SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): AUGUST 14, 1995.
ACC CORP.
DELAWARE 0-14567 16-1175232
(State or other (Commission File Number) (IRS Employer
jurisdiction Identification No.)
of incorporation)
400 WEST AVENUE, ROCHESTER, NY 14611
(Address of Principal Executive Offices)
Telephone Number, including area code: (716) 987-3000
NOT APPLICABLE
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 14, 1995, the Registrant, through its 70% owned Canadian
subsidiary, ACC TelEnterprises Ltd. ("ACL"), purchased all of the issued
and outstanding shares of capital stock of four affiliated privately-held
Canadian corporations operating under the business name of "Metrowide
Communications," pursuant to the terms of a Share Purchase Agreement
("Agreement") between ACL and the shareholders of the Metrowide
Communications corporations dated as of August 1, 1995.
The Metrowide Communications corporations are rebillers of local and
long distance telecommunications services in the Province of Ontario,
Canada that purchase both local service and long distance service capacity
from various providers of such services, including ACL, and repackage and
resell such services primarily in the Toronto, Ontario area. ACL is one of
the largest non-facilities based telecommunications carriers in Canada and
intends to continue to offer and to expand upon the telecommunications
services offered by the Metrowide Communications corporations.
ACL is paying a total purchase price of C$6,000,000 (approximately
U.S.$4,380,000) for all of these shares. Of this total, C$2,000,000
(approximately U.S.$1,460,000) was paid at the closing of this transaction
on August 14, 1995, and the remaining C$4,000,000 (approximately
U.S.$2,920,000) will be paid in installments through August 1, 1996. This
purchase price was determined on the basis of arms-length negotiations
between ACL and the shareholders of the Metrowide Communications
corporations.
Except for arms-length transactions between the various Metrowide
Communications corporations and ACL and its affiliates in the ordinary
course of business, none of the Metrowide Communications corporations nor
any of their respective officers or directors have any material
relationship with the Registrant, any of the Registrant's affiliates, any
Director or officer of the Registrant, or any associate of such Director or
officer.
The purchase price for this acquisition has been and will be paid out
of ACL's operating cash flow.
ITEM 7.FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. Not required.
(B) PRO FORMA FINANCIAL INFORMATION. Not required.
(C) EXHIBITS. See Exhibit Index.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
ACC CORP.
(Registrant)
Date: December 8, 1995 By:/s/ Sharon L. Barnes
Sharon L. Barnes, Controller
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
2-1 Share Purchase Agreement, dated as of August 1, 1995, between ACC
TelEnterprises Ltd. and the Shareholders of the Metrowide
Communications Corporations Listed Therein.
EXHIBIT 2.1
SHARE PURCHASE AGREEMENT
Made as of August 1, 1995
Between
ACC TELENTERPRISES LTD.
and
THE SHAREHOLDERS NAMED IN SCHEDULE A HERETO
McMillan Binch
BARRISTERS & SOLICITORS
Suite 3800 . South Tower . Royal Bank Plaza .
Toronto . Ontario . Canada M5J 2J7
Fax (416) 865-7048 . Telephone (416) 865-7000
TABLE OF CONTENTS
RECITALS.............................................................. 1
SECTION 1 - INTERPRETATION
1.1 DEFINITIONS..................................................... 1
1.2 HEADINGS AND REFERENCES......................................... 4
1.3 EXTENDED MEANINGS............................................... 4
1.4 ACCOUNTING PRINCIPLES........................................... 4
1.5 CURRENCY........................................................ 4
1.6 BEST OF KNOWLEDGE............................................... 4
1.7 SCHEDULES....................................................... 5
SECTION 2 - PURCHASE AND SALE
2.1 PURCHASE AND SALE............................................... 5
2.2 PAYMENT......................................................... 6
2.3 ALLOCATION OF PURCHASE PRICE.................................... 6
2.4 ACQUISITION TAX RETURNS......................................... 6
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF THE VENDORS
3.1 CORPORATE MATTERS............................................... 7
3.2 SHARE CAPITAL, DIVIDENDS AND SHARES............................. 9
3.3 FINANCIAL MATTERS............................................... 11
3.4 PROPERTY OF THE CORPORATIONS.................................... 18
3.5 CONDUCT OF BUSINESS............................................. 22
3.6 EMPLOYMENT MATTERS.............................................. 24
3.7 GENERAL MATTERS................................................. 25
SECTION 4 - CONDUCT OF BUSINESS
SECTION 5 - ACCESS AND CONFIDENTIALITY
5.1 ACCESS.......................................................... 29
5.2 CONFIDENTIALITY................................................. 29
SECTION 6 - CONDITIONS
6.1 GENERAL......................................................... 30
SECTION 7 - NON-COMPETITION
SECTION 8 - RELEASES
SECTION 9 - INDEMNITIES
9.1 GENERAL INDEMNITY............................................... 33
9.2 NOTICE AND PARTICIPATION........................................ 34
9.3 STATUS OF THE CORPORATIONS...................................... 34
SECTION 10 - CLOSING
SECTION 11 - SURVIVAL
11.1 SURVIVAL........................................................ 35
SECTION 12 - MISCELLANEOUS
12.1 FURTHER ASSURANCES.............................................. 36
12.2 INVESTMENT CANADA ACT........................................... 36
12.3 NO DISCLOSURE................................................... 36
12.4 BROKERS......................................................... 36
12.5 NOTICE.......................................................... 36
12.6 TIME............................................................ 37
12.7 HEADINGS........................................................ 37
12.8 GOVERNING LAW................................................... 37
12.9 ENTIRE AGREEMENT................................................ 37
12.10 SEVERABILITY.................................................... 37
12.11 BENEFIT OF AGREEMENT............................................ 38
12.12 COUNTERPARTS.................................................. 38
<PAGE>
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made as of August 1, 1995 between
ACC TELENTERPRISES LTD.,
a corporation formed under the
laws of Ontario
(the "Purchaser")
- and -
THE SHAREHOLDERS NAMED IN
SCHEDULE A HERETO
(collectively, the "Vendors")
RECITALS
WHEREAS the Purchaser wishes to purchase, and the Vendors wish
to sell their respective interests in all of the issued and outstanding shares
of Centex Telecommunications Ltd., 903622 Ontario Limited, 964997 Ontario
Limited and 839286 Ontario Ltd., on the terms and conditions of this Agreement;
ACCORDINGLY, for value received, the parties agree as follows:
SECTION 1 - INTERPRETATION
1. DEFINITIONS. In this Agreement the following terms have the following
meanings:
(a) 839 means 839286 Ontario Ltd., a corporation formed under the laws of
the Province of Ontario.
(b) 903 means 903622 Ontario Limited, a corporation formed under the laws
of the Province of Ontario.
(c) 964 means 964997 Ontario Limited, a corporation formed under the laws
of the Province of Ontario.
(d) 964 SUBSIDIARIES means 964's wholly-owned subsidiaries Metrowide
Communications (Ottawa) Inc., Metrowide International (Ottawa) Inc. and
Advantage Telecommunications Solutions Inc.
(e) ACQUISITION TAX RETURNS has the meaning ascribed to it in Section 2.4.
(f) ANNUAL FINANCIAL STATEMENTS means the audited financial statements of
Centex and 903, and the unaudited financial statements of 839 and 964, in each
case consisting of a balance sheet, statement of profit and loss, statement of
retained earnings and deficit and statement of changes in financial position
together with the notes thereto, dated and reported as follows:
(1) Centex, for the fiscal period ended April 30, 1995, as reported
by Messrs Peat Marwick Thorne, Chartered Accountants,
(2) 903, for the fiscal period ended July 31, 1994, as reported by
Messrs Peat Marwick Thorne, Chartered Accountants,
(3) 964, for the fiscal period ended July 31, 1994,
(4) 839, for the fiscal period ended July 31, 1994,
copies of which are attached hereto as Schedule 1.1(f).
(g) BUSINESS means the business of soliciting and providing
telecommunications services to business and residential customers in Ontario as
now conducted by each or any of the Corporations.
(h) BUSINESS DAY means a day on which banks are open for business in
Toronto, Ontario, Canada but excludes Saturday, Sunday and any other day which
is a legal holiday in such city.
(i) CENTEX means Centex Telecommunications Ltd., a corporation formed under
the laws of Canada.
(j) CLOSING DATE means August 1, 1995 or such other date as may be agreed
by the parties.
(k) CORPORATIONS means each of Centex, 903, 964, 839 and the 964
Subsidiaries.
(l) ENCUMBRANCE means any charge, mortgage, lien, pledge, security interest
whether created or arising by agreement, statute or otherwise at law, attaching
to property, interests or rights and shall be construed in the widest possible
terms and principles known under the law applicable to such property, interests
or rights and whether or not they constitute specific or floating charges as
those terms are understood under the laws of the Province of Ontario.
(m) GOOD STANDING, when used in reference to a corporation, denotes that
such corporation has not been discontinued or dissolved under the laws of its
incorporating jurisdiction, that no steps or proceedings have been taken to
authorize or require such discontinuance or dissolution and that such
corporation has submitted to the relevant authority all notices or returns of
corporate information and all other filings required by law to be submitted to
such authority.
(n) GOVERNMENTAL AUTHORITY means any nation or government, any state,
province, or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government including a regulatory authority, governmental agency,
commission, department, official or other instrumentality (including a Minister
of the Crown and his agents and employees).
(o) INTELLECTUAL PROPERTY has the meaning as set out in Section 3.4(h) of
this Agreement.
(p) INTERIM FINANCIAL STATEMENTS means the audited financial statements of
Centex and 903, and the unaudited financial statements of 839 and 964, in each
case as at and for the period ending April 30, 1995, consisting of a balance
sheet, statement of profit and loss, statement of retained earnings and deficit
and statement of changes in financial position together with the notes thereto,
copies of which are attached hereto as Schedule 1.1(p).
(q) ITA means the INCOME TAX ACT (Canada), as amended.
(r) PURCHASE means the transaction of purchase and sale of the Purchased
Shares contemplated by this Agreement.
(s) PURCHASE PRICE has the meaning ascribed to it in Section 2.1.
(t) PURCHASED SHARES means all of the issued and outstanding shares of
Centex, 903, 964 and 839, as set forth in Schedule 3.2(a).
(u) REAL PROPERTY has the meaning ascribed to it in Section 3.4(e).
(v) TAX or TAXES means all present and future taxes, levies, imposts,
assessments or other charges, including, without limitation, all income,
capital, sales, use, transfer, goods and services, franchise, withholding,
payroll, employment, health, education, excise, business, property, stamp or
other taxes, customs duties, surtaxes, anti-dumping and countervail duties,
fees, assessments, charges or governmental imposts of any kind whatsoever,
together with any interest, penalties or additions to such Taxes, including any
interest, penalties, fines or other amounts on, in lieu of, for non-collection
of, or otherwise in respect of, such amounts imposed by any federal,
provincial, local, foreign or other taxing authority.
(w) VENDORS' COUNSEL means Messrs. Cassels Brock & Blackwell.
1.2 HEADINGS AND REFERENCES. The division of this Agreement into sections
and subsections and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation of this Agreement.
The terms "this Agreement", "hereof", "hereunder" and similar expressions refer
to this Agreement and not to any particular section or other portion hereof and
include any agreement supplemental hereto. Unless something in the subject
matter or context is inconsistent therewith, references herein to sections are
to sections of this Agreement.
1.3 EXTENDED MEANINGS. In this Agreement words importing the singular
number only shall include the plural, and vice versa, words importing the
masculine gender shall include the feminine and neuter genders and vice versa,
and words importing persons shall include individuals, partnerships,
associations, trusts, unincorporated organizations and corporations. The term
"including" means "including without limitation".
1.4 ACCOUNTING PRINCIPLES. Wherever in this Agreement reference is made to
a calculation to be made in accordance with generally accepted accounting
principles, such reference shall be deemed to be to the generally accepted
accounting principles from time to time approved by the Canadian Institute of
Chartered Accountants, or any successor institute, applicable as at the date on
which such calculation is made or required to be made in accordance with
generally accepted accounting principles.
1.5 CURRENCY. All references to currency or dollar amounts herein are to
lawful money of Canada.
1.6 BEST OF KNOWLEDGE. Any statement in this Agreement expressed to be
made to "the best of the Vendors' knowledge" shall be understood to be made on
the basis of each Vendor's actual knowledge.
1.7 SCHEDULES. The following are the schedules annexed to this Agreement
and incorporated by reference and deemed to be part hereof:
Schedule A - List of Vendors
Schedule 1.1(f) - Annual Financial Statements
Schedule 1.1(p) - Interim Financial Statements
Schedule 2.2(b) - Promissory Note
Schedule 2.2(c) - Promissory Note
Schedule 2.2(d) - Promissory Note
Schedule 2.3 - Allocation of Purchase Price
Schedule 3.1(i) - Operations and Assets
Schedule 3.1(j) - Contractual and Regulatory Approvals
Schedule 3.2(a) - Issued Share Capital
Schedule 3.2(g) - Ownership of Securities
Schedule 3.3(g) - Taxes
Schedule 3.3(h) - Bank Accounts and Authorizations
Schedule 3.3(i) - Insurance
Schedule 3.3(j) - Capital Expenditures
Schedule 3.4(c) - Leases
Schedule 3.4(f) - Personal Property Leases and Conditional Sales
Agreements
Schedule 3.4(h) - Trademarks and Patents
Schedule 3.5(c) - Suppliers
Schedule 3.5(d) - Customers
Schedule 3.5(f) - Certain Interests
Schedule 3.5(g) - Contracts
Schedule 3.6(a) - Employees
Schedule 3.6(c) - Employee Contracts
Schedule 3.6(e) - Independent Agent Contracts
Schedule 3.6(f) - Pension and Benefit Plans
Schedule 3.7(a) - Legal Proceedings
Schedule 6.1(g) - Releases and Resignations
Schedule 6.1(k) - Opinion of Vendors' Counsel
SECTION 2 - PURCHASE AND SALE
2.1 PURCHASE AND SALE. Each of the Vendors shall sell and the Purchaser
shall purchase all but not less than all of the Purchased Shares upon and
subject to the terms and conditions contained in this Agreement for a purchase
price (the "PURCHASE PRICE") equal to $6,000,000.
2.2 PAYMENT. The Purchase Price shall be paid and satisfied by the Purchaser
as follows:
(a) as to $2,000,000 of the Purchase Price, by payment on the Closing
Date of such amount to Vendors' Counsel by certified cheque drawn
on, or banker's draft issued by, a Canadian chartered bank payable
to Vendors' Counsel, in trust;
(b) as to $1,250,000 of the Purchase Price, by delivery on the Closing
Date to the Vendors of a promissory note in the amount of
$1,250,000 payable to the order of the Vendors on November 1, 1995
as indicated therein, substantially in the form of Schedule 2.2(b);
(c) as to $1,250,000 of the Purchase Price, by delivery on the Closing
Date to the Vendors of a promissory note in the amount of
$1,250,000 payable to the order of the Vendors on February 1, 1996
as indicated therein, substantially in the form of Schedule 2.2(c);
and
(d) as to $1,500,000 of the Purchase Price, by delivery on the Closing
Date to the Vendors of a promissory note in the amount of
$1,500,000 payable to the order of the Vendors on August 1, 1996 as
indicated therein, substantially in the form of Schedule 2.2(d).
The promissory notes shall be delivered by the Purchaser and
accepted by the Vendors as evidence of and as security for the unpaid balance
of the Purchase Price which is represented by the principal amount of the
promissory notes.
2.3 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Shares in accordance with Schedule 2.3 and the Vendors and
the Purchaser each agree to prepare and file all Tax returns in a manner
consistent with such allocation.
2.4 ACQUISITION TAX RETURNS. Within ninety (90) days after the Closing Date,
the Corporations shall deliver to the Purchaser, before filing, all Tax returns
for the taxation years of the Corporations deemed to have ended for the
purposes of the ITA (and any other relevant provincial statute) immediately
before the change of control of the Corporations by the Purchaser
(collectively, the "ACQUISITION TAX RETURNS"). The Acquisition Tax Returns
prepared for the Corporations shall designate the certain assets and amounts as
appropriate for purposes of paragraph 111(4)(e) of the ITA (and any equivalent
provincial provision) The Acquisition Tax Returns prepared for the
Corporations shall include any T5 Supplementary and Summary forms and all other
forms and returns prescribed by Revenue Canada, Customs, Excise and Taxation
that the Corporations will be required to make or file in connection with any
interest or dividends paid or deemed to have been paid by the Corporations
during their taxation year that will end immediately before the acquisition of
control of the Corporations by the Purchaser. The Vendors will cooperate with
the Corporations as reasonably required in connection with the preparation of
the Acquisition Tax Returns by the Corporations.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF THE VENDORS
Each of the Vendors represents and warrants to the Purchaser as stated
below and acknowledges that the Purchaser is relying on the accuracy of each
such representation and warranty in entering into this Agreement and completing
the Purchase.
3.1 CORPORATE MATTERS
(a) STATUS. Each of the Corporations, and each of the Vendors which is a
corporation, has been duly incorporated and organized, is a subsisting
corporation in Good Standing under the laws of its jurisdiction of
incorporation and has the corporate power and capacity and is duly qualified to
own or lease its property and to carry on its business as now conducted in each
jurisdiction in which it owns or leases property or carries on business.
(b) AUTHORITY. Each of the Vendors has full corporate power and authority
(or, in the case of Vendors which are not corporations, full power and
authority) to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the Purchase and all other transactions contemplated by
this Agreement have been duly and validly authorized by each of the Vendors
that are corporations and no other corporate proceedings on the part of any of
the Vendors are necessary to authorize this Agreement or the Purchase.
(c) ENFORCEABILITY. This Agreement has been duly and validly executed and
delivered by each of the Vendors and is a valid and legally binding agreement
of each of the Vendors, enforceable against each of the Vendors in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency and other
laws affecting creditors' rights generally and to general principles of equity.
(d) RESIDENCE. Each of the Vendors is not a non-resident of Canada within
the meaning of the ITA.
(e) EQUITY INVESTMENTS. None of the Corporations owns, directly or
indirectly, any shares or other equity securities of any corporation or any
equity or ownership interest in any business or entity other than Metrowide
Communications (Ottawa) Inc., Metrowide International (Ottawa) Inc. and
Advantage Telecom Solutions Inc., all of the issued and outstanding shares of
which are owned by 964. None of the Corporations is subject to any obligation
or requirement to provide funds to or make any investment in any business or
entity by loan, capital contribution or otherwise.
(f) CORPORATE RECORDS. The corporate records and minute books of each of the
Corporations, all of which have been provided to the Purchaser, contain
complete and accurate minutes of all meetings of and corporate actions or
written consents by the boards of directors and shareholders of each of the
Corporations, including, without limitation, all by-laws and resolutions passed
by the boards of directors and shareholders of each the Corporations, since
they were incorporated. All such meetings were duly called and held, all such
corporate actions and written consents were duly taken or validly given and all
such by-laws and resolutions were duly passed. The share certificate books,
registers of shareholders, registers of transfers, registers of directors and
similar corporate records of each of the Corporations are complete, accurate
and current. All exigible security transfer taxes or similar taxes payable in
connection with the transfer of any securities of all of the Corporations have
been duly paid.
(g) SHAREHOLDERS' AGREEMENTS, ETC. There are no shareholders' agreements,
pooling agreements, voting trusts or other similar agreements with respect to
the ownership or voting of any of the shares of any of the Corporations.
(h) LICENCES AND PERMITS. Each of the Corporations holds all licences,
permits, approvals and authorizations requisite for, and has complied with all
laws, regulations and orders applicable to, the conduct of the Business carried
on by it. No registration, application, notice, consent, order or other action
is required by virtue of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby:
(1) to avoid the loss of any licence, permit, approval or other
authorization or the violation, breach or termination of, or any
default under, or the creation of any encumbrance under the terms
of, any law, regulation, order or other requirement of law; or
(2) to enable the Business to continue to be carried on as currently
conducted.
(i) OPERATIONS AND ASSETS. The Corporations do not carry on the Business in
any jurisdiction other than the Province of Ontario and the tangible assets
owned or used by the Corporations are located in Ontario at the locations
(other than dialers, the locations of which are not listed) listed in Schedule
3.1(i).
(j) CONTRACTUAL AND REGULATORY APPROVALS. Except as specified in Schedule
3.1(j) attached hereto, neither any of the Corporations nor any of the Vendors
is under any obligation, contractual or otherwise, to request or obtain the
consent of any person, and no permits, licenses, certifications, authorizations
or approvals of, or notifications to, any federal, provincial, municipal or
local government or governmental agency, board, commission or authority are
required to be obtained by any of the Corporations or any of the Vendors:
(1) in connection with the execution, delivery or performance by the
Vendors and the Corporations of this Agreement or the completion of
any of the transactions contemplated herein;
(2) to avoid the loss of any permit, licence, certification, approval
or other authorization, or
(3) in order that the authority of any of the Corporations to carry on
the Business in the ordinary course and in the same manner as
presently conducted remains in good standing and in full force and
effect as of and following the closing of the transactions
contemplated hereunder.
Complete and correct copies of any agreements under which any of the
Corporations or any of the Vendors is obligated to request or obtain any such
consent have been provided to the Purchaser and all such consents have been
obtained.
3.2 SHARE CAPITAL, DIVIDENDS AND SHARES
(a) AUTHORIZED AND ISSUED SHARE CAPITAL. The authorized capital of each of
the Corporations consists of an unlimited number of common shares without
nominal or par value and, in the case of 964, preferred shares without nominal
or par value. The issued capital of each of the Corporations is as set forth
in Schedule 3.2(a), all of which, on the Closing Date will have been validly
issued and are outstanding as fully paid and non-assessable and are held as set
forth in Schedule 3.2(a).
(b) RIGHTS AND OPTIONS. None of the Corporations has issued or authorized
the issue of any shares except the issued shares set forth in Schedule 3.2(a),
and no person has any agreement or option or right capable of becoming an
agreement or option for the purchase or acquisition of any issued or unissued
shares of any of the Corporations.
(c) TITLE TO SHARES. Each of the Vendors legally and beneficially owns and
controls the Purchased Shares set opposite its name in Schedule 3.2(a) with a
good and marketable title thereto free of any Encumbrance or claims of others
and to the best of each of the Vendors' knowledge, the other Vendors legally
and beneficially own and control the Purchased Shares set opposite their names
in Schedule 3.2(a) with a good and marketable title free of any Encumbrance or
claims of others.
(d) FAMILY LAW CLAIMS. No claim, action, application or order has been
brought or made by or for the benefit of any person, or, to the knowledge of
any of the Vendors, is contemplated, based on any provision of any family law,
matrimonial property or other similar legislation of any jurisdiction which
might affect in any way whatsoever, directly or indirectly, any of the issued
shares set forth in Schedule 3.2(a), the Purchased Shares, the property of the
Corporations or the ability of the Corporations to carry on the Business and
deal with their property.
(e) NO OTHER PURCHASE AGREEMENTS. No person has any agreement, option,
understanding or commitment, or any right or privilege (whether by law, pre-
emptive or contractual) capable of becoming an agreement, option or commitment,
including convertible securities, warrants or convertible obligations of any
nature, for:
(1) the purchase, subscription, allotment or issuance of, or conversion
into, any of the unissued shares in the capital of any of the
Corporations or any securities of any of the Corporations;
(2) the purchase from any of the Vendors or others of any of the issued
shares set forth in Schedule 3.2(a), or
(3) the purchase or other acquisition from any of the Corporations of
any of the Corporations' undertaking, property or assets, other
than in the ordinary course of the Business.
(f) DIVIDENDS. Since the date of the Interim Financial Statements, none of
the Corporations has, directly or indirectly, authorized, declared or paid any
dividends or declared or made any other distribution or return of capital in
respect of any of its shares of any class and none of the Corporations has,
directly or indirectly, redeemed, purchased or otherwise acquired any of its
shares of any class or agreed to do so, except as disclosed in the Interim
Financial Statements, which accrued dividends shall be paid out prior to, or
within 30 days after the Closing Date.
(g) OWNERSHIP OF SECURITIES. Except as specified in Schedule 3.2(g) attached
hereto, neither any of the Corporations nor any of the Vendors owns, directly
or indirectly, any securities of the Purchaser or any of its affiliates.
Except as provided for in this Agreement and as specified in Schedule 3.2(g),
attached hereto, neither any of the Corporations nor any of the Vendors has any
agreement or option or right capable of becoming an agreement or option for the
purchase or acquisition of any issued or unissued shares of the Purchaser or
any of its affiliates. Except as specified in Schedule 3.2(g) attached hereto,
neither any of the Corporations nor any of the Vendors has traded, as
principal, in the securities of the Purchaser or any of its affiliates,
directly or indirectly, within the 60 days preceding the date of this
Agreement.
3.3 FINANCIAL MATTERS
(a) BOOKS AND RECORDS. All material financial transactions of each of the
Corporations have been properly recorded in its books and records, which have
been maintained in accordance with applicable legal and accounting requirements
and good business practice, and for each of the Corporations individually, such
books and records:
(1) accurately reflect the basis for the financial condition and the
revenues, expenses and results of operations of the Corporation
shown in the Corporation's Annual Financial Statements and Interim
Financial Statements, and
(2) together with all disclosures made in this Agreement or in the
Schedules hereto, present fairly the financial condition and the
revenues, expenses and results of the operations of the Corporation
as of and to the date hereof.
No information, records, systems, controls or data pertaining to or required
for the operation or administration of the Corporations or the Business are
recorded, stored, maintained by, or are otherwise dependent upon, any
computerized or other system, program or device that is not exclusively owned
and controlled by the Corporations, other than the billing records which are
prepared for the Corporations by Datex Communications Co.; and on the Closing
Date the Corporations will have originals or copies of all such records,
systems, controls or data in their possession or control including, where
applicable, copies of all computer software and documentation relating thereto.
(b) FINANCIAL STATEMENTS. The Annual Financial Statements and Interim
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with those of the previous
year and present fairly the assets, liabilities (whether accrued, absolute,
contingent or otherwise) and the financial condition of the Corporations as at
their date. The financial position of the Corporations is now at least as good
as that shown by or reflected in the Interim Financial Statements.
(c) LIABILITIES OF THE CORPORATIONS. There are no liabilities (contingent or
otherwise) of any of the Corporations of any kind whatsoever, and to the best
of the knowledge of each of the Vendors there is no basis for assertion against
any of the Corporations of any liabilities of any kind, other than:
(1) liabilities disclosed or reflected in or provided for in the Annual
Financial Statements or the Interim Financial Statements;
(2) liabilities incurred since the date of the Interim Financial
Statements which were incurred in the ordinary course of the
routine daily affairs of the Business and, in the aggregate, are
not materially adverse to the Business; and
(3) other liabilities disclosed in this Agreement or in the Schedules
attached hereto.
(d) INVENTORIES. The Corporations do not own or maintain any inventories of
goods.
(e) OBLIGATIONS AND GUARANTEES. Except as disclosed in the Interim Financial
Statements, the Corporations do not have outstanding any bonds, debentures,
mortgages, promissory notes or other indebtedness maturing more than one year
after the date of creation or issue, are not under any obligation to create or
issue any bonds, debentures, mortgages, promissory notes or other indebtedness
maturing more than one year after the date of creation or issue, and have not
guaranteed or authorized the guarantee of any indebtedness or obligations of
any kind.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Interim
Financial Statements, none of the Corporations has:
(1) incurred any obligation or liability (fixed or contingent), except
normal trade or business obligations incurred in the ordinary
course of the Business, none of which is materially adverse to the
Corporation;
(2) paid or satisfied any obligations or liability (fixed or
contingent), except:
(A) current liabilities included in the Interim Financial
Statements;
(B) current liabilities incurred since the date of the Interim
Financial Statements in the ordinary course of the Business,
and
(C) scheduled payments pursuant to obligations under loan
agreements or other contracts or commitments described in
this Agreement or in the Schedules hereto;
(3) created any Encumbrance upon any of its properties or assets,
except as described in this Agreement or in the Schedules hereto;
(4) sold, assigned, transferred, leased or otherwise disposed of any of
its properties or assets, except in the ordinary course of the
Business;
(5) purchased, leased or otherwise acquired any properties or assets,
except in the ordinary course of the Business;
(6) waived, cancelled or written-off any rights, claims, accounts
receivable or any amounts payable to the Corporation, except in the
ordinary course of the Business;
(7) entered into any transaction, contract, agreement or commitment,
except in the ordinary course of the Business;
(8) terminated, discontinued, closed or disposed of any facility or
business operation;
(9) had a supplier terminate, or communicate to the Corporation the
intention or threat to terminate its relationship with the
Corporation, or the intention to substantially change the quantity
or quality of products or services it sells to the Corporation, or
the terms of such sale of products or services;
(10) had customers whose aggregate billings for the 1-year period prior
to the date hereof exceeded 5% of the gross billings of the
Corporation for such 1-year period, terminate, or communicate to
the Corporation the intention or threat to terminate, their
relationship with the Corporation, or communicate the intention to
substantially reduce the quantity of products or services they
purchase from the Corporation, or the terms of such purchases of
products or services, or their dissatisfaction with the products or
services sold by the Corporation;
(11) made any material change in the method of billing customers or the
credit terms made available by the Corporation to its customers;
(12) made any material change with respect to any method of management,
operation or accounting in respect of the Business;
(13) suffered any damage, destruction or loss (whether or not covered by
insurance) which has materially adversely affected or could
materially adversely affect the Business or the condition of the
Corporation;
(14) increased any form of compensation or other benefits payable or to
become payable to any of the employees of the Corporation.
(15) suffered any extraordinary loss relating to the Business;
(16) made or incurred any material change in, or become aware of any
event or condition which is likely to result in a material change
in the Business or the condition of the Corporation or its
relationships with its customers, suppliers or employees, or
(17) authorized, agreed or otherwise become committed to do any of the
foregoing.
(g) TAXES.
(1) Each of the Corporations has paid or will pay when due all Taxes
due at or prior to the Closing Date. Each of the Corporations has
made adequate provision in its Annual Financial Statements and
Interim Financial Statements for all Taxes payable in respect of
all its fiscal or other applicable Tax periods (or portions
thereof) (hereinafter "TAX PERIODS") prior to the date hereof but
not yet due. Each of the Corporations will make adequate provision
in its books and records for all Taxes payable in respect of Tax
Periods up to and including the Closing Date but not due at or
prior to the Closing Date. Any provision for Taxes shall be in
accordance with generally accepted accounting principles.
(2) Each of the Corporations has filed when due all Tax returns and
such returns are true, correct and complete in all material
respects and have been prepared on a consistent basis. There are
no agreements, waivers or other arrangements providing for an
extension of time with respect to filing of any Tax Return or the
expiration of any period within which an assessment or reassessment
may be made for the payment of any Taxes. There are no outstanding
issues relating to Taxes which have been raised by any Governmental
Authority. None of the Corporations has ever applied for or
received any advance income tax ruling from Revenue Canada,
Customs, Excise & Taxation or any other similar ruling or
determination from Revenue Canada, Customs, Excise & Taxation or
any other Governmental Authority.
(3) The Corporations have not been and are currently not required to
file Tax returns or elections or designations in respect of Taxes
with any Governmental Authority located in any jurisdiction outside
Canada or outside the Province of Ontario.
(4) Each of the Corporations has been assessed or reassessed for Tax
under the ITA and corresponding provincial legislation in respect
of all of its Tax Periods up to and including the year ended, in
the case of 839 and 964, July 31, 1994, in the case of Centex,
April 30, 1994 and in the case of 903 July 31, 1994. The
Vendors have provided the Purchaser with full and complete copies
of the Ontario and Federal Tax returns for the 1991, 1992, 1993 and
1994 Tax Periods for each of the Corporations and copies of all
assessments and reassessments relating to such Tax Periods.
(5) Each of the Corporations has properly withheld or collected all
Taxes required to be withheld or collected under applicable
legislation, and has timely remitted all such Taxes to the
applicable Governmental Authorities.
(6) Each of the Corporations is properly registered and licensed for
the purposes of paying, collecting and remitting all applicable
Taxes relating to the Business. Each of the Corporations has
properly applied for and filed, or will properly apply for and
file, claims for all Tax refunds or rebates to which it is
entitled, including, without limitation, any goods and services tax
rebates.
(7) The paid-up capital of the issued and outstanding shares in the
capital of the Corporations for purposes of the ITA and the stated
capital of such shares under applicable corporate law are as set
forth in Schedule 3.2(a).
(8) No debt or other obligation of any of the Corporations has been or
will be settled or extinguished on or prior to the Closing Date
such that the provisions of section 80 of the ITA applies or would
apply thereto. There are no circumstances existing which could
result in the application of section 78 of the ITA or any
equivalent provincial provision to any of the Corporations.
Schedule 3.3(g) accurately sets out the following tax accounts of
each of the Corporations as of the Closing Date and before any
designation under paragraph 111(4)(e) of the ITA (and any relevant
provincial taxing statute)]:
(a) the adjusted cost base of the Corporation's capital
properties;
(b) the Corporation's capital dividend account;
(c) the original cost of the Corporation's depreciable capital
property;
(d) the capital cost allowance taken on each class of the
Corporation's depreciable property;
(e) the undepreciated capital cost of each class of the
Corporation's depreciable property;
(f) the Corporation's cumulative eligible capital account; and
(g) the Corporation's refundable dividend tax on hand.
Each of the accounts in paragraphs (a) to (g), inclusive, shall be
as defined in the ITA and any relevant provincial taxing statute.
(9) Except as set out in Schedule 3.3(g), none of the Corporations has
ever made or filed an election under section 83 or 85 of the ITA or
any equivalent provincial provision. All elections made by each of
the Corporations under section 83 or section 85 of the ITA were
made in the manner and form, and within the time period, required
or prescribed by the ITA and the regulations thereunder. No amount
is or will become payable by any of the Corporations under Part III
of the ITA in respect of any election made by any of the
Corporations under section 83 of the ITA in respect of any dividend
paid or deemed to have been paid by any of the Corporations at or
prior to Closing.
Except as provided in Schedule 3.3(g), none of the Corporations has
claimed or will claim any reserve under any one or more of
subparagraph 40(1)(a)(iii) or paragraph 20(1)(l), 20(1)(m) or
20(1)(n) of the ITA or any equivalent provincial provision, which
amount may be included in the Corporation's income for its taxation
year ending immediately before the acquisition of control of the
Corporation by the Purchaser.
(10) The Vendors acknowledge that, as contemplated by Section 9.1, any
liability of any of the Corporations for Taxes payable in respect
of the period up to and including the Closing Date shall be the
responsibility of the Corporations, except for any such Taxes
payable in respect of (i) any misrepresentation or breach of
warranty or obligation by one or more of the Vendors, or (ii) a
reassessment of any of the Corporations which relates to
transactions not at arm's length to the Vendors, which Taxes in
either case shall be a liability of the Vendors.
(h) BANK ACCOUNTS AND AUTHORIZATIONS. Attached as Schedule 3.3(h) is a list
of all safe deposit boxes and bank accounts of each of the Corporations and the
names of all persons having access or signing authority and of all powers of
attorney given by each of the Corporations.
(i) INSURANCE. Attached as Schedule 3.3(i) is a list of all insurance
policies (including the name of the insurer, policy number, amount of coverage,
type of insurance, expiry date and details of pending claims) maintained by
each of the Corporations in respect of its assets, business operations,
directors, officers and employees. All such insurance policies are valid and
enforceable and in full force and effect, are underwritten by unaffiliated and
reputable insurers, are sufficient for all applicable requirements of law and
provide insurance, including, without limitation, liability and products
liability insurance, in such amounts and against such risks as is customary for
corporations engaged in businesses similar to the Business to protect the
employees, properties, assets, businesses and operations of the Corporations.
None of the Corporations is in default under any such insurance nor has failed
to give any notice or present any claim within the appropriate time therefor.
(j) CAPITAL EXPENDITURES. None of the Corporations is committed to make any
capital expenditures, nor have any capital expenditures been authorized by any
of the Corporations at any time since the date of the Interim Financial
Statements except for capital expenditures made in the ordinary course of the
routine daily affairs of the Business which, in the aggregate, do not exceed
$10,000, or except as set forth in Schedule 3.3(j).
(k) NON-ARM'S LENGTH PAYMENTS. None of the Corporations has made a payment
to any of the Vendors or to any person not dealing at arm's length with any of
the Vendors within the meaning of the ITA, none of the Vendors has made any
advances or charges to any of the Corporations for expenses or other amounts of
any nature and none of the Corporations is indebted to any person, firm or
corporation not dealing at arm's length with the Corporations within the
meaning of the ITA, other than as disclosed in the Interim Financial Statements
or other financial statements provided to the Purchaser or other than payments
made in the ordinary course of business of the Corporations.
(l) AMOUNTS RECEIVABLE. No amount is owing to any of the Corporations by any
shareholder, director, officer or employee or any person, firm or corporation
not dealing at arm's length with any of the foregoing within the meaning of the
ITA, except as disclosed in the Interim Financial Statements.
3.4 PROPERTY OF THE CORPORATIONS
(a) TITLE TO ASSETS: Each of the Corporations possesses and has a good and
marketable title to the assets shown or reflected on its Interim Financial
Statements (other than personal property disposed of in the ordinary course of
business) and to all other assets acquired since the date thereof free and
clear of any and all mortgages, charges, liens, encumbrances, security
interests or claims of others.
(b) REAL PROPERTY. None of the Corporations is the legal or beneficial owner
of any real property.
(c) LEASES. None of the Corporations is a party to any lease or agreement in
the nature of a lease relating to real or immovable property, as lessor or
lessee, except for leases with terms of less than two years and rents and
expenses aggregating less than $100 per month and except for the leases listed
in Schedule 3.4(c), which states the parties to such leases, the dates of
execution and expiry, the rent payable, the use and location of the property
and any options of renewal. Each of such leases is valid and binding, in good
standing and in full force and has not been amended and no breach of any term
has occurred on the part of any of the Corporations nor has any event occurred
which upon notice or the passage of time could constitute a default.
(d) STATUS OF PROPERTY. The use by each of the Corporations of the leased
property referred to in Section 3.4(c) above is not in breach of any building,
zoning or other statute, by-law, ordinance, regulation, covenant, restriction
or official plan, and each of the Corporations has adequate rights of ingress
and egress for the operation of the Business and, specifically:
(1) no alteration, repair, improvement or other work that has not been
completed has been ordered, directed or requested in writing by any
competent authority to be done in respect of the leased property or
any of the plumbing, heating, elevating, water, drainage or
electrical systems, fixtures or works;
(2) all accounts for work and services performed and materials
furnished in respect of the leased property at the request of each
of the Corporations has been paid and no one is entitled to claim a
lien under the CONSTRUCTION LIEN ACT (Ontario) or similar
applicable legislation against the leased property or any part
thereof, other than for current accounts in respect of which the
due date has not yet passed;
(3) there is nothing owing by any of the Corporations in respect of its
leased property to any municipal corporation, or to any other
corporation or commission owning or operating a public utility for
water, gas, electrical power or energy, steam or hot water, or for
the use thereof, other than current accounts in respect of which
the due date has not yet passed; and
(4) no part of its leased property has been taken or expropriated by
any competent authority nor has any notice or proceeding in respect
thereof been given or commenced.
(e) ENVIRONMENTAL CONSIDERATIONS. Since the date of acquisition by each of
the Corporations and, to the best of each of the Vendors' knowledge, prior to
that date:
(1) the real property leased to each of the Corporations (the "REAL
PROPERTY") has not been used as a disposal site for hazardous,
liquid, industrial or mono- or poly-chlorinated biphenyl wastes as
defined in the regulations to the ENVIRONMENTAL PROTECTION ACT
(Ontario);
(2) no pollutants or other toxic or hazardous substances (including any
solid, liquid, gaseous or thermal irritant or contaminant) are
present in any form on, or have been discharged, dispersed,
released, stored, treated, generated, disposed of or allowed to
escape onto the Real Property or, insofar as each of the Vendors is
aware, any adjoining property, which could result in any
obligation, order or liability under any applicable federal,
provincial, municipal or other law, regulation or requirement;
(3) no underground storage tanks are located on the Real Property, or
were located on the Real Property and subsequently removed or
filled;
(4) no electrical, heat transfer or hydraulic equipment containing
mono- or poly-chlorinated biphenyls or other substances having
similar chemical compositions or properties is or has been located
on the Real Property;
(5) neither the Real Property nor any of the Corporations is subject to
any request for compliance, certificate, order, direction or
similar document issued by any governmental authority under the
ENVIRONMENTAL PROTECTION ACT (Ontario) or any other applicable
federal, provincial, municipal or other law, regulation or
requirement relating to the environment.
The Vendors have delivered to the Purchaser true and complete copies of all
written communications between any of the Corporations and any agency having
authority under applicable environmental legislation, with respect to
environmental matters. None of the Corporations is in breach of any
environmental statute or regulation in any jurisdiction where its business is
carried on.
(f) PERSONAL PROPERTY. None of the Corporations is the lessee of any
personal or movable property and none is a party to any conditional sale or
other title retention agreement except as disclosed in Schedule 3.4(f).
(g) EQUIPMENT. All equipment currently in use by the Corporations in the
conduct of the Business is structurally sound with no known material defects,
is in good operating condition and repair and is located completely within the
boundaries of the real property identified in Schedule 3.4(c). Certificates of
mechanical fitness are readily available for all motor vehicles.
(h) INTELLECTUAL PROPERTY.
(1) Schedule 3.4(h) attached hereto lists and contains a description
of:
(A) all patents, patent applications and registrations, trade
marks, trade mark applications and registrations, copyrights,
copyright applications and registrations, trade names and
industrial designs, domestic or foreign, owned or used by
each of the Corporations or relating to the operation of the
Business;
(B) all trade secrets, know-how, inventions and other
intellectual property owned or used by each of the
Corporations or relating to the Business, and
(C) all computer systems and applications software, including all
documentation relating thereto and the latest revisions of
all related object and source codes therefor, owned or used
by each of the Corporations or relating to the Business,
(all of the foregoing being hereinafter collectively called the
"INTELLECTUAL PROPERTY").
(2) Each of the Corporations has good and valid title to all of its
Intellectual Property, free and clear of any and all Encumbrances,
except in the case of any Intellectual Property licensed to a
Corporation as disclosed in Schedule 3.4(h). Complete and correct
copies of all agreements whereby any rights in any of the
Intellectual Property have been granted or licensed to each of the
Corporations have been provided to the Purchaser. No royalty or
other fee is required to be paid by any of the Corporations to any
other person in respect of the use of any of the Intellectual
Property except as provided in such agreements delivered to the
Purchaser. Each of the Corporations has protected its rights in
its Intellectual Property in the manner and to the extent described
in Schedule 3.4(h). Except as indicated in Schedule 3.4(h), each
of the Corporations has the exclusive right to use all of its
Intellectual Property and has not granted any license or other
rights to any other person in respect of its Intellectual Property.
Complete and correct copies of all agreements whereby any rights in
any of its Intellectual Property have been granted or licensed by
any of the Corporations to any other person have been provided to
the Purchaser.
(3) Except as disclosed in Schedule 3.4(h), there are no restrictions
on the ability of any the Corporations or any successors to or
assignee from any of the Corporations to use and exploit all rights
in its Intellectual Property. All statements contained in all
applications for registration of each of the Corporations'
Intellectual Property were true and correct as of the date of such
applications. Each of the trade marks and trade names included in
the Intellectual Property is in use. None of the rights of any of
the Corporations in the Intellectual Property will be impaired or
affected in any way by the transactions contemplated by this
Agreement.
(4) The conduct of the Business and the use of the Intellectual
Property does not infringe, and none of the Corporations has
received any notice, complaint, threat or claim alleging
infringement of, any patent, trade mark, trade name, copyright,
industrial design, trade secret or other Intellectual Property or
propriety right of any other person, and the conduct of the
Business does not include any activity which may constitute passing
off.
3.5 CONDUCT OF BUSINESS
(a) NO MATERIAL ADVERSE CHANGE. Since the date of the balance sheet
contained in its Interim Financial Statements, there has not been any material
change in the affairs, prospects, operations, assets or financial condition of
the Business or of the Corporations other than changes in the ordinary and
normal course of business, none of which has been materially adverse; nor any
damage, destruction or loss or other event, development or condition of any
character (whether or not covered by insurance) materially and adversely
affecting the business, assets or properties of the Corporations.
(b) ORDINARY COURSE. Since the date of the balance sheet contained in its
Interim Financial Statements, each of the Corporations has carried on the
Business in the ordinary course and has not, directly or indirectly:
(1) transferred, assigned, sold or otherwise disposed of any of the
assets shown in the balance sheet contained in its Interim
Financial Statements except in the ordinary course of business;
(2) suffered any extraordinary loss, or waived any rights of
substantial value, or entered into any commitment or transaction
not in the ordinary course of business where such loss, rights,
commitment or transaction is or would be material in relation to
the Corporation or the Business as the case may be;
(3) mortgaged, pledged, subjected to lien, granted a security interest
in or otherwise encumbered any of its assets; or
(4) authorized or agreed or otherwise become committed to do any of the
foregoing.
(c) SUPPLIERS. Schedule 3.5(c) contains a list of the 3 largest suppliers
(by dollar volume) of materials or services to each of the Corporations during
the preceding twelve-month period, indicating the existing contractual
arrangements with each such supplier (including the dates of execution and
expiry of, and a description of the materials and services provided and amounts
charged under, all agreements between each Corporation and each such supplier).
(d) CUSTOMERS. Schedule 3.5(d) contains the following customer lists:
(1) all active customers of each of the Corporations up to the Closing
Date, together with the dates of execution and expiry of, and a
description of the services provided and amounts charged under, all
agreements between each Corporation and each such customer; and
(2) all prospective customers identified by each of the Corporations
as of the Closing Date.
(e) ABILITY TO CONTINUE BUSINESS. The assets owned or leased by the
Corporations are adequate for the conduct of the Business as usually conducted
and include all Intellectual Property and other property and assets, tangible
and intangible, applicable to or used in connection with the Business and none
of the Vendors owns any assets which are being used in or are reasonably
necessary to carry on the Business or operations of the Corporations in the
normal course. None of the Corporations is a party to any contract or
commitment that would limit its freedom to compete in any line of business or
with any person or in any geographical area or otherwise to conduct its
business as currently conducted and as proposed to be conducted, other than the
franchise agreement dated June 1, 1994 with Metrowide Telecommunications
(Seaway) Inc. No indication has been received that any significant customer or
number of customers will or may cease to deal with any of the Corporations as a
result of the sale of the Purchased Shares or for any other reason. There
exist no facts or circumstances which could materially and adversely affect the
ability of any of the Corporations to continue the Business substantially as
presently conducted following the completion of the transactions contemplated
by this Agreement.
(f) CERTAIN INTERESTS. Except as disclosed in Schedule 3.5(f), none of the
Vendors nor any person or corporation not dealing at arm's length with any of
the Corporations within the meaning of the ITA nor any officer or director of
any of the Vendors or of any such corporation nor, to the knowledge of any of
the Vendors, any relative of any such officer or director, is a party to or has
an interest with respect to any material contract or commitment which relates
to or affects the business of any of the Corporations or by which any of the
assets of any of the Corporations may be bound or has any material interest in
any property, real or personal, tangible or intangible, used in or pertaining
to the business of any of the Corporations.
(g) CONTRACTS. None of the Corporations is a party to or is bound by any
contract or commitment, written or oral, which has more than 3 months to run,
involves a price or consideration of more than $10,000.00 in the aggregate, or
which could materially and adversely affect the business, affairs or prospects,
financial or other, of the Corporation, except as disclosed in Schedule 3.5(g).
None of the Corporations is required to provide any bonding or other financial
security arrangements in connection with any transactions with its customers or
suppliers in the ordinary course of business. Each of the Corporations is in
good standing, and is entitled to all benefits, under all contracts to which
they are a party and none of them is dependent upon the guarantee of or any
security provided by a third party. There exists no state of facts which after
notice or lapse of time or both would constitute a default or breach under such
contracts and to the knowledge of each of the Vendors none of the other parties
to such contracts is in material default thereunder.
3.6 EMPLOYMENT MATTERS
(a) EMPLOYEES. Schedule 3.6(a) states the name, job title, duration of
employment and rate of remuneration of, and the nature of services performed
by, each employee of each of the Corporations and indicates the names of those
who have stated that they will resign or retire as a result of the transactions
contemplated by this Agreement.
(b) REMUNERATION. Since May 30, 1995, no payments have been made or
authorized to directors, officers or employees of any of the Corporations,
except at regular rates of remuneration, and no bonus or increase in
remuneration has been authorized or become effective, except as identified in
the Interim Financial Statements for accruals, which accrued management fees
will be paid before or within 30 days after the Closing Date if cashflow
permits or such later date as cashflow permits.
(c) EMPLOYEE CONTRACTS. None of the Corporations is a party to or bound by
any collective agreement, is currently conducting negotiations with any labour
union or employee association and none of the Vendors is aware of any current
attempt to organize the employees of any of the Corporations for the purpose of
collective bargaining. None of the Corporations is a party to any written
employment agreement and there is no employee whose employment cannot be
terminated on reasonable notice and without penalty. There is no agreement or
practice relating to the payment of any management, consulting, service or
other fee or any bonus, pension, share of profits or retirement allowance, or
any insurance, health or other employee benefit, except as disclosed in
Schedule 3.6(c).
(d) EMPLOYEE LEGISLATION. None of the Corporations are subject to the
WORKERS COMPENSATION ACT (Ontario) and there are no amounts payable in respect
of that legislation. There are no charges or orders to comply respecting any
of the Corporations outstanding under the OCCUPATIONAL HEALTH AND SAFETY ACT
(Ontario) or comparable legislation.
(e) INDEPENDENT AGENT CONTRACTS. None of the Corporations is a party to any
written agency agreement for the provision of sales, marketing or other
services to any of the Corporations, other than as listed in Schedule 3.6(e).
(f) PENSION AND BENEFIT PLANS. There are no deferred profit sharing, group
insurance, dental insurance, disability, death benefit, health and welfare,
hospitalization, vacation, vacation pay, unemployment, pension, retirement and
other employee benefit plans, agreements, policies, practices and other similar
arrangements currently applicable to the current and/or past officers,
employees, agents and/or independent contractors of any of the Corporations,
other than as set forth in Schedule 3.6(f).
3.7 GENERAL MATTERS
(a) LEGAL PROCEEDINGS. Except as set forth in Schedule 3.7(a), no action,
labour dispute, arbitration, governmental or regulatory proceeding or inquiry,
appeal, review or other proceeding or claim is pending or threatened against
any of the Corporations or any of the Vendors which might result in any
material adverse change in the business, affairs or prospects of any of the
Corporations, financial or otherwise or which might adversely affect the
ability of any of the Vendors to enter into this Agreement or to consummate the
transactions contemplated hereby, and none of the Vendors is aware of any
existing ground on which any action, suit or proceeding may be commenced with
any reasonable likelihood of success.
(b) RESTRICTIONS. None of the Corporations is subject to any judgment,
order, decision, ruling or requirement of any court or governmental regulatory
authority or other body which might adversely affect its business, affairs or
prospects, financial or other, or to any restriction in the conduct of its
business, contractual or other, which is not of general application to persons
carrying on similar businesses.
(c) COMPLIANCE WITH LAWS. None of the Corporations in carrying on the
Business is, nor has received notice of any allegation that it is, in violation
of any applicable federal, provincial, local or other law, regulation, order,
decision, ruling or tariff or any requirement of any governmental or regulatory
authority relating to, without limitation, its operations, products,
manufacturing processes, advertising, sales or employment practices, wages and
hours, product safety or civil rights, which violation could reasonably be
expected to have a material adverse effect on the Business.
(d) VIOLATIONS OR DEFAULTS. None of the Corporations is, nor has received
notice of any allegation that it is, in material violation of or in material
default under any charter, by-law, mortgage, lease, agreement or instrument or
any judgment, decree, order, decision, ruling or tariff or any statute, rule or
regulation. The execution, delivery and performance of this Agreement will not
result in any violation of, default under or conflict with any of the foregoing
and none of the foregoing provides for termination, variation or penalty by
reason of any change in the ownership or control of the shares of any of the
Corporations or requires the consent of any person to such change in ownership
or control.
(e) CONSENTS. No consent, approval or authorization of any Governmental
Authority or, except as disclosed in Schedule 3.1(j), any other person is
required to be obtained for the execution, delivery or performance of this
Agreement or any of the transactions contemplated in this Agreement.
(f) COPIES OF DOCUMENTS. Except for customer contracts which will be
delivered on the Closing Date, true and complete copies of all contracts,
leases, collective agreements, pension plans, benefit plans, policies of
insurance and other documents referred to or identified in this Agreement or
any schedule to this Agreement have been delivered to the Purchaser.
(g) DISCLOSURE. The representations and warranties of each of the Vendors
contained in this Agreement and in any certificate or other material delivered
under this Agreement, and all written statements, documents and other written
information provided to the Purchaser by the Vendors or the Corporations under
or in contemplation of this Agreement, are accurate and complete, do not
contain any untrue statement of a material fact or, considered in the context
in which presented, omit to state a material fact necessary in order to make
the statements and information contained herein or therein not misleading.
Without restricting the generality of the foregoing, there are no facts known
to any of the Vendors which should be disclosed to the Purchaser in order to
make any of the representations and warranties contained in this Agreement not
misleading or which may have a materially adverse affect on the or the property
and assets of the Corporations and no facts are known to any of the Vendors
which may materially adversely affect the Business or would operate to prevent
the Purchaser from using the assets of the Business to operate the Business in
the manner in which the Corporations have operated the Business prior to the
date of this Agreement.
SECTION 4 - CONDUCT OF BUSINESS
From, the date hereof to the Closing Date, except as otherwise consented
to by the Purchaser, each of the Vendors will take all reasonable action to
cause each of the Corporations to observe and perform the provisions stated
below.
(a) OPERATIONS: carry on the Business in the usual and ordinary course in
substantially the same manner as heretofore conducted and to preserve intact
its present business organization, use all reasonable efforts to keep available
the services of its present officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it and to take any and all such further actions reasonably requested by
the Purchaser to the end that the Business shall not be impaired in any
material respect at the Closing Date;
(b) INSURANCE: keep in full force its current insurance policies or without
permitting any termination, cancellation or lapse thereof, enter into
replacement policies providing coverage equal to or greater than the coverage
under those cancelled, terminated or lapsed for substantially similar premiums;
(c) AGREEMENTS: perform in all material respects its obligations under
agreements, contracts and instruments relating to or affecting its properties,
assets and business, except where the failure to perform would not have a
material adverse effect on the Business, its affairs or prospects, financial or
other;
(d) BOOKS AND RECORDS: maintain its books of account and records in the
usual and ordinary course of business;
(e) COMPLIANCE WITH LAWS: comply in all material respects with all statutes,
laws, ordinances, rules and regulations applicable to the Corporation and to
the conduct of the Business, except where the failure to comply would not have
a material adverse effect on the Business, its affairs or prospects, financial
or other;
(f) ARTICLES AND BY-LAWS: not amend its articles of incorporation or by-
laws;
(g) ADDITIONAL AGREEMENTS: not enter into or assume any agreement, contract
or commitment, except (i) purchases of supplies and services and sales of
services in the usual and ordinary course of business consistent with prior
practice and (ii) agreements, contracts or commitments which, individually or
in the aggregate, are not material to the Business taken as a whole, nor
otherwise make any material change in the conduct of the operations or affairs
of the Business;
(h) MERGER OR AMALGAMATION: not merge or amalgamate with, or agree to merge
or amalgamate with, or purchase substantially all of the assets of, or
otherwise acquire any business; and not sell or lease or agree to sell or
lease, any material properties or assets or approve or undertake any other
material transaction or furnish or cause to be furnished any information
concerning its business, properties or assets to any person (other than to the
Purchaser) which is interested in any such transaction;
(i) INCONSISTENT ACTIVITIES: not solicit or encourage any inquiries or
proposals or initiate discussions or negotiations with, or provide any
information to any third party (other than the Purchaser) concerning, or enter
into any transaction involving, the acquisition of all or any part of the
shares, assets or business of the Corporation;
(j) ISSUE OF SHARES: not issue or sell, authorize for issuance or sale, or
grant options, warrants or rights to subscribe for or purchase, any shares of
any class of the Corporation;
(k) CHANGES OR DIVIDENDS: not make any change in respect of any shares of
the Corporation, declare, set aside or pay any dividend or other distribution
(whether in cash, shares or property or any combination thereof) in respect of
its shares, or redeem or otherwise acquire any shares of the Corporation, other
than the payment of capital dividends as disclosed in writing and provided in
Section 3.2(f);
(l) EMPLOYEE REMUNERATION: not increase in any manner the compensation or
employee benefits of any of its directors, officers or employees, or pay or
agree to pay any pension or retirement allowance or other employee benefit not
required by any existing plan or agreement to such officers or employees, or
commit to any new or renewed employee pension, disability, bonus, deferred or
incentive compensation, profit sharing, share purchase, stock option,
retirement, group insurance, death benefit, vacation, health and welfare or
other employee benefit plan, agreement, policy, practice or other arrangement
or to any employment or consulting agreement (or amendment, renewal or
extension thereof) with or for the benefit of any officer, employee or other
person or to amend any of the foregoing now in existence;
(m) INDEBTEDNESS: not (i) create, incur or assume any long-term debt
(including obligations in respect of capital leases); (ii) create, incur,
assume, maintain or permit to exist any short-term debt representing
indebtedness for borrowed money; (iii) enter into any agreements requiring the
maintenance of a specific net worth; (iv) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, other than as the result of
the endorsement of negotiable instruments in the ordinary course of business
consistent with past practice; or (v) make any loans, advances or capital
contributions to, or investments in, any other person;
(n) CAPITAL AND OPERATING LEASE EXPENDITURES: not make any capital or
operating lease expenditure other than pursuant to existing non-cancellable
binding commitments previously disclosed in writing to and approved by the
Purchaser, nor enter into any contract or commitments for any capital or
operating lease expenditures in excess of $50,000 individually or in the
aggregate;
(o) DISPOSITION OF ASSETS: except in the ordinary course of business, not
sell, transfer, mortgage or otherwise dispose of, or encumber, or agree to
sell, transfer, mortgage or otherwise dispose of or encumber, any properties or
assets, real, personal or mixed;
(p) INTERCOMPANY BUSINESS: not make any change, except those in the ordinary
course of business and consistent with past practice, in the manner of
conducting intercompany business with any of the Vendors or any of its
affiliates; or
(q) REPRESENTATIONS AND WARRANTIES: not do anything that would cause any of
the representations and warranties in Section 3 to be false or misleading.
SECTION 5 - ACCESS AND CONFIDENTIALITY
5.1 ACCESS. The Purchaser and its auditors, counsel and other
representatives shall be afforded immediate and continuous access at all
reasonable times to all premises of, corporate, financial and other books and
records of, and all policies of insurance, contracts, leases, deeds and other
documents in the possession or control of, each of the Corporations to enable
the Purchaser to investigate the affairs of each of the Corporations and each
of the Vendors shall furnish to the Purchaser or its representatives such
information with respect to each of the Corporations and its affairs as the
Purchaser may reasonably request but no such investigation shall prejudice the
rights of the Purchaser under this Agreement.
5.2 CONFIDENTIALITY. Notwithstanding anything contained in this Agreement,
if the transactions contemplated by this Agreement are not completed for any
reason, the Purchaser shall hold in strict confidence, and shall not disclose
to any person or use any confidential information obtained by the Purchaser
with respect to any of the Corporations and their affairs. Upon completion of
the transactions contemplated by this Agreement each of the Vendors shall hold
in strict confidence and shall not disclose to any person (other than the
Purchaser) or use any confidential information of any of the Corporations.
The obligations of the Purchaser in this Section shall not extend to
information which:
(a) is established to be known to the Purchaser prior to disclosure by
the Vendors;
(b) is or becomes generally available to the public through no fault of
the Purchaser;
(c) corresponds to information furnished to the Purchaser without
similar restrictions by any third party having a bona fide right to
do so;
(d) corresponds to information furnished by one or more of the Vendors
to any third party on a non-confidential basis;
(e) is disclosed under any legal requirement to do so; or
(f) is obtained by the Purchaser in the ordinary course of doing
business with any of the Corporations, including, without
limitation, the Purchaser's provision of telephone services to the
Corporations or customers of the Corporations.
SECTION 6 - CONDITIONS
6.1 GENERAL. The
obligations of the Purchaser under this Agreement are subject to the conditions
stated below which are for the exclusive benefit of the Purchaser and all or
any of which may be waived by the Purchaser. Each of the Vendors shall cause
each of the conditions to be fulfilled or performed on or before the Closing
Date to the extent within the control of any of the Vendors. If any condition
is not satisfied on or before the Closing Date, the Purchaser may terminate
this Agreement without any liability on the part of the Purchaser by notice to
each of the Vendors without prejudice to any other rights or remedies of the
Purchaser.
(a) VERIFICATION. All
representations and warranties contained in this Agreement shall be true as of
the Closing Date with the same effect as though made on and as of that date and
each of the Vendors shall have delivered to the Purchaser evidence satisfactory
to the Purchaser to the foregoing effect dated the Closing Date, but the
acceptance of such evidence and the closing of the transactions hereby
contemplated shall not be a waiver of such representations and warranties.
(b) VENDORS' OBLIGATIONS.
Each of the Vendors shall have performed each of its obligations under this
Agreement to the extent required to be performed on or before the Closing Date.
(c) ADVERSE PROCEEDINGS.
No action or proceeding shall be pending or threatened which could reasonably
be expected to impair or prohibit the completion of the transactions
contemplated by this Agreement.
(d) MATERIAL ADVERSE
CHANGE. No damage to or destruction of a material part of the property, plant
or equipment of any of the Corporations shall have occurred and no change shall
have occurred in the operations, condition, affairs or prospects of any of the
Corporations, financial or other, other than changes in the ordinary and usual
course of business which, in the reasonable business judgment of the Purchaser,
are not expected to be materially adverse to the Corporation.
(e) STATUS OF LEASES.
Each of the Vendors shall have delivered to the Purchaser (i) acknowledgments
from the lessors under the leases identified in Schedule 3.4(c) that such
leases are in full force and the respective Corporation is not in breach of any
of the terms thereof and (ii) any consent to the change in ownership effected
by the sale of the Purchased Shares as may be required by the terms of such
leases.
(f) INDEBTEDNESS OF SHAREHOLDERS, DIRECTORS ETC.
All indebtedness to each of the Corporations of
its shareholders, directors, officers and employees and any person, firm or
corporation not dealing at arm's length with any of the foregoing within the
meaning of the ITA for advances or other amounts shall have been paid in full.
(g) RELEASES AND RESIGNATIONS.
The Vendors shall have delivered to the Purchaser releases and
resignations or termination acknowledgements of the persons listed on Schedule
6.1(g).
(h) CORPORATE ACTION.
All appropriate action of the directors, shareholders and officers of each of
the Corporations shall have been taken and all requisite consents, approvals
and resignations shall have been obtained to transfer the Purchased Shares to
the Purchaser and to constitute respective boards of directors consisting of
nominees of the Purchaser.
(i) APPROVALS, CONSENTS, ETC.
Any approval, consent, ruling, exemption or authorization that may be
necessary or appropriate in respect of the transactions hereby contemplated
shall have been received and shall be absolute or on terms reasonably
acceptable to the Purchaser.
(j) LIABILITIES. The Corporations shall have no liabilities other than
those listed in its Interim Financial Statements, other than liabilities
occurred in the ordinary course of business.
(k) APPROVAL OF COUNSEL. The status of each of the Corporations, its title
to its assets, all documents delivered hereunder, and the form and legality of
all corporate action and all other matters which in the reasonable opinion of
counsel for the Purchaser are material shall be subject to the approval of such
counsel, who may rely to such extent and with respect to such matters as such
counsel considers appropriate on the opinion of counsel for the Vendors, and
counsel for the Vendors shall have delivered to the Purchaser such legal
opinions as the Purchaser may reasonably request for the purposes of the
foregoing including an opinion in the form and content of Schedule 6.1(k).
SECTION 7 - NON-COMPETITION
Each of the Vendors hereby covenants that he, she or it, as the case may
be, will not, either alone or in partnership or with any other person, firm or
corporation, as principal, agent, shareholder or in any other capacity, carry
on or be engaged in or concerned with or interested in, directly or indirectly,
or advise, represent, be employed by, lend money to, guarantee the debts or
obligations of, or permit his, her, its name or any part thereof to be used by,
any person, firm, corporation, organization or other entity (other than the
Purchaser) engaged in or interested in, (i) soliciting (in connection with the
provision of local and/or long-distance voice or data telephone services, other
than wireless services) persons, firms, corporations, organizations, or other
entities which are then customers of the Purchaser or any affiliate of the
Purchaser in Canada for a period of five (5) years from the Closing Date or
(ii) any business of providing local and/or long distance voice or data
telephone services, other than wireless services, to residential
or non-residential customers carried on in Canada for a period of two (2) years
from the Closing Date.
Notwithstanding the foregoing, Gerry McNab may engage in the business of
providing local and/or long-distance voice or data telephone services to
residential or non-residential customers carried on in the Town of Port Hope
and all that area bounded by Highway 45 on the West, Highway 7 to the North as
far as Perth, then Highway 43 to the Quebec border, and all bounded to the
South by Lake Ontario and the St. Lawrence River, excluding the municipalities
of Perth and Smith Falls. Rob Benzie may engage in the business carried on
by Gerry McNab as an employee or agent of McNab and may continue to
engage in the business of providing local internet access services carried on
in the Ajax local telphone calling area, provided that Rob Benzie shall be
prohibited from providing internet access services outside of such Ajax local
telephone calling area except as an agent for the Purchaser, which agency
arrangement will only be offerred if the Purchaser engages other agents to sell
internet access services and will be on terms no more favourable than those
offerred to such other agents.
SECTION 8 - RELEASES
Each of the Vendors hereby fully and unconditionally release and forever
discharge each of the Corporations of and from any and all past, present and
future liabilities, claims, actions, causes of action, suits, debts, accounts,
bonds, covenants, contracts, obligations and demands whatsoever arising from
any cause, matter or thing existing up to and including the date hereof, except
for dividends and management fees which have been accrued in the Interim
Financial Statements or the financial books and records of the Corporations (to
the extent that such financial books and records were provided to the Purchaser
for review prior to the Closing Date) and which shall be paid before or within
30 days after the Closing Date if cashflow permits or such later date as
cashflow permits.
Each of the Vendors hereby acknowledges that the name "Metrowide" is the
property of the Corporations and agrees, from and after the Closing Date, to
cease using the name "Metrowide" in connection with any activities carried on
by the Vendor after the Closing Date, whether on any advertising, letterhead,
contracts, forms, documents or otherwise. Each of the Vendors shall in
compliance with the foregoing, within 30 days following the Closing Date,
discharge any business names, trade names, trade-marks or logos registered by
the Vendor and containing the words "Metrowide" and shall, on or before
closing, file articles of amendment to change the name of any corporation
(other than the Corporations) owned or controlled in whole or in part by the
Vendor which has the words "Metrowide" as part of the name of the corporation.
Notwithstanding the foregoing, the name "Metrowide" may continue to be used by
Metrowide Telecommunications (Seaway) Inc. in accordance with and to the extent
permitted under the franchise agreement dated June 1, 1994 with Metrowide
Telecommunications (Seaway) Inc.
SECTION 9 - INDEMNITIES
9.1 GENERAL INDEMNITY. The Vendors shall each fully indemnify the Purchaser
and each of the Corporations in proportion to their pro-rata share of the
Purchase Price as evidenced by the allocation in Schedule 2.3:
(a) for the maximum relevant period specified in Section 11 against all
loss, liability and expense arising out of any misrepresentation or
breach of warranty or obligation by one or more of the Vendors
under this Agreement and the other documents contemplated by or
delivered pursuant to this Agreement; and
(b) against all liabilities (including liabilities for any Taxes),
contingent or other, existing on the Closing Date or relating to
any period prior to the Closing Date, other than:
(1) liabilities disclosed or fully provided for in the Interim
Financial Statements of each of the Corporations,
(2) liabilities incurred in the ordinary course of business of
each of the Corporations subsequent to the date of the
balance sheet included in its Interim Financial Statements
and not incurred contrary to any provision of this Agreement,
and
(3) liabilities disclosed under this Agreement;
and such indemnity shall include, without limitation, reasonable expenses of
investigation and legal fees and expenses in connection with any action or
proceeding against any or all of the Vendors. If the amount required to
satisfy any claim so disclosed or provided for shall exceed the amount so
disclosed or provided for, the excess shall be considered to be a separate
liability in respect of which no disclosure or provision has been made. The
liability of the Vendors under this Section with regard to any representation
or warranty shall not extend to any claim asserted after the expiry thereof
under Section 11. No claim shall be made by the Purchaser for indemnity under
this Section until the amounts so claimed aggregate more than $100,000, at
which time such claim shall include the initial $100,000. The Purchaser may
off-set any amount payable by the Purchaser hereunder to the Vendors against
any amounts owing to the Purchaser or the Corporations under this Section,
provided that any amounts so set-off shall, if the claim for indemnity is
disputed by the Vendors, be paid by the Purchaser to McMillan Binch to be held
in trust until such dispute is resolved by agreement between the parties, by
arbitration or by a court of competent jurisdiction, as applicable.
9.2 NOTICE AND PARTICIPATION. The Purchaser shall give each of the Vendors
prompt notice of any loss, liability or expense for which any of the Vendors
may be liable under Section 9.1 above and each of the Vendors shall be
entitled, at its expense, to participate in any negotiations, and to assume the
defence of any action or proceeding in respect of which indemnification is
sought under this Section. The Vendors and the Purchaser shall obtain the
prior written approval of the other, which approval shall not be unreasonably
withheld, before entering into any settlement of any claim, action or
proceeding or ceasing to defend against any claim, action or proceeding.
9.3 STATUS OF THE CORPORATIONS. The Vendors acknowledge that, in the event
that the transactions contemplated by this Agreement fail to close, the
Purchaser shall have no liability to the Vendors in respect of any change in
the status or affairs of any of the Corporations, provided that the Purchaser
has complied with the confidentiality obligations applicable to it under the
non-binding letter of intent dated May 29, 1995 between the Corporations and
the Purchaser.
SECTION 10 - CLOSING
The closing shall take place at the offices of Messrs. McMillan Binch,
Suite 800, 3 Robert Speck Parkway, Mississauga, Ontario, at 11:00 a.m. on the
Closing Date at which time each of the Vendors shall deliver to the Purchaser
certificates for the Purchased Shares duly endorsed in blank for transfer
together with reasonable evidence of the due compliance by each of the Vendors
with all of the conditions contained in Section 6 and such other documents as
counsel for the Purchaser may consider necessary or appropriate against payment
of the purchase price by the Purchaser to the Vendors.
SECTION 11 - SURVIVAL
11.1 SURVIVAL. The representations, warranties and obligations contained in
this Agreement or in any document delivered hereunder shall survive the closing
of the transactions contemplated by this Agreement, subject to the limitations
that:
(a) the representations and warranties of the Vendors in Section 3.3(g) which
are based on misrepresentation or fraud shall continue in force indefinitely;
(b) the representations and warranties of the Vendors in Section 3.3(g) which
are not based on misrepresentation or fraud shall terminate upon the expiration
of the last to expire of any time within which an assessment, reassessment or
similar document may be issued under any applicable legislation;
(c) all other representations and warranties of the Vendors, except for
representations and warranties relating to title or environmental legislation
or regulations, shall terminate upon the expiration of 2 years after the
completion of the closing on the Closing Date; and
(d) no claim may be asserted for breach of any representation or warranty
after the expiration of any applicable time period referred to above.
SECTION 12 - MISCELLANEOUS
12.1 FURTHER ASSURANCES. All the parties shall from time to time both before
and after the Closing Date diligently take or cause to be taken such action and
execute and deliver or cause to be executed and delivered to the other such
documents and further assurances as may, in the reasonable opinion of counsel
for the other, be necessary or advisable to give effect to this Agreement,
including appropriate consents, releases and acknowledgements from third
parties.
12.2 INVESTMENT CANADA ACT. The Purchaser shall, within the time period
prescribed by law, give notice of the acquisition to Investment Canada with all
necessary information and the Vendors shall provide such relevant information
and documentation to assist with such notice or application as the Purchaser
may consider necessary or desirable to comply with the INVESTMENT CANADA ACT.
12.3 NO DISCLOSURE. Prior to completion of the closing on the Closing Date,
no disclosure with respect to the transactions contemplated by this Agreement
shall be made by any party to suppliers, customers or employees of any of the
Corporations or others without the prior approval of the other party (such
approval not to be unreasonably withheld except that:
(a) the Vendors may make disclosure in confidence to senior employees
of its respective Corporation affected by this transaction; and
(b) the Vendors and Purchaser may make such disclosure as is required
by law or any applicable regulatory authority, subject to prior
notice to the other of the text of any such disclosure.
12.4 BROKERS. All the parties represents to the other that none has employed
any broker, finder, investment banker or other intermediary in connection with
the transactions contemplated by this Agreement who might be entitled to a fee
from the other or from any of the Corporations or any commission upon
consummation of the transaction.
12.5 NOTICE. Any notice or other communication under this Agreement shall be
in writing and may be delivered personally or sent by facsimile ("FAX") or by
prepaid registered or certified mail, addressed in the case of the Purchaser,
as follows:
ACC TelEnterprises Ltd.
5343 Dundas Street West
Suite 600
Etobicoke, Ontario
M9B 6K5
Attention: General Counsel
Fax No: (416) 236-7392
and in the case of each of the Vendors, to the addresses and fax numbers set
forth in Schedule A, with a copy to:
Cassels Brock
Barristers & Solicitors
Suite 2100, 40 King Street West
Scotia Plaza
Toronto, Ontario
M5H 3C2
Attention: Mr. Gregory J. Peebles
Fax No. (416) 360-8877
Any such notice or other communication, if delivered or mailed, shall be
effective when received (or, if not received on a Business Day, on the first
Business Day following the day of receipt) and, if transmitted by facsimile and
the appropriate answerback received, shall be effective on the first Business
Day following the day of transmission.
12.6 TIME. Time shall be of the essence of this Agreement.
12.7 HEADINGS. The headings in this Agreement do not affect its
interpretation.
12.8 GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the Province of Ontario (regardless of the laws
that might otherwise govern under applicable Ontario principles of conflicts of
law) and each of the parties irrevocably attorns to the jurisdiction of the
courts of Ontario.
12.9 ENTIRE AGREEMENT. This Agreement and the attached Schedules constitute
the entire agreement between the parties with respect to the subject matter and
supersede all prior negotiations and understandings. No provision may be
amended or waived except in writing.
12.10 SEVERABILITY. Any provision of this Agreement which is invalid or
unenforceable shall not affect any other provision and shall be deemed to be
severable.
12.11 BENEFIT OF AGREEMENT. This Agreement shall not be assigned by any party
without the written consent of the other parties, except that the Purchaser may
assign this Agreement to any affiliate provided that any such assignment shall
not release the Purchaser from its obligations and liabilities herein, and this
Agreement shall enure to the benefit of and be binding upon the parties and
their respective heirs, executors, administrators, successors and permitted
assigns.
12.12 COUNTERPARTS. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute the same instrument.
EXECUTION
IN WITNESS
WHEREOF the parties have duly executed this Agreement as of the date first
above-written.
ACC TELENTERPRISES LTD.
By:
987939 ONTARIO INC.
By:
And:
J.C.F.K. MANAGEMENT INC.
By:
And:
COMMFIRST INVESTMENTS INC.
By:
And:
COMMTWO INVESTMENTS INC.
By:
And:
LARRY TAVES MANAGEMENT INC.
By:
And:
KRIS-JEN-LEE ENTERPRISES INC.
By:
And:
NABER MARKETING INC.
By:
And:
MERICO PERSONNEL INC.
By:
And:
KATHRYN KIELY PROMOTIONS INC.
By:
And:
Witness RON CROWE
Witness JOHN KIELY
Witness GERRY MCNAB
Witness ROBERT WATSON
Witness ROB BENZIE
Witness JULIE BENZIE
Witness MERRYL CROWE
Witness KATHRYN KIELY
<PAGE>
SCHEDULE A
THE VENDORS
987939 ONTARIO INC.
5211 Rothesay Court
Mississauga, Ontario
L5M 4Y3
Attention: Ron Crowe
J.C.F.K. MANAGEMENT INC.
4 Waterloo Crt.
Thornhill, Ontario
L3T 6L9
Attention: John Kiely
COMMFIRST INVESTMENTS INC.
R. R. #1
Puslinch, Ontario
N0B 2J0
Attention: Larry Taves
COMMTWO INVESTMENTS INC.
R. R. #1
Puslinch, Ontario
N0B 2J0
Attention: Larry Taves
<PAGE>
LARRY TAVES MANAGEMENT INC.
R. R. #1
Puslinch, Ontario
N0B 2J0
Attention: Larry Taves
KRIS-JEN-LEE ENTERPRISES INC.
R. R. #1
Puslinch, Ontario
N0B 2J0
Attention: Connie Taves
NABER MARKETING INC.
12 Lake Road, R.R.#2
Colborne, Ontario
K0K 1S0
Attention: Gerry McNab
MERICO PERSONNEL INC.
5211 Rothesay Court
Mississauga, Ontario
L5M 4Y3
Attention: Merryl Crowe
KATHRYN KIELY PROMOTIONS INC.
4 Waterloo Crt.
Thornhill, Ontario
L3T 6L9
Attention: Kathryn Kiely
RON CROWE
5211 Rothesay Court
Mississauga, Ontario
L5M 4Y3
JOHN KIELY
4 Waterloo Crt.
Thornhill, Ontario
L3T 6L9
GERRY MCNAB
12 Lake Road, R.R.#2
Colborne, Ontario
K0K 1S0
ROBERT WATSON
262 West Acres Drive
Guelph, Ontario
N1H 7P1
ROB BENZIE
5 Chipperfield Crescent
Whitby, Ontario
L1R 1M4
JULIE BENZIE
5 Chipperfield Crescent
Whitby, Ontario
L1R 1M4
MERRYL CROWE
5211 Rothesay Court
Mississauga, Ontario
L5M 4Y3
KATHRYN KIELY
4 Waterloo Crt.
Thornhill, Ontario
L3T 6L9
______________________
Note: The Registrant agrees to furnish supplementally to the Commission a copy
of any omitted schedules or exhibits to this Agreement upon request.
