exv10w1



 



Exhibit 10.1


HELIX HEARING CARE OF AMERICA CORP.



AND



FORGET & SAUVÉ, AUDIOPROTHESISTES, S.E.N.C.



AND



6068065 CANADA INC.







ASSET PURCHASE AND SALE AGREEMENT







DATED AS OF JULY 15, 2003



OGILVY RENAULT

Barristers and Solicitors



 






 





ASSET PURCHASE AND SALE AGREEMENT



THIS AGREEMENT dated as of the 15th day of July, 2003



	 	 	 
	AMONG:	 	
FORGET & SAUVÉ, AUDIOPROTHÉSISTES, S.E.N.C.,
doing business as “Le Groupe Forget,
Audioprothésistes”, a partnership existing
under the Civil Code of Québec, having its
principal place of business at 189 Hymus Blvd,
Suite 307, Pointe-Claire, Québec, Canada, H9R
1E9, hereinafter acting and represented by
Steve Forget, its Partner;
	 	 	 
	 	 	
(“GF”)
	 	 	 
	AND:	 	
6068065 CANADA INC., a Canadian corporation
incorporated pursuant to the laws of Canada,
having its head office at 1183 Tecumseh,
Dollard-des-Ormeaux, Québec, Canada, H9B 2Z4,
hereinafter acting and represented by Steve
Forget, its President;
	 	 	 
	 	 	
(“Canada Inc.”)
	 	 	 
	 	 	
(hereinafter collectively referred to as
the “Purchasers”)
	 	 	 
	AND:	 	
HELIX HEARING CARE OF AMERICA CORP., a Canadian corporation incorporated
pursuant to the laws of Canada, having its registered office at 7100 Jean
Talon East, Suite 610, Montreal, Québec, H1M 3S3, hereinafter acting and
represented by Stephen J. Hansbrough, its Chief Executive Officer;
	 	 	 
	 	 	
(the “Vendor”)



WITNESSES THAT



WHEREAS:



	(a)	 	the Vendor through Les Services d’Approvisionnement Hearing Care of
America SAHCA Inc. (“SAHCA”), Les Services de gestion Hearing Care of
America SGHCA Inc. (“SGHCA”) and Les Services de location Hearing Care of
America SLHCA Inc. (“SLHCA”), carries on the business of managing and
supplying a network of hearing



 






 






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	 	 	care centres in the Province of Québec that provide a full range of
audiological products and services for the hearing impaired (the
“Business”);
	 
	(b)	 	the Vendor is the owner of the Equipment (as hereinafter defined) and is
desirous of disposing of all its interest in the Equipment;
	 
	(c)	 	the Vendor is the owner of all of the issued and outstanding shares of
SAHCA, SGHCA and SLHCA and is desirous of disposing of all of its interest
in these companies and in the Business;
	 
	(d)	 	the Purchasers are familiar with the Business and GF has had a business
relationship with same for several years;
	 
	(e)	 	GF is a general partnership formed pursuant to the Civil Code of Québec
and Canada Inc. is a corporation incorporated pursuant to the Canada
Business Corporations Act. Both GF and Canada Inc. are controlled (as
such term is defined in the Canada Business Corporations Act, mutatis
mutandis) by Steve Forget;
	 
	(f)	 	the Vendor wishes to sell, assign and transfer to Canada Inc. the shares
of the Purchased Subsidiaries (as hereinafter defined); and
	 
	(g)	 	the Vendor wishes to sell, assign and transfer to GF the Equipment
pertaining to the Business and the Intellectual Property (as hereinafter
defined) and GF wishes to purchase such property and Intellectual
Property.



NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
set out and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties covenant and agree as follows:


ARTICLE 1

DEFINITIONS AND PRINCIPLES OF INTERPRETATION



Section 1.1 Definitions


For the purposes of this Agreement and the Ancillary Documents and any notice,
consent or other communication required or permitted to be given pursuant
hereto or thereto, the following terms shall have the following meanings
ascribed to them respectively, unless the subject matter or context otherwise
requires:


“Affiliate” or “Affiliates” of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person; for the purposes of this definition, “control”
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have meanings correlative to the foregoing;


 






 


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“Agreement” means this agreement entitled “Asset Purchase and Sale Agreement”
and all agreements, schedules and exhibits attached hereto;


“Ancillary Documents” means all agreements and instruments entered into and
delivered pursuant to this Agreement, including the Security Agreements, the
Non-Competition Agreement, the Termination Agreement, the Secured Promissory
Note, the final form of all such Ancillary Documents to be settled as
contemplated in Section 9.2(c);


“Benefit Plans” means all retirement, pension, supplemental pension, savings,
retirement savings, bonus, profit sharing, stock purchase, phantom stock, stock
appreciation, deferred compensation, severance or termination pay, change of
control, insurance, medical, hospital, dental, vision care, drug, sick leave,
short term or long term disability, salary continuation, unemployment benefits,
vacation, incentive, compensation or other employee benefit, plan, program,
arrangement, policy or practice that is maintained or otherwise contributed to,
or required to be contributed to, by or on behalf of the Vendor for the benefit
of its present or former employees, directors or officers;


“Books and Records” means all books and records of the Purchased Subsidiaries
(including the relevant minute books) as at the Effective Time relating to and
used or held for use by the Purchased Subsidiaries (as hereinafter defined)
with respect to the Business, copies of which have been made available to the
Purchasers, but excluding all contracts, instruments, deeds and other
agreements in respect of indebtedness for borrowed money of the Vendor, all
minute books, constating documents, corporate records, all tax returns (and
supporting documentation) of the Vendor and documents pertaining to the Ontario
operations of the Vendor;


“Business” has the meaning ascribed thereto in the preamble;


“Business Day” means a day that is not a Saturday, Sunday or statutory holiday
in Québec;


“Claims” means all claims, demands, debts, damages, losses, deficiencies,
liabilities (accrued, actual, contingent or otherwise), penalties, fines,
causes of action, actions, proceedings, judgments, orders or awards (judicial,
quasi-judicial, administrative, quasi-administrative or arbitral), settlement
payments, assessments, reassessments, and all costs and expenses relating
thereto (including reasonable legal fees and disbursements on a solicitor and
own client basis);


“Closing” means the completion of the purchase and sale of the Purchased Assets
and Business pursuant to this Agreement;


“Closing Date” means July 15, 2003 or such subsequent date jointly determined
by the Vendor and the Purchasers;


“Closing Time” means 2:00 p.m. EST on the Closing Date or such other time on
the Closing Date as Closing occurs with the concurrence of the Parties;


“Consent” means the consent, approval, order, qualification or waiver of,
registration (other than registration with respect to interest in immovable and
real property) or filing with, application or notice to, or other action
whatsoever of, any Person, including any Governmental Authority, which is
required in order for the right, activity or property (immovable and real or
movable and


 






 


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personal, tangible or intangible) referred to in the context in which such
defined term is used, to be sold, assigned, transferred, conveyed, obtained,
exercised, owned, leased, possessed or used, as applicable;


“Effective Time” means 12:01 a.m. EST on May 31, 2003;


“Employees” means, as at the Effective Time, all of the employees of the Vendor
employed in the Business, other than the Terminated Employees;


“Encumbrances” means all liens, prior claims, mortgages, charges, pledges,
security interests, hypothecations, easements, rights-of-way, encroachments,
covenants, conditions, rights of re-entry, leases, licences, assignments,
options or any other encumbrance or title defect whatsoever, and all ownership
or title retention, conditional sale, leasing and sale and leaseback agreements
and all other agreements that in substance secure payment or performance of an
obligation, regardless of form, whether or not registered or registrable and
whether or not consensual or arising at law (statutory or otherwise), including
rights of creditors under bankruptcy or insolvency legislation;


“Equipment” means all right, title and interest of the Vendor in, under or to
the equipment, machinery, tools, computer systems (hardware and software),
furnishings, accessories and office supplies owned by the Vendor as at the
Effective Time and all assignable warranties of any Person covering all or any
part thereof, listed in Schedule 1.1(d);


“ETA” means the Excise Tax Act (Canada);


“Governmental Authority” means any domestic, foreign, international, federal or
provincial government or state and each ministry, department, commission,
board, bureau or other agency of, or municipality, regional district or other
local governing body established by, any such government or state, or other
political subdivision thereof, and includes any Person exercising executive,
legislative, judicial, regulatory or administrative functions of, or pertaining
to, any such government or state and, in each case, having jurisdiction in the
relevant circumstances;


“GST” means the goods and services tax pursuant to ETA;


“Income Taxes” means all Taxes imposed on or measured by, in whole or in part,
income and all federal, provincial, local or foreign franchise tax imposed in
lieu of a tax on or measured by income including in each case all instalments
in respect thereof and all interest, penalties and fines thereon and additions
thereto;


“Indemnified Party” has the meaning ascribed thereto in Section 8.3;


“Indemnifying Party” has the meaning ascribed thereto in Section 8.3;


“Intellectual Property” means the intellectual property listed in Schedule
2.1(c) hereto and all goodwill associated with the foregoing, including any
right that is or may be granted or recognized under any Canadian or foreign
legislation with respect to any of the above;


“ITA” means the Income Tax Act (Canada);


 






 


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“Laws” means all laws, statutes, codes, regulations, ordinances, decrees,
rules, by-laws, permits, directives, policies, standards, guidelines and lawful
requirements of any Governmental Authority, and all judicial, quasi-judicial,
administrative, quasi-administrative and arbitral judgments, orders (including
injunctions) decisions or awards of any Governmental Authority, including
general principles of common law, civil law and equity, in each case having the
force of law and binding on the Person, property (immovable and real or movable
and personal, tangible or intangible) or activity referred to in the context in
which such defined term is used;


“Material Consents” means those of the Consents that are listed in Schedule
1.1(l);


“Non-Competition Agreement” means the non-competition agreement substantially
in the form attached as Schedule 1.1(o) among the Vendor and each of the
Purchasers and Steve Forget;


“Offer” has the meaning ascribed thereto in Section 10.1;


“Parties” means the Purchasers and the Vendor collectively, and “Party” means
either the Purchasers or the Vendor as the context indicates;


“Permitted Encumbrances” means: (i) the Encumbrances listed in Schedule 1.1(m)
(ii) Encumbrances which, both individually and in the aggregate, are of a minor
nature, do not affect the value and do not materially impair the use of those
of the Purchased Assets (as hereinafter defined) which are so affected for the
purpose of carrying on the Business.


“Person” means an individual, partnership, joint venture, firm, society,
association, unincorporated organization, corporation, body corporate, limited
liability company, bank, trust, Governmental Authority or any trustee,
executor, administrator or other legal representative, in each case whether
acting for itself, as agent or in any other capacity;


“PST” means the Québec provincial sales tax pursuant to the QSTA;


“Purchased Assets” means the Equipment, the Shares and the Intellectual
Property;


“Purchased Subsidiaries” means Les Services d’Approvisionnement Hearing Care of
America (SAHCA) Inc., Les Services de Gestion Hearing Care of America (SGHCA)
Inc. and Les Services de Location Hearing Care of America (SLHCA) Inc.;


“Purchasers” has the meaning ascribed thereto in the preamble;


“Purchasers’ Counsel” means Joli-Coeur, Lacasse, Geoffrion, Jetté, St-Pierre,
Avocats.


“Purchase Price” has the meaning ascribed thereto in Section 2.2(a);


“QSTA” means the Québec Sales Tax Act;


“Secured Promissory Note” has the meaning ascribed thereto in paragraph
2.3(a)(3);


“Security Agreements” means the deeds of hypothec under the laws of Québec and
other security documentation to be granted at Closing by each of GF and SAHCA
in favour of the


 






 


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Vendor to guarantee the Purchasers’ obligations under this Agreement, in form
and substance to be satisfactory to Vendor acting in a commercially reasonable
manner;


“Shares” means all the issued and outstanding shares of the Purchased
Subsidiaries;


“Subsidiary” of any Person means any corporation more than 50% of the voting
rights attaching to the shares of the capital of which, having general voting
power under ordinary circumstances to elect a majority of the board of
directors of such corporation, irrespective of whether or not at the time
shares of any other class or classes shall have or might have voting power by
reason of the happening of any contingency, is owned or controlled directly or
indirectly by such Person or by any other Subsidiary of such Person;


“Taxes” means all taxes, assessments, reassessments, charges, levies and all
other imposts whatsoever, together with all installments in respect thereof and
all interest, penalties and fines thereon or additions thereto, including gross
or net income, alternative or add-on minimum tax, excise, environmental,
property, sales, gross receipts, gains, transfer, occupation, privilege,
employment (including contributions in respect of social security, unemployment
and federal and provincial pension plans), employer health, use, value added,
goods and services, capital, net worth or surplus and franchise taxes and
customs duties, imposed, levied or assessed by any Governmental Authority or
taxing authority including any federal, provincial, local or foreign government
or taxing authority;


“Terminated Employees” shall have the meaning ascribed thereto in Section 5.1;


“Vendor” has the meaning ascribed thereto in the preamble;


“Vendor’s Counsel” means Ogilvy Renault;


“Vendor’s Ontario Operations” has the meaning ascribed thereto in Section 10.1;


Section 1.2 Interpretation


In this Agreement:



	(a)	 	the words “hereof”, “herein” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular part
of this Agreement;
	 
	(b)	 	references to “this Agreement” shall be deemed to be references to this
Asset Purchase and Sale Agreement;
	 
	(c)	 	nothing set out in the Schedules is intended, or shall be deemed, to
establish a standard or definition of materiality or of material adverse
effect;
	 
	(d)	 	the Article and Section headings are not to be considered part of this
Agreement, are included solely for convenience of reference and do not
define, limit or enlarge the construction or interpretation hereof;



 






 






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	(e)	 	unless otherwise expressly provided, all references to Articles, Sections
or other subdivisions or Schedules are references to Articles, Sections,
other subdivisions and Schedules of or to this Agreement;
	 
	(f)	 	references to any act or statute or section thereof shall be deemed to be
references to such act or statute or section (and shall also be deemed to
include and be a reference to the regulations made pursuant thereto), in
each case as amended, re-enacted, substituted for or replaced from time to
time;
	 
	(g)	 	references to “written” and “in writing” includes written communications
transmitted by facsimile (fax);
	 
	(h)	 	the word “include(s)” means “include(s), without limitation”, and the
word “including” means “including, but not limited to”, and the words
“such as” means “such as, without limitation”;
	 
	(i)	 	the expression “arm’s length” has the meaning ascribed thereto in the
ITA;
	 
	(j)	 	words, including defined terms, importing the singular number include the
plural and vice versa and words importing gender include all genders;
	 
	(k)	 	references to a Party shall include its successors and permitted assigns;
and
	 
	(l)	 	references to currency, and use of the dollar sign ($), are deemed to
mean lawful money of Canada and all amounts to be calculated or paid
pursuant to this Agreement are to be calculated in lawful money of Canada
and unless otherwise specified in this Agreement are to be paid by
certified cheque or bank draft drawn on a Canadian chartered bank payable
at par, in immediately available funds, in Montréal, Québec.



Section 1.3 Knowledge


All references herein to “the
best knowledge of”, “ the knowledge of” or
expressions to similar effect, shall mean the knowledge of the executive
officers of the Party referred to in the context in which such expression is
used or the knowledge which such Party and executive officers would have had if
they had conducted a diligent inquiry into the relevant subject-matter.


Section 1.4 Computation of Time Periods


In this Agreement, with respect to the computation of periods of time from a
specified date to a later specified date, unless otherwise expressly stated,
the word “from” means “from but
excluding” and the words “to” and “until” each
means “to and including”, and the word “month” means a period commencing on one
day in a calendar month and ending on the day in the next succeeding calendar
month the date of which corresponds numerically to the date of such first day;
provided that if there is no such numerically corresponding date in the next
succeeding calendar month such period shall end on the last day of such next
succeeding calendar month.


 






 


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Section 1.5 Performance on Business Day


Whenever any payment shall be stated to be due or action shall be stated to be
performed on a day which is not a Business Day, such payment shall be made or
action performed on the next succeeding Business Day.


Section 1.6 Schedules

 The following schedules are attached to this Agreement:



	 	 	 
	1.1(d)	 	
List of Equipment
	 	 	 
	1.1(l)	 	
Material Consents
	 	 	 
	1.1(m)	 	
Permitted Encumbrances
	 	 	 
	1.1(o)	 	
Non-Competition Agreement (form of agreement)
	 	 	 
	2.1(c)	 	
Intellectual Property
	 	 	 
	2.2(b)	 	
Allocation of Purchase Price
	 	 	 
	5.1	 	
Terminated Employees



ARTICLE 2

PURCHASE AND SALE AND PURCHASE PRICE



Section 2.1 Purchase and Sale



	(a)	 	The Vendor hereby agrees to sell, assign, transfer and convey to Canada
Inc. at the Closing, but with effect as of the Effective Time, with good
and marketable title, free and clear of all Encumbrances, other than
Permitted Encumbrances, and Canada Inc. hereby agrees to purchase from the
Vendor at the Closing, but with effect as of the Effective Time, all
right, title and interest in, to and under the Shares.
	 
	(b)	 	The Vendor hereby agrees to sell, assign, transfer and convey to GF at
the Closing, but with effect as of the Effective Time, with good and
marketable title, free and clear of all Encumbrances, other than Permitted
Encumbrances, and GF hereby agrees to purchase from the Vendor at the
Closing, but with effect as of the Effective Time, all right, title and
interest in, to and under the Equipment and the Intellectual Property.
	 
	(c)	 	The Vendor hereby agrees to assign and transfer to GF at the Closing,
provided that the Vendor has obtained, if necessary, the consent of any
third party, all its rights, title and interest in and to the Integra
Accounting software.
	 
	(d)	 	The Vendor hereby grants to GF the right to use, in the Province of
Québec and only to the extent that it has been used by the GF since July
11, 2002, the “Ear and Wave” design for an initial period of 20 years,
subject to reasonable usage by GF consistent with prior usage by the
Vendor or by others as permitted by the Vendor.



 






 



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	(e)	 	The Vendor hereby grants to GF the right to use, in the Province of
Québec, the “Helix” trademark and the related logo in connection with the
disposition in the ordinary course of business of the existing inventory
of products bearing such trademark, subject to reasonable usage by GF
consistent with prior usage by the Vendor or by others as permitted by the
Vendor.



Section 2.2 Purchase Price and Additional Consideration



	(a)	 	The Purchasers, jointly and severally, agree to pay $2,343,288 to the
Vendor (the “Purchase Price”), subject to the adjustments set forth in
Section 2.4 hereof.
	 
	(b)	 	The Purchase Price shall be allocated by the Parties to the Purchased
Assets as or in the manner set out in Schedule 2.2(b).
	 
	(c)	 	GF shall pay to the Vendor on the Closing Date an amount of $379,661.58
representing the portion of the accounts payable of SAHCA to Siemens
Hearing Instruments, Inc. , as of the Effective Date, previously paid by
the Vendor on June 30, 2003.



Section 2.3 Payment of Purchase Price



	(a)	 	The Purchase Price shall be payable as follows:




	 	(1)	 	An amount of $960,000 shall be paid to the Vendor by the
Purchasers at the Closing Time by way of certified cheques or wire
transfers of immediately available funds by each of GF and Canada
Inc.
	 
	 	(2)	 	The remainder of the Purchase Price shall be paid by the
Purchasers in the manner specified in (1) above as follows:




	 	 	 
	 	(i)	
$300,000 on the date that is 30 days after the Closing Date,
subject to the adjustments set forth in Section 2.4 hereof;
	 	 	 
	 	(ii)	
$400,000 on the date that is 60 days after the Closing Date;
	 	 	 
	 	(iii)	
$400,000 on the date that is 90 days after the Closing Date;
	 	 	 
	 	(iv)	
$145,000 on the date that is 120 days after the Closing Date; and
	 	 	 
	 	(v)	
$138,288 on the date that is 150 days after the
Closing Date, subject to the adjustments set forth in Section
2.4 hereof.




	 	(3)	 	On the Closing Date, the Purchasers shall execute a Secured
Promissory Note, in an amount of $1,383,288.00 in favour of the
Vendor as evidence of the indebtedness pursuant to paragraph
2.3(a)(2) above.
	 
	 	(4)	 	As security for the payment of the Purchase Price, the
Purchasers shall execute the Security Agreements in favour of the
Vendor.



 






 




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	 	(5)	 	The Purchasers shall not be entitled to set-off the amount of
any Claims hereunder against any other amounts payable by the
Purchasers to the Vendor whether hereunder or otherwise.



Section 2.4 Adjustments to Purchase Price



	(a)	 	The Purchase Price shall be increased to include the joint and several
obligation of the Purchasers to reimburse, for the period of time between
the Effective Time and the Closing Date, the following to the Vendor: (i)
all costs and expenses related to the continuing employment of the
Vendor’s director of operations for the Business and her assistant; and
(ii) fifty per cent (50%) of any and all costs and expenses incurred in
the ordinary course of business and consistent with past practices related
to the continuing operation of the Vendor’s corporate office located at
7100, Jean-Talon East, Suite 610, Montreal, Québec excluding all costs and
expenses related to Vendor’s in-house legal counsel; and
	 
	(b)	 	the adjustments to the Purchase Price pursuant to this Section 2.4 shall
be payable as follows: (i) as much as reasonably possible, all adjustments
shall be paid on the Closing Date; (ii) 30 days following the Closing Date
a second payment shall be made in connection with any adjustment not paid
on the Closing Date; and (iii) the balance of the adjustments shall be
paid 150 days following the Closing Date.



Section 2.5 GST and PST Elections


The Purchasers and the Vendor shall, with respect to the transfer of the
Purchased Assets to the Purchasers pursuant hereto, make a joint election
pursuant to Subsection 167(1) of the ETA and Section 75 of the QSTA, in the
prescribed forms containing the prescribed information and within the time
period specified for the purposes of the prescribed forms, in order to effect
such transfer of the Purchased Assets without payment of any GST and PST by the
Purchasers. The Vendor shall prepare and execute the prescribed forms and
deliver same at or before the Closing Time for execution by the Purchasers, and
the Purchasers shall file such forms within the prescribed time periods.


Section 2.6 Consent to Assignments



	(a)	 	The Vendor shall exercise all commercially reasonable efforts, and the
Purchasers shall assist using commercially reasonable efforts, for the
purpose of obtaining all Consents necessary for the assignment or transfer
by the Vendor to GF, or for the issue or re-issue to GF, of any Purchased
Asset which is intangible property or of any warranty pertaining to any
Purchased Asset (collectively, the “Rights”), and
	 
	(b)	 	If the Vendor is unable to obtain any of the Consents (other than the
Material Consents) required for the assignment, transfer, issue or
re-issue of any Right before the Closing Time, the Vendor shall, at the
request of the Purchasers and to the extent permitted by the applicable
Laws, hold, enforce, use, carry-out and comply with such Right, and all
benefits derived therefrom, against such Person as agent, and for the
exclusive benefit, of the Purchasers until such Consent is obtained, and
the Vendor shall continue, after the



 






 




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	 	 	Closing Time, to exercise their
commercially reasonable efforts to
obtain and cooperate with the
Purchasers for the purpose of
obtaining such Consents.



Section 2.7 Liabilities


The Vendor shall not be liable, directly or indirectly, for any liability,
obligation, agreement, contract, debt, charge, claim, judgment or other fee or
expense in connection with the operation of the Business following the Closing
Time. The foregoing shall not be construed as limiting the obligations of the
Vendor set forth in Article 8 below.


Section 2.8 Transfer Expenses


The Purchasers shall be solely liable for and shall pay all related fees,
expenses, legal and professional fees and other charges and payments to
competent authorities with respect to the transfer of the Intellectual Property
from the Vendor to GF and other Purchased Assets to Purchasers.


ARTICLE 3

REPRESENTATIONS AND WARRANTIES



Section 3.1 Representations and Warranties of the Vendor


In order to induce the Purchasers to enter into and to consummate the
transactions contemplated hereby, the Vendor represents and warrants to the
Purchasers, as at the date of execution of this Agreement the following:



	(a)	 	Corporate Status
	 
	 	 	The Vendor is:




	 	(1)	 	a corporation duly incorporated, organized and validly
existing under the federal laws of Canada,
	 
	 	(2)	 	duly registered as an extra provincial corporation in which
it owns the Purchased Assets or operates the Business operated by
it, except where failure to so register does not have a material
adverse effect on the consummation of the transaction contemplated
hereby,
	 
	 	(3)	 	in good standing with respect to the filing of annual reports
with the Director under the Canada Business Corporations Act and all
filings required to be made pursuant to or under the Loi sur la
publicité légale des entreprises individuelles, des sociétés et des
personnes morales (Québec).



 






 






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	(b)	 	Corporate Power and Capacity
	 
	 	 	The Vendor has the corporate power and corporate capacity




	 	(1)	 	to own the Purchased Assets owned by it,
	 
	 	(2)	 	to enter into and deliver this Agreement and the Ancillary
Documents to which it is a party, and to perform its obligations
hereunder and thereunder.




	(c)	 	Residency
	 
	 	 	The Vendor is not and shall not be on the Closing Date, a non-resident of
Canada for the purposes of the ITA or the Taxation Act (Québec).
	 
	(d)	 	Solvency
	 
	 	 	The Vendor is not insolvent nor has it committed an act of bankruptcy,
proposed a compromise or arrangement to its creditors generally, had any
petition in bankruptcy filed against it, made a voluntary assignment in
bankruptcy or taken any proceeding to be declared bankrupt, to liquidate
its assets or to be dissolved.
	 
	(e)	 	Enforceability
	 
	 	 	This Agreement and the Ancillary Documents constitute legal, valid and
binding obligations of the Vendor, and are enforceable against the Vendor
in accordance with their terms, except to the extent that




	 	(1)	 	the availability of equitable remedies is subject to the
discretion of applicable judicial authority,
	 
	 	(2)	 	enforceability may be limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or other laws relating to
the rights of creditors generally, and
	 
	 	(3)	 	the availability generally of remedies due to the application
of legal and equitable principles.




	(f)	 	Consents
	 
	 	 	Except as disclosed in Schedule 1.1(l), no Consent, is required in order
for the Vendor to,




	 	(1)	 	incur its obligations pursuant to this Agreement and the
Ancillary Documents,
	 
	 	(2)	 	enter into and deliver this Agreement and the Ancillary
Documents, and
	 
	 	(3)	 	perform and observe the provisions of this Agreement and the
Ancillary Documents.




 









 



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	(g)	 	Conduct of Business
	 
	 	 	Except as disclosed in Schedule 3.1(h), the Vendor has not, since October
20, 2002, directly or indirectly,




	 	(i)	 	conducted the Business other than in the ordinary
course and since said date the Vendor has not entered into any
transaction other than in the ordinary course of the Business
as previously conducted, and to the Vendor’s knowledge there
has been no material adverse effect on the Business,
	 
	 	(ii)	 	except for the management and supply of hearing
care centres in the Province of Ontario, carried on any
business other than the Business.




	(h)	 	Purchased Assets
	 
	 	 	The Equipment are, to the best of the Vendor’s knowledge, in good
operating condition and repair (having regard to the age and use
thereof), except for normal wear and tear, as shall permit their use and
the operation of the Business after the Effective Time in the same manner
as previously and presently conducted.
	 
	(i)	 	Title to Purchased Assets
	 
	 	 	The Vendor is the legal and beneficial owner of the Purchased Assets with
good and marketable title, free and clear of all Encumbrances, except the
Permitted Encumbrances.
	 
	(j)	 	Rights to Purchased Assets
	 
	 	 	No Person has any right, agreement or option, present or future,
contingent or absolute, or any right capable of becoming an agreement or
option, for the purchase of any of the Purchased Assets, except for Les
Laboratoires Orthopédiques Nouvelle Génération Division Distribution Inc.
pursuant to a Sub-Lease Agreement entered into on May 23, 2003, a copy of
which has been provided to the Purchasers.
	 
	(k)	 	Preservation of Rights
	 
	 	 	Since October 20, 2002, the Vendor has




	 	(1)	 	taken all reasonable action required to maintain and preserve
its right, title and interest in the Purchased Assets, and
	 
	 	(2)	 	not taken any action which has or may result in an
Encumbrance on, or an increase in the fees or taxes payable in
respect of, any of the Purchased Assets, other than the Permitted
Encumbrances with regard to the Purchased Assets.



 






 






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	(l)	 	Intellectual Property




	 	(1)	 	All Intellectual Property is owned by the Vendor free and
clear of any Encumbrances other than Permitted Encumbrances, and the
Vendor has not assigned, licensed, encumbered or otherwise granted
any of its rights to use such Intellectual Property to any Person
other than pursuant to Software License Agreements for the Audio
Software Québec software dated June 13, 2002 in favour of Richard
Doucet and Martin Cousineau and 9116-3832 Québec Inc.




	(m)	 	Books and Records
	 
	 	 	The Books and Records of the Purchased Subsidiaries include all such
books and records as are reasonably necessary for the conduct of the
Business of the Purchased Subsidiaries. Since July 11, 2002, the Books
and Records of the Purchased Subsidiaries have been maintained in
accordance with sound business practices and present fairly, in all
material respects, the matters referred to therein including all material
financial transactions relating to the Business of the Purchased
Subsidiaries.
	 
	(n)	 	Financial Records
	 
	 	 	Since July 11, 2002, all material transactions affecting the Purchased
Assets have been properly recorded or filed in the corporate and other
record books of the Vendor as applicable.
	 
	(o)	 	Claims Against the Vendor
	 
	 	 	To the best of the Vendor’s knowledge, since October 20, 2002 there are
no:




	 	(i)	 	Claims outstanding or pending or threatened before any
tribunal (judicial, quasi-judicial, administrative,
quasi-administrative or arbitral) or before or by any Governmental
Authority against or concerning the Vendor that may result in a
material adverse effect, or
	 
	 	(ii)	 	facts or circumstances in existence that could be expected to
give rise to such a claim, demand, investigation, cause of action,
action, proceeding, judgment, order or award.




	(p)	 	No Violation
	 
	 	 	The execution and delivery of this Agreement and the Ancillary Documents
by the Vendor and the consummation of the transactions provided for
herein or therein shall not result in the breach or violation of any, or
constitute a default under or an event that, with the giving of notice or
lapse of time or both, would constitute an event of default under, or
conflict with or cause acceleration of, any obligation of the Vendor
under




	 	(1)	 	any contract, consent or approval to which the Vendor is a
party or by which the Vendor is bound or any consent or approval
from which the Vendor derives benefit,



 






 






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	 	(2)	 	any provision of the constating documents and, where
applicable, by-laws or resolutions of the board of directors (or any
committee thereof) or shareholders of the Vendor,
	 
	 	(3)	 	any judgment, decree, order or award of any court,
Governmental Authority or arbitrator having jurisdiction over the
Vendor, or
	 
	 	(4)	 	any applicable Law.




	(q)	 	GST and PST Registrant
	 
	 	 	The Vendor is a GST and PST registrant pursuant to the ETA and the QSTA,
respectively and its GST and PST registration numbers are as follows:


	 	 	 
	 	GST Registration No.	PST Registration No.
	 

	 	141759308	
1019937701



Section 3.2 Representations and Warranties of Purchasers


In order to induce the Vendor to enter into and to consummate the transactions
contemplated hereby, each of the Purchasers represents and warrants to the
Vendor as follows:



	(a)	 	Purchasers Status
	 
	 	 	Canada Inc. is




	 	(1)	 	a corporation duly incorporated, organized and validly
existing under the federal laws of Canada;
	 
	 	(2)	 	in good standing with respect to the filing of annual reports
with the Director under the Canada Business Corporations Act and all
filings required to be made pursuant to or under the Loi sur la
publicité légale des entreprises individuelles, des sociétés et des
personnes morales (Québec).




	(b)	 	GF is:




	 	(1)	 	a general partnership duly registered organized and validly
existing under the laws of Québec;
	 
	 	(2)	 	in good standing with respect to all filings required to be
made pursuant to or under the Loi sur la publicité légale des
entreprises individuelles, des sociétés et des personnes morales
(Québec).




	(c)	 	Corporate Power and Capacity of Purchasers
	 
	 	 	Each of the Purchasers has the corporate power and capacity to enter into
and deliver this Agreement and the Ancillary Documents and to perform its
obligations hereunder and thereunder.



 






 






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	(d)	 	Solvency of Purchasers
	 
	 	 	Each of the Purchasers is not insolvent nor has it committed an act of
bankruptcy, proposed a compromise or arrangement to its creditors
generally, made a voluntary assignment in bankruptcy, taken any
proceeding to be declared bankrupt, liquidate its assets or be dissolved
or had, to the best of each of the Purchasers’ knowledge, any petition in
bankruptcy filed against it.
	 
	(e)	 	Enforceability
	 
	 	 	This Agreement and the Ancillary Documents constitute the legal, valid
and binding obligations of each of the Purchasers and are enforceable
against each of the Purchasers in accordance with their terms, except to
the extent that




	 	(1)	 	the availability of equitable remedies is subject to the
discretion of applicable judicial authority,
	 
	 	(2)	 	enforceability may be limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws
relating to the rights of creditors generally, and
	 
	 	(3)	 	the availability generally of remedies due to the application
of legal and equitable principles.




	(f)	 	Consents
	 
	 	 	No Consent is required in order for each of the Purchasers to




	 	(1)	 	incur its obligations pursuant to this Agreement and the
Ancillary Documents,
	 
	 	(2)	 	enter into and deliver this Agreement and the Ancillary
Documents, and
	 
	 	(3)	 	perform and observe the provisions of this Agreement and the
Ancillary Documents.




	(g)	 	No Violation
	 
	 	 	The execution and delivery of this Agreement and the Ancillary Documents
by each of the Purchasers and the consummation of the transactions
provided for herein or therein shall not result in the breach or
violation of any, or constitute a default under or an event that, with
the giving of notice or lapse of time or both, would constitute an event
of default under, or conflict with or cause acceleration of, any
obligation of each of the Purchasers under




	 	(1)	 	any contract, consent or approval to which any of the
Purchasers is a party or by which any of the Purchasers is bound or
any consent or approval from which any of the Purchasers derives
benefit,



 






 






- 17 -




	 	(2)	 	any provision of the constating documents and, where
applicable, by-laws or resolutions of the board of directors (or any
committee thereof) or shareholders of any of the Purchasers,




	 	(3)	 	any judgment, decree, order or award of any court,
Governmental Authority or arbitrator having jurisdiction over any of
the Purchasers, or




	 	(4)	 	any applicable Law.




	(h)	 	GST PST Registrant
	 
	 	 	Each of the Purchasers is a GST and PST registrant pursuant to the ETA
and the QSTA, respectively and its GST and PST registration numbers are
as follows:
	 
	 	 	GF:




	 	 	 	 	 
	GST Registration No.	 	PST Registration No.
	
	 	

	11186-5556	 	 	
1012303269	 




	 	 	6068065 Canada Inc.:




	 	 	 	 	 
	GST Registration No.	 	PST Registration No.
	
	 	

	898315502RT	 	 	
1204114753	 




	(i)	 	Financing
	 
	 	 	The Purchasers have obtained the necessary financing, from reputable
financial or other institutions that are acceptable to the Vendor acting
reasonably, and are in possession of immediately available funds to
fulfil their obligations under this Agreement and have provided evidence
of same to the Vendor.



ARTICLE 4

COVENANTS



Section 4.1 General Covenants of the Vendor


The Vendor covenants and agrees with the Purchasers that at the Closing Time,
it shall:



	(a)	 	duly execute and deliver or cause or arrange to have duly executed and
delivered, at or before the time required for delivery, all agreements,
instruments and certificates to be delivered by it pursuant to this
Agreement and the Ancillary Documents;
	 
	(b)	 	have obtained all required Material Consents to the sale, assignment,
transfer and conveyance to and purchase by the Purchasers of the Purchased
Assets;



 






 






- 18 -




	(c)	 	have obtained the discharge and release of all Encumbrances on the
Purchased Assets other than the Permitted Encumbrances;
	 
	(d)	 	have obtained the approval of Siemens Hearing Instruments, Inc. to this
transaction provided that the Purchasers or any of their Subsidiaries
enters into a supply agreement with Siemens Canada Limited and commits to
purchase from Siemens Canada Limited, an amount of products acceptable to
Siemens Hearing Instruments, Inc.;
	 
	(e)	 	have kept the respective books of account for the Purchased Assets and
the Purchased Subsidiaries to reflect all material financial transactions
in respect of the Purchased Assets and the Purchased Subsidiaries to which
the Vendor is a party in accordance with past practices;
	 
	(f)	 	have maintained and preserved the Vendor’s interest in the Purchased
Assets in good standing, except for dispositions and consumption in the
ordinary course of, and in a manner consistent with the practices for, the
Business applied during the previous periods;
	 
	(g)	 	have conducted the Business only in the ordinary course of, and in a
manner consistent with the practices for, the Business applied during the
previous periods; and
	 
	(h)	 	have terminated the management agreements between GF and each of SAHCA,
SLHCA, and SGHCA.



Section 4.2 General Covenants of Purchasers


Each of the Purchasers covenants and agrees with the Vendor that at the Closing
Time, it shall:



	(a)	 	have entered into a supply agreement with Siemens Canada Limited whereby
the Purchasers or any of their Subsidiaries shall commit to purchase from
Siemens Canada Limited, an amount of products acceptable to Siemens
Hearing Instruments, Inc.;
	 
	(b)	 	duly execute and deliver or cause or arrange to have duly executed and
delivered, at or before the time required for delivery, all agreements,
instruments and certificates to be delivered by it pursuant to this
Agreement and the Ancillary Documents;
	 
	(c)	 	advise the Vendor of the occurrence of any circumstance which materially
adversely affects, or with the giving of notice or lapse of time or
otherwise, could reasonably be anticipated to materially adversely affect,
the ability of the Purchasers to complete the transactions contemplated
hereby;
	 
	(d)	 	take all necessary steps and proceedings as may be considered appropriate
by the Vendor’s Counsel in order that the Purchased Assets be duly and
regularly sold, assigned, transferred and conveyed to the Purchasers as of
the Effective Time;
	 
	(e)	 	not have entered into any transaction which could have an adverse impact
on the consummation of the transactions contemplated hereunder; and



 






 






- 19 -




	(f)	 	have agreed to the termination of the management agreements between GF
and each of SAHCA, SLHCA and SGHCA.



ARTICLE 5

EMPLOYEE MATTERS



Section 5.1 Employment Liabilities; Termination of Employment by the Vendor


All liabilities to employees or former employees of the Vendor or any other
Person relating to the employment of, or services rendered by any of such
employees up to the Closing Date, shall remain and be the sole and complete
responsibility of the Vendor.


Prior to the Closing Date, the Vendor shall terminate the employment of the
individuals the name of which is listed in Schedule 5.1 (the “Terminated
Employees”) and shall assume any and all liabilities to any of the Terminated
Employees accrued on or before the termination of employment thereof or as a
result thereof.


Section 5.2 Employment by Purchasers


At the Closing, the Purchasers shall assume all the obligations in relation to
the Employees and provided for by the Civil Code of Québec in the provisions
appended to this Agreement, as well as the obligations provided for by the
Labour Standards Act (Québec) and any other statute in force in the Province of
Québec.


Moreover, the Purchasers shall indemnify and hold the Vendor free of all
liability arising from any legal proceeding or remedy instituted by a
Terminated Employee.


ARTICLE 6

CONDITIONS PRECEDENT



Section 6.1 Conditions for the Benefit of Purchasers


The obligations of the Purchasers to be performed pursuant to this Agreement
and the Ancillary Documents at the Closing Time are subject to the fulfilment,
on or before the Closing Time, of each of the following conditions:



	(a)	 	Representations and Warranties Remain Correct
	 
	 	 	Each of the representations and warranties of the Vendor contained in
this Agreement and the Ancillary Documents shall be true and correct, in
all material respects, on and as at the Closing Date;
	 
	(b)	 	Performance of Obligations
	 
	 	 	The Vendor shall have performed or complied in all material respects with
all their agreements, covenants, obligations and conditions herein agreed
to be performed or



 






 






- 20 -




	 	 	complied with or caused to be performed or complied with by the Vendor on
or prior to the Closing Time;
	 
	(c)	 	No Material Adverse Effect
	 
	 	 	No state of facts or circumstances shall exist as at the Closing Time
which has resulted or could reasonably be expected to result in a
material adverse effect on the Purchased Assets;
	 
	(d)	 	Material Consents and Releases
	 
	 	 	The Vendor shall have obtained all the Material Consents and all
discharges and releases contemplated in Section 4.1(b) hereof;
	 
	(e)	 	Transfer Instruments
	 
	 	 	The Vendor shall have entered into such deeds of transfer, bills of sale,
assignments and other documents as are reasonably required by the

Purchasers for the transfer of the Purchased Assets to the Purchasers;
	 
	(f)	 	Tax Elections
	 
	 	 	The Vendor and the Purchasers shall have entered into the tax elections
pursuant to Section 2.5;
	 
	(g)	 	No Actions or Proceedings
	 
	 	 	No action or proceeding at law or in equity shall be pending or
threatened by any Person to enjoin or prohibit the purchase and sale of
the Purchased Assets contemplated hereby or the right of the Purchasers
to own the Purchased Assets;
	 
	(h)	 	Corporate and Other Proceedings
	 
	 	 	All corporate and other proceedings of the Vendor, in connection with the
transactions contemplated hereby, including the approval of such
transactions by the Board of Directors of the Vendor, and all documents
evidencing same or incidental thereto, shall have been duly authorized
and executed, shall be in form and substance reasonably satisfactory to
the Purchasers, and the Purchasers shall have received all such
proceedings and documents, or duly certified copies thereof, as may be
reasonably requested;
	 
	(i)	 	Opinion of the Vendor’s Counsel
	 
	 	 	The Purchasers shall have received from the Vendor’s Counsel; a
favourable opinion addressed to the Purchasers, dated the Closing Date,
with respect to




	 	(1)	 	the corporate or other legal status and capacity of the
Vendor;



 






 






- 21 -




	 	(2)	 	corporate or other legal authorization by the Vendor; for the
execution and delivery of this Agreement and the Ancillary Documents
and the performance of all of their respective obligations hereunder
and thereunder,
	 
	 	(3)	 	this Agreement and all Ancillary Documents constituting
legal, valid and binding obligations of the Vendor and other parties
thereto other than the Purchasers, enforceable against such Vendor,
as applicable in accordance with their respective terms, subject to
customary exceptions, and
	 
	 	(4)	 	such other matters incident to the transactions contemplated
hereby as the Purchasers may reasonably require, and the Vendor’s
Counsel may, as to facts material to said opinion which are not
independently established by it, rely on certificates of public
officials or of officers of the Vendor.




	 	 	The conditions contained in this Section 6.1, other than those in Section
(f), are for the exclusive benefit of the Purchasers and may be waived by
the Purchasers in writing in whole or in part at or before the Closing
Time.



Section 6.2 Conditions for the Benefit of the Vendor


The obligations of the Vendor to be performed pursuant to this Agreement and
the Ancillary Documents at the Closing Time are subject to the fulfilment, on
or before the Closing Time, of each of the following conditions:



	(a)	 	Representations and Warranties Remain Correct
	 
	 	 	Each of the representations and warranties of each of the Purchasers
contained in this Agreement and the Ancillary Documents shall be true and
correct, in all material respects, on and as at the Closing Date;
	 
	(b)	 	Performance of Obligations
	 
	 	 	Each of the Purchasers shall have performed or complied in all material
respects with all their agreements, covenants, obligations and conditions
herein agreed to be performed or complied with or caused to be performed
or complied with by each of the Purchasers on or prior to the Closing
Time;
	 
	(c)	 	Non-Competition Agreement
	 
	 	 	Each of the Purchasers shall have entered into the Non-Competition
Agreement with the Vendor and the Purchasers shall cause Steve Forget to
enter into a Non-Competition Agreement with the Vendor;
	 
	(d)	 	Tax Elections
	 
	 	 	Each of the Purchasers and the Vendor shall have entered into the tax
elections pursuant to Section 2.5;



 






 






- 22 -




	(e)	 	No Actions or Proceedings
	 
	 	 	No action or proceeding at law or in equity shall be pending or
threatened by any Person to enjoin or prohibit the purchase and sale of
the Purchased Assets contemplated hereby;
	 
	(f)	 	Corporate and Other Proceedings
	 
	 	 	All corporate and other proceedings of each of the Purchasers in
connection with the transactions contemplated hereby, including the
approval of such transactions by the Board of Directors of Canada Inc.,
and all documents evidencing same or incidental thereto, shall have been
duly authorized and executed, shall be in form and substance reasonably
satisfactory to the Vendor, and the Vendor shall have received all such
proceedings and documents, or duly certified copies thereof, as may be
reasonably requested;
	 
	(g)	 	Opinion of Purchasers’ Counsel
	 
	 	 	The Vendor shall have received from the Purchasers’ Counsel a favourable
opinion addressed to the Vendor, dated at the Closing Date, with respect
to:




	 	(1)	 	the corporate status and capacity of each of the Purchasers,
	 
	 	(2)	 	corporate authorization by each of the Purchasers for the
execution and delivery of this Agreement and the Ancillary Documents
and the performance of all of their respective obligations hereunder
and thereunder,
	 
	 	(3)	 	this Agreement and the Ancillary Documents constituting
legal, valid and binding obligations of each of the Purchasers,
enforceable against each of the Purchasers in accordance with their
respective terms, subject to customary exceptions, and
	 
	 	(4)	 	such other matters incident to the transactions contemplated
hereby as the Vendor may reasonably require, and the Purchasers’
Counsel may, as to facts material to said opinion which are not
independently established by it, rely on certificates of public
officials or of officers of each of the Purchasers.



The conditions contained in this Section 6.2, other than those in Sections (c),
(d) and (e) are for the exclusive benefit of the Vendor and may be waived by
the Vendor in writing in whole or in part at or before the Closing Time.


ARTICLE 7

SURVIVAL AND RELIANCE ON REPRESENTATIONS AND WARRANTIES



Section 7.1 Survival Notwithstanding Investigation


Notwithstanding any investigation conducted before or after the Closing Date
and notwithstanding any actual or implied knowledge or notice of any fact or
circumstance which any Person may have as a result of such investigation or
otherwise, the Parties shall be entitled to


 






 


- 23 -



rely upon the representations and warranties contained in this Agreement and
the Ancillary Documents delivered pursuant hereto and the obligations of the
Parties with respect thereto shall survive the Closing Date and shall continue
in full force and effect as provided in Section 7.2.


Section 7.2 Survival of Liability for Representations and Warranties



	(a)	 	All the representations and warranties of the Vendor contained in this
Agreement shall survive the Closing Date and shall continue in full force
and effect as follows:




	 	(1)	 	where a Claim for the breach of a representation or warranty
is based on or relates to:


	 
	 	(i)	 	title to the Purchased Assets pursuant to the
provisions hereof, or
	 
	 	(ii)	 	intentional misrepresentation or fraud by the
Vendor,
	 


	 	 	 	until the expiry of the relevant limitation or prescription period
under applicable Law;
	 
	 	(2)	 	where a Claim for the breach of a representation or warranty
is based on or relates to any other matter, for a period of 150
days,




	 	 	except to the extent that during such period the Purchasers shall have
given notice to the Vendor of a Claim in respect of any such
representation or warranty, in which case such representation or warranty
with respect to such Claim (or any additional or supplemental Claim with
respect to the subject matter of the initial Claim) shall continue in
full force and effect until the final determination thereof.
	 
	(b)	 	All the representations and warranties of each of the Purchasers
contained in this Agreement and the Ancillary Documents shall survive the
Closing Date and shall continue in full force and effect for a period of
150 days, except to the extent that during such period the Vendor shall
have given notice to the Purchaser of a Claim in respect of any such
representation or warranty, in which case such representation or warranty
with respect to such Claim (or any additional or supplemental Claim with
respect to the subject matter of the initial Claim) shall continue in full
force and effect until the final determination thereof.



ARTICLE 8

INDEMNITY



Section 8.1 Indemnification by the Vendor


The Vendor shall be liable to the Purchasers and shall defend, indemnify and
hold harmless the Purchasers and their shareholders, directors and officers
against any and all Claims incurred after the Closing by the Purchasers
resulting from, relating to or in any way connected with:


 






 


- 24 -




	(a)	 	the breach or non-fulfilment of any representation, warranty, agreement,
covenant or any other obligation of the Vendor contained in this Agreement
and the Ancillary Documents delivered to the Purchasers pursuant hereto;
or
	 
	(b)	 	the conduct of the Business from October 20, 2002 up to the Effective
Time.



Section 8.2 Indemnification by Each of Purchasers


The Purchasers shall, on a joint and several basis, be liable to the Vendor and
shall defend, indemnify and hold harmless the Vendor and its shareholders,
directors and officers against any and all Claims incurred after the Closing by
it resulting from, relating to or in any way connected with:



	(a)	 	the breach or non-fulfillment of any representation, warranty, agreement,
covenant or any other obligation of each of the Purchasers contained in
this Agreement and the Ancillary Documents delivered to the Vendor
pursuant hereto;
	 
	(b)	 	any agreement, covenant, obligation or liability of the Purchased
Subsidiaries; or
	 
	(c)	 	the conduct of the Business after the Effective Time.



Section 8.3 Notice of Claim


A Party shall, when it has knowledge of facts or circumstances which give rise
to a Claim under this Agreement or the Ancillary Documents against another
Party, promptly notify the other Parties of such facts or circumstances in
writing.


Following receipt from the other party (the “Indemnified Party”) of written
notice of a Claim for indemnification, the Party who is in receipt of such
notice (the “Indemnifying Party”) shall have 30 days to make such investigation
of the Claim as the Indemnifying Party considers necessary or desirable for the
purpose of such investigation. The Indemnified Party shall make available to
the Indemnifying Party, the information relied upon by the Indemnified Party to
substantiate the Claim. If the Indemnified Party and the Indemnifying Party
agree at or prior to the expiration of such 30 day period (or any mutually
agreed upon extension thereof) to the validity and amount of the Claim, the
Indemnifying Party shall immediately pay to the Indemnified Party, the full
agreed upon amount of the Claim. If the Indemnified Party and the Indemnifying
Party fail to reach a mutually acceptable agreement with respect to a Claim
within the time period mentioned above, such Claim shall be referred to the
President or the Chief Executive Officer of each of the Indemnified Party and
the Indemnifying Party who shall then each appoint a representative to conduct,
during a further ten (10) day period (or any mutually agreed upon extension
thereof), good faith negotiations and agree on a complete and final settlement
of such Claim.


Section 8.4 Restrictions on Claims


Neither the Purchasers nor the Vendor shall be liable for a Claim with respect
to the breach of any of their respective representations or warranties pursuant
to Section 3.1 or Section 3.2, as applicable, unless the Indemnified Party has
commenced proceedings for enforcement of such


 






 


- 25 -



Claim within the applicable survival of liability period pursuant to Section
7.2(a) or Section 7.2(b), as applicable.


Section 8.5 GST and PST on Indemnity


If any indemnity payment determined under this Article 8 is deemed to include
GST or PST or similar taxes, the Indemnitor shall pay the Indemnifying Party,
in addition to the amount of such indemnity payment, an amount equal to the
amount of such indemnity payment multiplied by the applicable rate of GST, PST
or similar taxes at the time of the payment of such indemnity payment.


Section 8.6 Limit on Indemnity


Notwithstanding anything contained herein, the liability of the Vendor pursuant
to any indemnification obligations hereunder shall in no event exceed in the
aggregate of the Purchase Price.


ARTICLE 9

CLOSING



Section 9.1 Time and Place of Closing


The Closing will take place at the offices of the Vendor’s Counsel, Ogilvy
Renault, at Suite 1100, 1981 McGill College Avenue, Montréal, Québec, at the
Closing Time, or at such other place as the Parties agree in writing.


Section 9.2 Closing of Purchase and Sale


The completion of the purchase and sale of the Purchased Assets pursuant to
this Agreement shall take place at the Closing Time, as follows:



	(a)	 	At the Closing, the Vendor shall deliver or cause to be delivered to the
Purchasers:




	 	(1)	 	instruments of transfer for and documents of title to the
Purchased Assets, registered in the name of the Purchasers;
	 
	 	(2)	 	instruments of transfer for and documents of title to the
Intellectual Property; and
	 
	 	(3)	 	all such other agreements, instruments, certificates,
consents, opinions and other documents herein required to be
delivered by the Vendor at or prior to the Closing Time and not
theretofore received by the Purchasers.




	(b)	 	The Purchasers shall deliver or cause to be delivered:




	 	(1)	 	to the Vendor, the Purchase Price herein required to be paid
by the Purchasers pursuant to Section 2.3;



 






 






- 26 -




	 	(2)	 	to the Vendor, all such other agreements, certificates,
consents, opinions and other documents herein required to be
delivered by the Purchasers at or prior to the Closing Time and not
theretofore received by the Vendor.




	(c)	 	It is agreed that at the Closing each of the Vendor and the Purchasers
must be satisfied with the final form of each of the Ancillary Documents
and that each Schedule hereto is accurate and complete, each acting in a
commercially reasonable manner.



ARTICLE 10

RIGHT OF FIRST REFUSAL AND OF FIRST OFFER



Section 10.1 Right of First Refusal


The Vendor hereby grants to Canada Inc. a right of first refusal as set forth
herein for the purchase of all the Vendor operations conducted in Ontario,
Canada (the “Vendor’s Ontario Operations”). In the event that the Vendor
receives a bona fide offer from an unaffiliated third party to purchase all or
part of the Vendor’s Ontario Operations, which the Vendor’s Board of Directors
is inclined to accept (the “Offer”), the Vendor will give Canada Inc. notice of
such Offer, which notice shall include the terms and conditions of such Offer.
Canada Inc. shall then have the right to purchase all (but not less than all)
of the Vendor’s Ontario Operations which are the subject of the Offer on the
same terms and conditions as are contained in the Offer. Canada Inc.’s right
hereunder must be exercised in writing within fifteen (15) days following
receipt of the notice from the Vendor of the Offer. Canada Inc. must include
in his written exercise his irrevocable commitment to make such purchase and
the source of the funding for such purchase. The written exercise must be
accompanied by a written irrevocable funding commitment by the funding source,
which must be a bank, financial institution or other reputable source. In the
event Canada Inc. provides such timely notice to the Vendor, the Vendor agrees
that it will make the sale contemplated by the Offer to Canada Inc. on the
terms and conditions contained in the Offer. In the event Canada Inc. does not
exercise its right hereunder, or affirmatively declines to make the purchase on
the terms of the Offer, or fails to consummate the purchase on the terms of the
Offer within 30 days following receipt of the notice from the Vendor of the
Offer, then the Vendor may proceed with such proposed transaction on the terms
and conditions contained in the Offer. This right of first refusal shall
expire on the date that is eighteen (18) months following the Closing Date.
This right of first refusal shall not apply to any merger or consolidation of
the Vendor with an unaffiliated third party or any sale of all or substantially
all of the assets of the Vendor and its Affiliates to an unaffiliated third
party.


Section 10.2 Right of First Offer


The Vendor agrees that it will seriously consider any bona fide offer that
Canada Inc. might make to the Vendor to purchase all or part of the Vendor’s
Ontario Operations. To discharge this obligation, the Vendor shall cause any
such bona fide offer that Canada Inc. makes to management to the Vendor for
such purchase to be presented by management to the Board of Directors of Hear
USA, Inc. for its consideration.


 






 


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ARTICLE 11

MISCELLANEOUS



Section 11.1 Entire Agreement


This Agreement together with the Schedules referred to and attached hereto and
the Ancillary Documents contains the entire agreement among the Parties on the
subject matter hereof and supersedes and replaces all understandings,
communications, representations and agreements including the Term Sheet dated
April 2, 2003.


Section 11.2 Waiver


The failure by any Party, at any time or for any period of time, to require
performance by the other Parties or any of them, as applicable, of any of the
latter’s obligations under this Agreement or any Ancillary Document shall not
affect the former’s right thereafter to require such performance. The waiver
by any Party, at any time or for any period of time, of any breach by the other
Parties or any of them, as applicable, of any term or condition of this
Agreement or any Ancillary Document shall not be deemed or construed a waiver
of any such other breach thereafter.


Section 11.3 Amendments


This Agreement or any Ancillary Document shall not be modified or amended
except by agreement in writing signed by duly authorized representatives of all
the Parties.


Section 11.4 Cumulative Remedies


The rights and remedies of the Parties provided in this Agreement and the
Ancillary Documents are cumulative and no exercise or enforcement by the
Parties of any right or remedy under this Agreement or the Ancillary Documents
shall preclude the exercise or enforcement by the Parties of any other right or
remedy under this Agreement, the Ancillary Documents or otherwise available to
the Parties at law or in equity.


Section 11.5 Expenses Payable by Each Party


Each Party shall be responsible for all costs and expenses incurred in
connection with the negotiation and execution and delivery of this Agreement
and the Ancillary Documents and the completion of the transactions contemplated
hereby and thereby including all legal, accounting or other professional
advisory fees, all finder’s, agent’s or broker’s fees and expenses, if any, and
all costs or expenses relating to due diligence and investigations.


Section 11.6 Non Disclosure; Announcements


No report or press release in connection with this Agreement or the
transactions contemplated hereby or by the Ancillary Documents will be
released, made or issued to any third party without the prior written consent
of the Parties except for any information which is required to be disclosed by
applicable Laws, or must be disclosed to obtain the Consents or otherwise
satisfy the conditions precedent to Closing for the transfer of the Purchased
Assets. The Parties shall


 






 


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prepare a joint public announcement and press release to announce the purchase
and sale of the Purchased Assets, which shall be made and issued only after the
Closing unless otherwise required by law.


Section 11.7 Reasonable Efforts


Each Party shall use all commercially reasonable efforts to satisfy the
conditions contained in Article 6 to the extent that it is in such Party’s
power to do so.


Section 11.8 Termination


If the Parties consent in writing to terminate this Agreement, this Agreement
and the Ancillary Documents shall terminate and shall be of no force
or effect.


Section 11.9 Notices


Every notice or communication required or permitted to be given under this
Agreement and the Ancillary Documents shall be in writing and sent by
registered mail (return receipt requested) or by facsimile (fax) to such Party
at the following address or such other address as such Party notifies to the
other in the same manner.



	 	 	If to the Purchasers:
	 
	 	 	189 Hymus, Suite 307

Pointe-Claire, Québec H9R 1E9

Facsimile: (514) 630-3391

Attention: Steve Forget
	 
	 	 	If to the Vendor:
	 
	 	 	1250 Northpoint Parkway

West Palm Beach, Florida

33407
	 
	 	 	Facsimile: (561) 478-9603

Attention: Chief Financial Officer
	 
	 	 	Any such notice or communication shall be deemed to have been received
on the fifth Business Day following its sending by registered mail or
on the first Business Day following its sending by facsimile (fax).



Section 11.10 Successors and Assigns


This Agreement and the Ancillary Documents shall be binding upon, and enure to
the benefit of, the Parties and their respective successors, legal
representatives and permitted assigns. Neither this Agreement nor any of the
Ancillary Documents may be assigned by the Purchasers to any other Person
without the Vendor’s prior written consent, such consent not to be unreasonably
withheld.


 






 


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Section 11.11 Further Assurances


The Parties shall do with reasonable diligence all such things and provide all
such reasonable assurances as may be required to consummate the transactions
provided for under this Agreement and the Ancillary Documents, and each Party
shall provide such further documents required by the other Parties or any of
them, as applicable, as may be reasonably necessary or desirable to effect the
purpose of this Agreement and the Ancillary Documents and carry out their
respective provisions. Each Party shall promptly remit to the appropriate Party
any monies received by it and payable to such other Party.


Section 11.12 No Third Party Beneficiary


Nothing contained in this Agreement or the Ancillary Documents is intended, or
should be interpreted as having been intended, to create any right or assume
any obligation in favour of, or grant any waiver or release from any obligation
to, or otherwise constitute a stipulation in favour of any Person, other than
the Parties pursuant to the provisions hereof.


Section 11.13 Governing Law


This Agreement shall be governed by, and construed in accordance with, the laws
in force in the Province of Québec.


Section 11.14 Severability


Except for any provision or covenant contained herein which is fundamental to
the subject matter of this Agreement or of any Ancillary Documents, the
invalidity or unenforceability of any provision contained herein or therein
shall not affect the validity or enforceability of any other provision
contained herein or therein and any such invalid or unenforceable provision
shall be deemed to be severable.


Section 11.15 Time


Time is of the essence in the performance of each obligation under this
Agreement and the Ancillary Documents.


Section 11.16 Counterparts


This Agreement may be executed by the Parties in several counterparts
(including by facsimile (fax)), each of which when so executed and delivered
shall be an original, but all such counterparts shall constitute one and the
same document.


Section 11.17 Language


The parties hereto have specifically requested that this Agreement and any
other documents ancillary thereto be drafted in the English language. Les
parties aux présentes ont spécifiquement requis que les dispositions de la
présente et les documents qui y sont accessoires soient rédigés dans la langue
anglaise.


 






 


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IN WITNESS WHEREOF this Agreement has been executed by the Parties as of the
date first hereinbefore mentioned.




	 	 	 	 	 
	 	 	HELIX HEARING CARE OF AMERICA 
CORP.
	 	 	 	 	 
	 	 	Per:	 	/s/  Stephen J. Hansbrough
	 	 	 	 	

	 	 	 	 	Name: Stephen J. Hansbrough
	 	 	 	 	Title: Chief Executive Officer
	 	 	 	 	 
	 	 	FORGET & SAUVÉ, AUDIOPROTHÉSISTES,
 S.E.N.C.
	 	 	 	 	 
	 	 	Per:	 	/s/ Steve Forget
	 	 	 	 	

	 	 	 	 	Name: Steve Forget
	 	 	 	 	Title: Partner
	 	 	 	 	 
	 	 	Per:	 	/s/ Magella Sauvé
	 	 	 	 	

	 	 	 	 	Name: Magella Sauvé
	 	 	 	 	Title: Partner
	 	 	 	 	 
	 	 	6068065 CANADA INC.
	 	 	 	 	 
	 	 	Per:	 	/s/ Steve Forget
	 	 	 	 	

	 	 	 	 	Name: Steve Forget
	 	 	 	 	Title: President