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Asset Purchase Offer

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Introduction
Description
Use
Table of Contents

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Introduction

When a person wants to acquire all or a substantial part of a business without taking over the liabilities thereof, it must proceed through a purchase of assets. The best method to make such a purchase varies depending on the circumstances of each transaction.

Some sales begin with a simple letter of intent (see document Y01.200 of the Business Precedents) summarizing the broad outlines of the operation, which is then followed by a sale of business agreement (see document Y02.500 of the Business Precedents) containing all the details on the terms of sale. Others are initiated by submitting a very detailed offer, followed by a closing certificate (see document Y02.600 of the Business Precedents) and the execution of all documents required to complete the transfer of ownership of certain assets.

This document establishes, in a detailed manner, all the financial, legal and other elements normally contained in an offer to purchase a business.

Description

The Offer to Purchase a Business is the legal instrument by which a person called the OFFEROR offers to another person, called the OFFEREE, to purchase all the assets of his business, according to the price and terms specified in the offer.

The issue of such an offer is binding upon the OFFEROR upon acceptance of the offer by the OFFEREE.

Use

We recommend the use of this document as part of a proposed purchase, when the offeror wishes the offeree to immediately accept the contractual framework of the specific offer to purchase. The use of such an offer helps to reduce the risk that the transaction be aborted in the event that a disagreement occurs on any of the unspecified terms, as can happen when the process is launched by a simple letter of intent, such as document Y02.200 of the Business Precedents.

This offer is usually followed by a closing certificate (see document Y02.600 of the Business Precedents), rather than a sale of business agreement containing the full text of the offer (see document Y02.500 of the Business Precedents), which rather complements the letter of intent described above.

Table of Contents

0.00 INTERPRETATION
0.01 Definitions
0.01.01 Account Payable
0.01.02 Account Receivable
0.01.03 Activities
0.01.04 Adverse Event
0.01.05 Assets
0.01.06 Automotive Material
0.01.07 Best Effort
0.01.08 Breach
0.01.09 Clientele
0.01.10 Closing Certificate
0.01.11 Closing Date
0.01.12 Confidential Information
0.01.13 Creditor
0.01.14 Domain Name
0.01.15 Effective Date
0.01.16 Employees
0.01.17 Encumber or Encumbrance
0.01.18 Equipment
0.01.19 Force Majeure
0.01.20 GAAP
0.01.21 Hazardous Materials
0.01.22 Indemnification Warranty
0.01.23 Intellectual Property
0.01.24 Interim Period
0.01.25 Law
0.01.26 Legal Representatives
0.01.27 Notice of Acceptation and Disclosure
0.01.28 Offer
0.01.29 Ordinary Course of Business
0.01.30 PARTY
0.01.31 Person
0.01.32 Prime Rate
0.01.33 Products
0.01.34 Services
0.01.35 Suppliers
0.01.36 Transaction
0.01.37 Year
0.02 Precedence
0.03 Jurisdiction
0.03.01 Governing Law
0.03.02 Non-compliance
0.04 Miscellaneous
0.04.01 Cumulative Rights
0.04.02 Time and Dates
0.04.03 Financial References
0.04.04 References within Offer
0.04.05 Gender and Number
0.04.06 Headings
0.04.07 Presumptions
0.04.08 Knowledge
0.04.09 Approval
0.04.10 GAAP
1.00 PURPOSE
1.01 Offer to Purchase
1.02 Conditions
1.02.01 Required by the Offeror
1.02.02 Choice
2.00 CONSIDERATION
2.01 Amount Offered
2.02 Adjustments
2.03 Allocation
2.04 GST/QST
3.00 TERMS OF PAYMENT
3.01 Deposit
3.01.01 Remittance
3.01.02 Cashing
3.01.03 Penalty
3.01.04 Return
3.02 Reserve for Unpaid Creditors
3.03 Initial Instalment
3.04 Balance
3.05 Third-Party Claim
3.06 Interest
3.07 Promissory Note
3.08 Expiry of Term
3.09 Advance payment
3.10 Third Party Owner
3.11 Loss of Term
4.00 SECURITY
4.01 In Favour of OFFEROR
4.01.01 Indemnification Warranty
4.02 In Favour of OFFEREE
4.02.01 SURETYSHIP
4.02.02 Immovable Hypothec
4.02.03 Movable Hypothec without Delivery
5.00 MUTUAL REPRESENTATIONS AND WARRANTIES
5.01 Status
5.02 Authority
5.03 Binding Agreement
5.04 Commission
6.00 REPRESENTATIONS AND WARRANTIES OF THE OFFEROR
6.01 Nominee
6.02 Authority
6.03 Canadian Resident
7.00 REPRESENTATIONS AND WARRANTIES OF THE OFFEREE
7.01 Person
7.01.01 Status
7.01.02 Insolvency
7.01.03 Authority
7.02 Assets
7.02.01 Ownership
7.02.02 Quality
7.02.03 Safety
7.02.04 Peaceful Enjoyment
7.02.05 Encumbrance
7.02.06 Inventory
7.03 Human Resources
7.03.01 Labour Standards
7.03.02 Health and Safety
7.03.03 Collective Labour Agreement
7.03.04 Pension Plans
7.03.05 Pay Equity
7.03.06 Key Employees
7.04 Corporate Finance
7.04.01 Loan Agreements
7.04.02 Default
7.04.03 Breach
7.05 Financial Management
7.05.01 Financial Statements and Balance Sheet
7.05.02 Financial Position
7.05.03 Suretyship and Guarantees
7.05.04 Accounting Methods
7.05.05 Advances
7.05.06 Arrears
7.06 Tax Status
7.06.01 Taxation
7.06.02 Deductions at Source
7.07 Occupancy Titles
7.07.01 Valid Titles
7.07.02 Lease
7.08 Procurement
7.08.01 Equipment
7.08.02 Material Agreements
7.08.03 Suppliers
7.08.04 Parts
7.09 Operations
7.09.01 Important Agreements
7.09.02 Clientele
7.09.03 Warranties
7.09.04 Conduct of Business
7.09.05 Discriminatory Practices
7.09.06 Behavior
7.10 Permits and Licences
7.10.01 List
7.10.02 Situation
7.10.03 Compliance
7.10.04 Restriction
7.11 Environment
7.11.01 No Use
7.11.02 Use in Compliance
7.11.03 Location of Use
7.11.04 Notice of Default
7.12 Intellectual Property
7.12.01 List
7.12.02 Copyrights
7.12.03 Trade-marks
7.12.04 Patents
7.12.05 Trade Secrets /Know-How
7.13 Information Communication Technologies
7.13.01 Equipment
7.13.02 Software
7.13.03 Domain Names
7.13.04 Electronic Commerce
7.14 Advertising and Promotional Means
7.15 Marketing
7.15.01 Commercial Pratices
7.15.02 Consumer Protection
7.16 Customer Credit
7.16.01 Accounts Receivable
7.16.02 Consignment
7.17 Insurance
7.17.01 List of Policies
7.17.02 Coverage
7.17.03 Good Standing
7.17.04 Claims
7.18 Legal Proceedings
7.19 Miscellaneous
7.19.01 Creditors
7.19.02 Sufficiency
7.19.03 Use
7.19.04 Waiver and Discharge
7.19.05 Reason for Sale
7.19.06 Disclosure
8.00 MUTUAL DUTIES AND OBLIGATIONS
8.01 Confidential Information
8.02 Disclosure
9.00 DUTIES AND OBLIGATIONS OF THE OFFEROR
9.01 Prior to the Closing Date
9.01.01 Non-disclosure
9.01.02 Conditions
9.01.03 Continuous Information
9.02 After the Closing Date
9.02.01 Release, Discharge or Indemnification
9.02.02 Inventory
9.02.03 Insurance
9.02.04 Contributions
9.02.05 Lease
9.02.06 Staff
9.02.07 Taxes
9.02.08 Assumation by OFFEROR
10.00 DUTIES AND OBLIGATIONS OF THE OFFEREE
10.01 Prior to the Closing
10.01.01 Audit
10.01.02 Encumbrance
10.01.03 Taking of Inventory
10.01.04 Payment of Creditors
10.01.05 Assignment of Lease
10.01.06 Alcohol Licence
10.02 After the Closing Date
10.02.01 Transition
10.02.02 Delivery
10.02.03 Non-competition
10.02.04 Non-solicitation of Clientele
10.02.05 Non-solicitation of Staff
10.02.06 Dismissal
10.02.07 Leases and Leasing Agreements
10.02.08 Corporate Name
10.02.09 List of Creditors
10.03 Indemnification
10.03.01 “Loss”
10.03.02 Scope
10.03.03 Procedure
10.03.04 Deductible
10.03.05 Prescription
10.03.06 Limitation on claims
11.00 SPECIAL PROVISIONS
11.01 Assignment
11.01.01 Prohibition
11.01.02 Effect of Breach
11.01.03 Exception
11.02 Pre-incorporation Agreement
11.03 Force Majeure
11.03.01 No Default
11.03.02 Duty
11.03.03 Rights of Other PARTY
11.04 Fees and Disbursements
11.05 Registration of the Offer
11.06 Further Assurances
11.07 Other Remedies
11.07.01 Choices
11.07.02 No Limitations
11.08 Closing Session
11.09 Taking of Inventory
11.10 Prescription
12.00 GENERAL PROVISIONS
12.01 Notice
12.02 Dispute Resolution
12.02.01 Good Faith Negotiations
12.02.02 Mediation
12.02.03 Arbitration
12.03 Election
12.04 Counterparts
12.05 Amendment
12.06 Waiver of Rights
12.07 Electronic Transmission
12.08 Language
13.00 EXPIRATION OF THE OFFER
14.00 CLOSING SESSION
14.01 Time and Date
14.02 Delay
15.00 SCOPE

SCHEDULE A - EXCERPT OF A RESOLUTION OF THE OFFEROR
SCHEDULE B - EXCERPT OF A RESOLUTION OF THE OFFEREE
SCHEDULE 0.01.05 (a)- IMMOVABLE
SCHEDULE 0.01.05 (C) – EQUIPMENT, MACHINERY AND TOOLS
SCHEDULE 0.01.05 (D) – AUTOMOTIVE MATERIAL
SCHEDULE 0.01.05 (E)– MOVABLE GOODS AND OFFICE EQUIPMENT
SCHEDULE 0.01.05(F) – COMPUTERS AND COMPUTING EQUIPMENT
SCHEDULE 0.01.05 (J) - PERMITS AND LICENCES
SCHEDULES 0.01.05 (K) – INTELLECTUAL PROPERTY
SCHEDULE 0.01.05 (L) - LEASE
SCHEDULE 0.01.27 – NOTICE OF ACCEPTATION AND DISCLOSURE
SCHEDULE 3.07 – PROMISSORY NOTE
SCHEDULE 4.02.01 – SURETYSHIP
SCHEDULE 4.02.03 – MOVABLE HYPOTHEC WITHOUT DELIVERY
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Civil Law Version
Updated 14-02-2009
Québec
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