Exhibit 10.11
AMENDED AND RESTATED
PURCHASE AGREEMENT
BY AND AMONG
DOLLAR FINANCIAL CANADA LTD.
(FORMERLY KNOWN AS
000000 XXXXXXX LTD.)
AS PURCHASER,
DFG HOLDINGS INC.
AND
NATIONAL MONEY MART INC.,
AND
XXXXXXX X . XXXXX, XXXX XXXXXXXX, 698815 ALBERTA LTD.,
TRI-S INVESTMENTS LTD.
AND
BETSYN XXXXX
Dated as of October 23, 1996
TABLE OF CONTENTS
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Section Pages
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ARTICLE I 2
SALE AND PURCHASE OF SHARES 2
1.1 Sale and Purchase of Shares 2
1.2 National Assets 3
1.3 Excluded Assets 5
1.4 Liabilities 5
1.5 Tri-S Assets 5
ARTICLE II 6
PURCHASE AND PAYMENT 6
2.1 Amount of Purchase Price 6
2.2 Payment of Cash 6
2.3 [Intentionally Omitted] 6
2.4 Initial Calculation on Closing Date 6
2.5 Post-Closing Adjustments 7
ARTICLE III 9
CLOSING AND TERMINATION 9
3.1 Closing Date 9
3.2 Termination of Agreement 9
3.3 Procedure Upon Termination 10
3.4 Effect of Termination 10
Section Pages
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ARTICLE IV 10
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS 10
4.1 Organization and Good Standing 10
4.2 Authorization of Agreement 11
4.3 Capitalization 11
4.4 Subsidiaries and Other Interests 12
4.5 Corporate Records 13
4.6 Conflicts; Consents of Third Parties 13
4.7 Ownership and Transfer of Shares 14
4.8 Financial Statements 14
4.9 No Undisclosed Liabilities 15
4.10 Absence of Certain Developments 15
4.11 Taxes 17
4.12 Real Property 22
4.13 Tangible Personal Property 24
4.14 Intangible Property 25
4.15 Material Contracts 25
4.16 Employee Benefits 27
4.17 Labor 28
4.18 Employment Matters 29
4.19 Litigation 30
4.20 Compliance with Laws 30
4.21 Environmental Matters 30
4.22 Insurance 32
Section Pages
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4.23 Payables 32
4.24 Related Party Transactions 32
4.25 Banks 33
4.26 Financial Advisors 33
4.27 Franchise Operations 33
4.28 Name 33
4.29 Investment Intention 33
4.30 Accounts Receivable 35
4.31 [Intentionally Omitted] 35
4.32 No Bankruptcy 35
4.33 Minority Equity Interests 35
4.34 Absence of Activity 35
4.35 No Misrepresentation 36
ARTICLE V 36
REPRESENTATIONS AND WARRANTIES OF PURCHASER 36
5.1 Organization and Good Standing 36
5.2 Authorization of Agreement 36
5.3 Conflicts; Consents of Third Parties 37
5.4 Litigation 37
5.5 Investment Intention 37
5.6 Financial Advisors 37
ARTICLE VI 38
COVENANTS 38
6.1 Access to Information 38
Section Pages
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6.2 Conduct of the Business Pending the Closing 38
6.3 Consents 42
6.4 Consents to Real Property Leases 42
6.5 No Solicitation 43
6.6 Preservation of Records 43
6.7 Publicity 44
6.8 Repayment of Loans 44
6.9 Use of Name 44
6.10 Environmental Matters 44
6.11 Non-Competition Agreements 44
6.12 Shareholder Releases 45
6.13 Capital Contribution 45
6.14 Tax Matters 45
6.15 Transfer to Alberta 48
6.16 Obligations of Tri-S 48
6.17 Transfer to Xxx. Xxxxx 48
ARTICLE VII 48
CONDITIONS TO CLOSING 48
7.1 Conditions Precedent to Obligations of Purchaser 48
7.2 Conditions Precedent to Obligations of the
Shareholders and the Tri-S Shareholders 51
ARTICLE VIII 52
DOCUMENTS TO BE DELIVERED 52
8.1 Documents to be Delivered by the Shareholders and the
Tri-S Shareholders 52
Section Pages
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8.2 Documents to be Delivered by the Purchaser 54
ARTICLE IX 54
INDEMNIFICATION 54
9.1 Survival 54
9.2 General Indemnification 55
9.3 Limitations on Indemnification for Breaches of
Representations and Warranties 57
9.4 Indemnification Procedures 57
9.5 Tax Matters 59
9.6 Employee Benefits and Labor Indemnity 60
9.7 Waiver of Subrogation and Other Rights 60
9.8 Right of Offset 60
9.9 Treatment of Payment 60
ARTICLE X 61
MISCELLANEOUS 61
10.1 Certain Definitions 61
10.2 Payment of Sales, Use or Similar Taxes 72
10.3 Expenses 72
10.4 Specific Performance 72
10.5 Further Assurances 73
10.6 Submission to Jurisdiction; Consent to Service of
Process 73
10.7 Entire Agreement; Amendments and Waivers
Confidentiality 73
10.8 Governing Law 74
10.9 Table of Contents and Headings 74
Section Pages
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10.10 Notices 74
10.11 Severability 75
10.12 Binding Effect; Assignment 75
10.13 Shareholders' Representative 76
10.14 Western Union Bonus 76
10.15 Counterparts 77
ARTICLE XI 77
REPRESENTATIONS AND WARRANTIES OF DFG 77
11.1 Organization and Good Standing 77
11.2 Authorization of Agreement 77
11.3 Capitalization 78
11.4 Corporate Records 78
11.5 Conflicts; Consents of Third Parties 78
11.6 Financial Statements 79
11.7 No Undisclosed Liabilities 79
11.8 Absence of Certain Developments 80
11.9 Labor 80
11.10 Litigation 80
11.11 Compliance with Laws 81
11.12 No Bankruptcy 81
11.13 Taxes 81
11.14 No Misrepresentation 82
Section Pages
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ARTICLE XII 82
REPRESENTATIONS AND WARRANTIES OF THE TRI-S SHAREHOLDERS 82
12.1 Organization and Good Standing 82
12.2 Authorization of Agreement 83
12.3 Capitalization 83
12.4 Absence of Activity 84
12.5 Corporate Records 84
12.6 Conflicts; Consents of Third Parties 85
12.7 Ownership and Transfer of Shares 85
12.8 Financial Statements 85
12.9 Taxes 86
12.10 Litigation 90
12.11 Compliance with Laws 91
12.12 Related Party Transactions 91
12.13 Financial Advisors 91
12.14 No Bankruptcy 91
12.15 No Misrepresentation 91
PURCHASE AGREEMENT
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THIS AMENDED AND RESTATED PURCHASE AGREEMENT, dated as of
October 23, 1996 (the "Agreement"), by and among Dollar Financial
Canada Ltd. (formerly known as 000000 Xxxxxxx Ltd.), an Alberta
corporation (the "Purchaser"), DFG Holdings Inc., a Delaware
corporation ("DFG"), and National Money Mart Inc., an Alberta
corporation ("National"), and Xxxxxxx X. Xxxxx, Xxxx XxXxxxxx, and
698815 Alberta Ltd., an Alberta Corporation ("Alberta") (individually,
a "Shareholder" and collectively, the "Shareholders") and Tri-S
Investments Ltd. ("Tri-S"), an Alberta corporation and Betsyn Xxxxx
("Xxx. Xxxxx" and, together with Tri-S, individually a "Tri-S
Shareholder" and collectively, the "Tri-S Shareholders").
W I T N E S S E T H:
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WHEREAS, National presently owns and operates thirty six
(36) check cashing stores (the "Stores"), and franchises one hundred
six (106) check cashing stores, at the locations in Canada listed on
Schedule I;
WHEREAS, (i) as of the Closing the Shareholders will own an
aggregate of 6,208 shares of Common Stock (as hereinafter defined),
and Xxx. Xxxxx will own an aggregate of 2,500 shares of Common Stock
(together, the "Seller Shares"), and (ii) Tri-S owns an aggregate of
1,292 shares of Common Stock (the "Other Shares" and, together with
the Seller Shares, the "National Shares");
WHEREAS, the National Shares constitute all of the issued
and outstanding shares of capital stock of National;
WHEREAS, Xxx. Xxxxx owns an aggregate of 100 shares of
Common Stock, without par value of Tri-S (the "Tri-S Shares" and,
together with the National Shares, the "Shares"), which Tri-S Shares
constitute all of the issued and outstanding shares of capital stock
of Tri-S;
WHEREAS, Purchaser desires to purchase from (i) the
Shareholders and Xxx. Xxxxx, and the Shareholders and Xxx. Xxxxx
desire to sell to Purchaser, the Seller Shares, and (ii) Xxx. Xxxxx,
and Xxx. Xxxxx desires to sell to Purchaser, the Tri-S Shares, all for
the Purchase Price and upon the terms and conditions hereinafter set
forth;
WHEREAS, Purchaser desires that, effective upon the Closing
Date, each of the Shareholders and Xxx. Xxxxx will agree not to
compete with Purchaser or any of its affiliates pursuant to separate
Non-Competition Agreements to be entered into on the Closing Date in
substantially the form set forth on Exhibit A hereto;
WHEREAS, Purchaser is an indirect, wholly-owned subsidiary
of DFG;
WHEREAS, certain terms used in this Agreement are defined in
Section 10.1;
WHEREAS, the Purchaser, DFG, National, the Shareholders
(other than Alberta) and the Tri-S Shareholders have entered into a
Purchase Agreement dated as of October 23, 1996 (the "Prior
Agreement"); and
WHEREAS, the Purchaser, DFG, National, the Shareholders and
the Tri-S Shareholders have agreed to amend certain provisions
contained in the Prior Agreement, including, without limitation,
adding Alberta as a party to this Agreement and providing for the
purchase of the Tri-S Shares;
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements
hereinafter set forth, and upon the terms and subject to the
conditions hereinafter set forth, the Purchaser, DFG, National, the
Shareholders and the Tri-S Shareholders hereby agree that the Prior
Agreement is hereby amended and restated to read in its entirety as
follows:
ARTICLE I
SALE AND PURCHASE OF SHARES
1.1 Sale and Purchase of Shares.
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(a) Upon the terms and subject to the conditions contained
herein, on the Closing Date the Shareholders and Xxx. Xxxxx shall
sell, assign, transfer, convey and deliver to the Purchaser (or its
designees) good and marketable title, free and clear of all Liens, and
the Purchaser shall purchase from the Shareholders and Xxx. Xxxxx, the
Seller Shares.
(b) Upon the terms and subject to the conditions contained
herein, on the Closing Date Xxx. Xxxxx shall sell,
assign, transfer, convey and deliver to the Purchaser (or its
designees) good and marketable title, free and clear of all Liens, and
the Purchaser shall purchase from Xxx. Xxxxx, the Tri-S Shares.
(c) In addition, from and after the Closing, each of the
Shareholders and Xxx. Xxxxx agrees to provide, or cause to be
provided, to Purchaser, National and Tri-S access to all documents
and/or information as may be reasonably necessary to enable each of
them to see to the efficient and proper conduct and administration of
the assets owned by National (the "Assets") and the assets owned by
Tri-S, including, without limitation, all historical files, Tax
Returns, records and personnel data.
1.2 National Assets. Without limiting the foregoing, the
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Shareholders and Xxx. Xxxxx agree that, at the time of the Closing (as
hereinafter defined), all of the following, other than the Excluded
Assets, shall be owned by National and its Subsidiaries, free and
clear of all Liens except for the Permitted Exceptions:
(a) Licenses and Authorizations. All authorizations,
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approvals, orders, licenses, franchises, certificates and permits
(collectively, "Licenses") of and from all Governmental Bodies
necessary to own or lease the properties and assets used or useable in
the ownership and/or operation of the Stores, and to otherwise conduct
the business of National and its Subsidiaries conducted by it prior to
the date hereof other than with respect to the Excluded Assets (the
"Business") together with any renewals, extensions or modifications
thereof and additions thereto and other pending applications or
applications to be filed with any Governmental Body between the date
of this Agreement and the Closing Date.
(b) Cash, Accounts Receivable, Minority Equity Interests,
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etc. All cash, savings accounts, checks returned unpaid, accounts
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receivable, notes receivable, refunds of unearned insurance premiums,
bank deposits and similar items in the process of collection owned or
otherwise held by National on the Closing Date, and the Minority
Equity Interests set forth on Schedule 4.4 (b). For purposes of this
Agreement (including, without limitation, the calculation of the
Purchase Price pursuant to Article II hereof), all accounts receivable
that are 90 days or more past due (the "Discount Receivables") shall
be deemed to have been written-down to zero.
(c) Other Personal Property, etc. All tangible and
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intangible personal or moveable property, equipment, machinery,
furniture, fixtures, tools, computer hardware, supplies and other
assets, wherever located, used or useable in the ownership and/or
operation of the Stores and the Business, together with such
additions, modifications and replacements thereto, and subject to
deletions therefrom in connection with any such replacements, as may
be made in accordance with the terms of this Agreement and in the
ordinary course of business between the date of this Agreement and the
Closing Date.
(d) Real Property. All leased real or immovable property,
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buildings and structures, leasehold improvements, fixtures and
appurtenances used or useable in the operation of National and its
Subsidiaries (including all Company Properties) and their interests
and rights arising under all agreements, rights and appurtenances
relating thereto (including all Real Property Leases), any renewals,
extensions, amendments or modifications thereof, and any additional
agreements and leases made or entered into in accordance with the
terms of this Agreement and in the ordinary course of business between
the date of this Agreement and the Closing Date.
(e) Leases and Agreements. All contracts and agreements
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used or useable in the ownership and/or operation of the Stores and
the Business, including any renewals, extensions, amendments or
modifications thereof, and any additional agreements, leases,
commitments and orders made or entered into in accordance with the
terms of this Agreement between the date of this Agreement and the
Closing Date.
(f) Intellectual Property, Etc. All patents, patent
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licenses, copyrights, trademarks, trade names, service marks, trade
secret rights, computer programs and software, permits, licenses or
other similar rights used or useable in the ownership and/or operation
of the Stores and the Business, including, specifically, the
tradenames enumerated on Schedule 4.14 hereof, together with any
additions or modifications thereto and subject to any deletions
therefrom made in accordance with the terms of this Agreement between
the date of this Agreement and the Closing Date. The term "computer
programs and software" as used in this subparagraph (f) shall include,
without limitation, all point-of-sale ("POS") software developed
and/or owned by National and its Subsidiaries.
(g) Books and Records. All books, records and files
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pertaining to the Stores and the Business for all periods ending on or
before the Closing Date, including National's and its Subsidiaries'
minute books and stock register.
(h) Prepaid Expenses. All security deposits and other
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prepaid expenses relating to the operation and/or ownership of the
Stores and the Business, including, but not limited to, Taxes, rent,
licenses, postage and any other prepaid assets or deposits relating to
the operation and/or ownership of the Stores existing as of the
Closing Date.
(i) Customer Lists. All customer lists, vendor lists and
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other intangible assets relating to the operation and/or ownership of
the Stores and the Business, together with any additions or
modifications thereto and subject to any deletions therefrom made in
accordance with the terms of this Agreement between the date of this
Agreement and the Closing Date.
1.3 Excluded Assets. It is agreed that the assets set
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forth on Schedule 1.3 (collectively, the "Excluded Assets") shall not
constitute part of the Assets. The Excluded Assets shall be
transferred by National to the Shareholders prior to Closing, in the
manner described on Schedule 1.3.
1.4 Liabilities. Purchaser shall, following Closing,
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cause National and each of its Subsidiaries, as applicable, to perform
and discharge its obligations under the Assumed Contracts to which it
is a party, to the extent such obligations arise and accrue after the
Closing Date (excluding, however, those obligations that either arise
out of or would have been satisfied prior to the Closing but for a
breach or default by National or any of its Subsidiaries)
(collectively, the "Contract Liabilities"). The Shareholders and the
Tri-S Shareholders agree that prior to the Closing Date (i) they shall
cause National and its Subsidiaries to satisfy and discharge all of
its obligations and liabilities for amounts due or to become due for
services rendered or goods delivered to National or any of its
Subsidiaries prior to Closing, and (ii) they shall use, and cause
National and its Subsidiaries to use, their respective best efforts to
obtain a discharge or release of National and its Subsidiaries as of
the Closing, from any and all obligations, liabilities or expenses
other than the Contract Liabilities. Without limiting the generality
of the foregoing and without limiting Article IX below, and regardless
of whether any of the following may be disclosed to Purchaser pursuant
to Section 4 hereof or otherwise, or whether Purchaser may have
knowledge of the same, the Shareholders will be liable for and will
pay and indemnify National and Purchaser in respect of the Excluded
Liabilities.
1.5 Tri-S Assets. Without limiting the foregoing, the
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Shareholders and the Tri-S Shareholders covenant and agree
that, at the time of the Closing, (i) the only assets of Tri-S shall
be the Other Shares (which shall be held by Tri-S, free and clear of
all Liens), and (ii) Tri-S shall have no liabilities or obligations
(matured or unmatured, fixed or contingent) of any nature whatsoever.
ARTICLE II
PURCHASE AND PAYMENT
2.1 Amount of Purchase Price. The purchase price for the
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Seller Shares and the Tri-S Shares (the "Purchase Price") shall be an
amount equal to (i) the sum of (a) C$24,140,029.00, (b) the Cash on
Hand, (c) the Closing Date Accounts Receivable, (d) Prepaids, and (e)
MEI Interest less (ii) the sum of (w) Accounts Payable, (x) Bonuses,
(y) Dividends and (z) Shareholder Loans. The Purchase Price is
subject to adjustment as provided in this Agreement, and shall be paid
in the manner set forth in Section 2.2(b) below. 87.08% of the
Purchase Price shall be allocable to the purchase and sale of the
Seller Shares and 12.92% of the Purchase Price shall be allocable to
the purchase and sale of the Tri-S Shares.
2.2 Payment of Cash. (a) On the Closing Date and subject
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to the terms and conditions of this Agreement, the Purchaser shall pay
to the Shareholders' Representative the Purchase Price less C$700,000
in cash by certified or bank cashier's check in New York Clearing
House Funds, payable to the order of the Shareholders' Representatives
(or, at the Shareholders' Representative option, by wire transfer of
immediately available funds into an account designated, prior to the
Closing, by the Shareholders' Representative).
(b) Upon the Closing, and subject to the terms and
conditions of this Agreement, the Purchaser shall pay to Xxxx XxXxxxxx
and Alberta 139.19 and 185.58 shares, respectively, of DFG Common
Stock.
2.3 [Intentionally Omitted]
2.4 Initial Calculation on Closing Date. Notwithstanding
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any terms or provisions of this Agreement to the contrary, the
following components of the Purchase Price payment that is made on the
actual Closing Date shall be based upon National's October 31, 1996
internally prepared unaudited financial statements: (i) the amount of
Cash on Hand at National and each of its Subsidiaries, (ii) the
Closing Date Accounts
Receivable, (iii) the amount of Prepaids, (iv) the amount of MEI
Interests and (v) the amount of Accounts Payable, Bonuses and
Shareholder Loans .
2.5 Post-Closing Adjustments. (a) Purchaser shall
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prepare and deliver to Shareholder's Representative, as promptly as
practicable after the Closing Date, versions (based on audited
consolidated financial statements (prepared in accordance with GAAP
consistently applied) for National for the fiscal year ending on the
Closing Date; the "Closing Date Financial Statements") of: Schedules
for (i) the Cash on Hand, (ii) the Closing Date Accounts Receivable,
(iii) Prepaids, (iv) MEI Interests, (v) Accounts Payable, (vi)
Bonuses, (vii) Dividends and (viii) Shareholders Loans (collectively,
the "Updated Schedules"), all of which shall be dated as of the
Closing Date. The cost of preparing and delivering the Updated
Schedules and the Closing Date Financial Statements shall be shared
equally between (i) the Shareholders and (ii) the Purchaser.
(b) The Purchase Price shall be increased dollar for
dollar by an amount equal to: (i) any increase in the Cash on Hand (as
calculated pursuant to Section 2.4) as compared to Cash on Hand on the
Closing Date Financial Statements, (ii) any increase in the Closing
Date Accounts Receivable (as calculated pursuant to Section 2.4) as
compared to the Closing Date Accounts Receivable on the Closing Date
Financial Statements, (iii) any increase in Prepaids (as calculated
pursuant to Section 2.4) as compared to the Prepaids on the Closing
Date Financial Statements, (iv) any increase in MEI Interests as
compared to the MEI Interests on the Closing Date Financial
Statements, (v) any decrease in Accounts Payable (as calculated
pursuant to Section 2.4) as compared to Accounts Payable on the
Closing Date Financial Statements, (vi) any decrease in Bonuses (as
calculated pursuant to Section 2.4) as compared to Bonuses on the
Closing Date Financial Statements, (vii) any decrease in Dividends as
compared to Dividends on the Closing Date Financial Statements and
(viii) any decrease in Shareholders Loans (as calculated pursuant to
Section 2.4) as compared to Shareholders Loans on the Closing Date
Financial Statements.
In addition, the Purchase Price shall be decreased dollar
for dollar by an amount equal to: (i) any decrease in the Cash on Hand
(as calculated pursuant to Section 2.4) as compared to Cash on Hand on
the Closing Date Financial Statements, (ii) any decrease in the
Closing Date Accounts Receivable (as calculated pursuant to Section
2.4) as compared to the Closing Date Accounts Receivable on the
Closing Date Financial Statements, (iii) any decrease in Prepaids (as
calculated
pursuant to Section 2.4) as compared to the Prepaids on the Closing
Date Financial Statements, (iv) any decrease in MEI Interests as
compared to the MEI Interests on the Closing Date Financial
Statements, (v) any increase in Accounts Payable (as calculated
pursuant to Section 2.4) as compared to Accounts Payable on the
Closing Date Financial Statements, (vi) any increase in Bonuses (as
calculated pursuant to Section 2.4) as compared to Bonuses on the
Closing Date Financial Statements, (vii) any increase in Dividends as
compared to Dividends on the Closing Date Financial Statements and
(viii) any increase in Shareholders Loans (as calculated pursuant to
Section 2.4) as compared to Shareholders Loans on the Closing Date
Financial Statements.
The aggregate, net adjustment made pursuant to this Section
2.5(b) is hereinafter referred to as the "Adjustment Amount."
(c) As soon as is reasonably practicable following the
preparation and delivery of the Updated Schedules, the Purchaser shall
prepare and deliver to the Shareholders' Representative a statement
(the "Closing Statement") which shall set forth the adjustments to the
Purchase Price to be made, if any, in accordance with this Agreement.
Concurrently with its delivery of the Closing Statement to the
Shareholders' Representative, the Purchaser shall cause reasonable
access to be granted to the Shareholders' Representative to the work
papers and schedules prepared or used by the Purchaser and its
accountants in connection with the preparation of the Closing
Statement.
(d) To the extent the Adjustment Amount results in an
increase of the Purchase Price, Purchaser shall promptly pay the
amount of such increase to the Shareholders' Representative. To the
extent the Adjustment Amount results in a decrease to the Purchase
Price, the Shareholders in each case, jointly and severally, shall
promptly pay the full amount of such decrease to Purchaser. The
Adjustment Amount shall include interest from the Closing Date to the
date(s) of payment calculated at a rate of 10% per annum compounded
monthly. The Adjustment Amount together with such interest shall be
due and payable within 10 days after calculation of the Adjustment
Amount, subject to the terms of Section 2.5(e) below; provided that in
any event interest shall accrue at such rate through the date(s) of
payment. Any amounts paid pursuant to this Section 2.5 (other than
interest) shall be an adjustment to the Purchase Price.
(e) In the event that the Shareholders' Representative
gives the Purchaser written notice within 10 days after delivery to
the Shareholders' Representative of the Closing Statement that the
Shareholders' Representative disputes any portion of the Closing
Statement (a "Dispute Notice") and such dispute is not resolved within
20 days after delivery of such Dispute Notice to the Purchaser, either
Shareholders' Representative or the Purchaser may submit such dispute
to KPMG - Victoria, Chartered Accountants for arbitration for final
resolution in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The determination of
such arbitrators shall be final and binding upon the parties hereto,
and the fees of such arbitrators in connection with the determination
shall be paid by the party against whom the award was made, or if a
compromise was made, shared equally. Any portion of the Closing
Statement not subject to a Dispute Notice shall become binding and
final upon the parties on the 11th day after delivery of the Closing
Statement to the Shareholders' Representative.
ARTICLE III
CLOSING AND TERMINATION
3.1 Closing Date. Subject to the satisfaction of the
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conditions set forth in Sections 7.1 and 7.2 hereof (or the waiver
thereof by the party entitled to waive that condition), the closing of
the sale and purchase of the Shares provided for in Section 1.1 hereof
(the "Closing") shall take place at 10:00 A.M. at the offices of Weil,
Gotshal & Xxxxxx LLP located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
00000 (or at such other place as the parties may designate in writing)
on November 15, 1996, or on such other date and at such other place as
the Shareholders' Representative and the Purchaser may jointly
designate in writing. The date on which the Closing shall be held is
referred to in this Agreement as the "Closing Date."
3.2 Termination of Agreement. This Agreement may be
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terminated prior to the Closing as follows:
(a) At the election of either the Shareholders'
Representative or the Purchaser on or after November 15, 1996, if the
Closing shall not have occurred by the close of business on such date,
provided that the terminating party is not in breach of this Agreement
or otherwise in default of any of its obligations hereunder;
(b) by mutual written consent of the Shareholders'
Representative and the Purchaser; or
(c) by the Shareholders' Representative or the Purchaser
if there shall be in effect a final nonappealable Order of a
Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions
contemplated hereby.
3.3 Procedure Upon Termination. In the event of
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termination of this Agreement pursuant to Section 3.2 hereof, written
notice thereof shall forthwith be given by the terminating party to
the other party or parties, and this Agreement shall, subject to
Section 3.4, terminate, and the purchase of the Shares hereunder shall
be abandoned, without further action by the Purchaser or the
Shareholders. If this Agreement is terminated as provided herein,
each party shall redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to
the party furnishing the same.
3.4 Effect of Termination. In the event that this
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Agreement is validly terminated as provided herein, then the parties
shall be relieved of their duties and obligations arising under this
Agreement after the date of such termination and such termination
shall be without liability to the Purchaser, National or any
Shareholder; provided, however, that the obligations of the parties
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set forth in Section 10.3 hereof shall survive any such termination
and shall be enforceable hereunder; and provided, further, however,
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that nothing in this Section 3.4 shall relieve any party hereto of any
liability for a breach of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each of the Shareholders hereby jointly and severally
represents and warrants to Purchaser as follows:
4.1 Organization and Good Standing. Each of National and
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each Shareholder (other than Shareholders that are natural persons) is
a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization as set forth
above and has all requisite corporate power and authority to own,
lease and operate its properties and
to carry on its business as now conducted. Schedule 4.1 sets forth,
for each Shareholder that is not a natural person, the date of its
formation, and the jurisdiction under whose laws such Shareholder was
organized. Each of National and Alberta is duly qualified or
authorized to do business and is in good standing under the laws of
each jurisdiction in which it owns or leases real or immovable
property and each other jurisdiction in which the conduct of its
business or the ownership of its properties requires such
qualification or authorization.
4.2 Authorization of Agreement. Each Shareholder and
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National has all requisite power, authority and legal capacity to
execute and deliver this Agreement, a Non-Competition Agreement
substantially in the form of Exhibit A hereto (collectively, the "Non-
Competition Agreements") and each other agreement, document,
instrument or certificate contemplated by this Agreement to be
executed by such Person in connection with the consummation of the
transactions contemplated by this Agreement (together with this
Agreement and the Non-Competition Agreements, the
"Shareholder/National Documents"), and to consummate the transactions
contemplated hereby and thereby. This Agreement has been, and each of
the Shareholder/National Documents will be at or prior to the Closing,
duly and validly executed and delivered by each Shareholder and
National and (assuming the due authorization, execution and delivery
by Purchaser if a party thereto) this Agreement constitutes, and each
of the Shareholder/National Documents when so executed and delivered
will constitute, the legal, valid and binding obligations of each
Shareholder and National, enforceable against such Person in
accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
4.3 Capitalization.
--------------
(a) The authorized capital stock of National consists
solely of an unlimited number of Class A common shares, without par
value (the "Common Stock"). There are 10,000 shares of Common Stock
issued and outstanding. The National Shares constitute all of the
issued and outstanding shares of Common Stock and were duly authorized
for issuance and are validly issued, fully paid and non-assessable and
free of preemptive rights.
(b) There is no existing option, warrant, call, right,
commitment or other agreement of any character to which any
Shareholder, any Tri-S Shareholder or National or any of its
Subsidiaries is a party requiring (or which may in the future
require), and there are no securities of National or any of its
Subsidiaries outstanding which upon conversion or exchange would (or
may in the future) require, the issuance, sale or transfer of any
shares of capital stock or other securities of National or other
securities convertible into, exchangeable for or evidencing the right
to subscribe for or purchase shares of capital stock or other
securities of National. None of the Shareholders, the Tri-S
Shareholders or National is a party to any voting trust or other
voting agreement with respect to any of the shares of Common Stock or
to any agreement relating to the issuance, sale, redemption, transfer
or other disposition of the capital stock of National.
4.4 Subsidiaries and Other Interests. Schedule 4.4(a)
--------------------------------
hereto sets forth the name of each Subsidiary and, with respect to
each such Subsidiary, the jurisdiction in which it is incorporated or
organized, the jurisdictions, if any, in which it is qualified to do
business, the number of shares of its authorized capital stock, the
number and class of shares thereof duly issued and outstanding, the
names of all of its stockholders or other equity owners and the number
of shares of stock owned by each stockholder or the amount of equity
owned by each equity owner. Each Subsidiary is a duly organized and
validly existing corporation in good standing under the laws of the
jurisdiction of its incorporation and is duly qualified to do business
and is in good standing under the laws of (i) each jurisdiction in
which it owns or leases real or immovable property and (ii) each other
jurisdiction in which the conduct of its business or the ownership of
its assets requires such qualification. Each Subsidiary has all
requisite corporate power and authority to own its properties and
carry on its business as presently conducted. Other than (i) the
equity interests in Subsidiaries set forth on Schedule 4.4(a), and
(ii) the minority interests set forth on Schedule 4.4(b) (the
"Minority Equity Interests"), none of National or any of its
Subsidiaries owns any equity interests in any Person. The outstanding
shares of capital stock of each Subsidiary are validly issued, fully
paid and non-assessable, and all such shares are owned by the holder
thereof, free and clear of any and all Liens. No shares of capital
stock are held by any Subsidiary as treasury stock. There is no
existing option, warrant, call, right, commitment or other agreement
of any character to which any Subsidiary is a party requiring (or
which may in the future require), and there are no securities of
National or any Subsidiary outstanding which upon conversion or
exchange would (or may in the future) require, the issuance, sale or
transfer of any shares of capital stock or other securities of
National or any Subsidiary or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase
shares of capital stock of National or any Subsidiary. None of the
Shareholders, the Tri-S Shareholders or National is a party to any
voting trust or other voting agreement with respect to any of the
shares of Common Stock or to any agreement relating to the issuance,
sale, redemption, transfer or other disposition of the capital stock
of any Subsidiary. Neither National nor any of its Subsidiaries has
any present or future obligation (contingent or otherwise) to make any
capital contribution to, or purchase any equity of, any Subsidiary or
any other Person.
4.5 Corporate Records.
-----------------
(a) National and the Shareholders have delivered to the
Purchaser true, correct and complete copies of the certificate of
incorporation or amalgamation (certified by the Registrar of
Corporations or other appropriate official of the applicable
jurisdiction of organization) and articles (certified by the
secretary, assistant secretary or other appropriate officer) or
comparable organizational documents of National and each of its
Subsidiaries.
(b) The minute books of National and each Subsidiary have
been previously made available to the Purchaser and contain complete
and accurate records of all meetings and accurately reflect all other
corporate action of the stockholders and boards of directors
(including committees thereof) of National and such Subsidiaries. The
stock certificate books and stock transfer ledgers of National and the
Subsidiaries have been previously made available to the Purchaser and
are true, correct and complete.
4.6 Conflicts; Consents of Third Parties. Except as set
------------------------------------
forth on Schedule 4.6, (a) none of the execution and delivery by any
Shareholder or National of this Agreement and the Shareholder/National
Documents, the consummation by each of Shareholder and National the
transactions contemplated hereby and thereby, or compliance by any
Shareholder or National with any of the provisions hereof or thereof
will (i) conflict with, or result in the breach of, any provision of
the articles or certificate of incorporation, by-laws, shareholder
agreement or other organizational documents of any Shareholder,
National or any Subsidiary; (ii) conflict with, violate, result in the
breach or termination of, constitute a default under, or give rise to
any right of acceleration under, any note, bond, mortgage, deed
of trust, indenture, license, lease, agreement or other instrument or
obligation to which any Shareholder, National or any Subsidiary is a
party or by which any of them or any of their respective properties or
assets is bound; (iii) violate any statute, rule, regulation, judgment
or Order of any Governmental Body by which any Shareholder, National
or any Subsidiary is bound; or (iv) result in the creation of any Lien
upon the Shares or the properties or assets of National or any
Subsidiary.
(b) No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to,
any Person or Governmental Body is required on the part of any
Shareholder or National in connection with the execution and delivery
of this Agreement or the Shareholder/National Documents, or the
compliance by each Shareholder or National, as the case may be, with
any of the provisions hereof or thereof.
4.7 Ownership and Transfer of Shares. Each Shareholder is
--------------------------------
the record and beneficial owner of the Shares indicated as being owned
by such Shareholder on Schedule 4.7, free and clear of any and all
Liens. Each Shareholder has the power and authority to sell,
transfer, assign and deliver such Shares as provided in this
Agreement, and such delivery will convey to the Purchaser good and
marketable title to such Shares, free and clear of any and all Liens.
Immediately after the Closing, Purchaser will own, directly or (in the
case of the Other Shares) indirectly through Tri-S, all the equity
interests in National and Tri-S.
4.8 Financial Statements. National and the Shareholders
--------------------
have delivered to the Purchaser copies of (i) the audited consolidated
balance sheets of National and its Subsidiaries as at December 31,
1993, 1994 and 1995 and the related audited consolidated statements of
income and of cash flows of National and its Subsidiaries for the
years then ended and (ii) the unaudited consolidated balance sheet of
National and its Subsidiaries as at September 30, 1996 and the related
consolidated statements of income and cash flows of National and its
Subsidiaries for the period then ended (such audited and unaudited
statements, including the related notes and schedules thereto, are
referred to herein as the "Financial Statements"). Each of the
Financial Statements is complete and correct in all material respects,
has been prepared in accordance with GAAP (subject to normal year-end
adjustments in the case of the unaudited statements) and in conformity
with the practices consistently applied by National without
modification of the accounting principles used in the preparation
thereof, and presents fairly in accordance with GAAP the consolidated
financial position, results of operations and cash flows of National
and its Subsidiaries as at the dates and for the periods indicated.
For the purposes of this Article IV, the audited
consolidated balance sheet of National and its Subsidiaries as at
December 31, 1995 is collectively referred to as National's "Balance
Sheet" and December 31, 1995 is referred to as the "Balance Sheet
Date".
4.9 No Undisclosed Liabilities. Except as set forth on
--------------------------
Schedule 4.9, neither National nor any of its Subsidiaries has any
indebtedness, obligations or liabilities of any kind (whether
absolute, contingent or otherwise, and whether due or to become due)
which are not reflected on its respective Balance Sheet other than
such indebtedness, obligations or liabilities (i) as were incurred in
the ordinary and usual course of business consistent with its past
practices since the Balance Sheet Date, (ii) existing pursuant to any
contract or agreement disclosed on Schedules 4.12(a)(1), 4.13 or 4.15
(or any contract or agreement not required to be disclosed thereon
because such contract or agreement was not of the type required to be
disclosed thereon by such Sections) or (iii) which will be repaid or
discharged prior to the Closing.
4.10 Absence of Certain Developments. Except as expressly
-------------------------------
required by this Agreement or as set forth on Schedule 4.10, since the
Balance Sheet Date:
(a) there has not been any Material Adverse Change in
National or any Subsidiary nor has there occurred any event which is
reasonably likely to result in a Material Adverse Change in National
or any of the Subsidiaries;
(b) there has not been any damage, destruction or loss,
whether or not covered by insurance, with respect to the property and
assets of National or any Subsidiary having a replacement cost of more
than C$10,000 for any single loss or C$25,000 for all such losses;
(c) except as required by Section 1.3 with respect to the
Excluded Assets, there has not been any declaration, setting aside or
payment of any dividend or other distribution in respect of any shares
of capital stock of National or any repurchase, redemption or other
acquisition by National or any Subsidiary of any outstanding shares of
capital stock or other securities of, or other ownership interest in,
National or any Subsidiary;
(d) neither National nor any Subsidiary has (i) awarded or
paid any bonuses to employees of National or any Subsidiary with
respect to the fiscal year ended December 31, 1995, or (ii) entered
into, or increased or agreed to increase the compensation payable or
to become payable by it or the coverage or benefits available under,
any written or oral employment agreement or arrangement, deferred
compensation agreement, severance pay, termination pay, vacation pay,
company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation,
insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with National's or any Subsidiary's
directors, officers, employees, agents or representatives (other than
normal increases in the ordinary course of business consistent with
past practice and that in the aggregate have not resulted in a
material increase in the benefits or compensation expense of National
and the Subsidiaries taken as a whole);
(e) there has not been any change by National or any
Subsidiary in accounting or Tax reporting principles, methods or
policies;
(f) neither National nor any Subsidiary has entered into
any transaction or Contract or conducted its business other than in
the ordinary course consistent with past practice;
(g) neither National nor any Subsidiary has failed to
promptly pay and discharge current liabilities except where disputed
in good faith by appropriate proceedings;
(h) neither National nor any Subsidiary has made any loans,
advances or capital contributions to, or investments in, any Person or
paid any fees or expenses to any Shareholder or Tri-S Shareholder or
any Affiliate of any Shareholder or Tri-S Shareholder;
(i) neither National nor any Subsidiary has mortgaged,
pledged or subjected to any Lien any of its assets, or acquired any
assets or sold, assigned, transferred, conveyed, leased or otherwise
disposed of any assets, except for assets acquired or sold, assigned,
transferred, conveyed, leased or otherwise disposed of in the ordinary
course of business consistent with past practice;
(j) neither National nor any Subsidiary has discharged or
satisfied any Lien, or paid any obligation or liability (fixed or
contingent), except in the ordinary course of business consistent with
past practice and which, in the aggregate, would
not be material to National and its Subsidiaries taken as a whole;
(k) neither National nor any Subsidiary has canceled or
compromised any debt or claim or amended, canceled, terminated,
relinquished, waived or released any Contract or right except in the
ordinary course of business consistent with past practice and which,
in the aggregate, would not be material to National and its
Subsidiaries taken as a whole;
(l) neither National nor any Subsidiary has engaged in any
business in which it had not been engaged prior to the Balance Sheet
Date, other than Pay Day Loans;
(m) neither National nor any Subsidiary has made or
committed to make any capital expenditures or capital additions or
betterments in excess of C$25,000 individually or C$200,000 in the
aggregate;
(n) neither National nor any Subsidiary has entered into
any transaction, arrangement or agreement with a Shareholder, a Tri-S
Shareholder or any of its or any Shareholder's or Tri-S Shareholder's
Affiliates;
(o) neither National nor any Subsidiary has instituted or
settled any material Legal Proceeding; and
(p) none of the Shareholders, National or Tri-S Shareholder
has agreed to do anything set forth in this Section 4.10.
4.11 Taxes.
-----
(a) All Tax Returns required to be filed by or with
respect to National and each Subsidiary or their respective assets
have been properly prepared and duly and timely filed with the
appropriate taxing authorities in all jurisdictions in which such Tax
Returns are required to be filed, and all such Tax Returns are true,
complete and correct in all material respects. National and each
Subsidiary has duly and timely paid or has had duly and timely paid on
its behalf all Taxes that are due, or claimed or asserted by any
taxing authority to be due, from or with respect to it for periods
covered by such Tax Returns. With respect to any period for which Tax
Returns have not yet been filed, or for which Taxes are not due or
owing, National and each Subsidiary has made or has caused to be made
sufficient current accruals for such Taxes in its financial statements
and Taxes for such period have or shall arise solely in the usual and
ordinary
course of business. National and each Subsidiary has made or has
caused to be made all required estimated Tax payments sufficient to
avoid any underpayment penalties.
(b) National and each Subsidiary has or has caused to be
duly and timely withheld from employee salaries, wages and other
compensation and has paid over to the appropriate taxing authorities
all amounts required to be so withheld and paid over for all periods
under all applicable laws.
(c) No waivers of statutes of limitation or other
agreements or arrangements providing for an extension of time have
been given or requested with respect to National or any Subsidiary in
connection with any Tax Returns covering National or such Subsidiary
with respect to any Taxes payable by it and no power of attorney with
respect to any Tax matter is currently in force. The last period for
which Taxes were assessed with respect to the Federal Income Tax
Returns of National and any Subsidiary of National was December 31,
1995. The statutory period for the assessment of Taxes with respect
to the federal income Tax Returns of National and any Subsidiary of
National for all prior periods has expired. The last period for which
Taxes were assessed with respect to the provincial, local, and foreign
Tax Returns of National and any Subsidiary of National was December
31, 1995 (except for the Province of British Columbia, which was
December 31, 1994). The statutory period for the assessment of Taxes
with respect to the provincial, local, and foreign Tax Returns of
National and any Subsidiary of National for all periods through the
respective years specified in Schedule 4.11 has expired. No issue has
been raised by any taxing authority in any audit or examination of
National or any Subsidiary of National, which, by application of the
same or similar principles, could reasonably be expected to result in
a deficiency for any subsequent period (including periods subsequent
to the Closing Date). There are no outstanding agreements, waivers,
or arrangements extending the statutory period of limitation
applicable to any claim for, or the period for the collection or
assessment of, Taxes due from or with respect to National and each
Subsidiary for any taxable period.
(d) The Shareholders have delivered or made available to
the Purchaser true and complete copies of each of (i) any audit
reports issued by any taxing authority within the last three years
relating to the federal, provincial, local or foreign Taxes due from
or with respect to National, any Subsidiary of National and (ii) all
of the federal, provincial local and foreign Tax Returns, for each of
the last three years filed by National and any Subsidiary of National.
(e) All deficiencies asserted or assessments made as a
result of any examinations by the Revenue Canada or any other taxing
authority of the Tax Returns of or covering or including National or
any Subsidiary of National have been fully paid, and there are no
other audits or investigations by any taxing authority in progress,
nor has National or any Subsidiary of National received any notice
from any taxing authority that it intends to conduct such an audit or
investigation.
(f) Schedule 4.11 lists all material types of Taxes paid
and material types of Tax Returns filed by or on behalf of National or
any Subsidiary of National in respect of the last two completed fiscal
years. No claim has been made by a taxing authority in a jurisdiction
where National or any Subsidiary of National do not file Tax Returns
such that it is or may be subject to taxation by that jurisdiction.
(g) There are no liens with respect to Taxes upon any of
the assets of National or any Subsidiary of National.
(h) There are no actions, suits, proceedings,
investigations or claims now threatened or pending against any of
National or the Subsidiaries in respect of Taxes nor are there any
matters under discussion with any governmental authority with respect
to Taxes asserted by any such authority;
(i) The inventories of National and the Subsidiaries have
been valued for tax purposes at the lower of cost or net realizable
value;
(j) With the exception of computers of National and the
Subsidiaries, the fair market value of all depreciable assets of
National and the Subsidiaries is at least the amount of the
undepreciated capital cost therefor as recorded on their respective
books.
(k) The paid-up capital of National and the Subsidiaries
for income tax purposes equals their respective paid up capital under
corporate law;
(l) Except as set forth on Schedule 4.11, none of National
nor the Subsidiaries has, within the last four completed fiscal years,
made any election under Section 85 of the Tax Act with respect to the
acquisition or disposition of any property;
(m) None of National nor the Subsidiaries has, within the
last four completed fiscal years, made any election under
Sub-section 83(2) of the Tax Act with respect to payment out of a
capital dividend account;
(n) None of National nor the Subsidiaries has, within the
last four completed fiscal years, acquired or had the use of any
property from a person with whom it was not dealing at arm's length;
(o) Except for Excluded Assets none of National nor the
Subsidiaries has disposed of anything to a person with whom it was not
dealing at arm's length for proceeds less than the fair market value
thereof;
(p) None of National or the Subsidiaries has, since the
Balance Sheet Date, discontinued carrying on any business in respect
of which any non-capital losses were incurred;
(q) National and the Subsidiaries have made all elections
required to be made under the Tax Act in connection with any
distributions and all such elections were true and correct and in
prescribed form and were made within the prescribed time periods;
(r) Since their respective dates of incorporation, each of
National and the Subsidiaries has been a "Canadian-controlled private
corporation" within the meaning of the Tax Act;
(s) None of National nor the Subsidiaries is, nor has
previously been at any time, associated with any other Canadian-
controlled private corporations (within the meaning of the Tax Act),
and none of National nor the Subsidiaries has filed with the Minister
of National Revenue any agreement or form under Section 125(3) of the
Tax Act and, except as disclosed on Schedule 4.4(a) or Schedule
4.4(b), none of National nor any of the Subsidiaries is carrying on
and has ever carried on business as a member of any partnership;
(t) None of National nor any of the Subsidiaries nor their
respective directors, officers or employees are aware without inquiry
of any contingent Tax liabilities or any grounds which would prompt a
re-assessment, including aggressive treatment of income and expenses
in filing earlier Tax returns;
(u) Except for the transfer of a 25% equity interest from
Xxxx XxXxxxxx to Xxx. Xxxxx during January 1995, control of National
and the Subsidiaries has not been acquired by a person or persons
since its date of incorporation (for purposes of this
section, "control" is to be given the meaning found in Sections 186,
251 and 256 of the Tax Act);
(v) To the Shareholders' knowledge there are no amounts
outstanding and unpaid for which any of National or the Subsidiaries
has previously claimed a deduction under the Tax Act;
(w) To the Shareholders' knowledge, there are no
circumstances existing which could result in the application to any of
National or the Subsidiaries of either Section 78 or Section 80,
80.01, 80.02, 80.3 or 80.04 of the Tax Act;
(x) Except for a C$532,000 bonus received from Western
Union that may be eligible for a reserve, none of National or the
Subsidiaries has claimed and will not claim any reserve under any one
or more of subparagraph 40(1)(a)(iii) or subparagraphs 20(1)(m) or
20(1)(n) of the Tax Act if any such amount could be included in their
income for a period ending after Closing;
(y) The financial statements and schedules attached to the
corporate income tax returns as filed by each of National and the
Subsidiaries for each of their respective taxation years reflect and
disclose all transactions to which each of them was or is a party as
required by the Tax Act and the regulations made thereunder or other
applicable revenue laws and all of the transactions to which each of
National and the Subsidiaries was or is a party are reflected or
disclosed in these financial statements and schedules and these
statements and schedules have been duly and accurately completed as
required by these acts and regulations;
(z) None of National nor the Subsidiaries has received a
dividend out of tax paid undistributed surplus or 1971 capital surplus
on hand dividends within the meaning of the Tax Act with respect to
any assets it currently holds;
(aa) None of National nor the Subsidiaries has any net
capital loss as of the Balance Sheet Date and no transactions since
that date will result in any net capital loss;
(ab) Each of National and the Subsidiaries is duly
registered under subdivision (d) of Division V of Part IX of the
Excise Tax Act with respect to the GST, and their respective
registration numbers are as set forth on Schedule 4.11.
(ac) Each of National and the Subsidiaries has paid all
Taxes imposed by the Retail Sales Tax (Ontario) and the applicable
legislation of each other province of Canada on the acquisition of its
tangible personal property and none of its tangible personal property
or moveable property has been transferred in a transaction
contemplated under the provisions of Section 20.7 of the Retail Sales
Tax Act (Quebec) and any regulations made thereunder or Section 18 of
Regulation 904 to the Retail Sales Tax Act (Ontario), or any
predecessor thereof or the analogous provisions of the sales tax
legislation of any other province;
(ad) None of National nor the Subsidiaries has made or been
a party to any election under Sections 150(1), 156(1), 227(1) or
273(1) of the Excise Tax Act.
(ae) The preceding representations and warranties in this
Section 4.11 which refer to the Tax Act are true and correct with
respect to the same or equivalent provisions, if any, of the Quebec
Taxation Act or any other provincial taxation legislation.
4.12 Real Property.
-------------
(a) Schedule 4.12(a)(1) sets forth a complete list of all
real or immovable property and interests in real or immovable property
leased by National or any of the Subsidiaries (individually, a "Real
Property Lease" and the real or immovable properties specified in such
leases, being referred to herein individually as a "Company Property"
and collectively as the "Company Properties") as lessee or lessor. The
Company Property constitutes all interests in real or immovable
property currently used or currently held for use in connection with
the ownership and/or operation of the Stores or which are necessary
for the continued operation of the Stores as currently conducted. To
the best of Shareholders' knowledge the premises leased pursuant to
the Real Property Leases comply with all building, fire, zoning and
other ordinances and regulations applicable thereto. National and the
Subsidiaries have paid all rent, additional rent and/or other charges
reserved and payable under each of the Real Property Leases to the
extent so payable as of October 1, 1996. National and the
Subsidiaries have a valid and enforceable leasehold interest under
each of the Real Property Leases, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity); neither
National nor any Subsidiary has caused an event of default or received
any written
notice of any default or event that with notice or lapse of time, or
both, would constitute a default by National or any Subsidiary under
any of the Real Property Leases; and none of the landlords in respect
of the Real Property Leases has caused an event of default that with
notice or lapse of time, or both, would constitute a default by any
one of such landlords under any of the Real Property Leases. Each of
the Company Properties, buildings, fixtures and improvements thereon
is in good operating condition and repair (subject to normal wear and
tear). With respect to each Company Property, there is no management
agreement, equipment lease, service contract or other contract or
agreement to which National or any of the Subsidiaries is a party
affecting such Company Property (collectively, "Property Contracts")
which (i) was not made in the ordinary course of business, (ii) is not
terminable upon 30 days' prior notice by National or any of the
Subsidiaries without payment of a premium or penalty or (iii) requires
payments in excess of an amount that, if added to the monthly payment
obligations of all other Property Contracts in respect of such Company
Property, would cause the aggregate amount of all monthly payment
obligations in respect of all Property Contracts for such Company
Property to exceed C$1,000. National and the Shareholders have
delivered to the Purchaser true, correct and complete copies of the
Real Property Leases, together with all amendments, modifications or
supplements, if any, thereto. National presently owns and operates
check cashing stores at the locations set forth next to each Company
Property on Schedule 4.12(a)(1).
(b) National and the Subsidiaries have all certificates of
occupancy and Permits of any Governmental Body necessary or useful for
the current use and operation of each Company Property, and National
and the Subsidiaries have fully complied with all material conditions
of the Permits applicable to them. No material default or violation,
or event that with the lapse of time or giving of notice or both would
become a default or violation, has occurred in the due observance of
any Permit.
(c) There does not exist any actual or, to the best
knowledge of National and the Shareholders, threatened or contemplated
condemnation or eminent domain proceedings that affect any Company
Property or any part thereof, and none of National or any of the
Shareholders has received any notice, oral or written, of the
intention of any Governmental Body or other Person to take or use all
or any part thereof.
(d) None of the Shareholders or National has received any
written notice from any insurance company that has issued a
policy with respect to any Company Property requiring performance of
any structural or other repairs or alterations to such Company
Property.
(e) Neither National nor any Subsidiary owns or holds, or
is obligated under or a party to, any option, right of first refusal
or other Contract right to purchase, acquire, sell, assign or dispose
of any real estate or any portion thereof or interest therein.
(f) Neither National nor any Subsidiary owns or holds any
real or immovable property in fee.
4.13 Tangible Personal Property.
--------------------------
(a) Schedule 4.13 sets forth all leases of personal or
moveable property ("Personal Property Leases") relating to personal
property used or useable in the operation of the Stores or the
Business. National and the Shareholders have delivered or otherwise
made available to the Purchaser true, correct and complete copies of
the Personal Property Leases, together with all amendments,
modifications or supplements thereto.
(b) National and each of its Subsidiaries has a valid
leasehold interest under each of the Personal Property Leases under
which it is a lessee, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity), and there is no default
under any Personal Property Lease by National or any Subsidiaries or,
to the best knowledge of National or any of the Shareholders, by any
other party thereto, and no event has occurred that with the lapse of
time or the giving of notice or both would constitute a default
thereunder. Each of the items of tangible personal property having a
value greater than C$1,000 used by National or any of its Subsidiaries
under the Personal Property Leases is in good condition and repair
(ordinary wear and tear excepted) and is suitable for the purposes
used.
(c) National and each of its Subsidiaries has good and
marketable title to all of the items of tangible personal or moveable
property reflected in its respective Balance Sheet (except as sold or
disposed of subsequent to the date thereof in the ordinary course of
business consistent with past practice), free and clear of any and all
Liens other than the Permitted Exceptions. All such items of tangible
personal or moveable
property which, individually or in the aggregate, are material to the
operation of the Stores and the Business are in good condition and in
a state of good maintenance and repair (ordinary wear and tear
excepted) and are suitable for the purposes used.
(d) Each of National and the Subsidiaries owns (or leases
from unaffiliated Persons) all tangible property necessary to conduct
its respective business as conducted on the date hereof.
4.14 Intangible Property. Schedule 4.14 contains a
-------------------
complete and correct list of each patent, patent license, trademark,
trade name, trade secret, trade secret right, computer program,
software, service xxxx, brandmark, brandname and copyright owned or
used by National and/or any of its Subsidiaries as well as all
registrations thereof and pending applications therefor, and each
license or other agreement relating thereto. Each of the foregoing is
owned by the party shown on such Schedule as owning the same, free and
clear of all Liens and is in good standing and not the subject of any
challenge. There have been no claims made and none of the
Shareholders, National or any Subsidiary has received any notice or
otherwise knows or has reason to believe that any of the foregoing is
invalid or conflicts with the asserted rights of others. National and
each Subsidiary possesses all patents, patent licenses, trade names,
trademarks, trade secret rights, computer programs, software, service
marks, brand marks, brand names, copyrights, know-how, formulae and
other proprietary and trade rights necessary for the conduct of its
business as now conducted, not subject to any restrictions and without
any known conflict with the rights of others and neither National nor
any Subsidiary has forfeited or otherwise relinquished any such
patent, patent license, trade name, trademark, trade secret right,
computer program, software, service xxxx, brand xxxx, brand name,
copyright, know-how, formulae or other proprietary right necessary for
the conduct of its business as conducted on the date hereof. Neither
National nor any Subsidiary is under any obligation to pay any
royalties or similar payments in connection with any license to any
Shareholder, any Affiliate thereof or any other person.
4.15 Material Contracts. Schedule 4.15 sets forth all of
------------------
the following Contracts to which either National or any of its
Subsidiaries is a party or by which it is bound (collectively, the
"Material Contracts"): (i) Contracts with any Shareholder or Tri-S
Shareholder or any direct or indirect shareholder, partner or equity
holder of National (or any Affiliates of any of the foregoing) or any
current or former officer or director of
National or any of its Subsidiaries; (ii) Contracts with any labor
union or association representing any employee of National or any of
its Subsidiaries; (iii) Contracts pursuant to which any Person is
required to purchase or sell a stated portion of its requirements or
output from or to another Person; (iv) Contracts for the sale of any
of the assets of National or any of its Subsidiaries other than in the
ordinary course of business or for the grant to any Person of any
preferential rights to purchase any of its assets; (v) partnership,
shareholder or joint venture agreements; (vi) Contracts containing
covenants of National or any of its Subsidiaries or Affiliates not to
compete in any line of business or with any Person in any geographical
area or covenants of any other Person not to compete with National or
any of its Subsidiaries in any line of business or in any geographical
area; (vii) Contracts relating to the acquisition by National or any
of its Subsidiaries of any operating business or the capital stock of
any other Person; (viii) Contracts relating to the borrowing of money;
(ix) Contracts relating to the distribution of money orders or similar
instruments; (x) Contracts relating to money transfers; (xi) Contracts
relating to the payment of utility or other bills for third parties;
(xii) any other Contracts, other than Real Property Leases, which were
not entered into in the ordinary course consistent with past practice,
or which involve the expenditure of more than C$25,000 in the
aggregate or require performance by any party more than one year from
the date hereof; (xiii) Contracts involving an obligation to make a
Capital Expenditure; and (xiv) franchise or licensing Contracts
pursuant to which National or any Subsidiary is a franchisor or
licensor. There have been made available to the Purchaser true and
complete copies of each of the Material Contracts. Except as set
forth on Schedule 4.15, each of the Material Contracts and other
agreements is in full force and effect and is the legal, valid and
binding obligation of each party thereto, enforceable against such
party in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Except as
set forth on Schedule 4.15, neither National nor any Subsidiary is in
default in any material respect under any Material Contracts nor, to
the knowledge of any Shareholder or National, is any other party to
any Material Contract in default thereunder in any material respect.
For purposes hereof, "Assumed Contracts" shall consist of (i) the
Material Contracts listed on Schedule 4.15, (ii) the Non-Material
Contracts, and (iii) all Real Property Leases.
4.16 Employee Benefits.
-----------------
(a) Schedule 4.16(a) contains an accurate and complete
list and description of, and sets forth the annual amount payable
pursuant to, all pension, profit sharing, retirement, death benefit,
welfare, severance pay, vacation pay, company awards, salary
continuation for disability, sick leave, deferred compensation, bonus
or other incentive compensation, stock purchase arrangements or
policies, life insurance, scholarship or other employee benefit plan,
program, policy or arrangement maintained by National or any of its
Subsidiaries or to which National or any of its Subsidiaries has any
liability (contingent or otherwise) with respect to employees,
officers, directors or shareholders of National ("Employee Benefit
Plans") therein described and the Financial Statements reflect in the
aggregate an accrual of all amounts accrued but unpaid under all such
Employee Benefit Plans as of the dates thereof. None of National nor
the Subsidiaries has any commitment, whether formal or informal, and
whether legally binding or not, to create any additional such Employee
Benefit Plan. Each of such Employee Benefit Plans disclosed on
Schedule 4.16(a) is in effect and National and the Subsidiaries is in
compliance with all laws, rules and regulations applicable thereto.
All Employee Benefit Plans disclosed on Schedule 4.16(a) have been
duly registered where required by, and are in good standing under, all
applicable legislation and National and the Subsidiaries have
fulfilled their respective funding obligations under all such plans
and no past service funding liabilities exist thereunder. With
respect to each current Employee Benefit Plan or plan under which
benefits may be due to, or liabilities may exist in respect of,
current or former employees, the Shareholders have delivered to the
Purchaser accurate and complete copies of (i) all currently applicable
plan texts and agreements; (ii) all summary plan descriptions and
material employee communications; (iii) the most recent annual report;
(iv) the most recent annual and periodic accounting of plan assets;
(v) the most recent actuarial valuation. Each Employee Benefit Plan
has been administered materially in accordance with its terms. All
material reports, returns and similar documents with respect to the
Employee Benefit Plans required to be filed with any Governmental Body
or distributed to any Employee Benefit Plan participant has been duly
and timely filed or distributed. There are no pending investigations
by any Governmental Body, termination proceedings or other claims
(except claims for benefits payable in the normal operation of the
Employee Benefit Plans), suits or proceedings against or involving any
Employee Benefit Plan or asserting any rights or claims to benefits
under any Employee Benefit Plan that could give rise to any material
liability.
(b) All contributions and premiums required by law or by
the terms of any Employee Benefit Plan or any agreement relating
thereto have been timely made (without regard to any waivers granted
with respect thereto).
(c) There are no pending Legal Proceedings which have been
asserted or instituted against any of the Employee Benefit Plans, the
assets of any such plans or National, or the plan administrator or any
fiduciary of the Employee Benefit Plans with respect to the operation
of such plans (other than routine, uncontested benefit claims), and,
to the Shareholders' knowledge, there are no facts or circumstances
which could form the basis for any such Legal Proceeding.
(d) Except as disclosed on Schedule 4.16(d), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment
becoming due to any employee of National or any of its Subsidiaries;
(ii) increase any benefits otherwise payable under any Employee
Benefit Plan; or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
4.17 Labor.
-----
(a) Except as set forth on Schedule 4.17(a), neither
National nor any of its Subsidiaries is party to any labor or
collective bargaining agreement and there are no labor or collective
bargaining agreements which pertain to employees of National or any of
its Subsidiaries. The Shareholders have delivered or otherwise made
available to the Purchaser true, correct and complete copies of the
labor or collective bargaining agreements listed on Schedule 4.17(a),
together with all amendments, modifications or supplements thereto.
(b) Except as set forth on Schedule 4.17(b), no employees
of National or any of its Subsidiaries are represented by any labor
organization. No labor organization or group of employees of National
or any of its Subsidiaries has made a pending demand for recognition,
and there are no representation proceedings or petitions seeking a
representation proceeding presently pending or, to the best knowledge
of National or any Shareholder, threatened to be brought or filed,
with any federal or provincial agency responsible for labor or
employment laws or other labor relations tribunal. There is no
organizing activity involving National or any of its Subsidiaries
pending or, to the best knowledge of National or any Shareholder,
threatened by any labor organization or group of employees of National
or any of its Subsidiaries.
(c) There are no (i) strikes, work stoppages, slowdowns,
lockouts or arbitrations or (ii) material grievances or other labor
disputes pending or, to the best knowledge of National or any
Shareholder, threatened against or involving National or any of its
Subsidiaries. There are no unfair labor practice charges, grievances
or complaints pending or, to the best knowledge of National or any
Shareholder, threatened by or on behalf of any employee or group of
employees of National or any Subsidiary.
4.18 Employment Matters. The Subsidiaries have no
------------------
employees. Schedule 4.18 annexed hereto is a list of (a) the job
categories, number of employees in each category and salary or wage
range for each category with respect to employees of National who earn
total annual compensation of less than C$40,000, and (b) with respect
to all other employees, officers and directors of National, such
employee's name and a brief job description for each such employee
(collectively, the "Employees") and, for each such person, his or her
current rate of compensation (including salary, bonus and all other
forms of compensation), the date of hire and the date and amount of
the most recent increase in compensation, whether any commitment,
promise or undertaking has been made by National or any of its
officers with respect to any increase in the compensation payable to
any such employee or any portion thereof the extent of such employee's
participation in any Employee Benefit Plans and any accrued rights
under such Employee Benefit Plans that will lapse or terminate by
reason of the consummation of the transactions contemplated by this
Agreement. None of National nor the Subsidiaries has any employment,
consulting or severance contract, arrangement or understanding (either
written or oral) with any person whomsoever except such contracts as
are listed on Schedule 4.18. Each of National and the Subsidiaries
has made all deductions required by law to be made for wages and
salaries, which deductions are consistent with past practices and in
accordance with generally accepted accounting principles and has
either remitted same to the respective legally constituted authorities
entitled to receive payment of same or has provided for same in its
accounts. Hours worked by, and payments made to, employees of each of
National and the Subsidiaries have not been in violation of any
applicable laws, rules or regulations dealing with such matters and
all severance payments due to any employee have been paid or accrued
as a liability on the books of National and the Subsidiaries (as the
case may be). The consummation of the transactions contemplated by
this Agreement will not give rise to any liability of National and the
Subsidiaries for severance pay or termination benefits.
4.19 Litigation. Except as set forth in Schedule 4.19,
----------
there is no suit, action, proceeding, investigation, claim or order
pending or, to the knowledge of National or any Shareholder, overtly
threatened against National or any of its Subsidiaries (or to the
knowledge of National or any Shareholder, pending or threatened,
against any of the officers, directors or key employees of National or
any of its Subsidiaries with respect to their business activities on
behalf of National or any Subsidiary), or to which any of the
Shareholders or National or any of its Subsidiaries is otherwise a
party, before any court, or before any governmental department,
commission, board, agency, or instrumentality; nor, to the knowledge
of National or any Shareholder, is there any reasonable basis for any
such action, proceeding, or investigation. Neither National nor any
Subsidiary is subject to any judgment, Order or decree of any court or
Governmental Body and neither National nor any Subsidiary is engaged
in any legal action to recover monies due it or for damages sustained
by it.
4.20 Compliance with Laws. National and each Subsidiary
--------------------
possesses all Licenses of and from all Governmental Bodies, and has
made all filings with all Governmental Bodies, necessary to own or
lease its respective properties and assets and to conduct the
business(es) in which it is engaged. Except as set forth on Schedule
4.20, no proceeding has been served or, to our knowledge threatened
or commenced which seeks to, or could reasonably be anticipated to,
cause the suspension, modification, revocation or withdrawal of any
License. National and each Subsidiary is currently, and at all times
has been, in material compliance with all Laws applicable to National
and such Subsidiaries and/or the businesses in which they have been
engaged at any time on or prior to the Balance Sheet Date, including,
without limitation, all applicable credit, banking and consumer
protection Laws, regulating check cashing, debt collection, plain
language Laws and Laws proscribing unfair and/or deceptive acts or
practices) and franchise disclosure Laws; neither National nor any
Subsidiary nor any of their directors, officers, employees or
representatives has offered, proposed, promised or made any illegal
payment to officers, employees or representatives of any Governmental
Body, or engaged in any illegal reciprocal practices or made any
illegal payment or given any other illegal consideration to any third
party.
4.21 Environmental Matters. Except as set forth on
---------------------
Schedule 4.21 hereto:
(a) the operations of National and each of its
Subsidiaries have been and are in compliance with all applicable
Environmental Laws and all Licenses issued pursuant to Environmental
Laws ("Environmental Permits");
(b) National and each of its Subsidiaries has obtained all
Environmental Permits necessary to operate its business and is in
compliance with such Environmental Permits;
(c) neither National nor any of its Subsidiaries is the
subject of any outstanding written order, agreement or Contract with
any governmental authority or person respecting (i) Environmental
Laws, (ii) Remedial Action, (iii) any Release or threatened Release of
a Hazardous Material or (iv) any Environmental Claim;
(d) neither National nor any of its Subsidiaries has
received any written communication alleging that National or any of
its Subsidiaries or the operations thereof may be in violation of any
Environmental Law or any Environmental Permit, or may have any
liability under any Environmental Law;
(e) neither National nor any of its Subsidiaries has any
liability in connection with any Release of any Hazardous Materials
into the indoor or outdoor environment (whether on-site or off-site)
and no facts or circumstances exist which could reasonably be expected
to give rise to such liability under Environmental Laws;
(f) there are no legal or administrative proceedings
pending or, to the knowledge of any of the Shareholders or National,
threatened against National or any Subsidiary alleging the violation
of or seeking to impose liability pursuant to Environmental Laws;
(g) neither National nor any of its Subsidiaries has
received notice of any investigations of the business, operations, or
currently or previously owned, operated or leased property of National
or any of its Subsidiaries nor, to the knowledge of any of the
Shareholders or National, are there any such pending or threatened
investigations which could lead to the imposition of any liability
pursuant to Environmental Law;
(h) there is not located at any of the properties owned by
National or any of its Subsidiaries any (i) underground storage tanks,
(ii) asbestos-containing material or (iii) equipment containing
polychlorinated biphenyls;
(i) neither National nor any of its Subsidiaries has
transported, incorporated or otherwise deposited or installed any
(i) underground storage tanks, (ii) asbestos-containing material or
(iii) equipment containing polychlorinated biphenyls at any of the
properties leased, used or operated by National or any of its
Subsidiaries;
(j) National and the Shareholders have provided to the
Purchaser copies of all environmentally related audits, studies,
reports, analyses, and results of investigations that have been
performed with respect to the currently or previously owned properties
of National or any of its Subsidiaries; and
(k) National and the Shareholders have not had prepared
any environmentally related audits, studies, reports, analyses, or
results of investigation that have been performed with respect to the
currently or previously leased, used or operated properties of
National or any of its Subsidiaries.
4.22 Insurance. Schedule 4.22 sets forth a complete and
---------
accurate list of all policies of insurance of any kind or nature
covering National or any of its Subsidiaries or any of their
respective employees, properties or assets, including, without
limitation, policies of life, disability, fire, theft, workers
compensation, employee fidelity and other casualty and liability
insurance. All such policies are in full force and effect and neither
National nor any of its Subsidiaries is in default of any provision
thereof.
4.23 Payables. All accounts payable of National or any of
--------
its Subsidiaries reflected in their respective Balance Sheet or
arising after the date thereof are the result of bona fide
transactions entered into in the ordinary course of business and have
been paid or are not yet due and payable.
4.24 Related Party Transactions. Except as set forth on
--------------------------
Schedule 4.24, none of the Shareholders or any Affiliate of National
or any Shareholder has borrowed any monies from or has outstanding any
indebtedness or other similar obligations to National or any of its
Subsidiaries. Except as set forth in Schedule 4.24, none of the
Shareholders, National, any Subsidiary of National, any Affiliate of
National or any shareholder, officer, director or employee of any of
them (i) owns any direct or indirect interest of any kind in, or
controls or is a director, officer, employee or partner of, or
consultant to, or lender to or borrower from or has the right to
participate in the profits of, any Person which is (A) a competitor,
supplier, customer, landlord, tenant, creditor or debtor of National
or any of its Subsidiaries, (B) engaged in a business related to the
business of National or any of its Subsidiaries, or (C) a
participant in any transaction to which National or any of its
Subsidiaries is a party or (ii) is a party to any Contract or
transaction with National or any of its Subsidiaries. Since the
Balance Sheet Date, National has not entered into any transactions
with any Affiliate.
4.25 Banks. Schedule 4.25 contains a complete and correct
-----
list of the names and locations of all banks in which National or any
Subsidiary has accounts or safe deposit boxes and the names of all
persons authorized to draw thereon or to have access thereto. Except
as set forth on Schedule 4.25, no person holds a power of attorney to
act on behalf of National or any Subsidiary.
4.26 Financial Advisors. Except as set forth on Schedule
------------------
4.26, no Person has acted, directly or indirectly, as a broker, finder
or financial advisor for any of the Shareholders or National in
connection with the transactions contemplated by this Agreement and no
Person is entitled to any fee or commission or like payment in respect
thereof.
4.27 Franchise Operations. Schedule 4.27 sets forth a true
--------------------
and complete list of check cashing locations with which National has a
franchise arrangement, including the parties thereto, the terms
thereof and the fees payable thereunder.
4.28 Name. "National Money Mart", "Money Mart of Canada",
----
"Money Mart", and "Insta Cheques" are the only names used by National
in the operation of the Stores and the Business.
4.29 Investment Intention. (a) Each DFG Stock Purchaser
--------------------
is acquiring the DFG Common Stock to be acquired by it pursuant to
this Agreement for its own account, for investment purposes only and
not with a view to the resale or distribution (as such term is used in
Section 2(11) of the Securities Act of 1933, as amended (the
"Securities Act")) thereof, nor with any present intention of
distributing or selling the same; and, except as contemplated by this
Agreement and the exhibits hereto, such DFG Stock Purchaser has no
present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for the disposition
thereof. Each DFG Stock Purchaser understands that the shares of DFG
Common Stock to be received by it will not have been registered under
the Securities Act and cannot be sold unless subsequently registered
under the Securities Act or an exemption from such registration is
available. Each DFG Stock Purchaser hereby acknowledges that the
certificates delivered to him or it evidencing his or its shares of
DFG Common Stock shall be legended as indicated in the
previous sentence and as provided in the Shareholders Agreement and
DFG is not under any obligation to register such shares on such
shareholder's behalf or to assist such DFG Stock Purchaser in
complying with an exemption from registration under the Securities Act
or any state securities law. Each DFG Stock Purchaser is an
"accredited investor" within the meaning of Rule 501(a) of
Regulation D promulgated under the Securities Act.
(b) Each DFG Stock Purchaser will be acquiring the shares
of DFG Common Stock to be acquired by it: (i) as principal (as defined
in the Securities Act (British Columbia) (the "Act")) for its own
account, and not for the benefit of any other person; (ii) for
investment only and not with a view to immediate resale or
distribution; and (iii) under the exemption from prospectus
requirements available under paragraph 55(2)(4) of the Act and such
DFG Stock Purchaser is not a corporation or syndicate, partnership or
other form of unincorporated entity or organization created solely to
permit the purchase of such shares of DFG Common Stock by a group of
individuals whose individual share of the aggregate acquisition cost
of the shares of DFG Common Stock being acquired pursuant to this
Agreement is less than C$97,000.
(c) The offering and sale of shares of DFG Common Stock to
each DFG Stock Purchaser were not made through any advertisement in
printed media of general and regular paid circulation, radio or
television or any other form of advertisement.
(d) Each DFG Stock Purchaser is aware that no prospectus
has been prepared or filed by DFG with any securities commission or
similar authority in connection with the issue and sale of the shares
of DFG Common Stock contemplated hereby, and that:
(i) such DFG Stock Purchaser may be restricted from
using most of the civil remedies available under applicable securities
legislation;
(ii) such DFG Stock Purchaser may not receive
information that would otherwise be required to be given and DFG is
relieved from certain obligations to which it would otherwise be
subject if a prospectus were provided under applicable securities
legislation in connection with the issue and sale of the shares of DFG
Common Stock being issued as contemplated hereby, and
(iii) the issue and sale of the shares of DFG Common
Stock being issued as contemplated hereby to such DFG Stock Purchaser
is subject to such sale being exempt from the requirements of
applicable securities laws as to the filing of a prospectus or the
delivery of an offering memorandum.
4.30 Accounts Receivable. Schedule 4.30 contains the
-------------------
standard form of the note and other loan documentation used by
National and the Subsidiaries to evidence the Pay Day Loans. Each of
the accounts receivable is bona fide, and was made in the ordinary
course of business with arms' length parties. Those accounts
receivable that form part of the Excluded Assets have the book value
set forth on Schedule 4.30.
4.31 [Intentionally Omitted]
----------------------
4.32 No Bankruptcy. There has not been filed any petition
-------------
or application, or any proceeding commenced which has not been
discharged, by or against National, the Subsidiaries or any of the
Shareholders with respect to any assets of any of them under any law,
domestic or foreign, relating to bankruptcy, reorganization,
fraudulent transfer, compromise, arrangements, insolvency,
readjustment of debt or creditors' rights, and no assignment has been
made by any of them for the benefit of their respective creditors.
4.33 Minority Equity Interests.
-------------------------
(a) The interests in the Minority Equity Interests are as
set forth on Schedule 4.4(b), and are owned by National free and clear
of any and all Liens.
(b) Other than as set forth on Schedule 4.33, neither
National nor any Subsidiary owes or has any obligations (contingent or
otherwise) in respect to any Minority Equity Interest.
4.34 Absence of Activity. Alberta has never (i) owned or
-------------------
acquired, or agreed to acquire, any assets or property, (ii) incurred
or became subject to, or agreed to incur or become subject to, any
obligations or liabilities (whether absolute, contingent or otherwise,
known or unknown, and whether due or to become due), (iii) conducted
any business whatsoever, or (iv) taken any corporate action of any
nature whatsoever, including, without limitation, entering into any
agreement or arrangement, amending its articles or certificate of
documents, issuing any of its capital shares or other securities
(including any options, warrants or other rights to receive
securities), other than in
connection with Alberta's initial organization or the authorization,
execution and delivery of this Agreement and the transactions
contemplated hereby.
4.35 No Misrepresentation. No representation or warranty
--------------------
of any Shareholder contained in this Agreement or in any schedule
hereto or in any certificate or other instrument furnished by any
Shareholder to the Purchaser pursuant to the terms hereof, contains
any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the
Shareholders that:
5.1 Organization and Good Standing. The Purchaser is a
------------------------------
corporation duly organized, validly existing and in good standing
under the laws of the Province of Alberta.
5.2 Authorization of Agreement. The Purchaser has full
--------------------------
corporate power and authority to execute and deliver this Agreement
and each other agreement, document, instrument or certificate
contemplated by this Agreement or to be executed by the Purchaser in
connection with the consummation of the transactions contemplated
hereby and thereby (the "Purchaser Documents"), and to consummate the
transactions contemplated hereby and thereby. The execution, delivery
and performance by the Purchaser of this Agreement and each Purchaser
Document have been duly authorized by all necessary corporate action
on behalf of the Purchaser. This Agreement has been, and each
Purchaser Document will be at or prior to the Closing, duly executed
and delivered by the Purchaser and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this
Agreement constitutes, and each Purchaser Document when so executed
and delivered will constitute, legal, valid and binding obligations of
the Purchaser, enforceable against the Purchaser in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
5.3 Conflicts; Consents of Third Parties.
------------------------------------
(a) Except as set forth on Schedule 5.3 hereto, none of
the execution and delivery by the Purchaser of this Agreement and of
the Purchaser Documents, the consummation by the Purchaser of the
transactions contemplated hereby and thereby, or compliance by the
Purchaser with any of the provisions hereof or thereof will (i)
conflict with, or result in the breach of, any provision of the
certificate of incorporation or by-laws of the Purchaser, (ii)
conflict with, violate, result in the breach or termination of,
constitute a default under, or give rise to any right of acceleration
under, any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which the Purchaser is a party or by
which the Purchaser or its properties or assets is bound or (iii)
violate any statute, rule, regulation, judgment or Order of any
Governmental Body by which the Purchaser is bound.
(b) Except as set forth on Schedule 5.3, no consent,
waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any Person or Governmental Body is
required on the part of the Purchaser in connection with the execution
and delivery of this Agreement or the Purchaser Documents or the
compliance by Purchaser with any of the provisions hereof or thereof.
5.4 Litigation. There are no Legal Proceedings pending
----------
or, to the best knowledge of the Purchaser, threatened that are
reasonably likely to prohibit or restrain the ability of the Purchaser
to enter into this Agreement or consummate the transactions
contemplated hereby.
5.5 Investment Intention. The Purchaser is acquiring the
--------------------
Seller Shares and the Tri-S Shares for its own account, for investment
purposes only and not with a view to the resale or distribution (as
such term is used in Section 2(11) of the Securities Act) thereof.
Purchaser understands that the Shares have not been registered under
the Securities Act and cannot be sold unless subsequently registered
under the Securities Act or an exemption from such registration is
available.
5.6 Financial Advisors. No Person has acted, directly or
------------------
indirectly, as a broker, finder or financial advisor for the Purchaser
in connection with the transactions contemplated by this Agreement and
no Person is entitled to any fee or commission or like payment in
respect thereof.
ARTICLE VI
COVENANTS
6.1 Access to Information. National, the Shareholders and
---------------------
the Tri-S Shareholders agree that, prior to the Closing Date, the
Purchaser shall be entitled, through its officers, employees and
representatives (including, without limitation, its legal advisors and
accountants), to make such investigation of the properties, businesses
and operations of National and its Subsidiaries and such examination
of the books, records and financial condition of National and its
Subsidiaries as it reasonably requests and to make extracts and copies
of such books and records. Any such investigation and examination
shall be conducted during regular business hours and under reasonable
circumstances, and National the Tri-S Shareholders and the
Shareholders shall cooperate, and shall cause the Subsidiaries to
cooperate, fully therein. No investigation by the Purchaser prior to
or after the date of this Agreement shall diminish or obviate any of
the representations, warranties, covenants or agreements of the
Shareholders or the Tri-S Shareholders contained in this Agreement,
the Shareholder/National Documents or the Tri-S Documents. In order
that the Purchaser may have full opportunity to make such physical,
business, accounting and legal review, examination or investigation as
it may reasonably request of the affairs of National and its
Subsidiaries, National and the Shareholders shall cause the officers,
employees, consultants, agents, accountants, attorneys and other
representatives of National and its Subsidiaries to cooperate fully
with such representatives in connection with such review and
examination.
6.2 Conduct of the Business Pending the Closing.
-------------------------------------------
(a) Except as otherwise expressly contemplated by this
Agreement or with the prior written consent of the Purchaser, until
the Closing Date, each of National and the Shareholders shall, and
shall cause each of the Subsidiaries to:
(i) conduct the respective businesses of National and its
Subsidiaries only in the ordinary course consistent with past
practice;
(ii) use its best efforts to (A) preserve its present
business operations, organization (including, without limitation,
management and the sales force) and goodwill of National and its
Subsidiaries and (B) preserve its present
relationship with Persons having business dealings with National
and its Subsidiaries;
(iii) maintain (A) all of the assets and properties of each
of National and its Subsidiaries in their current condition,
ordinary wear and tear excepted and (B) insurance upon all of the
properties and assets of National and its Subsidiaries in such
amounts and of such kinds comparable to that in effect on the
date of this Agreement;
(iv) (A) maintain the books, accounts and records of each
of National and its Subsidiaries in the ordinary course of
business consistent with past practices, (B) continue to collect
accounts receivable and pay accounts payable utilizing normal
procedures and without discounting or accelerating payment of
such accounts, and (C) comply with all contractual and other
obligations applicable to the operation of each of National and
its Subsidiaries;
(v) promptly pay and discharge all liabilities (including
liabilities for services rendered or goods delivered to National)
that are due and payable by it prior to the Closing Date except
where such liabilities are being disputed in good faith by
appropriate proceedings; and
(vi) comply in all material respects with applicable Laws,
including, without limitation, Environmental Laws.
(b) Except as otherwise expressly contemplated by this
Agreement or with the prior written consent of the Purchaser, until
the Closing Date, National, the Shareholders and the Tri-S
Shareholders shall not, and shall cause each of National and its
Subsidiaries not to:
(i) except as expressly provided in Section 1.3, declare,
set aside, make or pay any dividend or other distribution in
respect of the capital stock of National or repurchase, redeem or
otherwise acquire any outstanding shares of the capital stock or
other securities of, or other ownership interests in, National or
any of its Subsidiaries;
(ii) except as provided in Sections 6.15 and 6.17,
transfer, issue, sell or dispose of any shares of capital stock,
partnership interests or other securities of National or any of
its Subsidiaries or grant options, warrants, calls or other
rights to purchase or otherwise acquire shares of the capital
stock, partnership interests or other securities of National or
any of its Subsidiaries;
(iii) effect any recapitalization, reclassification, stock
split or like change in the capitalization of National or any of
its Subsidiaries;
(iv) amend the certificate of incorporation, by-laws,
certificate of limited partnership or partnership agreement of
National or any of its Subsidiaries;
(v) Except as set forth on Schedule 6.2, (A) increase the
annual level of compensation of any employee of National or any
of its Subsidiaries whose annual compensation exceeds C$50,000,
other than any such increases of less than 5% in the aggregate
granted in the ordinary course of business consistent with past
practice, (B) increase the annual level of compensation payable
or to become payable by National or any of its Subsidiaries to
any of their respective executive officers, (C) grant any bonus,
benefit or other direct or indirect compensation to any employee,
director or consultant whose annual compensation exceeds
C$50,000, other than in the ordinary course consistent with past
practice and in such amounts as are fully reserved against in the
Financial Statements, (D) except for the Employment Agreement
increase the coverage or benefits available under any (or create
any new) severance pay, termination pay, vacation pay, company
awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance,
pension or other employee benefit plan or arrangement made to,
for, or with any of the directors, officers, employees, agents or
representatives of National or any of its Subsidiaries or
otherwise modify or amend or terminate any such plan or
arrangement or (E) enter into any employment, deferred compensa-
tion, severance, consulting, non-competition or similar agreement
(or amend any such agreement) to which National or any of its
Subsidiaries is a party or involving a director, officer or
employee of National or any of its Subsidiaries in his or her
capacity as a director, officer or employee of National or any of
its Subsidiaries;
(vi) except for trade payables and for indebtedness for
borrowed money incurred in the ordinary course of business and
consistent with past practice, borrow monies for any reason or
draw down on any line of credit or debt obligation, or become the
guarantor, surety, endorser or otherwise liable for any debt,
obligation or liability (contingent or otherwise) of any other
Person;
(vii) subject to any Lien, any of the Assets;
(viii) acquire any material properties or assets or sell,
assign, transfer, convey, lease or otherwise dispose of any of
the Assets, except (other than with respect to the Stores or the
Business) for fair consideration in the ordinary course of
business consistent with past practice of National and its
Subsidiaries;
(ix) cancel or compromise any debt or claim or waive or
release any material right of National or any of its Subsidiaries
except in the ordinary course of business consistent with past
practice;
(x) enter into any commitment for Capital Expenditures of
National and its Subsidiaries;
(xi) enter into, modify or terminate any labor or
collective bargaining agreement of National or any of its
Subsidiaries or, through negotiation or otherwise, make any
commitment or incur any liability to any labor organization with
respect to National or any of its Subsidiaries;
(xii) introduce any material change with respect to the
operation of National or any of its Subsidiaries, including any
material change in the types, nature, composition or quality of
its products or services or, other than in the ordinary course of
business, make any change in product specifications or prices or
terms of distributions of such products;
(xiii) permit National or any of its Subsidiaries to enter
into any transaction or to make or enter into any Contract which
by reason of its size or otherwise is not in the ordinary course
of business consistent with past practice;
(xiv) become obligated to develop any new locations;
(xv) permit National or any of its Subsidiaries to (i)
enter into or agree to enter into any merger or consolidation
with any Person or (ii) engage in any new business or invest in,
make a loan, advance or capital contribution to, or otherwise
acquire the securities of, any other Person;
(xvi) except for transfers of cash pursuant to normal cash
management practices, permit National or any of its Subsidiaries
to make any investments in or loans to, or pay any fees or
expenses to, or enter into or modify any Contract with, any
Shareholder or any Tri-S Shareholder or any shareholder, partner
or Affiliate of any Shareholder or any Tri-S Shareholder;
(xvii) restructure, change, modify or renegotiate the terms
of any obligation of National to another Person which
restructuring, change, modification or renegotiation has the
effect of extending, delaying or deferring the time for payment
or performance of any such obligation, other than in the ordinary
course of business consistent with past practice;
(xviii) agree to do anything prohibited by this Section 6.2
or take or omit to take any action which would make any of the
representations and warranties of the Shareholders or the Tri-S
Shareholders in this Agreement or the Shareholder/National
Documents or the Tri-S Documents untrue or incorrect in any
material respect as of any time through and including the Closing
Date; or
(xix) make any material Tax allocation or settle or
compromise any Tax liability for an amount materially in excess
of the liability therefor that is reflected on the financial
statements of National (or any Subsidiary of National), as the
case may be.
6.3 Consents. National, the Shareholders and the Tri-S
--------
Shareholders shall use their best efforts, and the Purchaser shall
cooperate with National and the Shareholders, to obtain at the
earliest practicable date all consents, waivers, approvals, Orders,
Permits and authorizations of any Person or Governmental Body required
to consummate the transactions contemplated by this Agreement,
including, without limitation, the consents, waivers, approvals,
Orders, Permits and authorizations of any Person or Governmental Body
referred to in Section 4.6(b) hereof.
6.4 Consents to Real Property Leases. National and the
--------------------------------
Shareholders shall use their best efforts to obtain all consents and
estoppels from landlords and lessors which are required to be obtained
to consummate the transactions contemplated by this Agreement pursuant
to the terms of any of the Real Property Leases.
6.5 No Solicitation. None of National, the Shareholders
---------------
or the Tri-S Shareholders will, nor will they cause or permit National
or any Subsidiary or any of National's or any Subsidiary's directors,
officers, employees, representatives or agents (collectively, the
"Representatives") to, directly or indirectly, (i) discuss, negotiate,
undertake, authorize, recommend, propose or enter into, either as the
proposed surviving, merged, acquiring or acquired corporation, any
transaction involving a merger, consolidation, business combination,
purchase or disposition of any capital stock or other equity interest
in, or material assets of, National or any of its Subsidiaries other
than the transactions set forth in this Agreement (an "Acquisition
Transaction"), (ii) facilitate, encourage, solicit or initiate
discussions, negotiations or submissions of proposals or offers in re-
spect of an Acquisition Transaction, (iii) furnish or cause to be
furnished, to any Person, any information concerning the business,
operations, properties or assets of National or any of its
Subsidiaries in connection with an Acquisition Transaction, or (iv)
otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person to
do or seek any of the foregoing. National, the Shareholders and the
Tri-S Shareholders will inform the Purchaser in writing immediately
following the receipt by any Shareholder, Tri-S Shareholder, National,
any Subsidiary or any Representative of any proposal or inquiry in
respect of any Acquisition Transaction.
6.6 Preservation of Records. Subject to Section 6.14(b)
-----------------------
hereof (relating to the preservation of Tax records), the
Shareholders, the Tri-S Shareholders and the Purchaser agree that each
of them shall preserve and keep the records held by any of them
relating to the business of National and its Subsidiaries for a period
of four years from the Closing Date and shall make such records and
personnel available to the other as may be reasonably required by such
party in connection with, among other things, any insurance claims by,
legal proceedings against or governmental investigations of the
Shareholders, the Tri-S Shareholders or the Purchaser or any of their
Affiliates or in order to enable the Shareholders, the Tri-S
Shareholders or the Purchaser to comply with their respective
obligations under this Agreement, the Non-Competition Agreements and
each other agreement, document or instrument contemplated hereby or
thereby. In the event any of the Shareholders, the Tri-S Shareholders
or the Purchaser wishes to destroy such records after that time, such
party shall first give ninety (90) days prior written notice to the
other and such other party shall have the right at its option and
expense, upon prior written notice given to such party
within that ninety (90) day period, to take possession of the records
within one hundred and eighty (180) days after the date of such
notice.
6.7 Publicity. Except for agreed to disclosures made by
---------
National and/or its Subsidiaries' franchisees, none of National, the
Shareholders, Tri-S Shareholders or the Purchaser shall issue any
press release or public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written
approval of the other parties hereto, which approval will not be
unreasonably withheld or delayed, unless, in the sole judgment of the
Purchaser, disclosure is otherwise required by applicable Law,
provided that, to the extent required by applicable law, the party
intending to make such release shall use its best efforts consistent
with such applicable law to consult with the other party with respect
to the text thereof.
6.8 Repayment of Loans. On or prior to the Closing Date
------------------
(i), all loans or other advances by National or any Subsidiary to the
Shareholders, the Tri-S Shareholders or any of their Affiliates (the
"Affiliate Loans"), including any accrued and unpaid interest thereon,
shall be repaid in full and, (ii) the guaranty set forth on Schedule
4.9 shall have been released and discharged in full.
6.9 Use of Name. The Shareholders and the Tri-S
-----------
Shareholders hereby agree that upon the consummation of the
transactions contemplated hereby, the Purchaser and National shall
have the sole right to the use of the names "National Money Mart",
"Money Mart of Canada", "Money Mart" and "Insta Cheques" and the
Shareholders and the Tri-S Shareholders shall not, and shall not cause
or permit any Affiliate to, use such names or any variation or
simulation thereof in any business or manner, either involving check
cashing or otherwise.
6.10 Environmental Matters. National and the Shareholders
---------------------
shall identify the Environmental Permits required by Purchaser to
operate the business of National and its Subsidiaries and shall
promptly file all materials required under Environmental Laws
(including, without limitation, foreign or state property transfer
laws) and all requests required for the issuance, transfer or
reissuance to Purchaser of all such Permits prior to the Closing Date.
6.11 Non-Competition Agreements. Each Shareholder and Mrs.
--------------------------
Xxxxx hereby agree that, on or prior to the Closing Date, such Person
shall execute and deliver to Purchaser a Non-
Competition Agreement, substantially in the form of Exhibit A hereto.
6.12 Shareholder Releases. Each Shareholder and Mrs.
--------------------
Xxxxx hereby agree that, on or prior to the Closing Date, such Person
shall execute and deliver to the Purchaser and National a release,
substantially in the form of Exhibit E hereto (the "Shareholder
Release").
6.13 Capital Contribution. The Purchaser (or any of its
--------------------
Affiliates) shall (i) advance, concurrently with Closing, funds in an
amount sufficient for National to pay the Bonuses, Dividends and
Shareholder Loans, based upon National's October 31, 1996 internally
prepared unaudited financial statements and (ii) cause National to
make or cause to be made the payments referred to in clause (i).
6.14 Tax Matters.
-----------
(a) Preparation of Tax Returns; Payment of Taxes.
--------------------------------------------
(i) Taxes, if any, attributable to the taxable
period of Tri-S, National or any Subsidiary of National beginning
before and ending after the Closing Date shall be allocated to the
Shareholders and Xxx. Xxxxx for the period up to and including the
Closing Date, and to Purchaser for the period subsequent to the
Closing Date. For purposes of this Section 6.14(a), Taxes for the
period up to and including the Closing Date and for the period
subsequent to the Closing Date shall be determined on the basis of an
interim closing of the books as of the Closing Date or, to the extent
not susceptible to such allocation, by apportionment on the basis of
elapsed days.
(ii) The Shareholders' Representative shall be
responsible for filing or causing to be filed all Tax Returns required
to be filed by or on behalf of Tri-S, National and each Subsidiary of
National and/or their operations and assets on or before the Closing
Date (taking into account applicable extensions) and shall pay or
cause to be paid any Taxes shown to be due thereon. The Shareholders
and Xxx. Xxxxx shall not be responsible for the filing of Tax Returns
required to be filed as a result of the change of control arising as a
result of the consummation of the transactions contemplated by this
agreement. The Shareholders' Representative shall be given the
opportunity to participate in the preparation and filing of all such
Tax Returns, and National shall prepare such Tax Returns in a manner
consistent with past practices and shall provide copies of such Tax
Returns to Purchaser and the Shareholders' Representative for
Purchaser's and the Shareholders' Representative's review and comment
at least fifteen (15) Business Days prior to filing. Purchaser shall
be responsible for filing or causing to be filed all Tax Returns
required to be filed by or on behalf of Tri-S, National and any
Subsidiary of National and/or their operations and assets after the
Closing Date (taking into account applicable extensions) and shall pay
or cause to be paid any Taxes shown to be due thereon subject to the
amount of any Taxes that are the responsibility of the Shareholders or
Xxx. Xxxxx pursuant to Section 6.14(a)(iii).
(iii) With respect to any Tax Return of Tri-S,
National and each Subsidiary of National required to be filed by
Purchaser for a taxable period of Tri-S, National or any Subsidiary of
National beginning before and ending on or after the Closing Date,
Purchaser shall provide the Shareholders' Representative with a
statement setting forth the amount of Tax shown on such Tax Return for
which the Shareholders and Xxx. Xxxxx are responsible pursuant to
Section 6.14(a)(i) (the "Statement") at least fifteen (15) business
days prior to the due date for filing of such Tax Return (including
extensions). Not later than five (5) business days before the due
date for payment of Taxes with respect to such Tax Return, the
Shareholders and Xxx. Xxxxx shall pay to Purchaser an amount equal to
the Taxes shown on the Statement as being the responsibility of the
Shareholders and Xxx. Xxxxx pursuant to Section 6.14(a)(i) hereof. No
payment pursuant to this Section 6.14(a)(iii) shall excuse the
Shareholders or Xxx. Xxxxx from their indemnification obligations
pursuant to Section 9.5 hereof should the amount of Taxes as
ultimately determined (on audit or otherwise), for the periods covered
by such Tax Returns and which are the responsibility of the
Shareholders or Xxx. Xxxxx exceed the amount of the Shareholders' or
Xxx. Xxxxx'x payment under this Section 6.14(a)(iii).
(iv) Neither the Shareholders nor Xxx. Xxxxx may file
any amended Tax Returns or refund claims in respect of any taxable
period of National or any Subsidiary of National or Tri-S ending on or
prior to the Closing Date without the prior written consent of
Purchaser.
(b) Cooperation with Respect to Tax Returns. Purchaser,
---------------------------------------
Shareholders and Xxx. Xxxxx agree to furnish or cause to be furnished
to each other, and each at their own expense, as promptly as
practicable, such information (including access to books and records)
and assistance, including making employees available on a mutually
convenient basis to provide additional information and explanations of
any material provided, relating
to Tri-S, National and any Subsidiary of National as is reasonably
necessary for the filing of any Tax Return, for the preparation for
any audit, and for the prosecution or defense of any claim, suit or
proceeding relating to any adjustment or proposed adjustment with
respect to Taxes. Purchaser, Shareholders and Xxx. Xxxxx shall
retain all information, records or documents in their possession
relating to Tri-S, National and any Subsidiary of National that might
be relevant to computations or payments required after the Closing
Date with respect to Tax matters relating to any taxable period ending
on, prior to or including the Closing Date until the expiration of the
relevant statute of limitations or extensions thereof or, if a
proceeding has been instituted for which the information, records or
documents is required, until there is a final determination with
respect to such proceeding.
(c) Tax Audits.
----------
(i) Purchaser shall promptly notify the
Shareholders' Representative upon receipt by Purchaser, Tri-S or
National or any Subsidiary of National of written notice of any Tax
audits of or proposed assessments against Tri-S, National or any
Subsidiary of National for taxable periods of Tri-S, National or any
Subsidiary of National ending on or prior to the Closing Date;
provided, however, that the failure of Purchaser to give the
-------- -------
Shareholders' Representative prompt notice as required herein shall
not relieve the Shareholders or Xxx. Xxxxx of any of its obligations
to pay such Taxes except and to the extent that the Shareholders or
Xxx. Xxxxx are actually and materially prejudiced thereby. Purchaser
shall have the right to represent Tri-S's, National's or any
Subsidiary of National's interests in any such Tax audit or
administrative or court proceeding and to employ counsel of its
choice; provided, that Purchaser may not agree to a settlement or
--------
compromise thereof without the prior consent of the Shareholders which
consent will not be unreasonably withheld. The Shareholders and Xxx.
Xxxxx agree that they will cooperate fully with Purchaser and its
counsel in the defense against or compromise of any claim in any said
audit or proceeding.
(ii) The Shareholders' Representative shall promptly
notify Purchaser upon receipt by the Shareholders or Xxx. Xxxxx of
written notice of any Tax audit or proposed assessment or other
proposed change or adjustment which may affect Tri-S, National or any
Subsidiary of National or its Tax attributes. The Shareholders'
Representative shall keep Purchaser duly informed of the progress
thereof and, if the results of such Tax audit or proceeding may have
an adverse effect on Tri-S, National or any Subsidiary of National,
Purchaser or its Affiliates for any taxable period including or ending
after the Closing Date, then the Shareholders or Xxx. Xxxxx may not
agree to a settlement or compromise thereof without Purchaser's
consent, which consent will not be unreasonably withheld.
(d) Transfer Taxes. The Shareholders and Xxx. Xxxxx shall
--------------
be jointly and severally liable for and shall pay (and shall indemnify
and hold harmless Purchaser against) all sales, use, stamp,
documentary, filing, recording, transfer or similar fees or taxes or
governmental charges as levied by any taxing authority or governmental
agency in connection with the transactions contemplated by this
Agreement (other than taxes measured by or with respect to income
imposed on Purchaser or its Subsidiaries). The Shareholders and Xxx.
Xxxxx hereby agree to file all necessary documents (including, but not
limited to, all Tax Returns) with respect to all such amounts in a
timely manner.
6.15 Transfer to Alberta. Xxxxx shall, prior to the
-------------------
Closing, transfer to Alberta, pursuant to documentation satisfactory
to Purchaser, the 3,528 shares of Common Stock owned by Xxxxx on the
date hereof and to be sold by Alberta to Purchaser pursuant to this
Agreement.
6.16 Obligations of Tri-S. On or prior to the Closing
--------------------
Date, all loans, obligations or other advances owing by Tri-S to any
other Person (including, without limitation, the Promissory Note,
dated January 5, 1995 made by Tri-S in favor of Xxxx XxXxxxxx) shall
have been released and discharged in full.
6.17 Transfer to Xxx. Xxxxx. Tri-S shall, prior to the
----------------------
Closing, transfer to Xxx. Xxxxx, pursuant to documentation
satisfactory to Purchaser, record ownership of the [2,500] shares of
Common Stock held of record by Tri-S on the date hereof and to be sold
by Xxx. Xxxxx to Purchaser pursuant to this Agreement.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions Precedent to Obligations of Purchaser. The
------------------------------------------------
obligation of the Purchaser to consummate the transactions
contemplated by this Agreement is subject to the fulfillment, on or
prior to the Closing Date, of each of the following conditions (any or
all of which may be waived by the Purchaser in whole or in part):
(a) all representations and warranties of the Shareholders
and the Tri-S Shareholders contained herein shall be true and correct
as of the date hereof;
(b) all representations and warranties of the Shareholders
and the Tri-S Shareholders contained herein qualified as to
materiality shall be true and correct, and the representations and
warranties of the Shareholders and the Tri-S Shareholders contained
herein not qualified as to materiality shall be true and correct in
all material respects, at and as of the Closing Date with the same
effect as though those representations and warranties had been made
again at and as of that time;
(c) the Shareholders, the Tri-S Shareholders and National
shall have performed and complied in all material respects with all
obligations and covenants required by this Agreement to be performed
or complied with by them on or prior to the Closing Date;
(d) the Purchaser shall have been furnished with
certificates (dated the Closing Date and in form and substance
reasonably satisfactory to the Purchaser) executed by each Shareholder
and each Tri-S Shareholder certifying as to the fulfillment of the
conditions specified in Sections 7.1(a), 7.1(b) and 7.1(c) hereof;
(e) certificates representing 100% of the Seller Shares
and the Tri-S Shares shall have been, or shall at the Closing be,
validly delivered and transferred to the Purchaser, free and clear of
any and all Liens;
(f) the Purchaser shall have obtained all consents and
waivers referred to in Section 5.3 hereof with respect to the
transactions contemplated by this Agreement and the Purchaser
Documents and the Tri-S Shareholders;
(g) there shall not have been or occurred any Material
Adverse Change since December 31, 1995;
(h) the Shareholders and the Tri-S Shareholders shall have
obtained all consents and waivers referred to in Section 4.6 hereof,
in a form reasonably satisfactory to the Purchaser, with respect to
the transactions contemplated by this Agreement the
Shareholder/National Documents and the Tri-S Documents;
(i) no Legal Proceedings shall have been instituted or
threatened or claim or demand made against any of the
Shareholders and the Tri-S Shareholders, National or any of its
Subsidiaries, or the Purchaser or any of its Affiliates seeking to
restrain or prohibit or to obtain substantial damages with respect to
the consummation of the transactions contemplated hereby, and there
shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(j) all Affiliate Loans shall have been repaid to National
prior to the Closing Date;
(k) the Shareholders and the Tri-S Shareholders shall have
furnished, or caused to be furnished, to Purchaser, in form and
substance satisfactory to Purchaser, such certificates and other
evidence as Purchaser may have reasonably requested as to the
satisfaction of the conditions contained in this Section and as to
such other matters relating to the representations, warranties,
covenants and undertakings in this Agreement as Purchaser may
reasonably request;
(l) any necessary consents from the landlords and lessors
under each Real Property Lease shall have been obtained in form and
substance satisfactory to Purchaser acting reasonably;
(m) each of the directors and officers of National and the
Subsidiaries and Tri-S shall deliver to the Purchaser as of the
Closing Date his or her resignation as an officer, director and
employee of National and the Subsidiaries and Tri-S (as the case may
be) and shall grant to National and the Subsidiaries a full and final
release in respect of any and all liabilities of National and the
Subsidiaries and Tri-S to such person;
(n) the Shareholders and Xxx. Xxxxx shall have delivered
to the Purchaser an affidavit attesting that each of them is a
resident of Canada within the meaning of Section 116 of the Tax Act;
(o) the Purchaser shall have received duly executed copies
of each of the documents enumerated in Section 8.1;
(p) the Purchaser shall have obtained, upon terms
acceptable to it, financing for the transaction contemplated hereby
pursuant to Dollar Financial Group, Inc.'s offering of approximately
$100,000,000 in aggregate principal amount of its Senior Subordinated
Notes due 2006;
(q) the Shareholders and shall have furnished to
Purchaser, in form and substance satisfactory to Purchaser, all
documentation evidencing the transfer by Xxxxx to Alberta of the 3,528
shares of Common Stock owned by Xxxxx on the date hereof and to be
sold by Alberta to Purchaser pursuant to this Agreement;
(r) the Shareholders and Xxx. Xxxxx shall have furnished
to Purchaser, in form and substance satisfactory to Purchaser,
evidence of the release and discharge of all loans, obligations and
advances referred to in Section 6.16;
(s) the Shareholders and Xxx. Xxxxx shall have furnished
to Purchaser, in form and substance satisfactory to Purchaser, all
documentation evidencing the transfer by Tri-S to Xxx. Xxxxx of record
ownership of the [2,500] shares of Common Stock held of record by Tri-
S on the date hereof and to be sold by Xxx. Xxxxx pursuant to this
Agreement; and
(t) all Excluded Assets shall have been distributed as set
forth on Schedule 1.3.
7.2 Conditions Precedent to Obligations of the
------------------------------------------
Shareholders and the Tri-S Shareholders. The obligations of the
---------------------------------------
Shareholders and Xxx. Xxxxx to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior
to or on the Closing Date, of each of the following conditions (any or
all of which may be waived by the Shareholders' Representative in
whole or in part to the extent permitted by applicable law):
(a) all representations and warranties of the Purchaser
and DFG contained herein shall be true and correct as of the date
hereof;
(b) all representations and warranties of the Purchaser
and DFG contained herein qualified as to materiality shall be true and
correct, and all representations and warranties of the Purchaser and
DFG contained herein not qualified as to materiality shall be true and
correct in all material respects, at and as of the Closing Date with
the same effect as though those representations and warranties had
been made again at and as of that date;
(c) the Purchaser shall have performed and complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Purchaser on or prior to
the Closing Date;
(d) the Shareholders and Xxx. Xxxxx shall have been
furnished with a certificate (dated the Closing Date and in form and
substance reasonably satisfactory to the Shareholders and Xxx. Xxxxx)
executed by the Chief Executive Officer of the Purchaser certifying as
to the fulfillment of the conditions specified in Sections 7.2(a),
7.2(b) and 7.2(c);
(e) certificates representing 324.77 shares of DFG Common
Stock shall have been, or shall at the Closing be, delivered to the
DFG Stock Purchasers free and clear of any and all Liens except for
those evidenced by or arising in connection with the Shareholders
Agreement;
(f) no Legal Proceedings shall have been instituted or
threatened or claim or demand made against any of the Shareholders or
the Tri-S Shareholders seeking to restrain or prohibit or to obtain
substantial damages with respect to the consummation of the
transactions contemplated hereby, and there shall not be in effect any
Order by a Governmental Body of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby;
(g) the cash portion of the Purchase Price shall at the
Closing be delivered to the Shareholders' Representative;
(h) the Shareholders and Xxx. Xxxxx shall have received
duly executed copies of each of the documents enumerated in Section
8.2; and
(i) the Purchaser (or any of its Affiliates) shall have
advanced funds to National in a sufficient amount to pay all Bonuses,
Dividends and Shareholders Loans, and shall have caused National to
pay same.
ARTICLE VIII
DOCUMENTS TO BE DELIVERED
8.1 Documents to be Delivered by the Shareholders and the
-----------------------------------------------------
Tri-S Shareholders. At the Closing, the Shareholders and the Tri-S
------------------
Shareholders shall deliver, or cause to be delivered, to the Purchaser
the following:
(a) stock certificates representing (i) the Seller Shares
and the Tri-S Shares, duly endorsed in blank or accompanied by stock
transfer powers and with all requisite stock
transfer tax stamps attached, and (ii) the Other Shares, registered in
the name of Tri-S;
(b) the certificates referred to in Section 7.1(d) hereof;
(c) the opinion of Xxxxxx & XxXxxxxx, counsel to the
Shareholders and Xxx. Xxxxx, in substantially the form of Exhibit C
hereto;
(d) copies of all consents and waivers referred to in
Section 7.1(h) hereof;
(e) written evidence of the repayment to National of all
Affiliate Loans;
(f) Non-Competition Agreements, substantially in the form
of Exhibit A hereto, duly executed by each Shareholder and Xxx. Xxxxx;
(g) written resignations of each of the directors of
National and Tri-S;
(h) certificates of good standing with respect to Tri-S,
National and each of its Subsidiaries issued by the Registrar of
Corporations and for each jurisdiction in which such Person is
qualified to do business as a foreign corporation;
(i) duly executed copies of the Shareholders Agreement,
executed by each DFG Stock Purchaser;
(j) Shareholder Releases, substantially in the form of
Exhibit E hereto, duly executed by each Shareholder and Xxx. Xxxxx;
(k) an Employment Agreement with Xxxxx, substantially in
the form of Exhibit F hereto, executed by Xxxxx and the Purchaser;
(l) for each DFG Stock Purchaser, a completed Form 20A as
required under the Act;
(m) the documents referred to in Section 7.1(q), 7.1(r)
and 7.1(s) hereof; and
(n) such other documents as the Purchaser shall reasonably
request.
8.2 Documents to be Delivered by the Purchaser. At the
------------------------------------------
Closing, the Purchaser shall deliver to the Shareholders and Xxx.
Xxxxx the following:
(a) evidence of the payments required to be made pursuant
to Section 2.2 hereof;
(b) the certificate referred to in Section 7.2(d) hereof;
(c) the opinion of counsel to the Purchaser and DFG, in
the form of Exhibit D hereto;
(d) certificates representing the DFG Common Stock
referred to in Section 2.3;
(e) an Employment Agreement with Xxxxx, substantially in
the form of Exhibit F hereto, executed by Xxxxx and the Purchaser;
(f) evidence of payment by National of all unpaid Bonuses,
Dividends and Shareholders' Loans; and
(g) such other documents as the Shareholders and Xxx.
Xxxxx shall reasonably request.
ARTICLE IX
INDEMNIFICATION
9.1 Survival. The representations and warranties of the
--------
Shareholders, the Tri-S Shareholders, Purchaser and DFG shall remain
operative and in full force and effect for a period of twenty-four
(24) months after the Closing Date, regardless of any investigation or
statement as to the results thereof made by or on behalf of any party
hereto; provided that the representations and warranties contained in
Sections 4.3, 4.4, 4.7, 4.11, 4.16, 4.20, 4.34, 11.3, 11.13, 12.3,
12.4, 12.7, 12.9 and 12.11 shall survive indefinitely.
Notwithstanding anything to the contrary herein, any representation or
warranty which is the subject of a claim or dispute which is asserted
in writing prior to the expiration of the applicable period set forth
above shall survive with respect to such claim or dispute until the
final resolution and satisfaction thereof.
9.2 General Indemnification.
-----------------------
(a) The Shareholders hereby agree, jointly and severally,
to indemnify and hold harmless the Purchaser and its Affiliates
(including, after the Closing, Tri-S, National and the Subsidiaries)
and their respective directors, officers, employees, agents,
successors and assigns (collectively, the "Purchaser Indemnified
Parties") from and against and in respect of any and all Losses
resulting from, arising out of, based on or relating to:
(i) the failure of any representation or warranty of any
Shareholder or of National set forth in this Agreement, any
Shareholder/National Document or any certificate or instrument
delivered by or on behalf of any Shareholder or National pursuant
to this Agreement, to be true and correct in all respects both as
of the date of this Agreement and on the Closing Date;
(ii) the breach of any covenant or other agreement on the
part of any Shareholder or of National under this Agreement or
any Shareholder/National Document;
(iii) any of the Excluded Liabilities;
(iv) (A) any Release of Hazardous Materials by or held on
behalf of (i) National or any of its Subsidiaries or (ii) any
Person for whose actions National or any of its Subsidiaries is
responsible in law in, on, at, or from the Company Properties
which occurred, or resulted from operations occurring, as of or
prior to the Closing; (B) any tort liability to third parties as
a result of any Releases or from exposure to Hazardous Materials
arising from any Releases as of or prior to the Closing; (C)
notification or designation under any Environmental Law as a
potentially responsible party for onsite or offsite disposal of
Hazardous Materials, which disposal occurred as of or prior to
the Closing; or (D) any other Environmental Costs and Liabilities
and any other Environmental Claim or Remedial Action resulting
from or based upon anything related to the property currently or
previously owned, leased or operated by National, any Subsidiary
or any of their respective predecessors thereof conducted prior
to Closing to the extent not fully reimbursable under a policy of
insurance under which coverage has not been denied; or
(v) the Excluded Assets or the ownership, operation, lease
or use thereof, or any action taken with respect thereto, by
National, any Subsidiary or any other Person.
(b) The Shareholders and Xxx. Xxxxx hereby agree, jointly
and severally, to indemnify and hold harmless the Purchaser
Indemnified Parties from and against and in respect of any and all
Losses resulting from, arising out of, based on or relating to:
(i) the failure of any representation or warranty of any
Tri-S Shareholder set forth in this Agreement or any Tri-S
Document or any certificate and instrument delivered by or on
behalf of any Tri-S Party pursuant to this Agreement, to be true
and correct in all respects both as of the date of this Agreement
and on the Closing Date;
(ii) the breach of any covenant or other agreement on the
part of any Tri-S Shareholder under this Agreement or any Tri-S
Document; and
(iii) any and all liabilities or obligations of Tri-S of any
kind, nature and description, absolute or contingent, known or
unknown, existing on or prior to the Closing Date or thereafter
coming into being or arising by reason of any state of facts
existing, or any transaction entered into, on or prior to the
Closing Date (including, without limitation, any such liabilities
arising under any Environmental Laws and any such liabilities
relating to Taxes).
(c) Purchaser hereby agrees to indemnify and hold harmless
the Shareholders and their respective Affiliates, and their respective
directors, officers, employees, agents, successors and assigns
(collectively, the "Shareholder Indemnified Parties") from and against
and in respect of any and all Losses resulting from, arising out of,
based on or relating to:
(i) the failure of any representation or warranty of the
Purchaser set forth in this Agreement or any Purchaser Document
or any certificate and instrument delivered by or on behalf of
the Purchaser pursuant to this Agreement, to be true and correct
in all respects both as of the date of this Agreement and on the
Closing Date;
(ii) the breach of any covenant or other agreement on the
part of the Purchaser under this Agreement or any Purchaser
Document; or
(iii) any Contract Liabilities.
(d) DFG hereby agrees to indemnify and hold harmless the
Shareholders and their respective Affiliates, and their respective
directors, officers, employees, agents, successors and assigns from
and against and in respect of any and all Losses resulting from,
arising out of, based on or relating to:
(i) the failure of any representation or warranty of DFG
set forth in this Agreement or any DFG Document or any
certificate and instrument delivered by or on behalf of DFG
pursuant to this Agreement, to be true and correct in all
respects both as of the date of this Agreement and on the Closing
Date; and
(ii) the breach of any covenant or other agreement on the
part of DFG under this Agreement or any DFG Document.
9.3 Limitations on Indemnification for Breaches of
----------------------------------------------
Representations and Warranties. The Shareholders and Xxx. Xxxxx,
------------------------------
collectively (together, the "Seller Indemnifying Parties"), shall not
have any liability under Section 9.2(a)(i) and 9.2(b)(i),
collectively, unless and until the aggregate amount of losses subject
to indemnification thereunder exceeds C$25,000 and in such event, the
Shareholders and/or Xxx. Xxxxx shall be required to pay the entire
amount of such Losses in excess of C$25,000. The Purchaser and DFG,
collectively (together, the "Purchaser Indemnifying Parties"), shall
not have any liability under Section 9.2(c)(i) and 9.2(d)(i),
collectively, unless and until the aggregate amount of Losses subject
to indemnification thereunder exceeds C$25,000 and, in such event, the
Purchaser and/or DFG shall be requested to pay the entire amount of
such Losses in excess of C$25,000. The aggregate amount of Losses
subject to indemnification by the Seller Indemnifying Parties, on the
one hand, and by the Purchaser Indemnifying Parties on the other hand,
shall not exceed an amount equal to 28% of the Purchase Price in each
instance.
9.4 Indemnification Procedures. Except as provided in
--------------------------
Section 6.14 with respect to Taxes, for the purposes of administering
the indemnification provisions of Section 9.2, the following
procedures shall apply:
(a) If an indemnified party shall receive notice of any
action or proceeding by a third party with respect to which the
indemnified party asserts is indemnifiable under Section 9.2 (a
"Claim"), the indemnified party shall notify the indemnifying party
(the "Indemnitor") of such Claim in writing promptly
following the receipt of notice of the commencement of such Claim.
The failure to give notice as required by this Section 9.4 in a timely
fashion shall not result in a waiver of any right to indemnification
hereunder except to the extent that the Indemnitor is actually
prejudiced thereby.
(b) Except as provided below, the Indemnitor shall be
entitled to assume the defense or settlement of any Claim of the type
referred to in clause (a) hereof (with counsel reasonably satisfactory
to the indemnified parties) if the Indemnitor shall provide the
indemnified parties a written acknowledgment of its liability to
indemnify such indemnified parties against all Losses resulting from,
relating to or arising out of such Claim. If the Indemnitor assumes
any such defense or settlement, it shall pursue such defense or
settlement in good faith. If the Indemnitor fails to elect in writing
to assume the defense of any Claim or to provide the written
acknowledgment provided for above within 10 days after the
notification referred to above, the indemnified party may engage
counsel to defend, settle or otherwise dispose of such Claim, which
counsel shall be reasonably satisfactory to the Indemnitor; provided,
--------
however, that the indemnified party shall not settle or compromise
-------
any such Claim without the consent of the Indemnitor (which consent
will not be unreasonably withheld or delayed).
(c) Notwithstanding anything to the contrary contained
herein, the Purchaser shall have the sole right, with counsel
reasonably satisfactory to the Indemnitor, to defend and settle in its
sole discretion any Claim which constitutes a Non-Assumable Claim and
no other party hereto shall be entitled to assume the defense thereof
or settle such claim. A "Non-Assumable Claim" means any claim, action
or proceeding (i) arising out of or in connection with, or relating
to, any violation or asserted violation of any Law, Order, judgment or
decree, (ii) involving any Governmental Body, or (iii) seeking
injunctive relief.
(d) In cases where the Indemnitor has elected to assume
the defense or settlement with respect to a Claim as provided above,
the Indemnitor shall be entitled to assume such defense or settlement
provided that: (i) the indemnified party (and its counsel) shall be
--------
entitled to continue to participate at its own cost in any such action
or proceeding or in any negotiations or proceedings to settle or
otherwise eliminate any claim for which indemnification is being
sought; (ii) the Indemnitor shall not be entitled to settle or
compromise any such claim without the consent or agreement of the
indemnified party (such consent not to be unreasonably withheld or
delayed); and
(iii) after written notice by the Indemnitor to the indemnified party
of its election to assume control of the defense of any Claim, the
Indemnitor shall not be liable to such indemnified party hereunder for
any attorneys' fees and disbursements subsequently incurred by such
indemnified party in connection therewith.
9.5 Tax Matters.
-----------
(a) The Shareholders agree, jointly and severally, to
indemnify and hold harmless each of the Purchaser Indemnified Parties
from and against any and all Losses resulting from, arising out of,
based on or relating to:
(i) any and all Taxes with respect to all taxable periods
(or portions thereof) of National and any Subsidiary ending on or
prior to the Closing Date and, to the extent provided in Section
6.14(a) hereof, all taxable periods that include, and end after,
the Closing Date; and
(ii) any breach of any representation, warranty or covenant
contained in Sections 4.11 or 6.14 hereof; and
(iii) any Taxes for which the Shareholders are liable
pursuant to subsection 6.14(a) and 6.14(d) hereof.
(b) The Shareholders and Xxx. Xxxxx agree, jointly and
severally, to indemnify and hold harmless each of the Purchaser
Indemnified Parties from and against any and all Losses resulting
from, arising out of, based on or relating to:
(i) any and all Taxes with respect to all taxable periods
(or portions thereof) of Tri-S ending on or prior to the Closing
Date and, to the extent provided in Section 6.14(a) hereof, all
taxable periods that include, and end after, the Closing Date;
and
(ii) any breach of any representation, warranty or covenant
contained in Sections 12.9 or 6.14 hereof; and
(iii) any Taxes for which Xxx. Xxxxx is liable pursuant to
subsections 6.14(a) and 6.14(d) hereof.
(c) Any claim for indemnity made under this Section 9.5
may be made at any time prior to sixty days following the expiration
of the applicable Tax statute of limitations with respect to the
relevant taxable period (including extensions). If a claim for
indemnity under this Section 9.5 is not made
within such time period, the Shareholders shall have no further
obligations in respect to such claim to the Purchaser.
9.6 Employee Benefits and Labor Indemnity. The
-------------------------------------
Shareholders hereby agree to jointly and severally indemnify and hold
the Purchaser Indemnified Parties harmless from and against any and
all Losses resulting from, arising out of or based on or relating to
any (i) Employee Benefit Plan, or (ii) the employment or termination
of employment of any Person prior to or up to the Closing with
National or any of its Subsidiaries including, without limitation, any
claim with respect to, relating to arising out of or in connection
with discrimination by National or any of its Subsidiaries or wrongful
discharge (including constructive discharge).
9.7 Waiver of Subrogation and Other Rights. Each
--------------------------------------
Shareholder and Xxx. Xxxxx hereby agree that if, following the
Closing, any payment is made or required to be made by him, her or it
pursuant to the terms of this Agreement, the Shareholder/National
Documents or the Tri-S Documents (including without limitation this
Article IX), none of the Shareholders or Xxx. Xxxxx shall have any
rights against National or any of the Subsidiaries or Tri-S, whether
by reason of subrogation or otherwise, in respect of any such
payments, and none of the Shareholders or Xxx. Xxxxx shall take any
action against National or any of the Subsidiaries or Tri-S with
respect thereto. Any such rights which any Shareholder or Xxx. Xxxxx
may, by operation of law or otherwise, have against National or any of
the Subsidiaries or Tri-S shall, effective at the time of the Closing,
be deemed to be hereby expressly and knowingly waived.
9.8 Right of Offset. Without in any way limiting any
---------------
other rights or remedies Purchaser may have at law or in equity, the
Purchaser and DFG shall have the right to set off against any
dividends, distributions or other payments that DFG would otherwise be
obligated to make in respect of any DFG Common Stock held by a
Shareholder or any of its transferees, the amount of any claim that
Purchaser may have for indemnification pursuant to this Agreement.
9.9 Treatment of Payment. The Shareholders, Xxx. Xxxxx
--------------------
and Purchaser agree to treat any indemnity payment made pursuant to
Sections 9.2, 9.5 or 9.6 of this Agreement as an adjustment to the
Purchase Price for federal, state, provincial, local and foreign
income tax purposes.
ARTICLE X
MISCELLANEOUS
10.1 Certain Definitions.
-------------------
For purposes of this Agreement, the following terms shall
have the meanings specified in this Section 10.1:
"Accounts Payable" means the aggregate dollar amount of
----------------
accounts payable, including all other current liabilities of National
and its Subsidiaries except those amounts unpaid in relation to
Bonuses, Dividends and Shareholder Loans (to the extent of the
payments required by Section 7.2(i) of this Agreement), as shall be
determined in accordance with GAAP, consistently applied, as of the
close of business on the Closing Date.
"Adjustment Amount" has the meaning ascribed thereto in
-----------------
Section 2.5.
"Affiliate" means, with respect to any Person, any other
---------
Person directly or indirectly controlling, controlled by or under
common control with such Person. For the purpose of this definition,
"control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting
securities, by contract or otherwise.
"Affiliate Loans" shall have the meaning ascribed to such
---------------
term in Section 6.9 hereof.
"Agreed Prepaid Expenses" shall have the meaning ascribed to
-----------------------
such term in Section 1.4(b) hereof.
"Agreement" shall have the meaning ascribed to such term in
---------
the introductory paragraph hereto.
"Alberta" shall have the meaning ascribed to such term in
-------
the introductory paragraph hereto.
"Assets" shall have the meaning ascribed to such term in
------
Section 1.1 hereof.
"Assumed Contracts" shall have the meaning ascribed to such
-----------------
term in Section 4.15 hereof.
"Bonuses" means National's net income from operations after
-------
management salaries (excluding bonuses payable to the Shareholders)
but before income tax minus the net income attributable to minority
interests, all as shall be determined in accordance with GAAP,
consistently applied, from January 1, 1991 through the close of
business on the Closing Date.
"Business" shall have the meaning ascribed to such term in
--------
Section 1.2(a) hereof.
"Business Day" means any day of the year on which national
------------
banking institutions in New York are open to the public for conducting
business and are not required or authorized to close.
"Calgary" has the meaning specified in Schedule 4.4(b).
-------
"Canadian Currency" and the "C$" sign each means the lawful
----------------- --
money of Canada.
"Capital Expenditures" means, for any Person for any period,
--------------------
the aggregate of all expenditures by such Person and its Subsidiaries,
except interest capitalized during construction, during such period
for property, plant or equipment, including, without limitation,
renewals, improvements, replacements and capitalized repairs, that
would be reflected as additions to property, plant or equipment on a
consolidated balance sheet of such Person and its Subsidiaries
prepared in conformity with GAAP. For the purpose of this definition,
the purchase price of equipment which is acquired simultaneously with
the trade-in of existing equipment owned by such Person or any of its
Subsidiaries or with insurance proceeds shall be included in Capital
Expenditures only to the extent of the gross amount of such purchase
price less the credit granted by the seller of such equipment being
traded in at such time or the amount of such proceeds, as the case may
be.
"Cash on Hand" means the sum of all cash in National's bank
------------
accounts or physically located in any of the Stores as of the close of
business on the Closing Date and other cash reported by National on
its books, in accordance with GAAP consistently applied, at the close
of business on the Closing Date; provided that Cash on Hand shall not
include any Reimbursable Security Deposits or any cash subject to any
lien, claim or encumbrance other than the security interests disclosed
in this Agreement to the Purchaser that are held by Bank of Montreal
as of the Closing Date.
"Claim" shall have the meaning ascribed to such term in
-----
Section 9.4(a) hereof.
"Xxxxx" shall mean Xxxxxxx X. Xxxxx.
-----
"Closing" shall have the meaning ascribed to such term in
-------
Section 3.1 hereof.
"Closing Date" shall have the meaning ascribed to such term
------------
in Section 3.1 hereof.
"Closing Date Accounts Receivable" means the aggregate
--------------------------------
dollar amount of accounts receivable (including only the net book
value of Discount Receivables) of National and its Subsidiaries
excluding any accounts receivable of any MEI, as shall be determined
in accordance with GAAP (except as either provided above or in Section
1.2(b) of this Agreement), consistently applied, as of the close of
business on the Closing Date.
"Closing Date Financial Statements" has the meaning ascribed
---------------------------------
thereto in Section 2.5(a).
"Collectible Amounts" shall have the meaning ascribed to
-------------------
such term in Section 1.3 hereof.
"Common Stock" shall have the meaning ascribed to such term
------------
in Section 4.3 hereof.
"Company Property" shall have the meaning ascribed to such
----------------
term in Section 4.12(a) hereof.
"Contract" means any contract, agreement, indenture, note,
--------
bond, loan, instrument, lease, commitment or other arrangement or
agreement.
"Contract Liabilities" shall have the meaning ascribed to
--------------------
such term in Section 1.4(a) hereof.
"DFG" shall have the meaning ascribed to such term in the
---
recitals hereto.
"DFG Common Stock" means the Common Stock, par value $.001
----------------
per share, of DFG.
"DFG Stock Purchasers" means Alberta and Xxxx XxXxxxxx.
--------------------
"Discount Receivables" shall have the meaning ascribed to
--------------------
such term in
Section 1.2 (b).
"Discount Receivables Amount" shall have the meaning
---------------------------
ascribed to such term in Section 1.2 (b).
"Dividends" means C$2,343,900 being an amount equal to the
---------
Retained Earnings of National, as determined in accordance with GAAP,
consistently applied, as of December 31, 1995 as of the close of
business on the Closing Date.
"EBITDA" shall have the meaning ascribed to such term in
------
Section 2.5 hereof.
"Eligible Acquisition" shall have the meaning ascribed to
--------------------
such term in Section 2.5 hereof.
"Employees" shall have the meaning ascribed to such term in
---------
Section 4.18 hereof.
"Employee Benefit Plans" shall have the meaning ascribed to
----------------------
such term in Section 4.16(a) hereof.
"Employment Agreement" means that certain employment
--------------------
agreement substantially in the form of Exhibit F hereto.
"Environmental Claim" means any accusation, allegation,
-------------------
notice of violation, action, claim, lien, demand, abatement or other
order or directive (conditional or otherwise) by any Governmental Body
or any other Person for personal injury (including sickness, disease
or death), tangible or intangible property damage, damage to the
environment, nuisance, pollution, contamination or other adverse
effects on the environment, or for fines, penalties or restrictions
resulting from or based upon (i) the existence, or the continuation of
the existence, of a Release (including, without limitation, sudden or
non-sudden accidental or non-accidental Releases) of, or exposure to,
any Hazardous Material, odor or audible noise in, into or onto the
environment (including, without limitation, the air, soil, surface
water or groundwater) at, in, by, from or related to any property
owned, operated or leased by National or any of the Subsidiaries or
any activities or operations thereof; (ii) the transportation,
storage, treatment or disposal of Hazardous Materials in connection
with any property owned, operated or leased by National or any of the
Subsidiaries or any operations or facilities thereof; or (iii) the
violation, or alleged violation, of any Environmental Law of or from
any Governmental Body
relating to environmental matters connected with any property owned,
operated or leased by National or any of the Subsidiaries.
"Environmental Costs and Liabilities" means any and all
-----------------------------------
losses, liabilities, obligations, damages, fines, penalties,
judgments, actions, claims, costs and expenses (including, without
limitation, fees, disbursements and expenses of legal counsel,
experts, engineers and consultants and the costs of investigation and
feasibility studies and Remedial Action) arising from or under any
Environmental Law or order or contract with any Governmental Body or
any other Person.
"Environmental Law" means any foreign, federal, state,
-----------------
provincial or local law, statute, regulation, code, ordinance, rule of
common law or other requirement in any way relating to the protection
of human health and safety or the environment as now or hereafter in
effect including, without limitation, the Canadian Environmental
Protection Act and the Environmental Assessment Act (British
Columbia), as such laws have been amended or supplemented, and the
regulations promulgated pursuant thereto, and all analogous foreign,
federal, state, provincial or local laws.
"Environmental Permits" shall have the meaning ascribed to
---------------------
such term in Section 4.20(a).
"Excise Tax Act" means the Excise Tax Act, R.S.C., 1985,
--------------
C.E-15, together with the regulations promulgated thereunder, as
amended or supplemented from time to time.
"Excluded Assets" shall have the meaning ascribed to such
---------------
term in Section 1.3 hereof.
"Excluded Liabilities" means any and all liabilities or
--------------------
obligations of National or any of its Subsidiaries of any kind, nature
and description, absolute or contingent, known or unknown, existing on
or prior to the Closing Date or thereafter coming into being or
arising by reason of any state of facts existing, or any transaction
entered into, on or prior to the Closing Date (including, without
limitation, any such liabilities arising under any Environmental Laws
and any such liabilities relating to Taxes), other than the Contract
Liabilities and Credited Liabilities referred to in Section 1.4
hereof. The definition of Excluded Liability shall include, without
limitation, (i) any liability arising in connection with any Pay Day
Loan made prior to Closing and, (ii) those liabilities disclosed on
Schedule 4.9.
"Expenses" shall have the meaning ascribed to such term in
--------
Section 1.4(b) hereof.
"Financial Statements" shall have the meaning ascribed to
--------------------
such term in Section 4.8 hereof.
"GAAP" means Canadian generally accepted accounting
----
principles as of the date hereof.
"Gent Isle" has the meaning specified in Schedule 4.4(b).
---------
"Governmental Body" means any government or governmental or
-----------------
regulatory body thereof, or political subdivision thereof, whether
federal, state, provincial, local or foreign, minister, governor or
lieutenant governor-in-council, board, tribunal or any agency,
instrumentality or authority thereof, or any court or arbitrator
(public or private).
"GST" shall refer to the Goods and Services Tax levied under
---
Part IX of the Excise Tax Act.
"Hazardous Material" means any substance, material or waste
------------------
which is regulated by Canada, or any state, provincial or local
Governmental Body including, without limitation, petroleum and its by-
products, asbestos, and any material or substance which is defined as
a "hazardous waste," "hazardous substance," "hazardous material,"
"restricted hazardous waste," "industrial waste," "solid waste,"
"contaminant," "pollutant," "toxic waste" or "toxic substance" under
any provision of Environmental Law.
"Indemnitor" shall have the meaning ascribed to such term in
----------
Section 9.4(a) hereof.
"Law" means any federal, state, provincial, local or foreign
---
law (including common law), statute, code, ordinance, rule, regulation
or other requirement.
"Legal Proceeding" means any judicial, administrative or
----------------
arbitral actions, suits, proceedings (public or private), claims or
governmental proceedings.
"Licenses" shall have the meaning ascribed to such term in
--------
Section 1.2(a) hereof.
"Lien" means any lien, pledge, mortgage, hypothec, deed of
----
trust, security interest, claim, prior claim, lease, charge, option,
right of first refusal, easement, servitude, transfer
restriction under any shareholder or similar agreement, encumbrance or
any other restriction or limitation whatsoever.
"Losses" means any and all losses, liabilities (accrued,
------
absolute, contingent or otherwise), suits, proceedings, judgments,
awards, demands, settlements, fines, assessments, damages, interest
and penalties, and costs and expenses (including without limitation
reasonable attorneys' fees and litigation expenses).
"Material Adverse Change" means any material adverse change
-----------------------
in the business, properties, results of operations, prospects or
condition (financial or otherwise) of National and the Subsidiaries
taken as a whole.
"Material Contracts" shall have the meaning ascribed to such
------------------
term in Section 4.15 hereof.
"MEI Interest" means the sum of the amount of Minority
------------
Interests for Calgary and Gent Isle, as of the close of business on
the Closing Date.
"Minimum Lease Condition" shall have the meaning ascribed to
-----------------------
such term in Section 10.15 hereof.
"Minority Equity Interests" shall have the meaning ascribed
-------------------------
to such term in Section 4.4 hereof.
"Minority Interests" means the amounts in respect to Calgary
------------------
and Gent Isle, calculated in the same manner as reported in National's
consolidated audited statement for its fiscal year ended December 31,
1995 under the heading "Investments and Minority Advances."
"National" shall have the meaning ascribed to such term in
--------
the introductory paragraph hereto.
"National Shares" shall have the meaning ascribed to such
---------------
term in the recitals hereof.
"Non-Assumable Claim" shall have the meaning ascribed to
-------------------
such term in Section 9.4(c) hereof.
"Non-Competition Agreement" shall have the meaning ascribed
-------------------------
to such term in Section 4.2 hereof.
"Non-Material Contract" means any Contract, other than Real
---------------------
Property Leases, and other than those Contracts that are or
should be Material Contracts which was entered into in the ordinary
course of business consistent with past practice in an arm's length
transaction.
"Order" means any order, injunction, judgment, decree,
-----
ruling, writ, assessment or arbitration award.
"Other Shares" shall have the meaning ascribed to such term
------------
in the recitals hereof.
"Pay Day Loans" means (i) any arrangement under the "Pay
-------------
Day Advance Service" presently operated by National (including any
schedule or amendment thereto or assignment, assumption, renewal or
novation thereof) in existence as of the Closing and any agreements
which are evidenced in whole or in part, by a promissory note and a
post-dated check made payable to National or any Subsidiary, and (ii)
any restructuring, modification or extension of any Pay Day Loan of
the type described in or any Subsidiary clause (i) hereof.
"Permits" means any approvals, authorizations, consents,
-------
Licenses, permits or certificates.
"Permitted Exceptions" means (i) statutory liens for current
--------------------
taxes, assessments or other governmental charges not yet delinquent or
the amount or validity of which is being contested in good faith by
appropriate proceedings, provided an appropriate reserve is
established therefor; (ii) mechanics', carriers', workers', repairers'
and similar Liens arising or incurred in the ordinary course of
business that are not material to the business, operations and
financial condition of the property so encumbered or National and the
Subsidiaries; (iii) zoning, entitlement and other land use and
environmental regulations by any Governmental Body, provided that such
regulations have not been violated; and (iv) such other imperfections
in title, charges, easements, restrictions and encumbrances which do
not materially detract from the value of or materially interfere with
the present use of any Company Property subject thereto or affected
thereby.
"Person" means any individual, corporation, partnership,
------
firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.
"Personal Property Lease" shall have the meaning ascribed to
-----------------------
such term in Section 4.13(a) hereof.
"Post-Closing EBITDA" shall have the meaning ascribed to
-------------------
such term in Section 2.5 hereof.
"Pre-Closing EBITDA" shall have the meaning ascribed to such
------------------
term in Section 2.5 hereof.
"Prepaids" means, without duplication, the aggregate dollar
--------
amount of (i) National's prepaid assets, (ii) Reimbursable Security
Deposits and (iii) National's corporate tax refunds (to the extend not
subject to reduction or offset) for the taxable period from January 1,
1996 through the Closing Date, all, as determined in accordance with
GAAP, consistently applied, and the terms hereof, of National as of
the close of business on the Closing Date.
"Property Contracts" shall have the meaning ascribed to such
------------------
term in Section 4.12(a) hereof.
"Purchase Price" shall have the meaning ascribed to such
--------------
term in Section 2.1 hereof.
"Purchaser" shall have the meaning ascribed to such term in
---------
the introductory paragraph hereto.
"Purchaser Documents" shall have the meaning ascribed to
-------------------
such term in Section 5.2 hereof.
"Purchaser Indemnified Parties" shall have the meaning
-----------------------------
ascribed to such term in Section 9.2(a) hereof.
"Real Property Lease" shall have the meaning ascribed to
-------------------
such term in Section 4.12(a) hereof.
"Reimbursable Security Deposits" shall have the meaning
------------------------------
ascribed to such term in Section 1.4(b) hereof.
"Release" means any release, spill, emission, leaking,
-------
pumping, pouring, dumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor
environment, or into or out of any property.
"Remedial Action" means all actions, including, without
---------------
limitation, any Capital Expenditures required, to (w) clean up,
remove, treat or in any other way address any Hazardous Material; (x)
prevent the Release or threat of Release of any Hazardous Material so
it does not endanger or threaten to endanger public health or welfare
or the indoor or outdoor environment; (y) perform pre-remedial studies
and investigations or post-remedial
monitoring and care; or (z) bring any facility owned, operated or
leased by National of any of the Subsidiaries and the operations
thereon into compliance with Environmental Laws.
"Representatives" shall have the meaning ascribed to such
---------------
term in Section 6.6 hereof.
"Securities Act" shall have the meaning ascribed to such
--------------
term in Section 4.30 hereof.
"Seller Shares" shall have the meaning ascribed to such term
-------------
in the recitals hereof.
"Shareholder" shall have the meaning ascribed to such term
-----------
in the introductory paragraph hereto.
"Shareholders Agreement" means that certain shareholders
----------------------
agreement substantially in the form of Exhibit B hereto.
"Shareholder Loans" means all loans or other advances from
-----------------
the Shareholders, Tri-S and Betsyn Xxxxx or any of their Affiliates
(other than National, any Subsidiary or any Minority Equity Interest)
to either National or any Subsidiary, including any accrued interest
thereon and any other unpaid obligations in respect thereto.
"Shareholder/National Documents" shall have the meaning
------------------------------
ascribed to such term in Section 4.2 hereof.
"Shareholder Indemnified Parties" shall have the meaning
-------------------------------
ascribed to such term in Section 9.2(d) hereof.
"Shareholder Releases" shall have the meaning ascribed to
--------------------
such term in Section 6.13 hereof.
"Shareholders' Representative" shall have the meaning
----------------------------
ascribed to such term in Section 10.13 hereof.
"Shares" shall have the meaning ascribed to such term in the
------
recitals hereto.
"Statement" shall have the meaning ascribed to such term in
---------
Section 6.15(b)(iii) hereof.
"Stores" shall have the meaning ascribed to such term in the
------
recitals hereto.
"Subsidiary" means (i)any Person of which a majority of the
----------
outstanding voting or equity securities or other voting or equity
interests are owned, directly or indirectly by National, and (ii) any
partnership of which a general partnership or other interest
representing a majority interest in profits or capital is owned
directly or indirectly by National.
"Tax Act" shall refer to the Income Tax Act, R.S.C., 1985
-------
(5th Suppl.) c. 1, together with the regulations promulgated
thereunder, as amended or supplemented from time to time, including
any proposed amendment to such legislation announced by way of press
release from time to time by the Minister of Finance of Canada or
other Minister charged with the administration of the Tax Act, which
announcement confirms that such proposed amendment, when enacted,
shall have retroactive effect to a date prior to the date of its
enactment.
"Taxes" means all taxes, charges, fees, levies, imposts,
-----
duties, and other assessments, including but not limited to any
income, alternative minimum or add-on tax, estimated, gross income,
gross receipts, sales, use, transfer, gains, transactions,
intangibles, ad valorem, value-added, franchise, registration, title,
license, capital, paid-up capital, profits, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, recording,
real property, personal property, highway use, commercial rent,
environmental, windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalties, or additions to
tax, and any interest or penalties imposed with respect to the filing,
obligation to file or failure to file any Tax Return.
"Tax Return" means any return, declaration, report, claim
----------
for refund, information return, statement, or other similar document
relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"Tri-S" shall have the meaning ascribed to such term in the
-----
introductory paragraph hereto.
"Tri-S Common Shares" has the meaning ascribed to such term
-------------------
in Section 12.3 hereof.
"Tri-S Documents" shall have the meaning ascribed to such
---------------
term in Section 12.2 hereof.
"Tri-S Financial Statements" shall have the meaning ascribed
--------------------------
to such term in Section 12.8 hereof.
"Tri-S Non-Competition Agreements" shall have the meaning
--------------------------------
ascribed to such term in Section 12.2 hereof.
"Tri-S Shareholders" shall have the meaning ascribed to such
------------------
term in the introductory paragraph hereto.
"Tri-S Shares" shall have the meaning ascribed to such term
------------
in the recitals hereof.
10.2 Payment of Sales, Use or Similar Taxes. All sales,
--------------------------------------
use, transfer, intangible, recordation, documentary stamp or similar
Taxes or charges, of any nature whatsoever, applicable to, or
resulting from, the transactions contemplated by this Agreement shall
be borne by the Shareholders and Xxx. Xxxxx.
10.3 Expenses. Except as otherwise provided in this
--------
Agreement, the Shareholders, Xxx. Xxxxx and the Purchaser shall each
bear their own expenses incurred in connection with the negotiation
and execution of this Agreement and each other agreement, document and
instrument contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby, it being agreed that
National and any of the Subsidiaries may bear any of such costs and
expenses solely out of cash that is an Excluded Asset.
10.4 Specific Performance. (a) The Shareholders and the
--------------------
Tri-S Shareholders acknowledge and agree that the breach of this
Agreement would cause irreparable damage to the Purchaser and that the
Purchaser will not have an adequate remedy at law. Therefore, the
obligations of the Shareholders and the Tri-S Shareholders under this
Agreement, including, without limitation, the Shareholders' and the
Tri-S Shareholders' obligation to sell the Shares to the Purchaser,
shall be enforceable by a decree of specific performance issued by any
court of competent jurisdiction, and appropriate injunctive relief may
be applied for and granted in connection therewith. Such remedies
shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies which any party may have under this
Agreement or otherwise.
(b) DFG acknowledges and agrees that the breach of Section
2.2(b) of this Agreement would cause irreparable damage to the
Shareholders and that the Shareholders will not have an adequate
remedy at law. Therefore, the obligations of DFG under Section 2.2(b)
of this Agreement shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and
appropriate injunctive relief may be applied for and granted in
connection therewith. Such remedies shall,
however, be cumulative and not exclusive and shall be in addition to
any other remedies which any party may have under this Agreement or
otherwise.
10.5 Further Assurances. Each of the Shareholders, the
------------------
Tri-S Shareholders and the Purchaser agrees to execute and deliver
such other documents or agreements and to take such other action as
may be reasonably necessary or desirable for the implementation of
this Agreement and the consummation of the transactions contemplated
hereby.
10.6 Submission to Jurisdiction; Consent to Service of
-------------------------------------------------
Process.
-------
(a) The parties hereto hereby irrevocably submit to the
non-exclusive jurisdiction of any federal or state court located
within the State of New York over any dispute arising out of or
relating to this Agreement or any of the transactions contemplated
hereby and each party hereby irrevocably agrees that all claims in
respect of such dispute or any suit, action proceeding related thereto
may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law,
any objection which they may now or hereafter have to the laying of
venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each of the
parties hereto agrees that a judgment in any such dispute may be
enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.
(b) Each of the parties hereto hereby consents to process
being served by any party to this Agreement in any suit, action or
proceeding by the mailing of a copy thereof in accordance with the
provisions of Section 10.10.
10.7 Entire Agreement; Amendments and Waivers
----------------------------------------
Confidentiality. This Agreement (including the schedules and exhibits
---------------
hereto) represents the entire understanding and agreement between the
parties hereto with respect to the subject matter hereof and can be
amended, supplemented or changed, and any provision hereof can be
waived, only by written instrument making specific reference to this
Agreement signed by the party against whom enforcement of any such
amendment, supplement, modification or waiver is sought. No action
taken pursuant to this Agreement, including without limitation, any
investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with
any representation, warranty, covenant or agreement contained herein.
The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any
other remedies provided by law. The parties acknowledge that they
each participated in drafting this Agreement, and there shall be no
presumption against any party on the ground that such party was
responsible for preparing this Agreement or any part thereof.
10.8 Governing Law. This Agreement shall be governed by
-------------
and construed in accordance with the laws of the State of New York
without giving effect to principles of conflicts of law.
10.9 Table of Contents and Headings. The table of contents
------------------------------
and section headings of this Agreement are for reference purposes only
and are to be given no effect in the construction or interpretation of
this Agreement.
10.10 Notices. All notices and other communications under
-------
this Agreement shall be in writing and shall be deemed given when
delivered personally or mailed by certified mail, return receipt
requested, to the parties (and shall also be transmitted by facsimile
to the Persons receiving copies thereof) at the following addresses
(or to such other address as a party may have specified by notice
given to the other party pursuant to this provision):
If to Purchaser or, after the Closing, National or Tri-S:
c/o Dollar Financial Group, Inc.
Xxxxxxxxxx Xxxxx, Xxxxx 000
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Vice President -
Corporate Development
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to any Shareholder, Xxx. Xxxxx or, prior to the Closing,
National or Tri-S:
National Money Mart Inc.
0000 Xxx Xxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx, X0X 0X0
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & XxXxxxxx
0000 00000-000 Xxxxxx
Xxxxxxxx, Xxxxxxx
Xxxxxx, X0X 0X0
Attention: Xxxxxx X.X Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Any party may by notice change the address to which notice
or other communications to it are to be delivered or mailed.
10.11 Severability. If any provision of this Agreement is
------------
invalid or unenforceable, the balance of this Agreement shall remain
in effect.
10.12 Binding Effect; Assignment. This Agreement shall be
--------------------------
binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns. Nothing in this
Agreement shall create or be deemed to create any third party
beneficiary rights in any person or entity not a party to this
Agreement except as provided below. No assignment of this Agreement
or of any rights or obligations hereunder may be made by any party
hereto without the prior written consent of the other parties hereto
and any attempted assignment without the required consents shall be
void; provided, however, that (i) the
-------- -------
Purchaser may assign this Agreement and any or all rights hereunder
(including, without limitation, the Purchaser's rights to purchase the
Seller Shares and the Tri-S Shares and the Purchaser's rights to seek
indemnification hereunder) to (x) any Affiliate of the Purchaser
(provided that the Purchaser shall remain liable for all of its
obligations under this Agreement) or (y) after the Closing, to any
purchaser or transferee of any of the stock or assets of National, any
of the Subsidiaries (ii) Xxxxxxx X. Xxxxx may assign his rights under
this Agreement to a newly formed corporation (provided that Xxxxxxx X.
Xxxxx shall remain liable for all of his obligations under this
Agreement and such newly formed corporation may not have any
liabilities or obligations other than liabilities and obligations
arising under this Agreement). Upon any such permitted assignment,
the references in this Agreement to the Purchaser shall also apply to
any such assignee unless the context otherwise requires.
10.13 Shareholders' Representative. Xxxxxxx X. Xxxxx
----------------------------
("Xxxxx") is hereby designated and authorized by each of Xxxx
XxXxxxxx, Betsyn Xxxxx and 698815 Alberta Ltd. as their representative
(the "Shareholders' Representative") to act for and represent the
Shareholders and Xxx. Xxxxx with respect to all matters arising out of
Article IX hereof and in those other matters with respect to which
this Agreement specifies that the Shareholders' Representative shall
or may act, as well as matters which require or permit notice to be
given to any of the Shareholders or Xxx. Xxxxx under this Agreement.
10.14 Western Union Bonus. The Parties recognize and agree
-------------------
that the payment of Five Hundred and Thirty Two Thousand
(C$532,000.00) Dollars (the "Western Union Bonus") received by
National from Western Union Financial Services (Canada) Inc. ("Western
Union") pursuant to that certain agreement dated January 1, 1996 is
contingent in nature and dependent upon the performance by National of
its obligations thereunder and that should such agreement be
terminated as a result of a default by National thereunder, then
National would be obliged to return to Western Union that portion of
the Western Union Bonus that is in proportion to the unexpired balance
of the term thereunder. Accordingly, the Parties agree that the
portion of the Western Union Bonus that is unearned as of the Closing
Date shall, for the purposes of the Closing Date Financial Statements
and the calculation of the Purchase Price (i) be recorded as an
Accounts Payable and (ii) the Taxes payable thereon shall not be
recorded as an Accounts Payable. For greater certainty and
notwithstanding anything to the contrary herein contained, any Taxes
payable on that portion of the Western Union Bonus that is
unearned as at the Closing Date shall be for the sole account of
National and the Shareholders shall have no liability in respect
thereto.
10.15 Counterparts. This Agreement may be executed by the
------------
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts
shall together constitute one and the same instrument. Each
counterpart may consist of a number of copies hereof each signed by
less than all, but together signed by all of the parties hereto.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES OF DFG
DFG hereby represents and warrants to the Shareholders that:
11.1 Organization and Good Standing. DFG is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws
of the State of Delaware.
11.2 Authorization of Agreement. DFG has all requisite
--------------------------
power and authority to execute and deliver this Agreement, and each
other agreement, document, instrument or certificate contemplated by
this Agreement to be executed by it in connection with
the consummation of the transactions contemplated by this Agreement
(together with this Agreement, the "DFG Documents"), and to consummate
the transactions contemplated hereby and thereby. This Agreement has
been, and each of the Documents will be at or prior to the Closing,
duly and validly executed and delivered by DFG and (assuming the due
authorization, execution and delivery by each Shareholder, Tri-S
Shareholder and National if a party thereto) this Agreement
constitutes, and each of the DFG Documents when so executed and
delivered will constitute, the legal, valid and binding obligations of
DFG, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity).
11.3 Capitalization.
--------------
(a) The authorized DFG Common Stock consists solely of
50,000 shares of common stock, $0.001 par value per share. There are
30,054.51 shares of DFG Common Stock issued and outstanding.
(b) Except as set forth on Schedule 11.3, there is no
existing option, warrant, call, right, commitment or other agreement
of any character to which DFG is a party requiring (or which may in
the future require), and there are no securities of DFG outstanding
which upon conversion or exchange would (or may in the future)
require, the issuance, sale or transfer of any shares of capital stock
or other securities of DFG or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase
shares of capital stock or other securities of DFG. Except as set
forth on Schedule 11.3, DFG is not a party to any voting trust or
other voting agreement with respect to any of the shares of DFG Common
Stock or to any agreement relating to the issuance, sale, redemption,
transfer or other disposition of the DFG Common Stock.
11.4 Corporate Records.
-----------------
(a) DFG has delivered to the Shareholders true, correct
and complete copies of the certificate of incorporation (certified by
the Secretary of State or and by-laws (certified by the secretary,
assistant secretary or other appropriate officer) of DFG.
(b) The minute books of DFG contain complete and accurate
records of all meetings and accurately reflect all other corporate
action of the stockholders and boards of directors (including
committees thereof) of DFG. The stock certificate books and stock
transfer ledgers of DFG are true, correct and complete. All stock
transfer taxes levied or payable with respect to all transfers of
shares of DFG prior to the date hereof have been paid and appropriate
transfer tax stamps affixed.
11.5 Conflicts; Consents of Third Parties. Except as set
------------------------------------
forth on Schedule 11.5, (a) none of the execution and delivery by DFG
of this Agreement and the Shareholder/National Documents, the consum-
mation by DFG of the transactions contemplated hereby and thereby, or
compliance by with any of the provisions hereof or thereof will (i)
conflict with, or result in the breach of, any provision of the
certificate of incorporation, by-laws, or other organizational
documents of DFG; (ii) conflict
with, violate, result in the breach or termination of, constitute a
default under, or give rise to any right of acceleration under, any
note, bond, mortgage, deed of trust, indenture, license, lease,
agreement or other instrument or obligation to which DFG is a party or
by which it or any of DFG assets is bound; (iii) violate any statute,
rule, regulation, judgment or Order of any Governmental Body by which
DFG is bound; or (iv) result in the creation of any Lien upon the
shares of DFG Common Stock being paid pursuant to Article II hereof or
the properties or assets of DFG.
(b) No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to,
any Person or Governmental Body is required on the part of DFG in
connection with the execution and delivery of this Agreement or the
Shareholder/National Documents, or the compliance by DFG, with any of
the provisions hereof or thereof.
11.6 Financial Statements. DFG has delivered to the
--------------------
Shareholders copies of (i) the audited consolidated balance sheets of
DFG and its subsidiaries as at June 30, 1996 and the related audited
consolidated statements of income and of cash flows of DFG and its
subsidiaries for the years then ended and (ii) the unaudited
consolidated balance sheet of DFG and its subsidiaries as at September
30, 1996 and the related consolidated statements of income and cash
flows of DFG and its subsidiaries for the period then ended (such
audited and unaudited statements, including the related notes and
schedules thereto, are referred to herein as the "DFG Financial
Statements"). Each of the DFG Financial Statements is complete and
correct in all material respects, has been prepared in accordance with
United States generally accepted accounting principals (subject to
normal year-end adjustments in the case of the unaudited statements)
and in conformity with the practices consistently applied by DFG
without modification of the accounting principles used in the
preparation thereof, and presents fairly in accordance with United
States generally accepted accounting principles the consolidated
financial position, results of operations and cash flows of DFG and
its subsidiaries as at the dates and for the periods indicated.
For the purposes of this Article (xi), the audited xxxxxxx-
dated balance sheet of DFG and its subsidiaries as at June 30, 1996 is
collectively referred to as DFG's "Balance Sheet" and December 31,
1995 is referred to as the "Balance Sheet Date".
11.7 No Undisclosed Liabilities. There are no obligations
--------------------------
of DFG as of the Balance Sheet Date which were
required to be disclosed on the Balance Sheet (or the accompanying
notes) that were not disclosed.
11.8 Absence of Certain Developments. Except as expressly
-------------------------------
required by this Agreement or as set forth on Schedule 11.8, since the
Balance Sheet Date:
(a) there has not been any material adverse change in DFG
nor has there occurred any event which is reasonably likely to result
in a material adverse change in DFG;
(b) there has not been any change by DFG in accounting or
Tax reporting principles, methods or policies;
(c) DFG has not entered into any transaction or Contract
or conducted its business other than in the ordinary course consistent
with past practice;
(d) DFG has not failed to promptly pay and discharge
current liabilities except where disputed in good faith by appropriate
proceedings;
(e) DFG has not made any loans, advances or capital
contributions to, or investments in, any Person or paid any fees or
expenses to any shareholder or any Affiliate of any shareholder;
(f) DFG has not mortgaged, pledged or subjected to any
Lien any of its assets, or acquired any assets or sold, assigned,
transferred, conveyed, leased or otherwise disposed of any assets,
except for assets acquired or sold, assigned, transferred, conveyed,
leased or otherwise disposed of in the ordinary course of business
consistent with past practice.
11.9 Labor. There are no (i) strikes, work stoppages,
-----
slowdowns, lockouts or arbitrations or (ii) material grievances or
other labor disputes pending or, to the best knowledge of DFG,
threatened against or involving DFG. There are no unfair labor
practice charges, grievances or complaints pending or, to the best
knowledge of DFG, threatened by or on behalf of any employee or group
of employees of DFG.
11.10 Litigation. Except as set forth in Schedule 11.10,
----------
there is no suit, action, proceeding, investigation, claim or order
pending or, to the knowledge of DFG, overtly threatened against DFG
(or to the knowledge of DFG, pending or threatened, against any of the
officers, directors or key employees of DFG with respect to their
business activities on behalf of DFG), or
to which any of the DFG is otherwise a party, before any court, or
before any governmental department, commission, board, agency, or
instrumentality that are reasonably likely to prohibit or restrain the
ability of DFG to enter into this Agreement or to consummate the
transactions contemplated hereby; nor, to the knowledge of DFG, is
there any reasonable basis for any such action, proceeding, or
investigation.
11.11 Compliance with Laws. DFG possesses all Licenses of
--------------------
and from all Governmental Bodies, and has made all filings with all
Governmental Bodies, necessary to own or lease its respective
properties and assets and to conduct the business(es) in which it is
engaged. Except as set forth on Schedule 11.11, no proceeding has
been threatened or commenced which seeks to, or could reasonably be
anticipated to, cause the suspension, modification, revocation or
withdrawal of any License. DFG is currently, and at all times has
been, in material compliance with all Laws applicable to it and/or the
businesses in which it is engaged including, without limitation, all
applicable credit, banking and consumer protection Laws. Laws
regulating check cashing, small loans or other loans, interest and
usury and debt collection, plain language Laws and Laws proscribing
unfair and/or deceptive acts or practices) and franchise disclosure
Laws. DFG has not offered, proposed, promised or made any illegal
payment to officers, employees or representatives of any Governmental
Body, or engaged in any illegal reciprocal practices or made any
illegal payment or given any other illegal consideration to any third
party.
11.12 No Bankruptcy. There has not been filed any petition
-------------
or application, or any proceeding commenced which has not been
discharged, by or against DFG with respect to any assets of any of
them under any law, domestic or foreign, relating to bankruptcy,
reorganization, fraudulent transfer, compromise, arrangements,
insolvency, readjustment of debt or creditors' rights, and no
assignment has been made by any of them for the benefit of their
respective creditors.
11.13 Taxes.
-----
(a) All Tax Returns required to be filed by or with
respect to DFG or its assets have been properly prepared and duly and
timely filed with the appropriate taxing authorities in all
jurisdictions in which such Tax Returns are required to be filed, and
all such Tax Returns are true, complete and correct in all material
respects. DFG has duly and timely paid all Taxes that are due, or
claimed or asserted by any taxing authority to be due, from or with
respect to it for periods covered by such Tax
Returns. With respect to any period for which Tax Returns have not
yet been filed, or for which Taxes are not due or owing, DFG has made
sufficient current accruals for such Taxes in its financial statements
and Taxes for such period have or shall arise solely in the usual and
ordinary course of business. DFG has made all required estimated Tax
payments sufficient to avoid any underpayment penalties.
(b) DFG has duly and timely withheld from employee
salaries, wages and other compensation and has paid over to the
appropriate taxing authorities all amounts required to be so withheld
and paid over for all periods under all applicable laws.
(c) There are no liens with respect to Taxes upon any of
the assets of DFG.
(d) Neither DFG nor any of its directors, officers or
employees are aware, without inquiry, of any contingent Tax
liabilities or any grounds which would prompt a re-assessment,
including aggressive treatment of income and expenses in filing
earlier Tax returns.
(e) There are no actions, suits, proceedings,
investigations or claims now pending against DFG in respect to Taxes.
11.14 No Misrepresentation. No representation or warranty
--------------------
of DFG contained in this Agreement or in any schedule hereto or in any
certificate or other instrument furnished by DFG to the Shareholders
pursuant to the terms hereof, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES OF THE TRI-S SHAREHOLDERS
Each of the Tri-S Shareholders hereby jointly and severally
represents and warrants to Purchaser as follows:
12.1 Organization and Good Standing. Tri-S is a
------------------------------
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization as set forth
above and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
conducted. Tri-S was formed on November 25, 1992
as 000000 Xxxxxxx Ltd., which name was subsequently changed on June
20, 1994. Tri-S is duly qualified or authorized to do business and
is in good standing under the laws of each jurisdiction in which it
owns or leases real or immovable property and each other jurisdiction
in which the conduct of its business or the ownership of its
properties requires such qualification or authorization.
12.2 Authorization of Agreement. Each Tri-S Shareholder
--------------------------
has all requisite power, authority and legal capacity to execute and
deliver this Agreement, a Non-Competition Agreement substantially in
the form of Exhibit A hereto (the "Tri-S Non-Competition Agreement")
and each other agreement, document, instrument or certificate con-
templated by this Agreement to be executed by such Person in
connection with the consummation of the transactions contemplated by
this Agreement (together with this Agreement and the Tri-S Non-
Competition Agreement, the "Tri-S Documents"), and to consummate the
transactions contemplated hereby and thereby. This Agreement has
been, and each of the Tri-S Documents will be at or prior to the
Closing, duly and validly executed and delivered by each Tri-S
Shareholder and (assuming the due authorization, execution and
delivery by Purchaser if a party thereto) this Agreement constitutes,
and each of the Tri-S Documents when so executed and delivered will
constitute, the legal, valid and binding obligations of each Tri-S
Shareholder enforceable against such Person in accordance with their
respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
12.3 Capitalization.
--------------
(a) The authorized capital stock of Tri-S consists solely
of an unlimited number of shares of common stock, without par value
(the "Tri-S Common Shares"). There are 100 shares of Tri-S Common
Shares issued and outstanding. The Tri-S Shares constitute all of the
issued and outstanding shares of Tri-S Common Shares and were duly
authorized for issuance and are validly issued, fully paid and non-
assessable and free of preemptive rights.
(b) There is no existing option, warrant, call, right,
commitment or other agreement of any character to which any
shareholder of Tri-S or Tri-S is a party requiring (or which
may in the future require), and there are no securities of Tri-S
outstanding which upon conversion or exchange would (or may in the
future) require, the issuance, sale or transfer of any shares of
capital stock or other securities of Tri-S or other securities
convertible into, exchangeable for or evidencing the right to
subscribe for or purchase shares of capital stock or other securities
of Tri-S. None of the shareholders of Tri-S or Tri-S is a party to
any voting trust or other voting agreement with respect to any of the
shares of Tri-S Common Shares or to any agreement relating to the
issuance, sale, redemption, transfer or other disposition of the
capital shares of Tri-S.
12.4 Absence of Activity. Tri-S has never (i) owned or
-------------------
acquired, or agreed to acquire, any assets or property other than the
Other Shares, (ii) incurred or became subject to, or agreed to incur
or become subject to, any obligations or liabilities (whether
absolute, contingent or otherwise, known or unknown, and whether due
or to become due), (iii) conducted any business whatsoever, or (iv)
taken any corporate action of any nature whatsoever, including,
without limitation, entering into any agreement or arrangement,
amending its articles or certificate of incorporation or amalgamation
or other organizational documents, issuing any of its capital shares
or other securities (including any options, warrants or other rights
to receive securities), other than in connection with Tri-S's initial
organization or the authorization, execution and delivery of this
Agreement and the transactions contemplated hereby.
12.5 Corporate Records.
-----------------
(a) The Tri-S Shareholders have delivered to the Purchaser
true, correct and complete copies of the certificate of incorporation
(certified by the Registrar of Corporations or other appropriate
official of the applicable jurisdiction of organization) and articles
(certified by the secretary, assistant secretary or other appropriate
officer) or comparable organizational documents of Tri-S.
(b) The minute books of Tri-S have been previously made
available to the Purchaser and contain complete and accurate records
of all meetings and accurately reflect all other corporate action of
the stockholders and boards of directors (including committees
thereof) of Tri-S. The stock certificate books and stock transfer
ledgers of Tri-S have been previously made available to the Purchaser
and are true, correct and complete.
12.6 Conflicts; Consents of Third Parties. Except as set
------------------------------------
forth on Schedule 12.6, (a) none of the execution and delivery by any
Tri-S Shareholder of this Agreement and the Tri-S Documents, the
consummation by each Tri-S Shareholder of the transactions
contemplated hereby and thereby, or compliance by either Tri-S
Shareholder with any of the provisions hereof or thereof will (i)
conflict with, or result in the breach of, any provision of the
certificate of incorporation, by-laws, shareholder agreement or other
organizational documents of any Tri-S Shareholder (or any of the
subsidiaries of Tri-S); (ii) conflict with, violate, result in the
breach or termination of, constitute a default under, or give rise to
any right of acceleration under, any note, bond, mortgage, deed of
trust, indenture, license, lease, agreement or other instrument or
obligation to which any Tri-S Shareholder (or any subsidiary of Tri-S)
is a party or by which any of them or any of their respective proper-
ties or assets is bound; (iii) violate any statute, rule, regulation,
judgment or Order of any Governmental Body by which any Tri-S
Shareholder (or any subsidiary of Tri-S) is bound; or (iv) result in
the creation of any Lien upon any of the Shares or the properties or
assets of National or any Subsidiary.
(b) No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to,
any Person or Governmental Body is required on the part of any Tri-S
Shareholder in connection with the execution and delivery of this
Agreement or the Tri-S Documents, or the compliance by each Tri-S
Shareholder, as the case may be, with any of the provisions hereof or
thereof.
12.7 Ownership and Transfer of Shares. Each Tri-S
--------------------------------
Shareholder is the record and beneficial owner of the Shares indicated
as being owned by it on Schedule 4.7, free and clear of any and all
Liens. Each Tri-S Shareholder has the power and authority to sell,
transfer, assign and deliver the Shares being transferred, assigned
and delivered by it pursuant to this Agreement as provided in this
Agreement, and such delivery will convey to the Purchaser good and
marketable title to such Shares, free and clear of any and all Liens.
Immediately after the Closing, Purchaser will own, directly or (in the
case of the Other Shares) indirectly through Tri-S, all the equity
interests in each of National and Tri-S.
12.8 Financial Statements. The Tri-S Shareholders have
--------------------
delivered to the Purchaser copies of (i) the unaudited balance sheets
of Tri-S as at December 31, 1993, 1994 and 1995 and the related
unaudited statements of income and of cash flows
of Tri-S for the years then ended and (ii) the unaudited balance sheet
of Tri-S as at September 30, 1996 and the related statements of income
and cash flows of Tri-S for the period then ended (such unaudited
statements, including the related notes and schedules thereto, are
referred to herein as the "Tri-S Financial Statements"). Each of the
Tri-S Financial Statements is complete and correct in all material
respects, has been prepared in accordance with GAAP (subject to normal
year-end adjustments in the case of the unaudited statements) and in
conformity with the practices consistently applied by Tri-S without
modification of the accounting principles used in the preparation
thereof, and presents fairly in accordance with GAAP the consolidated
financial position, results of operations and cash flows of Tri-S as
at the dates and for the periods indicated.
For the purposes of this Article XII, the audited balance
sheet of Tri-S as at December 31, 1995 is collectively referred to as
Tri-S' "Balance Sheet" and December 31, 1995 is referred to as the
"Balance Sheet Date".
12.9 Taxes.
-----
(a) All Tax Returns required to be filed by or with
respect to Tri-S or its respective assets have been properly prepared
and duly and timely filed with the appropriate taxing authorities in
all jurisdictions in which such Tax Returns are required to be filed,
and all such Tax Returns are true, complete and correct in all
material respects. Tri-S has duly and timely paid or has had duly and
timely paid on its behalf all Taxes that are due, or claimed or
asserted by any taxing authority to be due, from or with respect to it
for periods covered by such Tax Returns. With respect to any period
for which Tax Returns have not yet been filed, or for which Taxes are
not due or owing, Tri-S has made or has caused to be made sufficient
current accruals for such Taxes in its financial statements and Taxes
for such period have or shall arise solely in the usual and ordinary
course of business. Tri-S has made or has caused to be made all
required estimated Tax payments sufficient to avoid any underpayment
penalties;
(b) No waivers of statutes of limitation or other
agreements or arrangements providing for an extension of time have
been given or requested with respect to Tri-S in connection with any
Tax Returns covering Tri-S with respect to any Taxes payable by it and
no power of attorney with respect to any Tax matter is currently in
force. The last period for which Taxes were assessed with respect to
the Federal Income Tax Returns of Tri-S was December 31, 1995. The
statutory period for the
assessment of Taxes with respect to the federal income Tax Returns of
Tri-S for all prior periods has expired. Taxes have never been
assessed with respect to the provincial, local, and foreign Tax
Returns of Tri-S. No issue has been raised by any taxing authority in
any audit or examination of Tri-S, which, by application of the same
or similar principles, could reasonably be expected to result in a
deficiency for any subsequent period (including periods subsequent to
the Closing Date). There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitation applicable
to any claim for, or the period for the collection or assessment of,
Taxes due from or with respect to Tri-S for any taxable period;
(c) The Tri-S Shareholders have delivered or made
available to the Purchaser true and complete copies of each of (i) any
audit reports issued by any taxing authority within the last three
years relating to the federal, provincial, local or foreign Taxes due
from or with respect to Tri-S and (ii) all of the federal, provincial
local and foreign Tax Returns, for each of the last three years filed
by Tri-S;
(d) All deficiencies asserted or assessments made as a
result of any examinations by the Revenue Canada or any other taxing
authority of the Tax Returns of or covering or including Tri-S have
been fully paid, and there are no other audits or investigations by
any taxing authority in progress, nor has Tri-S received any notice
from any taxing authority that it intends to conduct such an audit or
investigation;
(e) Tri-S has paid no Taxes, and has filed a Federal Tax
Return in respect of the last two completed fiscal years. No claim
has been made by a taxing authority in a jurisdiction where Tri-S does
not file Tax Returns such that it is or may be subject to taxation by
that jurisdiction;
(f) There are no liens with respect to Taxes upon any of
the assets of Tri-S;
(g) There are no actions, suits, proceedings,
investigations or claims now threatened or pending against Tri-S in
respect of Taxes nor are there any matters under discussion with any
governmental authority with respect to Taxes asserted by any such
authority;
(h) Tri-S has no inventories;
(i) Tri-S has no depreciable assets;
(j) The paid-up capital of Tri-S for income tax purposes
equals their respective paid up capital under corporate law;
(k) Except as set forth on Schedule 12.9, Tri-S has not,
within the last four completed fiscal years, made any election under
Section 85 of the Tax Act with respect to the acquisition or
disposition of any property;
(l) Tri-S has not, within the last four completed fiscal
years, made any election under Sub-section 83(2) of the Tax Act with
respect to payment out of a capital dividend account;
(m) Tri-S has not, within the last four completed fiscal
years, acquired or had the use of any property from a person with whom
it was not dealing at arm's length;
(n) Tri-S has not disposed of anything to a person with
whom it was not dealing at arm's length for proceeds less than the
fair market value thereof;
(o) Tri-S has not, since the Balance Sheet Date,
discontinued carrying on any business in respect of which any non-
capital losses were incurred;
(p) Tri-S has made all elections required to be made under
the Tax Act in connection with any distributions and all such
elections were true and correct and in prescribed form and were made
within the prescribed time periods;
(q) Since its date of incorporation, Tri-S has been a
"Canadian-controlled private corporation" within the meaning of the
Tax Act;
(r) Tri-S is not, nor has previously been at any time,
associated with any other Canadian-controlled private corporations
(within the meaning of the Tax Act), and Tri-S has not filed with the
Minister of National Revenue any agreement or form under Section
125(3) of the Tax Act and, except as disclosed on Schedule 12._ or
Schedule 12._, Tri-S is not carrying on and has never carried on
business as a member of any partnership;
(s) None of Tri-S nor its respective directors, officers
or employees are aware without inquiry of any contingent Tax
liabilities or any grounds which would prompt a re-assessment,
including aggressive treatment of income and expenses in filing
earlier Tax returns;
(t) Control of Tri-S and the Subsidiaries has not been
acquired by a person or persons since its date of incorporation (for
purposes of this section, "control" is to be given the meaning found
in Sections 186, 251 and 256 of the Tax Act);
(u) To the Tri-S Shareholders' knowledge there are no
amounts outstanding and unpaid for which Tri-S has previously claimed
a deduction under the Tax Act;
(v) To the Tri-S Shareholders' knowledge, there are no
circumstances existing which could result in the application to Tri-S
of either Section 78 or Section 80, 80.01, 80.02, 80.3 or 80.04 of the
Tax Act;
(w) Tri-S has not claimed and will not claim any reserve
under any one or more of subparagraph 40(1)(a)(iii) or subparagraphs
20(1)(m) or 20(1)(n) of the Tax Act if any such amount could be
included in their income for a period ending after Closing;
(x) The financial statements and schedules attached to the
corporate income tax returns as filed by Tri-S for each of its
taxation years reflect and disclose all transactions to which each of
them was or is a party as required by the Tax Act and the regulations
made thereunder or other applicable revenue laws and all of the
transactions to which Tri-S was or is a party are reflected or
disclosed in these financial statements and schedules and these
statements and schedules have been duly and accurately completed as
required by these acts and regulations;
(y) Tri-S has not received a dividend out of tax paid
undistributed surplus or 1971 capital surplus on hand dividends within
the meaning of the Tax Act with respect to any assets it currently
holds;
(z) Tri-S has no net capital loss as of the Balance Sheet
Date and no transactions since that date will result in any net
capital loss;
(aa) Tri-S is not required to be registered under
subdivision (d) of Division V of Part IX of the Excise Tax Act with
respect to the GST;
(ab) Tri-S does not carry on business in any jurisdiction
and has not owed any Taxes imposed by the Retail Sales Tax (Ontario)
or the applicable legislation of any other province of Canada on the
acquisition of its tangible personal
property and none of its tangible personal property or moveable
property has been transferred in a transaction contemplated under the
provisions of Section 20.7 of the Retail Sales Tax Act (Quebec) and
any regulations made thereunder or Section 18 of Regulation 904 to the
Retail Sales Tax Act (Ontario), or any predecessor thereof or the
analogous provisions of the sales tax legislation of any other
province;
(ac) Tri-S has not made or been a party to any election
under Sections 150(1), 156(1), 227(1) or 273(1) of the Excise Tax Act;
(ad) Dividends or other Distributions - Tri-S has not paid
--------------------------------
any dividends or deemed dividends which are subject to tax under Part
VI.1 of the Act;
(ae) Tri-S Shares Not Part of Distribution - The Tri-S
-------------------------------------
Shares were not acquired by Xxx. Xxxxx as part of a distribution
(within the meaning of Subsection 55(1) of the Act) made in the course
of a reorganization in which a dividend was received to which
Subsection 55(2) would, but for paragraph 55(3)(b) of the Act apply;
(af) Other Shares Not Part of Distribution - The Other
-------------------------------------
Shares were not acquired by Tri-S as part of a distribution (within
---
the meaning of Subsection 55(1) of the Act) made in the course of a
reorganization in which a dividend was received to which Subsection
55(2) would, but for paragraph 55(3)(b) of the Act apply; and
(ag) The amount of the Dividend payable by National to Tri-
S does not exceed Tri-S' share of the income earned or realized by
National since the later of 1971 and the date that Tri-S first
acquired its stock in National and before the transaction or event or
the commencement of the series of transactions or events leading to
the transactions contemplated by the Agreement, the whole within the
meaning of Subsection 55(2) of the Act.
12.10 Litigation. There is no suit, action, proceeding,
----------
investigation, claim or order pending or, to the knowledge of any
Tri-S Shareholder, overtly threatened against Tri-S (or to the
knowledge of Tri-S, pending or threatened, against any of the officers
or directors of Tri-S with respect to their business activities on
behalf of Tri-S), or to which any of the Tri-S Shareholders is
otherwise a party, before any court, or before any governmental
department, commission, board, agency, or instrumentality; nor, to the
knowledge of any Tri-S Shareholder,
is there any reasonable basis for any such action, proceeding, or
investigation. Tri-S is not subject to any judgment, Order or decree
of any court or Governmental Body and Tri-S is not engaged in any
legal action to recover monies due it or for damages sustained by it.
12.11 Compliance with Laws. Tri-S is currently, and at all
--------------------
times has been, in material compliance with all Laws applicable to
Tri-S and/or the businesses in which it has been engaged.
12.12 Related Party Transactions. Except as set forth on
--------------------------
Schedule 12.12, none of the Tri-S Shareholders or any of its
Affiliates has borrowed any monies from or has outstanding any
indebtedness or other similar obligations to National or any of its
Subsidiaries. Except as set forth in Schedule 12.12, none of the Tri-S
Shareholders or any Affiliate or any shareholder, officer, director or
employee of any of them (i) owns any direct or indirect interest of
any kind in, or controls or is a director, officer, employee or part-
ner of, or consultant to, or lender to or borrower from or has the
right to participate in the profits of, any Person which is (A) a com-
petitor, supplier, customer, landlord, tenant, creditor or debtor of
National or any of its Subsidiaries, (B) engaged in a business related
to the business of National or any of its Subsidiaries, or (C) a par-
ticipant in any transaction to which National or any of its
Subsidiaries is a party or (ii) is a party to any Contract or
transaction with National or any of its Subsidiaries.
12.13 Financial Advisors. No Person has acted, directly or
------------------
indirectly, as a broker, finder or financial advisor for any of the
Tri-S Shareholders in connection with the transactions contemplated by
this Agreement and no Person is entitled to any fee or commission or
like payment in respect thereof except as set forth on Schedule 4.26.
12.14 No Bankruptcy. There has not been filed any petition
-------------
or application, or any proceeding commenced which has not been
discharged, by or against either of the Tri-S Shareholders with
respect to any assets of any of them under any law, domestic or
foreign, relating to bankruptcy, reorganization, fraudulent transfer,
compromise, arrangements, insolvency, readjustment of debt or
creditors' rights, and no assignment has been made by any of them for
the benefit of their respective creditors.
12.15 No Misrepresentation. No representation or warranty
--------------------
of any Tri-S Shareholder contained in this Agreement or
in any schedule hereto or in any certificate or other instrument
furnished by either Tri-S Shareholder to the Purchaser pursuant to the
terms hereof, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first written above.
DOLLAR FINANCIAL CANADA LTD.
(formerly known as 705532 ALBERTA LTD.)
By: /s/ XXXXXX X. XXXXXXXX
-------------------------------------
Name: XXXXXX X. XXXXXXXX
Title: SECRETARY AND TREASURER
NATIONAL MONEY MART INC.
By: /s/ XXXXXXX X. XXXXX
-------------------------------------
Name: XXXXXXX X. XXXXX
Title: PRESIDENT
698815 ALBERTA LTD.
By: /s/ XXXXXXX X. XXXXX
-------------------------------------
Name: XXXXXXX X. XXXXX
Title: PRESIDENT
/s/ XXXXXXX X. XXXXX
----------------------------------------
XXXXXXX X. XXXXX
/s/ XXXX XXXXXXXX
----------------------------------------
XXXX XXXXXXXX
TRI-S INVESTMENTS LTD.
By: /s/ BETSYN XXXXX
-------------------------------------
Name: BETSYN XXXXX
Title: PRESIDENT
/s/ BETSYN XXXXX
----------------------------------------
BETSYN XXXXX
DFG HOLDINGS, INC.
By: /s/ XXXXXXX X. XXXXX
-------------------------------------
Name: XXXXXXX X. XXXXX
Title: CHAIRMAN OF THE BOARD,
PRESIDENT AND CEO
DFG HOLDINGS, INC. HEREBY GUARANTIES PERFORMANCE BY THE
PURCHASER OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
DFG HOLDINGS, INC.
By: /s/ XXXXXXX X. XXXXX
-------------------------------------
Name: XXXXXXX X. XXXXX
Title: CHAIRMAN OF THE BOARD,
PRESIDENT AND CEO
