EX-2.5
6
w26544exv2w5.htm
PURCHASE AGREEMENT, DATED AS OF OCTOBER 31, 2006
EXHIBIT 2.5
THIS
PURCHASE AGREEMENT made as of October 31, 2006 (the “Agreement”),
BY AND AMONG
National Money Mart Company, a Nova Scotia unlimited company (the
“Purchaser”)
OF THE FIRST PART
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931669
Ontario Limited (“931-Ont”), 3081219 Nova Scotia Ltd.
(“219-NS”), 3085725 Nova Scotia Limited (“725-NS”), 603000 N.B. Inc.
(“603-NB”), 602268 N.B. Inc. (“6028-NB”), 11242 Newfoundland Limited
(“112-NF”), 722906
Ontario Limited (“722-Ont”), 2203850 Nova Scotia
Limited (“220-NS”), 3085726 Nova Scotia Limited (“726-NS”), 511742
N.B. Inc. (“511-NB”), 602269 N.B. Inc. (“6029-NB”), 10768
Newfoundland Limited (“107-NF”) (collectively the “Vendors”)
OF THE SECOND PART
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R Kruze Holdings Ltd., a company incorporated under the laws of the
Province of Alberta (“Kruze”)
OF THE THIRD PART
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1016725
Ontario Ltd., a company incorporated under the laws of the
Province of
Ontario (“101G”)
OF THE FOURTH PART
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101090510 Saskatchewan Ltd., a company incorporated under the laws
of the Province of Saskatchewan (“Sask”)
OF THE FIFTH PART
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▇▇▇ ▇▇▇▇▇, of the City of ▇▇▇▇▇▇, in the Province of British
Columbia (“▇▇▇”)
OF THE SIXTH PART
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▇▇▇▇▇ ▇▇▇▇▇, of the City of ▇▇▇▇▇▇, in the Province of British
Columbia (“Amber”)
OF THE SEVENTH PART
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▇▇▇▇▇ ▇▇▇▇▇▇▇, of the City of Saskatoon, in the Province of
Saskatchewan (“▇▇▇▇▇”)
OF THE EIGHTH PART
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, of the City of Saskatoon, in the Province of
Saskatchewan (“▇▇▇▇▇▇▇▇”)
OF THE NINETH PART
(Kruze, 101G, Sask, Ron, Amber, ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ hereinafter
called the “Vendor Group”)
WITNESSETH:
WHEREAS, the Vendors as of the date hereof own and operate
seven (7) cheque cashing and financial service stores at various locations in Nova Scotia, New
Brunswick and Newfoundland and Labrador (“Maritime Provinces”) and
Ontario as set out in Schedule
2.2(a);
WHEREAS, the Purchaser desires to purchase from the Vendors and the Vendors desire to sell to
Purchaser, all of the Assets for the Purchase Price and upon the terms and conditions hereinafter
set forth;
WHEREAS, the Purchaser desires that, effective upon the Closing Date, the Vendors and the
Vendor Group will agree not to compete with Purchaser or any of its Affiliates pursuant to a
separate Non-Competition Agreement to be entered into on the Closing Date in substantially the form
set forth on Exhibit A hereto;
WHEREAS, it is a condition of the Purchaser entering into this transaction that the Vendors
and the Vendor Group, provide the indemnities set out in Article X;
WHEREAS, certain terms used in this Agreement are defined in Section 1.1; and
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NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements
hereinafter contained, the parties hereby agree as follows:
ARTICLE I — INTERPRETATION
1.1 Defined Terms
For purposes of this Agreement, the following terms shall have the meanings specified in this
Section 1.1:
| | (a) | | “Acquisition Transaction” shall have the meaning set forth in
Section 7.5 hereof. |
| |
| | (a.1) | | “Adjustment Agreement” shall mean the agreeemnt attached as
Exhibit “E”. |
| |
| | (b) | | “Affiliate” means, with respect to any Person, any relative or
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. |
| |
| | (c) | | “Agreement” means this agreement and all schedules, exhibits
and attachments hereto. |
| |
| | (d) | | “Assets” shall have the meaning ascribed to such term in
Section 2.2 hereof. |
| |
| | (e) | | “Assumed Contracts” shall have the meaning ascribed to such
term in Section 5.14 hereof. |
| |
| | (f) | | “Audited Statements” shall have the meaning ascribed to such
term in Section 5.7(a) hereof. |
| |
| | (g) | | “Balance Sheet” shall have the meaning ascribed to such term in
Section 5.7(d). |
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| | (h) | | “Balance Sheet Date” shall mean June 30, 2006. |
| |
| | (i) | | “Business” shall have the meaning ascribed to such term in
Section 2.2(a) hereof. |
| |
| | (j) | | “Business Day” means any day of the year on which national
banking institutions in Toronto are open to the public for conducting business
and are not required or authorized to close. |
| |
| | (k) | | “Canadian Currency” and the “C$” sign each means the
lawful money of Canada. |
| |
| | (l) | | “Cash on Hand” means the sum of all cash (Canadian Currency and
foreign currency) physically located in any of the Stores as of the opening of
business on the Closing Date and all cash withdrawn from the Vendors’ bank
accounts at the close of business on the day immediately preceding the Closing
Date and at the opening of business on the Closing Date to be delivered by the
Vendors’ armoured car service or armoured car services to the Stores on the
Closing Date. |
| |
| | (l.1) | | “Claim” means any written or oral demand, claim, complaint,
suit, action, cause of action, investigation, proceeding or notice of any
Person alleging actual or potential liability for any Loss. |
| |
| | (m) | | “Closing” shall have the meaning ascribed to such term in
Section 4.1 hereof. |
| |
| | (n) | | “Closing Date” shall have the meaning ascribed to such term in
Section 4.1 hereof. |
| |
| | (o) | | “Closing Date Accounts Receivable” means the aggregate dollar
amount of accounts receivable of the Vendors related to the Business, including
without restriction defaulted loans, all cheques returned unpaid, Loan
Portfolio, accounts receivable, notes receivable and similar items in the
process of collection owned or otherwise held by the Vendors as of the
Effective Time. Closing Date Accounts Receivable does not include post dated
cheques not related to a |
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| | | | payday loan transaction or cheques deposited prior to the Closing Date
that are returned on or after the Closing Date. |
| |
| | (p) | | “Consent Documents” shall have the meaning ascribed to such
term in Section 9.3(a) hereof. |
| |
| | (q) | | “Contracts” shall have the meaning ascribed to such term in
Section 2.2(e) hereof. |
| |
| | (r) | | “Contract Liabilities” shall have the meaning ascribed to such
term in Section 2.4 hereof. |
| |
| | (s) | | “Current Rent” means minimum rent and additional rent
(including common area costs) payable in respect of the Real Property Leases
for the month in which the Closing Date occurs. |
| |
| | (t) | | “Effective Time” shall have the meaning ascribed to such term
in Section 4.1 hereof. |
| |
| | (u) | | “Employee Benefit Plans” shall have the meaning ascribed to
such term in Section 5.15(a) hereof. |
| |
| | (v) | | “Encumbrances” means any encumbrance or title defect of
whatever kind or nature, regardless of form, whether or not registered or
registerable and whether or not consensual or arising by law (statutory or
otherwise), including any mortgage, charge, pledge, hypothecation, security
interest, Lien, easement, right of way, encroachment, restrictive or statuary
covenant, right of entry, lease, license, assignment, option or claim, or right
of any Person of any kind or nature whatsoever which may constitute or become
by operation of law or otherwise such an encumbrance or title defect. |
| |
| | (w) | | “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 |
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| | | | 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 ground water) at,
in, by, from or related to any of the Stores or any activities or
operations thereof; (ii) the transportation, storage, treatment or
disposal of Hazardous Materials in connection with any of the Stores; or
(iii) the violation, or alleged violation, of any Environmental Law of
or from any Governmental Body relating to environmental matters
connected with any of the Stores. |
| |
| | (x) | | “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. |
| |
| | (y) | | “Environmental Law” means any foreign, federal, 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
(Ontario), as such laws have been amended or supplemented, and the regulations
promulgated pursuant thereto, and all analogous foreign, federal, provincial or
local laws. |
| |
| | (z) | | “Environmental Permits” shall have the meaning ascribed to such
term in Section 5.20(a). |
| |
| | (aa) | | “Escrow Agreement” means the form of escrow agreement referred
to in Section 9.3 and attached as Exhibit C1 or C2. |
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| | (bb) | | “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. |
| |
| | (cc) | | “Excluded Liabilities” means any and all liabilities
or obligations of the Vendors 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
Contract Liabilities referred to in Section 2.4 hereof. |
| |
| | (dd) | | “Franchise Obligations” means amounts owing by the Vendors to
the Purchaser up to the Closing Date arising out of the franchise relationship
between the Vendors and the Purchaser including without restricting the
generality of the foregoing royalties and advertising costs. |
| |
| | (ee) | | “Financial Statements” shall have the meaning ascribed to such
term in Section 5.7(a) hereof. |
| |
| | (ff) | | “GAAP” means Canadian generally accepted accounting principles
as of the date hereof. |
| |
| | (gg) | | “Governmental Body” means any government or governmental or
regulatory body thereof, or political subdivision thereof, whether federal,
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). |
| |
| | (hh) | | “GST” shall refer to the Goods and Services Tax levied under
Part IX of the Excise Tax Act. |
| |
| | (ii) | | “Hazardous Material” means any substance, material or waste
which is regulated by Canada, or any provincial or local Governmental Body
including, without limitation, petroleum and its by-products, asbestos, |
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| | | | 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. |
| |
| | (jj) | | “Interim Period” shall mean the period between the date of
execution of this Agreement and the earlier of Closing and the release of each
party’s obligations under Article IV or Article VIII. |
| |
| | (kk) | | “Law” means any federal, state, provincial, local or foreign
law (including common law), statute, code, ordinance, rule, regulation or other
requirement. |
| |
| | (ll) | | “Lease Assignment Holdback” shall have the meaning ascribed to
such term in Section 9.3. |
| |
| | (mm) | | “Lease Deposits” means the amount of prepaid rent and security
deposits held to the credit of the Vendors by landlords of Real Property Leases
as disclosed by estoppel certificates signed by such landlords. |
| |
| | (nn) | | “Legal Proceeding” means any judicial, administrative or
arbitral actions, suits, proceedings (public or private), claims or
governmental proceedings. |
| |
| | (oo) | | “Licenses” shall have the meaning ascribed to such term in
Section 2.2(a) hereof. |
| |
| | (pp) | | “Lien” means any lien, pledge, mortgage, hypothecate, 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. |
| |
| | (qq) | | “Listed Employees” shall have the meaning ascribed to said term
in Section 7.10(a) hereof. |
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| | (rr) | | “Loan Portfolio” means the value of post-dated cheques received
in respect of payday loan funds advanced to customers of the Business as at the
Effective Time and not yet due. |
| |
| | (ss) | | “Losses” means any and all losses, liabilities (accrued,
absolute, contingent or otherwise), suits, proceedings, judgments, awards,
demands, settlements, fines, assessments, re-assessments, damages, interest and
penalties, and costs and expenses (including without limitation reasonable
legal fees and litigation expenses) on a solicitor and his own client basis. |
| |
| | (tt) | | “Material Adverse Change” means any material adverse change in
the business, properties, results of operations, prospects or condition
(financial or otherwise) of the Business taken as a whole. |
| |
| | (tt.1) | | “Material Contracts” shall have the meaning ascribed to such term in Section
5.14 hereof. |
| |
| | (uu) | | “Minimum Lease Condition” shall have the meaning ascribed to
such term in Section 9.3 hereof. |
| |
| | (vv) | | “Non-Competition Agreement” shall have the meaning ascribed to
such term in Section 7.8 hereof. |
| |
| | (ww) | | “Non-Material Contract” means any Contract, other than the Real
Property Leases, the Personal Property Leases, the Property Contracts and the
Material Contracts, which was entered into in the ordinary course of the
Business consistent with past practice in an arm’s length transaction. |
| |
| | (xx) | | “Order” means any order, injunction, judgment, decree, ruling,
writ, assessment or arbitration award. |
| |
| | (yy) | | “Permits” means any approvals, authorizations, consents,
Licenses, permits or certificates. |
| |
| | (yy.1) | | “Permitted Encumbrances” means: |
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| | (i) | | Encumbrances, servitudes, easements,
restrictions, rights of parties in possession, zoning restrictions,
encroachments, reservations, rights-of-way and other similar rights
in real property or any interest therein, provided the same are not
of such nature as to materially adversely affect the validity of
title to or the value, marketability or use of the property subject
thereto by the Vendors; |
| |
| | (ii) | | assignments of insurance provided to
lessors or landlords (or their mortgagees) pursuant to the terms of
any Real Property Lease or Personal Property Lease and Liens or
rights reserved in any such lease for rent or for compliance with
the terms of such lease; |
| |
| | (iii) | | the reservations in any original
grants from the Crown of any real property or interest therein and
statutory exceptions to title that do not materially detract from
the value of the real property concerned or materially impair its
use in the operation of the Business; and |
| |
| | (iv) | | Liens relating to or arising out of the
Assumed Contracts. |
| | (zz) | | “Person” means any individual, corporation, partnership, firm,
joint venture, association, joint-stock company, trust, unincorporated
organization, Governmental Body or other entity. |
| |
| | (aaa) | | “Personal Property Lease” shall have the meaning ascribed to
such term in Section 5.12(a) hereof. |
| |
| | (bbb) | | “Property Contracts” shall have the meaning ascribed to such
term in Section 5.11(a) hereof. |
| |
| | (ccc) | | “Purchase Price” shall have the meaning ascribed to such
term in Section 2.1 hereof. |
| |
| | (ddd) | | “Purchaser” shall have the meaning ascribed to such term in
the introductory paragraph hereto. |
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| | (eee) | | “Purchaser Documents” shall have the meaning ascribed to such
term in Section 6.2 hereof. |
| |
| | (fff) | | “Purchaser Indemnified Parties” shall have the meaning
ascribed to such term in Section 10.2(a) hereof. |
| |
| | (ggg) | | “Purchaser’s Solicitors” shall mean Messrs. ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP, Barristers and Solicitors, 2500, ▇▇▇▇▇ — ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇. |
| |
| | (hhh) | | “Related Vendors” means Canadian Capital Corporation, ▇▇▇▇▇▇
Holdings Inc., 764815 Ontario Inc., 1556911 Ontario Limited 6052746 Canada
Inc., 0729648 B.C. Ltd., 1204594 Alberta Ltd., 360788 B.C. Ltd., 1008485
Alberta Ltd., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd.; |
| |
| | (iii) | | “Real Property Lease” shall have the meaning ascribed to such
term in Section 5.11(a) hereof. |
| |
| | (jjj) | | “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. |
| |
| | (kkk) | | “Remedial Action” means all actions, including, without
limitation, any capital expenditures required, to (i) clean up, remove, treat
or in any other way address any Hazardous Material; (ii) 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;
(iii) perform pre-remedial studies and investigations or post-remedial
monitoring and care; or (iv) bring any Store and the operations thereon into
compliance with Environmental Laws. |
| |
| | (lll) | | “Representatives” shall have the meaning ascribed to such term
in Section 7.5 hereof. |
| |
| | (mmm) | | “Stores” shall mean the financial service outlets itemized in
Schedule 2.2(a). |
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| | (nnn) | | “Tax” or “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, gross income, gross receipts, sales,
goods and services, business, 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,
health, education, highway use, commercial rent, environmental, windfall profit
tax, customs, import 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. |
| |
| | (ooo) | | “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 notice of ways and means motion or 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. |
| |
| | (ppp) | | “Tax Return” means any return, election, declaration, report,
claim for refund, information return, statement, or other similar document
including any schedule or attachment thereto, and including any amendment
thereof required to be filed under the provisions of any legislation in
relation to Taxes and any tax forms required to be filed, whether in connection
with a tax return or not, under any provisions of any applicable legislation in
relation to Taxes. |
| |
| | (qqq) | | “Time of Closing” shall mean 10:00 a.m. Eastern time. |
| |
| | (rrr) | | “Transaction Documents” shall have the meaning ascribed to
such term in Section 5.2 hereof. |
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| | (sss) | | “Unaudited Statements” shall have the meaning ascribed to such
term in Section 5.7(a) hereof. |
| |
| | (ttt) | | “Vendor Indemnified Parties” shall have the meaning ascribed
to such term in Section 10.2(b) hereof. |
| |
| | (uuu) | | “Vendor Group” shall have the meaning ascribed to such term in
the preamble hereof. |
| |
| | (vvv) | | “Vendors” shall have the meaning ascribed to such term in the
preamble hereof. |
| |
| | (www) | | “Vendors’ Solicitors” means Messrs. ▇▇▇▇ ▇▇▇▇▇▇▇ LLP,
10th Floor, Commerce Place, ▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇. |
1.2 Schedules and Exhibits
The Schedules and Exhibits to this Agreement hereinafter referred to are incorporated herein
by reference and are deemed to be part of this Agreement. The Exhibits to this Agreement are as
follows:
| | (a) | | Exhibit “A” — Form of Non-Competition Agreement |
| |
| | (b) | | Exhibit “B” — Form of Estoppel Certificate of Landlord and
Assignment of Lease |
| |
| | (c) | | Exhibit “C1” — Form of Escrow Agreement |
| |
| | (d) | | Exhibit “C2” — Form of Escrow Agreement |
| |
| | (e) | | Exhibit “D” — Forms of Solicitor’s Opinion |
| |
| | (f) | | Exhibit “E” — Adjustment Agreement |
The Schedules to this Agreement are as follows:
Schedule 2.2(a) — Stores
Schedule 2.2(c) — Personal Property
Schedule 2.2(h) — Prepaid Expenses
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Schedule 3.1 — Allocation of Purchase Price
Schedule 5.3(a) — Vendor Capitalization
Schedule 5.5 — Conflicts, Consents of Third parties — Vendors
Schedule 5.7(a) — Financial Statements
Schedule 5.8 — Undisclosed Liabilities
Schedule 5.9 — Developments since Balance Sheet Date
Schedule 5.10 — Tax Matters
Schedule 5.11(a) — Real Property Leases
Schedule 5.12 — Personal Property Leases
Schedule 5.13 — Intangible Property
Schedule 5.14 — Material Contracts
Schedule 5.15(a) — Employee Benefit Plans
Schedule 5.17 — Employees
Schedule 5.18 — Litigation
Schedule 5.19 — Compliance with Laws
Schedule 5.20 — Environmental Matters
Schedule 5.21 — Related Party Transactions
Schedule 6.3 — Conflicts; Consents of Third Parties — Purchaser
Schedule 7.2 — Increases to Compensation
Schedule 7.8 — Non-Competition
Schedule 9.1 — Vendors’ Closing Deliveries
Schedule 9.2 — Purchaser’s Closing Deliveries
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1.3 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 interpretations of this Agreement.
ARTICLE II — SALE AND PURCHASE OF ASSETS
2.1 Sale and Purchase of Assets
Upon the terms and subject to the conditions contained herein, on the Closing Date the
Purchaser agrees to purchase from the Vendors and the Vendors agree to sell, assign and transfer to
the Purchaser the Assets of the Vendors (other than the excluded assets referred to in Section 2.3
hereof) free and clear of all Encumbrances save and except for the Permitted Encumbrances, for the
sum of Fourteen Million Six Hundred Six Thousand Nine Hundred Sixty-Five (C$14,606,965.00) Dollars
plus Seventy Five (75%) Percent of the value of the Loan Portfolio determined as at the close of
business on the day immediately preceding the Closing Date (“Purchase Price”) subject to
adjustments as hereinafter set forth.
2.2 Assets
The assets (“the Assets”) owned by the Vendors and transferred to the Purchaser pursuant to
Section 2.1 hereof include all properties, tangible and intangible, used or useful in the operation
of the Business of the Stores, other than the excluded assets referred to in Section 2.3 hereof,
including, but not limiting the generality of the foregoing:
| | (a) | | Licenses and Authorizations All transferable
authorizations, approvals, orders, licenses, certificates and permits
(collectively, “Licenses”) of and from all Governmental Bodies necessary to
lease the properties and assets used or usable in the ownership and/or
operation of the stores listed in Schedule 2.2(a) (the “Stores”), and to
otherwise conduct the business of cheque cashing including negotiating
post-dated cheques, consumer loans, payday loans, currency exchange, cash wire
and money order transfer service, sale of money orders, utility ▇▇▇▇ payments,
income tax preparation and discounting service from the Stores that was
conducted by the Vendors prior to the date hereof (the “Business”) together
with any renewals, extensions or modifications thereof and additions thereto |
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| | | | and other pending applications or applications to be filed with any
Governmental Body between the date of this Agreement and the Closing
Date. |
| |
| | (b) | | Closing Date Accounts Receivable. |
| |
| | (c) | | Personal Property, Subject to Section 2.3 all tangible
and intangible personal or moveable property, equipment, machinery, furniture,
fixtures, tools, computer hardware, supplies and other assets, including a
leasehold interest the Personal Property Leases, wherever located, used or
usable in the ownership and/or operation of the Stores and the Business, as
itemized in Schedule 2.2(c) including security systems and all security codes
thereto, 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) | | Leasehold Property A leasehold interest in, pursuant
to the Real Property Leases all leased real or immovable property, buildings
and structures, leasehold improvements, fixtures and appurtenances used or
usable in the operation of the Business 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) | | Contracts All right, title, interest and benefit of
the Vendors in and to all agreements, contracts, Personal Property Leases
commitments and understandings (other than the Real Property Leases and the
Personal Property Leases) if any pertaining to the operation of the Stores and
supply of goods or services to the Business (the “Contracts”) including the
Property Contracts referred to in Section 5.11(a), the |
- 17 -
| | | | Material Contracts
referred to in Section 5.14 and the Non-Material Contracts referred to in
Section 1.1(ww). |
| |
| | (f) | | Intellectual Property, etc. All patents, patent
licenses, franchises, copyrights, trademarks, trade names, service marks, trade
secret rights, domain names, computer programs and software, if owned, permits,
licenses or other similar rights used or usable in the ownership and/or
operation of the Stores and the Business, to the extent that the same are
legally assignable, including, specifically, the trade names enumerated on
Schedule 5.13 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. |
| |
| | (g) | | Books and Records All books, records and files (or
copies thereof) pertaining to the Stores and the Business for all periods
ending on or before the Closing Date, including all payday loan agreements,
consumer loan agreements, and transaction records. |
| |
| | (h) | | Prepaid Expenses Subject to Section 2.3, all security
deposits and other prepaid expenses relating to the operation and/or ownership
of the Stores and the Business as at the Effective Time listed in Schedule
2.2(h), including Lease Deposits relating to Real Property Leases. |
| |
| | (i) | | Customer Lists and Records All goodwill of the
Business as a going concern together with customer lists, vendor lists,
telephone numbers and 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. |
| |
| | (j) | | Inventories All inventories of or relating to the
Business at the Stores as of the Closing Date including all forms, supplies,
brochures and advertising materials, Interac and Mastercard inventories, money
orders, Western Union forms, packaging materials, manufactured supplies and
finished goods. |
- 18 -
| | (k) | | Insurance Benefits Any benefits payable under all
insurance policies relating to repairs of damage or replacement of Assets of
the Business
at the Stores in respect of any claims based on occurrences prior to the
Closing Date, except for insurance proceeds received in respect of
repairs of damage or replacement of Assets paid by the Vendors prior to
Closing. |
| |
| | (l) | | Warranty Rights and Maintenance Contracts Full benefit
of all warranties and warranty rights against manufacturers or sellers which
apply to any of the Assets and all maintenance contracts on machinery equipment
and the other Assets, to the extent that the same are assignable, subject to
the Purchaser’s review and acceptance of such contracts and agreements prior to
the Closing Date. |
2.3 Excluded Assets
Assets purchased by the Purchaser from the Vendors shall not include (i) any cash or bank
accounts of the Vendors, (ii) shareholders or inter-company loans of the Vendors, (iii) any real
estate owned by the Vendors, (iv) post dated cheques not related to the Loan Portfolio or cheques
deposited by the Vendors prior to or after Closing that are returned on or after Closing, (v) all
personal and moveable property and assets of the Vendors located in and at any premises of the
Vendors, other than the Stores, and which is not necessary for the operation of the Business at the
Stores, (vi) any utility deposits lodged by the Vendors with utility companies in respect of the
Stores, (vii) any insurance premium rebates in respect of insurance coverages relating to the
Stores which are cancelled by the Vendors at or subsequent to the Effective Time, and (viii) any
deposit paid by the Vendors to Western Union, Nextwave, Datawave, Telpay or any other party for
whom the Vendors acts as agent.
2.4 Liabilities
Purchaser shall, following Closing, perform and discharge its obligations under the Assumed
Contracts to the extent such obligations arise and accrue after the Effective Time (the “Contract
Liabilities”) and shall not assume and discharge or be liable for those obligations that either
arise out of or would have been satisfied prior to the Closing. The Vendors agree that in the
normal course following Closing, the Vendors shall satisfy and discharge all of their
- 19 -
obligations
and liabilities for amounts due or to become due for services rendered or goods delivered to the
Vendors with respect to the Business prior to the Closing Date.
2.5 Excluded Liabilities
With the exception of the Contract Liabilities relating to the Assumed Contracts, it is understood
and agreed that the Purchaser is not assuming and shall not be liable or responsible for any
liabilities of the Vendors including Excluded Liabilities.
2.6 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 transfer of Assets from
the Vendors to the Purchaser contemplated by this Agreement shall be borne by the Purchaser, but
specifically excluding any taxes based on the net income of the Vendors.
2.7 Expenses
Except as otherwise provided in this Agreement, the Vendors, the Vendor Group 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.
ARTICLE III — PURCHASE AND PAYMENT
3.1 Allocation of Purchase Price
The Purchase Price for the Assets shall be allocated as set out in Schedule 3.1.
The Purchase Price is subject to adjustment as provided in this Agreement.
3.2 Adjustments to Purchase Price
The Purchase Price is subject to adjustment, as follows:
| | (a) | | The Purchase Price shall be increased by the amount of (i)
Lease Deposits, (ii) that portion of Current Rent paid by the Vendors
applicable to the period from and after Closing, (iii) Cash on Hand determined
in accordance with Section 3.5, and (iv) that portion of the payroll, if any,
paid by the Vendors in respect of all Listed Employees |
- 20 -
| | | | to be employed by the
Purchaser which is applicable to the period from and after the Effective Time. |
| |
| | (b) | | The Purchase Price shall be reduced by the amount of (i)
Franchisee Obligations and (ii) wages, salaries, bonuses, commissions and
accrued vacation pay due to Listed Employees of the Vendors up to the Effective
Time and unpaid. |
| |
| | (c) | | The amount of any Lease Assignment Holdback, if any, shall be
deducted from the Purchase Price and shall be paid into escrow in accordance
with Section 9.3, and the amount of any Permit Holdback, if any, shall be
deducted from the Purchase Price and shall be paid into escrow in accordance
with Section 8.3(c). |
3.3 Payment of Cash
On the Closing Date and subject to the terms and conditions of this Agreement, the Purchaser
shall pay to the account of the Vendors by wire transfer the full amount of the Purchase Price, as
adjusted, to the trust account of the Vendors’ Solicitors.
3.4 Post Closing Chargebacks
The Purchaser shall for a period of 30 days following the Closing Date act as agent for the
Vendors, upon request of the Vendors, to collect any cheques payable to any of the Vendors
deposited prior to Closing and returned after Closing for non sufficient funds and any post dated
cheques payable to any of the Vendors deposited after Closing and returned for non sufficient funds
for a fee of thirty (30%) per cent of the amounts collected. Upon expiry of said 30 day period,
the Purchaser shall return all uncollected NSF cheques and net proceeds of collected cheques to the
Vendors.
3.5 Calculation of Adjustments
| | (a) | | At the close of business on the day immediately preceding the Closing Date a
representative of the Vendors and the Purchaser in each of the Stores will cause a
physical count to be made of the following: |
| | (i) | | the amount of Canadian currency on hand: |
| |
| | (ii) | | the amount of foreign currency on hand: and |
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| | (iii) | | the Loan Portfolio. |
| | (b) | | The representatives of the Vendors and Purchaser at each Store shall set out
the totals of the amounts referred to in Section 3.5 (a) (i)(ii)(iii) in writing,
initial and fax a copy of the statement (“outlet statement”) to the Vendors’ Solicitor
and Purchaser’s Solicitor. |
| |
| | (c) | | The Vendors and the Purchaser shall receive all of the outlet statements at
Closing, determine the Cash on Hand and the Loan Portfolio for all Stores. The foreign
currency shall be valued in Canadian funds based on the cost to the Vendors to purchase
the foreign currency as if purchased on the day before the Closing Date. |
| |
| | (d) | | Should the Vendors or the Purchaser receive a payment from Western Union,
Nextwave, Telepay or any other party for which the Vendors act as agent to provide
services for the period both before and after the Effective Time, the party receiving
payment shall forthwith reimburse the other party in respect of all such commissions
earned up to the Effective Time or from and after the Effective Time as the case may
be. |
| |
| | (e) | | In the event that there is a dispute between the Vendors and Purchaser as to
the adjustments to the Purchase Price contemplated in Sections 3.2 or 3.5 and the
dispute is not resolved by the Closing Date then the parties shall proceed to complete
the transaction and any adjustments in dispute shall be determined in accordance with
the Adjustment Agreement. |
ARTICLE IV — CLOSING AND TERMINATION
4.1 Closing Date
Subject to the satisfaction of the conditions set forth in Sections 8.1 and 8.2 hereof (or the
waiver thereof by the party entitled to waive that condition), the closing of the sale and purchase
of the Assets (the “Closing”) shall take place at the Time of Closing at the offices of the
Vendors’ Solicitors (or at such other place as the parties may designate in writing) on October 31,
2006, with an effective time (the “Effective Time”) of 11:59 p.m. in each time zone within which
the Stores are located or on such other date and at such other place as the Vendors 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.”
- 22 -
4.2 Termination of Agreement
This Agreement may be terminated prior to the Closing as follows:
| | (a) | | by mutual written consent of the Vendors and the Purchaser; or |
| |
| | (b) | | by the Vendors or the Purchaser by written notice to the other
if there shall be in effect a final non-appealable Order of a Governmental Body
of competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby; or |
| |
| | (c) | | by: |
| | (i) | | the Purchaser if there is a material
breach of a representation or warranty or covenant by the Vendors;
or |
| |
| | (ii) | | the Vendors if there is a material
breach of a representation or warranty or breach of covenant by the
Purchaser; or |
| | (d) | | by the Purchaser if there is a Material Adverse Change. |
4.3 Procedure Upon Termination
In the event of termination of this Agreement pursuant to Section 4.2 or 4.5 hereof, this
Agreement shall, subject to Section 4.4, terminate, and the purchase of the Assets hereunder shall
be abandoned, without further action by the Purchaser or the Vendors. 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.
4.4 Effect of Termination
In the event that this 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 Vendors, or the Purchaser;
however, nothing in this Section 4.4 shall relieve any party hereto of any liability for a breach
of this Agreement prior to the date of such termination.
- 23 -
4.5 Risk of Loss
From the date hereof up to the Effective Time, the Assets shall be and remain at the risk of
the Vendors. If, prior to the Effective Time all or substantially all of the Assets are destroyed
or damaged by fire or by any other casualty or shall be appropriated, expropriated or seized by
governmental or other authority the Purchaser shall have the option, exercisable by notice in
writing given within 5 business days of the Purchaser receiving notice in writing from the Vendors
of such destruction, damage, expropriation or seizure:
| | (a) | | to complete the purchase without reduction of the Purchase
Price in which event all of the proceeds of insurance or compensation for
damage, destruction, expropriation or seizure shall be payable to the Purchaser
and all right and claim of the Vendors to any such amounts not paid by the
Closing Date shall be assigned to the Purchaser; or |
| |
| | (b) | | to rescind this agreement and not complete the purchase of the
Assets. |
ARTICLE V — REPRESENTATIONS AND WARRANTIES OF THE VENDORS, ▇▇▇▇▇ AND ▇▇▇
Each of the Vendors, ▇▇▇▇▇ and ▇▇▇ hereby jointly and severally represents and warrants to
Purchaser as follows:
5.1 Organization and Good Standing
| | (a) | | 931-Ont and 722-Ont are corporations duly organized, validly
existing and in good standing under the laws of the Province of Ontario and
have all requisite corporate power and authority to own, lease and operate its
properties and to carry on the Business. 931-Ont and 722-Ont are “private
companies” within the meaning of the Securities Act (Ontario) and are not
“reporting issuers” (or the equivalent thereof) under any securities laws of
any Province of Canada. |
| |
| | (b) | | 219-NS, 725-NS, 220-NS and 726-NS are corporations duly
organized, validly existing and in good standing under the laws of the Province
of Nova Scotia and have all requisite corporate power and authority to own,
lease and operate its properties and to carry on the Business. 219-NS, 725-NS,
220-NS and 726-NS are “private companies” within the meaning of |
- 24 -
| | | | the Securities Act (Nova Scotia) and are not “reporting issuers” (or the
equivalent thereof) under any securities laws of any Province of Canada. |
| |
| | (c) | | 603-NB, 6028-NB, 511-NB and 6029-NB are corporations duly
organized, validly existing and in good standing under the laws of the Province
of New Brunswick and have all requisite corporate power and authority to own,
lease and operate its properties and to carry on the Business. 603-NB, 6028-NB,
511-NB and 6029-NB are “private companies” within the meaning of the Securities
Act (New Brunswick) and are not “reporting issuers” (or the equivalent thereof)
under any securities laws of any Province of Canada. |
| |
| | (d) | | 112-NF and 107-NF are corporations duly organized, validly
existing and in good standing under the laws of the Province of Newfoundland
and Labrador and have all requisite corporate power and authority to own, lease
and operate its properties and to carry on the Business. 112-NF and 107-NF are
“private companies” within the meaning of the Securities Act (Newfoundland and
Labrador) and are not “reporting issuers” (or the equivalent thereof) under any
securities laws of any Province of Canada. |
5.2 Authorization of Agreement
Each of the Vendors 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 such Person in connection with the consummation of the transactions
contemplated by this Agreement (together with this Agreement and the Non-Competition Agreements,
the “Transaction Documents”), and to consummate the transactions contemplated hereby and thereby.
This Agreement has been, and each of the Transaction Documents will be at or prior to the Closing,
duly and validly executed and delivered by the Vendors and (assuming the due authorization,
execution and delivery by Purchaser if a party thereto) this Agreement constitutes, and each of the
Transaction Documents when so executed and delivered will constitute, the legal, valid and binding
obligations of the Vendors, enforceable against the Vendors 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).
- 25 -
5.3 Capitalization
| | (a) | | The sole legal and beneficial owners of all of the issued and outstanding
shares of the Vendors is set out in Schedule 5.3(a). |
| |
| | (b) | | There is no existing option, warrant, call, right, commitment or other
agreement of any character to which the shareholders of the Vendors is a party
requiring (or which may in the future require), and there are no securities of the
Vendors outstanding which upon conversion or exchange would require (or may in the
future require) the issuance, sale or transfer of any shares or any securities of the
Vendors or other securities convertible into, exchangeable for or evidencing the right
to subscribe for or purchase shares of the Vendors. At the Time of Closing, none of
Ron, Gerry, the Vendors or any shareholder of the Vendors will be a party to any voting
trust or any voting agreement with respect to any of the shares of the Vendors or to
any agreement related to the issuance, sale, redemption, transfer or other disposition
of the shares of the Vendors. |
5.4 Subsidiaries and Other Interests
Registered and beneficial title to all of the Assets is held and at Closing will be held in
the name of the Vendors solely and there are no Assets or rights with respect thereto held by any
partnership, joint venture or minority interest.
5.5 Conflicts; Consents of Third Parties
| | (a) | | Except in respect of the Real Property Leases and as set forth
on Schedule 5.5, none of the execution and delivery by any of the Vendors or
the Vendor Group, of this Agreement and the Transaction Documents, the
consummation by each of the Vendors or the Vendor Group, of the transactions
contemplated hereby and thereby, or compliance by the Vendors or the Vendor
Group 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,
articles, bylaws, shareholders agreement, trust agreements or other
organizational documents of the Vendors; (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 |
- 26 -
| | | | or obligation to which the Vendors, are a party or by which it or the
Assets are bound; (iii) give to any other Person any right of
termination, cancellation or acceleration with respect to any agreement,
instrument or other document which is material to the Business or Assets
or to which the Vendors are a party; (iv) violate any statute, rule,
regulation, judgment or Order of any Governmental Body by which the
Vendors are bound; or (v) result in the creation of any Lien upon the
Assets. |
| |
| | (b) | | Except in respect of the Real Property Leases and the Personal
Property Leases and as set forth on Schedule 5.5, 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
Vendors or the Vendor Group, in connection with the execution and delivery of
this Agreement or the Transaction Documents, or the compliance by the Vendorsor
the Vendor Group, as the case may be, with any of the provisions hereof or
thereof. |
5.6 Ownership and Transfer of Assets
The Vendors will be, at the Time of Closing, the registered and beneficial owner of all of the
Assets free and clear of any and all Liens save and except the Permitted Encumbrances. The Vendors
will have, at the Time of Closing, the power and authority to sell, transfer, assign and deliver
the Assets as provided in this Agreement, and such delivery will convey to the Purchaser good and
marketable title to such Assets, free and clear of any and all Liens save and except the Permitted
Encumbrances. Immediately after the Closing, Purchaser will own all of the Assets.
5.7 Financial Statements
| | (a) | | Attached hereto as Schedule 5.7 (a) are: (i) the audited
balance sheets of 722-Ont, 107-NF, 511-NB, 6029-NB and 726-NS as at March 31,
2005 and 2006 and the related audited statements of income and of changes in
financial position of 722-Ont, 107-NF, 511-NB, 6029-NB and 726-NS for the years
then ended and audited balance sheets of 931-Ont, 112-NF, 603-NB, 6028-NB and
725-NS as at March 31, 2006 and the related audited statements of income and of
changes in |
- 27 -
| | | | financial position of 931-Ont, 112-NF, 603-NB, 6028-NB and 725-NS and
the audited balance sheets of 219-NS and 220-NS as at July 31, 2006 and
the related audited statements of income and of changes in financial
position of 219-NS and 220-NS (collectively called the “Audited
Statements”); and (ii) the management prepared unaudited balance sheet
of 722-Ont, 107-NF, 511-NB, 6029-NB, 726-NS as at June 30, 2006 and the
related statement of earnings of each of 722-Ont, 107-NF, 511-NB,
6029-NB, 726-NS (the “Unaudited Statements”) 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 Audited Statements is complete and correct in
all material respects, has been prepared in accordance with conformity
with the practices consistently applied by 722-Ont, 107-NF, 511-NB,
6029-NB, 726-NS, respectively, without modification of the accounting
principles used in the preparation thereof (except as may be required by
GAAP), and presents fairly the financial position, results of operations
and changes in financial position of 722-Ont, 107-NF, 511-NB, 6029-NB,
726-NS respectively, as at the dates and for the periods indicated. |
| |
| | (b) | | The Unaudited Statements have been prepared in all material
respects on a basis consistent with the Audited Statements, are true, correct
and complete in all material respects and present fairly the financial
condition of 722-Ont, 107-NF, 511-NB, 6029-NB, 726-NS as of June 30, 2006
including the assets and liabilities of 722-Ont, 107-NF, 511-NB, 6029-NB,
726-NS as of June 30, 2006, and the revenues, expenses and results of the
operations of 722-Ont, 107-NF, 511-NB, 6029-NB, 726-NS for the three (3) month
period ended on June 30, 2006. |
| |
| | (c) | | The financial condition of 722-Ont, 107-NF, 511-NB, 6029-NB,
726-NS, are no worse than the financial condition reflected in the Unaudited
Statements, and no significant new liabilities have arisen since the Balance
Sheet Date. |
| |
| | (d) | | For the purposes of this Article V, the unaudited balance sheet
of 722-Ont, 107-NF, 511-NB, 6029-NB, 726-NS as at June 30, 2006 and the |
- 28 -
| | | | audited balance sheet of 219-NS and 220-NS as at July 31, 2006 are
collectively referred to as the Vendors’ “Balance Sheet” and June 30,
2006 is referred to as the “Balance Sheet Date”. |
5.8 No Undisclosed Liabilities
Except as set forth on Schedule 5.8, the Vendors have no 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 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
5.11(a), 5.12 or 5.14 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) existing under applicable builders lien legislation or claim in respect of any such lien
filed previously, which remains outstanding in respect of any portion of any Real Property Lease
and, to the knowledge of the Vendors, ▇▇▇▇▇ and ▇▇▇ there is no work currently in progress which
could give rise to such a Lien.
5.9 Absence of Certain Developments
Except as expressly required by this Agreement or as set forth on Schedule 5.9, since the
Balance Sheet Date:
| | (a) | | there has not been any Material Adverse Change in the Business
of the Vendors nor has there occurred any event which is reasonably likely to
result in a Material Adverse Change in the Business; |
| |
| | (b) | | the Vendors have not made any material change with respect to
any method of management, operation or accounting in respect of the Business; |
| |
| | (c) | | there has not been any damage, destruction or loss, whether or
not covered by insurance, with respect to the Assets having a replacement cost
of more than C$20,000 for any single loss or C$50,000 for all such losses; |
| |
| | (d) | | the Vendors have not (i) awarded or paid any bonuses to Listed
Employees as defined in Section 7.10 (a) hereof with respect to the |
- 29 -
| | | | most recent fiscal year ended prior to the Balance Sheet Date, 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 the Vendors’ Listed Employees, other than normal increases in the
ordinary course of business consistent with past practice and that in
the aggregate have not resulted in an increase of more than 3%
per annum in the benefits or compensation expense of the Vendors
taken as a whole; |
| |
| | (e) | | there has not been any change by the Vendors in accounting or
Tax reporting principles, methods or policies relating to the Business; |
| |
| | (f) | | the Vendors have not entered into any transaction or Contract
relating to the Business or conducted the Business other than in the ordinary
course consistent with past practice; |
| |
| | (g) | | the Vendors have not failed to promptly pay and discharge
current liabilities relating to the Business except where disputed in good
faith by appropriate proceedings; |
| |
| | (h) | | the Vendors have not made any loans, advances or capital
contributions to, or investments in, or paid any fees or expenses to any Listed
Employees of the Vendors in addition to their usual remuneration and in amounts
exceeding $10,000.00; |
| |
| | (i) | | the Vendors have not mortgaged, pledged or subjected to any
Lien any of its Assets except for Permitted Encumbrances, or acquired any
Assets or sold, assigned, transferred, conveyed, leased or otherwise disposed
of any assets related to the Business, except for assets acquired or sold,
assigned, transferred, conveyed, leased or otherwise disposed of in the
ordinary course of business consistent with past practice; |
- 30 -
| | (j) | | the Vendors have not discharged or satisfied any Lien, or paid
any obligation or liability (fixed or contingent) relating to the Business,
except in the ordinary course of business consistent with past practice; |
| |
| | (k) | | the Vendors have not 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 the Business taken as a whole; |
| |
| | (l) | | the Vendors have not made any capital expenditure or capital
additions or betterments except in the ordinary course of business consistent
with past practice, or committed to make but not made or completed any capital
expenditure or capital additions or betterments in excess of C$25,000
individually or C$100,000 in the aggregate; |
| |
| | (m) | | the Vendors have not instituted or settled any Legal Proceeding
which in any way is material to the Business; |
| |
| | (n) | | no Legal Proceedings have been instituted or threatened and no
claim or demand has been made against the Vendorsor the Vendor Group seeking to
restrain or prohibit or to obtain substantial damages with respect to the
consummation of the transactions contemplated herein and no Order by a
Governmental Body has been instituted or threatened to restrain, enjoin or
otherwise prohibit the consummation of the transactions contemplated herein; |
| |
| | (o) | | the Vendors have not sold, transferred, assigned or
hypothecated any bad debt or accounts receivable; and |
| |
| | (p) | | the Vendors have not agreed to do anything set forth in this
Section 5.9. |
5.10 Taxes
| | (a) | | Except as set out in Schedule 5.10, all Tax Returns required to
be filed by or with respect to the Vendors and the Assets have been |
- 31 -
| | | | properly prepared and all such Tax Returns are true, complete and correct. |
| |
| | (b) | | There are no Liens with respect to Taxes upon any of the
Assets. |
| |
| | (c) | | The Vendors will be, prior to the Closing Date, duly registered
under Part IX of the Excise Tax Act with respect to the GST, and its respective
registration number is as set forth on Schedule 5.10. |
| |
| | (d) | | The Vendors have remitted to the applicable tax collecting
authority, all Taxes required to be paid on or before the Closing Date to such
tax collecting authority and the Vendors undertake to pay any Taxes in respect
of the Business and this transaction that may become payable by the Vendors
after the Closing Date. |
5.11 Leased Property
| | (a) | | Schedule 5.11(a) sets forth a complete list of all real or
immovable property and interests in real or immovable property leased by the
individual Vendors as lessee in which a Store is located (individually, a “Real
Property Lease”) and the real or immovable properties specified in such leases,
together with the expiry date of each Real Property Lease and renewal term
available. The Real Property Leases constitute 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. The Vendors have and
at the Time of Closing will have a valid and enforceable leasehold interest
under each of the Real Property Leases; except as disclosed in Schedule
5.11(a), the Vendors have not 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 the Vendors under any of the Real Property
Leases; and to the best of the knowledge of the Vendors, ▇▇▇ and ▇▇▇▇▇, except
as disclosed in Schedule 5.11(a), 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 |
- 32 -
| | | | landlords under
any of the Real Property Leases. Each of the Stores and fixtures and
improvements thereon is in a sufficient and adequate condition and state of
maintenance and repair for the operation of the Business (subject to normal wear and tear). Except as disclosed in Schedule
5.11(a), with respect to each Store, there is no management agreement,
service contract or other contract or agreement, other than the Real
Property Leases, the Personal Property Leases and the Material
Contracts, to which the Vendors are a party affecting such Store
(collectively, “Property Contracts”) which (i) was not made in the
ordinary course of business, (ii) is not terminable upon 30 days’ prior
notice by the Vendors 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
Store, would cause the aggregate amount of all monthly payment
obligations in respect of all Property Contracts for such Store to
exceed C$2,000. The Vendors 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. |
| |
| | (b) | | The Vendors have obtained and will validly transfer to the
Purchaser on or prior to Closing all transferable Permits necessary or useful
for the current use and operation of each Store, and the Vendors have fully
complied with all material conditions of the Permits applicable to them.
Except as disclosed in Section 5.11(a), 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
the Vendors, ▇▇▇ and ▇▇▇▇▇, threatened or contemplated condemnation,
expropriation or eminent domain proceedings that affect any Store or any part
thereof, and none of the Vendors or the Vendor Group, 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. |
- 33 -
| | (d) | | None of the Vendors, or the Vendor Group, has received any
written notice from any insurance company, municipality or any Governmental
Body requiring performance of any structural or other repairs or alterations to
any Store. |
| | (e) | | Except as provided for in any Real Property Lease, the Vendors
do not own or hold, 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 in
respect of any Store. |
| |
| | (f) | | The Vendors have sent valid notices of intention to renew to
each lessor for a Real Property Lease that is due to receive notification of
renewal of Lease in accordance with the terms thereof. |
| |
| | (g) | | Except as disclosed in Schedule 5.11(a) or 5.18, the conduct of
the Business conducted from the Stores complies with all regulations, statutes,
enactments, laws and by-laws and to the knowledge of the Vendors, ▇▇▇ and ▇▇▇▇▇
the Stores comply with all regulations, statutes, enactments, laws and bylaws
including, without limitation, those dealing with zoning, parking, access,
loading facilities, landscaped areas, building construction, fire and public
health and safety and Environmental Laws. |
| | (h) | | Except as provided in Schedule 5.11(a), each Store (including
all buildings, improvements and fixtures) is fit for its present use, and no
Store is currently undergoing any alteration or renovation and to the knowledge
of the Vendors, ▇▇▇ and ▇▇▇▇▇, there are no material or structural repairs to,
or replacements of, the roof or the mechanical, electrical, heating,
ventilating, air-conditioning, plumbing or drainage equipment or systems that
are necessary and no alteration or renovation is contemplated. |
| |
| | (i) | | The Vendors’ share of all realty taxes, rates, levies and
assessments, all business excise and sales taxes and all utility charges and
other rates, levies and assessments charges and duties whatsoever required by
law to be paid in respect of the Business and the Assets up to the |
- 34 -
| | | | Closing Date
and of which the Vendors have had notice as of the Closing Date have been paid. |
| |
| | (j) | | All minimum rent and additional rent, taxes, utilities, common
area maintenance costs and other amounts due and owing under the Real Property Leases to the respective landlords or any third parties up to
the Closing Date and of which the Vendors have had notice as of the
Closing Date have been or will be paid and Current Rent will be paid in
full as of Closing. |
5.12 Tangible Personal Property
| | (a) | | Schedule 5.12 sets forth all leases of personal or moveable
property (“Personal Property Leases”) relating to personal property used or
usable in the operation of the Stores or the Business. The Vendors 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) | | The Vendors have or will validly transfer to the Purchaser on
or prior to Closing 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 the Vendors, or to the best knowledge of the Vendors, ▇▇▇ and
▇▇▇▇▇, 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 used by the
Vendors under the Personal Property Leases is in good condition and repair
(ordinary wear and tear excepted) and is suitable for the purposes used. |
| |
| | (c) | | The Vendors have and at the Time of Closing will have good and
marketable title to all of the items of tangible personal or moveable property
reflected in the Balance Sheet and forming a part of the |
- 35 -
| | | | Assets (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
except Permitted Encumbrances. 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 a sufficient and adequate condition and state of
maintenance and repair for the operation of the Business (ordinary wear
and tear excepted) and are suitable for the purposes used. |
| |
| | (d) | | The Vendors own (or lease from unaffiliated Persons) all
tangible property necessary to conduct the Business and will validly transfer
ownership of its interest in all such tangible property to the Purchaser at the
Closing. |
5.13 Intangible Property
| | (a) | | Subject to certain deficiencies with respect to software licensing which have
been identified by the Purchaser as set out in Schedule 5.13: (i) except for software
installed or provided by the Purchaser, Schedule 5.13 under the heading “software”
contains a complete and correct list of each software computer program licensed or used
by the Vendors in the Business and the license agreement for each computer software
program is in good standing; (ii) Schedule 5.13 under the heading “Custom Software
(written-in-house)” contains a complete and correct list of each software computer
program owned or licensed by the Vendors free and clear of all Liens (except the
Permitted Encumbrances) and is in good standing; (iii) there have been no claims made
respecting the intangible property and none of the Vendors or the Vendor Group, have
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; (iv) the Vendors
possess all patents, patent licenses, trade names, trademarks, trade secret rights,
computer programs, software, |
- 36 -
| | | | service marks, brand marks, brand names, copyrights,
know-how, formulae and other proprietary and trade rights and/or licences to the use
thereof necessary for the conduct of the Business as now conducted, not subject to any
restrictions materially adversely affecting the Business, and without any known
conflict with the rights of others and the Vendors have not in the last twenty-four
months forfeited, sold, assigned or otherwise relinquished any such patent, patent
license, trade name, trademark, trade secret right, computer program, software, service
▇▇▇▇, brand ▇▇▇▇, brand name, domain name, copyright, know-how, formulae or other
proprietary right necessary for the conduct of the Business; (v) the Vendors are not
under any obligation to pay any royalties or similar payments in connection with any
license to the Vendors, any Affiliate of the Vendors or any other Person other than as
set out in Schedule 5.13 and except in respect of any royalties or similar payments payable to the Purchaser or other parties in respect
of software or computer programs provided to the Vendor by the Purchaser. |
| |
| | (b) | | Schedule 5.13 under the heading “Domain Names” lists all the domain names
containing the words “Money Mart”, “Insta Cheques” and any trade ▇▇▇▇ referred to in
any franchise agreement entered into between the Vendor and Purchaser. The Vendor does
not own any patent, patent license or trade marks relating to the Business. |
5.14 Material Contracts
Schedule 5.14 sets forth all of the following Contracts (“Material Contracts”) to which the
Vendors are a party or by which it is bound including: (i) Contracts with any labour union or
association representing any employee of the Vendors; (ii) Contracts pursuant to which any Person
is required to purchase or sell a stated portion of its requirements or output or services from or
to the Vendors; (iii) Contracts for the sale of any of the Assets of the Vendors 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; (iv) Contracts containing covenants of the Vendors 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 the Vendors in any line of business or in any geographical area; (v)
Contracts relating to money transfers; (vi) Contracts relating to the payment of utility or other
bills for third parties; (vii) any other Contracts, other than Real Property Leases, Personal
Property Leases and Property Contracts, which were not entered into in the ordinary course of
business 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; (viii)
Contracts involving an obligation to make a capital expenditure in excess of C$25,000.00; and (ix)
licensing Contracts pursuant to which the Vendors are a licensor or licensee. There have been made
available to the Purchaser true and complete copies of each of the Material Contracts. Except as
set forth on Schedule 5.14, each of the Material Contracts and other agreements is in full force
and effect and to the knowledge of the Vendors, ▇▇▇ 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,
- 37 -
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). For
purposes hereof, “Assumed Contracts” shall consist of (i) the Non-Material Contracts, and the
Material Contracts, except such Non-Material Contracts and such Material Contracts identified in
Schedule 5.14 as not being assumed by the Purchaser; (ii) the Property
Contracts, (iii) the Personal Property Leases and (iv) the Real Property Leases. Except as set
forth on Schedule 5.14, the Vendors are not in default in any material respect under any Assumed
Contracts nor, to the knowledge of the Vendors, ▇▇▇▇▇ and ▇▇▇, is any other party to any Assumed
Contract in default thereunder in any material respect.
5.15 Employee Benefits
| | (a) | | Schedule 5.15(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, health insurance, workers
compensation, scholarship or other employee benefit plan, program, policy or
arrangement maintained by the Vendors or to which the Vendors have any
liability (contingent or otherwise) with respect to Listed Employees of the
Vendors (“Employee Benefit Plans”) therein described and the Financial
Statements reflect in the aggregate an accrual of all amounts accrued, if any,
but unpaid under all such Employee Benefit Plans as of the dates thereof. The
Vendors do not have any commitment, whether formal or informal, and whether
legally binding or not, to create any additional such Employee Benefit Plan and
no promise of improvement has been made relating to any Employee Benefit Plan.
Each of such Employee Benefit Plans disclosed on Schedule 5.15(a) is in effect
and the Vendors are in compliance with all laws, rules and regulations
applicable thereto. All Employee Benefit Plans disclosed on Schedule 5.15(a)
have been duly registered where required by, and are in good standing under,
all applicable legislation and the Vendors have fulfilled its funding
obligations under all such plans and each Employee Benefit Plan that is
required to be funded or that is a |
- 38 -
| | | | registered pension plan is fully funded on
both a “solvency” and “going concern” basis as determined in accordance with
the actuarial methods and assumptions used in the most recent actuarial report
prepared in respect of the Employee Benefit Plan. 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 Vendors have delivered to the Purchaser accurate and
complete copies of (i) all currently applicable plan texts and
agreements and any amendments thereto; (ii) all summary plan
descriptions and material employee communications; (iii) the most recent
annual report and/or annual information return filed in respect of the
Employee Benefit Plan with any applicable regulatory authority; (iv) the
most recent annual and periodic accounting of plan assets; (v) the most
recent actuarial valuation; (vi) the trust agreement or other funding
agreement (including all amendments made thereto); and (vii) a copy of
the most recent letter confirming regulation of the Employee Benefit
Plan with each applicable regulatory authority. 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 the Vendors’ 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 |
- 39 -
| | | | such plans of the Vendors 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 knowledge of the Vendors, ▇▇▇ and
▇▇▇▇▇, there are no facts or circumstances which could form the basis for any such Legal Proceeding. |
| |
| | (d) | | Except as disclosed on Schedule 5.15(a), 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 the Vendors; (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. |
| |
| | (e) | | There has been no withdrawal by the Vendors, or any other
employer of assets from the Employee Benefit Plans and no application for
approval of a withdrawal of assets has been made to any applicable federal or
provincial regulatory authority. Any application of surplus assets in any of
the Employee Benefit Plans to offset employer contributions required to be made
thereto has been permitted by the terms of the Employee Benefit Plan and any
funding agreement maintained in connection therewith. |
5.16 Labour
| | (a) | | The Vendors are not party to any labour or collective
bargaining agreement and there are no labour or collective bargaining
agreements which pertain to employees of the Vendors. |
| |
| | (b) | | No employees of the Vendors are represented by any labour
organization. No labour organization or group of employees of the Vendors have
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 the Vendors, ▇▇▇ or ▇▇▇▇▇, threatened to be
brought or filed, with any federal or provincial agency responsible for labour
or employment laws or other labour relations tribunal. There is no organizing
activity |
- 40 -
| | | | involving the Vendors pending or, to the best knowledge of the
Vendors, ▇▇▇ or ▇▇▇▇▇, threatened by any labour organization or group of
employees of the Vendors. |
| |
| | (c) | | There are no (i) strikes, work stoppages, slowdowns, lockouts
or arbitrations or (ii) material grievances or other labour disputes pending
or, to the best of the knowledge of the Vendors, A or B, threatened against or involving the Vendors. There are no
unfair labour practice charges, grievances or complaints pending or, to
the best of the knowledge of the Vendors, ▇▇▇ or ▇▇▇▇▇, threatened by or
on behalf of any employee or group of employees of the Vendors. |
5.17 Employment Matters
All of the employees listed on Schedule 5.17 are bona fide employed for the benefit of and
employed in the conduct of the Business and except as disclosed in Schedule 5.17, none of the
employees of the Vendors employed in respect of the Business is employed other than on an
indefinite hiring basis terminable on reasonable notice according to law.
Schedule 5.17 annexed hereto contains a complete and accurate 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 the Vendors
who earn total annual compensation of less than C$27,000.00; and |
| |
| | (b) | | with respect to all other employees of the Vendors, 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 the Vendors 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 |
- 41 -
| | | | terminate by reason of the consummation of the transactions contemplated by this
Agreement. The Vendors do not have 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 5.17. The Vendors have
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 the Vendors 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 or
will at time of Closing be paid. The consummation of the transactions
contemplated by this Agreement will not give rise to any liability on
the part of the Purchaser for severance pay, termination benefits, or
any other payments to employees or independent contractors. |
Except as detailed in Schedule 5.17:
| | (c) | | no notice has been received by the Vendors of any complaint
filed by any of the employees against the Vendors claiming the Vendors have
violated the Employment Standards Act (Ontario) or the Human Rights Code
(Ontario) (and any applicable employees or human rights or similar legislation
in the Maritime Provinces) or of any complaints or proceedings of any kind
involving the Vendors or, to the knowledge of the Vendors, ▇▇▇ and ▇▇▇▇▇, after
due inquiry, any of the employees of the Vendors before any labour relations
board; |
| |
| | (d) | | there are no outstanding orders or charges against the Vendors
under the Occupational Health and Safety Act (Ontario) (and any applicable
health and safety legislation in the Maritime Provinces); |
| |
| | (e) | | the Vendors have complied with all of its obligations under the
Pay Equity Act (Ontario) and similar legislation in the Maritime Provinces and
has provided the Purchaser with a copy of any “pay equity” plans |
- 42 -
| | | | filed with any governmental or regulatory authority or delivered to its employees; |
| |
| | (f) | | the Vendors have paid all assessments pursuant to workers’
compensation legislation levied by all Governmental Bodies and, to the
best of the knowledge of the Vendors, ▇▇▇ and ▇▇▇▇▇, the Vendors have no
liability for and there is not pending any state of facts which may result in
the levying of a special assessment or a penalty charge of any nature with
respect to the period prior to the Closing and the Vendors shall indemnify the
Purchaser in the event that a special assessment or penalty charge of any
nature is levied or claim made against the Purchaser in respect of any employee
of the Vendors relating to the period prior to the Closing. The Vendors have
filed on a timely basis all payroll statements required to be filed pursuant to
applicable workers’ compensation legislation. The Vendors are not liable to
indemnify any of its employees or any governmental body in respect of
compensation and/or healthcare payable to its employees pursuant to applicable
workers’ compensation legislation. The Vendors notified the relevant
governmental authorities, within the time periods specified by applicable
legislation, of all occurrences of accidents for which notification is required
by applicable legislation and has provided requisite details thereof; |
| |
| | (g) | | there are no other or additional contracts of employment or
service which are oral or in writing with any employees of the Vendors in
respect of the Business. Except as contemplated by Section 5.9(d) hereof, or
as set forth in Schedule 7.2 there has been no change in the terms of
employment of the Listed Employees since June 30, 2006; and |
| |
| | (h) | | the Vendors shall be responsible for payment of wages,
salaries, bonuses, benefits, commissions and all accrued vacation pay of the
Listed Employees up to and including the Closing Date, which if not paid by the
Vendors on or before the Closing Date shall be deducted as an adjustment from
the Purchase Price. |
- 43 -
5.18 Litigation
Except as set forth in Schedule 5.18, (i) there is no suit, action, proceeding, investigation,
claim or order pending or, to the knowledge of the Vendors, ▇▇▇ and ▇▇▇▇▇, overtly threatened
against the Vendors (or to the knowledge of the Vendors, ▇▇▇ and ▇▇▇▇▇, pending or threatened, against any
of the officers, directors or key employees of the Vendors with respect to their business
activities on behalf of the Vendors), or to which the Vendors, ▇▇▇ and ▇▇▇▇▇ is otherwise a party,
before any court, or before any Governmental Body, commission, board, or agency nor, to the
knowledge of the Vendors, ▇▇▇ and ▇▇▇▇▇, is there any reasonable basis for any such action,
proceeding, or investigation, and (ii) the Vendors are not subject to any judgment, Order or decree
of any court or Governmental Body and the Vendors are not engaged in any legal action to recover
monies due it or for damages sustained by it.
5.19 Compliance with Laws
The Vendors possess all Licenses of and from all Governmental Bodies, and has made all filings
with all Governmental Bodies, necessary to own or lease the Assets and the Stores and to conduct
the Business. Except as set forth on Schedule 5.19, no proceeding has been served or, to the
knowledge of the Vendors, ▇▇▇ and ▇▇▇▇▇, threatened or commenced which seeks to, or could
reasonably be anticipated to, cause the suspension, modification, revocation or withdrawal of any
License. To the knowledge of the Vendors, ▇▇▇ and ▇▇▇▇▇ and except as disclosed in Schedule 5.18,
the Vendors are currently, in compliance with all Laws applicable to the Vendors in respect of the
Business.
5.20 Environmental Matters
Except as set forth on Schedule 5.20 hereto with respect to Stores:
| | (a) | | The operations of the Vendors have been and are in compliance
with all applicable Environmental Laws and all Licenses issued pursuant to
Environmental Laws (“Environmental Permits”); |
| |
| | (b) | | The Vendors have obtained all Environmental Permits necessary
to operate the Business and is in compliance with such Environmental Permits; |
| |
| | (c) | | The Vendors are not the subject of any outstanding written
order, agreement or Contract with any governmental authority or person |
- 44 -
| | | | respecting (i) Environmental Laws, (ii) Remedial Action, (iii) any Release or
threatened Release of a Hazardous Material or (iv) any Environmental Claim; |
| |
| | (d) | | The Vendors have not received any written communication
alleging that the Vendors or the operations of the Business may be in violation
of any Environmental Law or any Environmental Permit, or may have any liability
under any Environmental Law; |
| |
| | (e) | | The Vendors have no 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 the Vendors, ▇▇▇ and ▇▇▇▇▇, threatened against the Vendors
alleging the violation of or seeking to impose liability pursuant to
Environmental Laws; |
| |
| | (g) | | The Vendors has not received notice of any investigations of
the Business, its operations, or currently or previously owned, operated or
leased property of the Vendors in connection with the Business nor, to the
knowledge of any of the Vendors, ▇▇▇ and ▇▇▇▇▇, are there any such pending or
threatened investigations which could lead to the imposition of any liability
pursuant to Environmental Law; |
| |
| | (h) | | To the knowledge of the Vendors, ▇▇▇ and ▇▇▇▇▇, there is not
located at any of the Stores any (i) underground storage tanks, (ii)
asbestos-containing material or (iii) equipment containing polychlorinated
biphenyls; |
| |
| | (i) | | The Vendors have not 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 under the Real Property Leases; |
- 45 -
| | (j) | | The Vendors have not had prepared any environmentally related
audits, studies, reports, analyses, or results of investigation that have been
performed with respect to any of the properties leased under the Real Property
Leases. |
5.21 Related Party Transactions
Except as set forth in Schedule 5.21, none of the Vendor Group, the Vendors, any Affiliate of
the Vendors, nor any officer, director or employee of any of them, 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 the
Vendors, or (b) engaged in the Business.
5.22 Brokers
No Person has acted, directly or indirectly, as a broker or finder for the Vendors 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.
5.23 Franchise Operations
Each of the Stores has been operated by the Vendors pursuant to and in compliance with a
franchise agreement with the Purchaser.
5.24 Name
“Money Mart” is the only name used by the Vendors in the operation of the Stores and the
Business.
5.25 Intentionally Deleted
5.26 No Bankruptcy
None of the Vendors, or the Vendor Group is insolvent, nor has any of them committed an act of
bankruptcy, proposed a compromise or arrangement to its creditors generally, had any petition or
receiving order in bankruptcy filed against them, taken any proceedings with respect to a
compromise or arrangement, taken any proceedings to have any of them declared bankrupt or wound-up,
taken any proceedings to have a receiver appointed over
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any material part of their assets, had any
encumbrancer take possession of any of their property, or had any execution or distress become
enforceable or become levied upon any of their properties or assets.
5.27 No Misrepresentation
None of the Vendors or the Vendor Group, has omitted to state a material fact or make a
statement which would make any of the representations or warranties contained herein misleading or
inaccurate.
5.28 Withholdings
The Vendors have withheld and will continue until the Closing Date to withhold from each
payment made to the Listed Employees the amount of all taxes, including but not limited to income
tax, premium contributions, remittance and assessments or re-assessments for unemployment insurance
employer health tax, Canada Pension Plan, income tax, workers’ compensation and any other
employment related legislation, accrued wages, Taxes, salaries, commission and employee benefit
plan payments, and other amounts required to be withheld therefrom, and will have paid the same to
the proper tax or other receiving authorities within the time required under any applicable
legislation. The amount of tax withheld but not remitted will be retained in the Vendors’ account
and will be remitted by the Vendors on or before the date same is due.
ARTICLE VI — REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Vendors that:
6.1 Organization and Good Standing
The Purchaser is a corporation duly organized, validly existing and in good standing under the
laws of the Province of Nova Scotia and is duly qualified and in good standing in the Province(s)
of Ontario, New Brunswick and Newfoundland and Labrador.
6.2 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
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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).
6.3 Conflicts; Consents of Third Parties
| | (a) | | Except as set forth on Schedule 6.3 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, articles, by-laws or other
organizational documents 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 6.3, no consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body not previously obtained 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. |
- 48 -
6.4 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 the Purchaser Documents or consummate the transactions contemplated
hereby and thereby.
6.5 Brokers
No Person has acted, directly or indirectly, as a broker or finder 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.
6.6 Bankruptcy
The Purchaser is not insolvent, nor has it committed an act of bankruptcy, proposed a
compromise or arrangement to its creditors generally, had any petition or receiving order in
bankruptcy filed against it, taken any proceedings with respect to a compromise or arrangement,
taken any proceedings to have itself declared bankrupt or wound-up, taken any proceedings to have a
receiver appointed over any material part of its assets, had any encumbrancer take possession of
any of its property, or had any execution or distress become enforceable or become levied upon any
of its properties or assets.
6.7 GST Registration
The Purchaser is or will at the Closing Date be registered under Part IX of the Excise Tax Act
and will provide to the Vendors at the Closing Date its registration number under such statute.
ARTICLE VII — COVENANTS
7.1 Access to Information
| | (a) | | During the Interim Period the Vendors agree that 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 the Vendors
relating to the |
- 49 -
| | | | Business and such examination of the books, records and
financial condition of the Vendors relating to the Business as it reasonably
requests and, at the Purchaser’s cost, to make extracts and copies of such
books and records. Purchaser shall use its best efforts to conduct any such
investigation and examination upon twenty-four (24) hours written notice to the
Vendors, and during regular business hours and under reasonable circumstances, and the
Vendors shall 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 Vendors or the Vendor Group, contained in this Agreement or the
Transaction 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 the Vendors relating to the Business, the Vendors shall cause
the officers, employees, consultants, agents, accountants, lawyers and
other representatives of the Vendors to cooperate fully with such
representatives in connection with such Purchaser review and
examination. |
| | (b) | | Prior to and up to and including the Closing, the Vendors shall
disclose to the Purchaser the personal information of individuals, including
the personal information of employees of the Vendors, provided however: |
| | (i) | | the personal information disclosed
shall only be that which relates to the transactions contemplated
hereby and the Purchaser shall only use and disclose that personal
information for such purposes; and |
| |
| | (ii) | | the personal information disclosed
shall be that which is needed in support of the Purchaser’s due
diligence and shall not omit any material fact and the Purchaser
shall only use and disclose that personal information as needed for
the purposes of the Purchaser determining whether to proceed with
the transaction contemplated hereby. |
| | (c) | | In the event the transactions contemplated hereby are not
completed, the Purchaser shall, in respect of all personal information
collected |
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| | | | pursuant to this Section and which remains in its custody or under
its control, either destroy that personal information or return it to the
Vendors, at the direction of the Vendors. |
| |
| | (d) | | In the event that the transactions contemplated hereby are
completed, the personal information of employees received from the Vendors
shall only be used by the Purchaser in respect of the employment relationship
between the employees and Purchaser: |
7.2 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, the Vendors during the Interim
Period shall: |
| | (i) | | conduct the Business 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 staff) and goodwill of the Vendors
and (B) preserve its present relationship with Persons having
business dealings with the Vendors; |
| |
| | (iii) | | maintain (A) all of the Assets and
properties of the Vendors in their current condition, ordinary wear
and tear excepted and (B) insurance upon all of the Assets in such
amounts and of such kinds comparable to that in effect on the date
of this Agreement; |
| |
| | (iv) | | maintain the books, accounts and
records of the Vendors in the ordinary course of business
consistent with past practices; |
| |
| | (v) | | continue to collect accounts receivable
and pay accounts payable utilizing normal procedures and without
discounting or accelerating payment of such accounts; |
| |
| | (vi) | | comply with all contractual and other
obligations applicable to the operation of the Business by the
Vendors; |
| |
| | (vii) | | promptly pay and discharge all
liabilities (including liabilities for services rendered or goods
delivered to the Vendors) that are due and payable by it prior to
the Closing Date except |
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| | | | where such liabilities are being disputed in good faith by appropriate proceedings; and |
| |
| | (viii) | | comply in all material respects with applicable Laws. |
| | (b) | | Except as otherwise expressly contemplated by this Agreement or
with the prior written consent of the Purchaser, the Vendors during the
Interim Period shall not: |
| | (i) | | increase the annual level of
compensation of the Listed Employees of the Vendors, other than
any such increases of not more than 3% in the aggregate granted in
the ordinary course of business consistent with past practice, (B)
grant any bonus, benefit or other direct or indirect compensation
to any Listed Employee other than in the ordinary course
consistent with past practice and in such amounts as are fully
reserved against in the Financial Statements, (C) 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 Listed Employees of the Vendors or
otherwise modify or amend or terminate any such plan or
arrangement or (D) enter into any employment, deferred
compensation, severance, consulting, non-competition or similar
agreement (or amend any such agreement) to which the Vendors is a
party involving a Listed Employee of the Vendors in his or her
capacity as an employee of the Vendors; |
| |
| | (ii) | | sell, assign, transfer, convey, lease
or otherwise dispose of any of the Assets, except (other than with
respect to the Stores or the Business) in the ordinary course of
business consistent with past practice of the Vendors; |
| |
| | (iii) | | enter into any commitment for Capital
Expenditures in excess of $25,000.00 with respect to the Assets; |
| |
| | (iv) | | enter into, modify or terminate any
labour or collective bargaining agreement of the Vendors or,
through negotiation or otherwise, make any commitment or incur any
liability to any labour organization with respect to the Vendors; |
| |
| | (v) | | introduce any material change with
respect to the operation of the Business, including any material
change in risk assessment, the types, nature, composition or
quality of its |
- 52 -
| | | | products or services or lending practices or, other
than in the ordinary course of business, make any change in
specifications for product or services of the Business or prices or
terms of distributions of such product or services; |
| | (vi) | | enter into any transaction or 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 of the Vendors or the Business; |
| |
| | (vii) | | become obligated to develop any new
locations; or |
| |
| | (viii) | | agree to do anything prohibited by this Section 7.2 or take or
omit to take any action which would make any of the representations
and warranties of the Vendors in this Agreement or the Transaction
Documents untrue or incorrect in any respect during the Interim
Period. |
7.3 Consents
| | (a) | | During the Interim Period the Vendors shall use its
commercially reasonable best efforts, and the Purchaser shall cooperate with
the Vendors 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 5.5(b) and/or Schedule 5.5 hereof. |
| |
| | (b) | | During the Interim Period the Purchaser shall use its
commercially reasonable best efforts, and the Vendors shall cooperate with the
Purchaser 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 6.3(b) and/or Schedule 6.3 hereof. |
- 53 -
7.4 Consents to Real Property Leases
The Vendors shall at their cost obtain all Consent Documents from landlords and lessors which
are required to be obtained under Section 9.3 hereof to transfer the Real Property Leases to the
Purchaser pursuant to the terms of any of the Real Property Leases.
7.5 No Solicitation
During the Interim Period the Vendors will not, nor will they cause or permit any of the
Vendors’ 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, the Vendors
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 respect of an Acquisition Transaction, (iii) furnish or cause to be furnished, to any
Person, any information concerning the business, operations, properties or assets of the Vendors 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. During the Interim Period, the Vendors will inform the Purchaser in writing
immediately following the receipt by the Vendors or any Representative of any proposal or inquiry
in respect of any Acquisition Transaction.
7.6 Publicity
Neither the Vendors, the Vendor Group or the Purchaser shall make or 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 law, applicable to the Purchaser or an Affiliate of the Purchaser. The
Vendors specifically acknowledges however, that if in the sole judgment of the Purchaser or its
advisors, disclosure of this Agreement is prudent or necessary to comply with public company
reporting requirements of disclosure of material transactions, the Purchaser shall be permitted to
unilaterally do so. The Purchaser shall use its best efforts to provide prior notification of an
announcement to the Vendors.
7.7 Use of Name
The Vendors hereby agree that upon the Closing Date, the Purchaser shall have
- 54 -
the sole right
to the use of the name “Money Mart” in connection with the Stores and the Vendors will discontinue
and will cause any Affiliate of the Vendors to discontinue any use of the name “Money Mart”. The
Vendors will assign their rights (if any) to all domain names listed in Schedule 5.13 to the Purchaser.
7.8 Non-Competition Agreements
Each of the Vendors and the Vendor Group hereby agree that, on or prior to the Closing Date,
each of them shall execute and deliver and, except as set out in Schedule 7.8, the Vendors shall
cause every other director, officer and shareholder of the Vendors to execute and deliver to the
Purchaser a Non-Competition Agreement, substantially in the form of Exhibit A hereto
(“Non-Competition Agreement”).
7.9 Employer Health Tax
The Vendors acknowledge and agree that, notwithstanding the completion of the transactions
contemplated by this Agreement, they shall continue to have sole responsibilities and liability for
the payment of tax pursuant to the Employer Health Tax Act (Ontario) or any similar legislation in
in the Maritime Provinces in respect of all remuneration paid to employees of the Vendors in the
Business in respect of services provided during the period up to the Closing Date, whether or not
the same is paid by Vendors or Purchaser and whether or not before or after the Closing Date.
7.10 Employees
| | (a) | | The Vendors agree to provide the Purchaser with an up-to-date
list of the names of the operating employees (the “Listed Employees”) and list
of non operating employees of the Business at least three (3) Business Days and
not more than five (5) Business Days prior to the Closing Date. The Purchaser
covenants and agrees that it shall offer employment to the Listed Employees,
effective as at the Effective Time, on substantially the same terms and
conditions of employment, including any Employee Benefit Plans in effect for
such employees, as at June 30, 2006 subject only to wage increases in the
normal course of business consistent with past practice not exceeding three
(3%) percent in the aggregate. The Vendors shall indemnify and hold harmless
the Purchaser from and against all losses suffered or incurred by the Purchaser
as a result of or arising directly or indirectly |
- 55 -
| | | | out of, in connection with or
pursuant to any claims arising before the Closing Date by any employees of the
Business, including non operating employees. No employee of the Business shall
be entitled to any rights under this Section 7.10 or under any other provisions of
this Agreement. |
| |
| | (b) | | The Vendors shall employ all of the Listed Employees set out in
Schedule 5.17 until the Closing Date, except for any such employees who prior
to the Closing Date: |
| | (i) | | are terminated for cause; |
| |
| | (ii) | | are terminated with the Purchaser’s
consent, which consent shall not be unreasonably withheld; |
| |
| | (iii) | | voluntarily resign; or |
| |
| | (iv) | | retire. |
The Vendors and the Vendor Group shall not attempt in any way to discourage any of the Listed
Employees from accepting any offer of employment to be made by the Purchaser or its Affiliates.
7.11 GST Election
The Vendors and the Purchaser shall elect jointly pursuant to the provisions of Subsection
167(1) of the Excise Tax Act by completing at or prior to Closing all prescribed forms and related
documents in such manner as is prescribed, so that for purposes of the Excise Tax Act, no GST is
payable in respect of the purchase and sale of the Assets. The Purchaser covenants that, at or
immediately subsequent to the Time of Closing, it will file with Revenue Canada, Customs and
Excise, the joint election made under Section 167 of the Excise Tax Act by registered mail and will
provide the Vendors with written confirmation of such filing.
7.12 Surrender of Franchise Agreements
On closing, the Purchaser shall deliver to the Vendors a surrender of all existing franchise
agreements between the Vendors and the Purchaser together with releases of all personal and
corporate guarantees given by principals and shareholders of the Vendors in the existing franchise
agreements with the Purchaser in respect of all liability of such guarantors relating to matters
arising from and after the Closing Date.
- 56 -
7.13 Vendors’ Access to Information
Subsequent to the Closing, the Purchaser shall allow the Vendors reasonable access to the
Vendors’ former books and records relating to the Business and, as reasonably
required, access to MMCOLLECT and MMSUITE to enable the Vendors to (i) deal with and process post
dated cheques not related to the Loan Portfolio or cheques deposited by the Vendors prior to or
after Closing that are returned on or after Closing, (ii) prepare its financial statements for the
fiscal year of the Vendors ending subsequent to the Closing, and (iii) respond to and deal with any
audit or reassessment of the Vendors by any taxing authority.
7.14 Financial Reporting
| | (a) | | On or before the 15th day of November, 2006, the Vendors shall
deliver to the Purchaser management prepared unaudited interim financial statements of
the Vendors (with relevant footnotes as in previous audited financial statements) as
follows: |
| | (i) | | Statement of income and cashflow for period from the Vendors’
last audited year end to September 30, 2006 and the comparative period ended
September 30, 2005; and |
| |
| | (ii) | | Balance sheet as at September 30, 2006 with comparative balance
sheet from the Vendors’ last audited year end; |
ARTICLE VIII — CONDITIONS TO CLOSING
8.1 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
(the determination of whether the same are satisfied or not is in the sole reasonable discretion of
the Purchaser and any or all of which may be waived by the Purchaser in whole or in part):
| | (a) | | All representations and warranties of the Vendors contained
herein shall be true and correct as of the Effective Time on the Closing Date; |
| |
| | (b) | | The Vendors shall have performed and complied in all material
respects with all obligations and covenants required by this |
- 57 -
| | | | Agreement to be performed or complied with by Vendors on or prior to the Effective Time on the Closing Date; |
| | (c) | | The Purchaser shall have been furnished with a certificate
(dated the Closing Date and in form and substance reasonably satisfactory to
the Purchaser) executed by an officer of the Vendors certifying as to the
fulfillment of the conditions specified in Sections 8.1(a) and 8.1(b); |
| |
| | (d) | | The Purchaser shall have obtained all consents and waivers
referred to in Schedule 6.3 hereof with respect to the transactions
contemplated by this Agreement and the Purchaser Documents; |
| |
| | (e) | | There shall not have been or occurred any Material Adverse
Change in the Business since the Balance Sheet Date; |
| |
| | (f) | | The Vendors shall have obtained all consents and waivers
referred to in Schedule 5.5 hereof, in a form reasonably satisfactory to the
Purchaser, with respect to the transactions contemplated by this Agreement or
the Transaction Documents. |
| |
| | (g) | | No Legal Proceedings shall have been instituted or threatened
or claim or demand made against either of the Vendors 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; |
| |
| | (h) | | The Vendors 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; |
- 58 -
| | (i) | | Consent Documents shall have been obtained in form and
substance satisfactory to Purchaser in accordance with Section 9.3; |
| |
| | (j) | | The Vendors shall have presented a form of opinion of the
Vendors’ Solicitors in the form attached as Exhibit “D”; |
| |
| | (k) | | The Purchaser shall have received duly executed copies of each
of the documents enumerated in Schedule 9.1; |
| |
| | (l) | | The Purchaser shall have been furnished with evidence of
consents or discharges of security agreements registered against the Assets
under the Personal Property Security Act (Ontario), the Personal Property
Security Act (Nova Scotia), Personal Property Security Act (New Brunswick), and
Personal Property Security Act (Newfoundland and Labrador) or other applicable
legislation as the Purchaser may reasonably require to give effect to the terms
of this Agreement; |
| |
| | (m) | | The Purchaser shall have received approval of its Board of
Directors to consummate the transactions contemplated by this Agreement; |
| |
| | (n) | | The Purchaser shall have obtained financing specifically to
fund the Purchase Price on terms and conditions acceptable to the Purchaser in
its sole discretion; |
| |
| | (o) | | Subject to the provisions of Section 8.3(c), the Purchaser
shall have obtained all Permits required to operate the Business; and |
| |
| | (p) | | The Purchaser shall have entered into purchase agreements with
the Related Vendors and the Purchaser and Related Vendors shall have satisfied
or waived all conditions precedent to consummating the transactions
contemplated in such purchase agreements. |
- 59 -
8.2 Conditions Precedent to Obligations of the Vendors
The obligations of the Vendors to consummate the transactions contemplated by this Agreement
are subject to the fulfillment, on or prior to the Closing Date, of each of the following
conditions (the determination of whether the same are satisfied or not is in the sole reasonable
discretion of the Vendors and any or all of which may be waived by the Vendors in whole or in
part):
| | (a) | | all representations and warranties of the Purchaser contained
herein shall be true and correct as of the Effective Time on the Closing Date; |
| |
| | (b) | | 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
Effective Time on the Closing Date; |
| |
| | (c) | | the Vendors shall have been furnished with a certificate (dated
the Closing Date and in form and substance reasonably satisfactory to the
Vendors) executed by an officer of the Purchaser certifying as to the
fulfillment of the conditions specified in Sections 8.2(a) and 8.2(b); |
| |
| | (d) | | the Purchase Price shall be delivered at the Closing to the
Vendors’ Solicitors including, to the extent applicable, payment of the Permit
Holdback to the Vendors’ Solicitor pursuant to Section 8.3(c) and payment of
the Lease Assignment Holdback to the Depositary pursuant to Section 9.3; |
| |
| | (e) | | the Purchaser shall have presented a form of opinion of the
Purchaser’s Solicitor in the form attached as Exhibit “D”; |
| |
| | (f) | | the Vendors shall have received duly executed copies of each of
the documents enumerated in Schedule 9.2; |
| |
| | (g) | | the Purchaser shall have obtained all consents and waivers
referred to in Schedule 6.3 hereof, in a form reasonably satisfactory to the
Vendors, with respect to the transactions contemplated by this Agreement and
the Purchaser Documents; |
- 60 -
| | (h) | | no Legal Proceedings shall have been instituted or threatened
or claim or demand made against either of the Vendors 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; |
| |
| | (i) | | the Purchaser shall have furnished to Vendors, in form and
substance satisfactory to Vendors, such certificates and other evidence as
Vendors 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 Vendors may reasonably request; |
8.3 Failure to Satisfy Conditions Precedent Set Out in 8.1
If any of the foregoing conditions contained in Section 8.1 which by their terms are to be
satisfied on or before the Time of Closing are not satisfied at the Time of Closing, the Purchaser
may:
| | (a) | | refuse to complete the transactions contemplated in this
Agreement by notice in writing to the Vendors and, in such event, the Purchaser
shall be released from all of its obligations under this Agreement and this
Agreement shall thereupon be deemed to be null and void and of no force or
effect whatsoever; or |
| |
| | (b) | | complete the transactions contemplated in this Agreement, it
being expressly understood and agreed that following such completion the
Purchaser may not rely upon the warranties, representations or covenants
relating to any unsatisfied condition unless the ability to satisfy the
unsatisfied condition was within the reasonable control of the Vendors; |
provided that any of the said conditions may be waived in whole or in part by the Purchaser without
prejudice to its rights of rescission in the event of non-fulfillment and/or non-
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performance of any
other condition or conditions; any such waiver prior to the Time of Closing to be binding on the
Purchaser only if same is in writing.
| | (c) | | If at Closing the Purchaser has obtained all Permits to operate
some but not all Stores, then, the parties shall complete the purchase and sale
with respect to Stores for which the Purchaser has obtained all Permits on the
Closing Date. That portion of the Purchase Price attributable to each Store
for which the Purchaser has not obtained all Permits (“Permit Holdback”) shall
be paid to the Vendors’ Solicitor to be held in escrow in an interest bearing
trust account and the Closing Date for such Store shall be deemed to be ten
(10) business days following receipt of all Permits for such Store, at which
time the purchase and sale of such Store shall be completed in accordance with
and subject to the terms of 11.5(b) including the terms and conditions
applicable to Closing and, the Permit Holdback together with interest
thereon, shall be delivered to the Vendors. The Purchaser covenants and
agrees to make commercially reasonable best efforts to make application
for and obtain such Permits. If the Purchaser has been unable to obtain
all Permits for any Store within one hundred twenty (120) days following
the Closing Date, then with respect to each such Store (i) the parties
shall be released from their obligations under this Agreement and this
Agreement shall thereupon be deemed to be null and void and of no force
and effect whatsoever; and (ii) the Vendors’ Solicitor shall repay to
the Purchaser the Permit Holdback attributable to such Store with all
interest accrued thereon without set off or deduction. The Permit
Holdback for a Store shall be the percentage of the Purchase Price that
is equal to the percentage that the annual gross revenue for the fiscal
period ending on the Balance Sheet Date for the Store bears to the
annual gross revenue of all Stores of the Vendors for the same period. |
8.4 Failure to Satisfy Conditions Precedent Set Out in 8.2
If any of the conditions contained in Section 8.2 which by their terms are to be satisfied on
or before the Time of Closing are not satisfied at the Time of Closing, the Vendors may:
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| | (a) | | refuse to complete the transactions contemplated in this
Agreement by notice in writing to the Purchaser and, in such event, the
Vendors, and the Vendor Group, shall be released from all of their obligations
under this Agreement and this Agreement shall be thereupon be deemed to be null
and void and of no force or effect whatsoever; or |
| |
| | (b) | | complete the transactions contemplated in this Agreement, it
being expressly understood and agreed that following such completion, the
Vendors may not rely upon the warranties, representations or covenants relating
to any unsatisfied condition unless the ability to satisfy the unsatisfied
condition was within the reasonable control of the Purchaser; |
provided that any of the said conditions may be waived in whole or in part by the Vendors without
prejudice to its rights of rescission in the event of non-fulfillment and/or non-performance of any
other condition or conditions; any such waiver prior to the Time of Closing to be binding on the
Vendors only if same is in writing.
ARTICLE IX — DOCUMENTS TO BE DELIVERED
9.1 Documents to be Delivered by the Vendors
At the Closing, the Vendors shall execute and deliver, or cause to be executed and delivered,
to the Purchaser those agreements, instruments and other documents required to be delivered by the
Vendors pursuant to Schedule 9.1 and such other instruments as may be required by the terms of this
Agreement to be delivered at the Closing.
9.2 Documents to be Delivered by the Purchaser
At the Closing, the Purchaser shall execute and deliver, or cause to be executed and
delivered, to the Vendors those agreements, instruments and other documents required to be
delivered by the Purchaser pursuant to Schedule 9.2 and such other instruments and documents and
items and make such payments of money as are required by the terms of this Agreement to be
delivered or paid at the Closing.
9.3 Minimum Lease Assignments
| | (a) | | The Vendors shall obtain and provide to the Purchaser the
estoppel certificates and consents to assignment (“Consent Documents”) under
the |
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| | | | Real Property Leases, substantially in the form set out in Exhibit “B”
hereto, duly executed by the landlords of the Real Property Leases for transfer
of the Real Property Leases to Purchaser. If the Vendors obtain the Consent
Documents under 90% of the Real Property Leases listed on Schedule 5.11(a) (the
“Minimum Lease Condition” for purposes of Article IX) then the condition
precedent set forth in Section 8.1(i) shall be deemed to be met. |
| |
| | (b) | | If at Closing all Consent Documents have not been obtained but
the Minimum Lease Condition is satisfied, then for each Store (“Deficient
Store”) and Real Property Lease for which the Vendors have not obtained Consent
Documents, the Purchaser may, at its option: |
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| | (i) | | complete the sale of Assets only for the Stores
for which Consent Documents have been provided and that portion of the
Purchase Price attributable to the Deficient Store (calculated below)
shall be paid into escrow with the Vendors’ Solicitors acting as
Depository in the Escrow 1 Agreement (the form of which Escrow 1
Agreement is attached as Exhibit “C1” hereto) and the Purchase Price
deliverable to the Vendors on Closing pursuant to Section 3.2 and 3.3
shall be reduced accordingly. Purchase and sale for the Deficient
Store will be completed within ten (10) business days following receipt
of the Consent Documents provided however should Consent Documents not
be provided within one (1) year from the Closing Date, the Purchaser
must elect to either proceed with the purchase of the Deficient Store
or terminate this Agreement with respect to purchase of the Deficient
Store and, in such latter case, the monies held in escrow shall be
refunded to the Purchaser. After such one (1) year period, in order to
elect to proceed with purchase of the Deficient Store the Purchaser
shall deliver written notice to the Vendors of its intention to proceed
with the purchase and sale at any time on or prior to the next business
day following the first anniversary of the Closing Date. The Closing
Date for such Deficient Store shall be deemed to be the tenth
(10th) business day following the date of delivery of
notice at which time the purchase and sale of the Deficient Store shall
be concluded. The portion of the Purchase Price attributable to the
Deficient Store paid into escrow shall be the percentage of the
Purchase Price that is equal to the percentage that the annual gross
revenue for the fiscal period ending June 30, 2006 for the Deficient
Store bears to the annual gross revenue for all Stores of the Vendors
for the same period; or |
| |
| | (ii) | | proceed with purchase and sale of the
Deficient Store in which case for such Deficient Store: |
| | (A) | | the amount of
C$250,000.00 of the Purchase Price shall be placed into
escrow (“Lease Assignment Holdback”) with the Vendors’
Solicitor acting as the Depositary in the Escrow 2 Agreement
(the form of which Escrow 2 Agreement is attached as Exhibit
“C2” hereto) pending receipt and delivery of such Consent
Documents (and the Purchase Price deliverable to the Vendors
on Closing pursuant to Section 3.2 and Section 3.3 shall be
reduced accordingly). Any Lease Assignment Holdback amounts
shall be held in escrow and disbursed pursuant to and as
provided in the Escrow 2 Agreement. |
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| | (B) | | In the event that Consent
Documents are not thereafter procured as to a particular
Deficient Store and as a result Purchaser is forced to move
the location of the Deficient Store to another site, all
relocation and related costs of the Purchaser incurred in
connection with the relocation of the Deficient Store
including any differential in rental rate during the
remaining term of the Real Property Lease of the Deficient
Store shall be reimbursed to the Purchaser out of the Lease
Assignment Holdback. In the event that the holdback is
insufficient to reimburse the Purchaser for all the costs of
relocation then the Vendors shall reimburse the Purchaser
for the shortfall. |
| |
| | (C) | | In the event that Consent
Documents in substantially the form proffered by the
Purchaser are thereafter procured, the amount of the Lease
Assignment Holdback escrowed as to the Deficient Store shall
be remitted to the Vendors. |
| |
| | (D) | | In the event that neither
of the events described in 9.3(b)(ii)(B) nor 9.3(b)(ii)(C)
occurs as to a Deficient Store within one (1) year of the
Closing Date, and during such one (1) year period the
Vendors have used reasonable commercial efforts to obtain
the Consent Documents and the landlord of the Deficient
Store has taken no steps to terminate the lease or
Purchaser’s possession of the Deficient Store, then the
funds escrowed as to the Deficient Store shall be paid over
to the Vendors. |
ARTICLE X — INDEMNIFICATION
10.1 Survival
The representations and warranties of the Vendors, ▇▇▇ and ▇▇▇▇▇ and the Purchaser shall
remain operative and in full force and effect regardless of any investigation or statement as to
the results thereof made by or on behalf of any party hereto. 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 in 10.2(a) or (b)
shall survive with respect to such claim or dispute until the final resolution and satisfaction
thereof.
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10.2 General Indemnification
| | (a) | | The Vendors and the Vendor Group, hereby jointly and severally
agree to indemnify and hold harmless the Purchaser and its Affiliates and their
respective directors, officers, employees, agents, successors and assigns,
(collectively, the “Purchaser Indemnified Parties”): |
| | (i) | | for a period of two (2) years from the
Closing Date from and against and in respect of any and all Losses
resulting from, arising out of, based on or relating to: |
| | (A) | | the failure of any
representation or warranty of the Vendors, ▇▇▇ and ▇▇▇▇▇,
set forth in this Agreement, any Transaction Document or
any certificate or instrument delivered by or on behalf of
the Vendors 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; |
| |
| | (B) | | the breach of any
covenant or other agreement on the part of the Vendors
under this Agreement or any Transaction Document; |
| |
| | (C) | | any Excluded Liability; |
| |
| | (D) | | any Release of
Hazardous Materials by or held on behalf of (i) the Vendors
or (ii) any Person for whose actions the Vendors are
responsible in law in, on, at, or from the Stores which
occurred, or resulted from operations occurring, as of or
prior to the Closing; 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
Closing; 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 any
other Environmental Costs and Liabilities and any other
Environmental Claim or Remedial Action resulting from or
based upon anything related to the Stores as of or prior to
Closing; and |
| | (ii) | | for an unlimited period from and
against and in respect of and Ninety-Two and three quarters
(92.75%) Percent of all Losses resulting from, arising out of, or based on or relating to the |
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| | | | provision of financial services by the Vendors to their
customers prior to the Closing Date, (other than any Losses
resulting from, arising out of or based on or calculated in
reference to the receipt by the Purchaser or any Affiliate of
the Purchaser of any royalty payments as a franchisor in respect
of the provisions of such services by the Vendors), including
without restricting the generality of and subject to the
foregoing, payments of any judgment or settlement by the
Purchaser in any class proceedings in respect of payday loan
transactions conducted by the Vendors with their customers prior
to the Effective Time, other than payments of any judgment or
settlement by the Purchaser resulting from, arising out of or
based on or calculated in reference to the receipt by the
Purchaser or any Affiliate of the Purchaser of any royalty
payments in respect of such payday loan transactions. |
| |
| | (iii) | | For an unlimited period from and
against and in respect of all Losses resulting from, arising out
of, based on or relating to fraud by the Vendors or the Vendor
Group. |
| | (b) | | Purchaser agrees to indemnify and hold harmless the Vendors and
their respective Affiliates, and their respective directors, officers,
employees, agents, successors and assigns (collectively, the “Vendor
Indemnified Parties”): |
| | (i) | | for a period of two (2) years from the
Closing Date from and against and in respect of any and all Losses
resulting from, arising out of, based on or relating to: |
| | (A) | | the failure of any
representation or warranty of the Purchaser set forth in
this Agreement or any Purchaser Document or any certificate
or 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; |
| |
| | (B) | | the breach of any
covenant or other agreement on the part of the Purchaser
under this Agreement or any Purchaser Document; |
| |
| | (C) | | any Contract
Liabilities; and |
- 68 -
| | (ii) | | for an unlimited period from and
against and in respect of Seven and one quarter (7.25%) Percent of
all Losses resulting from arising out of, or based on or relating
to the provision of payday loans by the Vendors to their customers
prior to the Effective Time. |
10.3 Limitations on Indemnification
| | (a) | | The Vendors and the Vendor Group shall not have any liability
under Section 10.2(a)(i), unless and until the aggregate amount of Losses
subject to indemnification thereunder exceeds C$30,000.00 and in such event,
the Vendors and the Vendor Group shall be required to pay the entire amount of
such Losses in excess of C$30,000.00. |
| |
| | (b) | | The Purchaser shall not have any liability under Section
10.2(b)(i), unless and until the aggregate amount of Losses subject to
indemnification thereunder exceeds C$30,000.00 and, in such event, the
Purchaser shall be required to pay the entire amount of such Losses in excess
of C$30,000.00. |
| |
| | (c) | | The maximum aggregate liability of the Vendors and the Vendor
Group in respect of an indemnity obligation arising pursuant to Section
10.2(a)(ii) shall be limited to and shall not exceed an amount equal to fifty
(50%) percent of the Purchase Price received by the Vendors. |
10.4 Indemnification Procedures
For the purposes of administering the indemnification provisions of Sections 10.2 and 10.3,
the following procedures shall apply:
| | (a) | | If an indemnified party shall receive notice of any Claim which the indemnified
party asserts is indemnifiable under Section 10.2, 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 10.4 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. |
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| | (b) | | The indemnified party shall have the right in first instance to assume defence
of any Claim. If the indemnified party notifies the Indemnitor that it does not elect
to assume the defence of the Claim then 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 party) if the Indemnitor shall
provide the indemnified party a written acknowledgment of its liability to indemnify
such indemnified party 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 subject to the indemnified party’s right to
assume defence of the Claim. 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, or if the indemnified party elects to
defend or assume defence of the Claim, the indemnified party shall have the sole right
to engage counsel and with counsel to defend the Claim in its sole discretion,
provided, however, that the indemnified party shall not settle or
compromise any such Claim for which it seeks indemnity from the Indemnitor without the
prior written consent of the Indemnitor (which consent will not be unreasonably
withheld or delayed). |
| |
| | (c) | | In cases where the Indemnitor has assumed 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 legal fees and disbursements
subsequently incurred by such indemnified party in connection therewith. |
| |
| | (d) | | The Vendors acknowledge that the Purchaser has been named as a Defendant in
class proceedings in the Provinces of Ontario, New Brunswick, Nova Scotia and |
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| | | | Newfoundland and Labrador. To the extent that such class proceedings in whole or in part claim damages against the Purchaser for payday loans provided by the
Vendors to their customers prior to the Closing Date (other than a claim for damages
based upon or calculated in reference to the royalties received by the Purchaser or
any Affiliate of the Purchaser in respect of such transactions) such class
proceedings constitute a Claim of which the Vendors have received notice, however
the Vendors do not hereby acknowledge nor do they reject any liability to indemnify
the Purchaser, and the Vendors specifically reserve their right to acknowledge or to
reject any liability to indemnify the Purchaser for Losses in respect of such
Claim. |
| |
| | (e) | | Notwithstanding anything to the contrary herein, to the extent that two or more
parties are “indemnified parties” in connection with a Claim (for example, if one legal
action is commenced that has multiple Claims the nature of which result in the
Purchaser being an indemnified party for certain of the Claims and the Vendors being an
indemnified party for other Claims contained in the same legal action), then each party
shall be entitled to assume defence of that portion of the Claim pursuant to which it
is the indemnified party. |
ARTICLE XI — GENERAL
11.1 Specific Performance
The Vendors 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 Vendors under this Agreement, including, without limitation, the Vendors’
obligation to sell the Assets 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.
11.2 Further Assurances
The Vendors and the Purchaser agree 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.
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11.3 Submission to Jurisdiction; Consent to Service of Process
| | (a) | | The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction
of any federal or other court located within the Province of Ontario 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 action on the judgment by
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 11.8. |
11.4 Entire Agreement, Amendments, Waivers and 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
- 72 -
presumption against any party on the
ground that such party was responsible for preparing this Agreement or any part thereof.
11.5 Severability
| | (a) | | If any provision of this Agreement is invalid or unenforceable, the balance of
this Agreement shall remain in effect. |
| |
| | (b) | | In the event that the Purchaser does not, pursuant to Section 8.3(c) and/or
Section 9.3(b)(i), purchase all of the Stores on the Closing Date, then the provisions
of this Agreement including the representations, warranties, covenants, obligations and
indemnities set out herein shall apply only with respect to the Stores that are
purchased on the Closing Date. Furthermore, the provisions of this Agreement including
the representations, warranties, covenants, obligations and indemnities shall continue
to apply with respect to the Stores not so purchased as if the Closing Date did not
occur. |
11.6 Binding Effect; Assignment
This Agreement shall be binding upon and enure 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 the Purchaser may assign this Agreement and any or all rights hereunder
(including, without limitation, the Purchaser’s rights to purchase the Assets and the Purchaser’s
rights to seek indemnification hereunder) to (a) any Affiliate of the Purchaser (provided that the
Purchaser shall remain liable for all of its obligations under this Agreement) or (b) after the
Closing, to any purchaser or transferee of any of the Assets of the Vendors. Upon any such
permitted assignment, the references in this Agreement to the Purchaser or the Vendors shall also
apply to any such assignee unless the context otherwise requires.
11.7 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
- 73 -
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.
11.8 Notices
All notices and other communications under this Agreement shall be in writing and shall be
deemed given when delivered personally or mailed by registered 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:
National Money Mart Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
- and -
Dollar Financial Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇, General Counsel
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
2500, ▇▇▇▇▇ — ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
If to the Vendors:
931669 Ontario Limited
3081219 Nova Scotia Ltd.
3085725 Nova Scotia Limited
603000 N.B. Inc.
602268 N.B. Inc.
11242 Newfoundland Limited
722906 Ontario Limited
2203850 Nova Scotia Limited
- 74 -
3085726 Nova Scotia Limited
511742 N.B. Inc.
602269 N.B. Inc.
10768 Newfoundland Limited
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
1016725 Ontario Ltd.
101090510 Saskatchewan Ltd.
▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
R ▇▇▇▇▇ Holdings Inc.
▇/▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, British Columbia
V1H 1E9
with a copy to:
▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇/▇▇▇▇▇ ▇▇▇▇▇▇
Any notice given in accordance with this paragraph shall be deemed received on the date of personal
delivery or five (5) days after posting by registered mail. Any party may by notice change the
address to which notice or other communications to it are to be delivered or mailed.
11.9 Language
The parties have acknowledged that they have requested and consented that this Agreement and
all documents, notices, correspondence and legal proceedings consequent thereon, ancillary or
related directly or indirectly thereto, forming part hereof or resulting herefrom be drawn up in
English.
11.10 Governing Law
This Agreement shall be governed by and construed in accordance with the laws
- 75 -
of the Province of Ontario without giving effect to principles of conflicts of law.
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.
931669 Ontario Limited
3081219 Nova Scotia Ltd.
3085725 Nova Scotia Limited
603000 N.B. Inc.
602268 N.B. Inc.
11242 Newfoundland Limited
722906 Ontario Limited
2203850 Nova Scotia Limited
3085726 Nova Scotia Limited
511742 N.B. Inc.
602269 N.B. Inc.
10768 Newfoundland Limited
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| | | | | R Kruze Holdings Ltd. | | |
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| | | | | 1016725 Ontario Ltd. | | |
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| | | | | 101090510 Saskatchewan Ltd. | | |
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| Witness | | | | ▇▇▇ ▇▇▇▇▇ | | |
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| Witness | | | | ▇▇▇▇▇ ▇▇▇▇▇ | | |
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| Witness | | | | ▇▇▇▇▇ ▇▇▇▇▇▇▇ | | |
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| Witness | | | | ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | | |
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| | | | | NATIONAL MONEY MART COMPANY | | |
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