SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT made the 8th day of July, 1999 BY and
AMONG;
INTERNET CABLE CORPORATION, a corporation incorporated under the laws
of the State of Nevada (hereinafter referred to as "Purchaser")
OF THE FIRST PART
1291973 ONTARIO LIMITED, a corporation incorporated under the laws of
the Province of Ontario (hereinafter referred to as "1291973")
OF THE SECOND PART
XXXXXX XXXXXX, of the Town of Whitchurch-Stouffville in the Regional
Municipality of York, Province of Ontario (hereinafter referred to as
"Xxxxxx")
OF THE THIRD PART
XXXXXX XXXXXXXX, of the Town of Markham in the Regional Municipality of
York, Province of Ontario (hereinafter referred to as "Xxxxxx")
OF THE FOURTH PART
ONTARIO CABLE AND CONTRACTING INCORPORATED, a corporation incorporated
under the laws of the Province of Ontario (hereinafter referred to as
"Ontario Cable")
OF THE FIFTH PART
XXXXX HOLDINGS INC., a corporation incorporated under the laws of the
Province of Ontario (hereinafter referred to as "Xxxxx")
OF THE SIXTH PART
RYVON FUTURE INC., a corporation incorporated under the laws of the
Province of Ontario (hereinafter referred to as "Ryvon")
OF THE SEVENTH PART
XXXXX XXXXXXXX, of the Town of Markham in the Regional Municipality of
York, Province of Ontario (hereinafter referred to as "Xxxxx")
OF THE EIGHTH PART
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XXXXXX XXXXXXXX, IN TRUST, of the Province of Ontario (hereinafter
referred to as "the Trustee")
OF THE NINTH PART
CABLE SYSTEMS TECHNICAL SERVICES INC., a corporation incorporated under
the laws of the Province of Ontario (hereinafter referred to as "Cable
Systems")
OF THE TENTH PART
WHEREAS the Purchaser desires to purchase all of the issued and
outstanding shares in the capital of Cable Systems;
NOW THEREFORE in consideration of the premises and the respective
covenants and agreements of the Parties herein contained, the sum of one dollar
now paid by each Party hereto to each of the other Parties hereto and other good
and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged by all of the Parties hereto), the Parties hereto covenant and
agree as follows:
ARTICLE 1
1.1 DEFINITIONS
-----------
Whenever used in this Agreement, unless there is something in the
subject matter or context inconsistent therewith, the following words and terms
shall have the respective meanings ascribed to them as follows:
"Accounts Receivable" mean any and all accounts receivable, trade
receivables, notes receivable and other receivables arising out of the
Business and operations of Cable Systems.
"Affiliate" of any Person means any corporation, proprietorship,
partnership or business entity which directly or indirectly owns or
controls, is under common ownership or control with, or is owned or
controlled by, such Person.
"Agreement" means this share purchase agreement, including all
Schedules and Exhibits hereto and all instruments supplemental hereto
or in amendment or confirmation hereof or thereof.
"Applicable Law" means any domestic or foreign law, statute,
regulation, rule, policy, guideline, ordinance, by-law (including,
without limitation, any Environmental Law)
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applicable to the Purchaser, the Vendors, the Business or operation of
Cable Systems, the Assets of Cable Systems or the Purchased Shares.
"Assets of Cable Systems" means all of the assets of Cable Systems used
in the Business of Cable Systems and the Subsidiaries of Cable Systems
and shall have the same meaning as "Cable Systems Assets".
"Business" means the engineering, planning, construction and
installation services in connection with the building, maintaining and
upgrading of cable telecommunications systems presently carried on by
Cable Systems and the Subsidiaries of Cable Systems.
"Business Day" means any day other than a Saturday, Sunday or holiday
on which the Canadian chartered banks located at Markham, Ontario are
open for business.
"Cable Systems" means Cable Systems Technical Services Inc., a
corporation incorporated under the laws of the Province of Ontario.
"Cable Systems USA" means Cable Systems Technical Services, Inc. a
corporation incorporated under the laws of the State of Delaware.
"Canadian Tax Act" shall mean the Income Tax Act (Canada) as amended
and the Regulations made pursuant thereto.
"Closing" means the completion of the sale to and purchase by the
Purchaser of the Purchased Shares hereunder by the transfer and
delivery of documents of title thereto and the payment of the Purchase
Price therefor as contemplated herein.
"Closing Date" means the 19th day of September, 1999, or such other
date as the Parties may agree or as may be extended by the Purchaser as
the date upon which the Closing shall take place.
"Closing Time" means 1:00 o'clock p.m. Eastern Standard time, on the
Closing Date or such other time on such date as the Parties may agree
as the time at which the Closing shall take place.
"Deposit" has the meaning ascribed in Section 2.2 hereof.
"Dollar" and "$" means lawful money of the United States of America.
"Effective Date" means the date of execution of this Agreement.
"Encumbrance" means any encumbrance of any kind, including, without
limitation, any option, pledge, security interest, lien, hypothec,
charge, encumbrance, mortgage,
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hypothecation, trust, deemed trust, trust deed, easement, lease,
sub-lease, claim, right of way, covenant, condition or restriction
(whether on sale, transfer or disposition or otherwise), whether
imposed by agreement, law or otherwise, whether of record or otherwise.
"Environmental Law" means any law, statute, regulation, rule, policy,
guideline, order, consent decree, settlement agreement or governmental
requirement of Canada or any province, territory or local government or
any agency thereof, which relates to or otherwise imposes liability or
standards of conduct concerning discharges, releases or threatened
releases of noises, odours or any pollutants, contaminants or hazardous
or toxic wastes, substances or materials into ambient air, water or
land, or otherwise relating to the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, clean-up, transport or
handling of pollutants, contaminants or hazardous or toxic wastes,
substances or materials.
"Environmental Permit" shall mean any Permit required by or pursuant to
any applicable Environmental Law.
"Financial Statements of Cable Systems" means the audited financial
statements of Cable Systems for the fiscal year ended December 31,
1998, consisting of a balance sheet and the statements of income,
retained earnings, source and application of funds and changes in
financial position and all notes thereto as reported upon by Ernst &
Young.
"Financial Statements of Cable Systems USA" means the audited financial
statements for Cable Systems USA for the fiscal year ended December 31,
1998 consisting of a balance sheet and the statements of income,
retained earnings, source and application of funds and changes in
financial position and all notes thereto as reported upon by Ernst &
Young.
"GAAP" shall mean generally accepted accounting principles from time to
time approved by the Canadian Institute of Chartered Accountants or any
successor Institute applicable as of the date on which any calculation
or determination is required to be made in accordance with generally
accepted accounting principles, and where the Canadian Institute of
Chartered Accountants includes a recommendation in its Handbook
concerning the treatment of any accounting matter, such recommendation
shall be regarded as the only generally accepted accounting principle
applicable to the circumstance that it covers.
"Governmental Authority" means the government of Canada or the
government of the United States of America or any province, xxxxx,
xxxxxxxxx, xxxxxx, xxxxxxxxxxxx, locality or other political
sub-division thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, as the case may be.
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"Interim Financial Statements" means the interim unaudited financial
statements of Cable Systems and Cable Systems USA for the Period ended
March 31, 1999, consisting of a balance sheet and the statements of
income, retained earnings, source and application of funds and changes
in financial position and all notes thereto as reported upon by Xxxx
XxxXxxxxx, C.A.
"Key Employees" means the senior employees and officers of Cable
Systems and the Subsidiaries of Cable Systems as set out in this
Agreement and the Schedules attached hereto.
"Leased Properties" means all of the lands, buildings, facilities,
installations, fixtures, structures and improvements leased to Cable
Systems.
"Losses" means all liabilities (including, without limitation, all
liabilities relating to Taxes), losses, costs, damages, deficiencies,
penalties or expenses (including, without limitation, solicitors' and
accountants' fees and expenses in costs of investigation and litigation
and any judgement, settlement or compromise relating thereto and
interest, penalties or other amounts paid in respect of judgements,
settlements or compromises).
"Material Adverse Effect" means a negative change in, or effect on the
operations, affairs, financial condition, results of operations assets,
liabilities, reserves or any other aspect of the corporation of the
business of the corporation that results in a negative adverse effect
on or a negative adverse change in any such aspect of the corporation
or the business of the corporation.
"Material Contract" means any contract entered into by Cable Systems or
a Subsidiary of Cable Systems having an annual Dollar value greater
than twenty-five thousand Dollars ($25,000.00) or a term in excess of
twenty-four months, excepting therefrom all financing agreements and
Encumbrances.
"Parties" means the Purchaser, 1291973, Eugene, Joseph, Ontario Cable,
Xxxxx, Ryvon, Xxxxx, The Trustee and Cable Systems collectively, and
"Party" means any one of them.
"Permits" means all of the permits, licenses, consents, approval,
certificates, variances, interim permits, permit applications or other
authorization required by or pursuant to Applicable Law.
"Permitted Assignee" shall mean Genesis Construction & Developments
Corp. or its successor.
"Person" means any individual, corporation, partnership, trustee or
trust or unincorporated association, and pronouns have a similarly
extended meaning.
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"Purchaser's Counsel" means Xxxxxxx, Savage & Xxxxxxxxx, LLP, 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention Xxx Xxxxxxxxx
(000) 000-0000, fax (000) 000-0000.
"Purchase Price" means the purchase price to be paid by the Purchaser
for the Purchased Shares as provided in Article 2 hereof.
"Purchased Shares" means 692 issued and outstanding common shares in
the capital of Cable Systems.
"Subsidiaries of Cable Systems" means the corporations listed in
Schedule 3.5 attached hereto, the majority of which issued and
outstanding securities of which, as shown on the said Schedule, are
beneficially owned and controlled directly by Cable Systems or
indirectly by a Subsidiary of Cable Systems.
"Taxes" means all taxes, charges, fees, duties, levies or other
assessments, including (without limitation) income, gross receipts, net
proceeds, ad valorem, turnover, real and personal (tangible and
intangible), sales, use, franchise, excise, value added, goods and
services, stamp, leasing, lease, user, transfer, fuel, excess profits,
payroll, occupation, interest, equalization, windfall profits,
severance and employees' withholding, unemployment, employer health and
social security taxes which are imposed by Canada or any province,
xxxxx, xxxxxxxxx, xxxxxx, xxxxxxxxxxxx or local or foreign government
or any agency thereof, and such term shall include any interest,
penalties or additions to tax attributable to such Taxes.
"Vendors' Counsel" means the law firm of Xxxxxxx & Associate, of 00
Xxxx Xxxxxx Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx X0X 0X0, counsel to Cable
Systems.
"Vendors" means 1291973, Eugene, Joseph, Ontario Cable, Xxxxx, Ryvon,
Xxxxx and the Trustee and "Vendor" means any one of them.
"Stock Options" means stock options in the capital of the Purchaser or
its successor; provided that in the event this Agreement is assigned by
the Purchaser to the Permitted Assignee that "Stock Options" shall mean
stock options in the capital of the Permitted Assignee or its
successor.
Terms defined in the preamble to this Agreement shall have the same meanings
herein as are ascribed thereto in the preamble.
1.2 GENDER AND NUMBER
-----------------
Words importing the singular include the plural and vice versa; words
importing gender include all genders.
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1.3 ENTIRE AGREEMENT
----------------
This Agreement, including the Schedules and Exhibits hereto, together
with the agreements and other documents to be delivered pursuant hereto,
constitute the entire agreement between the Parties pertaining to the subject
matter hereof and supersede all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the Parties and there are no
warranties, representations or other agreements between the Parties in
connection with the subject matter hereof except as specifically set forth
herein and therein.
1.4 WAIVERS, ETC.
-------------
No supplement, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the Party to be bound thereby. No
waiver of any of the provisions of this Agreement, in whole or in part, shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
1.5 OTHER WORDS AND PHRASES
-----------------------
In this Agreement, unless otherwise expressly provided (i) the words
"hereof", "herein", "hereto" and "hereunder" and words of similar import refer
to this Agreement as a whole and not to any particular Article, Section,
Subsection, paragraph or other subdivision, and (ii) all references to
designated "Articles", "Sections", Subsections", "paragraphs" or other
subdivisions are to the designated Articles, Sections, Subsections, paragraphs
and other subdivisions of this Agreement.
1.6 HEADINGS
--------
The Article and Sections headings contained herein are included solely
for convenience of reference, are not intended to be full or accurate
descriptions of the content thereof and shall not be considered part of this
Agreement.
1.7 GOVERNING LAW
-------------
This Agreement and the rights, obligations and relations of the Parties
shall be governed by and construed in accordance with the laws of the Province
of Ontario and the federal laws of Canada applicable therein, and the courts of
Ontario shall have exclusive jurisdiction to entertain any action in connection
with this Agreement.
1.8 CURRENCY
--------
Unless otherwise specified, all reference to currency herein are deemed
to mean lawful money of the United States of America, and all amounts to be paid
or calculated pursuant to this Agreement are to be paid or calculated in lawful
money of the United States of America.
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ARTICLE 2
PURCHASE AND SALE
-----------------
2.1 PURCHASE PRICE
--------------
Subject to the terms and conditions set forth in this Agreement, at the
Closing, the Vendors shall sell, assign and transfer to the Purchaser and the
Purchaser shall purchase, accept and acquire the Purchased Shares listed
opposite the Vendors' names on Schedule 2.1 attached hereto. The Purchase Price
for the Purchased Shares shall be three million, nine hundred thousand Dollars
($3,900,000.00) together with seventy five thousand (75,000) two year Stock
Options exercisable at $2.50 per option from the Closing Date, to be in the form
attached hereto as Schedule 2.1.
2.2 DEPOSIT
-------
The Purchaser shall immediately upon execution of this Agreement
deliver to the Vendors' Counsel a Deposit in the amount of one hundred thousand
Dollars, together with the Stock Options. The Deposit shall be held in trust by
the Vendors' Counsel, pending the completion or termination of the transactions
contemplated herein. The Deposit may be invested by the Vendor's Counsel in an
interest bearing account, any such interest accruing shall be for the account
and benefit of the party entitled to the deposit upon the Closing or otherwise
termination of this Agreement. The parties acknowledge receipt of TWENTY-FIVE
THOUSAND ($25,000.00) Dollars prior to the execution of this Agreement. A
further deposit of SEVENTY-FIVE THOUSAND ($75,000.00) Dollars shall be made upon
execution. Should the Purchaser fail to close the purchase for any reason other
than the vendors and Cable Systems failing to meet their obligations under this
agreement, then the Deposit held by the vendors counsel in trust, will be
considered liquidated damages and the deposit will be forfeited. Should the
representations and warranties on the part of the vendors and Cable Systems not
be fulfilled prior to the Closing Date, then the transaction shall be at an end
and the deposit returned to the Purchaser with interest and without deduction
except for the cost incurred by Cable Systems to prepare audited financial
statements for the fiscal year ended December 31, 1998, to a maximum of
$6,000.00 (six thousand dollars).
2.3 ACTION BY VENDORS AND PURCHASER AT THE CLOSING TIME
---------------------------------------------------
At the Closing, each of the Vendors and the Purchaser shall take the
following action:
(a) DELIVERY OF CERTIFICATES, ETC. - The Vendors shall transfer and
deliver to the Purchaser at the Closing share certificates
representing the Purchased Shares duly endorsed in blank for
transfer or accompanied by irrevocable security transfer powers
of attorney duly executed in blank, in either case by the holders
of records thereof. The Vendors shall take such steps as shall be
necessary to cause Cable Systems to, and Cable Systems shall,
enter the Purchaser or its nominee upon the
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books of Cable Systems as the holder of the Purchased Shares and
to issue one or more share certificate to the Purchaser or its
nominee representing the Purchased Shares;
(b) PAYMENT TO THE VENDORS - The Purchaser shall pay the sum of three
million, eight hundred thousand Dollars ($3,800,000.00) to or to
the order of the Vendors as follows:
(i) by certified cheque or bank draft in accordance with the
direction of the Vendors in the amount of two million, eight
hundred thousand Dollars ($2,800,000.00);
(ii) by certified cheque or bank draft in the principal amount of
one million dollars ($1,000,000.00) (the "2nd Instalment")
made payable to Xxxxxxx & Associate, in trust, which shall
be held in accordance with the terms of paragraph 2.4.
(c) PAYMENT OF SHAREHOLDER LOANS - The Purchaser shall cause Cable
Systems to discharge all outstanding shareholder loans to Cable
Systems and the Subsidiaries of Cable Systems listed on Schedule
2.3(c) attached hereto.
(d) REMOVAL OF PERSONAL GUARANTEES - The Purchaser shall cause to be
discharged all personal guarantees of the debts and other
obligations of Cable Systems and the Subsidiaries of Cable
Systems made by any of the Vendors and listed on Schedule 2.3(d)
attached hereto, on or before the Closing Date.
(e) REDEMPTION OF CLASS A PREFERENCE SHARES - The Purchaser shall
cause Cable Systems to redeem and retract on the Closing Date all
issued and outstanding Class A Preference Shares.
(f) INDEMNITY TO XXXXXX XXXXXXXX - The Purchaser shall deliver to
Xxxxxx Xxxxxxxx, a Vendor herein, an agreement to indemnify him
for all acts done on behalf of Cable Systems and the Subsidiaries
of Cable Systems to secure the financial obligations of Cable
Systems and the Subsidiaries of Cable Systems prior to the
Closing Date.
2.4 PAYMENT OF THE 2ND INSTALLMENT
------------------------------
The 2nd Installment shall be held in trust by the Vendors' Counsel
after Closing, and shall be released to the Vendors at the expiry of six weeks
from the Closing Date; provided the Purchaser cannot demonstrate the following:
(a) any warranty, representation or covenant of the Vendors is found
to be materially
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incorrect on Closing;
(b) any warranty, representation or covenant of Cable Systems is
found to be materially incorrect as of the Closing Date; and
(c) Cable Systems, the Cable Systems Business or the Assets of Cable
Systems are affected by a Material Adverse Effect;
in which case the 2nd Installment will be released in part in accordance with
the following procedure. Written notice of any material issue which arises shall
be given to Xxxxxx Xxxxxxxx and the Vendors' Counsel. After discussion of the
issue, a reasonable reserve shall be decided on by the parties. If the parties
cannot agree upon the amount of the reserve, then Ernst & Young, as auditors of
Cable Systems, shall be requested to determine the amount of the reserve and
their decision shall bind all parties. In the event that more than one material
issue arises, the above procedure shall apply to each instance. At the end of
six weeks from the Closing Date the total of all reserves so determined shall be
deducted from the 2nd Installment, and the balance of the 2nd Installment shall
be paid to the Vendors. The reserve, or total reserves, shall be held in trust
by the Vendors' Counsel until the material issue or issues are resolved to the
satisfaction of the parties, at which time the reserve or reserves shall be paid
out as appropriate.
2.5 PLACE OF CLOSING
----------------
The Closing shall take place at the Closing Time at a location in
Markham, Ontario as may be agreed upon by the Vendors and the Purchaser.
2.6 EXTENSION OF CLOSING
--------------------
The Purchaser may extend the Closing by 30 days up to three times, for
a maximum extension of 90 days. The Purchaser Price shall be increased by Forty
Thousand U.S. Dollars ($40,000.00) for each extension of the Closing required by
the Purchaser. The Purchaser shall give the Vendors at least fourteen (14) days
prior written notice in the case of the first extension and at least five (5)
days prior written notice in the case of the second and third extension, should
they be required. Upon each such notice being given, the Purchaser shall deliver
to the Vendors, together with the notice, a cheque in the amount of forty
thousand Dollars ($40,000.00) being the increase to the Purchase Price, which
shall be held in trust by the Vendors' Counsel, pending the completion of the
transactions contemplated herein. This increase to the Purchase Price shall be
an increase to the Deposit and shall be treated in a like manner with respect to
the provisions of Section 2.2 herein.
2.7 TENDER
------
Any tender of documents or money hereunder may be made upon the Parties
or their respective counsel, and money may be tendered by official bank draft
drawn upon a Canadian chartered bank or by negotiable cheque and certified by a
Canadian chartered bank.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE VENDORS, CABLE SYSTEMS
------------------------------------------------------------
AND CABLE SYSTEMS USA
---------------------
The Vendors and Cable Systems jointly and severally represent to the
Purchaser as follows:
3.1 ORGANIZATION AND VALID EXISTENCE: CABLE SYSTEMS AND CABLE SYSTEMS USA
---------------------------------------------------------------------
Cable Systems is a corporation duly incorporated, organized and validly
existing under the laws of the Province of Ontario. Cable Systems USA is a
corporation duly incorporated, organized and validly existing under the law of
the State of Delaware. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereunder have been or shall by
the Closing Date be duly authorized by all necessary corporate action on the
part of Cable Systems. Attached herewith as Schedule 3.1 is a copy of the
articles of incorporation of each of Cable Systems and the Subsidiaries of Cable
Systems.
3.2 ENFORCEABILITY OF OBLIGATIONS
This Agreement constitutes a valid and binding obligation of each of
the Vendors and Cable Systems enforceable against each of them in accordance
with its terms, subject to limitations with respect to enforcement imposed by
law in connection with bankruptcy or similar proceedings and to the extent that
equitable remedies such as specific performance and injunction are in the
discretion of the court from which they are sought. The execution, delivery and
performance of this Agreement and all other agreements, instruments,
certificates and documents contemplated hereby by each of the Vendors and Cable
Systems do not, on the date hereof, and will not, on the Closing Date:
(i) violate any Applicable Laws;
(ii) except as set forth on Schedule 3.2 attached hereto, violate
or conflict, or result in a breach of, or constitute a
default (or event, which with or without notice or lapse of
time or both, would constitute a default) under, or permit
cancellation of, or result in the creation of any
Encumbrance upon any of the Cable Systems Assets, the assets
used by Cable Systems in the Business, any requisite
licenses, permits or authorizations held by Cable Systems to
conduct its Business or own its Assets, or the Purchased
Shares under any of the terms, conditions or provisions of
any contract or agreement to which any of the Vendors is a
party or by which any of them or any of the Cable Systems
Assets, the assets used in the Cable Systems Business or the
Purchased Shares are bound, or would result in a breach of,
or default under any order of any court, Governmental
Authority
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or regulatory body;
(iii) cause the acceleration of the maturity of any indebtedness
of Cable Systems or any indebtedness secured by the Cable
Systems Assets or the assets of the Cable Systems Business
of the Purchased Shares, save and except a small business
loan (SBL), the total of which is less than $100,000.00;
(iv) violate or conflict with any provisions of the articles of
by-laws of Cable Systems or Cable Systems USA or any
director's or shareholder's resolutions of either Cable
Systems or Cable Systems USA.
3.3 RIGHT TO SELL - THE VENDORS
-------------
(i) are the sole and beneficial owner of the Purchased Shares as
set out in Schedule 2.1, which shares constitute all the
issued and outstanding shares in the capital of Cable
Systems;
(ii) has the exclusive right to dispose of the Purchased Shares
as herein provided and such disposition will not violate,
contravene, breach or offend against or result in any
default under any indenture, mortgage, lease, agreement,
instrument, charter or by-law provision or Applicable Law to
which any of the Vendors or by which any of the Vendors is
bound or affected;
(iii) is the holder of record of all the Purchased Shares, free
and clear of Encumbrances or rights of others (other than
the rights of the Purchaser hereunder) and no person (other
than the Purchaser hereunder) has any agreement, option or
any rights capable of becoming an agreement or option for
the acquisition of the Purchased Shares;
(iv) upon transfer to the Purchaser at Closing of certificates
representing such Purchased Shares, the Purchaser shall
receive full title to the Purchased Shares free and clear of
all Encumbrances;
(v) has been duly authorized by all requisite action of the
shareholders and directors of any Vendor which is a
corporation.
3.4 LICENSES, REGISTRATIONS AND COMPLIANCE
--------------------------------------
Cable Systems and the Subsidiaries of Cable Systems are registered,
licensed or otherwise qualified as corporations to do business in each
jurisdiction in which the nature of their businesses or the property owned or
leased by them makes such registrations, licensing or other qualification
necessary, and such registrations, licenses or qualifications (as the case may
be) are in good standing. Neither Cable Systems nor the Subsidiaries of Cable
systems are in violation of any
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Applicable Law, which violation could have a Material Adverse Effect, and,
without limiting the generality of the foregoing, neither Cable Systems of the
Subsidiaries of Cable Systems are in breach of any Environmental Law. Each
jurisdiction in which Cable Systems or a subsidiary of Cable Systems carries on
business and a brief description of the nature of such operations and each
jurisdiction in which tangible assets owned or used by Cable Systems or the
Subsidiaries of Cable Systems are located is set forth in Schedule 3.4 attached
hereto opposite the name of the relevant corporation.
3.5 SUBSIDIARIES OF CABLE SYSTEMS
-----------------------------
Save as set forth in Schedule 3.5 attached hereto, Cable Systems has no
other subsidiaries. Each such Subsidiary of Cable Systems is duly incorporated
or continued and organized and validly exists under the laws of its jurisdiction
of incorporation or continuance, as the case may be. The respective
jurisdictions of incorporation or continuance, as the case may be, and the
shares in the capital of such Subsidiaries of Cable Systems issued, optioned or
otherwise agreed to be issued to or in favour of Cable Systems are as set out in
Schedule 3.5. All such shares have been duly and validly issued, are outstanding
as fully paid and non-assessable in the capital of the respective Subsidiaries
of Cable Systems and are owned and beneficially owned and of record by Cable
Systems, free and clear of any Encumbrances or rights of others. No options,
warrants or other rights to purchase shares or other securities of any of the
Subsidiaries of Cable Systems have been authorized or agreed to be issued or are
outstanding.
3.6 CAPITALIZATION
--------------
The authorized and issued share capital of each of Cable Systems and
the Subsidiaries of Cable Systems is set forth in Schedule 3.6 attached hereto.
All such issued share capital has been duly and validly issued and is
outstanding as fully paid and non-assessable shares in the capital of Cable
Systems and Cable Systems USA. Save and except as set out in Schedule 3.6
herein, no options, warrants or other rights to purchase shares or other
securities of either Cable Systems or Cable Systems USA or other rights to
purchase shares or other securities of either Cable Systems or Cable Systems USA
have been authorized or agreed to be issued or are outstanding. Neither Cable
Systems nor Cable Systems USA is subject to any obligations (contingent or
otherwise) to repurchase or other wise retire or acquire any of its shares.
3.7 FINANCIAL STATEMENTS
(a) The Financial Statements of Cable Systems prepared by Ernst &
Young, are true and correct and have been prepared in accordance
with GAAP applied on a basis consistent with that of the
preceding period. The Financial Statements of Cable Systems
present a true and complete statement of the consolidated
financial condition and assets and liabilities of Cable Systems
as at December 31, 1998 and the other statements comprising the
Financial Statements of Cable Systems accurately set forth the
results of the operations of Cable Systems on a
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consolidated basis and the source and application of the funds
thereof throughout the period covered thereby.
(b) The Financial Statements of Cable Systems USA prepared by Ernst &
Young, are true and correct and have been prepared in accordance
with GAAP applied on a basis consistent with that of the
preceding period. The Financial Statements of Cable Systems USA
present a true and complete statement of the consolidated
financial condition and assets and liabilities of Cable Systems
USA as at December 31, 1998 and the other statements comprising
the Financial Statements of Cable Systems USA accurately set
forth the results of the operations of Cable Systems USA on a
consolidated basis and the source and application of the funds
thereof throughout the period covered thereby.
3.8 ABSENCE OF UNDISCLOSED LIABILITIES
----------------------------------
(a) Cable Systems: Except to the extent reflected or reserved against
in the Financial Statements of Cable Systems (including the notes
thereto) or incurred subsequent to the date thereof and disclosed
either in this Agreement or in Schedule 3.8 and except as
incurred in the ordinary and usual course of business or insured
against, Cable Systems has no outstanding indebtedness or any
liabilities or obligations (whether known or unknown, accrued,
absolute, contingent or otherwise) of a nature customarily
reflected or reserved against in a balance sheet (including the
notes thereto) prepared in accordance with GAAP.
(b) Cable Systems USA: Except to the extent reflected or reserved
against in the Financial Statements of Cable Systems USA
(including the notes thereto) or incurred subsequent to the date
thereof and disclosed in Schedule 3.8 and except as incurred in
the ordinary and usual course of business or insured against,
Cable Systems USA has no outstanding indebtedness or any
liabilities or obligations (whether known or unknown, accrued,
absolute, contingent or otherwise) of a nature customarily
reflected or reserved against in a balance sheet (including the
notes thereto) prepared in accordance with GAAP.
3.9 TAX MATTERS
(a) Cable Systems has duly and timely filed all federal, provincial
and local income, franchise, capital, sales or use, goods and
services, excise, fuel, payroll, property or other tax returns
required by any Applicable Law to be filed by it and all
liabilities required to be paid by Cable Systems on account of
Taxes prior to the date hereof have been duly paid.
(b) Cable Systems USA has duly and timely filed all federal, state
and local income, franchise, capital, sales or use, goods and
services, excise, fuel, payroll, property
-15-
or other tax returns required by any Applicable Law to be filed
by it and all liabilities required to be paid by Cable Systems
USA on account of Taxes prior to the date hereof have been duly
paid.
(c) Neither Cable Systems nor Cable Systems USA have received from
any Governmental Authority any assessment, re-assessment or
notice of underpayment of any Taxes or other charges and no such
notice is reasonably expected.
(d) There are no actions, suits, proceedings, investigations or
claims now threatened or pending against Cable Systems or Cable
Systems USA in respect of Taxes, governmental charges or
assessments, or any matters under discussion with any
Governmental Authority relating to Taxes, governmental charges or
assessments asserted by such authority.
(e) No agreements, consent or other arrangements extending or waiving
the time limited for the filing of any tax return by, or the
payment of any Taxes, governmental charge or deficiency against
Cable Systems or Cable Systems USA or the re-assessment of any
Taxes, or any statutes of limitations related thereto have been
filed with respect to Cable Systems for any fiscal year.
(f) Cable Systems and Cable Systems USA has withheld from each
payment made to any of its officers, directors, former directors
and employees, the full amount of all Taxes and other deductions
(including without limitation, income taxes, unemployment,
disability, and other required taxes and contributions) required
to be withheld and has paid the same together with the employer's
share of same, if any (to the extent required to be paid so no
such amount is past due), to the proper tax or other receiving
officers within the prescribed times and has filed, in complete
and accurate form, all information and other returns required
pursuant to any applicable legislation within the prescribed
times.
(g) None of Cable Systems or any of the Subsidiaries of Cable Systems
has been and is currently required to file any returns, elections
or designations with any tax authority of any jurisdiction
outside Canada or outside the Province of Ontario. Cable Systems
and the Subsidiaries of Cable Systems are not required to pay and
owe no Taxes or any other like amount to any Governmental
Authority located in any jurisdiction outside Canada.
(h) Cable Systems has paid, collected and remitted all Taxes which
are due and payable, collectible or remittable, as applicable, by
it on or before the date hereof. Adequate provision has been made
in the Financial Statements of Cable Systems and Interim
Financial Statements for all Taxes for the periods covered by the
Financial Statements of Cable Systems and Interim Financial
Statements,
-16-
respectively. Cable Systems has no liability for Taxes other than
those provided for in the Financial Statements of Cable Systems
and those arising in the ordinary course of business since
December 31, 1998.
(i) Canadian federal and provincial income tax assessments have been
issued to Cable Systems covering all past periods up to and
including December 31, 1998. There are no actions, suits,
proceedings, investigations, enquiries or claims now pending or
made or, to the best of the Vendors' knowledge, threatened
against Cable Systems in respect of taxes.
(j) Cable Systems is a Canadian-controlled private corporation, as
defined in the Canadian Tax Act, and has been one since its
incorporation.
(k) No debt or other obligation of Cable Systems has been or will be
settled or extinguished on or prior to the Closing Date such that
the provisions of Section 80 of the Canadian Tax Act applies or
would apply thereto.
3.10 ABSENCE OF CHANGES
------------------
Since the respective dates of the Interim Financial Statements of
Cable Systems and Cable Systems USA there has not been:
(a) any material changes in the condition or operations of the Cable
Systems Business, the Cable Systems Assets or the financial
condition of Cable Systems other than changes in the ordinary and
normal course of business, none of which has or would be expected
to have a Material Adverse Effect; or
(b) any damage, destruction or loss, labour troubles or other event,
development or condition of any character (whether or not covered
by insurance) affecting the Cable Systems Business, the Cable
Systems Assets or the properties or future prospects of Cable
Systems which has or would be expected to have a Material Adverse
Effect.
3.11 ABSENCE OF UNUSUAL TRANSACTIONS
-------------------------------
(a) Since the date of the Interim Financial Statements of Cable
Systems, Cable Systems has not:
(i) transferred, assigned, sold, leased or otherwise disposed of
any of the Cable Systems Assets or canceled any debts or
claims except in the ordinary and usual course of business;
(ii) incurred or assumed any obligation or liability (fixed or
contingent),
-17-
except those listed in Schedule 3.11(a) attached hereto and
except unsecured current obligations and liabilities
incurred in the ordinary and normal course of business and
consistent with past practice;
(iii) except as disclosed in Schedule 3.11(a), issued or sold any
shares in its capital or any warrants, bonds, debentures or
other securities of Cable Systems or issued, granted or
delivered and right, option or other commitment for the
issuance of any such or other securities;
(iv) discharged or paid any Encumbrance, or paid any obligation
or liability (fixed or contingent) other than liabilities
incurred since the date of the Financial Statements of Cable
Systems in the ordinary and normal course of business;
(v) declared or made any payment of any dividend or other
distribution in respect of any shares in its capital or
purchased or redeemed any such shares thereof or effected
any subdivision, consolidation or reclassification of any
such shares;
(vi) suffered any damage, destruction, operating loss or any
extraordinary loss, or waived, cancelled or written off any
rights of substantial value, or entered into any commitment
or transaction not in the ordinary and usual course of
business where such loss, rights, commitment or transaction
is or would have a Material Adverse Effect on Cable Systems;
(vii) except those listed in Schedule 3.11(a), amended or changed
or taken any action to amend or change its articles or
by-laws;
(viii) made any general wage or salary increases in respect of
personnel which it employs, other than increases in the
ordinary and normal course of business or as provided for in
the collective labour agreements referred to in Schedule
3.18 attached hereto;
(ix) mortgaged, pledged, subjected to Encumbrance or otherwise
encumbered any of the Cable Systems Assets or property,
whether tangible or intangible except in the ordinary and
normal course of business; or
(x) authorized or agreed or otherwise become committed to do any
of the foregoing.
(b) Since the date of the Interim Financial Statements of Cable
Systems USA, Cable Systems USA has not:
-18-
(i) transferred, assigned, sold, leased or otherwise disposed of
any of the Cable Systems USA Assets or cancelled any debts
or claims except in the ordinary and usual course of
business;
(ii) incurred or assumed any obligation or liability (fixed or
contingent), except those listed in Schedule 3.11(b)
attached hereto and except unsecured current obligations and
liabilities incurred in the ordinary and normal course of
business and consistent with past practice;
(iii) except as disclosed in Schedule 3.11(b), issued or sold any
shares in its capital or any warrants, bonds, debentures or
other securities of Cable Systems USA or issued, granted or
delivered and right, option or other commitment for the
issuance of any such or other securities;
(iv) discharged or paid any Encumbrance, or paid any obligation
or liability (fixed or contingent) other than liabilities
incurred since the date of the Interim Financial Statements
of Cable Systems USA in the ordinary and normal course of
business;
(v) declared or made any payment of any dividend or other
distribution in respect of any shares in its capital or
purchased or redeemed any such shares thereof or effected
any subdivision, consolidation or reclassification of any
such shares;
(vi) suffered any damage, destruction, operating loss or any
extraordinary loss, or waived, cancelled or written off any
rights of substantial value, or entered into any commitment
or transaction not in the ordinary and usual course of
business where such loss, rights, commitment or transaction
is or would have a Material Adverse Effect on Cable Systems
USA;
(vii) except those listed in Schedule 3.11(b), amended or changed
or taken any action to amend or change its articles or
by-laws;
(viii) made any general wage or salary increases in respect of
personnel which it employs, other than increases in the
ordinary and normal course of business or as provided for in
the collective labour agreements referred to in Schedule
3.18 attached hereto;
(ix) mortgaged, pledged, subjected to Encumbrance or otherwise
encumbered any of the Cable Systems USA Assets or property,
whether tangible or intangible except in the ordinary and
normal course of business; or
-19-
(x) authorized or agreed or otherwise become committed to do any
of the foregoing.
3.12 LEASED EQUIPMENT
----------------
Schedule 3.12 attached hereto sets forth a true and substantially
complete list of all equipment, other personal property and fixtures in the
possession or custody of Cable Systems and/or the Subsidiaries of Cable Systems,
which, as of May 15, 1999, is leased or held under license or similar
arrangement and of the leases, licenses, agreements and other documentation
relating thereto. Additional equipment has been or may be leased in the ordinary
course of business after May 15, 1999.
3.13 COLLECTABILITY OF ACCOUNTS RECEIVABLE
-------------------------------------
The accounts receivable as shown on the Financial Statements and
Interim Financial Statements of Cable Systems and Cable Systems USA are
collectible to within the full amount less the reserve shown on the Financial
Statements and Interim Financial Statements..
3.14 LEASES OF REAL PROPERTY
-----------------------
All leases of real property and all interests held by Cable
Systems and the Subsidiaries of Cable Systems as lessees under real property
leases are reduced to writing and are recorded on the books of Cable Systems
and/or the Subsidiaries of Cable Systems.
All rental and other payments required to be paid by Cable Systems or
any Subsidiaries of Cable Systems as lessees are paid on a timely basis.
Such leases are in full force and effect without amendment thereto and
neither Cable Systems nor any Subsidiary of Cable Systems, nor the other party
thereto, is otherwise in default in meeting its obligations contained in any
such lease.
3.15 REAL PROPERTY
-------------
Neither Cable Systems nor the Subsidiaries of Cable Systems own any
real property in fee simple.
3.16 USE
---
The use by Cable Systems and the Subsidiaries of Cable Systems of the
buildings and improvements located on the leased real property referred to in
Section 3.14, the operation and maintenance thereof as now operated and
maintained by Cable Systems and the Subsidiaries of Cable Systems, and the
purposes for which they are presently being used, are not in breach in any
material respect of any Applicable Law and there are no restrictive covenants or
Applicable Laws
-20-
which in any way restrict or prohibit the use of the said buildings,
improvements and real property for the purposes for which they are presently
being used.
Cable Systems and the Subsidiaries of Cable Systems are not aware of
any buildings and other structures located on the leased real property referred
to in Section 3.14 being or ever having been insulated with urea formaldehyde
foam insulation, nor are they aware of such buildings or structures contain any
aluminum wiring or friable asbestos or any other substance containing a type of
asbestos or asbestos product which is a hazardous product, toxic or priority
substance or any other substance deemed hazardous or regulated by any laws or
regulations of Canada or the Province of Ontario in force at the date hereof.
3.17 CONDITION OF ASSETS
-------------------
All Cable Systems Assets and all material tangible assets of the
Subsidiaries of Cable Systems used in or in connection with the Cable Systems
Business are in good condition, repair and (where applicable) proper working
order, reasonable wear and tear excepted.
3.18 EMPLOYMENT CONTRACTS
--------------------
Except as set out in Schedule 3.18 attached hereto, neither Cable
Systems nor the Subsidiaries of Cable Systems have any union or collective
labour, pension, deferred profit sharing, stock option or other similar
agreement nor do they have any written contracts of employment with any
employees or any oral contracts of employment which are not terminable on the
giving of reasonable notice in accordance with applicable law. There is not now
any circumstances or conduct which could result in the filing of an unfair
labour practice complaint, and there exists no event or condition which with the
giving of notice or the passage of time would constitute a breach or default
thereunder by any party thereto.
3.19 MATERIAL CONTRACTS
------------------
All Material Contracts of Cable Systems and the Subsidiaries of Cable
Systems have been reduced to writing and are recorded on the books of Cable
Systems and/or the Subsidiaries of Cable Systems. The Material Contracts are all
in full force and effect without amendment thereto and no material default
exists in respect thereof on the part of any of the parties thereto. Such
contracts and agreements include all the presently outstanding material
contracts entered into by Cable Systems and the Subsidiaries of Cable Systems in
the course of carrying on their respective businesses and all quotations, orders
or tenders for such contracts which remain open for acceptance. To the best of
the knowledge, information and belief of the Vendors, Cable Systems and the
Subsidiaries of Cable Systems have the capacity, including the necessary
personnel, equipment and supplies, to perform all their obligations thereunder.
-21-
3.20 PENSION PLANS
-------------
There are no pension plans established by or for Cable Systems or the
Subsidiaries of Cable Systems for its or their employees.
3.21 ABSENCE OF GUARANTEES
---------------------
Except as disclosed in Schedule 3.21 attached hereto, neither Cable
Systems nor any Subsidiary of Cable Systems has given or agreed to give, or is a
party or bound by, any guarantee of indebtedness or other obligations of third
parties or any other commitment by which Cable Systems or such Subsidiary of
Cable Systems is, or is contingently, responsible for such indebtedness or other
obligation.
3.22 LITIGATION
----------
Except as disclosed in Schedule 3.22 attached hereto, there is no suit,
action, litigation, arbitration proceeding or governmental proceeding, hearing
before an administrative tribunal, including appeals and applications for
review, in progress, pending or, to the best of the knowledge, information and
belief (after due enquiry) of the senior officers of Cable Systems and the
Subsidiaries of Cable Systems, threatened against or relating to Cable Systems
or the Subsidiaries of Cable Systems or affecting its or their properties or
business which, if determined adversely to Cable Systems or the Subsidiaries of
Cable Systems, individually or in the aggregate, might have a Material Adverse
Effect on the properties, business, future prospects or financial condition of
Cable Systems or the Subsidiaries of Cable Systems. Except as shown in the said
Schedule, there is not presently outstanding against Cable Systems or any
Subsidiary of Cable Systems, any judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency, instrumentality or
arbitrator.
3.23 EMPLOYEES
---------
Cable Systems and each Subsidiary of Cable Systems shall after the
execution of this Agreement deliver to the Purchaser a list of all personnel
employed or engaged thereby whose annual rate of remuneration exceeds
$50,000.00.
3.24 RESIDENCE OF VENDORS, ETC.
--------------------------
The Vendors are not non-residents of Canada for the purposes of the
Canadian Tax Act. Cable Systems is a Canadian-controlled private corporation for
the purposes of the Canadian Tax Act.
3.25 INSURANCE
---------
Cable Systems and each Subsidiary of Cable Systems has, since their
incorporation, maintained and currently maintains such policies of insurance,
issued by responsible insurers, as are appropriate to the Cable Systems
Business, the Cable Systems USA business, the property and Cable
-22-
Systems Assets and the property and assets of the Subsidiaries of Cable Systems,
in such amounts and against such risks as are customarily carried and insured
against by owners of comparable businesses, properties and assets; all such
policies of insurance are in full force and effect and neither Cable Systems nor
any Subsidiary of Cable Systems is in default, whether as to the payment of
premium or otherwise, under the terms of any such policy.
3.26 VEHICULAR EQUIPMENT
-------------------
Schedule 3.26 attached hereto contains a list of all vehicular
equipment owned or leased by Cable Systems and the Subsidiaries of Cable Systems
as of May 15, 1999. Such vehicular equipment is in roadworthy condition and is
capable of satisfying the inspection requirements and performance standards
prescribed by the Highway Traffic Act (Ontario) and the Regulations thereto, as
may be amended from time to time, for its particular type or class. Additional
vehicles have been or may be leased in the ordinary course of business after May
15, 1999.
3.27 COPIES OF AGREEMENTS, ETC.
--------------------------
True, correct and complete copies of all mortgages, leases,
agreements, instruments and other documents listed in Schedules hereto, and of
the policies of insurance referred to herein are located at the head office
location of Cable Systems and full and complete copies of which shall be made
available to the Purchaser after the execution of this Agreement.
3.28 CORPORATE RECORDS
-----------------
Other than as set out in Schedule 3.28 attached hereto, the corporate
records and minute books of Cable Systems and each of the Subsidiaries of Cable
Systems contain complete and accurate copies of all by-laws of Cable Systems,
and the Subsidiaries of Cable Systems respectively, minutes of all meetings and
resolutions of the directors and shareholders of such corporations; all such
meetings were duly called and held, all such by-laws and resolutions were duly
passed and the share certificate books, registers of shareholders, registers of
transfers and registers of directors of Cable Systems and each of the
Subsidiaries of Cable Systems are complete and accurate in all material
respects.
3.29 BOOKS OF ACCOUNT
----------------
The books and records of account of Cable Systems and the Subsidiaries
of Cable Systems, fairly and correctly set out and disclose in all material
respects and in accordance with generally accepted accounting principals,
consistently applied, the financial positions of Cable Systems and the
Subsidiaries of Cable Systems as of the date hereof and all material financial
transactions of Cable Systems and the Subsidiaries of Cable Systems respectively
have been accurately recorded in such books and records.
-23-
3.30 COMPLIANCE WITH ENVIRONMENTAL LAWS
----------------------------------
With respect to the properties leased by Cable Systems or the
Subsidiaries of Cable Systems, since the commencement date of these leases,
Cable Systems, the Subsidiaries of Cable Systems and the Cable Systems Business
are in compliance with and have always been in compliance with all Environmental
Laws.
3.31 EMPLOYMENT EQUITY
-----------------
None of Cable Systems or the Subsidiaries of Cable Systems have
received notice of any proposed or pending compliance review in respect of
employment equity, know of the basis for the assertion of the same and no
sanctions have been imposed on any of them for failing to honour their
commitment to employment equity.
3.32 FAMILY LAW ACT
--------------
No order has been given under the Family Law Act (Ontario) which would
or does affect the Purchased Shares in any manner whatsoever nor is there any
application threatened or pending under the Family Law Act by any of the
Vendors.
3.33 ASSETS SUFFICIENT FOR CONDUCT OF CABLE SYSTEMS BUSINESS AND CABLE
SYSTEMS USA BUSINESS
------------------------------------------------------------------
(a) Cable Systems Assets constitute all of the assets and properties
required for the operation of Cable System's business as it is
presently operated; and
(b) The assets of Cable Systems USA constitute all of the assets and
properties required for the operation of Cable Systems USA's
Business at it is presently operated.
3.34 BROKER
------
Other than the business brokering agreement was entered into by Cable
Systems in September 1998, neither the Vendors, Cable Systems nor Cable Systems
USA have entered into any brokerage or similar agreement. The herein Agreement
and the transactions contemplated herein are being completed as a result of the
September 1998 brokering agreement. The business broker or finder is entitled to
a brokerage fee or other commission based on the business brokering agreement,
such commission or fee as outlined in the brokering agreement to be paid by
Cable Systems.
3.35 CRIMINAL CODE
Neither Cable Systems nor any director, officer or shareholder of Cable
Systems has been found guilty of any offence under the Criminal Code (Canada).
-24-
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser hereby represents and warrants to the Vendors as follows:
4.1 ORGANIZATION AND VALID EXISTENCE
--------------------------------
The Purchaser is a corporation duly incorporated and organized and is
validly existing under the laws of the State of Nevada and has all necessary
corporate power, authority and capacity to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereunder have
been or by the Closing Date will be duly authorized by all necessary corporate
action on the part of the Purchaser.
4.2 ENFORCEABILITY OF OBLIGATIONS
-----------------------------
This Agreement constitutes a valid and binding obligation of the
Purchaser enforceable against it in accordance with its terms, subject, however,
to limitations with respect to enforcement imposed by law in connection with
bankruptcy or similar proceedings and to the extent that equitable remedies such
as specific performance and injunction are in the discretion of the court from
which they are sought. THE PURCHASER SPECIFICALLY WARRANTS THAT IT HAS THE
FINANCIAL RESOURCES AND ABILITY TO COMPLETE THE PURCHASE CONTEMPLATED BY THIS
AGREEMENT.
4.3 ABSENCE OF CONFLICTING AGREEMENTS
---------------------------------
The Purchaser is not a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, instrument, charter or by-law provision,
statute, regulation, order, judgment, decree or law which would be violated,
contravened or breached by, or under which any default would occur, as a result
of the execution and delivery of this Agreement or the consummation of any of
the transactions provided for herein.
4.4 RESIDENCE OF THE PURCHASER
--------------------------
The Purchaser is a non-Canadian within the meaning of the INVESTMENT
CANADA ACT. This transaction is exempt from the operation of the statue because
the Purchase Price is less than One Hundred Million ($100,000,000.00) Dollars.
4.5 LITIGATION
----------
There is no suit, action, litigation, arbitration proceeding or
governmental proceeding,
-25-
including appeals and applications for review, in progress, pending or, to the
best of the knowledge, information and belief (after due enquiry) of the senior
officers of the Purchaser, threatened against or involving the Purchaser or any
judgment, decree, injunction, rule or order of any Court, governmental
department, commission, agency, instrumentality or arbitrator which, in any such
case, might adversely affect the ability of the Purchaser to enter into this
Agreement or to consummate the transactions contemplated hereby. The Purchaser
is not aware of any existing ground on which any such action, suit or proceeding
may be commenced with any reasonable likelihood of success.
4.6 KEY EMPLOYEE AGREEMENTS
-----------------------
The Purchaser shall, prior to the Closing Date, negotiate employment
agreements with the Key Employees of Cable Systems and the Subsidiaries of Cable
Systems. Such agreements shall be executed on or before the Closing Date.
4.7 EMPLOYEE STOCK OPTIONS
----------------------
The Purchaser is authorized to issue to the employees of Cable Systems
and the Subsidiaries of Cable Systems 100,000 Stock Options, exercisable after
Closing at a strike price of $2.50 per each option, to be divided between the
employees of Cable Systems and the Subsidiaries of Cable Systems in a manner to
be determined. Neither the options, nor the shares issued upon exercise of these
options have been registered under United States securities laws. The employees
shall be entitled to exercise a maximum of one-third of the Stock Options in
each of the three years following the Closing Date. In the event that the
Purchaser assigns this Agreement in accordance with Section 10.6 hereto, the
Permitted Assignee shall be authorized to and shall issue to the employees of
Cable Systems and its Subsidiaries 120,000 Stock Options as above with a strike
price of $2.50 per each option.
4.8 DUE DILIGENCE
-------------
Following the execution of this Agreement, the Purchaser shall conduct
its due diligence subject to the following limitations. The Purchaser shall not
copy any of the Vendor's or Cable Systems' or Cable Systems USA's private
documents without prior written consent of the appropriate party. All
examinations of documents shall take place at the offices of Cable Systems in
Markham, Ontario, or such other place as the parties may agree to, all under
supervision of Cable Systems' personnel. In the event that this Agreement is not
completed for any reason whatsoever, the Purchaser shall not use the information
about the Vendors to compete with Cable Systems or Cable Systems USA, nor shall
the Purchaser solicit the employment of any employee or subcontractor of Cable
Systems or Cable Systems USA or otherwise interfere in the business of Cable
Systems or Cable Systems USA
-26-
ARTICLE 5
CONDITIONS PRECEDENT TO THE PERFORMANCE
---------------------------------------
BY THE PURCHASER OF ITS OBLIGATIONS UNDER THIS AGREEMENT
--------------------------------------------------------
The obligations of the Purchaser to complete the purchase of the
Purchased Shares hereunder shall be subject to the satisfaction of, or
compliance with, in all material respects, at or before the Closing Time, each
of the following conditions precedent (each of which is hereby acknowledged to
be inserted for the exclusive benefit of the Purchaser any may be waived by it
in whole or in part);
5.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF VENDOR AT THE CLOSING TIME
-------------------------------------------------------------------
All of the representations and warranties of each of the Vendors, Cable
Systems and Cable Systems USA made in or pursuant to this Agreement, including,
without limitation, the representations and warranties made and set forth in
Article 3 hereof, shall be materially true and correct as at the Closing Time
and with the same effect as if made at and as of the Closing Time (except as
such representations and warranties may be affected by the occurrence of events
or transactions expressly contemplated and permitted hereby or by transactions
in the ordinary and normal course of business), and the Purchaser shall have
received a certificate from the President or other person exercising the
functions of chief executive officer of each of the Vendors, Cable Systems and
Cable Systems USA and a certificate from the Vendors confirming, to the best of
his knowledge, information and belief (after due enquiry) the truth and
correctness of the representations and warranties of each of Cable Systems,
Cable Systems USA and each of the Vendors.
5.2 PERFORMANCE OF OBLIGATIONS
--------------------------
Each of Cable Systems, Cable Systems USA and each of the Vendors shall
have performed or complied with, in all respects, the Vendors, Cable Systems and
Cable Systems USA, all of its obligations, covenants and agreements hereunder.
5.3 RECEIPT OF CLOSING DOCUMENTATION
--------------------------------
All documentation relating to the due authorization and completion of
the sale and purchase hereunder of the Purchased Shares and all actions and
proceedings taken on or prior to the Closing in connection with the performance
by any of Cable Systems, Cable Systems USA or the Vendors of their obligations
under this Agreement shall be satisfactory to the Purchaser and the Purchaser's
counsel, acting reasonably, and the Purchaser shall have received copies of all
such documentation or other evidence as it may reasonably request in order to
establish the consummation of the transactions contemplated hereby and the
taking of all corporate proceedings in connection therewith in compliance with
these conditions, in form (as to certification and otherwise) and substance
satisfactory to the Purchaser and the Purchaser's Counsel.
5.4 NO FIRE DAMAGE
--------------
No substantial damage by fire or other hazard to the Assets of Cable
Systems shall have
-27-
occurred from the Effective Date to the Closing Date which is not adequately
insured against or which has caused a cessation of business for more than seven
(7) days if insured against.
5.5 LITIGATION
----------
On the Closing Date, there shall be no litigation, governmental
investigation or proceeding pending or threatened for the purpose of enjoining
or preventing the consummation of any of the transactions contemplated by this
Agreement or otherwise claiming that such consummation is improper.
5.6 MATERIAL CHANGE
---------------
Since the Effective Date there shall have been no:
(a) Nothing shall have occurred that has or could cause a Material
Adverse Effect;
(b) Material loss or damage not covered by insurance to any of the
Assets of Cable Systems and the Subsidiaries of Cable Systems.
5.7 DUE DILIGENCE REVIEW
--------------------
The Purchaser shall no later than 55 days after the Effective Date have
completed their due diligence review having been satisfied with the results of
its investigation and review of the business, operations, assets, liabilities,
result of operations, cash flows, conditions (financial and otherwise) and
prospects of, and other matters relating to Cable Systems and the Subsidiaries
of Cable Systems, delivered to the Vendors' Counsel a certificate evidencing the
Purchaser's satisfaction.
5.8 CERTIFICATES
------------
The Vendors shall have delivered to the Purchaser share certificates
representing all of the Purchased Shares, which share certificates shall have
been duly endorsed in blank for transfer or accompanied by duly executed stock
powers.
5.9 KEY EMPLOYEES
The Key Employees shall have entered into the Employment Agreements
referred to in Section 4.6 herein.
-28-
ARTICLE 6
CONDITIONS PRECEDENT TO THE PERFORMANCE BY
------------------------------------------
THE VENDORS OF THE OBLIGATIONS UNDER THIS AGREEMENT
---------------------------------------------------
The obligations of the Vendors to complete the sale of the Purchased
Shares hereunder shall be subject to the satisfaction of or compliance with, at
or before the Closing Time, each of the following conditions precedent (each of
which is hereby acknowledged to be inserted for the exclusive benefit of the
Vendors and may be waived by each of them in whole or in part);
6.1 TRUTH AND ACCURACY OF REPRESENTATIONS OF PURCHASER AT CLOSING TIME
------------------------------------------------------------------
All of the representations and warranties of the Purchaser made in or
pursuant to this Agreement, including without limitation the representations and
warranties made by the Purchaser and set forth in Article 4 hereof, shall be
true and correct as at the Closing Time and with the same effect as if made at
and as of the Closing Time and the Vendors shall each have received a
certificate from a duly authorized senior officer of the Purchaser confirming,
to the best of his knowledge, information and belief (after due enquiry), the
truth and correctness of the representations and warranties of the Purchaser
contained herein;
6.2 PERFORMANCE OF OBLIGATIONS
--------------------------
The Purchaser shall have performed or complied with, in all respects,
all of its obligations, covenants and agreements hereunder.
6.3 RECEIPT OF CLOSING DOCUMENTATION
--------------------------------
All documentation relating to the due authorization and completion of
the sale and purchase hereunder of the Purchased Shares and all actions and
proceedings taken on or prior to the Closing in connection with the performance
by the Purchaser of its obligations under this Agreement shall be satisfactory
to the Vendors and Vendor's Counsel and the Vendors shall have received copies
of all such documentation or other evidence as they may reasonably request in
order to establish the consummation of the transactions contemplated hereby and
the taking of all corporate proceedings in connection therewith in compliance
with these conditions, in form (as to certification and otherwise) and substance
satisfactory to the Vendors and Vendors' Counsel.
6.4 LITIGATION
----------
On the Closing Date, there shall be no litigation, governmental
investigation or proceeding pending or threatened for the purposes of enjoining
or presenting the consummation of any of the transactions contemplated by this
Agreement or otherwise claiming that such consummation is improper.
6.5 SATISFACTION WITH DUE DILIGENCE
-------------------------------
No later than 55 days after the Effective Date, the Purchaser shall
deliver to the Vendors'
-29-
Counsel a certificate evidencing the Purchaser's completion of their due
diligence review and the Purchaser's satisfaction with the same.
6.6 RELEASE OF PERSONAL GUARANTEES
------------------------------
On or before the Closing Date, the Vendors shall be released from any
and all guarantees of indebtedness or other obligations of third parties or any
other commitment by which Cable Systems or the Subsidiaries of Cable Systems
are, or are contingently, responsible for such indebtedness or other obligation.
6.7 KEY EMPLOYEES UNDER CONTRACT
----------------------------
On the Closing Date, the Key Employees of Cable Systems and the
Subsidiaries of Cable Systems shall have executed employment agreements with the
Purchaser satisfactory to the parties thereto.
6.8 ISSUANCE OF STOCK OPTIONS
-------------------------
On the Closing Date, the Purchaser or the Permitted Assignee shall
deliver to the Key Employees the Stock Options described in Section 4.7.
ARTICLE 7
OTHER COVENANTS OF THE PARTIES
------------------------------
7.1 FROM OFFER TO CLOSING DATE
--------------------------
During the period from the date of the Effective Date to the Closing
Time, Cable Systems and the Subsidiaries of Cable Systems shall:
(a) except as otherwise contemplated or permitted by this Agreement,
conducted their respective businesses in the ordinary and normal
course thereof and have not, without the prior written consent of
the Purchaser, entered into any transaction which if effected
before the date of this Agreement, would constitute a material
breach of the representations, warranties or agreements contained
herein;
(b) continued in force all existing policies of insurance presently
maintained by Cable Systems and the Subsidiaries of Cable
Systems;
(c) complied with all Applicable laws affecting the operation of the
Business and the Cable Systems Business and paid all required
Taxes and tax installments;
-30-
(d) not, without the prior written consent of the Purchaser taken any
of the actions, done any of the things or performed any of the
acts described in paragraphs (a)(i) to (x) inclusive and
paragraphs (b)(i) to (x) inclusive of Section 3.11.
7.2 ACTIONS TO SATISFY CLOSING CONDITIONS
-------------------------------------
Each of the Parties hereby agrees to take all such actions as are
within its power to control, and to use its best efforts to cause other actions
to be taken which are not within its power to control, so as to ensure
compliance with any conditions set forth herein which are for the benefit of any
other Party.
7.3 TERMINATION FOR CAUSE
---------------------
In the event of a material issue, which arises following the execution
of this Agreement, but prior to the Closing Date, the parties shall take all
reasonable actions to remedy the issue and close the transaction, including,
without limitation, making use of the dispute resolution procedure set out in
Article 9 hereof. Neither party shall terminate this Agreement without first
attempting, in good faith, to remedy any material issue. In the event any party
wishes to terminate this Agreement for cause, following attempts to remedy the
issue, such party shall notify all other parties in writing as to the nature of
the issue and the reason for termination prior to terminating this Agreement.
ARTICLE 8
SURVIVAL AND REMEDY: INDEMNIFICATION
------------------------------------
8.1 SURVIVAL
--------
All representations and warranties of the parties hereto shall survive
the Closing and shall expire as of 11:59 p.m. Eastern Standard time on the date
which is ninety days after the Closing Date.
8.2 INDEMNIFICATION BY VENDORS
--------------------------
The Vendors, Cable Systems and Cable Systems USA agree to indemnify the
Purchaser and agree to hold it harmless from any Losses incurred or suffered by
the Purchaser arising from any breach of or any inaccuracy in any representation
or warranty made by the Vendors, Cable Systems and Cable Systems USA pursuant to
this Agreement and any breach of or failure by the Vendors, Cable Systems and
Cable Systems USA to perform any covenant or obligation of the Vendors, Cable
Systems and Cable Systems USA set out in this Agreement.
-31-
8.3 INDEMNIFICATION BY PURCHASER
----------------------------
The Purchaser agrees to indemnify the Vendors, Cable Systems and Cable
Systems USA against and agrees to hold them harmless from any Losses incurred
and suffered by any of the Vendors, Cable Systems and Cable Systems USA or any
of their respective Affiliates (or any combination thereof) arising from any
breach of or any inaccuracy in any representation or warranty made by the
Purchaser pursuant to this Agreement and any breach of or failure by the
Purchaser to perform any covenant or obligation of the Purchaser set out in this
Agreement.
8.4 NOTICE OF CLAIMS: ASSUMPTION OF DEFENSE
---------------------------------------
The indemnified party shall give prompt notice to the indemnifying
party in accordance with the terms of Section 10.4 of the assertion of any claim
or the commencement of any suit proceeding by any party in respect of which
indemnity may be sought hereunder, specifying with reasonable particularity the
basis therefore and giving the indemnifying party such information with respect
thereto as the indemnifying party may reasonably request (but the giving of such
notice shall not be conditioned precedent to indemnification hereunder). The
indemnifying party may, at its own expense:
(a) participate in; and
(b) upon notice to the indemnified party and the indemnifying party's
written agreement that the indemnified party is entitled to
indemnification pursuant to Section 8.2 or Section 8.3 for Losses
arising out of such claim, suit, action or proceeding, at any
time during the course of any such claim, suit, action or
proceeding, assume the defense thereof; provided that:
(i) the indemnifying party's counsel is reasonably satisfactory
to the indemnified party;
(ii) the indemnifying party shall thereafter consult with the
indemnified party upon the indemnified party's reasonable
request for consultation from time to time with respect to
such claim, suit, action or proceeding; and
(iii) in the case of a claim arising from a breach of the
warranties contained in Section 3.9 hereof for which the
Vendors, Cable Systems and Cable Systems USA have, pursuant
to this section 8.4 assumed the defense thereof, if the
action of the Vendors, Cable Systems and Cable Systems USA
may adversely affect the Purchaser or Cable Systems tax
obligations for periods ending after the Closing Date, none
of the Vendors, Cable Systems and Cable Systems USA shall
enter into a settlement agreement, file and amended tax
return or seek a refund of Taxes with respect to the
operations of Cable Systems without the prior
-32-
written consent of the Purchaser, which consent shall not be
unreasonably withheld. If the indemnifying party assumes
such defense, the indemnified party shall have the right
(but not the duty) to participate in the defense thereof and
to employ counsel, at its own expense, separate from the
counsel employed by the indemnifying party. Whether or not
the indemnifying party chooses to defend or prosecute any
such claim, suit, action or proceeding, all of the Parties
hereto shall cooperate in the defense or prosecution
thereof.
8.5 SETTLEMENT OR COMPROMISE
------------------------
Any settlement or compromise made or caused to be made by the
indemnified party or the indemnifying party, as the case may be, of any such
claim, suit, action or proceeding of the kind referred to in Section 8.4 shall
also be binding upon the indemnifying party or the indemnified party, as the
case may be, in the same manner as if a final judgment or decree was entered by
a court of competent jurisdiction in the amount of such settlement or
compromise. No party shall settle or compromise any claim, suit, action or
proceeding without the prior written consent of the other parties hereto, which
consent shall not be unreasonably withheld.
8.6 FAILURE OF INDEMNIFYING PARTY TO ACT
------------------------------------
In the event the indemnifying party does not elect to assume the
defense of any claim, suit, action or proceeding, then any failure of the
indemnified party to defend or to participate in the defense of any such claim,
suit, action or proceeding or to cause same to be done, shall not relieve the
indemnifying party of its obligations hereunder, provided that the indemnified
party gives the indemnifying party at least thirty (30) days' notice of its
proposed intention not to defend or participate and affords the indemnifying
party the opportunity to assume the defense thereof.
8.7 PAYMENT OF INDEMNIFYING PARTY
-----------------------------
Contemporaneously with any compromise or settlement the indemnifying
party shall pay or cause to be paid to the indemnified party or as they may
direct, the amount owing under this indemnity with respect to such matter being
provided further that:
(a) the indemnifying party shall provide further security to the
indemnified party in respect of any cost of damages arising in
connection with any litigation; and
(b) the indemnifying party shall agree to reimburse the indemnified
party promptly in respect of all out of pocket expenses incurred
by indemnified party in connection with such litigation or
pending litigation.
-33-
8.8 LIMITATION RE INDEMNIFICATION BY THE VENDORS, CABLE SYSTEMS AND CABLE
SYSTEMS USA
-----------------------------------------------------------------------
Notwithstanding anything contained in Section 8.2 hereof, the Vendors,
Cable Systems and Cable Systems USA shall only be required to pay to the
Purchaser, an amount in respect of Losses for indemnification under the Section
8.2 to the extent by which the amount of such Losses exceeds, in the aggregate,
$25,000.
ARTICLE 9
DISPUTE RESOLUTION
------------------
9.1 NEGOTIATION - Subject to the provisions of this Agreement, the Vendors and
the Purchaser will attempt to resolve any controversy relating to the Agreement
by negotiation between representatives of the parties who have authority to
settle the controversy. The disputing Party will give the other Parties written
notice of the dispute. Within five (5) business days of receiving such notice,
the receiving Parties will submit to the other Parties a written response. The
notice and response shall not exceed three (3) pages. The representatives shall
meet at a mutually acceptable time and place within five (5) business days of
the date of the responding Party's notice.
9.2 MEDIATION
If the matter has not been resolved within five (5) business days of
the responding Party's notice, or if either Party will not meet, the dispute
will be submitted to mediation as set out below. The mediator will have no power
to bind the Parties. The mediation will be confidential. The mediation process
will be conducted as follows:
(a) SELECTION OF MEDIATOR - The Vendors and the Purchaser will have
three (3) business days from the end of the time for negotiation
to agree upon a mutually acceptable mediator (the "Mediator"). If
no Mediator has been selected within that time, the Vendors and
the Purchaser agree jointly to request that Cable System's
financial advisors supply, within two (2) business days, a list
of three (3) potential mediators. Within two (2) business days of
receipt of the list, Vendors and Purchaser will independently
rank the proposed candidates, will simultaneously exchange
rankings, and will agree to select as the Mediator the individual
receiving the highest combined ranking who is available. If
either Party does not rank and provide a copy of the ranking to
the other Party, the Party who does rank will be able to select
the Mediator from the list;
(b) TIME AND PLACE FOR MEDIATION - In consultation with the Mediator,
the Vendors and the Purchaser will designate a mutually
convenient time and place for the mediation (and unless
circumstances require otherwise, the date should be no later than
five (5) business days after the selection of the Mediator);
(c) SUMMARY OF VIEWS - Two (2) days prior to the mediation, each
Party will deliver
-34-
to the Mediator and to the other Parties a written summary of its
views of the dispute, such summary not to exceed three (3) pages;
(d) FEES OF MEDIATOR - The fees of the Mediator will be shared
equally by Vendor and Purchaser; and
(e) TERMINATION OF PROCEDURE - The Vendors and the Purchaser agree to
participate in the mediation for at least four (4) hours (unless
terminated earlier by the Mediator). After that time, either the
Vendors or the Purchaser may leave the mediation at any time. If
the mediation does not yield a settlement, the Vendors and the
Purchaser agree not to take any action (other than good faith
attempts to negotiate a settlement to the dispute) prior to the
conclusion of a five (5) day post-mediation period that commences
on the day after the conclusion of the mediation process.
9.3 ARBITRATION
-----------
After the expiry of the five (5) day moratorium period referred to in
the paragraph above, if either Party will not participate in the mediation, the
dispute will be finally settled by arbitration in accordance with the provisions
of the ARBITRATION ACT, R.S.O. 1990, c. A-24, as amended from time to time. The
following rules will apply to the arbitration:
(a) APPOINTMENT OF ARBITRATOR - The arbitration tribunal will consist
of one arbitrator (the "Arbitrator"). The Vendors and the
Purchaser will have five (5) business days from the end of the
five (5) day post-mediation period to agree on the Arbitrator. If
they cannot agree, either Party may request that Cable System's
financial advisors supply, within two (2) business days a list of
five (5) qualified arbitrators. Within two (2) business days of
the receipt of the list, the Vendors and the Purchaser will
independently rank the proposed arbitrators, will simultaneously
exchange rankings, and will agree to select as the Arbitrator the
individual receiving the highest combined ranking who is
available. If either Party does not rank and provide a copy of
the ranking to the other party, the Party who does rank will be
able to select the Arbitrator;
(b) RULES OF ARBITRATION - The Vendors and the Purchaser shall agree,
in consultation with the Arbitrator, on the rules for the
arbitration. Absent agreement to the contrary, the following
rules, designed to save time and expense for the Parties, will
apply:
(i) Pleadings shall be exchanged within twenty (20) days of the
selection of the Arbitrator, and shall be no more than five
(5) pages in length;
(ii) Each Party shall provide to the other access to any
documents in their
-35-
possession which may be relevant to the arbitration. Each
Party shall also provide to the other two (2) days before
the arbitration hearing, lists and copies of the documents
that the Party intends to rely on at the arbitration;
(iii) Each Party shall be entitled to oral discovery of the other
Party if it deems it appropriate. Any questions refused
shall be put to the Arbitrator for the Arbitrator's
determination as to whether the questions are appropriate
and relevant. Oral discovery shall take place within thirty
(30) days of the delivery of the conclusion of the exchange
of pleadings;
(iv) The arbitration shall take place within three (3) months of
the selection of the Arbitrator;
(v) At the Arbitration hearing, opening argument will be limited
to one half hour per party;
(vi) Each Party may produce up to two witnesses for direct
examination. The total time permitted for direct examination
(whether one or two witnesses is produced) will be two
hours. Total time for cross-examination will also be two
hours for each Party;
(vii) All evidence is admissible and its weight will be
determined by the Arbitrator;
(viii) Each Party may introduce any of its 15 documents;
(ix) Closing argument will be limited to (1) one hour for each
Party; and
(x) The Arbitrator shall be instructed to produce a decision
within seven (7) calendar days of the conclusion of the
arbitration, and written reasons within one (1) month of the
arbitration.
(c) The arbitration will be conducted in English and will take place
in the Town of Markham;
(d) The arbitration awards will be given in writing and will be
final, not subject to any appeal, and will deal with the question
of costs of the arbitration. In the award of costs, the
Arbitrator may consider each Party's efforts to make any
settlement offer. If either Party refuses to participate in the
negotiation or mediation, there will be a presumption that costs
on a solicitor and client basis will be awarded against the Party
refusing to participate, regardless of the outcome of the
arbitration;
-36-
(e) Judgement upon the arbitration award may be entered into any
court having jurisdiction, or application may be made to such
court for judicial recognition of the award; and
(f) The Arbitrator will not award punitive or special damages.
9.4 LIMITED PROCEDURE FOR SETTLING DISPUTES
---------------------------------------
The Parties hereto mutually agree that the procedure specified in the
Agreement are the only procedures available for the resolution of any
controversies or disputes arising out of or relating to this Part, or the
breach, termination or validity of it, or any other related agreement between
the Vendors and the Purchaser. If any Party attempts to have issues resolved in
court that should property be resolved pursuant to this Part, the Parties agree
that this section can be used to stay any such proceedings. However, before or
during the time that the Vendor and the Purchaser follow these procedures,
either one can go to the appropriate court to get an injunction if the party
reasonably believes that such a step is necessary to avoid irreparable damage or
harm. Even if any Party takes such action, the Parties will continue to
participate in good faith in the procedures set out in this Part.
ARTICLE 10
OTHER MATTERS
-------------
10.1 POWER OF ATTORNEY
-----------------
The Vendors, or any of them, may act by Attorney. Power of Attorney
shall be given to Xxxxxx Xxxxxxxx. The Attorney, Xxxxxxxx, shall, upon request,
produce a copy of the Power of Attorney authorizing him to sign all documents
including this Agreement, on behalf of the Vendors. Each Vendor shall, unless
unable to act on his/her or its own behalf, execute the share transfer in favour
of the Purchaser herein.
10.2 EXPENSES
--------
The Purchaser shall pay all taxes, assessments, charges and fees,
imposed by Canada or any province or political subdivision thereof required to
be paid in connection with the transfer and sale of the Purchased Shares.
10.3 TIME
----
Time shall be of the essence hereof.
-37-
10.4 NOTICES
-------
Any notice, direction or other document required to be given hereunder
or for the purposes hereof (hereinafter in this Section 9.3 called a "notice")
to any Party shall be in writing and shall be sufficiently given if delivered
personally, or if sent by prepaid registered mail or if transmitted by facsimile
or other form of recorded communication tested prior to transmission to such
Party:
(a) in the case of a notice to the Vendors at:
000 Xxxxxxx Xxxxx, Xxxx 0
Xxxxxxx, Xxxxxxx X0X 0X0
with a facsimile number of (000) 000-0000
Attention: as applicable
with a copy to the Vendors' Counsel at:
Xxxxxxx & Associate
00 Xxxx Xxxxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
with a facsimile number of (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
(b) in the case of a notice to the Purchaser at:
000 Xxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxxx, XX 00000
with a facsimile number of (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
with a copy to the Purchaser's Counsel at:
Xxxxxxx, Savage & Xxxxxxxxx, LLP
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000
with a facsimile number of (000) 000-0000
Attention: Xxx Xxxxxxxxx (000) 000-0000
-38-
or at such other address as the Party to whom such writing is to be given shall
have last notified the Party giving the same in the manner provided in this
section. Any notice delivered to the Party to whom it is addressed as
hereinbefore provided shall be deemed to have been given and received on the day
it is so delivered at such address, provided that if such day is not a Business
Day then the notice shall be deemed to have been given and received on the first
Business Day next following such day. Any notice mailed as aforesaid shall be
deemed to have been given and received on the fifth Business Day following the
date of its mailing. Any notice transmitted by facsimile or other form of
recorded communication shall be deemed given and received on the first Business
Day after its transmission. Failure to transmit timely or adequate notice to
Vendor's Counsel or to Purchaser's Counsel, as the case may be, shall not
invalidate, nullify or otherwise detrimentally affect the provision of same to a
Party.
10.5 AMENDMENT
---------
This Agreement may be amended, modified or supplemented but only in
writing signed by all of the Parties hereto.
10.6 ASSIGNMENT
----------
Neither this Agreement nor any rights or obligations hereunder shall be
assignable by any Party without the prior written consent of the other Parties
hereto; provided that the Purchaser shall be entitled to assign this Agreement
to the Permitted Assignee. In the event that this Agreement is assigned to the
Permitted Assignee, the Permitted Assignee shall execute an Addendum to this
Agreement confirming its terms and the obligations of the Permitted Assignee to
be bound thereto prior to the Permitted Assignee being entitled to the benefit
of this Agreement hereof.
10.7 TAX MATTERS
-----------
The Vendors and Purchaser shall treat and report the transactions
contemplated by this Agreement in all respects consistently for the purposes of
the Canadian Tax Act and any other federal, provincial, xxxxx, xxxxxxxxxxx,
xxxxxxxx, xxxxxxxxx, local or foreign taxing statute. The Parties hereto shall
not take any actions or positions inconsistent with the obligations set forth
herein.
10.8 FURTHER ASSURANCES
------------------
The Parties hereto shall with reasonable diligence do all such things
and provide all such reasonable assurances as may be required to consummate the
transactions contemplated hereby, and each Party shall provide such further
documents or instruments required by any other Party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing.
-39-
10.9 SEVERABILITY
------------
If any covenant or provision of this Agreement is prohibited in whole
or in part in any jurisdiction, such covenant or provision shall, as to such
jurisdiction, be ineffective to the extent of such jurisdiction without
invalidating the remaining covenants and provisions hereof and shall, as to such
jurisdiction, be deemed to be severed from this Agreement to the extent of such
prohibition.
10.10 COUNTERPARTS
------------
This Agreement may be executed by the Parties in separate counterparts
each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
10.11 PUBLIC NOTICES
--------------
Except for disclosures required by Applicable Law, all public notices
to third parties and all other publicity concerning the transactions
contemplated herein shall be jointly planned and coordinated by the Vendors and
the Purchaser and no Party shall act unilaterally in this regard without the
prior approval of every other Party, such approval not to be unreasonably
withheld.
IN WITNESS WHEREOF the Parties have hereunto duly executed this
Agreement.
SIGNED, SEALED AND DELIVERED )
In the Presence of: ) INTERNET CABLE CORPORATION
)
)
) PER:____________________________
) A.S.O.
)
)
) ----------------------------
) XXXXXX XXXXXX
)
)
) ----------------------------
) XXXXXX XXXXXXXX
)
)
) 1291973 ONTARIO LIMITED
)
)
) PER:________________________
A.S.O.
-40-
)
)
) ONTARIO CABLE AND
) CONTRACTING INCORPORATED
)
)
) PER:________________________
) A.S.O.
)
) XXXXX HOLDINGS INC.
)
)
) PER:________________________
) A.S.O.
)
) RYVON FUTURE INC.
)
)
) PER:________________________
) A.S.O.
)
)
) ----------------------------
) XXXXX XXXXXXXX
)
)
) ------------------------
) XXXXXX XXXXXXXX, IN TRUST
)
) CABLE SYSTEMS TECHNICAL
) SERVICES INC.
)
)
) PER:________________________
) A.S.O.
-41-
SCHEDULE 2.1
LIST OF SHAREHOLDERS
--------------------
Ryvon Future Inc. 114 Common Shares
Xxxxxx Xxxxxx 98 Common Shares
Xxxxx Holdings Inc. 26 Common Shares
Ontario Cable and Contracting Inc. 103 Common Shares
1291973 Ontario Limited 98 Common Shares
Xxxxxx Xxxxxxxx 114 Common Shares
Xxxxx Xxxxxxxx 114 Common Shares
Ryvon Future Inc., in trust 25 Common Shares
Xxxxx Xxxxxx 50 Class "A" Preference Shares
-42-
SCHEDULE 2.3(C)
OUTSTANDING SHAREHOLDER LOANS TO CABLE SYSTEMS AND THE SUBSIDIARIES OF CABLE
SYSTEMS
----------------------------------------------------------------------------
(i) Fifty thousand Canadian dollars (CAN$50,000.00) to Cable Systems by Xxxxx
Xxxxxx, represented by all issued and outstanding Class A Preference Shares of
Cable Systems;
-43-
SCHEDULE 2.3(D)
PERSONAL GUARANTEES OF THE DEBTS AND OTHER OBLIGATIONS OF CABLE SYSTEMS AND THE
SUBSIDIARIES OF CABLE SYSTEMS
-------------------------------------------------------------------------------
(i) personal guarantees by Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxxx of
the debts and obligations of Cable Systems and the Subsidiaries of Cable Systems
to the Canadian Imperial Bank of Commerce (CIBC);
(ii) personal guarantees by Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxxx of
the debts and obligations of Cable Systems and the Subsidiaries of Cable Systems
to the Business Development Bank of Canada (BDC); and
(iii) personal guarantees by Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxxx of
the debts and obligations of Cable Systems and the Subsidiaries of Cable Systems
to the Bank of Nova Scotia;
-44-
SCHEDULE 3.1
COPY OF ARTICLES OF INCORPORATION
---------------------------------
Cable Systems Technical Services, Inc. (Deleware)
Cable Systems Technical Services Inc. (Ontario)
Articles of Amendment to Ontario Corporation
-45-
SCHEDULE 3.2
OBLIGATIONS
-----------
NONE
-46-
SCHEDULE 3.5
SUBSIDIARIES
------------
Name: Cable Systems Technical Services Inc.
Jurisdiction of Incorporation: State of Delaware
Issued Shares Cable Systems Technical Services
Inc. (Ontario) 700 Common Shares
Xxxx Xxxxxxxxxx 100 Common Shares
Xxxxxxx Xxxxxxxxxxx 100 Common Shares
Optional Shares: None
-47-
SCHEDULE 3.6
CAPITALIZATION
--------------
(iii) CABLE SYSTEMS TECHNICAL SERVICES INC. (Ontario)
-------------------------------------
TYPE OF SHARES AND AUTHORIZED NUMBER NO. OF SHARES ISSUED
------------------------------------ --------------------
Unlimited Common Shares 692 Common Shares
10,000 Class "A" Preference Shares 50 Class "A" Preference
10,000 Class "B" Preference Shares None
(iv) CABLE SYSTEMS TECHNICAL SERVICES INC. (U.S.A.)
-------------------------------------
TYPE OF SHARES AND AUTHORIZED NUMBER
------------------------------------
3,000 Common Shares 900 Common Shares
-48-
SCHEDULE 3.8
UNDISCLOSED LIABILITIES
-----------------------
NONE
-49-
SCHEDULE 3.11
UNUSUAL TRANSACTIONS
--------------------
NONE
-50-
SCHEDULE 3.12
LEASED EQUIPMENT
----------------
-51-
SCHEDULE 3.18
EMPLOYMENT CONTRACTS
--------------------
NONE
-52-
SCHEDULE 3.21
GUARANTEES
----------
Cable Systems and Cable Systems USA have guaranteed the results and actions of
their subcontractors in their day to day roles on behalf of both companies to
the customers of Cable Systems and Cable Systems USA.
-53-
SCHEDULE 3.22
LITIGATION
----------
NONE
-54-
SCHEDULE 3.23
EMPLOYEES OFFICES HELD
--------- ------------
Xxxxxx Xxxxxxxx Director; President, C.E.O and Treasurer
Xxxxx Xxxxxx
Xxx Xxxxx
Xxxxxx Xxxxxx Director and Secretary
Xxxxxx Xxxxxx
-55-
SCHEDULE 3.26
VEHICULAR EQUIPMENT
-------------------
-56-
SCHEDULE 3.28
CORPORATE RECORDS
-----------------
NONE
-57-
SCHEDULE 4.6
KEY EMPLOYEES
-------------
Xxxxxx Xxxxxxxx - President and CEO
Xxxxx Xxxxxx - Vice President, Engineering
Xxxxxx Xxxxxx - Secretary and Director
