Schedule 13D

On Closing

As at June 30, 2007 and thereafter

The current portion of the senior term arising from the bullet repayment as well as the current portion of the mezzanine debt would be excluded from the calculation in the appropriate quarterly covenant calculations;

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KgANS+CTO2AIjt/yUnMlbxkUev3VjiXplBIKqZF86PLSOAyTSOd+nrZUxuf/Y+6z 9I00W4dP0sXqLSoWSL9sAA== 0001193125-06-201184.txt : 20061002 0001193125-06-201184.hdr.sgml : 20061002 20061002171626 ACCESSION NUMBER: 0001193125-06-201184 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20061002 DATE AS OF CHANGE: 20061002 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: YAK COMMUNICATIONS INC CENTRAL INDEX KEY: 0001084544 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 980203422 STATE OF INCORPORATION: FL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-79472 FILM NUMBER: 061121475 BUSINESS ADDRESS: STREET 1: 300 CONSILIUM PLACE STREET 2: SUITE 500 CITY: TORONTO ONTARIO STATE: A6 ZIP: M1H 3G2 BUSINESS PHONE: (647) 722-2752 MAIL ADDRESS: STREET 1: 300 CONSILIUM PLACE STREET 2: SUITE 500 CITY: TORONTO ONTARIO STATE: A6 ZIP: M1H 3G2 FORMER COMPANY: FORMER CONFORMED NAME: YAK COMMUNICATIONS USA INC DATE OF NAME CHANGE: 19990913 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Globalive Communications Corp. CENTRAL INDEX KEY: 0001375864 IRS NUMBER: 000000000 STATE OF INCORPORATION: A5 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 60 ADELAIDE ST E, 6TH FLOOR CITY: TORONTO STATE: A6 ZIP: M5C 3E4 BUSINESS PHONE: 1 416 204 0263 MAIL ADDRESS: STREET 1: 60 ADELAIDE ST E, 6TH FLOOR CITY: TORONTO STATE: A6 ZIP: M5C 3E4 SC 13D 1 dsc13d.htm SCHEDULE 13D Schedule 13D

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

YAK COMMUNICATIONS INC.

(Name of Issuer)

COMMON STOCK, NO PAR VALUE

(Title of Class of Securities)

984208 20 7

(CUSIP Number)

Anthony Lacavera

Chief Executive Officer

Globalive Communications Corp.

60 Adelaide Street East, 6th Floor

Toronto, Ontario M5C 3E4 Canada

(416) 640-1088

With a Copy to:

Kevin K. Rooney, Esq.

Michael F. Hayden, Esq.

Hayden Bergman Rooney,

Professional Corporation

150 Post Street, Suite 650

San Francisco, CA 94108

(415) 692-3310

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

September 20, 2006

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


CUSIP No. 984208 20 7


1.		Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).

		Globalive Communications Corp.
2.		Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)
		(b)
3.		SEC Use Only:

4.		Source of Funds (See Instructions)

		WC and BK
5.		Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)


6.		Citizenship or Place of Organization

		Province of Nova Scotia, Canada


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7. Sole Voting Power

		None
		8. Shared Voting Power

		6,496,700*
		9. Sole Dispositive Power

		None
		10. Shared Dispositive Power

		6,496,700*


11.	Aggregate Amount Beneficially Owned by Each Reporting Person

	6,496,700*
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)	¨

	N/A
13.	Percent of Class Represented by Amount in Row (11)

	50.1%**
14.	Type of Reporting Person (See Instructions)

	CO

Beneficial ownership of the common stock referred to herein is being reported hereunder solely because the reporting person may be deemed to have beneficial ownership of such shares as a result of the Support and Exchange Agreements described in Items 3, 4 and 5 hereof. Neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission by Globalive Communications Corp. that it is the beneficial owner of any of the common stock referred to herein for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or for any other purpose, and such beneficial ownership is expressly disclaimed.

**	Based on 12,965,250 shares of common stock of Yak Communications Inc. outstanding as of September 20, 2006 as set forth in the Merger Agreement (as defined below).

Item 1. Security and Issuer

This Statement on Schedule 13D (“Statement”) relates to shares of common stock, no par value per share (the “Shares”), of Yak Communications Inc., a Florida corporation (the “Company”), which has its principal executive offices at 300 Consilium Place, Suite 500, Toronto, Ontario M1H 3G2 Canada.

Item 2. Identity and Background

This Statement is being filed by Globalive Communications Corp., a Nova Scotia unlimited liability company (“Globalive”). Globalive’s principal place of business and office address is 60 Adelaide Street East, 6th Floor, Toronto, Ontario M5C 3E4 Canada. The name, citizenship, business address, present principal occupation or employment, and the name and principal business and address of any corporation or other organization in which such employment is conducted, of each director and executive officer of Globalive is set forth on Schedule I hereto and incorporated herein by reference.

Neither Globalive, nor, to its knowledge, any person listed on Schedule I has during the last five years (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws.

Item 3. Source and Amount of Funds or Other Consideration

The Offer (as defined below) is not conditioned upon Globalive’s or the Offeror’s (as defined below) ability to finance the purchase of Shares pursuant to the Offer. Globalive estimates that the total amount of funds required to purchase all of the outstanding Shares pursuant to the Offer will be approximately $69 million, including related transaction fees and expenses. Such funds will be made available to Globalive from the Senior Loans (as defined below) and Subordinated Loans (as defined below) as well as from internal cash resources of Globalive.

Globalive has obtained (A) a senior debt financing commitment from The Toronto-Dominion Bank (“TD Bank”) and Canadian Imperial Bank of Commerce (“CIBC” and together with TD Bank, the “Senior Lenders”) to provide Globalive with up to Canadian $65 million (or the U.S. Dollar equivalent thereof) in senior secured debt financing in connection with the Offer in the form of (i) a three-year term loan facility in the amount of Canadian $45 million (or the U.S. Dollar equivalent thereof; the “Term Loan”); (ii) a 364-day revolving loan facility in the amount of Canadian $10 million (or the U.S. Dollar equivalent thereof; the “Revolving Loan”); and (iii) a 7-day non-revolving bridge loan facility in the amount of Canadian $10 million (or the U.S. Dollar equivalent thereof; the “Bridge Loan” and together with the Term Loan and the Revolving Loan, the “Senior Loans”) and (B) a subordinated debt financing commitment from CIBC and Roynat Capital (“Roynat” and together with CIBC, the “Subordinated Lenders”) to provide Globalive with up to Canadian $10 million (or the U.S. Dollar equivalent thereof) in subordinated secured debt financing in connection with the Offer in the form of a 54-month term loan facility (the “Subordinated Loans”). A Commitment Letter for the Senior Loans is attached hereto as Exhibit 1 and a Commitment Letter for the Subordinated Loans is attached hereto as Exhibit 2. The funds will be used to finance the transaction contemplated under the Agreement and Plan of Merger, dated as of September 20, 2006 (as it may be amended from time to time, the “Merger Agreement”), by and among Globalive, Yakquisition Corp., a Delaware corporation and wholly-owned subsidiary of Globalive (the “Offeror”), and the Company and, to the extent not utilized for that purpose following the completion of such transaction, for working capital requirements and other general corporate purposes. Availability of the Senior Loans and the Subordinated Loans will be subject to certain customary conditions, and Globalive must comply with certain customary financial and other covenants and reporting obligations under the credit documentation which will govern and evidence the Senior Loans and the Subordinated Loans, respectively.

The Shares to which this Statement relates have not been purchased by Globalive or the Offeror. As an inducement for Globalive to enter into the Merger Agreement and in consideration thereof, certain directors, officers and other shareholders of the Company entered into support and exchange agreements dated as of September 19, 2006, with respect to an aggregate of 6,496,700 Shares (the “Support and Exchange Agreements”). Globalive did not pay additional consideration to these shareholders in connection with the execution and delivery of the Support and Exchange Agreements. For a description of the Support and Exchange Agreements, see Item 4 below, which description is incorporated herein by reference in response to this Item 3.

Item 4. Purpose of Transaction

On September 20, 2006, Globalive, the Offeror and the Company entered into the Merger Agreement, which provides for the commencement of a cash tender offer (as it may be amended from time to time as permitted by the Merger Agreement, the “Offer”) by the Offeror to purchase all Shares of the Company, at a price of $5.25 per Share, net to the seller in cash without interest thereon, less any required withholding taxes (such price, or any such higher price per Share as may be paid in the Offer, the “Offer Price”).

The Offer is subject to the conditions, among others, that (i) prior to the expiration of the Offer there be validly tendered in accordance with the terms of the Offer and not withdrawn a number of Shares that, together with the Shares then owned by Globalive and the Offeror, represents at least 80% of the total number of outstanding Shares on a fully-diluted basis (the “Minimum Condition”), and (ii) receipt of approval of the United States Federal Communications Commission for transfer of control of the Company’s subsidiary Yak Communications (America) Inc. and its Section 214 license.

If, at the initial expiration of the Offer or any permitted or required extension thereof, more than 50% of the Shares on the expiration date of the Offer, as it may be extended, have been tendered and not withdrawn, the Company has granted Globalive and the Offeror the irrevocable option to purchase newly-issued Shares for a consideration per Share equal to the Offer Price but only to the extent necessary to cause the Offeror to own one share more than 80% of the Shares, after such issuance.

The Merger Agreement provides, among other things, that, after the consummation of the Offer and subject to certain conditions, the Offeror will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation (the “Surviving Corporation”). Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each Share issued and outstanding immediately prior to the Effective Time (other than Shares held by the Company, Globalive or the Offeror, all of which Shares will be cancelled and retired and shall cease to exist), will be converted into the right to receive the Offer Price in cash, without interest.

The directors and officers of Offeror immediately prior to the Effective Time shall be the directors and officers from and after the Effective Time of the Surviving Corporation until their respective successors are duly elected, designated or qualified. Globalive anticipates that, if the Merger is completed in accordance with the Merger Agreement, the Company will be a wholly-owned subsidiary of Globalive, that Globalive will seek to cause the Shares to be delisted from quotation on the Nasdaq Global Market and that the Shares would become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The purpose of the Offer will be to acquire control of, and the entire equity interest in, the Company. The purpose of the Merger is to acquire all outstanding Shares not tendered and purchased pursuant to the Offer. If the Offer is successful, Globalive intends to consummate the Merger as promptly as practicable. If the Minimum Condition is satisfied, we believe the Offeror will have sufficient voting power to cause a short-form merger under the Florida Business Corporation Act (“FBCA”) without the affirmative vote of any other shareholders. Under the FBCA, the approval of the Board of Directors of the Company is required to approve and adopt the Merger Agreement and the transactions contemplated thereby including the Merger. The Board of Directors of the Company has unanimously approved and adopted the Merger Agreement and the transactions contemplated thereby, including the Merger.

In connection with the Merger Agreement, and in order to induce Globalive and Offeror to enter into the Merger Agreement, Anthony Heller, Charles Zwebner, David and Dina Brothman, David Heller, Evelyn Gestetner, Helmsbridge Holdings Limited, Joseph Genova, Lipmann Heller, Rushlade Investments Limited, Snowdon Investments Limited, Summertime Limited,

Wynnefield Capital Management LLC and Kevin Crumbo (the “Tendering Shareholders”), certain of whom are directors and/or officers of the Company, in their respective capacities as shareholders of the Company, concurrently with the execution and delivery of the Merger Agreement, entered into the Support and Exchange Agreements with Globalive, pursuant to which such shareholders agreed, among other things, to tender the shares held by them in the Offer and to vote such shares in favor of adoption of the Merger Agreement, all upon the terms and subject to the conditions set forth in such Support and Exchange Agreements. Such shareholders collectively hold a majority ownership interest in Yak. Each Tendering Shareholder has agreed that, unless their respective Support and Exchange Agreement is terminated as described below, they will not (i) transfer (which term shall include, without limitation, any sale, assignment, gift, pledge, hypothecation or other disposition), or consent to any transfer of, any or all of its Shares or any interest therein, or create or permit to exist any encumbrance on such Shares, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of its Shares or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to its Shares, (iv) deposit its Shares into a voting trust or enter into a voting agreement or arrangement with respect to such Shares, or (v) take any other action, other than in such Tendering Shareholder’s capacity as an officer or director of the Company, that would in any way restrict, limit or interfere with the performance of its obligations hereunder or the transactions contemplated hereby or by the Merger Agreement. The Support and Exchange Agreements terminate upon the earlier to occur of (i) the termination of the Merger Agreement in accordance with the terms of the Merger Agreement, (ii) the Effective Time or (iii) at the election of the Tendering Shareholder, upon written notice to Globalive, at any time after January 31, 2007 (December 29, 2006 in the case of Wynnefield Capital Management LLC). In connection with the Support and Exchange Agreements, each Tendering Shareholder also delivered to Globalive an irrevocable proxy with respect to his or its Shares subject to the Support and Exchange Agreement, allowing Anthony Lacavera and Brice Scheschuk, the Chief Executive Officer and Chief Financial Officer of Globalive, respectively, to vote (i) in favor of the adoption of the Merger Agreement, and in favor of each of the other actions contemplated by the Merger Agreement and (ii) against approval of any proposal made in opposition to, or in competition with, consummation of the Offer, the Merger or any other transactions contemplated by the Merger Agreement. The proxy terminates on (i) such date and time as the Merger Agreement shall have been terminated pursuant to its terms, (ii) such date and time as the Merger shall become effective in accordance with the terms and provisions of the Merger Agreement, (iii) such date and time as any amendment or change to the Merger Agreement is effected without the Tendering Shareholder’s consent that (A) decreases the Offer Price or (B) materially and adversely affects the Tendering Shareholder, or (iv) at the election of the Tendering Shareholder, upon written notice to Globalive, at any time after January 31, 2007 (December 29, 2006 in the case of Wynnefield Capital Management LLC).

Other than changes described in this Item 4, it is contemplated that the business and operations of the Company will be continued substantially as they are currently being conducted. The Offeror currently intends to maintain the Company’s headquarters in Toronto, Ontario. Offeror will continue to evaluate the business and operations of the Company during the pendency of the Offer and after the consummation of the Offer and the Merger and will take such actions as it deems appropriate under the circumstances then existing. Thereafter, Offeror intends to review such information as part of a comprehensive review of the Company’s business, operations, capitalization, indebtedness and management with a view to optimizing development of the Company’s potential in conjunction with Globalive’s existing business. Notwithstanding the foregoing, it is expected that, prior to or concurrently with the Merger, the Company will sell the assets of Yak Communications (America) Inc.

The above is a summary of the material provisions of the Merger Agreement and Support and Exchange Agreements. These summaries are qualified in their entirety by the Merger Agreement and the form of the Support and Exchange Agreement, which are filed herewith as Exhibit 3 and 4, respectively, by reference to their filing as Exhibits 2.1 and 4.1, respectively, to the Current Report on Form 8-K filed by the Company on September 22, 2006.

Except as set forth in this Statement (including any information incorporated herein by reference) and in connection with the transaction described above, Globalive does not have any plan or proposal that relates to or would result in any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

Item 5. Interest in Securities of the Issuer

(a) and (b) For the purpose of Rule 13d-3 promulgated under the Exchange Act, Globalive, by reason of the execution and delivery of the Support and Exchange Agreements, may be deemed to have beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of the 6,496,700 Shares which are subject to the Support and Exchange Agreements, which represent approximately 50.1% of the outstanding Shares.

With respect to the 6,496,700 Shares, Globalive has shared power to dispose of or to direct the disposition of such Shares and shared power to vote or direct the vote of such Shares. Except as set forth in this Item 5, Globalive does not, nor to its knowledge, does any person listed in Schedule 1 hereto, own beneficially any Shares. Neither the filing of this Statement nor any of its contents shall be deemed to constitute an admission by Globalive that it is the beneficial owner of any of the common stock referred to herein for purposes of Section 13(d) of the Exchange Act, or for any other purpose, and such beneficial ownership is expressly disclaimed.

(c) Except for the execution and delivery of the Support and Exchange Agreements and the Merger Agreement, no transactions relating to the Shares were effected by Globalive or, to its knowledge, by any person listed in Schedule I hereto, during the 60 days prior to the date hereof.

(d) Not applicable.

(e) Not applicable.

References to, and descriptions of, the Merger Agreement and the Support and Exchange Agreements as set forth herein are not intended to be complete and are qualified in their entirety by reference to the Merger Agreement and the form of the Support and Exchange Agreement, respectively, which are filed herewith as Exhibit 3 and 4, respectively, by reference to their filing as Exhibits 2.1 and 4.1 to the Current Report on Form 8-K filed by the Company on September 22, 2006.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

The information set forth, or incorporated by reference, in Items 3 through 5 of this Statement is hereby incorporated by this reference in this Item 6. To the best knowledge of Globalive, except as otherwise described in this Statement, there are no contracts, arrangements, understandings or relationships (legal or otherwise), including, but not limited to, transfer or voting of any of the securities of the Company, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies, between the persons enumerated in Item 2, and any other person, with respect to any securities of the Company, including any securities pledged or otherwise subject to a contingency the occurrence of which would give another person voting power or investment power over such securities other than standard default and similar provisions contained in loan agreements.

Item 7. Material to Be Filed as Exhibits

Exhibit 1: Commitment Letter, dated September 27, 2006 by and among Globalive, The Toronto-Dominion Bank and Canadian Imperial Bank of Commerce.

Exhibit 2: Commitment Letter, dated October 2, 2006 between Globalive and Canadian Imperial Bank of Commerce and Roynat Capital.

Exhibit 3: Agreement and Plan of Merger, dated September 20, 2006, among Globalive, Offeror and the Company (incorporated herein by reference to Exhibit 2.1 to Company’s Current Report on Form 8-K dated September 22, 2006).

Exhibit 4: Form of Support and Exchange Agreement between Globalive and certain shareholders of the Company (incorporated herein by reference to Exhibit 4.1 to Company’s Current Report on Form 8-K dated September 22, 2006).

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in the Statement is true, complete and correct.

Dated: October 2, 2006


GLOBALIVE COMMUNICATIONS CORP.

By:		/s/ ANTHONY LACAVERA
Name:		Anthony Lacavera
Title:		Chief Executive Officer

SCHEDULE I

INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF GLOBALIVE COMMUNICATIONS CORP.

The following list sets forth the name, citizenship, present principal employment or occupation and the name and principal business and address of any corporation or other organization in which such employment is conducted of each director and officer of Globalive Communications Corp. Unless otherwise indicated, the current business address of each person is 60 Adelaide Street East, 6^th Floor, Toronto, Ontario M5C 3E4 Canada. Unless otherwise indicated, each director and officer is a citizen of Canada.


Name		Position and Principal Occupation
Anthony Lacavera		Director and Chief Executive Officer

Brice Scheschuk		Chief Financial Officer

Ezio D’Onofrio		President and Chief Operating Officer

John Doran		Secretary

Mitchel Smith		Director; Vice President National Matching Services Inc.; 20 Holly Street, Suite 301, Toronto, ON M5C 3E4 Canada

Rafael Galicot		Director; Director and Secretary of BBG Communications, Inc.; 1658 Gailes Blvd, Suite B, San Diego, CA 92154; U.S. and Mexican Citizenship

EX-1 2 dex1.htm SENIOR LOAN COMMITMENT LETTER Senior Loan Commitment Letter

Exhibit 1

LOGO


CIBC Greater Toronto Commercial Banking				TD Commercial Banking
199 Bay Street, 3^rd Floor,				100 Wellington Street, 26^th Floor,
Commerce Court West				Toronto, Ontario
Toronto, Ontario				M5K 1A2
M5L 1A7
				Tel. 416-982-7772
Tel. 416-980-4354				Fax. 416-982-6076
Fax. 416-980-5352

September 27, 2006

PRIVATE & CONFIDENTIAL

Globalive Communications Corp.

80 Adelaide Street East, 6^th Floor

Toronto, Ontario

M5C 3E4

Attention:

Mr. Anthony Lacavera
Mr. Brice Scheschuk
Mr. Stewart Thompson

Dear Sirs:

Canadian Imperial Bank of Commerce (“CIBC”) and Toronto Dominion Bank (“TD”) are pleased to present a Committed Offer of Finance in accordance with the terms and conditions contained herein. The purpose of the financing is to provide senior credit facilities for Globalive Communications Corp. for the purposes of acquiring Yak Communications Inc and its subsidiaries.

Borrowers:

Globalive Communications Corp (“Borrower”).

Co-Lead Arrangers:

Canadian Imperial Bank of Commerce (“CIBC”) and the Toronto Dominion Bank (“TD”) each propose to underwrite 50% of the credit facilities in accordance with the terms and conditions described below.

Lenders:

CIBC and TD are referred to in this Summary as the “Lenders”.

Closing Date:

“That date (the “Closing”) on which the Borrower: (i) acquires a sufficient number of securities of Yak so as to permit the Borrower to avail itself of the compulsory acquisition provisions of the applicable securities/corporate statutes in respect of the remaining outstanding securities of Yak at such time (and in any event acquires no less than 80% of the total issued and outstanding YAK shares) (the “Transaction”) and (ii) satisfies all other Conditions Precedent to Funding as contained herein (provided that such date is not later than December 29, 2006 in which case this offer to finance shall lapse and be of no effect unless otherwise agreed to in writing by the Lenders at their sole discretion).”

Transaction:

The establishment of credit facilities to finance the Transaction by Borrower of 100% of the outstanding shares of Yak.

Amount:

An aggregate of up to $65,000,000 in Canadian dollars (“C$”), or the equivalent amount in United States dollars (“US$”) will be available in multiple credit facilities (each a “Credit Facility” and collectively, the “Credit Facilities”).

Summary of Terms for the Revolving Operating Credit Facility (“Revolver”)

Maximum Amount:

C$10,000,000 (the “Maximum Amount”); to be undrawn on Closing.

Maturity:

364 days from Closing, with full repayment on maturity.

Availability:

Drawings are to be governed by a borrowing base (“Borrowing Base”), which is based on up to 80% of eligible accounts receivable; less priority accounts payable and any potential contra accounts.

The Borrower may draw under the Revolver by way of:

Prime Rate Loans in Canadian dollars;

U.S. Base Rate Loans in U.S. dollars;

Canadian dollar Banker’s Acceptance (“BA’s”), with terms of 1, 2, or 3 months, subject to availability;

London Inter-Bank Offered Rate Loans in U.S. dollars (“LIBOR Loans”) with terms of 1, 2, or 3 months, subject to availability

Letters of Credit with terms of up to one year, subject to a cap of $1,500,000.

Purpose:

To assist the Borrower with working capital requirements and other general corporate purposes, excluding capital expenditure.

Conditions:

All L/Cs under this Credit are to be used for general business purposes and may not have terms to expiry of more than 12 months.

Summary of Terms for the Non-Revolving Term Loan Facility (“Term Facility”)

Amount:

C$45,000,000

Maturity:

3 years from Closing.

Amortization:

The Term Facility will amortize according to the following schedule, payable in equal quarterly instalments:


Period		Annual Amount
Year 1 (2007)		$10,000,000
Year 2 (2008)		$15,000,000
Year 3 (2009)		$15,000,000
Bullet at Maturity		$5,000,000

Availability:

The Borrower may draw under the Term Facility by way of a single drawing made at Closing and thereafter only by way of rollovers and conversions by way of:

Prime Rate Loans in Canadian dollars;

BA’s with terms of 1, 2, or 3 months, subject to availability;

U.S. Base Rate Loans in U.S. dollars; and

LIBOR Loans with terms of 1, 2, or 3 months, subject to availability.

Purpose:

The Term Facility will be used to assist with financing the Transaction.

Summary of Terms for the Non-Revolving Cash Bridge Loan Facility (“Bridge Facility”)

Amount:

C$10,000,000.

Maturity:

7 days from Closing.

Amortization:

100% bullet payment due on Maturity.

Availability:

The Borrower may draw under the Bridge Facility by way of a single drawing made at Closing and thereafter only by way of rollovers and conversions by way of:

Prime Rate Loans in Canadian dollars;

U.S. Base Rate Loans in U.S. dollars; and

Any undrawn amounts of the Bridge Facility at Closing will be cancelled.

Security:

The Facility will be fully cash collateralized and will be supported by all other security as required hereunder.

Purpose:

The Facility will be used to assist with financing the Transaction.

General Terms and Conditions

Interest Rate:

The Credit Facilities will bear interest according to the following table, (“Pricing Grid Table”) which is based on the ratio of Total Funded Debt to EBITDA:


Total Funded Debt to EBITDA	Cdn. Prime & USBR	BA’s Stamping Fee & LIBOR Loans, L/C’s	Standby Fees
³2.25 x	150 bps	275 bps	50 bps
³1.75 x	125 bps	250 bps	37.5 bps
³1.25 x	100 bps	225 bps	37.5 bps
< 1.25 x	0 bps	125 bps	25 bps

Non-refundable Standby Fees, based on the undrawn portion of the Revolver, are to be paid to each Lender by the Borrower, monthly in arrears according to the above schedule.

The Total Funded Debt to EBITDA Ratio shall be measured on a quarterly basis to determine the pricing for the following quarter. EBITDA shall be calculated on a rolling four-quarter basis.

Fees:

As per the Fee Letter dated September 27, 2006 (the “Fees Letter”) provided under separate correspondence which is to be executed and returned by the Borrower concurrent with this Term Sheet by September 29, 2006 failing which this Committed Offer will become null and void.

Security:

The existing security currently held by CIBC plus any other usual and customary security for transactions of this type in form and substance satisfactory to the Lenders (together with such other security as the Lenders, acting reasonably in their sole discretion, may consider to be necessary or advisable in the circumstances having regard to the Transaction and the results of the Lenders’ due diligence), including, without limitation:

First ranking security over all of the present and future undertaking and property of the Borrower and a first ranking pledge of all securities in all present and future subsidiaries of the Borrower now or in the future held by the Borrower and an assignment of all material contracts, licenses, brands, trademarks, intellectual property etc., acknowledged by the counterparties thereto, subject to acceptable permitted liens, as advised by Lenders’ counsel,

Full recourse guarantees from any subsidiaries of the Borrower supported by first ranking security over all of the present and future undertaking and property of each such subsidiary and a first ranking pledge of all securities in all other present and future subsidiaries of the Borrower now or in the future held by such subsidiary and an assignment of all material contracts, licenses, brands, trademarks, intellectual property etc., acknowledged by the counterparties thereto, subject to acceptable permitted liens, as advised by Lenders’ counsel,

Full recourse guarantee from Canada Payphone Corporation supported by first ranking security over all of the present and future undertaking and property (Note: this guarantee will not be required if Canada Payphone Corporation is merged with the Borrower prior to closing of YAK),

Assignment of insurance policies,

Landlords’ waiver and assignment of lease,

Credit Agreement executed between the Borrower and the Lenders,

Postponements of all shareholders’ and related party loans,

Pledge of shares of the Borrower, including all wholly owned and non-wholly owned material subsidiaries,

Inter-creditor agreement executed amongst the Lenders and the Subordinated Debt providers and the Borrower outlining the various priority interests re: Security,

All Credit Facilities are to rank pari passu. Any interest rate or foreign exchange rate hedging facilities provided by the Lenders, subject to appropriate limitations on hedging facilities to be determined, will also rank pari passu with the Credit Facilities,

Security documents or additions thereto, are subject to satisfactory due diligence by counsel

Voluntary Prepayments:

The Borrower may voluntarily prepay advances at any time, without premium or penalty, subject to 3 business days notice, minimum amount of C$1,000,000 and reimbursements of breakage funding costs and related expenses, if any. BA’s may not be prepaid, only cash collateralized. All Voluntary Prepayments under the Term Loan will be applied in the inverse order of maturity.

Mandatory Prepayments:

In addition to any regularly scheduled payments of principal, the Borrower will be required to make the following additional mandatory payments:

(i)

Cash of the Borrower and YAK and their subsidiaries to be used to repay the Bridge Facility immediately upon its availability for such purpose and, in any event, no later than the maturity date of the Bridge Facility.

(ii)

Any excess of the Revolver balance over the lesser of the Maximum Amount and the Borrowing Base;

(iii)

Net proceeds of asset dispositions (other than sales of inventory in the ordinary course of business) to be paid within 3 business days of closing of disposition, subject to rights to replace assets disposed;

(iv)

100% of the net cash proceeds from any equity offering to be paid within 2 business days of closing of equity offering;

(v)

100% of the net cash proceeds from any permitted debt issuance to be paid within 2 business days of closing of debt issuance;

(vi)

100% of the net cash proceeds from any insurance proceeds to be paid within 2 business days of receipt;

(vii)

Annual sweep of 75% of excess cash flow due 120 days after fiscal year end. The sweep will reduce to 0% when the Term Facility is repaid in full. Excess cash flow to be defined as EBITDA less

permitted capital expenditures and cash taxes, cash interest, scheduled and voluntary principal repayments on the Term Facility.

(viii)

Any excess over the limit of a Credit Facility outstanding under such Credit Facility as a result of currency fluctuations.

Application of Proceeds:

Voluntary Prepayments will be applied as detailed above, while Mandatory Prepayments pursuant to the above (other than (i) and (vii) above) shall be applied to Term Facility payments in the inverse order of maturity.

Documentation:

The definitive documents are governed by the laws of the Province of Ontario and the laws of Canada applicable in such Province and will contain conditions precedent; affirmative, negative, and financial covenants; indemnities; events of default and remedies; and representations and warranties, as required by the Lenders.

Conditions Precedent to Funding:

Usual and customary for transactions of this type (together with such other conditions precedent as the Lenders, acting reasonably, may consider to be necessary or advisable in the circumstances having regard to the Transaction and the results of the Lenders’ due diligence), including, without limitation, without limitation, completion of the following conditions precedent to the satisfaction of the Lenders at their sole discretion::

(i)

Satisfactory evidence that the Borrower shall obtain unrestricted access to Yak’s cash and short term investments and the availability of such cash in the merged entity to help facilitate the acquisition financing, and all documentation related thereto;

(ii)

First ranking perfected charge over the Borrower’s and Yak’s cash and short term investments;

(iii)

Execution and delivery of acceptable credit and security (including registrations and search reports relative to security and opinions relative to all credit documents) documentation, which embodies the terms and conditions contained in this Summary;

(iv)

Completion of the Transaction on terms and conditions and in a manner acceptable to the Lenders;

(v)

The Lenders shall be satisfied that the tender offer by the Borrower for the securities of Yak has been accepted by a sufficient number of the holders of the securities of Yak so as to permit the Borrower to avail itself of the compulsory acquisition provisions of the applicable securities/corporate statutes (in any event no less than 80% of the outstanding YAK shares are to be tendered upon closing);

(vi)

The Borrower to provide a closing Balance Sheet consolidating its results with that of Yak;

(vii)

Satisfactory confirmatory financial, business, environmental, regulatory and legal due diligence with same to confirm no material adverse changes and/or no Lender’s receipt of information or any other matter that, in the Bank’s opinion, is inconsistent with the information or matter disclosed to the Bank prior to the date hereof;

(viii)

Satisfaction with terms of the Subordinated Debt and the supporting inter-creditor agreement;

(ix)

Satisfactory review of the Borrower’s pro-forma balance sheet, giving effect to the Transaction, together with a compliance certificate providing evidence the Borrower’s compliance with all terms and conditions of the Credit Agreement;

(x)

Review, to the satisfaction of the Lenders of the Borrower’s pro-forma financial statements giving effect to the transaction. At a minimum these statements will confirm LTM EBITDA of greater than $13,800,000 for Yak and greater than $9,000,000 for Globalive, after accounting for adjustments and/or normalizations identified prior to close and agreed to by the Lenders;

(xi)

Confirmation that a minimum of $7,500,000 in cash will be on the combined balance sheet of the Borrower after repayment of the $10,000,000 bridge loan, payment of the Borrower’s $11,000,000 deposit submitted with the YAK Offer;

(xii)

No material adverse change for Globalive and Yak since dates of last audited fiscal year end;

(xiii)

Receipt of a satisfactory audit opinion on the audited financial statements for YAK for the year ended June 30, 2006;

(xiv)

The Borrower shall have obtained all necessary regulatory, government, Securities, FCC, CRTC and other third party consents necessary to effect the Transaction;

(xv)

Payment of all fees and expenses payable to the Lenders under the credit documents (including payment of the fees, charges and expenses of Lenders’ counsel);

(xvi)

The Borrower’s receipt of $10,000,000 in new Subordinated Debt or equity in terms satisfactory to the Lenders;

(xvii)

Compliance Certificate from CEO/CFO that the Borrower will meet all financial covenants at closing. Senior Debt/EBITDA to be no greater than 2.00:1 at closing;

(xviii)

Satisfactory completion of transaction as contemplated with minimum $17,000,000 cash consideration allocated towards purchase price;

(xix)

Such other documents as the Lenders may reasonably request;

(xx)

No Event of Default or event which would constitute an Event of Default with the giving of notice or the passage of time, either prior to or after giving effect to such borrowing;

(xxi)

Provision of a Notice of Borrowing;

(xxii)

The Transaction shall not be hostile; and

(xxiii)

Each Representation and Warranty shall be true and correct.

Representations & Warranties:

Usual and customary for transactions of this type (together with such other representations and warranties as the Lenders, acting reasonably, may consider to be necessary or advisable in the circumstances having regard to the Transaction and the results of the Lenders’ due diligence), including, without limitation, (a) corporate status, (b) corporate power and authority, (c) enforceability, (d) no violation of law, contracts or organizational documents, (e) no material litigation, (f) correctness of specified financial information (including projections) and no material adverse change, (g) no required governmental or third party approvals (except to the extent already obtained), (h) use of proceeds, (i) no existing security interests, (j) compliance with laws (including environmental laws and regulations and other environmental matters), (k) compliance with pension matters, (l) status of existing debt, (o) existence and ownership of property and assets, (p) maintenance of appropriate insurance coverage, (q) payment of taxes, and (r) identification and description of subsidiaries and their jurisdictions of incorporation, the location of their places of business and assets and their capital structure.

Reporting Requirements:

Usual and customary for transactions of this type (together with such other reporting requirements as the Lenders, acting reasonably, may consider to be necessary or advisable in the circumstances having regard to the Transaction and the results of the Lenders’ due diligence), including, without limitation, the following reporting in form and substance satisfactory to the Lender:

Within 30 days after the end of each month, an Officer’s Certificate as to Receivable Value, on an aged basis, and a Monthly Statement of Available Credit Limit, as of that month-end;

Within 90 days after the end of each fiscal year, the audited consolidated financial statements of the Borrower for such year, prepared in accordance with GAAP;

Within 90 days after the end of each fiscal year, the consolidated financial statements of any material investments of the Borrowers for such year, prepared in accordance with GAAP;

Within 30 days after the end of each month, the internal consolidated financial statements of the Borrower on a year to date basis (including segmental reporting showing YAK performance separate from Globalive) for the year to date, prepared in accordance with GAAP;

Within 45 days after the end of each quarter, the internal consolidated financial statements of the Borrower (including segmental reporting showing YAK performance separate from Globalive) for the year to date, prepared in accordance with GAAP with a comparison to budget along with a compliance certificate accompanied by reasonably detailed financial covenant calculations;

Within 30 days prior to the end of each fiscal year, a business plan/forecast for the Borrower (including segmental reporting and the projected capital expenditure budget) for its next fiscal year;

Promptly after obtaining knowledge thereof, particulars of any failure by any of the Borrower and its Subsidiaries to perform or observe any of its covenants or agreements in favour of the Lenders;

Promptly upon receipt and/or after obtaining knowledge thereof, copies of the auditor’s Management Letters or particulars of any Default Notices or material Litigation of the Borrower or any of its Subsidiaries in favour of the Lenders; and

Such other information relative to the Borrower and its Subsidiaries, as the Lenders may reasonably require.

Affirmative Covenants:

Usual and customary for transactions of this type (together with such other affirmative covenants as the Lenders, acting reasonably, may consider to be necessary or advisable in the circumstances having regard to the Transaction and the results of the Lenders’ due diligence), including, without limitation, the following summary of covenant requirements:

Payment of liabilities under credit documents; Payment and satisfaction of other indebtedness and material obligations; Maintenance of existence; Conduct of business; Insurance; Maintenance of property and permits; Compliance with laws; Payment of taxes, Supplemental disclosure; Intellectual property; Inspection of property, books and records; Environmental matters; Use of accommodation; Delivery and maintenance of security; Payment of Lenders’ expenses; and Further assurances.

The Borrower agrees and undertakes to effect a disposition via a sale, transfer, and/or shut down of Worldcity VOIP and YAK America within 120 days of closing.

“The Borrower agrees and undertakes to acquire or cause its subsidiaries to acquire as soon as possible (and, in any event, within seven days of the Closing) all remaining securities of Yak which have not been acquired by the Borrower or its subsidiaries on the Closing in each case for the same price per security as was paid for those securities of Yak which were acquired by the Borrower or its subsidiaries on the Closing.”

Negative Covenants:

Usual and customary for transactions of this type (together with such other negative covenants as the Lenders, acting reasonably, may consider to be

necessary or advisable in the circumstances having regard to the Transaction and the results of the Lenders’ due diligence), including, without limitation, the following summary of covenant requirements:

Limitations on additional indebtedness; Limitation on other security interests; limitation on mergers, amalgamations and acquisitions; Limitations on hostile take-over bids; Limitations on financial assistance; Limitations on interest rate, foreign exchange and other hedging programs; Limitations on capital expenditures; Limitations on investments, loans, dividends and/or advances and other capital reduction transactions; Limitations on employee loans and affiliate transactions; Limitations on change in control; Limitations on sale and leaseback transactions; Limitation on sale of assets; Limitations on change of organizational documents, corporate name, location and/or fiscal year; Limitation on change of business.

Financial Covenants:

The following financial covenants pertain to the Borrower on a consolidated basis in accordance with GAAP

Fixed Charge coverage ratio defined as (i) EBITDA less Unfunded Capital Expenditures and cash taxes, divided by the sum of, (ii) total interest expense, scheduled principal payments, dividends paid, and payments made under capital leases, all measured on a rolling four quarter basis will be no less than 1.25:1 until the fiscal year ended December 31, 2007 at which time the covenant increases to 1.5:1;

Senior Funded Debt to EBITDA, measured on a rolling four-quarter basis: :


a.	On Closing	2.25:1
b.	As of June 30, 2007	1.75:1
c.	As of December 31, 2007	1.50:1
d.	As of June 30, 2008	1.25:1
e.	As of December 31, 2008	1.00:1

Total Funded Debt to EBITDA, measured on a rolling four-quarter basis: :


a.	On Closing	2.50:1
b.	As of June 30, 2007	2.00:1
c.	As of December 31, 2007	1.50:1
d.	As of June 30, 2008	1.25:1
e.	As of December 31, 2008	1.00:1

Minimum Current Ratio: Not less than 1.0:1 on close, increasing to 1.1:1 commencing June 30, 2007. The current portion of the Credit Facilities arising from the bullet repayment would be excluded from the calculation in the appropriate quarterly covenant calculations

Maximum Capex: $2,000,000 per annum.

Minimum consolidated LTM EBITDA from Globalive of $9,000,000, increasing to $10,000,000 as at December 31, 2007 (for the purposes of this calculation and for

greater clarity, LTM EBITDA from Globalive does not include any EBITDA originating from the YAK business or operations or any incremental EBITDA that might be generated by the Borrower in the event of a merger of YAK with the Borrower);

Consolidated LTM EBITDA will be defined as:

•

LTM EBITDA from Globalive plus LTM EBITDA for Canada Payphone Corporation (if not amalgamated prior to funding) plus LTM EBITDA for Yak normalized for the adjustments identified in the PWC due diligence report dated September 6^th, 2006 but not including adjustments for the money losing operations (YAK America and Worldcity VoIP) until these operations are completely divested

Events of Default:

Usual and customary for transactions of this type (together with such other events of default as the Lenders, acting reasonably, may consider to be necessary or advisable in the circumstances having regard to the Transaction and the results of the Lenders’ due diligence), including, without limitation, the following summary of events of default:

Failure to pay when due any principal, interest, fees or other amounts owing under the credit documents; Failure to comply with Affirmative Covenants, Negative Covenants, Financial Covenants, Reporting Requirements or other covenants under any of the credit documents; Breach of any Representations and Warranties; Cross default to other indebtedness; Any credit document ceasing to be enforceable, Security ceasing to constitute a security interest of the nature and priority contemplated under the credit documents or the validity or enforceability of any credit document being disputed by the Borrower or any of its subsidiaries; Material encumbrance or judgement; Material adverse effect; Involuntary or voluntary insolvency proceedings; Appointment of a receiver; Qualified auditor’s report; Change of control.

Assignments & Participations:

Customary for credit facilities of this nature. Subject to the consent of the Borrower at any time that no default or event of default is continuing, such consent not to be unreasonably withheld or delayed, the Lenders shall have the right to assign, sell or participate their respective rights and obligations in the Credit Facilities or in any borrowing thereunder, in whole or in part, to one or more persons (each of which shall be included in the references in this Summary to “Lenders”), subject to a minimum assignment amount of C$5,000,000.

General Indemnities:

Customary for credit facilities of this nature. The Borrower will indemnify the Lenders against all losses, liabilities, claims, damages or expenses, including without limitation legal or other expenses, incurred in connection with the entry into and performance of the Credit Facilities or the use of the Credit Facility proceeds, or the consummation of any transaction (including the Transaction) contemplated by the Credit Agreement, including the reasonable fees and disbursements of Lenders’ counsel.

Environmental Indemnities:

Usual and customary for transactions of this type.

Costs:

All reasonable legal and other out-of-pocket costs and expenses of the Lenders associated with the creation, documentation, syndication, publication, management, amendment, collection and enforcement of this Summary, the Credit Facilities and the Credit Agreement will be for the account of the Borrower, whether or not the transactions described in this Summary close.

Increased Costs:

The Borrower shall reimburse the Lenders and their holding companies, if any, for any additional costs or reduction of income arising as a result of the imposition of or increase in capital or other taxes on amounts paid by the Borrower to the Lenders, an imposition or increase in reserve requirements, or the imposition of any other condition affecting the Credit Facilities by any government, governmental agency or body, tribunal or regulatory authority. All payments under the credit documents shall be made free and clear of and without deduction for, all taxes, imposts, duties or other charges of any nature whatsoever.

Governing Law:

Province of Ontario and Canada.

Lenders’ Counsel:

Gowling Lafleur Henderson LLP.

Expiry:

This Committed Offer and the accompanying Fee Letter is open for acceptance by the Borrower until the end of the business day on September 29^th, 2006 failing which the Committed Offer will become null and void.

Publicity:

From time to time, the Lenders publish advertisements or announcements of completed transactions. These advertisements or announcements may take the form of press releases, paid advertisements, project financing signs, internally displayed tombstones, or information displayed on the Internet or on the Lenders’ Intranet. The Borrower hereby consents to the publication of an advertisement or announcement of the within transaction.

This summary supercedes in all respects those summaries of terms delivered to you by the Lenders (and all other commitment letters, term sheets and other such agreements or documents).

Please acknowledge your agreement to the foregoing terms and conditions by signing this Committed Offer to Finance in the space provided below together with the Fees Letter and returning the signed copies to the undersigned on or before September 29^th, 2006, failing which this Offer to Finance shall lapse and be of no effect.


Canadian Imperial Bank of Commerce /s/ DARYL JOHNSTON		Toronto Dominion Bank /s/ PAUL WATANABE
Name:	Daryl Johnston	Name:	Paul Watanabe
Title:	Director, Commercial Banking	Title:	Senior Manager

The undersigned confirms agreement to, an acceptance of the terms and conditions outlined above, this 29^th day of September, 2006.


Globalive Communications Corp. /s/ ANTHONY LACAVERA
Per:		Anthony Lacavera
		CEO

/s/ BRICE SCHESCHUK
Per:		Brice Scheschuk
		CFO

EX-2 3 dex2.htm SUBORDINATED LOAN COMMITMENT LETTER Subordinated Loan Commitment Letter

Exhibit 2

LOGO

This Summary of Terms and Conditions (“Summary”) represents an outline of the basis on which the Subordinated Lenders are prepared to provide their commitment under the Credit Facilities. The Credit Facilities will only be established upon completion of definitive loan documentation including a credit agreement (the “Credit Agreement”) which will contain the terms and conditions set out in this Summary in addition to such other representations, warranties, covenants, indemnities, defaults, and other terms and conditions (including increased costs. reserve, tax, capital adequacy, currency of payment and other provisions) as the Subordinated Lenders may reasonably require

PRIVATE & CONFIDENTIAL

Globalive Communications Corp.

80 Adelaide Street East, 6^th Floor

Toronto, Ontario

M5C 3E4

Attention:

Mr. Anthony Lacavera
Mr. Brice Scheschuk
Mr. Stewart Thompson

October 2^nd, 2006

Dear Sirs:

Canadian Imperial Bank of Commerce (“CIBC Mezzanine Finance”) and Roynat Capital (“Roynat”) are pleased to present a Committed Offer of Finance in accordance with the terms and conditions contained herein. The purpose of the financing is to provide a subordinated debt placement in in Globalive Communications Corp. for the purposes of acquiring Yak Communications Inc and its subsidiaries.

BORROWER:

Globalive Communications Corporation (“Globalive”).

SUBORDINATED LENDERS:

CIBC Mezzanine Finance and Roynat (collectively the “Subordinated Lenders”). Each of CIBC Mezzanine Finance and Roynat will be equal partners in the transaction in every respect and will conclude their respective loans through separate but identical credit agreements supported by identical security charges. Each of the Subordinated Lenders will lend one-half of the amounts referenced below. All fees, principal payments, prepayments and any and all other payments without limitation made by the Borrower in respect of the Loan will be shared equally between Roynat and CIBC Mezzanine Finance.

Globalive Communications Corp

October 2^nd, 2006

SENIOR LENDERS:

Canadian Imperial Bank of Commerce and Toronto Dominion Bank (collectively the “Senior Lenders”)

AMOUNT:

Up to CDN $10,000,000 secured subordinated term loan (the “Loan”).

PURPOSE:

To assist with the funding requirements of the acquisition by Globalive of the outstanding shares of Yak pursuant to the terms and conditions of the binding Agreement of Plan and Merger dated September 20^th, 2006 by and among, inter alia, the Borrower and Yak Communications Inc. (“Yak”).

SOURCES & USES
OF FUNDS:


Sources		Uses

Senior Revolving Debt	—	Purchase of Yak Shares	76,200,000
Senior Term Debt	45,000,000	Existing Capital Leases	1,863,393
Existing Capital Leases	1,863,393	Restructuring and	—
Bridge Loan	10,000,000	Transactions Costs	8,500,000
Subordinated Debt	10,000,000

Total Debt	66,863,393

Globalive Communications Cash	9,500,000
Yak Communications Inc. Cash	10,200,000

Total Sources	86,563,393	Total Uses	86,563,393

TERM:

The Company shall repay the amount outstanding on the Debenture and all accrued and unpaid interest upon the earlier of:

54 months from closing (“Maturity Date”); or

At the Subordinated Lender’s option, following any of the events listed below:

upon a sale of a majority of the assets of the Company;

upon the amalgamation or merger with another company;

event of default; or

change of control of the Company; or

at the time of an initial public offering (“IPO”).

DISBURSEMENT:

One single draw on Closing.

INTEREST RATE:

Prime + 5.5% per annum, payable monthly in arrears on the last day of each month following disbursement (the “Coupon Payment Date”). The first Coupon Payment Date will be due on the last day of the month in which the funding occurs and shall include all interest payable from the date of disbursement to such last day of the month.

PREMIUM:

Every calendar quarter, the Borrower shall pay an additional amount of $83,000 in the form of a fixed premium (“Premium”). This Premium will be paid in arrears on the final day of the quarter for the term of the Loan. The first Premium will be due on the last day of the calendar quarter following funding with subsequent Premium payments due on the last day of each subsequent calendar quarter thereafter for a total of 18 Premium payments.

Globalive Communications Corp

October 2^nd, 2006

REPAYMENT:

The Loan is repayable, in full, on the earlier of: a) Maturity and b) Acceleration of the Loan pursuant to the terms outlined above.

Upon the termination of the Cash Flow Sweep pursuant to the terms of the Senior Term Loan, the Subordinated Lenders will receive payments to be applied to the principal outstanding on the Loan in an amount equal to 75% of excess cash flow (excess cash flow is defined as EBITDA less permitted capital expenditures and cash taxes, cash interest, scheduled and voluntary principal repayments made on the Senior Term Debt).

OPTIONAL
PREPAYMENT:

At the Borrower’s option, the Loan may be repaid, in whole, at any time. In the event that the Subordinated Debenture is repaid, the prepayment must include interest due on the amount thereof to the date of prepayment together with an amount equal to the remaining Premium payments that the Subordinated Lenders would have received had the loan continued to maturity.

WARRANTIES:

Standard for financings of this type, but in any event no more onerous than the Senior Lenders.

POSITIVE COVENANTS:

Standard for financings of this type.

REPORTING REQUIREMENTS:

Standard for financings of this type including, without limitation:

Monthly financial statements for the Borrowers including segmented results showing Yak performance and Canada Payphone Corporation (unless amalgamated with the Borrower prior to funding) separate from Globalive performance within 30 days of month-end;

Quarterly unaudited financials of the Borrowers for each fiscal quarter with a comparison to budget along with a compliance certificate accompanied by reasonably detailed financial covenant calculations within 45 days of the end of each quarter;

Annual audited financial statements with a comparison to budget within 90 days of the end of each year;

Within 90 days after the end of each fiscal year, the consolidated financial statements of any material investments of the Borrowers for such year, prepared in accordance with GAAP;

An annual operating and capital budget for the coming fiscal year 30 days prior to the Borrower’s fiscal year-end; and,

Globalive Communications Corp

October 2^nd, 2006

Any other business and financial information that may be reasonably requested.

FINANCIAL COVENANTS:

Financial covenants will be harmonized with those of the Senior Lenders but in any event no more onerous than the Senior Lenders. In addition, the following financial covenants shall apply:

Fixed Charge Coverage ratio defined as (i) Consolidated LTM EBITDA less Un-financed Capital Expenditures, and cash taxes, divided by the sum of, (ii) total cash interest expense, scheduled principal payments on the Senior Term Debt, and payments made under capital leases, all measured on a rolling four quarter basis will be no less than 1.20:1 until the fiscal year ended December 31, 2007 at which time the covenant increases to 1.45:1;

Maximum Total Funded Debt to Consolidated LTM EBITDA, measured on a rolling four-quarter basis:


•	On Closing	£2.75:1

•	As at June 30, 2007	£2.25:1

•	As at December 31, 2007	£1.75:1

•	As at June 30, 2008	£1.50:1

•	As at December 31, 2008	£1.25:1

Minimum Current Ratio:

Minimum consolidated LTM EBITDA of $28,000,000 as measured on a rolling four quarter basis;

Maximum capital expenditures of $2,000,000 per annum.

Additional Definitions:

Funded Debt is defined as all interest bearing indebtedness for borrowed money excluding the Bridge Loan, normal course trade payables, deferred taxes, accrued liabilities and any other indebtedness subordinated to the Loan on terms and conditions satisfactory to the Subordinated Lenders.

Consolidated LTM EBITDA will be defined as:

•

LTM EBITDA for Globalive plus LTM EBITDA for Canada Payphone Corporation (if not amalgamated prior to funding) plus LTM EBITDA for Yak normalized for the adjustments identified in the PWC due diligence report dated September 6^th, 2006.

Globalive Communications Corp

October 2^nd, 2006

NEGATIVE COVENANTS:

Standard for financings of this type, including, without limitation:

•

Limitations on amalgamations, acquisitions, mergers and investments (including the formation of subsidiaries, joint ventures, or partnerships) which would have an adverse impact on the Subordinated Lenders’ position, without prior written notice and documentation and the Subordinated Lenders’ consent;

•

Limitations on the sale, transfer, assignment, lease or other disposition of any of the assets (including, without limitation, intellectual and industrial property) without prior written notice and documentation and the Subordinated Lenders’ consent;

•

Prohibition against the granting, creation and/or assumption of additional debt without the Subordinated Lenders’ consent;

•

Restrictions on providing guarantees and other forms of financial assistance without the Subordinated Lenders’ consent;

•

Restrictions on capital reorganizations and other changes in the capital structure of the Borrower that would be prejudicial to the Subordinated Lenders’ position, without the consent of the Subordinated Lenders;

•

Restrictions on the establishment of any benefit plans, profit-sharing plans or other arrangements or agreements with any shareholders, or officers who are not employees, without the consent of the Subordinated Lenders;

•

Restrictions on non-arms length transactions and payments without the Subordinated Lenders’ consent;

•

Prohibition against change of business without the Subordinated Lenders’ consent;

•

Any other negative covenants given to the Borrower’s Senior Lenders.

EVENTS OF DEFAULT:

Standard for financings of this type including, without limitation:

Default in the payment of any principal, interest, fees or other amounts payable by the Borrower to the Subordinated Lenders and/or default in the performance of any other covenant;

Cross default to any other debt holder;

Customary bankruptcy and insolvency events relating to the Borrower;

A material adverse change in the financial condition, assets, operations or prospects of the Borrower;

Change of Control.

Globalive Communications Corp

October 2^nd, 2006

DEFAULT INTEREST RATE:

Upon the occurrence, and during the continuance, of a default under the Loan, all amounts outstanding in connection with the Loan will be 2% higher than the prevailing Interested Rate per annum, payable monthly in arrears on the last day of each month.

DOCUMENTATION:

The Borrower and the Subordinated Lenders shall negotiate definitive agreements and documents (the “Definitive Documents”) reflecting the terms and provisions contained herein and such other terms and provisions as are customary for similar financings, including, without limitation (all of which Definitive Documents are to be in form and substance satisfactory to the Subordinated Lenders and their legal counsel):

Credit Agreement;

Security documents including, without limitation:

Guarantees and General Security Agreements creating fixed and floating charges on all assets of the Borrower including patents, licenses, rights, and any other intellectual property, subject only to the priority of the Borrower’s Senior Lender(s);

an assignment of all risks insurance, together with a Certificate of Insurance or Binder indicating the Subordinated Lender’s interests;

postponements of all shareholders’ and related party loans;

Pledge of Shares of the Borrower and all wholly owned and non-wholly owned subsidiaries;

Guarantee from Canada Payphone Corporation supported by a general security agreement unless amalgamated into the Borrower prior to funding;

Inter-Creditor agreement;

Pari-passu Agreement between CIBC Mezzanine Finance and Roynat

Security documents or additions thereto, are subject to satisfactory due diligence by counsel.

CONDITIONS PRECEDENT:

This financing proposal is conditional on the following:

Completion of the purchase of Yak on terms and conditions satisfactory to the Subordinated Lenders; including without limitation, the review of the share purchase agreement and corporate structure of the Borrower after giving effect to the acquisition;

Globalive Communications Corp

October 2^nd, 2006

Completion of legal documentation in a form satisfactory to the Subordinated Lenders and their legal Counsel; including without limitation, execution and delivery of all Definitive Documents; satisfactory review of new management contracts for senior management; provision of a bring down certificate to facilitate closing demonstrating satisfactory evidence of the required minimum cash position and covenant compliance at closing; and receipt of all regulatory, securities and/or third party consents and/or approvals;

Review to the satisfaction of the Subordinated Lenders with the capital structure of the Borrower and the Subsidiaries after giving effect to the acquisition confirming a minimum of $9,000,000 in cash on the balance sheet post closing but pre- restructuring costs and review of the Borrower’s pro-forma financial statements giving effect to the transaction. At a minimum these statements will confirm combined LTM EBITDA of greater than $28,000,000 for Yak Canada and Globalive after accounting for adjustments and/or normalizations identified in the PWC due diligence report dated September 6, 2006 and agreed to by the Subordinated Lenders;

Evidence, to the Subordinated Lenders’ satisfaction, that the issue of any of the respective transactions as outlined in this memorandum has been approved by the Directors of the Borrower;

Nothing shall have occurred which, in the opinion of the Subordinated Lenders, would have a material adverse effect on the business, operations, properties, condition, financial position, prospects or on the ability of the Borrower and YAK to perform any of its obligations.

FEES:

The Subordinated Lenders will earn and be paid the following fees:

(i)

An amount equal to 1.0% of the amount of the Debenture upon signing of the Discussion paper dated August 30^th, 2006 as a non-refundable work fee (received).

(ii)

An amount equal to 1.0% of the amount of the Debenture has been earned as a result of delivery of this Offer of Finance from the Subordinated Lenders in conformance with the terms and conditions established in the Discussion Paper dated August 30^th, 2006. This portion of the fee is due and payable on closing. If Globalive does not proceed with the acquisition of Yak, this portion of the fees will not apply.

(iii)

If the Borrower does not proceed with this Offer of Finance but does proceed with the proposed purchase of Yak then a fee of $250,000 will immediately be due and payable to the Subordinated Lenders. This fee will be considered earned by the Subordinated Lenders as a genuine estimate of the Subordinated Lenders’ internal costs and expenses in connection with the proposed financing.

EXPENSES:

The Borrower shall be responsible for any and all reasonable costs, fees and expenses (including, without limitation, all reasonable professional fees) incurred by the Subordinated Lenders in connection with its Due Diligence and the preparation, negotiation and registration of all loan and security documents and the other documents and agreements contemplated herein whether or not the Loan is advanced.

Globalive Communications Corp

October 2^nd, 2006

CONFIDENTIALITY:

This Offer of Finance, its terms and the transactions referred to herein are private and confidential and (other than to the Borrower’s officers, directors, senior management, and professional advisors) may not be disclosed by the Borrower or any of the Subsidiaries to any person whatsoever, except as outlined above, without the prior written consent of the Subordinated Lenders.

ASSIGNMENT:

In the event of a default, the Subordinated Lenders reserve the right to participate, sell or assign the Loan, in whole or in part, to one or more persons (“Participants”), without notice to, or the consent of, the Borrower. For this purpose, the Subordinated Lenders may disclose, on a confidential basis, to a potential Participant such information concerning the Borrower as the Subordinated Lenders considers appropriate. The Borrower agrees to execute and deliver, at the Subordinated Lenders’ request and expense, such further documentation as the Subordinated Lenders consider necessary or advisable to effect such syndication, participation, sale or assignment provided such documents do not adversely modify any of the rights or increase any of the obligations of the Borrower under the documents.

INDEMNITY:

The Borrower hereby indemnifies the Subordinated Lenders and their respective officers, directors, employees, advisers and agents (each an “Indemnified Person”) and holds each of them harmless from and against all losses, costs, expenses (including, without limitation, professional fees) and damages incurred by an Indemnified Person arising out of, relating to or resulting from this Offer of Finance or the Loan (whether or not the Loan is advanced), provided that no Indemnified Person will be indemnified for its own gross negligence or wilful misconduct.

GOVERNING LAW:

The laws of the Province of Ontario and of Canada applicable therein.

EXPIRY:

This Committed Offer is open for acceptance until the end of the business day on October 2^nd, 2006.

LAPSING DATE:

The Subordinated Lenders will have the right to withdraw any commitment made if the Debenture has not been issued prior to December 29^th, 2006.

Please acknowledge your agreement to the foregoing terms and conditions by signing this Committed Offer to Finance in the space provided below and returning the signed copy to the undersigned on or before October 2^nd, 2006.

Canadian Imperial Bank of Commerce

/s/ BLAIR COWAN

Roynat Capital

/s/ DAN KOCHANOWSKI

Globalive Communications Corp

October 2^nd, 2006

The undersigned confirms agreement to, an acceptance of the terms and conditions outlined above, this 2^nd day of October, 2006.

Globalive Communications Corp.

/s/ BRICE SCHESCHUK

Per: Brice Scheschuk

CFO

/s/ ANTHONY LACAVERA

Per: Anthony Lacavera

CEO

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