MEMORANDUM OF AGREEMENT ENTERED INTO AT THE CITY OF MONTREAL, PROVINCE OF
QUEBEC, ON THE 1ST DAY OF OCTOBER, 2003 AT 12:01 A.M.
BY AND BETWEEN:
3577996 CANADA INC., a corporation duly
incorporated under the Canada Business
Corporations Act, herein represented by
Jeanne Chan, duly authorised for the
purposes hereof pursuant to a resolution
of the board of directors dated October
1, 2003 (hereinafter referred to as the
"Vendor")
PARTY OF THE FIRST PART
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AND:
TELEPLUS RETAIL SERVICES INC., a company
duly incorporated under Part 1A of the
Companies Act (Quebec), herein
represented by Anthony Fitzgerald, duly
authorised for the purposes hereof
pursuant to a resolution of the board of
directors dated October 1, 2003
(hereinafter referred to as the
"Purchaser")
PARTY OF THE SECOND PART
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WHEREAS the Vendor operates a business under the name and style TelePlus
Consumer Services (hereinafter referred to as the "Business");
WHEREAS the parties have reached an understanding whereby the Vendor will
sell and the Purchaser will purchase certain assets from the Vendor relating to
the Business;
WHEREAS the parties are mutually desirous of setting forth in writing all
of the terms and conditions whereby the aforementioned purchase and sale of the
aforesaid assets shall take place.
THE PARTIES AGREE AS FOLLOWS:
ARTICLE 1. INTERPRETATION
1.1 The preamble hereto shall form an integral part hereof as if recited
herein at length.
1.2 Where used herein or in any amendment hereto the following term shall
have the meaning defined in this Section unless the context indicates otherwise:
(a) "Assumed Liabilities" means those accounts payable and accrued liabilities
of the Vendor which are being assumed by the Purchaser, the whole as set
forth on Schedule "B" annexed hereto;
(b) "Accounts Receivable" means all accounts receivable of the Vendor as set
forth in Schedule "A" annexed hereto;
(c) "Act" means the Income Tax Act (Canada);
(d) "Business" has the meaning assigned thereto in the preamble;
(e) "Cash" means all of the Vendor's cash on hand and funds on deposit;
(f) "Computer Hardware" means the computer hardware of the Vendor relating to
the Business;
(g) "Computer Software" means the computer software of the Vendor relating to
the Business;
(h) "Financial Statements" means the financial statements of the Vendor as set
forth in Schedule "E" annexed hereto;
(i) "Goodwill" means the goodwill of the Vendor relating to the Business,
including the use of the name "TelePlus Consumer Services" or any
derivation thereof, books and records of the Vendor, the right to all
telephone, telex and telecopier numbers relating to the Business, all
information in the possession of the Vendor relating to the operations of
the Business, the exclusive right of the Purchaser to represent itself as
carrying on the Business as well as all corporate business opportunities of
the Vendor;
(j) "Inventory" means the inventory of the Vendor;
(k) "Leasehold Improvements" means that all leasehold improvements of the
Vendor with respect to any and all premises currently being leased by the
Vendor;
(l) "Leases" means all of the leases under which the Vendor is currently
leasing any premises, wherever situated;
(m) "Loans Receivable" means all loans receivable by the Vendor including all
loans due from the Vendor's parent corporation;
(n) "Office Equipment and Furniture" means the office equipment and furniture
of the Vendor;
(o) "Prepaid Expenses and Deposits" means all prepaid expenses and deposits of
the Vendor.
1.3 The division of this Agreement into articles, sections, subsections,
paragraphs and schedules, the use of headings or the provision of a table of
contents are for convenience of reference only and should not affect the
interpretation or construction of this Agreement.
1.4 All dollar amounts referred to in this Agreement and in the Schedules
hereto are in Canadian funds unless otherwise expressly stated.
1.5 The singular shall include the plural where indicated by the context and
all words and personal pronouns relating thereto shall be read and construed so
as to give them proper meaning within the context in which they are used.
1.6 This Agreement shall be governed by and construed in accordance with the
laws of the Province of Quebec and the laws of Canada insofar as each has
jurisdiction.
1.7 The following Schedules are incorporated in this Agreement by reference
and is deemed to be an integral part hereof:
Schedule A - Purchased Assets and allocation of Purchase Price
Schedule B - Assumed Liabilities
Schedule C - Leases
Schedule D - Employees
Schedule E - Financial Statements
1.8 The Accounts Receivable, Cash, Computer Hardware, Computer Software,
Financial Statements, Goodwill, Inventory, Leasehold Improvements, Leases, Loans
Receivable, Office Equipment and Furniture, Prepaid Expenses and Deposits as
well as any other assets or liabilities provided for in this Agreement shall be
as of October 1, 2003.
ARTICLE 2. PROPERTY AND ASSETS TO BE PURCHASED AND SOLD
2.1 Subject to the terms and conditions hereof, the Vendor hereby sells,
assigns and transfers and the Purchaser hereby purchases from the Vendor the
following assets:
(a) The Cash;
(b) The Accounts Receivable;
(c) The Inventory
(d) The Prepaid Expenses and Deposits to the extent they may be used by the
Purchaser;
(e) The Loans Receivable;
(f) The Computer Hardware;
(g) The Computer Software;
(h) The Leasehold Improvements;
(i) The Office Equipment and Furniture; and
(j) The Goodwill.
(the aforementioned assets are hereinafter referred to as the "Purchased
Assets").
ARTICLE 3. PURCHASE PRICE AND PAYMENT THEREOF
3.1 The purchase price payable to the Vendor for the Purchased Assets (the
"Purchase Price") shall be, subject to adjustments herein provided for, a sum
equal to the aggregate of the following amounts and shall be allocated among the
assets as set forth below:
(a) as to the Cash, Accounts Receivable and Loans Receivable, the face value
thereof, the whole as set forth on Schedule "A" annexed hereto;
(b) As to the Prepaid Expenses, the book value of all prepaid expenses to the
extent they can be used by the Purchaser the whole as set forth on Schedule
"A" annexed hereto;
(c) As to the Computer Software, Computer Hardware, Leasehold Improvement and
Office Equipment and Furniture, the amounts set forth on Schedule "A"
annexed hereto;
(d) As to the Goodwill, the amount set forth on Schedule "A" annexed hereto.
3.2 The Purchase Price for the Purchased Assets shall be payable by the
Purchaser by assumption of the Assumed Liabilities. To the extent that the
Assumed Liabilities exceed the Purchase Price, the Vendor shall issue a demand
note to the Purchaser for the amount of the excess.
3.3 Excluded Liabilities. The Purchaser shall not assume and shall not be
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liable for any liabilities of the Vendor other than the Assumed Liabilities as
hereinabove provided. For greater certainty, the liabilities set forth in
Schedule "B" annexed hereto constitute and complete and exhaustive list of the
Assumed Liabilities. Notwithstanding the foregoing, if, by mutual agreement of
the parties, the Purchaser assumes any liabilities of the Vendor other than the
Assumed Liabilities then the amount of any such additional liabilities shall be
set off against the Purchase Price. The Vendor hereby expressly agrees to
indemnify and save harmless the Purchaser from all of its obligations,
commitments and other undertakings not assumed by the Purchaser.
ARTICLE 4. ASSIGNMENT OF LEASES
4.1 The Vendor hereby assigns all of its right, title and interest in and to
all Leases set forth on schedule "C" annexed hereto. In consideration therefore,
the Purchaser hereby undertakes to discharge, perform and fulfill all
obligations, commitments and engagements of the Vendor entered into in
connection with said Leases and to indemnify and save the Vendor harm-less with
respect to same.
ARTICLE 5. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor covenants, represents and warrants as follows to the Purchaser
and acknowledges and confirms that the Purchaser is relying on such covenants,
representations and warranties in connection with the purchase of the Purchased
Assets:
5.1 The Vendor is a company duly incorporated under the Canada Business
Corporations Act and is validly subsisting and in good standing under the laws
of Canada; the Vendor has the corporate power to own its property and to carry
on the Business as now being conducted by it, is duly qualified as a corporation
to do business and is in good standing in each jurisdiction in which the nature
and location of the Business and the Purchased Assets makes such qualification
necessary. The Vendor has full corporate power, capacity and authority to enter
into, and to carry out and perform its obligations under this Agreement and any
agreements contemplated hereby;
5.2 All of the Purchased Assets are owned solely and unconditionally by the
Vendor and the Vendor has good, valid and marketable title thereto, free and
clear of all hypothecs, pledges, mortgages, liens, charges, security interests,
encumbrances, actions, claims or demands of any nature whatsoever or however
arising except for those charges disclosed to the Purchaser or created by
operation of law alone;
5.3 No person, firm or corporation has any written or oral agreement,
option, understanding or commitment, or any right or privilege capable of
becoming an agreement, for the purchase from the Vendor of any of the Purchased
Assets;
5.4 The execution, delivery and carrying out of this Agreement by the Vendor
will not violate any provision of law or its constating documents and will not
conflict with or result in any breach of any of the terms, conditions or
provisions of or constitute a default pursuant to any instrument or agreement to
which the Vendor is a party or by which it is bound;
5.5 The Vendor is not a non-resident of Canada within the meaning of the
Act.
5.6 The Vendor has obtained all approvals and consents necessary in order to
effect the transactions contemplated hereby.
5.7 The books and records of the Vendor fairly and correctly set out and
disclose in all material respects, in accordance with generally accepted
accounting principles, the financial position of the Vendor and all material
financial transactions of the Vendor relating to the Business have been
accurately recorded in such books and records.
5.8 The Financial Statements of the Vendor have been prepared in accordance
with generally accepted accounting principles applied on a basis consistent with
those of previous fiscal years and present fairly the assets, liabilities
whether accrued, absolute, contingent or other-wise and the financial condition
of the Business, and the sales and earnings of the Vendor during the periods
covered by the Financial Statements. There have been no material adverse changes
affecting the Business as a going concern since the date of the most recent
Financial Statements.
5.9 All of the Accounts Receivable are bona fide, result from the ordinary
course of business, have been properly recorded in the ordinary course of
business, and are good and collectible in full when due without any discount,
setoff or counterclaim, in amounts equal to not less than the aggregate face
amounts thereof.
5.10 The Assumed Liabilities of the Vendor are being paid in the ordinary
course of business on the terms and within the delays allowed by the relevant
creditors.
5.11 All inventories have been accumulated in the ordinary course, are in
good and marketable condition save and except such reserves for damages as are
reflected in the Financial Statements.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
6.1 The Purchaser covenants, represents and warrants as follows to the
Vendor and acknowledges and confirms that the Vendor is relying on such
covenants, representations and warranties in connection with the purchase of the
Purchased Assets:
(a) the Purchaser is a company duly incorporated under the laws of Quebec and
is validly subsisting and in good standing under said laws; the Purchaser
has the corporate power to own its property and to carry on its business as
now being conducted by it. The Purchaser has full corporate power, capacity
and authority to enter into, and to carry out and perform its obligations
under this Agreement and any agreements contemplated hereby;
(b) the execution, delivery and carrying out of this Agreement by the Purchaser
will not violate any provision of law or its constating documents and will
not conflict with or result in any breach of any of the terms, conditions
or provisions of or constitute a default pursuant to any instrument or
agreement to which the Vendor is a party or by which it is bound;
(c) the Purchaser is not a non-resident of Canada within the meaning of the
Act;
(d) the Purchaser has obtained all approvals and consents necessary in order to
effect the transactions contemplated hereby.
ARTICLE 7. EMPLOYMENT MATTERS
7.1 The Vendor is not a party to any written or oral employment, service or
pension agreement with respect to persons providing services to the Vendor.
7.2 The Purchaser hereby agrees to assume all of the obligations of the
Vendor towards the employees set forth on Schedule "D" annexed hereto. The
Vendor expressly represents and warrants to the Purchaser that the Vendor has no
employees other than those set forth on schedule "D" annexed hereto and that the
obligations toward said employees are as set forth in said schedule.
7.3 The Vendor has not made any agreements with any labour union or employee
association nor made commitments to same with respect to the Business, and the
Vendor is not aware of any current attempts to organize or establish any new or
fresh labour union or employee association with respect to the Business.
7.4 All salaries, bonuses, commissions and other emoluments or other
payments of any kind or description due to employees of the Business prior to
the date hereof, will be paid by the Vendor to the total exoneration of the
Purchaser.
ARTICLE 8. INDEMNIFICATION
8.1 The Vendor hereby undertakes and agrees to indemnify the Purchaser and
save it harmless from and against any claims, actions or suits which may be made
or instituted against the Purchaser, and from and against any and all damages or
losses suffered by the Purchaser by reason of or arising from the breach of any
obligation of the Vendor under this Agreement, or any incorrectness in, or
breach of, any representation or warranty made by the Vendor in this Agreement.
8.2 The Purchaser hereby undertakes and agrees to indemnify the Vendor and
save it harmless from and against any claims, actions or suits which may be made
or instituted against the Vendor, and from and against any and all damages or
losses suffered by the Vendor by reason of or arising from the breach of any
obligation of the Purchaser under this Agreement, or any incorrectness in, or
breach of, any representation or warranty made by the Purchaser in this
Agreement.
ARTICLE 9. VARIOUS
9.1 The representations, warranties and covenants contained herein and the
documents submitted pursuant to or in connection with the transactions herein
provided shall survive the closing of the purchase and sale of the Purchased
Assets and, notwithstanding such closing and regardless of any investigations by
or on behalf of any of the parties with respect thereto, shall continue in full
force and effect for the benefit of the respective parties.
9.2 In the event that any Account Receivable is not collected within sixty
(60) days hereof, the Purchaser shall have the option to sell back to the Vendor
such uncollected Accounts Receivable for a purchase price equal to the face
value thereof, payable immediately.
9.3 As of the date hereof, the Vendor hereby agrees to:
(a) deliver to Purchaser all necessary deeds, conveyances, consents and any
other documents necessary or reasonably required effectively to transfer
the Purchased Assets to the Purchaser with a good and marketable title;
(b) deliver possession of the Purchased Assets to the Purchaser;
(c) deliver to Purchaser certified copies of resolutions of the Shareholders
and Directors of the Vendor authorizing the transfers contemplated hereby.
9.4 The Purchaser shall be liable for all provincial and federal sales tax
applicable to the sale of any of the Purchased Assets.
9.5 The Purchaser warrants that it is registered for purposes of the Goods
and Services Tax ("GST") and the Quebec Sales Tax ("QST").
9.6 GST Election. The Vendor and the Purchaser shall elect jointly pursuant
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to the provisions of subsection 167(1) of the Excise Tax Act (and corresponding
analogous provisions of the Quebec Sales Tax Act) by completing all prescribed
forms and related documents in such manner as is prescribed, so that for
purposes of the Excise Tax Act and the Quebec Sales Tax Act, no GST or QST is
payable in respect of the purchase and sale of the Purchased Assets. The
Purchaser agrees that it will file the joint election in the manner and within
the time limits prescribed under the Excise Tax Act and the Quebec Sales Tax Act
and provide the Vendor with written evidence of such filing.
9.7 Notwithstanding the elections referred to in Section 9.6 above, the
Purchaser expressly agrees that it shall indemnify and hold harmless the Vendor
and its directors, officers, employees and representatives from and against any
and all assessments which may be made against the Vendor or its directors,
officers, employees and representatives by the federal or provincial taxation
authorities regarding the application of the GST or QST to the sale of assets of
the Business hereunder. The Vendor agrees to give notice to the Purchaser of
any such assessments or claims within such delay so as not to materially
prejudice the ability of the Purchaser to contest same.
9.8 The preparation and production of all documents required to be delivered
by the Vendor at Closing shall be at the Vendor's expense, however the costs of
registering any documents pursuant the transactions hereunder shall be at the
expense of the Purchaser.
9.9 From time to time and at any time subsequent to the date hereof:
(a) the Vendor shall at the request and expense of the Purchaser, take such
further actions as the Purchaser may reasonably determine to be necessary
or appropriate to carry out the purposes of this Agreement; and
(b) the Purchaser shall at the request and expense of the Vendor take such
further actions as the Vendor may reasonably determine to be necessary or
appropriate to carry out the purposes of this Agreement.
9.10 This Agreement, including the Schedules annexed hereto constitutes the
entire Agreement between the parties and may not be amended or modified in any
respect by written instrument signed by both parties.
9.11 This Agreement is personal to the parties and may not be assigned,
transferred or otherwise disposed of to any other party.
9.12 This Agreement shall ensure to the benefit of and be binding upon the
parties hereto and their respective administrators and successors.
9.13 In the event that any of the warranties, representations or covenants
or any portion of them contained in this Agreement are unenforceable or are
declared invalid for any reason whatsoever, such unenforceability or invalidity
shall not affect the enforceability or validity of the remaining terms or
portions thereof contained in this Agreement.
9.14 The parties hereto have requested that these presents be drafted in
English. Les parties aux pr sentes reconnaissent qu'ils ont exig s que ce qui pr
cede soit r dig s en anglais.
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement on
the date and at the place first hereinabove mentioned.
3577996 CANADA INC.
Per: /s/ Jeanne Chan
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Jeanne Chan
PARTY OF THE FIRST PART
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TELEPLUS RETAIL SERVICES INC.
Per: /s/ Anthony Fitzgerald
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Anthony Fitzgerald
PARTY OF THE SECOND PART
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