EXHIBIT 10.25
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BETWEEN:
NATIONAL MONEY MART COMPANY
OF THE FIRST PART
- and -
KING MORTGAGE LTD.
OF THE SECOND PART
- and -
▇▇▇▇▇ ▇▇▇▇▇▇▇
OF THE THIRD PART
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PURCHASE AGREEMENT
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▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Barristers and Solicitors
#2500, ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
File No. 31,707-256 (NJKB)
TABLE OF CONTENTS
ARTICLE I - INTERPRETATION............................................................. 2
1.1 Defined Terms..................................................................... 2
1.2 Schedules and Exhibits............................................................ 12
1.3 Table of Contents and Headings.................................................... 14
ARTICLE II - DISSOLUTION OF PARTNERSHIP AND SALE AND PURCHASE OF ASSETS................ 14
2.1 Dissolution....................................................................... 14
2.2 Distribution...................................................................... 14
2.3 Sale and Purchase of Assets....................................................... 14
2.4 Assets............................................................................ 15
2.5 Liabilities....................................................................... 17
2.6 Excluded Liabilities.............................................................. 18
2.7 Expenses.......................................................................... 18
2.8 Services of ▇▇▇▇▇▇▇............................................................... 18
ARTICLE III - PURCHASE AND PAYMENT..................................................... 19
3.1 Amount of Purchase Price.......................................................... 19
3.2 Allocation of Purchase Price...................................................... 19
3.3 Payment of Purchase Price......................................................... 19
3.4 Post Closing Chargebacks.......................................................... 19
3.5 Adjustments....................................................................... 20
3.6 Financial Services................................................................ 20
ARTICLE IV - CLOSING AND TERMINATION................................................... 20
4.1 Closing Date...................................................................... 20
4.2 Termination of Agreement.......................................................... 21
4.3 Procedure Upon Termination........................................................ 21
4.4 Effect of Termination............................................................. 21
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE VENDOR AND DENIS..................... 22
5.1 Organization and Good Standing.................................................... 22
5.2 Authorization of Agreement........................................................ 22
5.3 Subsidiaries and Other Interests.................................................. 22
5.4 Conflicts; Consents of Third Parties.............................................. 23
5.5 Ownership and Transfer of Vendor's Share of Assets................................ 23
5.6 Financial Statements.............................................................. 24
5.7 No Undisclosed Liabilities........................................................ 25
5.8 Absence of Certain Developments................................................... 25
5.9 Residency......................................................................... 27
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5.10 Leased Property.................................................................. 27
5.11 Tangible Personal Property....................................................... 30
5.12 Intangible Property.............................................................. 31
5.13 Material Contracts............................................................... 32
5.14 Employee Benefits................................................................ 33
5.15 Labour........................................................................... 33
5.16 Employment Matters............................................................... 34
5.17 Litigation....................................................................... 36
5.18 Compliance with Laws............................................................. 36
5.19 Environmental Matters............................................................ 37
5.20 Insurance........................................................................ 38
5.21 Payables......................................................................... 39
5.22 Related Party Transactions....................................................... 39
5.23 Financial Advisors............................................................... 39
5.24 Licensed Operations.............................................................. 39
5.25 Name............................................................................. 40
5.26 Third Party Discussion........................................................... 40
5.27 No Bankruptcy.................................................................... 40
5.28 No Misrepresentation............................................................. 40
5.29 Partnerships..................................................................... 40
5.30 Withholdings..................................................................... 40
5.31 The Partnership.................................................................. 41
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF PURCHASER............................... 41
6.1 Organization and Good Standing................................................... 41
6.2 Authorization of Agreement....................................................... 41
6.3 Conflicts; Consents of Third Parties............................................. 42
6.4 Litigation....................................................................... 43
6.5 Financial Advisors............................................................... 43
6.6 Bankruptcy....................................................................... 43
6.7 Approvals........................................................................ 43
ARTICLE VII - COVENANTS................................................................ 43
7.1 Access to Information............................................................ 43
7.2 Conduct of the Business Pending the Closing...................................... 44
7.3 Consents......................................................................... 47
7.4 Consents to Real Property Leases................................................. 48
7.5 No Solicitation.................................................................. 48
7.6 Intentionally Deleted............................................................ 48
7.7 Publicity........................................................................ 48
7.8 Use of Name...................................................................... 49
7.9 Preservation of Records.......................................................... 49
7.10 Non-Competition Agreements....................................................... 49
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7.11 Employer Health Tax.............................................................. 49
7.12 Employees........................................................................ 49
ARTICLE VIII - CONDITIONS TO CLOSING................................................... 51
8.1 Conditions Precedent to Obligations of Purchaser................................. 51
8.2 Conditions Precedent to Obligations of the Vendor................................ 52
8.3 Failure of Vendor to Satisfy Conditions Precedent................................ 53
8.4 Failure of Purchaser to Satisfy Conditions Precedent............................. 54
ARTICLE IX - DOCUMENTS TO BE DELIVERED................................................. 55
9.1 Documents to be Delivered by the Vendor and Denis................................ 55
9.2 Documents to be Delivered by the Purchaser....................................... 56
9.3 Minimum Lease Assignments........................................................ 57
ARTICLE X - INDEMNIFICATION............................................................ 58
10.1 Survival......................................................................... 58
10.2 General Indemnification.......................................................... 58
10.3 Limitations on Indemnification for Breaches of
Representations and Warranties................................................... 59
10.4 Indemnification Procedures....................................................... 60
10.5 Treatment of Payment............................................................. 61
10.6 Limitation of Indemnity.......................................................... 62
ARTICLE XI - GENERAL................................................................... 62
11.1 Specific Performance............................................................. 62
11.2 Further Assurances............................................................... 62
11.3 Submission to Jurisdiction; Consent to Service of
Process.......................................................................... 63
11.4 Entire Agreement; Amendments and Waivers
Confidentiality.................................................................. 63
11.5 Severability..................................................................... 64
11.6 Binding Effect; Assignment....................................................... 64
11.7 Counterparts..................................................................... 64
11.8 Notices.......................................................................... 65
11.9 Governing Law.................................................................... 66
THIS PURCHASE AGREEMENT made as of the 4th day of February, 1999 (the
"Agreement"),
BY AND AMONG
NATIONAL MONEY MART COMPANY, an unlimited liability
Corporation duly registered under the laws of the
Province of Nova Scotia ("Purchaser")
OF THE FIRST PART
- and -
KING MORTGAGE LTD., a company incorporated in and
under the laws of the Province of Alberta ("Vendor")
OF THE SECOND PART
- and -
▇▇▇▇▇ ▇▇▇▇▇▇▇ of the City of Calgary, of the
Province of Alberta ("Denis")
OF THE THIRD PART
WITNESSETH:
WHEREAS as of the date hereof the Vendor and the Purchaser carry on
business in partnership under the name "Calgary Money Marts" (the
"Partnership");
WHEREAS the Purchaser owns a thirteen and one half (13.5%) percent
interest in the Partnership and the Vendor owns an eighty-six and one half
(86.5%) percent interest in the Partnership.
WHEREAS Denis is the sole director and officer and the majority
shareholder of the Vendor;
WHEREAS the Vendor has leased premises from which it operates on
behalf of the Partnership Six (6) cheque cashing and financial service stores
(the "Stores") at various locations in Calgary, Alberta as set out in Schedule
2.4(a);
WHEREAS the Purchaser and Vendor desire to dissolve the Partnership
and the Purchaser desires to purchase from the Vendor and the Vendor desires to
sell to Purchaser, the Vendor's interest in the Stores and related assets as
hereinafter defined and upon the terms and conditions hereinafter set forth;
WHEREAS, certain terms used in this Agreement are defined in Section
1.1;
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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) "Accounts Payable" means the aggregate dollar amount of
accounts payable, including all current liabilities of the
Partnership.
(b) "Accounts Receivables" shall have the meaning ascribed to such
term in Section 2.4(c).
(c) "Acquisition Transaction" shall have the meaning set forth in
Section 7.5 hereof.
(d) "Adjustment Items" means those items set forth on Exhibit "B"
and referred to in Section 3.5(a) hereof which will adjust the
Purchase Price.
(e) "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.
(f) "Agreement" means this agreement and all schedules, exhibits
and attachments hereto.
(g) "Assets" shall have the meaning ascribed to such term in
Section 2.4 hereof.
(h) "Assumed Contracts" shall have the meaning ascribed to such
term in Section 5.13 hereof.
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(i) "Balance Sheet" shall have the meaning ascribed to such term
in Section 5.6(b).
(j) "Balance Sheet Date" shall mean December 31, 1998.
(k) "Business" shall have the meaning ascribed to such term in
Section 2.4(b) hereof.
(l) "Business Day" means any day of the year on which national
banking institutions in Edmonton are open to the public for
conducting business and are not required or authorized to
close.
(m) "Canadian Currency" and the "C$" sign each means the lawful
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money of Canada.
(n) "Capital Expenditures" means, for any Person for any period,
the aggregate of all expenditures by such Person, except
interest capitalized during construction, during such period
for property, plant or equipment, including, without
limitation, renewals, improvements, replacements and
capitalized repairs, that would be reflected as additions to
property, plant or equipment on a consolidated balance sheet
of such Person prepared in conformity with GAAP. For the
purpose of this definition, the purchase price of equipment
which is acquired simultaneously with the trade-in of existing
equipment owned by such Person or with insurance proceeds
shall be included in Capital Expenditures only to the extent
of the gross amount of such purchase price less the credit
granted by the seller of such equipment being traded in at
such time or the amount of such proceeds, as the case may be.
(o) "Cash on Hand" means the sum of all cash (Canadian Currency
and U.S. Currency) of the Partnership.
(p) "Claim" shall have the meaning ascribed to such term in
Section 10.4(a) hereof.
(q) "Closing" shall have the meaning ascribed to such term in
Section 4.1 hereof.
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(r) "Closing Date" shall have the meaning ascribed to such term in
Section 4.1 hereof.
(s) "Closing Date Accounts Receivable" means the aggregate dollar
amount of accounts receivable of the Partnership at the time
of Closing.
(t) "Company Property" shall have the meaning ascribed to such
term in Section 5.10(a) hereof.
(u) "Consent Documents" shall have the meaning ascribed to such
term in Section 9.3(a) hereof.
(v) "Contract" means any contract, agreement, indenture, note,
bond, loan, instrument, lease, commitment or other arrangement
or agreement.
(w) "Contract Liabilities" shall have the meaning ascribed to such
term in Section 2.5 hereof.
(x) "Dissolution Agreement" shall mean the form of agreement set
out in Exhibit "E".
(y) "Effective Time" shall have the meaning ascribed to such term
in Section 4.1 hereof.
(z) "Employees" shall have the meaning ascribed to said term in
Section 5.16 hereof.
(aa) "Employee Benefit Plans" shall have the meaning ascribed to
such term in Section 5.14(a) hereof.
(bb) "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 against the Vendor or
Partnership for personal injury (including sickness, disease
or death), tangible or intangible property damage, damage to
the environment, nuisance, pollution, contamination or other
adverse effects on the environment, or for fines, penalties or
restrictions resulting from or based upon (i) the
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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 or from any property
operated or leased by the Corporation or any activities or
operations thereof; (ii) the transportation, storage,
treatment or disposal of Hazardous Materials in connection
with any property operated or leased by the Partnership or any
operations or facilities thereof; or (iii) the violation, or
alleged violation, of any Environmental Law of or from any
Governmental Body relating to environmental matters connected
with any property owned, operated or leased by the
Partnership.
(cc) "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 Claim.
(dd) "Environmental Law" means any 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 Protection
and Enhancement Act (Alberta), as such laws have been amended
or supplemented, and the regulations promulgated pursuant
thereto, and all analogous federal, provincial or local laws.
(ee) "Environmental Permits" shall have the meaning ascribed to
such term in Section 5.19(a).
(ff) "Escrow Agreement" shall mean the Escrow Agreement attached
hereto as Exhibit "D".
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(gg) "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.
(hh) "Excluded Liabilities" means any and all liabilities or
obligations of the Partnership, or Vendor of any kind, nature
and description, absolute or contingent, known or unknown,
existing 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, 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 2.5 hereof.
(ii) "Financial Statements" shall have the meaning ascribed to such
term in Section 5.6(a) hereof.
(jj) "GAAP" means Canadian generally accepted accounting principles
as of the date hereof.
(kk) "Governmental Body" means any government or governmental or
regulatory body thereof, or political subdivision thereof,
whether federal, provincial or local minister, governor or
lieutenant governor-in-council, board, tribunal or any agency,
instrumentality or authority thereof, or any court or
arbitrator (public or private).
(ll) "GST" shall refer to the Goods and Services Tax levied under
Part IX of the Excise Tax Act.
(mm) "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, 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.
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(nn) "Indemnitor" shall have the meaning ascribed to such term in
Section 10.4(a) hereof.
(oo) "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.
(pp) "Law" means any federal, provincial or local law (including
common law), statute, code, ordinance, rule, regulation or
other requirement.
(qq) "Legal Proceeding" means any judicial, administrative or
arbitral actions, suits, proceedings (public or private),
claims or governmental proceedings.
(rr) "Licenses" shall have the meaning ascribed to such term in
Section 2.4(b) hereof.
(ss) "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.
(tt) "Listed Employees" shall have the meaning ascribed to such
term in Section 7.12(a) hereof.
(uu) "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.
(vv) "Material Adverse Change" shall mean:
(i) an event whereby the gross revenues of the Stores for the
period from occurrence until the Closing are 5% less than
for the same period of the previous year; or
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(ii) an event that causes or will cause the closure of a Store
or the ability of the Purchaser to operate the Business
from a Store; or
(iii) 20% or more of the Listed Employees resigned or
indicate their intention to resign during the Interim
Period.
(ww) "Material Contracts" shall have the meaning ascribed to such
term in Section 5.13 hereof.
(xx) "Minimum Lease Condition" shall have the meaning ascribed to
such term in Section 9.3 hereof.
(yy) "Non-Assumable Claim" shall have the meaning ascribed to such
term in Section 10.4(c) hereof.
(zz) "Non-Competition Agreement" shall have the meaning ascribed to
such term in Section 7.10 hereof.
(aaa) "Non-Material Contract" means any Contract, other than Real
Property Leases or Material Contracts, which was entered into
in the ordinary course of the Business consistent with past
practice in an arm's length transaction.
(bbb) "Order" means any order, injunction, judgment, decree, ruling,
writ, assessment or arbitration award.
(ccc) "Partner" or "Partners" shall mean the Vendor and the Purchaser
individually and collectively;
(ddd) "Partnership" shall have the meaning ascribed to such term in
the first preamble paragraph.
(eee) "Partnership Agreements" shall mean a Partnership Agreement
between Calgary Money Mart Inc. and the Vendor dated June 1,
1990, Trade ▇▇▇▇ License Agreement between the Partnership and
Purchaser dated June 1, 1990, Management Agreement between
306166 Alberta Ltd., the Vendor, Sebe Investments Ltd. and
Denis dated July 1, 1984 and Management Amendment Agreement
between the Partnership and Denis dated June 1, 1990;
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(fff) "Permitted Exceptions" means (i) statutory liens for current
taxes, assessments or other governmental charges not yet
delinquent or the amount or validity of which is being
contested in good faith by appropriate proceedings, provided
an appropriate reserve is established therefor; (ii)
mechanics', carriers', workers', repairers' and similar Liens
arising or incurred in the ordinary course of business
provided that they are not greater than $1000.00 in the
aggregate; (iii) zoning, entitlement and other land use and
environmental regulations by any Governmental Body, provided
that such regulations have not been violated; (iv) such other
imperfections in title, charges, easements, restrictions and
encumbrances which do not materially detract from the value of
or materially interfere with the present use of any Company
Property subject thereto or affected thereby and including
leasehold improvements owned by Landlord; and (v) exceptions
for which the Purchaser has provided its consent in writing or
as otherwise provided for in this Agreement.
(ggg) "Permits" means any approvals, authorizations, consents,
Licenses, permits or certificates.
(hhh) "Person" means any individual, corporation, partnership, firm,
joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other
entity.
(iii) "Personal Property Lease" shall have the meaning ascribed to
such term in Section 5.11(a) hereof.
(jjj) "Prepaids" means, without duplication, the aggregate dollar
amount of all prepaid assets, prepaid expenses, prepaid rent,
security deposits, all as determined in accordance with GAAP,
consistently applied, of the Partnership related to the
Business at the Effective Time, as summarized in the attached
Schedule 1.1.
(kkk) "Property Contracts" shall have the meaning ascribed to such
term in Section 5.10(a) hereof.
(lll) "Purchase Price" shall have the meaning ascribed to such term
in Section 3.1 hereof.
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(mmm) "Purchaser" shall have the meaning ascribed to such term in the
introductory paragraph hereto.
(nnn) "Purchaser Documents" shall have the meaning ascribed to such
term in Section 6.2 hereof.
(ooo) "Purchaser Indemnified Parties" shall have the meaning ascribed
to such term in Section 10.2(a) hereof.
(ppp) "Purchaser's Solicitors" shall mean Messrs. ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
Barristers and Solicitors, 2500, ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇.
(qqq) "Real Property Lease" shall have the meaning ascribed to such
term in Section 5.10(a) hereof.
(rrr) "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.
(sss) "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 facility owned, operated or leased by the
Partnership and the operations thereon into compliance with
Environmental Laws.
(ttt) "Representatives" shall have the meaning ascribed to such term
in Section 7.5 hereof.
(uuu) "Stores" shall have the meaning ascribed to such term in the
recitals hereto.
(vvv) "Tax", "Taxes" 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,
estimated, gross
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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.
(www) "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.
(xxx) "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.
(yyy) "Time of Closing" shall mean 10:00 a.m. Edmonton time.
(zzz) "Transaction Documents" shall have the meaning ascribed to such
term in Section 5.2 hereof.
(aaaa) "Unaudited Statement" shall have the meaning ascribed to such
term in Section 5.6(a) hereof.
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(bbbb) "Vendor Indemnified Parties" shall have the meaning ascribed
to such term in Section 10.2(b) hereof.
(cccc) "Vendor" shall have the meaning ascribed to such term in the
preamble hereof.
(dddd) "Vendor's Share" shall have the same meaning ascribed to such
term in Section 2.3 hereof.
(eeee) "Vendor's Solicitors" means Cleall Pahl Barristers and
Solicitors 2500, ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Q.C.
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" - Estimated Adjustment Items
(c) Exhibit "C" - Form of Consent and Estoppel Certificate of
Landlord
(d) Exhibit "D" - Form of Escrow Agreement
(e) Exhibit "E" - Form of Partnership Dissolution Agreement
The Schedules to this Agreement are as follows:
Schedule 1.1 - Summary of Prepaids
Schedule 2.4(a) - Stores
Schedule 2.4(d) - Personal Property
Schedule 5.4 - Conflicts, Consents of Third parties
Schedule 5.6(a) - Financial Statements
Schedule 5.7 - Undisclosed Liabilities
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Schedule 5.8 - Developments since Balance Sheet Date
Schedule 5.10(a) - Real Property Leases
Schedule 5.11 - Personal Property Leases
Schedule 5.12 - Intangible Property
Schedule 5.13 - Material Contracts
Schedule 5.16 - Employees
Schedule 5.17 - Litigation
Schedule 5.18 - Compliance with Laws
Schedule 5.19 - Environmental Matters
Schedule 5.22 - Related Party Transactions
Schedule 5.26 - Third Party Discussions
Schedule 6.3 - Conflicts, Consents of Third Parties
Schedule 7.2 - Increases to Compensation
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 - DISSOLUTION OF PARTNERSHIP AND SALE AND PURCHASE OF ASSETS
2.1 Dissolution
The Vendor and Purchaser shall surrender the Partnership Agreements
and dissolve the Partnership on the day prior to the Closing Date effective as
of 12:01 a.m. The parties shall effective as at Closing enter into the
Partnership Dissolution Agreement attached hereto as Exhibit "E".
2.2 Distribution
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Immediately prior to dissolution, Denis on behalf of the Partnership
shall pay all of the liabilities of the Partnership and shall thereafter
distribute the Cash on Hand and each Partner's share of the Assets to the
respective Partners.
2.3 Sale and Purchase of Assets
Upon the terms and subject to the conditions contained herein, on the
Closing Date at the Effective Time the Vendor shall sell, assign, transfer,
convey and deliver to the Purchaser good and marketable title, free and clear of
all Liens, and the Purchaser shall purchase from the Vendor all of the Vendor's
interest in the Assets being eighty-six and one half (86.5%) percent ("Vendor's
Share") of the Assets.
In addition, from and after the Closing, the Vendor agrees to provide,
or cause to be provided, to Purchaser, access to all documents and/or
information as may be reasonably necessary to enable the Purchaser to see to the
efficient and proper conduct and administration of the Assets owned by the
Partnership as hereinafter defined including, without limitation, all historical
files, copies of Tax Returns, records and personnel data of the Partnership or
the Vendor related to the Business.
2.4 Assets
Without limiting the foregoing, the Vendor agrees that the following
are the assets of the Partnership ("Assets") and, immediately prior to the
Effective Time the Assets shall be owned by the Partnership free and clear of
all Liens except for the Permitted Exceptions:
(a) Stores Leasehold interest in the Stores.
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(b) Licenses and Authorizations All authorizations, approvals,
---------------------------
orders, licenses, franchises, certificates and permits
(collectively, "Licenses") of and from all Governmental Bodies
necessary to own or lease the properties and assets used or
usable in the ownership and/or operation of the Stores, and to
otherwise conduct the business of the operation of cheque
cashing and other financial services from the Stores that was
conducted by the Partnership prior to the date hereof (the
"Business") together with any renewals, extensions or
modifications thereof and additions thereto and other pending
applications or applications to be filed with any Governmental
Body between the date of this Agreement and the Closing Date.
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(c) Accounts Receivable Closing Date Accounts Receivable
-------------------
including without restriction all cheques returned unpaid,
post-dated cheques, accounts receivable, notes receivable and
similar items in the process of collection owned or otherwise
held by the Partnership on the Closing Date ("Accounts
Receivable").
(d) Other Personal Property, etc. All tangible and intangible
-----------------------------
personal or moveable property, equipment, machinery,
furniture, fixtures, tools, computer hardware, supplies and
other assets, wherever located, used or usable in the
ownership and/or operation of the Stores and the Business as
set out in Schedule 2.4(d) 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.
(e) Leasehold Property All leased real or immovable property,
------------------
buildings and structures, leasehold improvements, fixtures and
appurtenances used or usable in the operation of the
Partnership and 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.
(f) Leases and Agreements All contracts and agreements used or
---------------------
usable in the ownership and/or operation of the Stores and the
Business, including any renewals, extensions, amendments or
modifications thereof, and any additional agreements, leases,
commitments and orders made or entered into in accordance with
the terms of this Agreement between the date of this Agreement
and the Closing Date.
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(g) Intellectual Property, etc. All licenses of patents, patent
---------------------------
licenses, franchises, copyrights, trademarks, trade names,
service marks, trade secret rights, computer programs and
software to the extent such computer programs are currently
licensed and are transferable, permits, licenses or other
similar rights used or usable in the ownership and/or
operation of the Stores and the Business, including,
specifically, the trade names enumerated on Schedule 5.12
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.
(h) Books and Records All books, records and files pertaining to
-----------------
the Stores and the Business for all periods ending on or
before the Closing Date.
(i) Prepaid Expenses All security deposits and other prepaid
----------------
expenses relating to the operation and/or ownership of the
Stores and the Business, including, but not limited to, any
prepaid rent, licenses, postage and any other prepaid assets
or deposits relating to the operation and/or ownership of the
Stores existing as of the Closing Date.
(j) Customer Lists 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.
(k) Inventories All inventories of or relating to the Business at
-----------
the Stores as of the Closing Date including all packaged
materials, manufactured supplies and finished goods, excluding
cash or cash equivalent.
(l) Insurance Benefits Any benefits payable under all insurance
------------------
policies relating to the Assets or the Business at the Stores
in respect of any claims based on occurrences prior to the
Closing Date.
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(m) Supply Contracts The full benefit of all contracts providing
----------------
for the supply of goods and services to the Business.
(n) 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 subject
to the Purchaser's review and acceptance of such contracts and
agreements prior to the Closing Date.
2.5 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 for all goods
ordered prior to but delivered after Closing in the ordinary course of business
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
Vendor and Purchaser agree that in the normal course following Closing the
Partnership shall satisfy and discharge all of its obligations and liabilities
for amounts due or to become due for services rendered or goods delivered to the
Partnership with respect to the Business prior to Closing.
2.6 Excluded Liabilities
With the exception of 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 Partnership, Vendor or Business ("Excluded Liabilities").
The Vendor shall indemnify and save harmless the Purchaser and their officers,
directors, employees, agents and shareholders from and against the Vendor's
Share of all costs, expenses, losses, claims or liabilities including legal fees
on a solicitor and client basis suffered or incurred by the Purchaser or any of
its Affiliates arising out of any of the Excluded Liabilities.
2.7 Expenses
Except as otherwise provided in this Agreement, the Vendor 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. Immediately prior to Closing the
Vendor shall at the expense of the Partnership cause their
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accountants to prepare an internal financial statement of the Partnership for
the fiscal period ending immediately prior to Closing and shall provide a copy
to the Purchaser and Vendor. All other expenses related to accounting advice to
the Vendor shall be borne by the Vendor.
2.8 Services of ▇▇▇▇▇▇▇
For a period of sixty (60) days following Closing ▇▇▇▇▇▇▇ shall,
without further compensation, make his services available as a courtesy as
reasonably requested by the Purchaser to assist in the orderly take-over and
operation of the Business.
ARTICLE III - PURCHASE AND PAYMENT
3.1 Amount of Purchase Price
The purchase price for the Vendor's Share of the Assets (the "Purchase
Price") shall be Seven Million Eight Hundred Fifty Thousand (C$7,850,000.00)
Dollars. The Purchase Price is subject to adjustment as provided in this
Agreement.
3.2 Allocation of Purchase Price
The Vendor and the Purchaser covenant and agree that the Purchase
Price for the Vendor's Share of the Assets shall be allocated among the Vendor's
Share of the Assets in the manner as follows:
(a) As to depreciable assets and equipment an amount equal to the
aggregate respective book value thereof as at the Closing
Date.
(b) As to the inventories, an amount equal to the wholesale cost
to the Partnership of the inventories;
(c) As to the Accounts Receivable, the sum of One ($1.00) Dollar;
(d) As to goodwill the balance of the Purchase Price;
The Vendor and the Purchaser agree to co-operate in the filing of elections
under the Income Tax Act, R.S.C., as amended and other taxation statutes as may
be necessary or desirable to give effect to the allocation for tax purposes.
3.3 Payment of Purchase Price
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On the Closing Date and subject to the terms and conditions of this
Agreement, the Purchaser or the Purchaser's Solicitors shall pay the Purchase
Price to the account of the Vendor by wire transfer to the trust account of the
Vendor's' Solicitors.
3.4 Post Closing Chargebacks
(a) The Vendor shall indemnify and save harmless the Purchaser for
any amounts charged back on the bank accounts of the Purchaser
from and after Closing with respect to postdated cheques
delivered by the Vendor to the Purchaser and deposited to the
bank accounts of the Purchaser after Closing that are
dishonoured and remain uncollected for thirty (30) days. The
Purchaser shall notify the Vendor thirty (30) days following
becoming aware of each chargeback, shall provide to the Vendor
all documentation and information related to the chargeback
and shall assign its rights with respect to collection of the
said chargeback to the Vendor whereupon the Vendor shall
reimburse the Purchaser for the amount of each said
chargeback.
(b) It is understood that the Vendor shall not indemnify the
Purchaser for cheques returned unpaid that were delivered to
the Purchaser by the Vendor at Closing and remain uncollected
thereafter.
3.5 Adjustments
(a) The Purchase Price shall be increased or decreased by the
amount set out in the statement of estimated adjustment items
("Adjustment Items") attached hereto as Exhibit "B". As soon
as reasonably possible following the Closing Date the Vendor
and Purchaser shall prepare a statement of actual Adjustment
Items;
(b) To the extent the adjusted amount results in an amount owing
by the Purchaser to the Vendor the Purchaser shall promptly
pay such amount to the Vendor. To the extent that the
adjusted amount results in an amount owing by the Vendor to
the Purchaser, the Vendor shall promptly pay such amount to
the Purchaser.
3.6 Financial Services
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The Vendor and Purchaser acknowledge that the Business is exclusively
financial services and as such there is no Goods and Services Tax applicable
thereto and no requirement to file an election under the Excise Tax Act.
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 Vendor's Share of Assets
provided for in Section 2.3 hereof (the "Closing") shall take place at the Time
of Closing at the offices of the Purchaser's Solicitors on February 18, 1999,
with an effective time (the "Effective Time") of 12:02 a.m. or on such other
date and at such other place as the Vendor 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."
4.2 Termination of Agreement
This Agreement may be terminated prior to the Closing as follows:
(a) by mutual written consent of the Vendor and the Purchaser; or
(b) by the Vendor 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.
4.3 Procedure Upon Termination
In the event of termination of this Agreement pursuant to Section 4.2
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 Vendor. 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.
In the event that the Partnership Dissolution Agreement is executed prior to
termination the same shall be surrendered and deemed to be void.
4.4 Effect of Termination
-21-
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 Vendor, or the Purchaser; however,
-------
nothing in this Section 4.4 shall relieve any party hereto of any liability for
a breach of this Agreement.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE VENDOR AND DENIS
The Vendor and Denis hereby jointly and severally represent and
warrant to Purchaser as follows:
5.1 Organization and Good Standing
The Vendor is a corporation duly organized, validly existing and in
good standing under the laws of the Province of Alberta and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on the Business as one of the partners of the Partnership. The Vendor is
a "private company" within the meaning of the Securities Act (Alberta). The
Vendor is duly qualified or authorized to do business and is in good standing
under the laws of the Province of Alberta.
5.2 Authorization of Agreement
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The Vendor 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 herein in connection
with the consummation of the transactions contemplated by this Agreement
(together with this Agreement, the Escrow Agreement, assignments of lease, the
Partnership Dissolution 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 Vendor 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 Vendor, enforceable against the Vendor in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
5.3 Subsidiaries and Other Interests
Registered and beneficial title to all of the Assets is held in the
name of the Partnership and/or the Vendor on behalf of the Partnership and at
the Effective Time the registered and beneficial title to the Vendor's Share of
the Assets will be held in the name of the Vendor.
5.4 Conflicts; Consents of Third Parties
(a) Except in respect of the Real Property Leases as set forth in
Schedule 5.10(a), the Partnership Agreements, and as set forth on
Schedule 5.4 none of the execution and delivery by the Vendor of
this Agreement and the Transaction Documents, the consummation by
the Vendor of the transactions contemplated hereby and thereby, or
compliance by the Vendor 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, memorandum,
articles, shareholders agreement, trust agreements or other
organizational documents of the Vendor; (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
-23-
trust, indenture, license, lease, agreement or other instrument or
obligation to which the Vendor is a party or by which any the
Vendor or any of Assets is bound; (iii) violate any statute, rule,
regulation, judgment or Order of any Governmental Body by which the
Vendor is bound; or (iv) result in the creation of any Lien upon
the Assets.
(b) Except as set forth in Schedule 5.4 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 Vendor in connection with the execution and
delivery of this Agreement or the Transaction Documents, or the
compliance by the Vendor with any of the provisions hereof or
thereof.
5.5 Ownership and Transfer of Vendor's Share of Assets
The Vendor shall be at the Effective Time the registered and beneficial
owner of the Vendor's Share of Assets free and clear of any and all Liens. The
Vendor has and will have at the Effective Time the power and authority to sell,
transfer, assign and deliver the Vendor's Share of the Assets, free and clear of
any and all Liens, as provided in this Agreement, and such delivery will convey
to the Purchaser good and marketable title to Vendor's Share of the Assets.
5.6 Financial Statements
(a) Attached hereto as Schedule 5.6(a) are: (i) the unaudited balance
sheets of the Partnership as at June 30, 1996, 1997 and 1998 and
the related unaudited statements of income, retained earning and of
changes in financial position of the Partnership for the years then
ended (collectively called the "Unaudited Statements"); and (ii)
the draft unaudited balance sheet of the Partnership as at December
31, 1998 and the related statement of income of the Partnership
(the "Interim Statements") for the period then ended (such
Unaudited and Interim Statements, including the related notes and
schedules thereto, are referred to herein as the "Financial
Statements"). Each of the Unaudited Statements is complete and
correct in all material respects, has been prepared in accordance
with GAAP (subject to normal year-end adjustments in the case of
the unaudited statements) and in conformity with the practices
consistently applied by the
-24-
Partnership without modification of the accounting principles used
in the preparation thereof, and presents fairly the financial
position, results of operations and changes in financial position
of the Partnership as at the dates and for the periods indicated.
(b) The Interim Statements have been prepared in all material respects
on a basis consistent with the Unaudited Statements, are true,
correct and complete in all material respects and present fairly
the financial condition of the Partnership as of December 31, 1998
the assets and liabilities of the Partnership as of December 31,
1998 and the revenues, expenses and results of the operations of
the Partnership for the six (6) month period ended on December 31,
1998.
(c) The financial condition of the Partnership is not now materially
different from the financial condition reflected in the Unaudited
Statements save and except for the dissolution of the Partnership
and any changes to the Unaudited Statements agreed to by the
parties.
(d) For the purposes of this Article V, the unaudited balance sheet of
the Partnership as at December 31, 1998 is referred to as the
Partnership's "Balance Sheet" and December 31, 1998, is referred to
as the "Balance Sheet Date".
5.7 No Undisclosed Liabilities
Except as set forth on Schedule 5.7, the Partnership has 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 5.10(a), 5.11, 5.12, 5.13 or 5.16
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.
5.8 Absence of Certain Developments
Except as expressly required by this Agreement or as set forth on Schedule
5.8, since the Balance Sheet Date:
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(a) there has not been any Material Adverse Change in the
Partnership nor has there occurred any event which is
reasonably likely to result in a Material Adverse Change in
the Partnership;
(b) the Partnership has 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 property and
assets of the Partnership having a replacement cost of more
than C$10,000 for any single loss or C$25,000 for all such
losses;
(d) the Partnership has not (i) awarded or paid any bonuses to
employees of the Partnership and the employee benefit plan
with respect to the fiscal year ended June 30, 1998, 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
Partnership's or the Vendor's directors, officers, employees,
agents or representatives (other than normal increases in the
ordinary course of business consistent with past practice) and
that in the aggregate have not resulted in a material increase
in the benefits or compensation expense of the Partnership
taken as a whole;
(e) there has not been any change by the Partnership in accounting
or Tax reporting principles, methods or policies;
(f) the Partnership has not entered into any transaction or
Contract or conducted the Business other than in the ordinary
course consistent with past practice;
-26-
(g) the Partnership has not failed to promptly pay and discharge
current liabilities except where disputed in good faith by
appropriate proceedings;
(h) the Partnership has not made any loans, advances or capital
contributions to, or investments in, any Person or paid any
fees or expenses to the Vendor and any Affiliate of the
Vendor;
(i) the Partnership has not mortgaged, pledged or subjected to any
Lien any of its assets, or acquired any assets or sold,
assigned, transferred, conveyed, leased or otherwise disposed
of any assets, except for assets acquired or sold, assigned,
transferred, conveyed, leased or otherwise disposed of in the
ordinary course of business consistent with past practice;
(j) the Partnership has not discharged or satisfied any Lien, or
paid any obligation or liability (fixed or contingent), except
in the ordinary course of business consistent with past
practice;
(k) the Partnership has not canceled or compromised any debt or
claim or amended, canceled, terminated, relinquished, waived
or released any Contract or right except in the ordinary
course of business consistent with past practice and which, in
the aggregate, would not be material to the Partnership taken
as a whole;
(l) the Partnership has not engaged in any business in which it
had not been engaged prior to the Balance Sheet Date;
(m) the Partnership has not made any Capital Expenditure or
capital additions or betterments in excess of C$25,000
individually or C$100,000 in the aggregate or committed to
make but not made or completed any Capital Expenditure or
capital additions or betterments of any amount;
(n) the Partnership has not instituted or settled any material
Legal Proceeding; and
(o) none of the Vendor, Denis or the Partnership has agreed to do
anything set forth in this Section 5.8.
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5.9 Residency
(a) The Vendor is not a non-resident for the purposes of the
Income Tax Act (Canada);
5.10 Leased Property
(a) Schedule 5.10(a) sets forth a complete list of all real or
immovable property and interests in real or immovable property
leased by the Vendor on behalf of the Partnership as lessee in
which a Store is located (individually, a "Real Property
Lease") and the real or immovable properties specified in such
leases, (therein individually referred to as "Company
Property" and collectively referred to as "Company
Properties") 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
-28-
ownership and/or operation of the Stores. Except as disclosed
in Schedule 5.10(a) the Partnership, at Time of Closing, will
have a valid and enforceable leasehold interest under each of
the Real Property Leases, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding
at law or in equity) and will have obtained the consent of the
landlord of each Real Property Lease to assign the Real
Property Lease from the Vendor or the Partnership to the
Purchaser. The Partnership has not received any written
notice of any outstanding default and to the knowledge of the
Vendor and Denis none of the landlords in respect of the Real
Property Leases has caused an event of default that with
notice or lapse of time, or both, would constitute a default
by any one of such landlords under any of the Real Property
Leases. Each of the Company Properties, fixtures and
improvements thereon is in operating condition and repair
(subject to normal wear and tear). Except as disclosed on
Schedule 5.10(a) the Partnership is not in default of any
material terms of the Real Property Leases. With respect to
each Company Property and excepting any contracts with the
Purchaser, there is no equipment lease, service contract or
other contract or agreement to which the Partnership or the
Vendor is a party affecting such Company Property
(collectively, "Property Contracts") which (i) was not made in
the ordinary course of business, (ii) is not terminable upon
30 days' prior notice by the Partnership without payment of a
premium or penalty or (iii) requires payments in excess of an
amount that, if added to the monthly payment obligations of
all other Property Contracts in respect of such Company
Property, would cause the aggregate amount of all monthly
payment obligations in respect of all Property Contracts for
such Company Property to exceed C$1,000. The Vendor has
delivered to the Purchaser true, correct and complete copies
of the Real Property Leases, together with all amendments,
modifications or supplements, if any, thereto. The
Partnership presently owns and operates cheque cashing and
financial services
-29-
stores at the locations set forth next to each Company
Property on Schedule 5.10(a).
(b) To the best knowledge of the Vendor and Denis without due
diligence, the Partnership has obtained all material Permits
of any Governmental Body necessary for the current use and
operation of each Company Property, and the Partnership has
fully complied with all material conditions of the Permits
applicable to them. No material default or violation, or
event that with the lapse of time or giving of notice or both
would become a default or violation, has occurred in the due
observance of any Permit.
(c) There does not exist any actual or, to the best knowledge of
the Vendor and Denis, threatened or contemplated condemnation
or eminent domain proceedings that affect any Company Property
or any part thereof, and none of the Vendor, Denis and the
Partnership has received any notice, oral or written, of the
intention of any Governmental Body or other Person to take or
use all or any part thereof.
(d) None of the Vendor, Denis or the Partnership has received any
written notice from any insurance company municipality or of
the governmental authority requiring performance of any
structural or other repairs or alterations to such Company
Property.
(e) The Partnership has sent notice 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.
(f) To the best knowledge of the Vendor and Denis without due
diligence, the Company Property and the current uses thereof
and the conduct of the Business comply with all zoning
regulations and bylaws and to the knowledge of the Vendor and
Denis without due inquiry, all other regulations, statutes,
enactments, laws and by-laws including, without limitation,
those dealing with parking, access, loading facilities,
landscaped areas, building construction, fire and public
health and safety and Environmental Laws.
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(g) the Company Property (including all improvements and fixtures)
is fit for its present use, and to the best of knowledge of
the Vendor, Denis and the Partnership 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 currently
necessary for the continued operation of the Business and the
Company Property is not currently undergoing any alteration or
renovation nor is any such alteration or renovation
contemplated.
5.11 Tangible Personal Property
(a) Schedule 5.11 sets forth all written 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 Vendor has 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 Partnership has a valid leasehold interest under each of
the Personal Property Leases under which it is a lessee,
subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity),
and there is no default under any Personal Property Lease by
the Partnership or, to the best knowledge of the Vendor and
Denis, 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 Partnership under the
Personal Property Leases is in operating condition and repair
(ordinary wear and tear excepted) and is suitable for the
purposes used.
(c) The Partnership has 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 (except as
sold or disposed of subsequent to the date thereof in the
ordinary course of business
-31-
consistent with past practice), free and clear of any and all
Liens other than the Permitted Exceptions and except as set
out in Schedule 5.11. All such items of tangible personal or
moveable property which, individually or in the aggregate, are
material to the operation of the Stores and the Business are
in good condition and in a state of good maintenance and
repair (ordinary wear and tear excepted) and are suitable for
the purposes used.
(d) The Partnership owns (or leases from unaffiliated Persons) all
tangible personal property used to conduct the Business.
5.12 Intangible Property
Schedule 5.12 under the heading "software" contains a complete and
correct list of each software computer program used by the Partnership or the
Vendor on behalf of the Partnership and to the knowledge of Denis and the Vendor
without due inquiry, the license agreement for each computer software program is
in good standing assuming the installer has correctly licensed and documented
the software being installed. Schedule 5.12 contains a complete and correct
list of each software computer program owned by the Partnership or Vendor on
behalf of the Partnership free and clear of all Liens and is in good standing
subject to any rights and restrictions of any retail "off the shelf" software
programs or any license agreement with the Purchaser for Money P.O.S. software.
The Partnership does not own any patent or patent license. There have been no
claims made and none of the Vendor or Denis has received any notice or otherwise
knows or has reason to believe that any of the foregoing is invalid or conflicts
with the asserted rights of others. The Partnership possesses through ownership
or license all trade names, trademarks, trade secret rights, computer programs,
software, service marks, brand marks, brand names, copyrights, know-how,
formulae and other proprietary and trade rights for the conduct of the Business
as now conducted, and without any known conflict with the rights of others and
the Partnership has not forfeited or otherwise relinquished any such patent,
patent license, trade name, trademark, trade secret right, computer program,
software, service ▇▇▇▇, brand ▇▇▇▇, brand name, copyright, know-how, formulae or
other proprietary right currently used for the conduct of its business as
conducted on the date hereof. The Partnership is not under any obligation to
pay any royalties or similar payments in connection with any license to the
Vendor, Denis or any Affiliate thereof or any other Person other than as set out
in Schedule 5.12.
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5.13 Material Contracts
Schedule 5.13 sets forth all of the following Contracts to which the
Partnership is a party or by which it is bound (collectively, the "Material
Contracts"): (i) Contracts with the Vendor or any direct or indirect
shareholder, partner or equity holder of the Vendor (or any Affiliates of any of
the foregoing) or any current or former officer or director of the Partnership
or Vendor; (ii) Contracts with any labor union or association representing any
employee of the Partnership; (iii) Contracts for the sale of any of the assets
of the Partnership 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) partnership, or joint venture agreements; (v) Contracts containing
covenants of the Partnership, Vendor 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 Partnership in any line of business or in any
geographical area; (vi) Contracts relating to the acquisition by the Partnership
of any operating business or the capital stock of any other Person; (vii)
Contracts of the Partnership relating to the borrowing of money; (viii)
Contracts relating to the distribution of money orders or similar instruments;
(ix) Contracts relating to money transfers; (x) Contracts relating to the
payment of utility or other bills for third parties; (xi) any other Contracts,
other than Real Property Leases, which were not entered into in the ordinary
course consistent with past practice, or which involve the expenditure of more
than C$25,000 in the aggregate or require performance by any party more than one
year from the date hereof; (xii) Contracts involving an obligation to make a
Capital Expenditure; and (xiii) franchise or licensing Contracts pursuant to
which the Partnership is a franchisor, franchisee, 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 5.13, each of the
Material Contracts and other agreements is in full force and effect and is the
legal, valid and binding obligation of each party thereto, enforceable against
such party in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). Except as set forth on Schedule 5.13, the
Partnership is not in default in any material respect under any Material
Contracts nor, to the knowledge of the Vendor and Denis, is any other party to
any Material Contract in default thereunder in any material respect. For
purposes hereof, "Assumed Contracts" shall consist of (i) the Material Contracts
listed on Schedule 5.13 (ii) the Non-Material Contracts, (iii) Personal Property
Leases and (iv) all Real Property Leases.
5.14 Employee Benefits
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(a) All of the employees working on a full-time basis in the
Stores or the Business are and at all times during such
employment have been employees of the Partnership and not the
Vendor or a third party. The Partnership has no pension,
profit sharing, retirement, death benefit, welfare, company
awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation,
stock purchase arrangements or policies, life insurance,
scholarship or other employee benefit plan, program, policy or
arrangement maintained by the Partnership or to which the
Partnership has any liability (contingent or otherwise) with
respect to employees, officers, directors or shareholders of
the Partnership ("Employee Benefit Plans") and the Financial
Statements reflect in the aggregate an accrual of all amounts
accrued but unpaid to or for the benefit of all employees as
of the dates thereof. The Partnership does not have any
commitment, whether formal or informal, and whether legally
binding or not, to create any such Employee Benefit Plan. All
accrued and unpaid vacation pay of employees owing to the
employees for the period up to and including the day prior to
the Closing Date shall be paid to the employees by the Vendor
on behalf of the Partnership on or prior to the Closing Date.
5.15 Labour
(a) Except as set forth on Schedule 5.15(a), the Partnership is
not a party to any labor or collective bargaining agreement
and there are no labor or collective bargaining agreements
which pertain to employees of the Partnership. The Vendor and
Denis have delivered or otherwise made available to the
Purchaser true, correct and complete copies of the labor or
collective bargaining agreements listed on Schedule 5.15(a),
together with all amendments, modifications or supplements
thereto.
(b) Except as set forth on Schedule 5.15(b), no employees of the
Partnership are represented by any labor organization with
respect to their employment with the Partnership. No labor
organization or group of employees of the Partnership have
made a pending demand for recognition, and there are no
representation proceedings or petitions seeking a
representation proceeding presently pending or,
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to the best knowledge of the Vendor and Denis, threatened to
be brought or filed, with any federal or provincial agency
responsible for labor or employment laws or other labor
relations tribunal. There is no organizing activity involving
the Partnership pending or, to the best knowledge of the
Vendor and Denis threatened by any labor organization or group
of employees of the Partnership.
(c) There are no (i) strikes, work stoppages, slowdowns, lockouts
or arbitrations or (ii) material grievances or other labor
disputes pending or, to the best of the knowledge of the
Vendor and Denis, threatened against or involving the
Partnership. There are no unfair labor practice charges,
grievances or complaints pending or, to the best of the
knowledge of the Vendor and Denis threatened by or on behalf
of any employee or group of employees of the Partnership.
5.16 Employment Matters
Schedule 5.16 annexed hereto is 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 Partnership who earn total annual
compensation of less than C$25,000, and
(b) With respect to all other employees, officers and directors of
the Partnership, such employee's name and a brief job
description for each such employee (the employees in 5.16(a)
and (b) being 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 Partnership or any of its
officers with respect to any increase in the compensation
payable to any such employee or any portion thereof the extent
of such employee's participation in any Employee Benefit Plans
and any accrued rights under such Employee Benefit Plans that
will lapse or terminate by reason of the consummation of the
transactions contemplated by this Agreement. The Partnership
does not have any employment, consulting or severance
contract, arrangement or
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understanding (either written or oral) with any person
whomsoever except such contracts as are listed on Schedule
5.16. Payments made to, employees of the Partnership have not
been in violation of any applicable laws, rules or regulations
dealing with such matters and all severance payments due to
any employee have been paid or accrued as a liability on the
books of the Partnership.
(c) No notice has been received by the Partnership of any
outstanding complaint filed by any of the employees against
the Partnership claiming the Partnership has violated any
provincial act or legislation applicable to employees or human
rights (or similar legislation in the other jurisdictions in
which the Business is conducted or the Partnership operates)
or of any complaints or proceedings of any kind involving the
Partnership or, to the knowledge of Denis or the Vendor,
without due inquiry, any of the employees of the Partnership
before any labour relations board save and except as set out
in Schedule 5.16(c).
(d) There are no outstanding orders or charges against the
Partnership or Vendor with respect to the Business under any
applicable health and safety legislation in the Province of
Alberta.
(e) Neither the Vendor nor ▇▇▇▇▇▇▇ is aware of any non-compliance
by the Partnership of any obligations under the Human Rights
Act (Alberta).No "pay equity" plans have been filed by or on
behalf of the Partnership with any governmental or regulatory
authority or delivered to its employees.
(f) The Partnership is an excluded employer under the workers'
compensation legislation and has no obligation to remit any
assessments pursuant to workers' compensation legislation
levied by any governmental authorities and, to the best of the
knowledge of the Vendor and Denis, the Partnership has no
liability for and there is no pending any state of facts which
may result in the levying of an assessment or a penalty charge
of any nature with respect to the period prior to the Closing.
The Partnership is not required to file payroll statements
pursuant to any workers' compensation legislation. The
Partnership is not liable to indemnify any of its
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employees or any governmental body in respect of compensation
and/or healthcare payable to its employees pursuant to
applicable workers' compensation legislation.
5.17 Litigation
Except as set forth in Schedule 5.17, there is no suit, action,
proceeding, investigation, claim or order pending or, to the knowledge of the
Vendor or Denis overtly threatened against the Partnership or the Vendor pending
or threatened, against any of the officers, directors or key employees of the
Partnership or the Vendor with respect to their business activities on behalf of
the Partnership), or to which the Vendor or the Partnership are otherwise a
party, before any court, or before any governmental department, commission,
board, agency, or instrumentality; nor is the Vendor or Denis aware of any facts
that would give rise to any such action, proceeding, or investigation. The
Partnership and the Vendor are not subject to any judgment, Order or decree of
any court or Governmental Body and the Partnership is not engaged in any legal
action to recover monies due it or for damages sustained by it.
5.18 Compliance with Laws
To the best knowledge of the Vendor and Denis without due inquiry the
Partnership possesses all material Licenses of and from all Governmental Bodies,
and has made all material filings with all Governmental Bodies, necessary to own
or lease its properties and assets and to conduct the Business. Except as set
forth on Schedule 5.18, no proceeding has been served or, to the knowledge of
the Vendor and Denis, threatened or commenced which seeks to, or could
reasonably be anticipated to, cause the suspension, modification, revocation or
withdrawal of any License. The Partnership is currently, and at all times has
been, in material compliance with all Laws applicable to the Partnership and/or
the Business at any time or on prior to the Balance Sheet Date, including,
without limitation, all applicable credit, banking and consumer protection
Laws, regulating check cashing, debt collection, plain language Laws and
Laws proscribing unfair and/or deceptive acts or practices and
franchise disclosure laws. Neither the Partnership, the Vendor nor any of its
directors, officers, employees or representatives has offered, proposed,
promised or made any illegal payment of a material amount of money or material
value to officers, employees or representatives of any Governmental Body, or
engaged in any illegal reciprocal practices or made any illegal payment or given
any other illegal consideration of a material amount of money or material value
to any third party.
5.19 Environmental Matters
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Except as set forth on Schedule 5.19 hereto with respect to Company
Properties:
(a) The operations of the Partnership have been and are in
material compliance with all applicable Environmental Laws and
all Licenses issued pursuant to Environmental Laws
("Environmental Permits");
(b) The Partnership is not required to obtain any Environmental
Permits to operate, sell or assign the Business;
(c) The Partnership is not the subject of any outstanding written
order, agreement or Contract with any governmental authority
or person respecting (i) Environmental Laws, (ii) Remedial
Action, (iii) any Release or threatened Release of a Hazardous
Material or (iv) any Environmental Claim;
(d) The Partnership nor the Vendor has not received any written
communication alleging that the Partnership or the operations
thereof may be in violation of any Environmental Law or any
Environmental Permit, or may have any liability under any
Environmental Law;
(e) The Partnership has no known 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 Vendor and Denis threatened against
the Partnership alleging the violation of or seeking to impose
liability pursuant to Environmental Laws;
(g) The Partnership has not received notice of any investigations
of the business, operations, or currently or previously owned,
operated or leased property of the Partnership in connection
with the Business nor, to the knowledge of any of the Vendor
and Denis, are there any such pending or threatened
investigations which could lead to the imposition of any
liability pursuant to Environmental Law;
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(h) The Partnership has not, to the knowledge of Vendor or Denis,
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;
(i) Neither the Vendor nor Denis has obtained or is aware of the
existence of any environmentally related audits, studies,
reports, analyses, and results of investigations that have
been performed with respect to the Company Properties; and
(j) The Partnership has not had prepared any environmentally
related audits, studies, reports, analyses, or results of
investigation that have been performed with respect to the
Company Properties.
5.20 Insurance
All insurance policies of any kind or nature covering the Partnership
or any of its respective employees, properties or assets, including, without
limitation, policies of life, disability, fire, theft, workers compensation,
employee fidelity and other casualty and liability insurance are in full force
and effect and the Partnership is not in default of any material provision
thereof. To the best of the knowledge of the Vendor and Denis there are no
circumstances under which the Partnership would be required to or in order to
maintain its coverage should give any notice to insurers under any such
insurance policies related to the Assets or Company Properties which has not
been given. Neither the Partnership nor the Vendor has received any notice from
any of the insurers regarding cancellation of such insurance policies. The
Partnership nor the Vendor has not failed to give any notice of or present any
claim under such insurance policy in due and timely fashion. The Partnership
has not received notice from any insurers denying any outstanding claims.
5.21 Payables
All accounts payable of the Partnership reflected in its Balance Sheet
or arising after the date thereof are the result of bona fide transactions
entered into in the ordinary course of business and have been paid or are not
yet due and payable.
5.22 Related Party Transactions
Except as set forth on Schedule 5.22, as at the Balance Sheet Date
none of the Partnership, the Vendor and Denis and any Affiliate of the
Partnership, Vendor or Denis has
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borrowed any monies from or has outstanding any indebtedness or other similar
obligations to the Partnership. Except as set forth in Schedule 5.22, none of
the family members of the Vendor or Denis, any Affiliate of the Vendor or Denis
or any officer, director or employee of either of them (i) owns any direct or
indirect interest of any kind in, or controls or is a director, officer,
employee or partner of, or consultant to, or lender to or borrower from or has
the right to participate in the profits of, any Person which is (A) a
competitor, supplier, customer, landlord, tenant, creditor or debtor of the
Denis, (B) engaged in a business related to the business of the Partnership, or
(C) a participant in any transaction to which the Partnership is a party or (ii)
is a party to any Contract or transaction with the Partnership.
5.23 Financial Advisors
No Person has acted, directly or indirectly, as a broker, finder or
financial advisor excepting legal or accounting advisers for the Vendor or Denis
in connection with the transactions contemplated by this Agreement and no Person
excepting legal and accounting advisors is entitled to any fee or commission or
like payment in respect thereof.
5.24 Licensed Operations
Each of the Stores set out in Schedule 2.4(a) are operated by the
Partnership pursuant to a trademark license agreement with the Purchaser. The
Partnership and the Vendor are not a party to any franchise agreements.
5.25 Name
"Money Mart" and "Calgary Money Mart" are the only business names used
by the Partnership in the operation of the Stores and the Business.
5.26 Third Party Discussion
Schedule 5.26 sets forth a list of all current and proposed plans or
discussions by the Partnership, the Vendor or Denis with third parties related
to potential acquisitions of equity interest in cheque cashing, currency
exchange, tax rebate programs, tax preparation or retail financial service
outlets.
5.27 No Bankruptcy
There has not been filed any petition or application, or any
proceeding commenced which has not been discharged, by or against the
Partnership, the Vendor or Denis, or any Affiliate of any of them with respect
to any Assets of any of them under any
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law, domestic or foreign, relating to bankruptcy, re-organization, insolvency,
re-adjustment of debt or creditors rights and no assignment has been made by any
of them for the benefit of their respective creditors.
5.28 No Misrepresentation
Neither the Vendor nor Denis 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.
5.29 Partnerships
Since 1991 the Business has always been operated in and the Assets
owned by or on behalf of the Partnership.
5.30 Withholdings
The Partnership has withheld and will continue until the Closing Date
to withhold from each payment made to the 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 Partnership's account and will be
remitted by the Partnership on the earlier of the date same is due or the
Closing Date.
5.31 The Partnership
The Partnership has not and will not during the Interim Period carry
on, be engaged or involved in any business or activity whatsoever, including an
adventure in the nature of trade, have any employees, have any assets or
liabilities or enter into contracts or agreements excepting the Business and
this Agreement. At the time of dissolution of the Partnership the Business
operated from the Outlets was exclusively financial services and without
restricting the generality of the foregoing did not include services of sale of
photo identification cards, mail box rentals, fax and copy services, sale of
phone cards or sale of transit passes.
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ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Vendor 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 Alberta.
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 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 which will
affect the Purchaser's ability to close, 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 order of amalgamation or articles of the Purchaser,
(ii) conflict with, violate, result in the breach or
termination of, constitute a default under, or give rise to
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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.
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 consummate the
transactions contemplated hereby.
6.5 Financial Advisors
No Person has acted, directly or indirectly, as a broker, finder or
financial advisor for the Purchaser in connection with the transactions
contemplated by this Agreement and no Person is entitled to any fee or
commission or like payment in respect thereof.
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 Approvals
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The Purchaser does not have to obtain any federal, provincial,
municipal or other governmental approvals and consents in order to permit the
purchase of Vendor's Share of Assets contemplated herein.
ARTICLE VII - COVENANTS
7.1 Access to Information
During the Interim Period the Vendor agrees 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 and the
Partnership and such examination of the books, records and financial condition
of the Partnership as it reasonably requests and to make extracts and copies of
such books and records. Any such investigation and examination shall be
conducted during regular business hours and under reasonable circumstances, and
the Vendor 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 Vendor and Denis
contained in this Agreement or the Transaction Documents unless waived by the
Purchaser in writing prior to Closing. 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
Partnership, the Vendor shall cause the officers, employees, consultants,
agents, accountants, lawyers and other representatives of the Partnership and
Vendor to cooperate fully with such representatives in connection with such
review and examination. Notwithstanding the above until the Vendor discloses
the sale of the Assets to its employees the Purchaser, its officers, employees
and representatives shall maintain utmost secrecy in conducting its
investigation and shall not speak to employees of the Partnership with respect
to the transactions contemplated herein or enter any of the Stores without the
prior written consent of Denis.
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
Partnership and the Vendor during the Interim Period shall:
(i) conduct the business of the Partnership 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 Partnership
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and (B) preserve its present relationship with Persons
having business dealings with the Partnership;
(iii) maintain (A) all of the assets and properties of the
Partnership 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
(A) the books, accounts and records of the Partnership
in the ordinary course of business consistent with
past practices,
(B) continue to collect accounts receivable and pay
accounts payable utilizing normal procedures and
without discounting or accelerating payment of such
accounts, and
(C) comply with all contractual and other obligations
applicable to the operation of the Partnership;
(v) promptly pay and discharge all liabilities (including
liabilities for services rendered or goods delivered to
the Partnership) that are due and payable by it prior to
the Closing Date except where such liabilities are being
disputed in good faith by appropriate proceedings; and
(vi) comply in all material respects with applicable Laws.
(b) Except as otherwise expressly contemplated by this Agreement
or with the prior written consent of the Purchaser, the
Partnership and the Vendor during the Interim Period shall
not:
(i) transfer, issue, sell or dispose of any partnership
interests or other securities of the Partnership or grant
options, warrants, calls or other rights to purchase or
otherwise acquire shares of the capital stock,
partnership interests or other securities of the
Partnership;
(ii) except as set forth on Schedule 7.2, (A) increase the
annual level of compensation of any employee of the
Partnership whose annual compensation exceeds C$25,000,
other than any such increases of less than 5% in the
aggregate granted in the ordinary course of business
consistent with past practice, (B) increase the annual
level of compensation
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payable or to become payable by the Partnership to any of
their respective executive officers, (C) grant any bonus,
benefit or other direct or indirect compensation to any
employee, director or consultant whose annual
compensation exceeds C$25,000, other than in the ordinary
course consistent with past practice and in such amounts
as are fully reserved against in the Financial
Statements, (D) increase the coverage or benefits
available under any (or create any new) severance pay,
termination pay, vacation pay, company awards, salary
continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation,
insurance, pension or other employee benefit plan or
arrangement made to, for, or with any of the directors,
officers, employees, agents or representatives of the
Partnership or otherwise modify or amend or terminate any
such plan or arrangement or (E) enter into any
employment, deferred compensation, severance, consulting,
non-competition or similar agreement (or amend any such
agreement) to which the Partnership is a party or
involving a representative or employee of the Partnership
in his or her capacity as a representative or employee of
the Partnership;
(iii) except for trade payables and for indebtedness for
borrowed money incurred in the ordinary course of
business and consistent with past practice, borrow monies
for any reason or draw down on any line of credit or debt
obligation, or become the guarantor, surety, endorser or
otherwise liable for any debt, obligation or liability
(contingent or otherwise) of any other Person;
(iv) subject any of the Assets to any Lien, ;
(v) acquire any material properties or assets or sell,
assign, transfer, convey, lease or otherwise dispose of
any of the Assets, except (other than with respect to the
Stores or the Business) for fair consideration in the
ordinary course of business consistent with past practice
of the Partnership;
(vi) cancel or compromise any debt or claim or waive or
release any material right related to the Business or the
Assets of the Partnership except in the ordinary course
of business consistent with past practice;
(vii) enter into any commitment for Capital Expenditures out
of the ordinary cause of business and in excess of Five
Thousand ($5,000.00) Dollars in the aggregate;
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(viii) enter into, modify or terminate any labor or
collective bargaining agreement of the Partnership or,
through negotiation or otherwise, make any commitment or
incur any liability to any labor organization with
respect to the Partnership or;
(ix) introduce any material change with respect to the
operation of the Partnership, including any material
change in the types, nature, composition or quality of
its products or services or, other than in the ordinary
course of business, make any change in specifications for
product or services of the Business or prices or terms of
granting credit and other distribution of such product or
services;
(x) enter into any transaction or to make or enter into any
Contract which by reason of its size or otherwise is not
in the ordinary course of business consistent with past
practice of the Partnership or the Business;
(xi) become obligated to develop any new locations;
(xii) enter into or agree to enter into any merger or
consolidation with any Person or engage in any new
business or invest in, make a loan, advance or capital
contribution to, or otherwise acquire the securities of,
any other Person;
(xiii) except for transfers of cash pursuant to normal cash
management practices, make any investments in or loans
to, or pay any fees or expenses to, or enter into or
modify any Contract with any of the Vendor, Denis or a
partner or Affiliate of the Vendor and Denis other than
in accordance with past practices;
(xiv) restructure, change, modify or renegotiate the terms of
any obligation of the Partnership to another Person which
restructuring, change, modification or renegotiation has
the effect of extending, delaying or deferring the time
for payment or performance of any such obligation, other
than in the ordinary course of business consistent with
past practice; or
(xv) 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 Vendor and
Denis in this Agreement or the Transaction Documents
untrue or incorrect in any material respect during the
Interim Period.
7.3 Consents
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During the Interim Period the Vendor shall use their commercially
reasonably best efforts, and the Purchaser shall cooperate with them 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, estoppels, Orders, Permits and
authorizations of any Person or Governmental Body referred to in Section 5.4(b)
hereof. If requested by the Vendor the Purchaser shall assist the Vendor by
providing reasonable information to necessary third parties.
7.4 Consents to Real Property Leases
The Vendor shall use their commercially reasonable best efforts and
the Purchaser shall cooperate with the Vendor to obtain all consents and
estoppels from landlords which are required to be obtained under Section 9.3
hereof to transfer the Real Property Leases to the Buyer and consummate all
other transactions contemplated by this Agreement pursuant to the terms of any
of the Real Property Leases.
7.5 No Solicitation
During the Interim Period the Vendor will not, nor will the Vendor
cause or permit any of its 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, or the Partnership 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
Partnership 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.
The Vendor will inform the Buyer in writing immediately following the receipt by
the Vendor of any proposal or inquiry in respect of any Acquisition Transaction.
7.6 Intentionally Deleted
7.7 Publicity
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None of the Partnership, the Vendor, and Denis and the Purchaser shall
issue any press release or public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
the other parties hereto, which approval will not be unreasonably withheld or
delayed, unless, in the sole judgment of the Purchaser, disclosure is otherwise
required by applicable Law, provided that, to the extent required by applicable
law, the party intending to make such release shall use its best efforts
consistent with such applicable law to consult with the other party with respect
to the text thereof.
7.8 Use of Name
The Vendor hereby agrees that upon the consummation of the
transactions contemplated hereby, the Vendor shall have no right to the use of
the name "Money Mart" in connection with the Stores or otherwise.
7.9 Preservation of Records
The Purchaser shall preserve and keep the books and records delivered
to it by the Vendor for a period of four years from the Closing Date and shall
make such records available to the Vendor as may be reasonably required in
connection with, among other things, preparation of financial records and tax
returns, audits, legal proceedings, government investigations and insurance
claims by or against the Vendor. In the event that the Vendor wishes to take
possession of the records following expiry of the four year period it shall
provide notice to the Purchaser within ninety (90) days following expiry of the
four year period of such fact and shall arrange for pick-up of such records at a
mutually convenient time.
7.10 Non-Competition Agreements
Each of the Vendor and Denis hereby agree that, on or prior to the
Closing Date, each of them shall execute and deliver and shall cause ▇▇▇▇▇▇
▇▇▇▇▇▇▇ to execute and deliver to the Purchaser a Non-Competition Agreement,
substantially in the form of Exhibit A hereto ("Non-Competition Agreement").
7.11 Employer Health Tax
The Partnership has no responsibility and liability for Workers'
Compensation Board payments in respect of all remuneration paid to employees of
the Partnership in the Business in respect of services provided during the
period prior to the Closing Date.
7.12 Employees
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(a) The Vendor agrees to provide the Purchaser with an up-to-date
list of the names of the employees of the Business at least
two Business Days and not more than four Business Days prior
to the Closing Date (the "Listed Employees").
(b) The Partnership shall employ all of the employees set out in
Schedule 5.16 until Closing Date, except for any 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.
(c) The Purchaser shall, with effect from and after said Closing
offer employment to all Listed Employees of the Partnership on
the same terms and conditions under which the Listed Employees
are presently employed. In the event that the Purchaser
shall, subsequent to the time when any Listed Employee becomes
employed by the Purchaser terminate or constructively
terminate the employment of such Listed Employees in
circumstances where the Listed Employees shall make or have a
claim or entitlement in respect of wrongful dismissal,
severance pay or the receipt of reasonable prior notice, the
Purchaser shall be responsible and shall indemnify the Vendor
and Denis for all payments to be made and all expenses and
costs arising out of or in connection with such termination.
The Vendor and Denis shall not attempt in any way to
discourage any of the Listed Employees from accepting work
with the Purchaser. The Vendor and Denis shall not solicit
the services of any of the Employees during the five (5) year
period following the Closing Date without the consent in
writing of the Purchaser.
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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 (any or all of which may be
waived by the Purchaser in whole or in part):
(a) Deleted.
(b) All representations and warranties of the Vendor and Denis
contained herein not qualified as to materiality shall be true
and correct, and the representations and warranties of the
Vendor contained herein qualified as to materiality shall be
true and correct in all material respects, at and as of the
Closing Date with the same effect as though those
representations and warranties had been made again at and as
of that time;
(c) The Vendor and Denis shall have performed and complied in all
material respects with all obligations and covenants required
by this Agreement to be performed or complied with by them on
or prior to the Closing Date;
(d) The Purchaser shall have obtained all consents and waivers
referred to in Section 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 Partnership or the Business since the Balance
Sheet Date;
(f) The Vendor shall have obtained all consents and waivers
referred to in Section 5.4 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 any of the Partnership, the
Vendor, Denis 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
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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) Estoppels, assignments and any necessary consents from the
landlords and lessors under each Real Property Lease shall
have been obtained in form and substance satisfactory to
Purchaser in accordance with Section 9.3;
(i) The Vendor shall have presented a form of opinion of the
Vendor's Solicitors in a form and substance satisfactory to
the Purchaser acting reasonably;
(j) The Purchaser shall have received duly executed copies of each
of the documents enumerated in Section 9.1;
(k) The Vendor shall have amended such Real Property Leases
necessary to cure the defaults set out in Schedule 5.10(a).
8.2 Conditions Precedent to Obligations of the Vendor
The obligations of the Vendor to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or on
the Closing Date, of each of the following conditions (any or all of which may
be waived by the Vendor in whole or in part to the extent permitted by
applicable law):
(a) Deleted.
(b) all representations and warranties of the Purchaser contained
herein not qualified as to materiality shall be true and
correct, and all representations and warranties of the
Purchaser contained herein qualified as to materiality shall
be true and correct in all material respects, at and as of the
Closing Date with the same effect as though those
representations and warranties had been made again at and as
of that date;
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(c) the Purchaser shall have performed and complied in all
material respects with all obligations and covenants required
by this Agreement to be performed or complied with by
Purchaser on or prior to the Closing Date;
(d) The Vendor shall have obtained all consents and waivers
referred to in Section 5.4 hereof with respect to the
transactions contemplated by this Agreement and the
Transaction Documents.
(e) No Legal Proceedings shall have been instituted or threatened
or claim or demand made against any of the Partnership, the
Vendor, Denis 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;
(f) the Purchaser shall have obtained all consents and waivers
referred to in Section 6.3 hereof, in a form reasonably
satisfactory to the Vendor, with respect to the transactions
contemplated by this Agreement or the Transaction Documents;
(g) The Purchaser shall have presented a form of opinion of the
Purchaser's Solicitors in a form and substance satisfactory to
the Vendor acting reasonably;
(h) the Vendor shall have received duly executed copies of each of
the documents enumerated in Section 9.2; and
(i) The Vendor shall have amended such Real Property Leases
necessary to cure the defaults set out in Schedule 5.10(a) and
to satisfy the stated requirements of the Purchaser with
respect to the leases for ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇
- ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇.
8.3 Failure of Vendor to Satisfy Conditions Precedent
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If any of the foregoing conditions contained in Section 8.1 are not
satisfied at the Time of Closing, the Purchaser may:
(a) refuse to complete the transaction contemplated in this
Agreement by notice in writing to the Vendor 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. Vendor and Denis shall not be released from
their obligations hereunder unless the ability to satisfy the
unsatisfied condition was beyond reasonable the control of the
Vendor and Denis; or
(b) complete the transactions contemplated in this Agreement, it
being expressly understood and agreed that following such
completion the Purchaser may rely upon the warranties,
representations or covenants relating to any unsatisfied
condition unless the ability to satisfy the unsatisfied
condition was beyond the reasonable control of the Vendor and
Denis.
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-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.
8.4 Failure of Purchaser to Satisfy Conditions Precedent
If any of the conditions contained in Section 8.2 are not satisfied at
the Time of Closing, the Vendor and Denis may:
(a) refuse to complete the transactions contemplated in this
Agreement by notice in writing to the Purchaser and, in such
event, the Vendor and Denis hereto shall be released from all
of their respective obligations under this Agreement and this
Agreement shall be thereupon be deemed to be null and void and
of no force or effect whatsoever. Purchaser shall not be
released from its obligations hereunder unless the ability to
satisfy the unsatisfied condition was beyond the reasonable
control of the Purchaser; or
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(b) complete the transactions contemplated in this Agreement, it
being expressly understood and agreed that following such
completion, the Vendor and Denis may rely upon the warranties,
representations or covenants relating to any unsatisfied
condition unless the ability to satisfy the unsatisfied
condition was beyond the reasonable control of the Purchaser.
provided that any of the said conditions may be waived in whole or in part by
the Vendor without prejudice to their 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 Vendor only if
same is in writing.
ARTICLE IX - DOCUMENTS TO BE DELIVERED
9.1 Documents to be Delivered by the Vendor and Denis
At the Closing, the Vendor and Denis shall deliver, or cause to be
delivered, to the Purchaser the following:
(a) the opinion of the Vendor's Solicitors, in a form acceptable
to the Purchaser acting reasonably;
(b) copies of all consents and waivers referred to in Section
8.1(f) hereof;
(c) Non-Competition Agreement, substantially in the form of
Exhibit A hereto, duly executed by each of the Vendor, Denis
and ▇▇▇▇▇ ▇▇▇▇▇▇▇;
(d) certificate of good standing with respect to the Vendor by the
Registrar of Corporations (Alberta);
(e) Certificate of Incumbency of the Vendor;
(f) necessary Consents and or assignments from all lessors to all
material Personal Property Leases and other parties to the
Material Contracts from the Partnership to the Purchaser;
(g) Estoppel certificates by all landlords of the Real Property
Leases substantially in the form of Exhibit "C" hereto or as
agreed in writing by the Purchaser;
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(h) assignments of the Real Property Leases from the Partnership
to the Purchaser consented to by the landlords;
(i) Certified Copy of Resolution of the sole director of the
Vendor approving the transactions contemplated by this
Agreement;
(j) ▇▇▇▇ of Sale transferring the Vendor's Share of the Personal
Property to the Purchaser;
(k) Statement of Adjustments;
(l) Partnership Dissolution Agreement;
(m) Declaration of Dissolution of Partnership;
(n) Escrow Agreement duly executed by the Vendor and the
Partnership if necessary;
(o) Evidence of payment of Purchaser's Share of Cash on Hand;
(p) Form T2060; and
(q) such other documents as the Purchaser shall reasonably
request.
9.2 Documents to be Delivered by the Purchaser
At the Closing, the Purchaser shall deliver to the Vendor the
following:
(a) evidence of the payment of the Purchase Price required to be
made pursuant to Section 3.3 hereof;
(b) evidence of payment of the Adjustments required to be made
pursuant to Section 3.5 hereof.
(c) the opinion of the Purchaser's Solicitors in a form acceptable
to the Vendor acting reasonably;
(d) copies of consents and waivers referred to in Section 8.2(d)
hereof;
(e) Certificate of good standing with respect to the Purchaser by
the Registrar of Corporations (Alberta) and Nova Scotia;
(f) Certificate of Incumbency of the Purchaser;
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(g) Certified Copy of Resolution of the Directors of the Purchaser
approving the transaction contemplated by this Agreement;
(h) Partnership Dissolution Agreement;
(i) Declaration of Dissolution;
(j) Declaration of Dissolution of Partnership;
(k) Escrow Agreement duly executed by the Purchaser if necessary;
(l) Form T2060; and
(m) such other documents as the Vendor reasonably request.
9.3 Minimum Lease Assignments
(a) The Vendor is required under Section 8.1(h) to obtain all of
the estoppel certificates, and consents to assignment of the
landlord/lessors ("Consent Documents") under the Real Property
Leases for assignment from the Vendor on behalf of the
Partnership to the Purchaser hereunder. If the Vendor obtains
the Consent Documents of five (5) of the Real Property Leases
(the "Minimum Lease Condition" for purposes of Article IX)
then the condition precedent set forth in Section 8.1(h) shall
at the option of the Purchaser be deemed to be met. Assuming
the satisfaction of the Minimum Lease Condition, if Purchaser,
shall give the written notice to the Vendor as provided in
Section 11.8, then for each Real Property Lease for which the
Vendor has not obtained Consent Documents the amount of
C$100,000 of the Purchase Price shall be paid into escrow in
accordance with the terms of the Escrow Agreement pending
receipt and delivery of such consent.
ARTICLE X - INDEMNIFICATION
10.1 Survival
The representations and warranties of the applicable Vendor, Denis and
the Purchaser shall remain operative and in full force and effect for a period
of thirty-six (36) months after the Closing Date, regardless of any
investigation or statement as to the results thereof made by or on behalf of any
party hereto. Notwithstanding anything to the contrary
-57-
herein, any representation or warranty which is the subject of a specific claim
or dispute which is asserted in writing prior to the expiration of the
applicable period set forth above shall survive with respect to such claim or
dispute until the final resolution and satisfaction thereof.
10.2 General Indemnification
(a) The Vendor and Denis hereby jointly and severally agree to
indemnify and hold harmless the Purchaser and its Affiliates
(including their respective directors, officers, employees,
agents, successors and assigns (collectively, the "Purchaser
Indemnified Parties")) from and against and in respect of the
Vendor's Share of any and all Losses resulting from, arising
out of, based on or relating to:
(i) the failure of any representation or warranty of the
Vendor or Denis set forth in this Agreement, any
Transaction Document or any certificate or instrument
delivered by or on behalf of the Vendor or Denis
pursuant to this Agreement, to be true and correct in
all respects both as of the date of this Agreement and
on the Closing Date;
(ii) the breach of any covenant or other agreement on the
part of the Vendor or Denis under this Agreement or any
Transaction Document;
(iii) any Excluded Liability;
(iv) (A) any Release of Hazardous Materials by or held on
behalf of (i) the Partnership or (ii) any Person for
whose actions the Partnership is responsible in law in,
on, at, or from the Company Properties which occurred,
or resulted from operations occurring, prior to the
Closing; (B) any tort liability to third parties as a
result of any Releases or from exposure to Hazardous
Materials arising from any Releases prior to the
Closing; (C) notification or designation under any
Environmental Law as a potentially responsible party for
onsite or offsite disposal of Hazardous Materials, which
disposal occurred prior to the Closing; or (D) any other
Environmental Costs and Liabilities and any other
Environmental Claim or Remedial Action resulting from or
based upon anything related to the property currently or
previously owned, leased or operated by the Partnership
or any of its previously amalgamated companies thereof
conducted prior to Closing.
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(b) The Purchaser hereby agrees to indemnify and hold harmless the
Vendor and Denis and their respective successors and assigns
(collectively, the "Vendor Indemnified Parties") from and
against and in respect of any and all Losses resulting from,
arising out of, based on or relating to:
(i) the failure of any representation or warranty of the
Purchaser set forth in this Agreement or any Purchaser
Document or any certificate and instrument delivered by
or on behalf of the Purchaser pursuant to this
Agreement, to be true and correct in all respects both
as of the date of this Agreement and on the Closing
Date;
(ii) the breach of any covenant or other agreement on the
part of the Purchaser or National under this Agreement
or any Purchaser Document;
(iii) any Contract Liabilities or breaches of the Assumed
Contracts.
10.3 Limitations on Indemnification for Breaches of Representations
and Warranties
The Vendor or Denis shall not have any liability under Section
10.2(a), unless and until the aggregate amount of losses subject to
indemnification thereunder exceeds C$5,000.00 and in such event, the Vendor or
Denis shall be required to pay the entire amount of such Losses in excess of
C$5,000.00. The Purchaser shall not have any liability under Section 10.2(b),
unless and until the aggregate amount of Losses subject to indemnification
thereunder exceeds C$5,000.00 and, in such event, the Purchaser shall be
requested to pay the entire amount of such Losses in excess of C$5,000.00.
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 action or
proceeding by a third party with respect to which the
indemnified party asserts is indemnifiable under Section 10.2
(a "Claim"), the indemnified party shall notify the
indemnifying party (the "Indemnitor") of such Claim in writing
promptly following the receipt of notice of the commencement
of such Claim. The failure
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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.
(b) Except as provided below, the Indemnitor shall be entitled to
assume the defense or settlement of any Claim of the type
referred to in clause (a) hereof (with counsel reasonably
satisfactory to the indemnified parties) if the Indemnitor
shall provide the indemnified parties a written acknowledgment
of its liability to indemnify such indemnified parties against
all Losses resulting from, relating to or arising out of such
Claim. If the Indemnitor assumes any such defense or
settlement, it shall pursue such defense or settlement in good
faith. If the Indemnitor fails to elect in writing to assume
the defense of any Claim or to provide the written
acknowledgment provided for above within 10 days after the
notification referred to above, the indemnified party may
engage counsel to defend, settle or otherwise dispose of such
Claim, which counsel shall be reasonably satisfactory to the
Indemnitor; provided, however, that the indemnified party
-------- -------
shall not settle or compromise any such Claim without the
consent of the Indemnitor (which consent will not be
unreasonably withheld or delayed).
(c) Notwithstanding anything to the contrary contained herein, the
Purchaser shall have the sole right, with counsel reasonably
satisfactory to the Indemnitor, to defend and settle in its
sole discretion any Claim which constitutes a Non-Assumable
Claim and no other party hereto shall be entitled to assume
the defense thereof or settle such claim. A "Non-Assumable
Claim" means any claim, action or proceeding (i) arising out
of or in connection with, or relating to, any violation or
asserted violation of any Law, Order, judgment or decree, (ii)
involving any Government Body other than in respect to Taxes,
or (iii) seeking injunctive relief.
(d) In cases where the Indemnitor has elected to assume the
defence 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
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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.
10.5 Treatment of Payment
The Vendor and Purchaser agree to treat any indemnity payment made
pursuant to Sections 10.2 of this Agreement as an adjustment to the Purchase
Price for federal, provincial, local and foreign income tax purposes.
10.6 Limitation of Indemnity
The amount of any loss or damage which may be claimed by a party
pursuant to the provisions of this Article X shall be calculated after giving
effect to:
(a) any insurance proceeds received by the Vendor in the case of a
claim by the Purchaser, in relation to the matter which is the
subject of the claim; and
(b) the value of any tax benefits realized or which will be
realized relating thereto, less any tax imposed as a result of
the receipt of the indemnification hereunder, as determined by
KPMG in the case of a claim by the Purchaser or determined by
▇▇▇▇▇ & Co. in the case of a claim by the Vendor, in relation
to the matter which is the subject of the claim.
ARTICLE XI - GENERAL
11.1 Specific Performance
The Vendor acknowledges and agrees that the breach of this Agreement
would cause irreparable damage to the Purchaser and that the Purchaser will not
have an adequate
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remedy at law. Therefore, the obligations of the Vendor under this Agreement,
including, without limitation, the obligation of the Vendor 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 Vendor 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.
11.3 Submission to Jurisdiction; Consent to Service of Process
(a) The parties hereto hereby irrevocably submit to the
jurisdiction of any federal or other court located within the
Province of Alberta 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 by such
court. 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 and Waivers Confidentiality
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This Agreement and the Transaction Documents represent 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. Except as set out in this Agreement, 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
unless and to the extent that such failure, delay or partial exercise prejudices
the Indemnitor. All remedies hereunder are cumulative and are not exclusive of
any other remedies provided by law. The parties acknowledge that they each
participated in drafting this Agreement, and there shall be no presumption
against any party on the ground that such party was responsible for preparing
this Agreement or any part thereof.
11.5 Severability
If any provision of this Agreement is invalid or unenforceable, the
balance of this Agreement shall remain in effect.
11.6 Binding Effect; Assignment
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns. Nothing in this
Agreement shall create or be deemed to create any third party beneficiary rights
in any person or entity not a party to this Agreement except as provided below.
No assignment of this Agreement or of any rights or obligations hereunder may be
made by any party hereto without the prior written consent of the other parties
hereto and any attempted assignment without the required consents shall be void;
provided, however, that 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 upon the
purchaser
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assignee agreeing to be bound by such covenant and obligation of the Purchaser
and further provided that the Purchaser is not released from its obligations set
out herein. Upon any such permitted assignment, the references in this Agreement
to the Purchaser shall also apply to any such assignee unless the context
otherwise requires.
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 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
c/o National Money Mart Company
3rd Floor, ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇, President
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
2500, ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Vendor and Denis:
King Mortgage Ltd.
▇▇▇ ▇▇, ▇▇▇▇ ▇▇, ▇.▇. ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
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T3E 6W3
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy to:
Cleall Pahl
Barristers and Solicitors
2500, ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Q.C.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice given in accordance with this paragraph shall be deemed received on
the date of personal delivery or three (3) 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 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Alberta 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.
NATIONAL MONEY MART COMPANY
Per:
---------------------------------
KING MORTGAGE LTD.
Per:
---------------------------------
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Witness ▇▇▇▇▇ ▇▇▇▇▇▇▇