuant to clause (a) above
shall be held by Buyer in accordance with and subject to the
terms of the confidentiality agreement, dated February 28,
1998, between Buyer and BCR (the "Confidentiality
Agreement").
5.2 Registrations, Filings and Consents; Proceedings.
(a) BCR and Buyer will cooperate and use their respective
reasonable best efforts to fulfill the conditions precedent
to the other party's obligations hereunder, including but not
limited to, securing as promptly as practicable all consents,
approvals, waivers and authorizations required, necessary or
desirable in connection with the transactions contemplated
hereby. Buyer and BCR will promptly file documentary
materials required by the Competition Act, Environmental Laws
and each of the other items listed in Section 3.1(c) and
Section 4.1(b) and promptly file any additional information
requested as soon as practicable after receipt of request
therefor; provided that each party shall duly
file with the Director the notification and
35
report form (the "Report") required under the Competition Act
with respect to the sale and purchase of the Shares no later
than three Business Days after the date hereof. Buyer
acknowledges that BCR's ability to assist with filings may be
constrained by confidentiality obligations BCR has to certain
third parties.
(b) Each of Buyer and BCR shall vigorously defend or cause to be
defended any lawsuits or other legal proceedings brought
against it or any Affiliate thereof challenging this
Agreement or the completion of the transactions contemplated
by this Agreement. Neither Buyer nor BCR shall settle or
compromise any claim brought by their respective present,
former or purported holders of any of their securities in
connection with the transactions contemplated by this
Agreement prior to the Closing Date without the prior written
consent of the other party.
5.3 Operation of Business. During the period commencing on the date hereof and
continuing until the Closing Date, unless Buyer shall otherwise agree in
writing (such agreement not to be unreasonably withheld) or as otherwise
expressly contemplated or permitted by this Agreement, BCR will cause Westel:
(a) to carry on its business in the ordinary course and use its
reasonable best efforts to preserve intact its business,
organization, employees, customers, suppliers and goodwill;
(b) not to subdivide, consolidate, redeem, purchase or otherwise
acquire or reclassify any of its outstanding shares of any
class, declare any dividends on or make other distributions
(whether in cash, securities or property or any combination
thereof) in respect of its shares of any class;
(c) not to amend its memorandum or articles or similar o
rganizational documents;
(d) not to issue, authorize or propose or commit to the issuance
of (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or
otherwise), or, directly or indirectly, through an Affiliate
or otherwise, purchase or propose the purchase of, any shares
in its capital of any class or securities convertible into or
exchangeable for, or rights, warrants or options to acquire,
any such shares or other convertible or exchangeable
securities;
(e) not to commit to or merge or consolidate with or into any
other Person;
36
(f) not to sell, lease, transfer or otherwise dispose of or
create or suffer to exist any Encumbrance on any of its
Assets except in the ordinary course of business and except
for Permitted Transfers and Permitted Encumbrances;
(g) except for Permitted Capital Expenditures, not to:
(i) incur indebtedness for money borrowed or assume,
guarantee, endorse or otherwise become liable or
responsible for the obligations of any other Person
in excess of such amount, or issue or sell any debt
securities;
(ii) make any new capital expenditures in excess of
$100,000 in the aggregate;
(iii) enter into a contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(h) not to grant to any employee of Westel any increase in
compensation or in severance or termination pay, or enter
into new or amend existing agreements respecting employment
(including benefits) with any employee of Westel, except as
may be required under employment or termination agreements in
effect on the date hereof including the Permitted Retention
Bonuses and the Permitted Severance Arrangements or as may be
required by law or in a manner consistent with past
practices;
(i) not to enter into any transaction or perform any act which
might interfere or be inconsistent with the successful
completion of the transactions contemplated by this Agreement
or which would render inaccurate any of the representations
and warranties set forth herein;
(j) to use its reasonable best efforts to renew each of the
Expired Leases on normal commercial terms and to assign or
transfer leases in BCR's name to Westel; and
(k) to use its reasonable efforts to complete the registration of
its Pension Plan as contemplated by Section 3.1(k)(ii).
5.4 Retention of Books and Records. Buyer shall cause Westel to retain, until
all applicable tax statutes of limitations (including periods of waiver) have
expired, all books, records and other documents pertaining to Westel in
existence on the Closing Date that are required to be retained under current
retention policies and to make the same available after
37
the Closing Date for inspection and copying by BCR or its agents at BCR's
expense, during regular business hours and upon reasonable request and upon
reasonable advance notice in connection with any Taxes or Tax Returns of BCR.
After the expiration of such period, no such books and records shall be
destroyed by Buyer without first advising BCR in writing detailing the contents
thereof and giving BCR at least 120 days to obtain possession thereof. Buyer
shall keep such records strictly confidential and use them only for tax and
accounting purposes.
5.5 Closing Date Financial Information. For a period of one year from and after
the Closing Date, to the extent reasonably necessary for BCR or its Continuing
Affiliates to prepare consolidated financial statements or any governmental
permits, licenses or required filings and to comply with reporting obligations
in respect thereof, upon the written request of BCR, Westel will provide, and
Buyer shall use its reasonable best efforts to cause Westel to provide, to BCR
and its accountants within 20 Business Days of such request such computer
support, access to employees and Buyer's accountants and financial information
of Westel as of the Closing Date as BCR may reasonably request in the format
customarily required by BCR or its Affiliates and, upon BCR's request, it will
be accompanied by supplemental financial schedules customarily required by BCR
or its Affiliates in support of such financial information. BCR shall keep such
records strictly confidential and use them only for accounting and tax
purposes.
5.6 Telecommunications Services Agreement. BCR shall cause BC Rail to enter
into, and the parties hereto shall cause Westel to enter into, the
Telecommunications Services Agreement.
5.7 Non-Competition Agreement. The Buyer, Westel and BCR shall each execute and
deliver the Non-Competition Agreement at the Closing Time.
5.8 Capitalization of Inter-corporate Debt. Immediately prior to the Closing
Time, BCR shall subscribe for such number of common shares of Westel at $1.00
per share as is equal to the amount of the Inter-corporate Debt and shall pay
such subscription price to Westel. BCR shall cause Westel to use the
subscription price to repay to BCR, the amount of the Intercorporate Debt at
the Closing Time.
5.9 Further Assurances. Each party shall do such acts and shall execute such
further documents, conveyances, deeds, assignments, transfers and the like, and
will cause the doing of such acts and will cause the execution of such further
documents as are within its power as any other party may in writing at any time
and from time to time reasonably request be done and or executed, in order to
give full effect to the provisions of this Agreement and the transactions
contemplated hereby.
38
5.10 Continue Insurance. Up to the Time of Closing, BCR shall cause Westel to
continue in force and good standing all policies of insurance maintained by
Westel and shall present all claims under such policies in a due and timely
manner. The Buyer acknowledges that to the extent placed with BCR Captive
Insurance Co. Ltd., such insurance cannot be continued thereafter. BCR shall
cooperate with the Buyer and shall provide any necessary information to the
Buyer so that the Buyer may arrange for insurance on the Assets and the
Business which is normal and prudent for a business of the type owned and
operated by Westel.
5.11 Comply with Laws. BCR shall cause Westel to comply with all Applicable
Laws affecting Westel which are material to the operation of the Business.
5.12 Brokerage Fees. BCR shall pay all fees and expenses of Xxxxxxx Xxxxx
payable in connection with this Agreement and the transactions contemplated
hereby.
5.13 Disclosure of Breaches. No party hereto shall be deemed to have breached
any representation, warranty, covenant or agreement in this Agreement, if (i)
such party shall have notified the other parties hereto in writing, on or prior
to the Closing Date, of the breach of, or inaccuracy in, or of any facts or
circumstances constituting or resulting in the breach of or inaccuracy in, such
representation, warranty, covenant or agreement, specifically referring to the
provisions of this Agreement so breached or rendered inaccurate, and (ii) the
other party has permitted the Closing to occur and, for purposes of this
Agreement, is thereby deemed to have waived such breach or inaccuracy;
provided, however, that a disclosure pursuant to this Section 5.13 shall not
prejudice the rights of the parties pursuant to Article VI hereof not to
consummate the transactions contemplated by this Agreement.
5.14 Pension Plan. BCR shall cooperate with the Buyer so that (i) the
administrator and trustee of the Pension Plan is changed to an administrator
and trustee selected by the Buyer and (ii) the investments of the Pension Plan
ire reinvested in investments selected by the administrator appointed by the
Buyer. The Buyer shall use its reasonable best efforts to effect such changes
as soon as practicable after the Closing.
5.15 Value Allocation Schedule. The parties agree that the aggregate value of
the Current Assets as set forth in the Value Allocation Schedule is the fair
market value of such Assets on the date hereof and that the allocation of such
value among classes of assets as set out therein represents an appropriate
allocation of such value.
5.16 Transfer of Telecommunication Assets. BCR acknowledges that the Buyer will
enter into an asset purchase agreement with the Canadian Carrier that will
contain representations, warranties, covenants and indemnities with respect to
the Telecommunication Assets (collectively "Telecommunication Warranties")
which are
39
substantially to the same effect as the representations, warranties, covenants
and indemnities given by BCR to the Buyer with respect to the Assets and the
Business and that the giving of such representations, warranties, covenants and
indemnities by the Buyer will be made in reliance on the representations,
warranties, covenants and indemnities given by BCR to the Buyer in this
Agreement. The Buyer may claim against BCR under Article VI for any Loss
suffered or incurred by the Buyer as a result of any claim made by the Canadian
Carrier against the Buyer for any breach of the Telecommunication Warranties
which are result from or relate to any breach by BCR of the representations,
warranties, covenants and indemnities given by BCR to the Buyer in this
Agreement.
5.17 Permitted Transfers. At or before the Time of Closing, BCR may cause
Westel to transfer to BC Rail the Assets listed in Schedule 3.1(d)(v)(A)
provided that such sale shall take place in accordance with the following
terms:
(a) The price for the Assets transferred shall be an amount equal
to the net book value thereof.
(b) The price shall be paid by BCR to Westel by a reduction in
the Inter-corporate Debt.
(c) With respect to those assets described in Part I of Schedule
3.1(d)(v)(A), Westel and BC Rail shall provide in the Telecom
Services Agreement that Westel shall have unrestricted access
to and the right to use the transferred assets free of charge
for the remainder of their useful life without cost to
Westel.
5.18 Permitted Retention Bonuses and Permitted Severance Arrangements. BCR
shall reimburse Westel for all Permitted Retention Bonuses which become payable
to employees of Westel as a result of the Closing and shall indemnify Westel
and save it fully harmless from and against any such liabilities. BCR shall not
be liable to pay any amounts owing under the Permitted Severance Arrangements,
or any other severance arrangements or termination obligations, liabilities,
damages or costs of any kind whatsoever applicable to the employees of Westel
which may arise out of the transactions contemplated herein, whether occurring
before or after the Closing Date, all of which shall continue to be the
responsibility of Westel.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions for the Benefit of Buyer. The obligation of Buyer to consummate
the transactions contemplated by this Agreement shall be subject to the
satisfaction or waiver
40
by Buyer in writing on or prior to the Closing Date of each of the following
conditions, all of which are for its exclusive benefit:
(a) Representations and Warranties. Each of the representations
and warranties of BCR contained in this Agreement which
refers to a Material Adverse Effect or otherwise makes
reference to a concept of materiality shall be true when made
and as of the Closing Date, and each of the other
representations and warranties of BCR contained in this
Agreement shall be true in all material respects when made
and as of the Closing Date, with the same effect as though
such representations and warranties had been made on and as
of the Closing Date (except (i) representations and
warranties that are made as of a specific date need be true,
or true in all material respects, as the case may be, only as
of such date and (ii) as expressly permitted by this
Agreement to change between the date of this Agreement and
the Closing Date); each of the covenants and agreements of
BCR to be performed on or prior to the Closing Date shall
have been duly performed in all material respects; and Buyer
shall have received at the Closing certificates to that
effect dated as of the Closing Date and executed on behalf of
BCR by its President or any of its Vice Presidents and its
Secretary or any of its Assistant Secretaries.
(b) Opinion of BCR's Counsel. Buyer shall have received from BCR
an opinion of Xxxxxx Xxxxx, counsel to BCR, dated as of the
Closing Date, acceptable to the Buyer and its counsel, acting
reasonably.
(c) Consents, Authorizations and Representations. Subject to
Section 6.3 hereof, all consents, approvals, orders and
authorizations of any Person or Governmental Authorities (or
registrations, declarations, filings or recordings with any
of them), required for the Closing (other than routine
post-closing notifications or filings), shall have been
obtained or made on or before the Closing, including the
consents and approvals set forth in Schedules 3.1(c) and
4.1(b).
(d) No Material Adverse Change. No material adverse change shall
have occurred since the date hereof with respect to the
Condition of the Business and the Buyer shall have received
immediately prior to Closing a certificate from a senior
officer of BCR certifying, to the best of that officer's
knowledge, information and belief (after due enquiry) that
the condition in this Section has been satisfied.
41
(e) Litigation. No order or judgment shall have been made that
prohibits or restricts the Closing. None of the parties
(including the Buyer or Westel), nor any of their respective
directors, officers, employees or agents, shall be a
defendant or third party to or threatened with any litigation
or proceedings before any Court or Governmental Authority
which, in the opinion of the Buyer, acting reasonably, could
prevent or restrict that party from performing any of its
obligations in any Closing Document.
(f) Receipt of Closing Documentation.. All documentation relating
to the sale and purchase of the Shares including all closing
documents relating to the due authorization and completion of
such sale and purchase and all actions and proceedings taken
on or prior to the Closing in connection with the performance
by BCR of its obligations under this Agreement shall be
satisfactory to the Buyer and its counsel, acting reasonably.
The Buyer shall have received copies of the closing documents
and 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 form (as to
certification and otherwise) and substance satisfactory to
the Buyer and its counsel.
(g) Directors of Company. At the Closing Time, all directors of
Westel and the BCR officers as listed in Schedule 6.1(g)
hereto shall submit:
(i) a resignation from all positions with Westel, and
(ii) a release of all claims against Westel up to the
Closing Time except for (i) current unpaid
remuneration and advances made to Westel and (ii)
any matters for which such director is entitled to
indemnity under the by-laws of Westel and any
insurance related thereto.
(h) Non-Competition Agreement. BCR shall have executed and
delivered to the Buyer and Westel a Non-Competition Agreement
in the form of Schedule 6.1(h).
(i) Competition Act Approval. The Competition Act Approval shall
have been obtained.
(j) Telecommunications Services Agreement. Westel and BCR
Partnership shall have entered into the Telecommunications
Services Agreement.
42
(k) Permitted Transfers Any transfer of assets pursuant to
Section 5.17 shall be completed to the satisfaction of the
Buyer, acting reasonably.
6.2 Conditions for the Benefit of BCR. The obligation of BCR to consummate the
transactions contemplated by this Agreement shill be subject to the
satisfaction or waiver by BCR in writing on or prior to the Closing Date of
each of the following conditions all of which are for its exclusive benefit:
(a) Representations and Warranties. Each of the representations
and warranties of Buyer contained in this Agreement qualified
by a concept of materiality shall be true when made and as of
the Closing Date, and each of the other representations and
warranties of Buyer contained in this Agreement shall be true
in all material respects when made and as of the Closing
Date, with the same effect as though such representations and
warranties had been made on and as of the Closing Date
(except (i) representations and warranties that are made as
of a specific date need be true, or true in all material
respects, as the case may be, only as of such date and (ii)
as expressly permitted by this Agreement to change between
the date of this Agreement and the Closing Date); each of the
covenants and agreements of Buyer to be performed on or prior
to the Closing Date shall have been duly performed in all
material respects; and BCR shall have received at the Closing
certificates to that effect dated as of the Closing Date and
executed on behalf of Buyer by its President or any of its
Vice Presidents and its Secretary or any of its Assistant
Secretaries.
(b) Opinion of Buyer's Consel. BCR shall have received from
Fasken Xxxxxxxx Xxxxxxx, as counsel for Buyer, an opinion,
dated as of the Closing Date, acceptable to BCR and its
counsel, acting reasonably.
(c) Telecommunications Services Agreement. Westel and BCR
Partnership shall have entered into the Telecommunications
Services Agreement.
(d) Receipt of Closing Documentation. Buyer shall deliver all
documents reasonably requested by BCR or its counsel and
shall take all actions reasonably necessary to complete the
transactions contemplated by this Agreement.
(e) Litigation. No order shall have been made that prohibits or
restricts the Closing. None of the parties (including BCR or
Westel), nor any of their respective directors, officers,
employees or agents, shall be a defendant or third party to
or threatened with any litigation or proceedings before any
43
court or Governmental Authority which, in the opinion of BCR,
acting reasonably, could prevent or restrict that party from
performing any of its obligations in this Agreement or any
closing document.
(f) Consents, Authorizations and Registrations. All consents,
approvals, orders and authorizations of any Person or
Governmental Authorities (or registrations, declarations,
filings or recordings with any of them), required for the
Closing (other than routine post-closing notifications or
filings), shall have been obtained or made on or before the
Closing, Including the consents and approvals set forth in
Schedule 3.1(c).
(g) Release of Guarantee. BCR and its Affiliates shall have been
released from all obligations under any guarantees of the
debts or other obligations of Westel listed on Schedule
3.1(hh).
(h) Permitted Transfers. Any transfer of assets pursuant to
Section 5.17 shall be completed to the satisfaction of BCR,
acting reasonably.
6.3 Termination if Conditions Not Met. If the conditions set out in this
Article VI are not satisfied or waived on or before August 31, 1998 or such
later date as the parties hereto agree to in writing, this Agreement may be
terminated by either party by notice in writing to the other. In the event of a
termination of this Agreement pursuant to this paragraph 6.3, the obligations
of BCR and Buyer under this Agreement shall be at an end except for the
obligations contained in the Confidentiality Agreement, provided that either
BCR or Buyer may also bring an action against the other for damages suffered
where the non-performance or non-fulfillment of the relevant condition is as
result of a breach of covenant, representation or warranty contained in this
Agreement by the other.
ARTICLE VII
INDEMNIFICATION
7.1 Definitions. As used in this Article 7:
"Claim" means any demand, action, suit, proceeding, claim,
assessment, judgment or settlement or compromise relating
thereto which may give rise to a right to indemnification
under Sections 7.2 or 7.3;
"Direct Claim" means any Claim by an Indemnified party
against an Indemnifier which does not result from a Third
party Claim;
44
"Indemnifier" means any party obligated to provide
indemnification under this Agreement;
"Indemnified Party" means any Person entitled to
indemnification under this Agreement;
"Indemnity Payment" means any amount of Loss required to be
paid pursuant to Sections 7.2 or 7.3;
"Loss" means any and all loss, liability, damage, cost or
expense actually suffered or incurred by a party resulting
from the subject matter of any Claim, including the costs and
expenses of any action, suit, proceeding, demand, assessment,
judgment, settlement or compromise relating thereto, less the
amount of any judgment awarded as a result of any
counterclaim or set-off relating to that Claim;
"Representative" means each director, officer, employee,
agent, solicitor, accountant, professional advisor and other
representative of an Indemnified party and in the case of the
Buyer includes each director, officer, employee, agent,
solicitor, accountant, professional advisor and other
representative of Westel;
"Third Party Claim" means any Claim asserted against an
Indemnified Party by any Person who is not a party or an
affiliate of such a party;
7.2 Indemnification by BCR. BCR shall indemnify and save harmless the Buyer and
each of its Representatives from and against any and all Loss suffered or
incurred by them, as a result of:
(a) subject to Sections 3.3 and 5.13 and the limits set forth in
Section 7.11, any misrepresentation or breach of warranty
made or given by BCR in this Agreement;
(b) any failure by BCR to observe or perform any covenant or
obligation contained in this Agreement to be observed or
performed by it;
(c) any of the claims, actions, proceedings, suits, or other
matters listed on Schedule 3.1(i).
45
In addition, BCR shall indemnify and save harmless the Buyer and each of its
Representatives from and against any and all Loss suffered or incurred by them,
as a result of any Taxes required to be paid by Westel relating to any period
ending on or before the Closing Date, in excess of the Taxes accrued as a
liability on the Financial Statements or included in the calculation of Closing
Working Capital.
7.3 Indemnification by the Buyer. The Buyer shall indemnify, defend and save
harmless BCR and each of its Representatives from and against any and all Loss
suffered or incurred by them, as a result of:
(a) subject to Sections 4.3 and 5.13 and the limits set forth in
Section 7.11, any misrepresentation or breach of any warranty
made or given by the Buyer in this Agreement; and
(b) any failure by the Buyer to observe or perform any covenant
or obligation contained in this Agreement to be observed or
performed by it.
7.4 Agency for Representatives. Each Indemnified Party agrees that it accepts
each indemnity in favour of any of its Representatives as agent and trustee of
that Representative. Each party agrees that an Indemnified Party may enforce an
indemnity in favour of any of that party's Representatives on behalf of that
Representative.
7.5 Notice of Third Party Claims. If an Indemnified Party receives notice of
the commencement or assertion of any Third Party Claim, the Indemnified Party
shall give the Indemnifier reasonably prompt notice thereof, but in any event
no later than 30 days after receipt of such notice of such Third Party Claim.
Such notice to the Indemnifier shall describe the Third Party Claim in
reasonable detail and shall indicate, if reasonably practicable, the estimated
amount of the Loss that has been or may be sustained by the Indemnified Party.
7.6 Defence of Third Party Claims. The Indemnifier may participate in or assume
the defence of any Third Party Claim by giving notice to that effect to the
Indemnified Party not later than 30 days after receiving notice of that Third
Party Claim (the "Notice Period") and may enforce any right of set-off or
counterclaim to which the Indemnified Party may be entitled. The Indemnifier's
right to do so shall be subject to the rights of any insurer or other party who
has potential liability in respect of that Third Party Claim. The Indemnifier
agrees to pay all of its own expenses of participating in or assuming such
defence. The Indemnified Party shall cooperate in good faith in the defence of
each Third Party Claim, even if the defence has been assumed by the Indemnifier
and may participate in such defence assisted by counsel of its own choice at
its own expense. If the Indemnified Party has not received notice within the
Notice Period that the Indemnifier has elected to assume the defence, of
46
such Third Party Claim, the Indemnified Party may assume such defence. assisted
by counsel of its own choosing and the Indemnifier shall be liable for all
reasonable costs and expenses paid or incurred in connection therewith and any
Loss suffered or incurred by the Indemnified Party with respect to such Third
Party Claim.
7.7 Assistance for Third Party Claims. The Indemnifier and the Indemnified
Party will use all reasonable efforts to make available to the party which is
undertaking and controlling the defense of any Third Party Claim (the
"Defending Party"),
(a) those employees whose assistance, testimony or presence is
necessary to assist the Defending Party in evaluating and in
defending any Third Party Claim; and
(b) all documents, records and other materials in the possession
of such party reasonably required by the Defending Party for
its use in defending any Third Party Claim,
and shall otherwise cooperate with the Defending Party. The Indemnifier shall
be responsible for all reasonable expenses associated with making such
documents, records and materials available and for all reasonable expenses of
any employees made available by the Indemnified Party to the Indemnifier
hereunder, which expense shall not exceed the actual cost to the Indemnified
Party associated with such employees.
7.8 Settlement of Third Party Claims. If an Indemnifier elects to assume the
defence of, or any counterclaims or claims of set-off with respect to, any
Third Party Claim as provided in Section 7.6, the Indemnifier shall not be
liable for any legal expenses subsequently incurred by the Indemnified Party in
connection with the defence of such Third Party Claim. However, if the
Indemnifier fails to take reasonable steps necessary to defend diligently such
Third Party Claim within 30 days after receiving notice from the Indemnified
Party that the Indemnified Party bona fide believes on reasonable grounds that
the Indemnifier has failed to take such steps, the Indemnified Party may, at
its option, elect to assume the defence of and to compromise or settle the
Third Party Claim assisted by counsel of its own choosing and the Indemnifier
shall be liable for all reasonable costs and expenses paid or incurred in
connection therewith. The Indemnifier shall not settle or compromise any Third
Party Claim without obtaining the prior written consent of the Indemnified
Party, such consent not to be unreasonably withheld so long as all liability of
the Indemnified Party with respect to the Third Party Claim is released. The
Indemnified Party shall not settle or compromise any Third Party Claim without
the prior written consent of the Indemnifier unless such settlement or
compromise is made without any liability to the Indemnifier.
47
7.9 Direct Claims. Any Direct Claim shall be asserted by giving the Indemnifier
reasonably prompt written notice thereof, but in any event not later than 60
days after the Indemnified Party becomes aware of such Direct Claim The
Indemnifier shall then have a period of 30 days within which to respond in
writing to such Direct Claim. If the Indemnifier does not so respond within
such 30 day period, the Indemnifier shall be deemed to have rejected such
Claim.
7.10 Failure to Give Timely Notice. A failure to give timely notice as provided
in this Article 7 shall not affect the rights or obligations of any party
except and only to the extent that, as a result of such failure, any party
which was entitled to receive such notice was deprived of its right to recover
any payment under its applicable insurance coverage or was otherwise directly
and materially damaged as a result of such failure.
7.11 Limitation.
(a) No claims for indemnification may be made by the Buyer or its
Representatives against BCR under Section 7.2(a) in respect
of any Loss arising in connection with any misrepresentation
or breach of warranty made or given by BCR in this Agreement
unless the aggregate of all Losses suffered or incurred by
the Buyer or its Representatives in respect of all such
misrepresentations or breaches of warranty, exceeds Five
Hundred Thousand Dollars ($500,000) in the aggregate, in
which event the amount of all such Losses may be recovered by
the Buyer or its Representatives.
(b) No claims for indemnification may be made by BCR or its
Representatives against the Buyer under Section 7.3(a) in
respect of any Loss arising in connection with any
misrepresentation or and breach of warranty made or given by
the Buyer in this Agreement, unless the aggregate of all
Losses suffered or incurred by BCR or its Representatives in
respect of all such misrepresentations or breaches of
warranty, exceeds Five Hundred Thousand Dollars ($500,000) in
the aggregate, in which event the amount of all such Losses
may be recovered by BCR or its Representatives.
(c) The maximum aggregate liability of BCR to the Buyer or its
Representatives hereunder shall not exceed 70% of the amount
of the Purchase Price, as adjusted.
(d) The Buyer may set off against any amount due by it to BCR
hereunder, the amount of any Loss suffered or incurred by it
from time to time.
48
ARTICLE VIII
ARBITRATION
8.1 Arbitration. Any dispute between the parties concerning a dispute with
respect to the purchase price adjustment calculations under Section 2.3 shall
be referred to and finally resolved by arbitration in accordance with the
Commercial Arbitration Act of British Columbia and governed by the Rules of
Procedure, using a single arbitrator.
8.2 Location of Arbitration. Any arbitration hereunder shall be held at
Vancouver, British Columbia, unless the parties otherwise agree.
8.3 Applicable Law. The law to be applied in connection with the arbitration
shall be the law of British Columbia, including its conflicts of laws rules.
ARTICLE IX
MISCELLANEOUS
9.1 Amendment and Modification; Waiver. This Agreement may only be amended or
modified in writing, signed by BCR and Buyer, at any time prior to the Closing
with respect to any of the terms contained herein. At any time prior to the
Closing either BCR or Buyer may (i) extend the time for the performance of any
of the obligations or other acts of the other party hereto, (ii) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto, and (iii) waive compliance
with any of the agreements or conditions of the other party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party
granting such extension or waiver. No waiver of any provision of this Agreement
shall constitute a waiver of any other provision nor shall any waiver of any
provision of this Agreement constitute a continuing waiver unless otherwise
expressly provided.
9.2 Return of Information. If for any reason whatsoever the sale and purchase
of the Shares pursuant to this Agreement is not consummated, Buyer shall
promptly return to BCR or Westel all books, records and documents of BCR or
Westel (including all copies, if any, thereof) furnished by BCR, Westel, or any
of their respective agents, employees, or representatives, and shall not use or
disclose the information contained in such books, records or documents for any
purpose or make such information available to any other Person.
9.3 Expenses. Except as otherwise expressly provided in this Agreement, whether
or not the transactions contemplated by this Agreement are consummated, the
parties shall bear their own respective expenses (including, but not limited
to, all
49
compensation and expenses of counsel, consultants, actuaries and independent
accountants) incurred in connection with this Agreement and the transactions
contemplated hereby.
9.4 Public Disclosure. Each of the parties to this Agreement hereby agrees with
the other parties hereto that, except as may be required to comply with the
requirements of applicable law or the rules and regulations of the stock
exchanges upon which the securities of the parties or their Affiliates are
listed, no press release or similar public announcement or communication will
be made or caused to be made concerning the execution or performance of this
Agreement unless specifically approved in advance by all parties hereto;
provided, however, that to the extent that either party to this Agreement is
required by law or the rules and regulations of any stock exchange upon which
the securities of one of the parties or its Affiliates is listed to make such a
public disclosure, such public disclosure shall only be made after prior
consultation, to the extent such consultation is practicable in the
circumstances, with the other party to this Agreement.
9.5 Assignment. No party to this Agreement may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
party hereto.
9.6 Entire Agreement. This Agreement and the Transaction Documents contain the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings, oral or written,
with respect to such matters, except for the Confidentiality Agreement which
will remain in full force and effect for the term provided for therein.
9.7 Fulfillment of Obligations. Any obligation of any party to any other party
under this Agreement, which obligation is performed, satisfied or fulfilled by
an Affiliate of such party, shall be deemed to have been performed, satisfied
or fulfilled by such party.
9.8 Parties in Interest; No Third Party Beneficiaries. This Agreement shall
enure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Except as expressly provided in
this Agreement nothing in this Agreement is intended to confer upon any Person
other than Buyer, BCR, or their successors or permitted assigns, any rights or
remedies under or by reason of this Agreement.
9.9 Schedules. The inclusion of any matter in any schedule to this Agreement
shall be deemed to be an inclusion in any other schedule where such disclosure
is specifically cross referenced in the other schedule, but inclusion therein
shall expressly not be deemed to constitute all admission by BCR, or otherwise
imply, that any such matter is material or creates a measure for materiality
for the purposes of this Agreement.
50
9.10 Counterparts. This Agreement and any amendments hereto may be executed in
one or more counterparts, each of which shall be deemed to be an original by
the parties executing such counterpart, but all of which shall be considered
one and the same instrument. A signed facsimile or telecopied copy of this
Agreement shall be effectual and valid proof of execution and delivery.
9.11 Section Headings. The section and paragraph headings and table of contents
contained in this Agreement are for reference purposes only and shall not in
any way affect the meaning or interpretation of this Agreement.
9.12 Notices. All notices hereunder shall be deemed given if in writing and
delivered personally or sent by facsimile, telex or by registered or certified
mail (return receipt requested) to the parties at the following addresses (or
at such other addresses as shall be specified by like notice):
(a) if to BCR, to:
British Columbia Railway Company
000 Xxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx, X.X.
X0X 0X0
Attention: Xxxxx Xxxxxx
Vice President, Finance
and Information Technology
Fax: (000) 000-0000
With a copy to:
Xxxxxx Xxxxx
0000 Xxxxxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx
X.X. Xxx 00000,
Xxxxxxxxx, Xxxxxx
X0X lT2
Attention: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
51
(b) if to Buyer, to:
RSL COM Holdings Canada Inc.
c/o RSL Communications Ltd.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx
X.X.X. 10153
Attention: Xxxxx Xxxxxxx
Associate Legal Counsel
Fax: (000) 000-0000
With a copy to:
Fasken Xxxxxxxx Xxxxxxx
4200 Toronto Dominion Xxxx Xxxxx
Xxx 00, Xxxxxxx-Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxx
X0X 0X0
Attention: C. Xxx Xxxx
Fax: (000) 000-0000
Any notice given by mail shall be effective, if mailed at any other time than
during a general discontinuance of postal service due to strike, lockout or
otherwise, on the fourth Business Day after the post-marked date thereof. Any
notice given by telex or facsimile shall be effective on the Business Day
following the sending. Any notice delivered personally shall be effective at
the time it is delivered to the applicable address noted above either to the
individual designated above or to an individual at such address having apparent
authority to accept deliveries on behalf of the addressee. In the event of a
general discontinuance of postal service due to strike, lock-out or otherwise,
notices or other communications shall be delivered personally or by telex or
facsimile.
9.13 Governing Law, Submission to Jurisdiction; Selection of Forum. This
Agreement shall be governed by, and construed in accordance with, the laws of
the Province of British Columbia without reference to the choice of law
principles thereof. Each party hereto attorns to the non-exclusive jurisdiction
of the Courts of the Province of British Columbia (the "Chosen Courts") and (i)
irrevocably submits to the non-exclusive Jurisdiction of the Chosen Courts,
(ii) waives any objection to venue in any such action or proceeding in the
Chosen Courts, and (iii) waives any objection that the Chosen Courts are an
inconvenient forum or do not have jurisdiction over any party hereto.
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IN WITNESS WHEREOF, this Agreement has been signed on behalf
of each of the parties hereto as of the date first written above.
BRITISH COLUMBIA RAILWAY COMPANY
Per:
---------------------------------------------
Xxxx X. XxXxxxxxxx
Group President and Chief Executive
Officer
Per:
---------------------------------------------
J. Xxxxx Xxxxxx
Vice-President, Finance & Information
Technology
RSL COM HOLDINGS CANADA INC.
Per:
---------------------------------------------
Xxxxx X. Xxxxxxxx
President
53
SCHEDULES
Schedule 1.1(g) Assets
Schedule 1.1(ss) Lenders
Schedule 1.1(eee) Permitted Encumbrances
Schedule 1.1(rrr) Telecommunications Services Agreement
Schedule 1.1(vvv) Value Allocation Schedule
Schedule 3.1(c) BCR's Consents and Approvals
Schedule 3.1(d)(v)(A) Permitted Transfers
Schedule 3.1(d)(v)(D) Permitted Retention Bonuses and Permitted Severance
Arrangements
Schedule 3.1(e) Financial Statements
Schedule 3.1(f) Material Liabilities
Schedule 3.1(i) Litigation
Schedule 3.1(j) Labour and Employment Relations
Schedule 3.1(k) Benefit Plans
Schedule 3.1(r) Contracts
Schedule 3.1(t) Environmental Matters
Schedule 3.1(z) Insurance
Schedule 3.1(aa) Intellectual Property Rights, including Trade Marks
Schedule 3.1(dd) Leases and Expired Leases
Schedule 3.1(ff) Major Suppliers and Customers
Schedule 3.1(gg) Millennium Compliant Programme
Schedule 4.1(b) Buyer's Consents and Approvals
Schedule 5.3(g)(i) Permitted Capital Expenditures
Schedule 6.1(g) Resigning Officers
Schedule 6.1(h) Non-Competition Agreement
54
