Xentel DM Incorporated
TSX VENTURE : XDM

Xentel DM Incorporated

February 25, 2010 03:07 ET

Acquisition of Shares of Xentel DM Incorporated

TORONTO, ONTARIO--(Marketwire - Feb. 25, 2010) - Xentel DM Incorporated (TSX VENTURE:XDM) -

SF FUND MANAGEMENT INC. ("SF"), SF FUND MANAGEMENT II INC. ("SF II") and SF FUND MANAGEMENT III INC. ("SF III"), each in its capacity as the general partner of the respective Ontario limited partnership noted below (collectively, the "Acquirers"), hereby announce that they have entered into agreements to acquire a total of 9,053,855 Class A common shares of XENTEL DM INCORPORATED ("XENTEL").

The shares to be acquired will comprise in the aggregate approximately 27.37% of the outstanding Class A common shares of XENTEL which will be outstanding after giving effect to XENTEL's issuance of shares in exchange for the outstanding shares of RMG, as noted below.

3,928,053 of the acquired shares are to be issued to the undernoted Acquirers by XENTEL in exchange for their sale to XENTEL of 47.5% of the outstanding shares in the capital of The Responsive Marketing Group Inc. ("RMG"). RMG is a private company all of the outstanding shares in the capital of which are to be acquired by XENTEL in exchange for the issuance by it of 8,269,585 Class A common shares (such acquisition is herein referred to as the "RMG Purchase"). The remaining 5,125,802 shares will be purchased by one of the Acquirers in a private transaction from two related Sellers at the price 30 cents per share plus reimbursement of certain of their legal expenses, the total of the amount of such reimbursement and the purchase price of the shares not to exceed 32.2 cents per share.

The shares will be acquired as follows:

Buyer   Issuer/Seller   No. of Shares  
SF   XENTEL   1,964,027  
SF II   XENTEL   1,964,026  
SF III   Two related XENTEL Shareholders   5,125,802  
           

SF, SF II and SF III, and the limited partnerships of which they respectively are the general partners, act jointly or in concert. Such limited partnerships, and the number of shares to be acquired by each, are as follows:

General Partner   Limited Partnership   No. of Shares To Be Acquired  
SF   The SF Fund Limited Partnership   1,910,016  
SF   The Shotgun Fund Limited Partnership II   54,011  
SF II   SF Fund Limited Partnership II   1,898,992  
SF II   SF Fund Limited Partnership II-B   65,034  
SF III   Shotgun Fund Limited Partnership III   5,125,802  
           

The address of each of the Acquirers is:

141 Adelaide Street West, Suite 760, Toronto, ON M5H 3L5, Canada.

The shares will be acquired for investment purposes. None of the reporting persons intends to acquire any additional securities of XENTEL.

In connection with the acquisitions, a Shareholders' Agreement is to be entered into among the Acquirers, the following three individuals and their respective family holding companies as named below, and XENTEL. Such three individuals and their family holding companies are:

Michael Davis & 2062766 Ontario Inc.
Michael Platz & All West Productions Ltd.
DAVID A. WINOGRAD & D & W MANAGEMENT FUND LLC

Mr. Platz is the Chief Executive Officer and a director, and Mr. Winograd is the President and a director, of XENTEL. Mr. Davis is the Chief Executive Officer of RMG and will become a director and senior officer of XENTEL on completion of the RMG Purchase. Mr. Davis' family holding company will be issued 3,928,053 Class A common shares of XENTEL in exchange for its 47.5% of the outstanding shares of RMG. The Acquirers understand that such three individuals and their family holding companies will, upon completion of the RMG Purchase, own an aggregate of 14,221,596 Class A common shares of XENTEL, comprising approximately 43% of the number of Class A common shares of XENTEL which will be outstanding.

By the Shareholders' Agreement, the contracting XENTEL shareholders who are parties thereto (the "Contracting Shareholders") will therein agree to vote their shares of XENTEL to elect as the directors of XENTEL three nominees of the Acquirers, one nominee of each of the other respective Contracting Shareholders, and a joint nominee of those other three Contracting Shareholders, for a total of seven directors. The Shareholders' Agreement will provide for the ongoing management of the operations of XENTEL under the direction of its board of directors; for Michael Platz and Michael Davis are to be the co-chief executive officers of XENTEL, for David Winograd to be its President; and for the employment by XENTEL of Messrs. Davis, Platz and Winograd, and their remuneration; and will contain non-competition and confidentiality covenants in favour of XENTEL from each of the other parties to the Shareholders' Agreement.

Pursuant to the Shareholders' Agreement, the shareholders will deposit their shares of XENTEL with a third party depository under an agreement which will prohibit the release of their shares except as agreed by the depositing shareholders.

Contact Information

  • Corporate Office East
    8000 Jane St Tower A, Suite 401
    Concord, ON L4K 5B8
    416-633-4646
    416-633-4643 (FAX)
    www.xentel.com