SHARE TRANSFER AGREEMENT

 

 

4205219 CANADA INC. ,

 

a corporation incorporated under the laws of Canada

 

(“ Shareholder No. 3 ”)

 

-and-

 

4205227 CANADA INC. ,

 

a corporation incorporated under the laws of Canada

 

( “Shareholder No. 4 ”)

 

-and-

 

NEW FREEDOM CORPORATION ,

 

a corporation incorporated under the laws of the British Virgin Islands

 

(“ Shareholder No. 5 ”)

 

(Shareholder No. 1, Shareholder No. 2, Shareholder No. 3, Shareholder No. 4 and Shareholder
No. 5 are sometimes hereinafter collectively referred to as “ Shareholders ”)

 

RECITALS:

 

1.                                                                                        The Buyer is a wholly-owned subsidiary of IGN.

 

2.                                                                                        The Shareholders are the registered and beneficial owners of all of the issued and outstanding shares in the capital of the Seller.

 

3.                                                                                        The Seller is the registered and beneficial owner of all of the issued and outstanding shares in the capital of AskMen.com Solutions Canada Inc. (“ AskMen ”).

 

4.                                                                                        Immediately prior to the date hereof, the Seller purchased from Armando Gomez (“ Gomez ”) and Ashkan Karbasfrooshan (“ Karbasfrooshan ”) all of their respective shares in the capital of AskMen (the “ AskMen Minority Transaction ”) pursuant to a share purchase agreement in the form attached hereto as Schedule 3.1.4 (the “ AskMen Minority Purchase Agreement ”).

 

5.                                                                                        The Buyer has agreed to purchase from the Seller and the Seller has agreed to sell to the Buyer all but not less than all of the issued and outstanding shares of AskMen on the terms and conditions hereinafter set forth.

 

THIS AGREEMENT WITNESSES THAT, in consideration of the premises and the mutual agreements, covenants, representations, warranties and payments set forth or

 

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provided for in this Agreement, and of other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each Party), the Parties agree as follows:

 

ARTICLE 1
INTERPRETATION

 

1.1                                                                                Definitions

 

In this Agreement,

 

“ Accounting Records ” means all of the books of account, accounting records and other financial data and information of Company, including copies of filed Tax Returns and tax assessment notices for each of the fiscal years of Company since its incorporation;

 

“ Accounts Payable ” means all accounts payable and notes payable of Company and other debts of Company due or accruing due to Persons other than the Buyer or IGN or any affiliate thereof, provided that “Accounts Payable” shall not include any debts incurred by Company following the Closing arising in connection with the financing of the purchase of the Shares;

 

“ Accounts Receivable ” means all accounts receivable and notes receivable of a Person and other debts due or accruing due to such Person;

 

“ Accounts Receivable Amount ” has the meaning ascribed thereto in Section 2.3(a);

 

“ Act ” means the Canada Business Corporations Act and the regulations thereunder, each as amended to the date hereof;

 

“ Activities ” means (i) publication, distribution and/or sale of books, in print and/or machine readable form, and (ii) production, distribution, sale and/or exhibition of film or video products, and/or audio and/or video music recordings (for greater certainty, “Activities” do not include the presence on the AskMen website of short video or audio clips nor the passive provision of advertising services to any Person who promotes or otherwise is involved in Activities);

 

“ Adjusted Indemnification Purchase Price ” means the Purchase Price, less the AskMen Minority Purchase Price;

 

“ Adjusted Proportionate Cap ” means, in respect of Shareholder No. 1, an amount equal to thirty percent (30%) of the Adjusted Indemnification Purchase Price, in respect of Shareholder No. 2, an amount equal to twenty-five percent (25%) of the Adjusted Indemnification Purchase Price, and, in respect of each of Shareholder No. 3, Shareholder No. 4 and Shareholder No. 5, an amount equal to fifteen percent (15%) of the Adjusted Indemnification Purchase Price;

 

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“ Adjusted Proportionate Share ” means, in respect of Shareholder No. 1, thirty percent (30%), in respect of Shareholder No. 2, twenty-five percent (25%), and, in respect of each of Shareholder No. 3, Shareholder No. 4 and Shareholder No. 5, fifteen percent (15%);

 

“ Adjustment Amount ” means the net amount of any adjustment to the Base Purchase Price determined in accordance with Section 2.4 and, if applicable, Section 2.6;

 

“ Adjustment Date ” means, subject to Section 2.6, the later of (i) the 145th day after the month end following the Closing Date; and (ii) the tenth Business Day after the final version of the Operating Working Capital Balance Statement is delivered to the Sellers Representative;

 

“ affiliate ” and “ body corporate ” have the respective meanings ascribed to those terms by the Act on the date hereof;

 

“ Agreement ” means this share transfer agreement and all attached schedules, in each case as the same may be supplemented, amended, restated or replaced from time to time by written instrument executed by all of the parties hereto;

 

“ Analogous Provision ” has the meaning ascribed thereto in Section 3.1.13(e);

 

“ Applicable Law ” means any statute, law, ordinance, rule, regulation, restriction, regulatory policy or by-law (zoning or otherwise) of Canada or the United States (whether federal, state, provincial or municipal) and with respect to any such ordinance, rule, regulation, restriction, regulatory policy or by-law only to the extent that same has the force of law, or Order, or any exemption or any Licence of any Governmental Authority, but only to the extent that such License is obligatory, that applies in whole or in part, where the term is used in relation to a representation, warranty or covenant of the Shareholders, to the Shareholders, the Seller, the Company, the Business or to any of the Shares (as applicable) and, where the term is used in relation to a representation, warranty or covenant of IGN or Buyer, to IGN or Buyer (as applicable);

 

“ Articles ” means in relation to a corporation, its articles of incorporation, and any articles of amendment, articles of continuance and articles of amalgamation;

 

“ AskMen ” has the meaning ascribed thereto in the recitals to this Agreement;

 

“ AskMen Minority Purchase Agreement ” has the meaning ascribed thereto in the recitals to this Agreement;

 

“ AskMen Minority Purchase Price ” means the price paid to the Minority Shareholders for the shares of AskMen acquired by the Seller pursuant to the AskMen Minority Purchase Agreement

 

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“ AskMen Minority Transaction ” has the meaning ascribed thereto in the recitals to this Agreement;

 

“ Assets ” means all of the assets, tangible and intangible, of Company, including those tangible assets listed in Schedule 3.1.18 and the Contracts, Contractual Rights and Intellectual Property Rights;

 

“ Base Purchase Price ” means THIRTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($13,500,000);

 

“ Benefit Plans ” means all bonus, deferred compensation, incentive compensation, share purchase, share appreciation and share option, severance or termination pay, hospitalization or other medical benefits, life or other insurance, dental, disability, salary continuation, vacation, supplemental unemployment benefits, profit-sharing, mortgage assistance, employee loan, employee assistance, pension, retirement or supplemental retirement plan or agreement (including any pension plan and any group registered retirement savings plan), and each other employee benefit plan or agreement (whether oral or written, formal or informal, funded or unfunded) sponsored, maintained or contributed to by Company for the benefit of any of the Employees, whether or not insured, except that the term “ Benefit Plans ” shall not include any statutory plans with which Company is required to comply, including the Canada/Québec Pension Plan or plans administered pursuant to applicable provincial health tax, workers’ compensation, workers’ safety and insurance and unemployment insurance legislation;

 

“ Books and Records ” means the Accounting Records and all books, records, books of account, sales and purchase records, lists of suppliers and customers, credit and pricing information, formulae, business, engineering and consulting reports and research and development information and plans and projections of or relating to Company or the Business or the Assets and all other documents, files, records, corporate records, correspondence, and other data and information, financial or otherwise, which are relevant to Company or the Business or the Assets, including all data and information stored electronically or on computer related media;

 

“ Business ” means the business carried on by Company of operating a men’s “lifestyle” web portal, including the portal operated at the domain name “www.askmen.com”, and related activities, but excluding the Activities;

 

“ Business Day ” means a day other than a Saturday or Sunday, or a statutory holiday in Montreal, Quebec or in Brisbane, California;

 

“ Cash Equivalents ” means, for the purposes of the determination of the Closing Cash Amount, cash invested in money market funds and short-term securities that can be redeemed within 72 hours provided that such funds and securities are confirmed by Buyer, acting reasonably, to be satisfactory cash-equivalents;

 

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“ Closing ” means the completion of the sale to, and purchase by the Buyer of, the Shares as contemplated by this Agreement;

 

“ Closing Accounts Payable ” means the Accounts Payable outstanding as at the close of business on the Closing Date (other than inter-Company Accounts Payable), including any Accounts Payable (other than inter-Company Accounts Payable) for which invoices are received after the Closing Date and which relate to goods purchased or services received prior to the close of business on the Closing Date;

 

“ Closing Accounts Receivable ” means the Accounts Receivable of the Company outstanding as at the close of business on the Closing Date (other than inter-Company Accounts Receivable), including any Accounts Receivable (other than inter-Company Accounts Receivable) invoiced after the Closing Date and which relate to goods purchased or services performed prior to the close of business on the Closing Date;

 

“ Closing Balance Sheet ” means the balance sheet of Company as at the close of business on the Closing Date determined in accordance with Section 2.3;

 

“ Closing Cash Amount ” has the meaning ascribed thereto in Section 2.3;

 

“ Closing Date ” means the date hereof;

 

“ Closing Document ” means any document delivered at the Closing Time as provided in or pursuant to this Agreement and any document delivered pursuant to Article 2 hereof;

 

“ Closing Time ” has the meaning ascribed thereto in Section 2.8 hereof;

 

“ Collectible Accounts Receivable Amount ” has the meaning ascribed thereto in Section 2.4;

 

“ Collective Agreement ” means any collective agreement, letter of understanding, letter of intent or other written communications with any trade union or association which may qualify as a trade union under Applicable Law, which would cover any Employees and be binding upon 3218864 or any Subsidiary;

 

“ Company ” means AskMen and PCI, collectively, or AskMen or PCI as the context may require and so as to provide the broadest import;

 

“ Condition of the Business ” means the condition of Company, including the Assets, liabilities, operations, earnings, affairs and financial position of Company, excluding Company’s prospects;

 

“Contracts ” means the contracts, agreements, licence agreements and other legally binding instruments entered into by any Company which are listed or identified on Schedule 3.1.14;

 

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“ Contractual Rights ” means the full benefit of all legally binding unfilled customer purchase orders, quotations, tenders for contracts which remain open for acceptance, and entitlements and engagements to which Company is entitled at the Closing Time, whether written or oral, including any deposits made in connection therewith, and legally binding forward commitments of Company for supplies or materials entered into in the ordinary course, all as set forth in Schedule 3.1.14;

 

“ Convertible Security ” means a security of a body corporate which is convertible into, exchangeable for or which carries an obligation to purchase, one or more shares or Voting Securities of such body corporate;

 

“ Defending Party ” has the meaning ascribed thereto in Section 5.7;

 

“ Deficiency Amount ” has the meaning ascribed thereto in Section 2.4(d);

 

“ Draft Closing Balance Sheet ” has the meaning ascribed thereto in Section 2.3(b);

 

“ Draft OWCBS ” has the meaning ascribed thereto in Section 2.4(b);

 

“ Employees ” means those individuals employed by AskMen on the date hereof and listed on Schedule 3.1.19;

 

“ Encumbrance ” means any encumbrance of any kind whatever (registered or unregistered) and includes a security interest, lien, hypothec, pledge, hypothecation, assignment, charge, security under section 426 or section 427 of the Bank Act (Canada), trust or deemed trust (whether contractual, statutory or otherwise arising), and a voting trust or pooling agreement with respect to securities;

 

“ Environment ” includes the air, surface water, underground water, any land, soil or underground space even if submerged under water or covered by a structure, all living organisms and the interacting natural systems that include components of air, land, water, organic and inorganic matters and living organisms and the environment or natural environment as defined in any Environmental Law and “ Environmental ” shall have a similar extended meaning;

 

“ Environmental Laws ” means all Applicable Laws relating in whole or in part to pollution or protection of human health or the Environment;

 

“ Equipment ” means all fixed assets and tangible personal property of Company, including all equipment described in Schedule 3.1.18 and all machines, machinery, fixtures, furniture, furnishings, vehicles, computers, office equipment, tools and spare parts used in the Business;

 

“ Equipment Leases ” means the leases of personal property listed on Schedule 3.1.35;

 

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“ Escrow Agent ” means The Canada Trust Company;

 

“ Escrow Agreement ” means the escrow agreement to be entered into between the Seller, the Buyer, and the Escrow Agent, at the Closing Time in the form of Schedule 2.5;

 

“ Escrow Funds ” means the amount held from time to time in escrow, including accrued interest thereon, pursuant to the Escrow Agreement;

 

“ Estoppel Certificate ” means a certificate dated May 4, 2005 addressed to AskMen and the Buyer, signed by the landlord under the Lease, stating that (i) the Lease is in good standing, unmodified and in full force and effect; (ii) all rent and other amounts thereunder are current; and (iii) no default of AskMen under such Lease exists as of Closing;

 

“ Excess Amount ” has the meaning ascribed thereto in Section 2.4(c);

 

“ Excess Payables Amount ” has the meaning ascribed thereto in Section 2.4(e);

 

“ Financial Statements ” means, on a non-consolidated basis, the financial statements of the Company for the fiscal year ended December 31, 2004, inclusive, copies of which have been provided to the Buyer, each consisting of a balance sheet, statement of income, statement of changes in financial position and notes to the financial statements, and the Interim Statements;

 

“ Generally Accepted Accounting Principles ” means Canadian generally accepted accounting principles from time to time approved by the Canadian Institute of Chartered Accountants, or any successor institute, applicable as at the date on which any calculation or determination is required to be made in accordance with generally accepted accounting principles, and where the Canadian Institute of Chartered Account includes a recommendation in its Handbook concerning the treatment of any accounting matter, such recommendation shall be regarded as the only generally accepted accounting principle applicable to the circumstances that it covers;

 

“ Gomez ” has the meaning ascribed thereto in the recitals to this Agreement;

 

“ Governmental Authority ” means any federal, provincial, state or municipal government of Canada or of the United States of America and any agency, authority, tribunal or commission of any kind whatsoever exercising authority under or for the account of such government;

 

“ Guaranteed Liabilities ” has the meaning ascribed thereto in Section 7.1;

 

“ Hazardous Substance ” means any substance, pollutant, contaminant, waste, hazardous substance, hazardous material, toxic substance, dangerous substance or dangerous good as defined, judicially interpreted, identified or regulated in any Environmental Law;

 

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“ including ” means “ including without limitation ” and the term “ including ” shall not be construed to limit any general statement which it follows to the specific or similar items or matters immediately following it;

 

“ Indemnification Notice ” has the meaning ascribed thereto in Section 5.5;

 

“ IPR Licences ” means all licenses granted by AskMen, PCI or Seller permitting third parties to use the Intellectual Property Rights or granted by third parties to AskMen, PCI or Seller to use Intellectual Property Rights (other than any “off-the-shelf” licenses acquired by AskMen, PCI or Seller that are not material to the Business);

 

“ Intellectual Property Rights ” means all intellectual property rights of or used by Company, including:

 

(a)                                   all trade-marks, trade names, designs, graphics, logos and other commercial symbols, whether registered or not;

 

(b)                                  all copyrights, whether registered or not;

 

(c)                                   all patents, and all applications therefore of Company, including patents which may be issued out of such applications (including divisions, reissues, renewals, re-examinations, continuations, continuations in part and extensions), applied for or registered in any jurisdiction; and

 

(d)                                  all domain names;

 

“ Interim Statements ” means the unaudited non-consolidated financial statements of the Company for the three (3)-month period ended March 31, 2005 consisting of a balance sheet, statement of income and statement of changes in financial position, copies of which are attached as Schedule 3.1.9;

 

“ Inventory ” means all inventories of materials, work-in-progress, stock-in-trade, finished goods, supplies, packaging and advertising and publicity materials of the Company, wherever located, and whether on consignment or not;

 

“ Karbasfrooshan ” has the meaning ascribed thereto in the recitals to this Agreement;

 

“ Key Employees ” means those Employees listed in Schedule 4.4;

 

“ Knowledge ” means, with respect to any representation or warranty contained in this Agreement that is expressly qualified by reference to the “ Knowledge of the Shareholders ” or similar expressions, the actual knowledge of the Seller, the Company and each of the Shareholders and the knowledge they would have had after (i) review of the books and records of the Seller and each Shareholder and the Books and Records and Contracts of the Company pertaining to the relevant subject matter; and (ii) oral inquiry of all Employees and the current outside

 

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advisors of Shareholders, Seller and Company (on matters other than the negotiation and implementation of this Agreement) in respect of which such advisors have heretofore been engaged by Shareholders, Seller, PCI and/or AskMen into such subject matter and, in the case of the Buyer and IGN, the actual knowledge of the Buyer and IGN after review of their books and records and oral inquiry of management-level personnel of each such company, and, in the case of an individual Shareholder, the actual knowledge of such Shareholder after a review of the books and records of such Shareholder and any inquiry of any management-level personnel of such Shareholder;

 

“ Leased Premises ” means the lands and buildings which are subject to the Lease;

 

“ Lease ” means the office lease to which AskMen is a party and described in Schedule 3.1.30;

 

“ Letter of Intent ” means the letter of intent dated February 23, 2005 between IGN and AskMen and the Seller as amended by an amendment letter dated May 12, 2005;

 

“ Licence ” means any licence, permit, approval, right, privilege, concession or franchise issued, granted, conferred or otherwise created by a Governmental Authority;

 

“ Material Adverse Effect ” means any change in, or effect on, the operations, affairs, prospects, financial condition, results of operations, assets, liabilities, reserves or any other aspect of Company, or the Business that results in a material adverse effect on, or a material adverse change in, any such aspect of Company, or the Business;

 

“ Minority Shareholders ” means Gomez and Karbasfrooshan, and “ Minority Shareholder ” means any one of them;

 

“ Non-Active Employees ” means the Employees who are absent from work on the Closing Date by reason of short or long term disability or by reason of authorized leave of absence but, for the avoidance of doubt, does not include Employees who are absent from work on the Closing Date by reason of holiday, parental leave or scheduled day off;

 

“ Non-Competition Agreements ” means the non-competition agreements entered into at the Closing Time between AskMen and the Buyer, on the one hand, and, on the other hand and, as applicable, the Seller and each of the Shareholders and their principals or the Minority Shareholders, in the form of Schedule 5.2;

 

“ Notice Period ” has the meaning ascribed thereto in Section 5.6;

 

“ Operating Working Capital Balance Amount ” has the meaning ascribed thereto in Section 2.4(a);

 

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“ Operating Working Capital Balance Statement ” has the meaning ascribed thereto in Section 2.4(b);

 

“ Occupational Health and Safety Acts ” means the Occupational Health and Safety Act (Quebec), as amended to the date hereof, and the Industrial Accidents and Occupational Diseases Act (Quebec), as amended to the date hereof, and all other legislation having application in the Province of Quebec and dealing with the health or safety of employees;

 

“ Options ” means the options to be granted by IGN to the Key Employees as contemplated in Section 4.4;

 

“ Order ” means any order, judgment, injunction, decree, award or writ of any court, tribunal, arbitrator or Governmental Authority, in each case only to the extent that such order, judgment, injunction, decree, award or writ has the force of law;

 

“ ordinary course ” or “ normal course ”, when used in relation to the conduct of Company, means any transaction which constitutes an ordinary day-to-day business activity of such corporation consistent with its past practices;

 

“ PCI ” means Publications Collections Inc., a Nevada corporation;

 

“ Parties ” means IGN, the Buyer, the Seller and the Shareholders, collectively, and “ Party ” means any one of them;

 

“ Pension Plan ” means a Benefit Plan that is a “registered pension plan” as that term is defined in subsection 248(1) of the Income Tax Act (Canada);

 

“ Permitted Encumbrances ” means

 

(i)                                      Encumbrances for Taxes not at the time overdue but only if the amount thereof at the Closing Date is included in Closing Accounts Payable;

 

(ii)                                   any Encumbrances in favor of any lessor or licensor for rent or royalties to become due or for other obligations or acts, the performance of which is required under leases, subleases or licenses, so long as the payment of such rent, royalties or the performance of such other obligation or act is not currently due, and only if the amount thereof at the Closing Date is included in Closing Accounts Payable;

 

(iii)                                Encumbrances of any Employees for salaries or wages earned but not yet payable, but only if the amount thereof at the Closing Date is included in Closing Accounts Payable; and

 

(iv)                               Encumbrances of unpaid vendors of personal property, or other similar Encumbrances, in each case arising in the ordinary course of business for charges that are not currently due under any Contract listed on any

 

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Schedule attached hereto, and only if the amount thereof at the Closing Date is included in Closing Accounts Payable;

 

“ Person ” shall be broadly interpreted and includes an individual, body corporate, partnership, joint venture, trust, association, unincorporated organization, the Crown, any Governmental Authority or any other entity recognized by law;

 

“ Prime Rate ” for any day means the rate of interest expressed as a rate per annum that Bank of Montreal establishes at its head office in Montreal as the reference rate of interest that it will charge on that day for Canadian dollar demand loans to its customers in Canada and which it at present refers to as its prime rate;

 

“ Publications ” has the meaning ascribed thereto in Section 3.1.32;

 

“ Purchase Price ” means, subject to Section 2.6, the Base Purchase Price to be paid by the Buyer to the Seller for the Shares as provided in Section 2.2 as adjusted in accordance with Sections 2.4 and 2.5 by the Adjustment Amount;

 

“ QSTA ” means The Act respecting the Quebec sales tax , as amended to the date hereof;

 

“Receivables Auditor” has the meaning ascribed thereto in Section 2.6;

 

“ Recovered Loss ” has the meaning ascribed thereto in Section 5.2(g);

 

“ Reduced Payables Amount ” has the meaning ascribed thereto in Section 2.4(f);

 

“ Release ” includes releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, migrating, escaping, leaching, disposing, dumping, depositing, spraying, burying, abandoning, incinerating, seeping or placing, or any similar action defined in any Environmental Law;

 

“ Rights ” means any options, rights, warrants or subscription privileges issued or granted by a body corporate (whether or not currently exercisable or exercisable on conditions) to purchase Voting Securities, Convertible Securities or shares of such body corporate;

 

“ Section 338 Liabilities ” means any Tax or other loss, whether arising prior to the Closing or thereafter, resulting from the U.S. Internal Revenue Code Section 338(g) election intended to be made by IGN and Buyer pursuant to Section 2.9;

 

“ Seller ” has the meaning ascribed thereto in the recitals to this Agreement;

 

“ Sellers Representative ” means Ricardo Poupada of the City of Montreal in the Province of Quebec or such other person of whom Seller may from time to time notify Buyer in accordance with Section 8.3;

 

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“ Shareholders’ Agreement ” means the agreement between the Minority Shareholders, AskMen and the Seller dated January 15, 2002;

 

“ Shares ” means all shares of any class of AskMen owned by the Seller, namely, 10,436 Class A common shares;

 

“ Tax Act ” means the Income Tax Act (Canada), as amended to the date hereof;

 

“ Taxation Act ” means the Taxation Act (Quebec), as amended to the date hereof;

 

“ Taxes ” means all taxes and similar governmental charges payable under Applicable Law, including interest and penalties associated therewith, whether disputed or not, and whether federal, provincial, state, territorial, or municipal, and including income, franchise, capital, real property, personal property, withholding, payroll, employer health, transfer, goods and services, sales, use, consumption, excise, customs, duties, anti-dumping, countervail, value added taxes, employers’ contributions to Canada and Quebec pension plans, employment insurance premiums and all other taxes and similar governmental charges of any kind for which Company may have any legal liability imposed by any Governmental Authority, and “ Tax ” has a corresponding meaning;

 

“ Tax Returns ” means all reports, returns and other documents filed or required to be filed by Company with any taxing authority in respect of Taxes; and

 

“ Voting Securities ” means the common shares of a body corporate and all other securities of such body corporate of any kind or class having power to vote for the election of directors either under all circumstances or in certain circumstances or in certain events (whether such circumstances or events exist or have occurred).

 

1.2                                                                                Statutes

 

Unless specified otherwise, reference in this Agreement to a statute refers to that statute, as it may have been amended to the date hereof.

 

1.3                                                                                Generally Accepted Accounting Principles

 

All accounting and financial terms used herein, unless specifically provided to the contrary, shall be interpreted and applied in accordance with Generally Accepted Accounting Principles.

 

1.4                                                                                Headings; etc.

 

The division of this Agreement into articles, sections, subsections and schedules and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.  The article, section, subsection and schedule headings in this Agreement are not intended to be full or precise descriptions of the text to which they refer and are not to be considered part of this Agreement.  All uses of the words “ hereto ”, “ herein ”, “ hereof ”, “ hereby ” and “ hereunder ” and similar expressions refer to this Agreement

 

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and not to any particular section or portion of it.  References to an Article, Section, Subsection or Schedule refer to the applicable article, section, subsection or schedule of this Agreement.

 

1.5                                                                                Number and Gender

 

In this Agreement, words in the singular include the plural and vice versa and words in one gender include all genders.

 

1.6                                                                                Entire Agreement

 

This Agreement, together with the IGN non-disclosure agreement signed by Ricardo Vigia Poupada as President of Seller and AskMen, dated July 21, 2004, and the Closing Documents, constitute the entire agreement between the Parties pertaining to the subject matter hereof and supersede all prior agreements, negotiations, discussions and understandings, written or oral, between the Parties, including the Letter of Intent.  Without limiting the generality of the foregoing, there are no representations or warranties of any kind or nature whatsoever being provided by any Party hereto other than those representations and warranties expressly set forth in this Agreement and the Closing Documents.  In the event of any discrepancy between the terms of this Agreement, the said non-disclosure agreement and any of the Closing Documents, the provisions of this Agreement shall prevail.

 

1.7                                                                                Amendment

 

This Agreement may be amended, modified or supplemented only by the written agreement of the parties.

 

1.8                                                                                Waiver of Rights

 

Any waiver of, or consent to depart from, the requirements of any provision of this Agreement shall be effective only if it is in writing and signed by the Party giving it, and only in the specific instance and for the specific purpose for which it has been given.  No failure on the part of any Party to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver of such right.  No single or partial exercise of any such right shall preclude any other or further exercise of such right or the exercise of any other right.

 

1.9                                                                                Schedules

 

The following Schedules form part of this Agreement:

 

Schedule		Description of Schedule
2.5		Form of Escrow Agreement
3.1.4		Form of AskMen Share Purchase Agreement
3.1.1(e)		List of Directors and Officers
3.1.6		Assets and Liabilities of PCI
3.1.8		List of Consents
3.1.9		Financial Statements and Interim Financial Statements
3.1.11(v)		Dividends

 

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Schedule		Description of Schedule
3.1.12		Unusual Transactions
3.1.13		Tax Matters
3.1.14		List of Contracts
3.1.18		Description of Assets
3.1.19		List of Employees
3.1.21		List and Description of Benefit Plans
3.1.22		Description of Litigation
3.1.23		Description of Insurance Policies
3.1.24		List of Permitted Encumbrances
3.1.25		Intellectual Property Rights
3.1.25(f)		List of Trade Marks
3.1.30		Description of Lease
3.1.31		List of Major Customers and Suppliers
3.1.35		Description of Equipment Leases
3.1.36		List of Licences
3.1.38		Books and Records
3.1.40		Trade Allowances
3.1.43		List of Bank Accounts
4.3		Retainer Document
4.4		IGN Stock Options
5.2		Non-Competition Agreement

 

1.10                                                                         Applicable Law

 

This Agreement shall be governed by, and interpreted and enforced in accordance with, the laws in force in the Province of Ontario (excluding any conflict of laws rule or principle which might refer such interpretation to the laws of another jurisdiction).  Subject to Article 6, each Party irrevocably submits to the non-exclusive jurisdiction of the courts of the Province of Ontario, in the city of Toronto, with respect to any matter arising hereunder or related hereto.

 

1.11                                                                         Currency

 

Unless specified otherwise, all statements of or references to dollar amounts in this Agreement are to U.S. dollars.  Where any dollar amount in connection with this Agreement is required to be converted from U.S. dollars to Canadian dollars or vice versa as of a particular date, the equivalent amount in the applicable currency shall be the amount of Canadian dollars or U.S. dollars, as applicable, which would result from the conversion of a specified amount of U.S. dollars or Canadian dollars, as the case may be, at the Spot Rate on that date if it is a Business Day or on the immediately preceding Business Day if that date is not a Business Day.  For the purposes of this Section 1.11, the “Spot Rate” shall, as at any date with respect to the conversion of an amount in one currency (the “ original currency ”) to another currency (the “ other currency ”), means the mid-market rate of exchange for large volume transactions quoted by the Bank of Montreal in Toronto, Canada at noon EST on such date for the spot purchase in the foreign exchange market of the other currency with such original currency.

 

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1.12                                                                         Tender

 

Any tender of documents or money hereunder may be made upon the Parties or their respective counsel and money shall be tendered by official bank draft or by wire transfer.

 

1.13                                                                         Performance on Holidays

 

If any action is required to be taken pursuant to this Agreement on or by a specified date which is not a Business Day, then such action shall be valid if taken on or by the next succeeding Business Day.

 

1.14                                                                         Calculation of Time

 

In this Agreement, a period of days shall be deemed to begin on the first day after the event which began the period and to end at 6:00 p.m. (EST) on the last day of the period.  If, however, the last day of the period does not fall on a Business Day, the period shall terminate at 6:00 p.m. (EST) on the next Business Day.

 

1.15                                                                         Third Party Beneficiaries

 

Nothing in this Agreement or in any Closing Document is intended expressly or by implication to, or shall, confer upon any Person (including, without limitation, any Employee) other than the Parties and their Representatives (as defined in Article 5), any rights or remedies of any kind.

 

ARTICLE 2
PURCHASE AND SALE OF SHARES

 

2.1                                                                                Purchase and Sale of the Shares

 

Subject to the terms and conditions hereof, the Seller hereby sells, conveys and transfers to the Buyer, and the Buyer hereby purchases from the Seller, for the consideration set forth in Article 2, all of the Shares.

 

2.2                                                                                Purchase Price

 

Subject to the adjustments set forth in Section 2.4, the Purchase Price for the Shares shall be THIRTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($13,500,000).

 

2.3                                                                                Post Closing Review

 

(a)                                   Forthwith following the Closing Time, the Buyer, or its nominee, shall conduct a review of the Accounting Records of Company for the period commencing on February 23, 2005 and ending on the close of business on the Closing Date, inclusive, in order to prepare the Closing Balance Sheet, including

 

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(i) the actual amount of cash and Cash Equivalents of Company on hand in the accounts of Company as at close of business on the Closing Date (the “ Closing Cash Amount ”); and

 

(ii) the aggregate amount of the Closing Accounts Receivable of Company (the “ Accounts Receivable Amount ”); and

 

(iii) the aggregate amount of the Closing Accounts Payable.

 

The Closing Balance Sheet shall be prepared in accordance with Generally Accepted Accounting Principles, consistently applied, subject to the provisions of this Agreement pertaining to the definition and calculation of the Closing Accounts Receivable and Closing Accounts Payable. The purpose of the Closing Balance Sheet shall be to determine whether there has been any breach of the representations made in Section 3.1.11(b), provided that, for the avoidance of doubt, the Parties acknowledge and agree that the Closing Balance Sheet is not the only basis on which such determination may be made.  Any claim that a breach of such representations did occur shall be dealt with in accordance with the indemnification provisions of Article 5.

 

(b)                                  The Buyer shall provide to the Sellers Representative, for his review, copies of all working papers of the Buyer and its nominee resulting from, or used in connection with, the preparation of the Closing Balance Sheet as contemplated in this Article 2, and shall permit representatives of the Seller to be present during its preparation of the Closing Balance Sheet.  Subject to Section 2.6, a final version of the Closing Balance Sheet resulting from such review shall be delivered to the Sellers Representative within 125 days of the month end following Closing Date.  A draft of the Closing Balance Sheet (the “ Draft Closing Balance Sheet ”) shall be delivered to the Sellers Representative at least 15 days prior to the delivery of the final Closing Balance Sheet and the Buyer shall, or shall cause its nominee to, meet with the Sellers Representative and the accountants of the Seller forthwith thereafter to review the Draft Closing Balance Sheet as soon as possible within such 15-day period.  For greater certainty, it is acknowledged that the failure of the Sellers Representative or the accountants of the Seller to object to any item in the Closing Balance Sheet shall not prevent the Seller from raising objections thereto (i) in the event that the Buyer seeks indemnification pursuant to the provisions of Article 5 hereof on the basis of a breach of the representations made in Section 3.1.11(b); or (ii) in connection with any adjustment to the Base Purchase Price pursuant to Section 2.4.

 

2.4                                                                                Base Purchase Price Adjustment

 

(a)                                   It is the intent of the Parties hereto that:

 

(A) Company shall have a Closing Cash Amount and collectible Closing Accounts Receivable in an amount no less than $600,000, which shall consist of

 

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no less than $300,000 in cash and Cash Equivalents and no less than $300,000 in collectible Closing Accounts Receivable (collectively, such Closing Cash Amount and collectible Closing Accounts Receivable amount, the “ Operating Working Capital Balance Amount ”); and

 

(B) the Closing Accounts Payable shall not exceed $155,000.

 

(b)                                  Within 145 days of the month end following Closing Date, the Buyer or its nominee shall prepare a statement (the “ Operating Working Capital Balance Statement ”) calculating (i) the amount of the Closing Accounts Receivable that have not been paid to Company during the 120 day period following the end of the month following the Closing Date, and (ii) based on the Closing Balance Sheet, the amount of the Closing Accounts Payable.  In this regard, payments in respect of the Closing Accounts Receivable received from a debtor will be applied to the oldest account receivable owing by that debtor unless otherwise specified by the debtor.  Buyer shall keep Sellers Representative informed of progress in collecting the Closing Accounts Receivable and permit Sellers Representative or his nominee to participate in such collection efforts.  Buyer agrees to cause Company to use commercially reasonable efforts consistent with Company’s past practices to collect the Closing Accounts Receivable.  For the purposes of the Operating Working Capital Balance Statement, such amounts of Closing Accounts Receivable that have not been paid to Company during such 120 day period shall be deducted from the Accounts Receivable Amount as set forth in the Closing Balance Sheet (such net amount, the “ Collectible Accounts Receivable Amount ”).  The Buyer shall provide to the Sellers Representative, for his review, copies of all working papers of the Buyer and its nominee resulting from, or used in connection with, the preparation of the Operating Working Capital Balance Statement as contemplated in this Article 2, and shall permit representatives of the Seller to be present during its preparation of the Operating Working Capital Balance Statement.  Subject to Section 2.6, a final version of the Operating Working Capital Balance Statement resulting from such review shall be delivered to the Sellers Representative within 145 days of the month end following the Closing Date.  A draft of the Operating Working Capital Balance Statement (the “ Draft OWCBS ”) shall be delivered to the Sellers Representative at least fifteen (15) days prior to the delivery of the final Operating Working Capital Balance Statement and the Buyer shall, or shall cause its nominee to, meet with the Sellers Representative and the accountants of the Seller forthwith thereafter to review the Draft OWCBS as soon as possible within such 15-day period.  For greater certainty, it is acknowledged that the failure of the Sellers Representative or the accountants of the Seller to object to any item in the Operating Working Capital Balance Statement shall not prevent the Seller from raising objections thereto in connection with any adjustment to the Base Purchase Price pursuant to this Section 2.4.

 

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(c)                                   Subject to Section 2.6, in the event that the Operating Working Capital Balance Statement indicates that the aggregate of the Closing Cash Amount and the Collectible Accounts Receivable Amount exceeds the Operating Working Capital Balance Amount, the Base Purchase Price shall be adjusted upwards on a dollar-for-dollar basis by an amount equal to such excess (the “ Excess Amount ”).  Subject to Section 2.4(g), such Excess Amount shall be remitted to Heenan Blaikie LLP in trust for the Seller on the Adjustment Date as contemplated in Section 2.5(b).

 

(d)                                  Subject to Section 2.6, in the event that the Operating Working Capital Balance Statement indicates that the aggregate of the Closing Cash Amount and the Collectible Accounts Receivable Amount is less than the Operating Working Capital Balance Amount, the Base Purchase Price shall be reduced on a dollar-for-dollar basis by the amount of such deficiency (the “ Deficiency Amount ”).  Subject to Section 2.4(g), such Deficiency Amount shall be remitted to the Buyer on the Adjustment Date as contemplated in Section 2.5(b).

 

(e)                                   Subject to Section 2.6, in the event that the Operating Working Capital Balance Statement indicates that the actual amount of the Closing Accounts Payable exceeds $155,000, the Base Purchase Price shall be reduced on a dollar-for-dollar basis by the amount by which the actual amount of the Closing Accounts Payable exceeds $155,000 (the “ Excess Payables Amount ”).  Subject to Section 2.4(g), such Excess Payables Amount shall be remitted to the Buyer on the Adjustment Date as contemplated in Section 2.5(b).

 

(f)                                     Subject to Section 2.6, in the event that the Operating Working Capital Balance Statement indicates that the actual amount of the Closing Accounts Payable is less than $155,000, the Base Purchase Price shall be increased on a dollar-for-dollar basis by the amount by which such actual Closing Accounts Payable is less than $155,000 (the “ Reduced Payables Amount ”).  Subject to Section 2.4(g), the Reduced Payables Amount shall be remitted to Heenan Blaikie LLP in trust for the Seller on the Adjustment Date as contemplated in Section 2.5(b).

 

(g)                                  Only the net amount of the Excess Amount, Deficiency Amount, Excess Payables Amount and Reduced Payables Amount owing by Buyer to Seller or by Seller to Buyer hereunder shall be payable pursuant to the foregoing paragraphs 2.4(c) to (f), inclusive, and in accordance with Section 2.5(b).

 

2.5                                                                                Payment of Purchase Price

 

(a)                                   The Buyer shall pay the Base Purchase Price to the Seller at the Closing Time as follows:

 

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(i)             The Buyer shall pay EIGHT MILLION SEVEN HUNDRED THOUSAND DOLLARS ($8,700,000) by bank draft or wire transfer of immediately available funds to Heenan Blaikie LLP in trust for the Seller;

 

(ii)            the Buyer shall pay FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000) by bank draft or wire transfer to the Escrow Agent to be held in accordance with Escrow Agreement;

 

(iii)           the Buyer shall pay THREE HUNDRED THOUSAND DOLLARS ($300,000) by bank draft or wire transfer to the Escrow Agent to be held in accordance with the Escrow Agreement;

 

(b)                                  On the Adjustment Date, if, pursuant to the provisions of Sections 2.4 and 2.6, it is determined that the Purchase Price is:

 

(i)                                      less than the Base Purchase Price, an amount equal to the Adjustment Amount shall be released, in accordance with the provisions of the Escrow Agreement, to the Buyer from the escrow accounts contemplated in Section 2.5(a)(iii) and if any balance remains in the escrow accounts contemplated in Section 2.5(a)(iii), such balance shall be released to Heenan Blaikie LLP in trust for the Seller.  If the Adjustment Amount is greater than the amount held in escrow pursuant to Section 2.5(a)(iii), the outstanding amount owed to the Buyer following the release of the amount held in escrow pursuant to Section 2.5(a)(iii) shall be paid by the Seller to the Buyer by bank draft or wire transfer of immediately available funds to an account or accounts specified by Buyer;

 

(ii)                                   equal to the Base Purchase Price, all of the amount contemplated in Section 2.5(a)(iii) shall be released, in accordance with the provisions of the Escrow Agreement, to Heenan Blaikie LLP in trust for the Seller; or

 

(iii)           greater than the Base Purchase Price, all of the amount contemplated in Section 2.5(a)(iii) shall be released, in accordance with the provisions of the Escrow Agreement, to the Seller and an amount equal to the Adjustment Amount shall be paid by the Buyer to the Seller by bank draft or wire transfer of immediately available funds to Heenan Blaikie LLP in trust for the Seller.

 

2.6                                                                                Disputes

 

If the Seller disputes the Buyer’s, or its nominee’s, determination of the amount of Collectible Accounts Receivable Amount or the Closing Accounts Payable, the Sellers Representative shall give notice to the Buyer on or before the 10th Business Day after the Operating Working Capital Balance Statement (not the Draft OWCBS) has been received by the Sellers Representative.  Upon receipt by the Buyer of such notice, the Parties will, in good faith, attempt to resolve the dispute expeditiously by negotiation and, where such resolution is not achieved within thirty (30) days from the date of receipt of the Operating Working Capital

 

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Balance Statement, the amount of the Collectible Accounts Receivable Amount or the Closing Accounts Payable, or both, as applicable, shall be finally and bindingly determined by RSM Richter (the “Receivables Auditor ”), at the cost of the Seller; provided that, where the Receivables Auditor determines that the Closing Accounts Receivable Amount should be increased by 10% or more from the amount set out in the Operating Working Capital Balance Statement, or that the Closing Accounts Payable amount should be decreased by 10% or more from the amount set out in the Operating Working Capital Balance Statement, the Buyer shall bear the cost of such determination by the Receivables Auditor.  Either Party may refer the dispute to the Receivables Auditor.  The Receivables Auditor shall be required to make a determination within 30 days after the date on which the dispute is first referred to it.  The Receivables Auditor shall have the right to conduct such investigation as it needs to perform its duties hereunder and the Parties will cooperate in that regard.  Where the Adjustment Amount is determined pursuant to this Section 2.6, the Adjustment Date shall be deemed to be the second Business Day immediately following the date (i) of the negotiated settlement, or (ii) that the Receivables Auditor advises the Buyer and the Sellers Representative of its final determination of all matters in dispute, as the case may be.  The Parties hereby agree that during the period from the Closing Date to the Adjustment Date and, if the Receivables Auditor is engaged pursuant to this Section 2.6, for two years thereafter, no Party shall, jointly or severally, utilize the services of the Receivables Auditor.

 

2.7                                                                                Delivery of Certificates

 

The Seller shall transfer and deliver to the Buyer at the Closing Time share certificates representing the Shares duly endorsed in blank for transfer, or accompanied by irrevocable security transfer powers of attorney duly executed in blank acceptable to the Buyer and shall cause AskMen to enter the Buyer on the books of AskMen as the holder of the Shares and to issue one or more share certificates representing the Shares to the Buyer.

 

2.8                                                                                Closing Arrangements

 

The Closing shall take place immediately after the execution and delivery hereof (the “ Closing Time ”) at the offices of Fasken Martineau DuMoulin LLP, Stock Exchange Tower, Suite 3400, 800, Place Victoria,, Montreal, Quebec, or at such other time and place as may be agreed upon by the Seller and the Buyer.

 

2.9                                                                                U.S. Internal Revenue Code Election

 

IGN and the Buyer intends to make an election under Section 338(g) of the U.S. Internal Revenue Code .

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES

 

3.1                                                                                Representations and Warranties of the Shareholders

 

The Shareholders represent and warrant to the Buyer and IGN as set out in the following Subsections of this Section and acknowledge that the Buyer and IGN are relying upon such representations and warranties in entering into this Agreement.

 

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3.1.1                                                                      Corporate Matters

 

(a)                                   Each of Seller and Company is a corporation duly incorporated, organized and validly existing in good standing under the laws of its jurisdiction of incorporation.  No proceedings have been taken or authorized by Seller or Company or, to the Knowledge of the Shareholders, by any other Person, with respect to the bankruptcy, insolvency, liquidation, dissolution or winding up of Seller or Company, or with respect to any amalgamation, merger, consolidation, arrangement or reorganization relating to Seller or Company.

 

(b)                                  Company has all necessary power and authority to own or lease the Assets and to carry on its business as at present carried on.  Under Applicable Law, neither the physical location nor physical character of any of the Assets requires Company to be registered, licensed or otherwise qualified as an extra-provincial or foreign corporation or to be in good standing in any jurisdiction other than jurisdictions where it is duly registered, licensed or otherwise qualified and in good standing for such purpose, namely, in the case of AskMen, Quebec and the federal jurisdiction of Canada, and in the case of PCI, Nevada.

 

(c)                                   A true copy of the Articles and all by-laws of Seller and Company have been delivered to the Buyer or its solicitors by the Seller.  The Articles and such by-laws of Seller and Company constitute all of the constating documents and by-laws of Seller and Company, are complete and correct and are in full force and effect.

 

(d)                                  The original or true copies of all corporate records of Company have been delivered to the Buyer or its solicitors for review.  Such corporate records have been maintained in accordance with Applicable Law and contain complete and accurate:

 

(i)             minutes of all meetings of the board of directors, any committee thereof and the shareholders of Company held since the date of incorporation;

 

(ii)            originals of all resolutions of the board of directors, any committee thereof and the shareholders of Company passed by signature in writing since the date of incorporation; and

 

(iii)           waivers, notices and other documents required by law to be contained therein other than to the extent that the failure to do so would not have a material adverse effect on Company, or the issuance to or ownership by the Seller of the Shares;

 

and reflect all actions taken and resolutions passed by the directors or the shareholders of Company since the date of its incorporation.

 

All resolutions contained in such records have been duly passed and, all such meetings have been duly called and held.  The share certificate books, registers of

 

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shareholders, registers of transfers and registers of directors of Company are complete and accurate and all applicable security transfer or documentary stamp taxes payable in respect of shares of Company have been duly paid.

 

(e)                                   The list of officers and directors in Schedule 3.1.1(e) constitutes a complete and accurate list of all current officers and directors of Company on the Closing Date.

 

3.1.2                                                                      Authorized and Issued Capital of AskMen

 

The authorized capital of AskMen consists of an unlimited number of Class A common shares and an unlimited number of preferred shares, of which 10,436 Class A common shares and no preferred shares have been validly issued and are outstanding as fully paid and non-assessable shares.

 

3.1.3                                                                      Ownership of Shares of the Seller

 

The percentage ownership of Seller (on a fully diluted basis) by each of the Shareholders as shown in the corporate records of the Seller, is as follows and no Shareholder has any Knowledge that the beneficial owner of any share of the Seller held by a Shareholder is other than as set forth in such corporate records:

 

Name of Shareholder		Ownership as a Percentage
Shareholder No. 1		30
Shareholder No. 2		25
Shareholder No. 3		15
Shareholder No. 4		15
Shareholder No. 5		15
Total		100	%

 

3.1.4                                                                      Title to Shares; Ownership of PCI

 

(a)                                   The Seller owns beneficially and of record, free and clear of all Encumbrances, 10,436 Class A common shares in the capital of AskMen, being all of the issued and outstanding shares of AskMen.  There are no restrictions on the transfer of the shares of AskMen except those set forth in the Articles of AskMen, in the Shareholders’ Agreement and in the Letter of Intent.

 

(b)                                  On the date hereof and immediately prior to the execution of this Agreement, the Seller purchased from Gomez and Karbasfrooshan an aggregate of 436 Class A common shares in the capital of AskMen, representing all of the issued and outstanding shares in the capital of AskMen not already owned beneficially and as of record by the Seller, pursuant to a share purchase agreement in the form attached hereto as Schedule 3.1.4 (the “ AskMen Minority Purchase Agreement ”).  None of the Seller’s rights under such

 

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agreement have been amended, terminated, waived or compromised and such agreement remains fully enforceable in accordance with its terms.

 

(c)                                   AskMen owns beneficially and of record 100 common shares in the capital of PCI, being all of the issued and outstanding shares in the capital of PCI.

 

3.1.5                                                                      No Options

 

No Person other than the Buyer hereunder and IGN under the terms of the Letter of Intent has any oral or written agreement, option, warrant, right, privilege or any other right capable of becoming any of the foregoing (whether legal, equitable, contractual or otherwise) for the purchase, subscription or issuance of any unissued shares, Voting Securities, Convertible Securities or Rights of Company.

 

3.1.6                                                                      Affiliates, etc.

 

(a)                                   Subject to Section 3.1.6(b) hereof, Company carries on the entire Business. Seller carries on none of the Business. Seller’s only asset (other than cash and cash equivalents) has been ownership of the domain name “www.askmen.com”, which ownership has been transferred to AskMen immediately prior to the Closing Time, and ownership of the Shares. Seller is not party to any agreement or instrument related to the Business other than this Agreement, the Closing Documents and the Letter of Intent.  Seller owns, directly or indirectly, all of the issued and outstanding shares and Voting Securities, Convertible Securities and Rights of AskMen.  Other than as disclosed in Section 3.1.4(c), Company does not hold and has not agreed to acquire any shares, Voting Securities, Convertible Securities or Rights.

 

(b)                                  PCI has no assets or liabilities except as set out in Schedule 3.1.6 and PCI is not party to any agreement or instrument related to the Business, other than agreements with AskMen and with CCBill, this Agreement, the Closing Documents and the Letter of Intent.

 

(c)                                   There are no agreements or obligations between any two or more of AskMen and/or PCI, on the one hand, and any one or more of Seller and any of the Shareholders except as set forth in Schedule 3.1.14 hereto.

 

The only shareholders’ agreement pertaining to the Seller or Company is the Shareholders’ Agreement, a copy of which has been provided to Buyer.  The Shareholders’ Agreement has been terminated and all rights thereunder (including the piggy-back rights contained in Section 14 thereof) have been waived.

 

3.1.7                                                                      Absence of Conflicting Agreements

 

None of the execution and delivery of, or the observance and performance by the Seller of any covenant or obligation under, this Agreement or any Closing Document to which it is a party, or the Closing:

 

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(a)                                   contravenes or results in, or will contravene or result in, a violation of or a default under (with or without the giving of notice or lapse of time, or both) or in the acceleration of any obligation under:

 

(i)                                      as with respect to the Seller or Company, any Applicable Law;

 

(ii)                                   any Licence of the Seller or Company;

 

(iii)                                the articles, by-laws, directors or shareholders resolutions of the Seller or Company;

 

(iv)                               subject to obtaining the consents listed in Schedule 3.1.8, the provisions of any agreement, lease, mortgage, security document, obligation or instrument to which the Seller or Company is a party, or by which any of them or the Assets are bound or affected;

 

(b)                                  subject to obtaining the consents listed in Schedule 3.1.8, relieve any other party to any Contract, Lease, Equipment Lease or Contractual Right, of that party’s obligations thereunder or enable it to terminate its obligations thereunder; or

 

(c)                                   result in the creation or imposition of any Encumbrance on any of the Assets, other than any Encumbrance that may be imposed or created in connection with the financing of the Buyer’s purchase of the Shares.

 

3.1.8                                                                      Consents, Approvals

 

Except as disclosed in Schedule 3.1.8 and other than (i) those which have been obtained prior to the Closing, and (ii)  routine post-closing notifications and filings, there are no Licences, Orders, authorizations, registrations or declarations of, or filings with, any Governmental Authority or other Person required by the Seller or Company in connection with the (a) execution and delivery by Seller or AskMen of this Agreement and/or the Closing Documents to which it is a party, or (b) the observance and performance by the Seller or AskMen of its obligations under this Agreement or the Closing Documents to which it is a party. The Seller has obtained the Estoppel Certificate.

 

3.1.9                                                                      The Financial Statements

 

Except as set forth in Schedule 3.1.9, the Financial Statements:

 

(a)                                   have been prepared in accordance with Generally Accepted Accounting Principles, applied on a basis consistent with that of the preceding periods;

 

(b)                                  are complete and accurate in all material respects;

 

(c)                                   accurately disclose in all material respects the assets, liabilities (whether accrued, absolute or contingent) and financial position of the Company and

 

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the results of the operations of such corporations, as at the dates thereof and for the periods covered thereby; and

 

(d)                                  reflect in all material respects all proper accruals as at the dates thereof and for the periods covered thereby of all amounts which, though not payable until a time after the end of the relevant period, are attributable to activities undertaken during that period.

 

3.1.10                                                               Undisclosed Liabilities

 

Other than any Section 338 Liabilities, if any, Company has no liabilities (whether accrued, absolute or contingent or otherwise, matured or unmatured) of any kind except:

 

(a)                                   liabilities disclosed or provided for in the Financial Statements; and

 

(b)                                  liabilities incurred in the ordinary course of business since the date of the Interim Statements.

 

3.1.11                                                               Absence of Changes

 

(a)                                   Except for the cessation of Activities contemplated by Section 3.1.32, since December 31, 2004:

 

(i)                                      Company has conducted the Business in the ordinary course in respect of the collection and treatment of accounts receivable and accounts payable, has not incurred any debt, obligation or liability out of the ordinary course of business or of an unusual or extraordinary nature and has used all reasonable commercial efforts to preserve the Business and the Assets;

 

(ii)                                   there has not been any change in the Condition of the Business other than changes in the ordinary course of business, and such changes have not, either individually or in the aggregate, been materially adverse and have not had nor may they be reasonably expected to have, either before or after the Closing Time, a materially adverse effect on the Condition of the Business, provided that this representation is to the Knowledge of Shareholders insofar as it pertains to changes to Applicable Law since December 31, 2004 which impose a restriction on electronic commerce generally and which may affect the Condition of the Business;

 

(iii)                                there has not been any termination, amendment or revocation of any Licence or any transfer, assignment, sale or other disposition of or damage or destruction to any of the Assets which would have a Material Adverse Effect on Company or the Business;

 

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(iv)                               there has not been any change in the accounting principles, policies, practices or procedures of the Company or their application to the Company.

 

(b)                                  Except for the cessation of Activities contemplated by Section 3.1.32, since February 23, 2005 and to the Closing Time:

 

(i)                                      the Business has been operated in the ordinary course of busi