West 49 Inc.

MODES FREEDOM INC.

as the Vendor

and

as Purchaser

ASSET PURCHASE AGREEMENT

September 28, 2005

Note: This asset purchase agreement was negotiated at arms length to provide contractual protections for the benefit of the parties and not for purposes of disclosure to investors or any other purpose. Accordingly, investors and potential investors are cautioned that it would be inappropriate to rely on this document in making an investment decision. All schedules have been omitted for confidentiality reasons.

ARTICLE 1 INTERPRETATION

		ARTICLE 1 INTERPRETATION
Section	1.1	Defined Terms. ...............................................................................................1
Section	1.2	Gender and Number......................................................................................7
Section	1.3	Headings, etc...................................................................................................7
Section	1.4	Currency. .........................................................................................................7
Section	1.5	Certain Phrases, etc........................................................................................7
Section	1.6	Knowledge. .....................................................................................................7
Section	1.7	Accounting Terms..........................................................................................7
Section	1.8	Incorporation of Schedules. ..........................................................................8
Section	1.9	References to Persons and Agreements. .....................................................8
Section	1.10	Statutes.............................................................................................................8
Section	1.11	Non-Business Days. .......................................................................................8
		ARTICLE 2
		PURCHASED ASSETS AND PURCHASE PRICE
Section	2.1	Purchase and Sale...........................................................................................8
Section	2.2	Excluded Assets..............................................................................................9
Section	2.3	Assignment of Contracts.............................................................................10
Section	2.4	Purchase Price...............................................................................................10
Section	2.5	Allocation. .....................................................................................................10
Section	2.6	Deposit ...........................................................................................................10
Section	2.7	Payment of the Purchase Price...................................................................11
Section	2.8	No Effect on Other Rights...........................................................................12
Section	2.9	Payment of Sales Tax, and GST/ QST and Income Tax Elections. ........12
Section	2.10	New Store Adjustment. ...............................................................................13
Section	2.11	Inventory Adjustment. ................................................................................13
Section	2.12	Prepaid Expense Adjustment. ....................................................................14
Section	2.13	Purchase Price Adjustment Determination..............................................14

ARTICLE 3 ASSUMED LIABILITIES

		ARTICLE 3 ASSUMED LIABILITIES
Section	3.1	Assumed Liabilities......................................................................................16
Section	3.2	Excluded Liabilities......................................................................................17
Section	3.3	Assumption of Contractual Liabilities. .....................................................18

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE VENDOR

Section 4.1 Representations and Warranties of the Vendor.......................................18

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ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

Section 5.1 Representations and Warranties of the Purchaser. .................................31

Section	5.1	Representations and Warranties of the Purchaser. .................................31
		ARTICLE 6
		PRE-CLOSING COVENANTS OF THE PARTIES
Section	6.1	Conduct of Business Prior to Closing........................................................32
Section	6.2	Access for Due Diligence.............................................................................35
Section	6.3	Purchaser Confidentiality. ..........................................................................35
Section	6.4	Actions to Satisfy Closing Conditions.......................................................35
Section	6.5	Transfer of the Purchased Assets...............................................................36
Section	6.6	Request for Consents. ..................................................................................36
Section	6.7	Filings and Authorizations. ........................................................................36
Section	6.8	Notice of Untrue Representation or Warranty.........................................36
Section	6.9	Exclusive Dealing.........................................................................................37
Section	6.10	Use of Name..................................................................................................37

Section Section Section Section Section	6.6 6.7 6.8 6.9 6.10	Request for Consents. ..................................................................................36 Filings and Authorizations. ........................................................................36 Notice of Untrue Representation or Warranty.........................................36 Exclusive Dealing.........................................................................................37 Use of Name..................................................................................................37
		ARTICLE 7
		CONDITIONS OF CLOSING
Section	7.1	Conditions for the Benefit of the Purchaser. ............................................37
Section	7.2	Conditions for the Benefit of the Vendor..................................................41
		ARTICLE 8
		CLOSING
Section	8.1	Date, Time and Place of Closing. ...............................................................43
Section	8.2	Closing Procedures. .....................................................................................43
Section	8.3	Risk of Loss....................................................................................................43
		ARTICLE 9
		TERMINATION
Section	9.1	Termination Rights. .....................................................................................44
Section	9.2	Effect of Termination. ..................................................................................44
		ARTICLE 10
		INDEMNIFICATION
Section	10.1	Survival..........................................................................................................45
Section	10.2	No Effect of Knowledge. .............................................................................46
Section	10.3	Indemnification in Favour of the Purchaser.............................................46
Section	10.4	Indemnification in Favour of the Vendor.................................................47
Section	10.5	Notification....................................................................................................47
Section	10.6	Procedure for Third Party Claims..............................................................48

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Section 10.7 Limitations on Indemnification..................................................................51

ARTICLE 11 POST-CLOSING COVENANTS

Section 11.1 Confidentiality..............................................................................................52 Section 11.2 Assistance By Vendor. .................................................................................52 Section 11.3 Co-operation by Vendor..............................................................................53 Section 11.4 Further Assurances. .....................................................................................53 Section 11.5 Consent to Use of Historical Financial Information................................53

ARTICLE 12 EMPLOYEES

Section 12.1 Employees. ....................................................................................................53 Section 12.2 Employee Liability. ......................................................................................53 Section 12.3 Employee Liability. ......................................................................................54

ARTICLE 13

ARBITRATION

Section 13.1 Settling Disputes...........................................................................................55 Section 13.2 Arbitration.....................................................................................................55 Section 13.3 Availability of Officers, Employees, etc....................................................56 Section 13.4 Arbitration Does Not Apply.......................................................................57

ARTICLE 14 MISCELLANEOUS

Section 14.1 Notices. ..........................................................................................................57 Section 14.2 Time of the Essence......................................................................................58 Section 14.3 Brokers. ..........................................................................................................58 Section 14.4 Announcements............................................................................................59 Section 14.5 Third Party Beneficiaries.............................................................................59 Section 14.6 Expenses. .......................................................................................................59 Section 14.7 Amendments.................................................................................................60 Section 14.8 Waiver............................................................................................................60 Section 14.9 Non-Merger...................................................................................................60 Section 14.10 Entire Agreement. ........................................................................................60 Section 14.11 Successors and Assigns. ..............................................................................61 Section 14.12 Severability....................................................................................................61 Section 14.13 Governing Law.............................................................................................61 Section 14.14 Language. ......................................................................................................61 Section 14.15 Counterparts. ................................................................................................62

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ASSET PURCHASE AGREEMENT

Asset Purchase Agreement dated September 28, 2005 between Modes Freedom Inc. (the “ Vendor ”) and West 49 Inc. (the “ Purchaser ”).

RECITAL:

The Purchaser wishes to purchase certain assets of the Vendor and the Vendor wishes to sell such assets to the Purchaser on the terms set forth in this Agreement. ARTICLE 1 INTERPRETATION

Section 1.1 Defined Terms.

As used in this Agreement, the following terms have the following meanings:

“Affiliate” has the meaning specified in the Canada Business Corporations Act on the date hereof.

“Agreement” means this asset purchase agreement and all schedules attached to it; and the expressions “Article” and “Section” followed by a number mean and refer to the specified Article or Section of this Agreement.

“Ancillary Agreements” means all agreements, certificates and other instruments delivered or given pursuant to this Agreement, including the existing confidentiality agreement between certain of the Parties.

“Assets” means all property and assets of every nature and kind and wheresoever situate owned by the Vendor and used in the Business.

“Assumed Liabilities” has the meaning specified in Section 3.1.

“ Assumed Payables” has the meaning specified in Section 3.1(a).

“ Authorization” means, with respect to any Person, any order, permit, approval, consent, waiver, licence or similar authorization of any Governmental Entity having jurisdiction over the Person.

“ Books and Records” means the following in any form relating to the Business: financial and accounting information and records, personnel records, sales and purchase information, customer and supplier lists, written lists of potential suppliers, production reports and records, equipment logs, operating guides and manuals, business reports, plans and projections, marketing and advertising materials, whether in written, printed, electronic

or computer printout form, or stored on computer discs or other data and software storage and media devices.

“ Business” means the retail sale of apparel, footwear, hardgoods and accessories (i) related to adrenaline and action sports and (ii) relating to licensed music intellectual property geared to the youth market, including in both cases in retail stores branded D-Tox, Amnesia and/ or Arsenic and apparel under the private label brands Rewind and Vexy.

“ Business Day” means any day of the year, other than a Saturday, Sunday or any day on which major banks are closed for business in Toronto, Ontario or Montreal, Québec.

“ Cash Float” has the meaning specified in Section 2.1(k).

“ Closing” means the completion of the transaction of purchase and sale contemplated in this Agreement.

“ Closing Date” means October 31, 2005 or such earlier or later date as the Purchaser and the Vendor may mutually agree in writing.

“ Contract” means any agreement, contract, licence, undertaking, engagement or commitment of any nature, written or oral, other than leases of real or immovable property.

“ Contractual Rights” has the meaning specified in Section 2.3.

“ Damages” means any loss, liability, damage or expense (including reasonable legal fees and expenses, including extra-judicial fees and costs, and costs on a solicitor-client basis) whether resulting from any action, suit, proceeding, arbitration, claim or demand that is instituted or asserted by a third party or any cause, matter, thing, act, omission or state of facts not involving a third party.

“ Deposit” has the meaning specified in Section 2.6(1).

“ Designated Employees” means those individuals who are Employees as at the Closing Date.

“ Direct Claim” means any cause, matter, thing, act, omission or state of facts not involving a Third Party Claim which entitles an Indemnified Person to make a claim for indemnification under this Agreement.

“ Dispute” has the meaning specified in Section 13.1.

“ Elections” has the meaning specified in Section 2.9(3).

“ Effective Time” means 12:01 a.m. (Toronto time) on the Closing Date.

“ Employees” means those Persons listed on Schedule 4.1(y) who are employed by the Vendor in the Business; including all Persons who are absent by reason of a leave approved by the Vendor, including parental or pregnancy leaves or leave related to receipt of short-term and long-term disability benefits or workers’ compensation benefits (collectively referred to as “ Leave Employees ” )

“ Employee Plans” means all the employee benefit, fringe benefit, supplemental unemployment benefit, bonus, incentive, profit sharing, termination, change of control, pension, retirement, stock option, stock purchase, stock appreciation, health, welfare, medical, dental, disability, life insurance and similar plans, programmes, arrangements or practices relating to the current or former directors, officers or employees of the Vendor’s Business, maintained, sponsored or funded by the Vendor, whether written or oral, funded or unfunded, insured or self-insured, registered or unregistered under which the Vendor may have any liability, whether present or future, absolute or contingent or otherwise, whether or not subject to any Laws, except that the term “ Employee Plans” will not include the Canada Pension Plan, the Québec Pension Plan, and all other statutory plans which the Vendor is required to participate in or to comply with, including any health insurance, employment insurance or workers compensation program sponsored by a government entity.

“ Employment Contracts” means each employment contract, whether oral or written, including retention agreements, between the Vendor and an Employee.

“ Environmental Laws” means all applicable Laws and agreements with Governmental Entities and all other statutory requirements relating to public health or the protection of the environment and all Authorizations issued pursuant to such Laws, agreements or statutory requirements.

“ Escrow Agent” has the meaning specified in Section 2.6(b).

“ Escrow Agreement” has the meaning specified in Section 2.6(b).

“ Escrow Certificate” has the meaning specified in Section 2.12.

“ Excluded Assets” has the meaning specified in Section 2.2.

“ Excluded Liabilities” has the meaning provided in Section 3.2.

“ Financial Statements ” means the financial statements of the Vendor for the fiscal years ending January 29, 2005, January 29, 2004 and January 29, 2003 respectively, consisting of a balance sheet and the accompanying statement of income, retained earnings and changes in financial position for the year then ended and all notes thereto.

“ GAAP” means accounting principles generally accepted in Canada as recommended in the Handbook of the Canadian Institute of Chartered Accountants, at the relevant time applied on a consistent basis.

“ Governmental Entity” means (i) any international, multinational, national, federal, provincial, state, municipal, local or other governmental or public department, central bank, court, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) any subdivision or authority of any of the foregoing, or (iii) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the above, and/ or (iv) any stock exchange.

“ Indemnified Person” means a Person with indemnification rights or benefits under Section 10.3 or Section 10.4, or otherwise under this Agreement.

“ Indemnifying Party” means a Party against which a claim may be made for indemnification under this Agreement, including pursuant to Article 10.

“ Intellectual Property” means domestic and foreign: (i) patents, applications for patents and reissues, divisions, continuations, renewals, extensions and continuations-in-part of patents or patent applications; (ii) proprietary and non-public business information, including trade secrets, confidential information, formulae and customer lists, and documentation relating to any of the foregoing; (iii) copyrights, copyright registrations and applications for copyright registration; (iv) mask works, mask work registrations and applications for mask work registrations; (v) designs, design registrations and design registration applications; (vi) trade names, business names, corporate names, domain names, website names and world wide web addresses, common law trade-marks, trade-mark registrations, trade mark applications, trade dress and logos and the goodwill associated with any of the foregoing, including D-Tox, Amnesia, Arsenic, Rewind and Vexy; and (vii) any other intellectual property used in the Business.

“ Interim Period” means the period between the opening of business on the date of this Agreement and the Closing.

“ Inventories” has the meaning specified in Section 2.1(c).

“ Inventory Adjustment” has the meaning specified in Section 2.11.

“ Laws” means any and all applicable (i) laws, constitutions, treaties, statutes, codes, ordinances, principles of common and civil law and equity, orders, decrees, rules, regulations and municipal by-laws whether domestic, foreign or international, (ii) judicial, arbitral, administrative, ministerial, departmental and regulatory judgments, orders, writs, injunctions, decisions, and awards of any Governmental Entity and (iii) policies, practices and guidelines of, or Contracts with, any Governmental Entity, in each case binding on or affecting the Person referred to in the context in which the word is used.

“ Lien” means any mortgage, charge, pledge, prior claim, hypothec, security interest, assignment, lien (statutory or otherwise), easement, servitude, title retention agreement or arrangement, conditional sale, deemed or statutory trust, restrictive covenant or other encumbrance of any nature or any other arrangement or condition which, in substance, secures payment or performance of an obligation.

“ New Store Payments” has the meaning specified in Section 2.10.

“ Notice” has the meaning specified in Section 14.1.

“ Ordinary Course” means, with respect to an action taken by a Person, that such action is consistent with the past practices of the Person and is taken in the ordinary course of the normal day-to-day operations of the Person.

“ Parties” means the Vendor, the Purchaser and any other Person who may become a party to this Agreement.

“ Person” means a natural person, partnership, limited partnership, limited liability partnership, corporation, limited liability corporation, unlimited liability company, joint stock company, trust, unincorporated association, joint venture or other entity or Governmental Entity, and pronouns have a similarly extended meaning.

“ Public Statement” has the meaning specified in Section 14.4.

“ Purchase Price” has the meaning specified in Section 2.4.

“ Purchase Price Adjustment” has the meaning specified in Section 2.13(1).

“ Purchased Assets” has the meaning specified in Section 2.1.

“ Purchased Contracts” has the meaning specified in Section 2.1(d).

“ Purchased Leases” means the leases of the Leased Properties described in Schedule 4.1(q) and the lease for the new D-Tox store in Hull, Quebec being opened in the Interim Period.

“ Purchaser” means West 49 Inc.

“ Replacement Plans” has the meaning specified in Section 12.2.

“ Required Authorizations ” has the meaning specified in Section 4.1(d)

“ Required Consents” has the meaning specified in Section 4.1(e).

“ Resale Restrictions Agreement” has the meaning specified in Section 2.7(a).

“ Share Escrow Agreement ” has the meaning specified in Section 2.7(a).

“ Tax Act” means the Income Tax Act, R.S.C. 1985 (5th Supp.) c.1, and the regulations thereunder, each as amended.

“ Tax Returns” means any and all returns, reports, declarations, elections, notices, forms, designations, filings, and statements (including estimated tax returns and reports, withholding tax returns and reports, and information returns and reports) filed or required to be filed in respect of Taxes. “ Taxes” means: (i) any and all taxes, duties, fees, excises, premiums, assessments, imposts, levies and other charges or assessments of any kind whatsoever imposed by any Governmental Entity, whether computed on a separate, consolidated, unitary, combined or other basis, including those levied on, or measured by, or described with respect to, income, gross receipts, profits, gains, windfalls, capital, capital stock, production, recapture, transfer, land transfer, license, gift, occupation, wealth, environment, net worth, indebtedness, surplus, sales, goods and services, Quebec sales, harmonized sales, use, value-added, excise, special assessment, stamp, withholding, business, franchising, health, employee health, payroll, workers’ compensation, employment or unemployment, severance, social services, social security, education, utility, surtaxes, customs, import or export, and including all license and registration fees and all employment insurance, health insurance and government pension plan premiums or contributions; (ii) all interest, penalties, fines, additions to tax or other additional amounts imposed by any Governmental Entity on or in respect of amounts of the type described in clause (i) above or this clause (ii); (iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) as a result of being a member of an affiliated, consolidated, combined or unitary group for any period; and (iv) any liability for the payment of any amounts of the type described in clauses (i) or (ii) as a result of any express or implied

obligation to indemnify or compensate any other Person or as a result of being a transferee or successor in interest to any party.

“ Third Party Claim” means any action, suit, proceeding, arbitration, claim or demand that is instituted or asserted by a third party against an Indemnified Person which entitles the Indemnified Person to make a claim for indemnification under this Agreement.

“ Transferred Employees” means those Designated Employees who are being transferred to the Purchaser’s pursuant to Section 12.1(1).

“ Vendor ” means Modes Freedom Inc.

Section 1.2 Gender and Number.

Any reference in this Agreement to gender includes all genders. Words importing the singular number only shall include the plural and vice versa.

Section 1.3 Headings, etc.

The provision of a Table of Contents, the division of this Agreement into Articles and Sections and the insertion of headings are for convenient reference only and are not to affect its interpretation.

Section 1.4 Currency.

All references in this Agreement to dollars or to $ are expressed in Canadian currency, unless otherwise specifically indicated.

Section 1.5 Certain Phrases, etc.

In this Agreement (i) the words “ including” , “ includes” and “ include” mean “ including (or includes or include) without limitation” , and (ii) the phrase “ the aggregate of” , “ the total of” , “ the sum of” , or a phrase of similar meaning means “ the aggregate (or total or sum), without duplication, of” .

Section 1.6 Knowledge.

Where any representation or warranty contained in this Agreement is expressly qualified by reference to the knowledge of the Vendor, it shall be deemed to refer to the knowledge of the Vendor. The Vendor confirms that it has made due and diligent inquiry of such Persons (including, where applicable, appropriate officers or employees of the Vendor) as it considers necessary as to the matters that are the subject of the representations and warranties.

Section 1.7 Accounting Terms.

All accounting terms not specifically defined in this Agreement are to be interpreted in accordance with GAAP.

Section 1.8 Incorporation of Schedules.

The schedules attached to this Agreement form an integral part of it for all purposes of this Agreement.

Section 1.9 References to Persons and Agreements.

Any reference in this Agreement to a Person includes its predecessors, successors and permitted assigns (subject to any limitations on assignment provided herein). Any reference to this Agreement or any other agreement or document is a reference to this Agreement or such other agreement or document as it may have been, or may from time to time be, amended, restated, replaced, supplemented or novated, and shall include all schedules to it.

Section 1.10 Statutes.

Except as otherwise provided in this Agreement, any reference in this Agreement to a statute refers to such statute and all rules and regulations made under it, as it or they may have been or may from time to time be amended or reenacted.

Section 1.11 Non-Business Days.

Whenever payments are to be made or an action is required to be taken on a day which is not a Business Day, such payment shall be made or such action shall be required to be taken on or not later than the next succeeding Business Day. ARTICLE 2 PURCHASED ASSETS AND PURCHASE PRICE

Section 2.1 Purchase and Sale.

Subject to the terms and conditions of this Agreement, the Vendor agrees to sell, assign and transfer to the Purchaser and the Purchaser agrees to purchase from the Vendor on the Closing Date, effective as of the Effective Time, the following property and assets of the Business wheresoever situate (other than the Excluded Assets) (collectively, the assets being acquired are the “ Purchased Assets ” ), including:

(a) Machinery, Equipment and Supplies. All equipment, furniture, furnishings and accessories and supplies of all kinds including office supplies, owned by the Vendor situate in the Leased Properties and used in connection with the Business, including those listed and described in Schedule 2.1(a) and other than those supplies used in shipment or sale of Inventories which are included in Section 2.1(b);
(b) Inventories. All inventories of the Business (the “ Inventories” including (i) finished goods, packing and shipping supplies, and (ii) all
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other materials and supplies on hand to be used or consumed, including shopping bags;

(c) Prepaid Expenses. All prepaid expenses of the Business;
(d) Contracts. The full benefit of the Contracts listed in Schedule 2.1(d) (the “ Purchased Contracts ” );
(e) Leased Property. All right, title and interest of the Vendor in and benefits of the Vendor to and under the Purchased Leases;
(f) Authorizations. All Authorizations, owned, held or used by the Vendor in connection with the Business, to the extent that they are transferable;
(g) Intellectual Property. All right, title and interest of the Vendor in and to the Intellectual Property owned by, licensed to or used by the Vendor in connection with the Business;
(h) Goodwill. The goodwill of the Business, including the exclusive right of the Purchaser to (i) represent itself as carrying on the Business in continuation of and in succession to the Vendor, and (ii) use any words indicating that the Business is so carried on, including all of the Vendor’s right, title and interest in and to the names “ D-Tox” “ Amnesia” , “ Arsenic” , “ Rewind” and “ Vexy” , or any variation of them, together with the rights, if any, to telephone and facsimile numbers used by the Business in the Leased Properties and internet domain names used in connection with the Business;
(i) Head Office Assets. The Assets listed on Schedule 2.2(f);
(j) Claims. All claims of the Vendor relating to the Business or the Purchased Assets, whether choate or inchoate, known or unknown, contingent or otherwise; and
(k) Cash Float. The cash float typically maintained at each of the retail stores of the Business in an amount not to exceed $200 for each retail store (the “ Cash Float ” ).

Section 2.2 Excluded Assets.

The Purchased Assets shall not include any of the following assets (collectively, the “ Excluded Assets ” ):

(a) all cash and cash equivalents other than the Cash Float;
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(b) the minute books and corporate records of the Vendor;
(c) all Employee Plans;
(d) insurance policies of the Vendor;
(e) all assets utilized by the Business situate in the Vendor’s warehouse and distribution centre;
(f) all assets utilized by the Business situate in the Vendor’s head office other than the assets set forth on Schedule 2.2(f).

Section 2.3 Assignment of Contracts.

Nothing in this Agreement will be construed as an attempt to assign any Purchased Contract or Purchased Lease which is not assignable in whole or in part without the consent of the other party or parties to it, unless such consent has been given on terms satisfactory to the Purchaser, acting reasonably (and in this Agreement, the benefits under the non-assigned Purchased Contracts and Purchased Leases are referred to as the “ Contractual Rights ” ). In accordance with Section 6.6, the Vendor will use its reasonable best efforts to obtain such consents on terms satisfactory to the Purchaser, acting reasonably, and will take all actions described in Section 11.2 to preserve the full benefit of the Purchased Contracts, the Purchased Leases and the Contractual Rights for the Purchaser.

Section 2.4 Purchase Price.

The consideration (the “ Purchase Price” ) payable by the Purchaser to the Vendor for the Purchased Assets will be 1,100,000 common shares of the Purchaser issued from treasury (the “ Issued Shares ” ) (subject to the Share Escrow Agreement) and $7,275,000, increased by the amounts, if any, required to be paid pursuant to Sections 2.10 to 2.13 inclusive.

Section 2.5 Allocation.

The Vendor and the Purchaser agree to allocate the Purchase Price in accordance with the provisions of Schedule 2.5. The Parties agree to execute and file all of their own Tax Returns and prepare all of their own financial statements and other instruments on the basis of this allocation.

Section 2.6 Deposit

(1) The Parties acknowledge that Stikeman Elliott LLP has received from the Purchaser a deposit in the amount of $100,000 (the “ Deposit ” ).
(2) The Deposit together with all accrued interest or other proceeds will be applied on Closing in satisfaction of an equivalent amount of the Purchase Price. If the Closing does not occur for any reason other than a default by the
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Purchaser in the performance of its obligations under this Agreement, the full amount of the deposit together with all accrued interest shall be immediately returned to the Purchaser.

(3) If the Closing does not occur because of a default by the Purchaser in the performance of its obligations under this Agreement, the full amount of the deposit together with all accrued interest shall become the property of, and may be retained by, the Vendor as liquidated damages.

Section 2.7 Payment of the Purchase Price.

At the Closing, the Purchase Price shall be paid and satisfied, subject to adjustment in accordance with Sections 2.10 to 2.13 inclusive, as follows:

(a) by the Purchaser issuing and delivering certificates for 1,100,000 Issued Shares to the Vendor, of which
(i) 550,000 Issued Shares are subject to a share escrow agreement in the form attached as Schedule 2.7(a)(i) (the “ Share Escrow Agreement ” ); and
(ii) the remaining 550,000 Issued Shares are subject to a resale restrictions agreement in the form attached as Schedule 2.7(a)(ii) (the “ Resale Restrictions Agreement” );
(b) by the Purchaser paying $1,500,000 to or to the order of Kaufman Laramee LLP, in trust (the “ Escrow Agent” ) on account of the potential Purchase Price Adjustment by bank draft, certified cheque or wire transfer of immediately available funds, to be held in escrow pursuant to the terms and conditions of an escrow agreement substantially in the form of the escrow agreement attached as Schedule 2.7(b) (the “ Escrow Agreement” );
(c)
by the Purchaser assuming the Assumed Payables;
(d) by payment of the deposit and interest accrued thereon under Section 2.6(1) to the Vendor by certified cheque, bank draft or wire transfer of immediately available funds; and
(e) by the Purchaser paying $7,275,000 less the amount paid under Section 2.7(d) to or to the order of the Vendor, by bank draft, certified cheque or wire transfer of immediately available funds.
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Section 2.8 No Effect on Other Rights.

The determination and adjustment of the Purchase Price in accordance with the provisions of this Article shall not limit or affect any other rights or causes of action either the Purchaser or the Vendor may have with respect to the representations, warranties, covenants and indemnities in its or their favour contained in this Agreement.

Section 2.9 Payment of Sales Tax, and GST/QST and Income Tax Elections.

(1) The Purchaser shall be liable for and shall pay all federal and provincial sales taxes, GST and all other taxes (excluding income or capital taxes), duties, registration charges or other like charges, and penalties or interest related thereto, properly payable upon and in connection with the conveyance and transfer of the Purchased Assets by the Vendor to the Purchaser.
(2) The Purchaser may withhold the amount of any taxes under the Act respecting the Quebec Sales Tax (Quebec) and/ or the Excise Tax Act (Canada) until the Vendor is legally required to remit such taxes under applicable law to enable the Purchaser to seek to receive its refund before such payment is legally required to be remitted by the Vendor. The Purchaser shall submit such payment to the Vendor within two (2) Business Days before the Vendor is legally required to remit such payment.
(3) The Vendor and the Purchaser agree to jointly elect under Section 85 of the Tax Act and Section 518 of the Quebec Taxation Act (the “ Elections ” ) in respect of such of the Purchased Assets which are paid for, in whole or in part, by the issuance of the Issued Shares, as described in Section 2.5. The elected amount referred to in paragraph 85(1)(a) of the Tax Act, which applies on a property by property basis, shall be determined in the sole discretion of the Vendor within the limits prescribed by subsection 85(1). The Vendor and the Purchaser agree that the prescribed forms for the Elections will be prepared and signed by the Vendor and the Purchaser agrees to sign the prescribed forms and return them to the Vendor within fifteen (15) days of receipt of the completed and signed forms.
(4) The Vendor and the Purchaser agree that each of them will elect in prescribed form pursuant to paragraph 56.4(3) of the Tax Act and the corresponding provisions of the Quebec Taxation Act in respect of the restrictive covenant granted by the Vendor pursuant to the non-competition, non-solicitation and confidentiality agreement referred to in Section 7.1(e)(v), and each of them acknowledges and agrees that the Vendor will file such prescribed forms, together with a copy of such agreement, with the Canada Revenue Agency and the Minister of Revenue of Quebec on or before the filing-due date for the its taxation year that includes the date hereof. The Vendor and the Purchaser
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agree to cooperate in good faith to determine the manner and timing of compliance with section 56.4 of the Tax Act and the corresponding provisions of the Quebec Taxation Act in the event that such provisions (which, at the date hereof, is a legislative proposal of the Minister of Finance (Canada)) has not been enacted prior to the applicable filing-due dates for such tax returns and the prescribed forms referred to above; and further agree to adjust their obligations under this Section 2.9(5) appropriately in the event that section 56.4 or the corresponding provisions of the Quebec Taxation Act is not enacted, or is enacted in terms different than that proposed by the Minister of Finance (Canada) in draft legislation released on July 18, 2005.

Section 2.10 New Store Adjustment.

The cash portion of the Purchase Price will be increased, dollar-for-dollar, for each dollar of the New Store Payments that the Vendor has paid or will, prior to the Closing Date, pay net of tenant allowances, which increase shall be paid by certified cheque, bank draft or wire transfer of immediately available funds as provided in Section 2.13. “ New Store Payments ” means amounts paid or payable prior to the Closing Date for (i) the 4,000 to 5,000 square feet Repentigny store to be sub-leased by the Vendor on terms satisfactory to the Purchaser and consistent with the existing lease, which sub-lease will (subject to receiving any consent required on terms satisfactory to the Purchaser) at Closing become one of the Purchased Leases; (ii) the St. Dorothy store which lease will (subject to receiving any consent required on terms satisfactory to the Purchaser) at Closing become one of the Purchased Leases; (iii) the Rosemere store which lease will (subject to receiving any consent required on terms satisfactory to the Purchaser) at Closing become one of the Purchased Leases, with an estimated cost of $50,000 to $60,000 net of tenant allowance; and (iv) the new St. Bruno Amnesia/ D-Tox store, which lease will (subject to receiving any consent required on terms satisfactory to the Purchaser) at Closing become one of the Purchased Leases, with an estimated cost of $400,000, net of tenant allowance. The Parties have agreed that there will be no adjustment to the Purchase Price for the conversion of the Amnesia St. Bruno store to a Freedom store (which store is not being purchased hereunder) and the conversion of the Freedom Angrignon store to a D-Tox store (which will, subject to receiving any consent required on terms satisfactory to the Purchaser, at Closing become one of the Purchased Leases), the cost of which conversions it has been agreed offset one another.

Section 2.11 Inventory Adjustment.

The cash portion of the Purchase Price will be increased, dollar for dollar, by an amount equal to the Inventory Adjustment, which increase shall be paid by certified cheque, bank draft or wire transfer of immediately available funds as provided in Section 2.13. A physical inventory count will be completed by the Purchaser (or its auditor or other representative) at each store that is part of the Business as well as at the Vendor’s warehouse for inventory related to the Business

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on a date agreed to in writing between the Purchaser and the Vendor as close as practicable to the Closing Date. The “ Inventory Adjustment ” means the cost paid for the aggregate inventory that are part of the Business in the Vendor’s stores and the Vendor’s warehouse resulting from such physical inventory and goods in transit that have been purchased by Valino International Coverup Inc. (“ Valino ” ) for and on behalf of the Business all of which shall be reduced in the manner set forth in Schedule 2.11.

Section 2.12 Prepaid Expense Adjustment.

The cash portion of the Purchase Price will be increased, dollar for dollar, by an amount equal to the book value of the reasonable prepaid expenses of the Business and the Cash Float at the Closing Date, which increase shall be paid by certified cheque, bank draft or wire transfer of immediately available funds as provided in Section 2.13.

Section 2.13 Purchase Price Adjustment Determination.

(1) Within 90 days following the Closing Date (or such other date as is mutually agreed to by the Vendor and the Purchaser in writing), the Purchaser will prepare and deliver to the Vendor a draft statement (the “ Draft Statement of Adjustments” ) setting forth the sum of (i) the amount of New Store Payments, Inventory Adjustment, and book value of the prepaid expenses of the Business and the Cash Float at the Closing Date, less (ii) the amount of the Assumed Payables prepared as of the Effective Time (the result of such calculation being the “ Purchase Price Adjustment ” ) and, in the case of the Inventory Adjustment, based on the physical inventory count described in Section 2.11, together with notice to the Escrow Agent releasing to the Vendor from the escrow funds an amount equal to the aggregate of the amounts set forth in the Draft Statement of Adjustments.
(2) The Vendor will have a period of 10 Business Days to review the Draft Statement of Adjustments following receipt of it, at its expense. The Vendor must notify the Purchaser in writing if it has any objections to the Draft Statement of Adjustments within such 10 Business Day period. The notice of objection must contain a statement of the basis of each of the Vendor's objections and each amount in dispute. The Purchaser will provide access, upon every reasonable request, to the Vendor and its auditors, to all work papers of the Purchaser and its auditors, accounting books and records and the appropriate personnel to verify the accuracy, presentation and other matters relating to the preparation of the Draft Statement of Adjustments , subject to execution and delivery by the Vendor and its auditors of any agreement or other document, including any release, waiver or indemnity that the Purchaser’s auditors require prior to providing such access .
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(3) If the Vendor sends a notice of objection of the Draft Statement of Adjustments, the Parties will work expeditiously and in good faith in an attempt to resolve such objections within 10 Business Days following the date of notification by the Vendor to the Purchaser of such objections. Failing resolution of any objection to the Draft Statement of Adjustments raised by the Vendor, the dispute will be submitted for determination to an independent firm of chartered accountants mutually agreed to by the Vendor and the Purchaser (and, failing such agreement between the Vendor and the Purchaser within a further period of 10 Business Days, such independent firm of chartered accountants shall be BDO Dunwoody LLP, or if such firm is unable or unwilling to act, Ernst & Young LLP). The determination of such firm of chartered accountants will be final and binding upon the Parties and will not be subject to appeal, absent manifest error. Such firm of chartered accountants are deemed to be acting as experts and not as arbitrators.
(4) If the Vendor does not notify the Purchaser of any objection within the 10 Business Day period, the Vendor is deemed to have accepted and approved the Draft Statement of Adjustments and such Draft Statement of Adjustments will be final, conclusive and binding upon the Parties, and will not be subject to appeal, absent manifest error. The Draft Statement of Adjustments will become the “ Final Statement of Adjustments” on the next Business Day following the end of such 10 Business Day period in such circumstances.
(5) If the Vendor sends a notice of objection, the Parties will revise the Draft Statement of Adjustments to reflect the final resolution or final determination of such objections under Section 2.13(3) within 5 Business Days following such final resolution or determination. Such revised Draft Statement of Adjustments will be final, conclusive and binding upon the Parties, and will not be subject to appeal, absent manifest error. The Draft Statement of Adjustments will become the “ Final Statement of Adjustments” on the next Business Day following revision of the Draft Statement of Adjustments under this Section 2.13(5). In the event the Purchase Price Adjustment in the Final Statement of Adjustments exceeds the Purchase Price Adjustment paid by the Escrow Agent to the Vendor under Section 2.13(1), the Escrow Agent shall release to the Vendor from the escrow funds the difference and the remaining escrow funds, if any, shall be released to the Purchaser. If the escrow funds are insufficient to make such payment to the Vendor, the Purchaser shall within two (2) Business Days of the date that the Draft Statement of Adjustments became the Final Statement of Adjustments pay the amount of such shortfall to the Vendor by certified cheque or wire transfer of immediately available funds. Any amounts not paid when due in this Section 2.13(5) shall bear interest at the prime rate charged by the Canadian Imperial Bank of Commerce for loans in Canadian dollars to Canadian customers plus
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2% per annum from the date payment is due until the date payment is received by the Vendor, compounded monthly.

(6) The Vendor and the Purchaser will each bear their own fees and expenses, including the fees and expenses of their respective auditors, in preparing or reviewing, as the case may be, the Draft Statement of Adjustments. In the case of a dispute and the retention of a firm of chartered accountants to determine such dispute, the costs and expenses of such firm of chartered accountants shall be borne equally by the Vendor and the Purchaser. However, the Vendor and the Purchaser will each bear their own costs in presenting their respective cases to such firm of chartered accountants.
(7) The Parties agree that the procedure set forth in this Section 2.13 for resolving disputes with respect to the Draft Statement of Adjustments is the sole and exclusive method of resolving such disputes. This Section 2.13(7) will not prohibit any Party from instigating litigation to compel specific performance of this Section 2.13 or to enforce the determination of the independent firm of chartered accountants. Where any payment required to be made by the Vendor to the Purchaser is not made within the time period required under this Section 2.13, in addition to any other remedy to which the Purchaser may be entitled, the Purchaser may provide written notice to the Vendor and the Escrow Agent requiring the Escrow Agent to release to the Purchaser from the funds held in escrow an amount equal to the amount required to be so paid.

ARTICLE 3 ASSUMED LIABILITIES

Section 3.1 Assumed Liabilities.

Subject to Closing, the Purchaser agrees to discharge, perform and fulfil and to indemnify and save harmless the Vendor from and against the following obligations and liabilities, if any, of the Vendor with respect to the Business and the Purchased Assets (collectively, the “ Assumed Liabilities ” ):

(a) all accounts payable relating to the Business reflected in the Books and Records or incurred in the Ordinary Course at or prior to the Effective Time and not yet reflected in the Books and Records but due or accruing due after the Effective Time including any payables owing by the Vendor to Valino in respect of goods in transit which have been purchased by Valino for and on behalf of the Business (collectively, the “ Assumed Payables ” ). An estimate of the Assumed Payables as at the Effective Time will be made by the Vendor and evidenced by a certificate of the Chief Financial Officer of the Vendor to be delivered two Business Days prior to the Closing Date;
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(b) all obligations and liabilities under the Purchased Contracts and the Purchased Leases arising in respect of the period after the Effective Time and not related to any matter, circumstance or default existing at, prior to or as a consequence of Closing; and
(c) all other obligations and liabilities expressly assumed under this Agreement as of and from the Effective Time.

Section 3.2 Excluded Liabilities

The Purchaser shall not assume and shall have no obligation to discharge, perform or fulfil, and the Vendor will indemnify the Purchaser from and against, any and all Excluded Liabilities. “ Excluded Liabilities ” means any and all liabilities and obligations, contingent or otherwise of the Vendor other than the Assumed Liabilities, including:

(a) liabilities incurred or accruing due prior to the Effective Time under the Purchased Contracts and Purchased Leases, except if reflected as an Assumed Payable;
(b) all liabilities and obligations under all Contracts to which the Vendor is a party which are not part of the Purchased Assets and under the Purchased Contracts and Purchased Leases in respect of the period prior to the Effective Time;
(c) any assessment or reassessment for Taxes of the Vendor or, if incurred or accruing due prior to the Effective Time, relating to the Business or the Purchased Assets;
(d) any product liability or warranty liability arising at any time in respect of products or services of the Business produced or performed on or prior to the Effective Time, even though a claim may be made or filed after the Effective Time;
(e) all liabilities and obligations of the Vendor described Section 12.3(1); and
(f) all liabilities and obligations relating to the Employees including those arising out of the Employment Contracts or otherwise, with the exception of any liability expressly assumed by the Purchaser under this Agreement in respect of any Transferred Employee pursuant to Article 12.
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Section 3.3 Assumption of Contractual Liabilities.

Notwithstanding anything in this Agreement, the Purchaser shall not assume and shall have no obligation to discharge any liability or obligation under or in respect of any Purchased Contract or Purchased Lease (i) which is not assignable and/ or assumable in whole or in part without the consent of the other party or parties to it, unless such consent has been obtained on terms satisfactory to the Purchaser, acting reasonably, or unless the Vendor shall have performed their obligations under Section 11.2 and the value of such Purchased Contracts, Purchased Leases and Contractual Rights shall have enured to the Purchaser, or (ii) which cannot be assumed by the Purchaser without the consent of the other party or parties, unless such consent shall have been given on terms satisfactory to the Purchaser, acting reasonably.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE VENDOR

Section 4.1 Representations and Warranties of the Vendor

The Vendor represents and warrants as follows to the Purchaser and acknowledges and confirms that the Purchaser is relying upon the representations and warranties in connection with the purchase by the Purchaser of the Purchased Assets and the assumption by the Purchaser of the Assumed Liabilities:

Corporate Matters

(a) Incorporation and Qualification, Etc . The Vendor is a corporation incorporated and existing under the laws of Canada and has the corporate power to own and operate its property, carry on its business and enter into and perform its obligations under this Agreement and each of the Ancillary Agreements to which it is or will at Closing be a party. The Vendor is qualified, licensed or registered to carry on business in the Province of Quebec. The Province of Quebec is the only jurisdiction in which the nature of the Purchased Assets or the Business makes such qualification necessary or where the Vendor owns or leases any material assets or property or conduct any material business relating to the Business.
(b) Corporate Authorization . The execution and delivery of and performance by the Vendor of this Agreement and each of the Ancillary Agreements to which it is or will at Closing be a party and the consummation of the transactions contemplated by them have been duly authorized by all necessary corporate or other action on the part of the Vendor.
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(c) No Conflict . Except as disclosed in Schedule 4.1(d) and except for the consents, approvals and waivers described in Schedule 4.1(e), the execution and delivery of and performance by the Vendor of this Agreement and each of the Ancillary Agreements to which it is or will at Closing be a party:
(i) do not and will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) constitute or result in a violation or breach of, or conflict with, or allow any other Person to exercise any rights under, any of the terms or provisions of its constating documents, partnership agreement or by-laws, as applicable;
(ii) do not and will not (or would not with the giving of notice, the lapse of time or the happening or any other event or condition) constitute or result in a breach or violation of, or conflict with or allow any other Person to exercise any rights under, any of the terms or provisions of any Contracts, Leases or instruments to which it is a party or pursuant to which any of its assets or property may be affected;
(iii) do not and will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) constitute or result in a breach or violation of, or conflict with, or allow any Person to exercise any rights under, any orders, decrees or judgments to which it is a party or pursuant to which any of its assets or property may be affected;
(iv) do not and will not result in a breach of, or cause the termination or revocation of, any Authorization held by the Vendor or necessary to the ownership of the Purchased Assets or the operation of the Business; and
(v) do not and will not result in the violation of any Law.
(d) Required Authorizations . There is no requirement on the part of the Vendor to make any filing with, give any notice to, or obtain any Authorization of, any Governmental Entity as a condition to the lawful completion of the transactions contemplated by this Agreement (and the assignment of the Purchased Assets to a wholly-owned subsidiary of the Purchaser contemporaneously at Closing and to the Purchaser’s and such subsidiary’s bank as security), except for the filings, notifications and Authorizations described under the heading
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“ Required Authorizations” in Schedule 4.1(d) (the “ Required Authorizations ” ).

(e) Required Consents . There is a requirement to obtain the consent, approval or waiver under each Purchased Lease and all Purchased Contracts to the transactions contemplated by this Agreement (and the assignment of the Purchased Assets to a wholly-owned subsidiary of the Purchaser contemporaneously at Closing and to the Purchaser’s and such subsidiary’s bank as security) and there is also a requirement to obtain the consents listed under the heading “ Required Consents” in Schedule 4.1(e) (the “ Required Consents ” ).
(f) Execution and Binding Obligation . This Agreement and each of the Ancillary Agreements to which the Vendor is or will at Closing be a party have been duly executed and delivered by the Vendor and constitute legal, valid and binding agreements enforceable against it in accordance with their respective terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement, fraudulent preference and conveyance, assignment and preference and other laws of general application affecting the enforcement of creditors' rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction.
(g) Residence of the Vendor; GST/QST Registration . The Vendor is not a non-resident of Canada within the meaning of the Tax Act. The Vendor is a registrant for purposes of any Taxes imposed under Part IX of the Excise Tax Act and Chapter VIII of An act Respecting the Quebec Sales Tax and its registration numbers are as follows:
(i) Federal: 890451966;
(ii) Quebec: 1020324984.

General Matters Relating to the Business

(h) Conduct of Business in Ordinary Course . Except as set forth in Schedule 4.1(h), since January 29, 2005 the Business has been carried on in the Ordinary Course. Without limiting the generality of the foregoing, except as set forth in Schedule 4.1(h), since January 29, 2005 the Vendor has not:
(i) sold, transferred or otherwise disposed of or diminished the value of any assets used in the Business except for (A) assets which are obsolete and which individually or in the aggregate
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do not exceed $5,000, or (B) inventory sold in the Ordinary Course;

(ii) terminated the employment of any officer or other senior employees of the Vendor’s Business or granted any severance or termination pay to any officer or senior employees of the Vendor’s Business;
(iii) made any change (whether or not generally applicable) in the rate of wages, salaries, bonuses or other remuneration of any Employee except as may be required by the terms of a Material Contract or in the Ordinary Course as a result of a general salary increase not to exceed 3% of the prior year’s salary;
(iv) made any change (whether or not generally applicable) in the benefits to which Employees are entitled under any Employee Plan or created any new Employee Plan for any Employee;
(v) suffered any extraordinary loss, in respect of the Business or any of the Purchased Assets, whether or not covered by insurance;
(vi) suffered any material shortage or any cessation or interruption of inventory shipments, supplies or ordinary services, in connection with the Business;
(vii) compromised or settled any litigation, proceeding or other governmental action relating to the Purchased Assets or the Business;
(viii) cancelled or reduced any of its insurance coverage on the Business or any of the Purchased Assets;
(ix) made any change in any method of accounting practice; and
(x) authorized, agreed or otherwise committed, whether or not in writing, to do any of the foregoing.
(i) No Material Adverse Change . Since January 29, 2005 there has not been any material adverse change in the affairs, prospects, operations or condition of the Vendor, any of the Purchased Assets, or the Business and, to the knowledge of the Vendor, no event has occurred or circumstance exists which may result in such a material adverse change.
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(j) Compliance with Laws . The Vendor is conducting and has always conducted the Business in compliance with all applicable Laws of each jurisdiction in which the Business is carried on, other than acts of noncompliance which, individually or in the aggregate, are not material.
(k) Authorizations . The Vendor owns, holds, possesses or lawfully uses in the operation of the Business, all Authorizations which are necessary for it to conduct the Business as presently or previously conducted or for the ownership and use of the Purchased Assets in compliance with all applicable Laws. All Authorizations material to the Vendor or the Business, and all Tax Authorizations, are listed in Schedule 4.1(k). Each Authorization is valid, subsisting and in good standing, the Vendor is not in material default or breach of any Authorization and, to the knowledge of the Vendor, no proceeding is pending or threatened to revoke or limit any Authorization. All Authorizations are not assignable to the Purchaser and the Purchaser will have to obtain its own Authorizations.

Matters Relating to the Purchased Assets

(l) Sufficiency of Purchased Assets . With the exception of inventory in transit and equipment in transit, all of the Purchased Assets are situate at the Leased Properties or at the Vendor’s warehouse in the City of Montreal.
(m) Title to the Purchased Assets . Except for the Excluded Assets, the property and assets included in the Purchased Assets (i) constitute all of the assets used by the Vendor in carrying on the Business, and (ii) include all the assets set forth on or reflected on the Financial Statements, other than assets acquired since the date of the Financial Statements or sold, transferred or otherwise disposed of in accordance with this Agreement since the date of the Financial Statements. The Vendor has legal and beneficial ownership of the Purchased Assets, free and clear of all Liens.
(n) No Options, etc. to Purchase Assets. Except for the Purchaser under this Agreement, no Person has any written or oral agreement, option, understanding or commitment, or any right or privilege capable of becoming such for the purchase or other acquisition from the Vendor of any of the Purchased Assets, other than (i) Purchased Assets which are obsolete and which individually or in the aggregate do not exceed $5,000 or (ii) inventory to be sold in the Ordinary Course.
(o) Condition of Tangible Assets . The equipment and other tangible personal and movable property of the Vendor comprising part of the
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Purchased Assets are structurally sound, in good operating condition and repair having regard to their use and age and are adequate and suitable for the uses to which they are being put. None of such equipment or other property is in need of maintenance or repairs except for routine maintenance and repairs in the Ordinary Course that are not material in nature or cost.

(p) Deleted Intentionally.
(q) Leases . The Vendor is not a party to, or under any agreement to become a party to, any lease with respect to real or immovable property which is used or to be used in the Business other than the Purchased Leases, copies of which have been provided to the Purchaser. Each Purchased Lease is in good standing, creates a good and valid leasehold estate in the Leased Properties thereby demised and is in full force and effect without amendment, except as disclosed in Schedule 4.1(q). With respect to each Purchased Lease (i) all rents and additional rents have been paid, (ii) no waiver, indulgence or postponement of the lessee’s obligations has been granted by the lessor, (iii) except for the Required Consents, there exists no event of default or event, occurrence, condition or act (including the purchase of the Purchased Assets) which, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a default under the Purchased Lease, and (iv) to the knowledge of the Vendor, all of the covenants to be performed by any other party under the Purchased Lease have been fully performed. Each of the Leased Properties is adequate and suitable for the purposes for which it is presently being used and the Vendor has adequate rights of ingress and egress into each of the Leased Properties for the operation of the Business in the Ordinary Course. Schedule 4.1(q) contains a list of all of the Purchased Leases setting out, in respect of each Purchased Lease, the parties to the Purchased Lease, a description of the leased premises (by municipal address and proper legal description), the term of the Purchased Lease, the rental payments under the Purchased Lease (specifying any breakdown of base rent and additional rents), any rights of renewal and the term thereof, and any restrictions on assignment, amalgamation or change of control of the Vendor or sale of any of the Purchased Assets.
(r) Material Contracts . The Vendor is not a party to any Contracts in connection with the Purchased Assets or the Business requiring payment in excess of $5,000 over the life of the Contract (other than inventory purchases in the Ordinary Course), which are with Persons with whom the Vendor does not deal at arm’s length within the
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meaning of the Tax Act that expire more than one year after the date hereof or that are terminable on more than 30 days notice, except those Contracts listed in Schedule 4.1(r).

(s) No Breach of Purchased Contracts . The Vendor has performed all of the obligations required to be performed by it or them and are entitled to all benefits under the Purchased Contracts. The Vendor is not alleged to be in default of any Purchased Contract. Each of the Purchased Contracts is in full force and effect, unamended, and there exists no default or event of default or event, occurrence, condition or act (including the purchase of the Purchased Assets) which, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a default or event of default under any Purchased Contract other than the Required Consents. True, correct and complete copies of all Purchased Contracts have been delivered to the Purchaser.
(t) Intellectual Property .
(i) Attached as Schedule 4.1(t) is a list of all Intellectual Property owned by or licensed to the Vendor and included in the Purchased Assets used by the Vendor in carrying on the Business.
(ii) Schedule 4.1(t) includes complete and accurate particulars of all registrations and applications for registration of the Intellectual Property included in the Purchased Assets. All of such owned Intellectual Property which has been registered or applied for has been properly maintained and renewed by the Vendor in accordance with all applicable Laws.
(iii) Except as set forth in Schedule 4.1(t), the Vendor owns all right, title and interest in and to the Intellectual Property listed as owned by the Vendor, free and clear of all Liens and the Vendor has the right to use all such Intellectual Property used by it in carrying on the Business.
(iv) Except as set forth in Schedule 4.1(t), the Vendor is not a party to or bound by any Contract or other obligation that limits or impairs its ability to use, sell, transfer, assign or convey, or that otherwise affects, any of the Intellectual Property. Except as set forth in Schedule 4.1(t), the Vendor has not granted to any Person any right, license or permission to use all or any portion of, or otherwise encumbered any of its rights in, or to, any of the
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Intellectual Property owned by or licensed to or used by the Vendor. Except as set forth in Schedule 4.1(t), the Vendor is not obligated to pay any royalties, fees or other compensation to any Person in respect of its ownership, use or license of any Intellectual Property.

(v) To the knowledge of the Vendor, the operation of the Business does not infringe upon the Intellectual Property rights of any Person. Except as set forth in Schedule 4.1(t), no claims have been asserted or are threatened by any Person alleging that the conduct of the Business, including the use of the Intellectual Property included in the Purchased Assets owned by, licensed to or used by the Vendor, infringes upon any of their Intellectual Property rights. To the knowledge of the Vendor, there are no valid grounds for any such bona fide claims by any such Persons alleging a conflict with or infringement of their Intellectual Property rights. To the knowledge of the Vendor, there is no state of facts that casts doubt on the validity or enforceability of any of the Intellectual Property included in the Purchased Assets.
(vi) The transaction contemplated by this Agreement and the continued operation of the Business will not violate or breach the terms of any Intellectual Property license, or entitle any other party to any such Intellectual Property license to terminate or modify it, or otherwise adversely affect the Vendor’s rights under it.
(vii) Except as set forth in Schedule 4.1(t), following Closing, the Purchaser will be entitled to continue to use, practice and exercise rights in, all of the Intellectual Property, owned by, licensed to and used by the Vendor, to the same extent and in the same manner as used, practiced and exercised by the Vendor prior to Closing, without financial obligation to any Person.
(viii) To the knowledge of the Vendor, no Person is currently infringing any of the Intellectual Property owned by, licensed to or used by the Vendor.
(ix) Except as set forth in Schedule 4.1(t), following the Closing, none of the Vendor or any affiliate of the Vendor will retain or use any of the Intellectual Property included in the Purchased Assets or used in the Business.
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(x) None of the Intellectual Property included in the Purchased Assets has been developed by the Vendor with the assistance of or funding of any third party. Vendor’s owned Intellectual Property has been developed with the assistance or use of any funding from third parties or third party agencies, including funding from any Governmental Entity.
(xi) The Vendor’s Internet websites related to the Business are currently under construction. Schedule 4.1(t) also sets out any applicable Internet hosting Contract including the term of the Contract, associated costs, corporate information of the host and amount of bandwidth to which the server is connected to the Internet. In addition, Schedule 4.1(t) sets out the name and IP address of the Internet Web homepage of the Business, when the homepage was granted and the date of the next annual payment.

Financial Matters

(u) Books and Records . All accounting and financial books and records of the Vendor relating to the Business have been fully, properly and accurately kept and are complete in all material respects. The books and records and other data and information relating to the Business are not recorded, stored, maintained, operated or otherwise wholly or partly dependent upon or held by any means (including any electronic, mechanical or photographic process, whether computerized or not) which will not be available to the Purchaser in the Ordinary Course.
(v) Financial Statements . The Financial Statements have been prepared in accordance with GAAP applied on a basis consistent with those of previous fiscal years and present fairly:
(i) the assets, liabilities, (whether accrued, absolute, contingent or otherwise) and the financial position of the Vendor as at the respective dates of the relevant statements; and
(ii) the sales and earnings of the Vendor during the periods covered by the Financial Statements.

True, correct and complete copies of the Financial Statements are attached as Schedule 4.1(v).

(w) No Liabilities . There are no liabilities or obligations of any nature whatsoever, whether known, unknown, due, to become due, direct,
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indirect, absolute, contingent or otherwise and whether or not required to be accrued on the financial statements of the Vendor that would affect the Purchased Assets in any manner.

Particular Matters Relating to the Business

(x) Environmental Matters .
(i) None of the Leased Properties (i) has ever been used by the Vendor or, to the knowledge of the Vendor, by any other Person as a waste disposal site or as a licensed landfill, or (ii) to the knowledge of the Vendor, has ever had asbestos, asbestoscontaining materials, PCBs, urea formaldehyde foam insulation, radioactive substances or aboveground or underground storage systems, active or abandoned, located on, at or under them; and
(ii) The Vendor has not been required by any Governmental Entity to (i) alter any of the Leased Properties in a material way in order to be in compliance with Environmental Laws, or (ii) perform any environmental closure, decommissioning, rehabilitation, restoration or post-remedial investigations, on, about, or in connection with any real or immovable property.
(y) Employees.

With respect to the Business :

(i) The Vendor is in compliance with all material terms and conditions of employment and all Laws respecting employment, including pay equity, French language requirements, human rights, labour standards, protection of personal information, wages and hours of work and occupational health and safety. There are no outstanding claims, complaints, investigations, orders, outstanding decisions, settlements under the abovementioned Laws, or any similar legislation of any jurisdiction, which place any obligation upon the Vendor to do or refrain from doing any act in relation with employment of the Employees, and to the knowledge of the Vendor and of the Shareholder, no complaints, grievance, claim, work order or investigation has been filed, made or commenced, against the Vendor, under such legislation.

To the knowledge of the Vendor, there has not been any threat of, or occurrence which might lead to, any such complaint, grievance, claim, work order or investigation.

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(ii) The Vendor has not and is not engaged in any unfair labour practice and no unfair labour practice complaint, grievance or arbitration proceeding is pending or, to the knowledge of the Vendor threatened against the Vendor.
(iii) No collective agreement exists or is currently being negotiated by the Vendor or any other Person in respect of employees of the Business.
(iv) No trade union, council of trade unions, employee bargaining agency or affiliated bargaining agent holds bargaining rights with respect to any of the employees of the Vendor by way of certification, interim certification, voluntary recognition, or successor rights, or has applied or, to the knowledge of the Vendor, threatened to apply to be certified as the bargaining agent of any employees of the Vendor. To the knowledge of the Vendor, there are no threatened or pending union organizing activities involving any employees of the Vendor. There is no labour strike, dispute, work slowdown, picketing or stoppage pending or involving or, to the knowledge of the Vendor, threatened against the Vendor in respect of the Business and no such event has occurred within the last five (5) years.
(v) There is no application for recognition, petition for certification or representation, petition pending or, to the knowledge of the Vendor, threatened with respect to any employees of the Business.
(vi) All amounts due or accrued due to Employees for all salary, wages, bonuses, commissions, vacation with pay, and benefits under the Employee Plans have either been paid or are accurately reflected in the Books and Records.
(vii) Schedule 4.1(y) contains a correct and complete list of each Employee, of the Vendor employed or retained in connection with the Business (and shall be amended as of the Closing Date to reflect actions during the Interim Period specifically permitted under Section 6.1), whether actively at work or Leave Employees, their salaries, wage rates, commissions and consulting fees, bonus arrangements, benefits, positions, ages, status as full-time or part-time employees, location of service and length of service. In addition, with respect to the Employees, Schedule 4.1(y) contains for each Employee their annual vacation entitlement in days, vacation days taken and
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vacation days remaining; his or her annual sick day entitlement, sick days taken and sick days remaining; and Schedule 4.1(y) lists any Leave Employee currently on leave and in receipt of disability benefits, applicable workplace safety and insurance legislation benefits and those Leave Employees currently on pregnancy or parental leave or other leave approved by the Vendor, together with the type of leave and their expected date of return to work if known.

(viii) There are no written Employment Contracts. No Employee has any agreement as to length of notice or severance payment required to terminate his or her employment, other than such as results by Law from the employment of an employee without an agreement as to notice or severance.
(ix) There are no outstanding assessments, penalties, fines, liens, charges, surcharges, or other amounts due or owing pursuant to any workplace safety and insurance legislation in respect of the Business and the Vendor has not been reassessed in any material respect under such legislation during the past three (3) years and, to the knowledge of the Vendor, no audit of the Business is currently being performed pursuant to any applicable workplace safety and insurance legislation. There are no claims or potential claims which may materially adversely affect the Vendor’s accident cost experience in respect of the Business.
(x) The Vendor has never received and is not subject to any orders issued under applicable occupational health and safety legislation (“ OHSA ” ). The Vendor has provided to the Purchaser all orders and inspection reports relating to the Business. There are no charges pending under OHSA in respect of the Business. The Vendor has complied in all material respects with any orders issued under OHSA in respect of the Business and there are no appeals of any orders under OHSA currently outstanding.
(z) Litigation . There are no (i) actions, suits or proceedings, at law or in equity, by any Person (including the Vendor), (ii) any grievance, arbitration or alternative dispute resolution process, (iii) administrative or other proceeding by or before (or to the knowledge of the Vendor any investigation by) any Governmental Entity, pending, or, to the knowledge of the Vendor, threatened against or affecting the Vendor, the Business or any of the Purchased
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Assets, and, to the knowledge of the Vendor, there is no valid basis for any such action, complaint, grievance, suit, proceeding, arbitration or investigation. The Vendor is not subject to any judgment, order or decree entered in any lawsuit or proceeding. The Vendor is not the plaintiff or complainant in any action, suit or proceeding, grievance, arbitration or alternative dispute resolution process arising out of or connected with the Business;

(aa) Suppliers . Schedule 4.1(aa) is a true and correct list setting forth the ten largest suppliers of the Business by dollar amount for the 12 months ended January 29, 2005. The Vendor has no reason to believe that the benefits of any relationship with any of the major suppliers of the Vendor will not continue after the Closing Date in substantially the same manner as prior to the date of this Agreement;
(bb) Taxes. All Taxes that are or may become payable by or due from the Vendor in respect of the Business have been fully paid or fully disclosed and fully provided for in the Books and Records and the Financial Statements. No notice of assessment or reassessment has been received and, to the knowledge of the Vendor, no examination of any Tax Return of the Vendor in respect of the Business is currently in progress. There are no claims, actions, suits or proceedings (or, to the knowledge of the Vendor, any investigation) pending, or, to the knowledge of the Vendor, threatened against the Vendor relating to Taxes of the Business and the Vendor knows of no valid basis for any such claim, action, suit, proceeding, investigation or discussion. The Vendor has withheld and collected all amounts required by applicable Law to be withheld or collected by it on account of Taxes and has remitted all such amounts to the appropriate Governmental Entity within the time prescribed under applicable Law.
(cc) Privacy . The Vendor is, and has been since required by law conducting the Business in compliance with all applicable Laws governing privacy and the protection of personal information, including An Act respecting the protection of personal information in the private sector (Quebec) other than acts of non-compliance which individually or in the aggregate are not material.
(dd) Full Disclosure . There is no fact known to the Vendor (other than things affecting the economy generally or items of public knowledge) which materially and adversely affects the affairs, prospects, operations or condition of the Vendor, the Purchased Assets or the Business which has not been set forth in this Agreement.
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(ee) Issued Shares. The Vendor acknowledges that the distribution of the Issued Shares to the Vendor has not been made through, or as a result of, and is not being accompanied by, (i) a general solicitation, (ii) any advertisement including articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or (iii) any seminar or meeting whose attendees have been invited by general solicitation or general advertising.

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

Section 5.1 Representations and Warranties of the Purchaser.

The Purchaser represents and warrants as follows to the Vendor and acknowledges and confirms that the Vendor is relying on such representations and warranties in connection with the sale by the Vendor of the Purchased Assets:

(a) Incorporation and Corporate Power . The Purchaser is a corporation incorporated and existing under the laws of its jurisdiction of incorporation. The Purchaser has the corporate power and authority to enter into and perform its obligations under this Agreement and each of the Ancillary Agreements to which it is or will at Closing be a party.
(b) Corporate Authorization . The execution and delivery of and performance by the Purchaser of this Agreement and each of the Ancillary Agreements to which it is a party and the consummation of the transactions contemplated by them have been duly authorized by all necessary corporate action on the part of the Purchaser.
(c) No Conflict . The execution and delivery of and performance by the Purchaser of this Agreement and each of the Ancillary Agreements to which it is or will at Closing be a party, subject to the filing with Autorité des marchés financiers (“ AMF ” ) within 10 days after the Closing Date of a private placement notice and payment of the applicable fee:
(i) do not and will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition) constitute or result in a violation or breach of, or conflict with, or allow any other Person to exercise any rights under, any of the terms or provisions of its constating documents or by-laws;
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(ii) subject to obtaining the consent of the Toronto Stock Exchange to the issuance of the Issued Shares, do not and will not (or would not with the giving of notice, the lapse of time or the happening or any other event or condition) constitute or result in a breach or violation of, or conflict with or allow any other Person to exercise any rights under, any of the terms or provisions of any material Contracts or instruments to which it is a party; and
(iii) do not and will not result in the violation of any Law.
(d) Execution and Binding Obligation . This Agreement and each of the Ancillary Agreements to which the Purchaser is or will be a party have been duly executed and delivered by the Purchaser and constitute legal, valid and binding agreements of the Purchaser, enforceable against it in accordance with their respective terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up insolvency, arrangement, fraudulent preference and conveyance, assignment and preference and other similar laws of general application affecting creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction.
(e) Issued Shares. Upon issuance to the Vendor in accordance with this Agreement at closing, the Issued Shares will be duly issued as fully paid and non-assessable shares. The Issued Shares will be issued pursuant to a prospectus exemption under Section 2.12 of National Instrument 45-106-Prospectus and Registration Exemptions and will be subject to a statutory hold period of four months from the Closing Date and contractual resale restrictions for a total of six months from the Closing Date (running concurrently) pursuant to the Share Escrow Agreement, the Resale Restrictions Agreement and thereafter pursuant to the resale restrictions contained in section 2.5 of Multilateral Instrument 45-102 Resale of Securities (as amended or replaced from time to time). In addition, 550,000 Issued Shares shall be subject to the vesting provisions set forth in the Share Escrow Agreement.

ARTICLE 6

PRE-CLOSING COVENANTS OF THE PARTIES

Section 6.1 Conduct of Business Prior to Closing.

(1) During the Interim Period, the Vendor will conduct the Business in the Ordinary Course.
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(2) Without limiting the generality of Section 6.1(1), the Vendor will not during the Interim Period:
(a) sell, transfer or otherwise dispose of any of the Purchased Assets except for (i) Purchased Assets which are obsolete and which individually or in the aggregate do not exceed $5,000, or (ii) inventory sold in the Ordinary Course;
(b) increase its indebtedness for borrowed money or make any loan or advance or assume, guarantee or otherwise become liable with respect to the liabilities or obligations of any Person in connection with the Business which would reasonably be expected to adversely affect the Purchased Assets;
(c) make any bonus or profit sharing distribution or similar payment of any kind to any Employee except in the Ordinary Course;
(d) enter into a new employment contract other than for sales staff in the Ordinary Course;
(e) remove the auditor or any director or terminate the employment of any officer or any employee of the Business listed in Schedule 4.1(y) or grant any severance or termination pay to any officer or senior employee of the Business listed in Schedule 4.1(y);
(f) make any change (whether or not generally applicable) in the rate of wages, salaries, bonuses or other remuneration of any Employees;
(g) make any change (whether or not generally applicable) in the benefits to which Employees are entitled under any Employee Plan or create any new Employee Plan for any Employee except as may be required by an Employment Contract;
(h) cancel or waive any material claims or rights in connection with the Business;
(i) enter into any non arm’s length contract or any lease with respect to the Business;
(j) compromise or settle any litigation, proceeding or governmental investigation to the extent it would reasonably be expected to adversely affect any of the Purchased Assets, the Business, or the Vendor;
(k) cancel or reduce any of its insurance coverage; or
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(l) authorize, agree, or otherwise commit, whether or not in writing, to do any of the foregoing.
(3) Without limiting the generality of Section 6.1(1) and without derogating from the obligation of the Vendor in Section 6.1(2), the Vendor shall during the Interim Period:
(a) maintain adequate levels of inventories to carry on the Business in the Ordinary Course;
(b) maintain the Purchased Assets in good state of repair and condition;
(c) comply with all Authorizations and contractual obligations under the Purchased Contracts and Purchased Leases;
(d) maintain all Books and Records in the usual, regular and ordinary manner;
(e) use commercially reasonable efforts to preserve intact the current business organization, keep available the services of the present Employees and agents of the Business and maintain good relations with, and the goodwill of, the suppliers, customers, landlords, creditors, distributors and all other Persons having business relationships with the Business;
(f) confer with the Purchaser concerning operational matters of a material nature;
(g) use commercially reasonable efforts to retain possession and control of the Purchased Assets and preserve the confidentiality of any confidential or proprietary information of the Business;
(h) use reasonable best efforts to not cause or permit to exist a breach of any representations and warranties of the Vendor contained in this Agreement and to conduct the Business in such a manner that on the Closing Date such representations and warranties shall be true, correct and complete as if they were made on and as of such date;
(i) not enter into any contracts requiring payment over the life of the contract of more than $10,000 in relation to the Business or the Purchased Assets without the prior consent of the Purchaser;
(j) not engage in any material acquisitions (shares or assets or dispositions), other than the purchase of inventory in the Ordinary Course, in relation to or which would adversely affect the Business or
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the Purchased Assets or the Purchaser without the prior consent of the Purchaser; and

(k) otherwise periodically report to the Purchaser concerning the state of the Business and the Purchased Assets.

Section 6.2 Access for Due Diligence.

(1) Subject to applicable Law, during the Interim Period, the Vendor will (i) upon reasonable notice, permit the Purchaser and its employees, agents, counsel, accountants or other representatives to have reasonable access during normal business hours to (A) the premises of the Vendor, (B) the Purchased Assets and the Business, including all Books and Records whether retained by the Vendor or otherwise, (C) all Purchased Contracts and Purchased Leases, and (D) the senior personnel of the Vendor, and (ii) furnish to the Purchaser or its employees, agents, counsel, accountants or other such representatives such financial and operating data and other information with respect to the Purchased Assets and the Business of the Vendor as the Purchaser from time to time reasonably requests, including without limitation, data and information with respect to information technology and any other information concerning the Purchased Assets and the Business.
(2) No investigations made by or on behalf of the Purchaser, whether under this Section 6.2 or any other provision of this Agreement or any Ancillary Agreement, shall have the effect of waiving, diminishing the scope of, or otherwise affecting any representation or warranty made in this Agreement or any Ancillary Agreement.

Section 6.3 Purchaser Confidentiality.

The Vendor and the Purchaser acknowledge having signed a confidentiality agreement in the form of Schedule 6.3 and the Purchaser agrees to comply with such agreement in accordance with its terms. Upon closing, such confidentiality agreement shall be deemed to have been terminated and the Purchaser and its Affiliates shall be released from all of its terms save and except with respect to any information provided to the Purchaser by the Vendor with respect to all retail businesses of the Vendor other than the Business.

Section 6.4 Actions to Satisfy Closing Conditions.

(1) The Vendor shall take all such actions as are within its power to control and to use its reasonable best efforts to cause other actions to be taken which are not within their power to control, so as to ensure compliance with all of the conditions set forth in Section 7.1 including ensuring that during the Interim Period and at Closing, there is no breach of any of its representations and warranties.
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(2) The Purchaser shall take all such actions as are within its power to control and to use its reasonable best efforts to cause other actions to be taken which are not within its power to control, so as to ensure compliance with all of the conditions set forth in Section 7.2 including ensuring that during the Interim Period and at Closing, there is no breach of any of its representations and warranties.

Section 6.5 Transfer of the Purchased Assets.

The Vendor shall take all necessary steps and proceedings to permit good title to the Purchased Assets to be duly and validly transferred and assigned to the Purchaser at the Closing, free of all Liens including without limitation, the lease for the Rewind store shall be transferred from 172674 Canada Inc. to the Vendor and the trademarks in the name of 172674 Canada Inc. and 3797457 Canada Inc. shall be transferred to the Vendor and all shall be part of the Purchased Assets.

Section 6.6 Request for Consents.

The Vendor will use its reasonable best efforts to obtain or cause to be obtained, prior to Closing, all consents, approvals and waivers that are required by the terms of the Purchased Leases and the Purchased Contracts in order to complete the transactions contemplated by this Agreement, including the consents, approvals and waivers described in Schedule 4.1(e). Such consents, approvals and waivers will be upon such terms as are acceptable to the Purchaser, acting reasonably.

Section 6.7 Filings and Authorizations.

Each of the Parties, as promptly as practicable after the execution of this Agreement, will (i) make, or cause to be made, all filings and submissions under all Laws applicable to it, that are required for it to consummate the purchase and sale of the Purchased Assets in accordance with the terms of this Agreement, (ii) use its reasonable best efforts to obtain, or cause to be obtained, all Authorizations necessary or advisable to be obtained by it in order to consummate such transfer, and (iii) use its reasonable best efforts to take, or cause to be taken, all other actions which are necessary or advisable in order for it to fulfil its obligations under this Agreement.

Section 6.8 Notice of Untrue Representation or Warranty.

The Vendor shall promptly notify the Purchaser, and the Purchaser shall promptly notify the Vendor, upon any representation or warranty made by it contained in this Agreement or any Ancillary Agreement becoming untrue or incorrect during the Interim Period. Any such notification shall set out particulars of the untrue or incorrect representation or warranty and details of any actions being taken by the Vendor, or the Purchaser, as the case may be, to rectify that state of affairs. For the purposes of this Section 6.8 each representation and warranty shall be deemed to be given at and as of all times during the Interim Period. Any such

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notification shall set out particulars of the untrue or incorrect representation or warranty.

Section 6.9 Exclusive Dealing.

During the Interim Period, the Vendor shall not, directly or indirectly, solicit, initiate, or encourage any inquiries or proposals from, discuss or negotiate with, provide any non-public information to, or consider the merits of any inquiries or proposals from, or enter into any agreement with, any Person (other than the Purchaser) relating to any transaction involving the sale of any shares of the Vendor or the shareholder of the Vendor or the sale of the Business or any of the Purchased Assets or any other business combination.

Section 6.10 Use of Name.

The Vendor, on behalf of itself and its Affiliates, hereby consents to the use of the names “ D-Tox” , “ Amnesia” , “ Arsenic” by the Purchaser or any of its subsidiaries in connection with incorporating one or more companies to complete the transactions contemplated in this Agreement and will provide any consent reasonably required in that regard. If the transaction of purchase and sale contemplated by this Agreement is not completed, the Purchaser shall change the name of the Purchaser and its Affiliates to a name not including such names and will discontinue any use of such names.

ARTICLE 7 CONDITIONS OF CLOSING

Section 7.1 Conditions for the Benefit of the Purchaser.

The purchase and sale of the Purchased Assets is subject to the following conditions being satisfied at or prior to Closing, which conditions are for the exclusive benefit of the Purchaser and may be waived, in whole or in part, by the Purchaser in its sole discretion:

(a) Truth of Representations and Warranties . The representations and warranties of the Vendor contained in this Agreement shall have been true and correct as of the date of this Agreement and shall be true and correct as of the Closing Date with the same force and effect as if such representations and warranties had been made on and as of such date, and the Vendor shall also have executed and delivered a certificate of a senior officer to that effect. The receipt of such certificates and the Closing shall not constitute a waiver by the Purchaser of any of the representations and warranties of the Vendor which are contained in this Agreement . Upon the delivery of such certificates, the representations and warranties of the Vendor in Article 4 shall be
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deemed to have been made on and as of the Closing Date with the same force and effect as if made on and as of such date.

(b) Performance of Covenants . The Vendor shall have fulfilled or complied with all covenants contained in this Agreement to be fulfilled or complied with by it at or prior to the Closing, and the Vendor shall have executed and delivered a certificates of a senior officer to that effect. The receipt of such certificates and the Closing shall not constitute a waiver by the Purchaser of any of the covenants of the Vendor which are contained in this Agreement.
(c) Consents and Authorizations . All Required Consents shall have been made, given or obtained on terms acceptable to the Purchaser, acting reasonably. The Purchaser shall have received all Authorizations necessary or desirable to carry on the Business on terms satisfactory to the Purchaser, acting reasonably.
(d) Financing. The Purchaser shall have received financing sufficient to complete the transaction of purchase and sale contemplated in this Agreement and operate the Business on terms and conditions satisfactory to the Purchaser, acting reasonably.
(e) Deliveries . The Vendor shall deliver or cause to be delivered to the Purchaser the following in form and substance satisfactory to the Purchaser acting reasonably:
(i) certified copies of (i) the charter documents and by laws, as amended, of the Vendor, (ii) all resolutions of the shareholders and the board of directors of the Vendor approving the entering into and completion of the transaction contemplated by this Agreement and the Ancillary Agreements, and (iii) a list of the directors and officers of the Vendor authorized to sign agreements together with their specimen signatures;
(ii) a certificate of status, compliance, good standing or like certificate with respect to the Vendor issued by the appropriate Governmental Entity in its jurisdiction of incorporation;
(iii) the certificates referred to in Section 7.1(a) and Section 7.1(b); and
(iv) an opinion of counsel to the Vendor, Angelina Raimondo and Tony Raimondo in the form agreed between the Vendor and the Purchaser, acting reasonably;
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(v) a non-competition, non-solicitation and confidentiality agreement duly executed by each of the Vendor, Tony Raimondo and Angelina Raimondo, substantially in the form of the agreement in Schedule 7.1(e)(v);
(vi) an employment agreement duly executed by Angelina Raimondo substantially in the form of the agreement in Schedule 7.1(e)(vi) ;
(vii) a consulting/ advisory agreement duly executed by Tony Raimondo, substantially in the form of the agreement in Schedule 7.1(e)(vii);
(viii) definitive agreements in respect of those Purchased Leases which are currently in the form of offers to lease;
(ix) landlord’s acknowledgement and consent from each lessor under each of the Purchased Leases (as required by the Purchaser and by its lender), consenting to the assignment of the Purchased Lease to the Purchaser and the grant of security to the Purchaser’s lender and such other matters, each in form and substance satisfactory to the Purchaser, acting reasonably;
(x) copies of the Books and Records;
(xi) a services agreement and an agency agreement, each in the form of the agreements attached as Schedule 7.1(e)(xi), duly executed by the Vendor;
(xii) necessary deeds, conveyances, assurances, transfers and assignments and any other instruments necessary or reasonably required to transfer the Purchased Assets to the Purchaser with a good title, free and clear of all Liens;
(xiii) the Vendor shall have executed an authorization form prior to Closing for the Purchaser to enable the Purchaser to obtain all relevant information regarding the Business and the Employees from the Commission de la sante et la securite du travail (the “ CSST ” );
(xiv) the Escrow Agreement, Share Escrow Agreement and the Resale Restrictions Agreement, duly executed by the Vendor;
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(xv) the Required Consents from the Toronto-Dominion Bank, Soul Suites Inc. and the other suppliers under the conditional sales agreement dated April 21, 2003 as well as from Bell Canada;

(xvi) the licence in favour of the Purchaser from Gemmar Systems International Inc., upon the same terms and conditions as the current licence agreement with the Vendor or otherwise satisfactory to the Purchaser;

(xvii) removal of security registrations of the National Bank of Canada, Montcap Financial Corporation and Montreal Modes Investissements Inc. and/ or letters in form and substance satisfactory to the Purchaser, acting reasonably, confirming that National Bank of Canada, Montcap Financial Corporation and Montreal Modes Investissements Inc. have no security interest in the Purchased Assets;

(xviii) letters in form and substance satisfactory to the Purchaser, acting reasonably, releasing any security interest in the Purchased Assets held by 2902681 Canada Inc., 3925304 Canada Inc., the Toronto-Dominion Bank, Tony Raimondo, Supreme 75 Inc., Modes TXT Carbon Inc. and Distributions Banger Inc.; and
(xix) in respect of merchandise included in the Purchased Assets and supplied pursuant to conditional sales, evidence of payment by the Vendor to suppliers for all such merchandise.
(f) Proceedings . All corporate proceedings to be taken in connection with the transactions contemplated by this Agreement and any Ancillary Agreement shall be reasonably satisfactory in form and substance to the Purchaser, acting reasonably, and the Purchaser shall have received copies of all instruments and other evidence as it may reasonably request in order to establish the consummation of such transactions and the taking of all necessary corporate proceedings in connection therewith, including a registrable form of assignment of trademarks.
(g) No Legal Action . No action or proceeding shall be pending or threatened by any Person (other than the Purchaser) in any jurisdiction, to enjoin, restrict or prohibit any of the transactions contemplated by this Agreement or the right of the Purchaser to conduct the Business after Closing on substantially the same basis as heretofore operated.
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(h) No Material Adverse Change . Since the date hereof, there shall have been no material adverse change in the affairs, prospects, operations or condition of the Vendor, any of the Purchased Assets or the Business .
(i) Regulatory Consent. The consent of the Toronto Stock Exchange and if required, relief from the AMF, to the issuance of the Issued Shares shall have been received on terms satisfactory to the Purchaser.
(j) Bank Consent. The consent of the Canadian Imperial Bank of Commerce, the Purchaser’s banker, shall have been obtained on terms satisfactory to the Purchaser.

Section 7.2 Conditions for the Benefit of the Vendor.

The purchase and sale of the Purchased Assets is subject to the following conditions being satisfied at or prior to Closing, which conditions are for the exclusive benefit of the Vendor and may be waived, in whole or in part, by the Vendor in its sole discretion:

(a) Truth of Representations and Warranties . The representations and warranties of the Purchaser contained in this Agreement shall be true and correct as of the Closing Date with the same force and effect as if such representations and warranties had been made on and as of such date, and the Purchaser shall have executed and delivered a certificate of a senior officer to that effect. The receipt of such certificate and the Closing shall not constitute a waiver of the representations and warranties of the Purchaser which are contained in this Agreement. Upon delivery of such certificate, the representations and warranties of the Purchaser in Article 5 shall be deemed to have been made on and as of the Closing Date with the same force and effect as if made on and as of such date.
(b) Performance of Covenants . The Purchaser shall have fulfilled or complied with all covenants contained in this Agreement to be fulfilled or complied with by it at or prior to Closing and the Purchaser shall have executed and delivered a certificate of a senior officer to that effect. The receipt of such certificate and the Closing shall not constitute a waiver by the Vendor of the covenants of the Purchaser which are contained in this Agreement.
(c) Deliveries . The Purchaser shall deliver or cause to be delivered to the Vendor the following in form and substance satisfactory to the Vendor acting reasonably:
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(i) certified copies of (i) the charter documents and extracts from the by-laws of the Purchaser relating to the execution of documents, (ii) all resolutions of the board of directors of the Purchaser approving the entering into and completion of the transactions contemplated by this Agreement and the Ancillary Agreements, and (iii) a list of its officers and directors authorized to sign agreements together with their specimen signatures;
(ii) a certificate of status, compliance, good standing or like certificate with respect to the Purchaser issued by appropriate government officials of the jurisdiction of its incorporation;
(iii) the certificates referred to in Section 7.2(a) and Section 7.2(b);
(iv) the employment agreement for Angelina Raimondo referenced in Section 7.1(e)(vi), duly executed by the Purchaser;
(v) the consulting/ advisory agreement referenced Section 7.1(e)(vii) for Tony Raimondo, duly executed by the Purchaser;
(vi) [Intentionally Deleted]
(vii) [Intentionally Deleted]
(viii) the services and the agency agreements referenced in Section 7.1(e)(xi), duly executed by the Purchaser;
(ix) evidence of approval of the Toronto Stock Exchange to the issuance of the Issued Shares; and
(x) the Escrow Agreement and the Share Escrow Agreement, duly executed by the Purchaser.
(d) Proceedings . All corporate proceedings to be taken in connection with the transactions contemplated in this Agreement and any Ancillary Agreement shall be reasonably satisfactory in form and substance to the Vendor, acting reasonably, and the Vendor shall have received copies of all the instruments and other evidence as they may reasonably request in order to establish the consummation of such transactions and the taking of all corporate proceedings in connection therewith.
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(e) No Legal Action. No action or proceeding shall be pending or threatened by any Person (other than the Vendor) in any jurisdiction, to enjoin, restrict or prohibit any of the transactions contemplated by this Agreement or the right of the Purchaser to conduct the Business after closing on substantially the same basis as heretofore operated .

ARTICLE 8 CLOSING

Section 8.1 Date, Time and Place of Closing.

The completion of the transaction of purchase and sale contemplated by this Agreement shall take place at the offices of �� - Levesque Blvd West, 40[th] Floor, Montreal, Quebec, at 10:00 a.m. (Montreal time) on the Closing Date or at such other place, on such other date and at such other time as may be agreed upon in writing between the Vendor and the Purchaser.

Section 8.2 Closing Procedures.

Subject to satisfaction or waiver by the relevant Party of the conditions of closing, at the Closing, the Vendor shall deliver actual possession of the Purchased Assets to the Purchaser and the instruments of conveyance described in Section 8.1 and upon such deliveries the Purchaser shall pay or satisfy the Purchase Price in accordance with Section 2.4. The transfer of possession of the Purchased Assets shall be deemed to take effect at the Effective Time. Contemporaneously with Closing, the Purchased Assets will be transferred by the Purchaser to a wholly-owned subsidiary of the Purchaser.

Section 8.3 Risk of Loss.

If, prior to Closing, all or any material part of the Purchased Assets are destroyed or damaged by fire or any other casualty or are appropriated, expropriated or seized by any Governmental Entity, the Purchaser shall have the option, exercisable by notice in writing given within 4 Business Days of the Purchaser receiving notice in writing from the Vendor of such destruction, damage, expropriation or seizure:

(a) to complete the transaction contemplated in this Agreement without reduction of the Purchase Price, in which event (i) all proceeds of any insurance or compensation for expropriation, appropriation or seizure shall be payable to the Purchaser, and (ii) all right and claim of the Vendor to any such amounts not paid by the Closing Date shall be assigned to the Purchaser; or
(b) to terminate this Agreement and not complete the transaction contemplated in this Agreement, in which case all obligations of the
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Purchaser and the Vendor (save and except for their respective obligations under Section 2.6 regarding the Deposit, Section 6.3, Section 14.3, Section 14.4 and Section 14.6 which shall survive) shall terminate immediately upon the Purchaser giving notice as required herein.

ARTICLE 9 TERMINATION

Section 9.1 Termination Rights.

This Agreement may, by notice in writing given prior to or on the Closing Date, be terminated:

(a) by mutual consent of the Vendor and the Purchaser;
(b) by the Purchaser if any of the conditions in Section 7.1 have not been satisfied at or prior to Closing and the Purchaser has not waived such condition at or prior to Closing;
(c) by the Vendor if any of the conditions in Section 7.2 have not been satisfied at or prior to Closing and the Vendor has not waived such condition at or prior to Closing;
(d) in the circumstances and upon the terms set out in Section 8.3; or
(e) by either Party if the Closing has not occurred on or before October 31, 2005 or such later date as the Purchaser and the Vendor agree to in writing, unless the Closing has not occurred by such date because the Party seeking to terminate this Agreement has failed to perform any one or more of its obligations or covenants under this Agreement to be performed at or prior to Closing.

Section 9.2 Effect of Termination.

(1) Each Party’s right of termination under this Article is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. Nothing in this Article limits or affects any other rights or causes of action any Party may have with respect to the representations, warranties, covenants and indemnities in its favour contained in this Agreement. If a Party waives compliance with any of the conditions, obligations or covenants contained in this Agreement, the waiver will be without prejudice to any of its rights of termination in the event of non-fulfilment, non-observance or nonperformance of any other condition, obligation or covenant in whole or in part.
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(2) If this Agreement is terminated pursuant to Section 9.1, all obligations of the Parties under this Agreement will terminate, except that:
(a) all of the obligations under Section 2.6 regarding the Deposit, Section 6.3, Section 14.3, Section 14.4 and Section 14.6 will survive; and
(b) if this Agreement is terminated by a Party because of a breach of this Agreement by the other Party or because a condition for the benefit of the terminating Party has not been satisfied because the other Party has failed to perform any of its obligations or covenants under this Agreement which are reasonably capable of being performed or caused to be performed by such Party, the terminating Party’s right to pursue all legal remedies will survive such termination unimpaired.

ARTICLE 10 INDEMNIFICATION

Section 10.1 Survival.

(1) The representations and warranties contained in this Agreement and the certificates to be delivered pursuant to Section 7.1(a) and Section 7.2(a) will survive the Closing and continue in full force and effect for a period of three years after the Closing Date, except that:
(a) the representations and warranties set out in Section 4.1(a), Section 4.1(b), Section 4.1(c), Section 4.1(d), Section 4.1(e), Section 4.1(f), Section 5.1(a), Section 5.1(b), Section 5.1(c), Section 5.1(d) and the corresponding representations and warranties set out in the certificates to be delivered pursuant to Section 7.1(a) and Section 7.2(a) will survive and continue in full force and effect without limitation of time; and
(b) the representations and warranties set out in Section 4.1(g) and 4.1(dd) (and the corresponding representations and warranties set out in the certificates to be delivered pursuant to Section 7.1(a)), will survive and continue in full force and effect until 6 months after the expiration of the period (the “ tax assessment period” ) during which any tax assessment may be issued by a Governmental Entity in respect of any taxation year to which such representations and warranties extend. The tax assessment period will be determined without regard to any consent, waiver, agreement or other document, made or filed after the Closing Date that extends the period during which a Governmental Entity may issue a tax assessment. A tax assessment includes any assessment, reassessment or other form of recognized document assessing liability for Taxes under applicable Law; and
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(c) any representation and warranty involving fraud or fraudulent misrepresentation by the Party giving that representation and warranty will survive and continue in full force and effect without limitation of time.
(2) No Party has any obligation or liability with respect to any representation or warranty made by such Party in this Agreement or the certificates to be delivered pursuant to Section 7.1(a) and Section 7.2(a) after the end of the applicable time period specified in Section 10.1(1) except for claims relating to the representations and warranties that the Party has been notified of prior to the end of the applicable time period.
(3) Where a Party has a right to make a claim for breach of representation or warranty under this Agreement, the right to enforce that claim in court proceedings remains subject to applicable limitation periods imposed by Law.

Section 10.2 No Effect of Knowledge.

The right to indemnification or other remedy of any Party based on the representations, warranties, covenants and obligations contained in this Agreement and the certificates to be delivered pursuant to Section 7.1(a) and Section 7.2(a), exists notwithstanding the Closing and notwithstanding any investigation or knowledge acquired prior to the Closing.

Section 10.3 Indemnification in Favour of the Purchaser.

(1) The Vendor will indemnify and save each of the Purchaser and its shareholders, directors, officers, employees, agents and representatives, harmless, of and from, and will pay for, any Damages suffered by, imposed upon or asserted against it or any of them as a result of, in respect of, connected with, or arising out of, under, or pursuant to:
(a) any breach or inaccuracy of any representation or warranty given by any of the Vendor contained in this Agreement or the certificate to be delivered pursuant to Section 7.1(a), for which a notice of claim under Section 10.5 has been provided to the Vendor within the applicable period specified in Section 10.1;
(b) any failure of the Vendor to perform or fulfil any of its covenants or obligations under this Agreement;
(c) any failure of the Vendor to transfer legal and beneficial ownership of the Purchased Assets to the Purchaser free and clear of all Liens;
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(d) the non-compliance of the Purchased Assets or the Business on or prior to the Closing Date with Laws existing at any time on or prior to Closing; and
(e) any Excluded Liabilities.
(2) The right to indemnification under Section 10.3(1)(b) through Section 10.3(1)(e) inclusive exists notwithstanding Section 10.1 and notwithstanding any representation and warranty in Article 4.

Section 10.4 Indemnification in Favour of the Vendor.

(1) The Purchaser will indemnify and save the Vendor and its shareholders, directors, officers, employees, agents and representatives harmless of and from and will pay for any Damages suffered by, imposed upon or asserted against it or any of them as a result of, in respect of, connected with, or arising out of, under or pursuant to:
(a) any breach or inaccuracy of any representation or warranty given by the Purchaser contained in this Agreement or the certificate to be delivered pursuant to Section 7.2(a), for which a notice of claim under Section 10.5 has been provided to the Purchaser within the applicable period specified in Section 10.1;
(b) any failure of the Purchaser to perform or fulfil any of its covenants or obligations under this Agreement; and
(c) the Assumed Liabilities.
(2) The right to indemnification under Section 10.4(1)(b) through Section 10.4(1)(c) exists notwithstanding Section 10.1 and notwithstanding any representation and warranty in Article 5.

Section 10.5 Notification.

(1) If a Third Party Claim is instituted or asserted against an Indemnified Person, the Indemnified Person will notify the Indemnifying Party in writing of the Third Party Claim.
(2) If an Indemnified Person becomes aware of a Direct Claim, the Indemnified Person will notify the Indemnifying Party in writing of the Direct Claim.
(3) Notice to an Indemnifying Party under this Section of a Direct Claim or a Third Party Claim is assertion of a claim for indemnification against the Indemnifying Party under this Agreement. Upon receipt of such notice, the
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provisions of Section 10.6 will apply to any Third Party Claim and the provisions of Article 13 will apply to any Direct Claim.

(4) The omission to notify the Indemnifying Party will not relieve the Indemnifying Party from any obligation to indemnify the Indemnified Person, unless the notification occurs after the expiration of the specified period set out in Section 10.1 or (and only to that extent that) the omission to notify materially prejudices the ability of the Indemnifying Party to exercise its right to defend provided in Section 10.6.

Section 10.6 Procedure for Third Party Claims.

(1) Upon receiving notice of a Third Party Claim, the Indemnifying Party may participate in the investigation and defence of the Third Party Claim, subject to the terms of this Section. The Indemnifying Party may also elect to assume the investigation and defence of the Third Party Claim, subject to the terms of this Section. An Indemnifying Party may not participate in or assume the investigation or defence of a Third Party Claim if it relates to Taxes of the Indemnified Person.
(2) In order to assume the investigation and defence of a Third Party Claim, the Indemnifying Party must give the Indemnified Person written notice of its election within 15 days of Indemnifying Party’s receipt of notice of the Third Party Claim.
(3) The Indemnifying Party may not assume the investigation and defence of a Third Party Claim if:
(a) the Indemnifying Party is also a party to the Third Party Claim and the Indemnified Person determines in good faith that joint representation would be inappropriate;
(b) the Indemnifying Party fails to provide reasonable assurance to the Indemnified Person of its financial capacity to defend the Third Party Claim and provide indemnification with respect to the Third Party Claim;
(c) the Indemnifying Party does not unconditionally acknowledge in writing its obligation to indemnify and hold the Indemnified Person harmless with respect to the Third Party Claim; or
(d) the Third Party Claim seeks relief against the Indemnified Person other than monetary damages or the Indemnified Person determines in good faith that there is a reasonable probability that the Third Party Claim may adversely affect it or its affiliates or the Business, other than as a
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result of monetary damages for which it would be entitled to indemnification under this Agreement, and the Indemnified Person has notified the Indemnifying Party that it will assume the exclusive right to defend, compromise or settle the Third Party Claim.

(4) If the Indemnifying Party assumes the investigation and defence of a Third Party Claim:
(a) the Indemnifying Party will pay for all costs and expenses of the investigation and defence of the Third Party Claim except that the Indemnifying Party will not, so long as it diligently conducts such defence, be liable to the Indemnified Person for any fees of other counsel or, except as provided in Section 10.6(4)(b) or Section 10.6(8) below, any other expenses with respect to the defence of the Third Party Claim, incurred by the Indemnified Person after the date the Indemnifying Party validly exercised its right to assume the investigation and defence of the Third Party Claim;
(b) the Indemnifying Party will reimburse the Indemnified Person for all costs and expenses incurred by the Indemnified Person in connection with the investigation and defence of the Third Party Claim prior to the date the Indemnifying Party validly exercised its right to assume the investigation and defence of the Third Party Claim; and
(c) legal counsel chosen by the Indemnifying Party to defend the Third Party Claim must be satisfactory to the Indemnified Person, acting reasonably.
(5) If the Indemnifying Party (i) is not entitled to assume the investigation and defence of a Third Party Claim under Section 10.6(1) or Section 10.6(3), other than Section 10.6(3)(d), (ii) does not elect to assume the investigation and defence of a Third Party Claim, (iii) assumes the investigation and defence of a Third Party Claim but fails to diligently pursue such defence, or the Indemnified Person concludes that the Third Party Claim is not being defended to its satisfaction, acting reasonably, the Indemnified Person has the right (but not the obligation) to undertake the defence of the Third Party Claim and, thereafter, compromise and settle the Third Party Claim on behalf, for the account, and at the risk and at the cost and expense of the Indemnifying Party. In the case where the Indemnifying Party fails to diligently pursue the defence of the Third Party Claim or the Indemnified Person concludes that the Third Party Claim is not being defended to its satisfaction, acting reasonably, the Indemnified Person may not assume the defence of the Third Party Claim unless the Indemnified Person gives the Indemnifying Party written demand to diligently pursue the defence and the
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Indemnifying Party fails to do so within 14 days after receipt of the demand, or such shorter period as may be reasonably required to respond to any deadline imposed by a court, arbitrator or other tribunal.

(6) If, under Section 10.6(3)(d), the Indemnifying Party is not entitled to assume the investigation and defence of a Third Party Claim, the Indemnifying Party will not be bound by any determination of the Third Party Claim or any compromise or settlement of the Third Party Claim effected without the consent of the Indemnifying Party (which consent may not be unreasonably withheld or delayed).
(7) The Indemnifying Party will not be permitted to compromise and settle or to cause a compromise and settlement of a Third Party Claim without the prior written consent of the Indemnified Person, which consent may not be unreasonably withheld or delayed unless:
(a) the terms of the compromise and settlement require only the payment of money for which the Indemnified Person is entitled to full indemnification under this Agreement;
(b) the Indemnified Person is not required to admit any wrongdoing, take or refrain from taking any action, acknowledge any rights of the Person making the Third Party Claim or waive any rights that the Indemnified Party may have against the Person making the Third Party Claim; and
(c) the Indemnified Person receives, as part of the compromise and settlement, a legally binding and enforceable unconditional release from any and all obligations or liabilities it may have with respect to the Third Party Claim. Such release must be, in form and substance, satisfactory to the Indemnified Person, acting reasonably.
(8) The Indemnified Person and the Indemnifying Party agree to keep the other fully informed of the status of any Third Party Claim and any related proceedings. If the Indemnifying Party assumes the investigation and defence of a Third Party Claim, the Indemnified Person will, at the request and expense of the Indemnifying Party, use its reasonable efforts to make available to the Indemnifying Party, on a timely basis, those employees whose assistance, testimony or presence is necessary to assist the Indemnifying Party in investigating and defending the Third Party Claim. The Indemnified Person shall, at the request and expense of the Indemnifying Party, make available to the Indemnifying Party, or its representatives, on a timely basis all documents, records and other materials in the possession, control or power of the Indemnified Person, reasonably required by the
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Indemnifying Party for its use solely in defending any Third Party Claim which it has elected to assume the investigation and defence of.

(9) Except as provided in this Section, the indemnities provided in Section 10.3 and Section 10.4 shall constitute the only remedy of the Purchaser or the Vendor, respectively, against another Party in the event of any breach of a representation, warranty, covenant or agreement of such Party contained in this Agreement. The Purchaser may exercise its rights under Article 8 and the Parties may exercise their rights of termination set forth in Article 9. The Parties may also exercise any remedies available with respect to Intellectual Property. The Purchaser and the Vendor expressly waive and renounce any other remedies whatsoever, whether at law or in equity, to which it would otherwise be entitled as against any other Party.

Section 10.7 Limitations on Indemnification.

(1) The Vendor will have no obligation to make any payment for Damages (for indemnification or otherwise) with respect to the matters described in Section 10.3(1)(a), Section 10.3(1)(b) or Section 10.3(1)(c) until the total of all Damages with respect to such matters exceeds $100,000. Once the total of all Damages with respect to such matters exceeds $100,000, the Vendor will be fully liable for all such Damages, both below and above the threshold amount.
(2) Section 10.7(1) will not apply to: (i) matters described in Sections 10.3(1)(d) and 10.3(1)(e); (ii) any fraudulent act or fraudulent misrepresentation of the Vendor with respect to any representation or warranty given by the Vendor contained in this Agreement or the certificate to be delivered pursuant to Section 7.1(a); or (iii) any intentional breach by the Vendor of any covenant or obligation under this Agreement, and the Vendor will be liable for all Damages with respect to such matters.
(3) The Purchaser will have no obligation to make any payment for Damages (for indemnification or otherwise) with respect to the matters described in Section 10.4 until the total of all Damages with respect to such matters exceeds $100,000. Once the total of all Damages with respect to such matters exceeds $100,000, the Purchaser will be fully liable for all such Damages, both below and above the threshold amount. For greater certainty, this shall not affect the obligation of the Purchaser to make payment of the Purchase Price in accordance with this Agreement at Closing.
(4) Section 10.7(3) will not apply to: (i) any fraudulent act or fraudulent misrepresentation of the Purchaser with respect to any representation or warranty given by the Purchaser contained in this Agreement, or the certificate to be delivered pursuant to Section 7.2(a); or (ii) any intentional
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breach by the Purchaser of any covenant or obligation, and the Purchaser will be liable for all Damages with respect to such matters.

(5) For purposes of determining whether a threshold in Section 10.7(1) or Section 10.7(3) has been met, Damages in respect of claims by a Party for indemnification or otherwise which have not been asserted or for which the limitation period applicable to such claim has expired will be included and nothing will preclude or prevent such Party from entering into evidence in connection with any claim the amount of such Damages.

ARTICLE 11 POST-CLOSING COVENANTS

Section 11.1 Confidentiality.

After the Closing, the Vendor will keep confidential all information in its possession or under its control relating to the Vendor, the Purchased Assets and the Business, unless required by law or unless such information is or becomes generally available to the public other than as a result of a disclosure by the Vendor in violation of this Agreement .

Section 11.2 Assistance By Vendor.

In order that the Purchaser may realize the full benefit of the Purchased Contracts, Purchased Leases and the Contractual Rights that cannot by their terms be assigned or that require the consent of a third party which consent cannot be obtained on terms satisfactory to the Purchaser, the Vendor shall, at the request and expense and under the direction of the Purchaser, in the name of the Vendor or otherwise as the Purchaser shall specify:

(a) hold such Purchased Contracts, Purchased Leases and Contractual Rights in trust for the benefit of the Purchaser;
(b) take all such action and do or cause to be done all such things as shall, in the opinion of the Purchaser, be necessary or proper in order that the obligations of the Vendor may be performed in such manner that the value of such Purchased Contracts, Purchased Leases and Contractual Rights are preserved and enure to the benefit of the Purchaser, and that the collection of moneys due and payable to the Purchaser in and under such Purchased Contracts, Purchased Leases and Contractual Rights are received by the Purchaser; and
(c) promptly pay over to the Purchaser all moneys collected by or paid to the Vendor in respect of every such Purchased Contract, Purchased Lease and Contractual Right.
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Section 11.3 Co-operation by Vendor.

The Vendor agrees to fully co-operate with the Purchaser and to provide all information requested (whether financial or otherwise) by the Purchaser in a timely manner in connection with the fulfillment of the Purchaser’s regulatory obligations.

Section 11.4 Further Assurances.

From time to time after the Closing Date, each Party shall, at the request of any other Party, execute and deliver such additional conveyances, transfers and other assurances as may be reasonably required to effectively transfer the Purchased Assets to the Purchaser and carry out the intent of this Agreement and any Ancillary Agreement.

Section 11.5 Consent to Use of Historical Financial Information.

The Vendor hereby consents to (and agree to sign a separate consent form for this purpose at the Closing) the use by the Purchaser of the financial information of the Business for the period up to and including the Closing Date for all purposes required to comply with the obligations of the Purchaser under applicable securities Laws.

ARTICLE 12 EMPLOYEES

Section 12.1 Employees.

(1) Subject to the Closing, the Purchaser shall deliver, prior to the Closing Date, a letter to all Transferred Employees of the Business employed by the Vendor (with a copy to the Vendor) confirming the transaction contemplated in this Agreement and confirming that, conditional upon the completion of the Closing, effective as of the Closing Date and in accordance with applicable Laws, the terms of employment of each Transferred Employee will be continued by the Purchaser on terms substantially equivalent in the aggregate to those existing as of the Closing Date (except that in determining any such equivalence, any benefit relating to equity ownership, including stock options, stock purchase and stock appreciation which are in effect on or prior to the Closing Date shall not be taken into account).
(2) The form of the letter to be remitted to the Employees shall be prepared by the Purchaser and approved by the Vendor, acting reasonably.

Section 12.2 Employee Liability.

The Transferred Employees shall, as of the Closing Date in respect of their employment by the Vendor cease to actively participate in, accrue benefits under or be covered by the Employee Plans. The Purchaser agrees that it shall permit the Transferred Employees to participate in benefit plans sponsored by the Purchaser in

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its discretion (such plans to be called the “ Replacement Plans ” ). The Purchaser shall cause each Replacement Plan to recognize the prior service of the Transferred Employee rendered to the Vendor for purposes of eligibility to participate, vesting and entitlement to benefits under such Replacement Plans but not for the purpose of benefit accrual.

Section 12.3 Employee Liability.

(1) Without limiting the Vendor’s obligations in respect of Persons employed in the Business in respect of the period prior to the Closing Date, the Vendor shall be responsible for and shall assume:
(a) all liabilities for salary, wages, bonuses, commissions, vacation pay and other compensation relating to employment of all Persons in the Business prior to the Closing Date including for greater certainty, all accrued amounts, or amounts to be accrued pursuant to Employment Contracts made prior to the Closing Date;
(b) all long term service payments, pay in lieu of notice, severance payments, damages for wrongful dismissal and all related costs in respect of the termination by the Vendor of the employment of any Persons in the Business prior to the Closing Date;
(c) all liabilities for claims for injury, disability, death or workers’ compensation arising from or related to employment in the Business in respect of the period prior to the Closing Date whether any such claim is made prior to or after the Closing Date; and
(d) all employment-related claims, penalties and assessments in respect of the Business arising out of matters which occurred prior to the Closing Date.
(2) Without limiting the Purchaser’s obligations in respect of the Transferred Employees in respect of the period from and after the Closing Date, the Purchaser shall be responsible for:
(a) all liabilities for salary, wages, bonuses, commissions, vacation pay, and other compensation relating to employment of all Transferred Employees in respect of the period from and after the Closing Date;
(b) all long-term service payments, pay in lieu of notice, severance payments, damages for wrongful dismissal and all related costs in respect of the termination by the Purchaser from and after the Closing Date of the employment of any Transferred Employee;
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(c) all liabilities for claims for injury, disability, death or workers’ compensation arising from or related to employment of the Transferred Employees in the Business in respect of the period from and after the Closing Date;
(d) all employment-related claims, penalties and assessments in respect of the Business arising out of matters which occur in respect of the period from and after the Closing Date.

ARTICLE 13 ARBITRATION

Section 13.1 Settling Disputes.

Subject to Section 13.4, in any dispute, claim, question or difference arises with respect to this Agreement or its performance, enforcement, breach, termination or validity (a ” Dispute ” ), the Parties will meet to see if they can settle the Dispute.

Section 13.2 Arbitration.

Subject to Section 13.4, except as is expressly provided in this Agreement, if the Parties do not reach a solution pursuant to Section 13.1 within a period of 15 Business Days following the first notice of the Dispute by any Party to the other, then upon written notice by any Party to the other, the Dispute shall be finally settled by arbitration in accordance with the provisions of the Code of Civil Procedure (Quebec), Book VII (Arbitration), except as such provisions are modified by this Article 13, based upon the following:

(a) The arbitration tribunal shall consist of one arbitrator appointed by mutual agreement of the Parties, or in the event of failure to agree within 10 Business Days following delivery of the written notice to arbitrate, any Party may apply to a judge of the Quebec Superior Court to appoint an arbitrator. The arbitrator shall be qualified by education and training to rule upon the particular matter to be decided.
(b) The arbitrator shall be instructed that time is of the essence in the arbitration proceeding and, in any event, the arbitration award must be made if at all possible within 60 days of the submission of the Dispute to arbitration or as soon thereafter as possible.
(c) The arbitration shall take place in Montreal and the language of arbitration shall be English.
(d) The arbitration award shall be given in writing and shall be final and binding on the Parties, not subject to any appeal, and shall deal with the question of costs of arbitration and all related matters, subject to
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the next sentence. A Party to a Dispute may, at any time, make an offer to the other Party to the Dispute to settle all or any part of the Dispute. Any offer to settle shall be deemed to be an offer of compromise made in confidence and without prejudice. The fact that an offer to settle has been made shall not be communicated to the arbitrator until the arbitrator has made a final determination of all aspects of the Dispute other than costs. If an offer to settle is not accepted and the arbitration award is no more favourable to the Party to which the offer was made, the Party making the offer shall be entitled to all of its costs in connection with the arbitration in respect of the period from the date the offer to settle was made to the making of the arbitration award. The costs of arbitration include the arbitrators’ fees and expenses, the provision of a reporter and transcripts, reasonable legal fees and reasonable costs of preparation.
(e) Judgment upon any award may be entered in any Court having jurisdiction or application may be made to the Court for a judicial recognition of the award or an order of enforcement, as the case may be.
(f) All Disputes referred to arbitration (including the scope of the agreement to arbitrate, any statute of limitations, prescription, set-off claims, compensation, conflict of laws rules and interest claims) shall be governed by the substantive law of Quebec.
(g) The Parties agree that the arbitration shall be kept confidential and that the existence of the proceeding and any element of it (including any pleadings, briefs or other documents submitted or exchanged, any testimony or other oral submissions and any awards) shall not be disclosed beyond the arbitrator, the Parties, their counsel and any person necessary to the conduct of the proceeding, except as may lawfully be required in judicial proceedings relating to the arbitration or otherwise or as may be required by Law or by applicable stock exchange rules.

Section 13.3 Availability of Officers, Employees, etc.

Each Party to a Dispute agrees to use all reasonable efforts to make available to the other Party to the Dispute, upon reasonable request, those current and former director, officers, employees, agents and representatives of the Party or any of its affiliates (as such term is defined in the Business Corporations Act (Ontario)) whose assistance, testimony or presence is necessary or desirable to assist the other Party in preparing for and participating in the arbitration of the Dispute, but only for such purpose.

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Section 13.4 Arbitration Does Not Apply.

Section 13.1 and Section 13.2 do not apply to (i) Disputes under Section 2.13 which will be resolved in accordance with that Section or (ii) Third Party Claims which will be resolved in the manner set forth in Section 10.6. Nothing in this Section 13.4 shall limit or prevent a Party from seeking to enforce the performance of this Agreement by injunction or specific performance upon application to a court of competent jurisdiction without proof of actual damage (and without the requirement of posting a bond or other security).

ARTICLE 14 MISCELLANEOUS

Section 14.1 Notices.

Any notice, direction or other communication (each a “ Notice” ) given regarding the matters contemplated by this Agreement must be in writing, sent by personal delivery, courier or facsimile (but not by electronic mail) and addressed:

(a) to the Purchaser at:

4335 Mainway Drive Burlington, Ontario L7L 5N9 Attention: Peter Pigott Telephone: (905) 315-8400 Facsimile: (905) 315-8134

with a copy (which shall not constitute notice) to:

Stikeman Elliott LLP 5300 Commerce Court West 199 Bay Street Toronto, Ontario M5L 1B9

Attention: Simon Romano and Samantha Horn Telephone: (416) 869-5596 and (416) 869-5636 Facsimile: (416) 947-0866

(b) to the Vendor at:
9050 Park Avenue 4[th] Floor
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Attention: Tony Raimondo Telephone: (514) 385-9048 ext. 2220 Facsimile: (514) 385-9049

with a copy (which shall not constitute notice) to:

Kaufman, Laramée 800 ouest, boul. René-Levesque, Suite 2220 Montreal, Québec H3B 1X9

Attention: Barry Mintz Telephone: (514) 871-5322 Facsimile: (514) 875-7147

A Notice is deemed to be delivered and received (i) if sent by personal delivery, on the date of delivery if it is a Business Day and the delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, (ii) if sent by same-day service courier, on the date of delivery if sent on a Business Day and delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, (iii) if sent by overnight courier, on the next Business Day, or (iv) if sent by facsimile, on the Business Day following the date of confirmation of transmission by the originating facsimile. A Party may change its address for service from time to time by providing a Notice in accordance with the foregoing. Any subsequent Notice must be sent to the Party at its changed address. Any element of a Party’s address that is not specifically changed in a Notice will be assumed not to be changed. The failure to send a copy of a Notice to legal counsel in accordance with the foregoing shall not invalidate any Notice given to a Party in accordance with this Section.

Section 14.2 Time of the Essence.

Time is of the essence in this Agreement. The mere lapse of time in the performance of the terms of this Agreement by any Party shall have the effect of putting such Party in default in accordance with Articles 1594 to 1600 of the Civil Code of Québec .

Section 14.3 Brokers.

The Vendor shall indemnify and save harmless the Purchaser from and against any and all claims, losses and costs whatsoever for any commission or other remuneration payable or alleged to be payable to any broker, agent or other intermediary who purports to act or have acted for the Vendor, provided that the 4% fee to Oberfeld Snowcap shall, conditional upon Closing, be paid 50% by the Vendor and 50% by the Purchaser. The Purchaser shall indemnify and save harmless the Vendor from and against any and all claims, losses and costs

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whatsoever for any commission or other remuneration payable or alleged to be payable to any broker, agent or other intermediary who purports to act or have acted for the Purchaser. These indemnities are not subject to any of the limitations set out in Article 10.

Section 14.4 Announcements.

No press release, public statement or announcement or other public disclosure (a “ Public Statement” ) with respect to this Agreement or the transactions contemplated in this Agreement may be made prior to Closing except with the prior written consent and joint approval of the Vendor and the Purchaser, or if required by Law or a Governmental Entity. Where the Public Statement is required by Law or a Governmental Entity, the Party required to make the Public Statement will use its commercially reasonable efforts to obtain the approval of the other Party as to the form, nature and extent of the disclosure. After the Closing, any Public Statement by the Vendor may be made only with the prior written consent and approval of the Purchaser unless the Public Statement is required by Law or a Governmental Entity, in which case the Vendor shall use its reasonable best efforts to obtain the approval of the Purchaser as to the form, nature and extent of the disclosure.

Section 14.5 Third Party Beneficiaries.

Except as otherwise provided in Section 10.3 and Section 10.4, the Parties intend that this Agreement will not benefit or create any right, stipulation for the benefit of, delegation open for acceptance by, or cause of action in favour of any Person, other than the Parties and their respective successors and permitted assigns. Except for the Indemnified Persons, no Person, other than the Parties and their respective successors and permitted assigns, shall be entitled to rely on the provisions of this Agreement in any action, suit, proceeding, hearing or other forum. Despite the foregoing, the Vendor acknowledges to each of the Purchaser’s Indemnified Persons their direct rights against them under Section 10.3 of this Agreement and the Purchaser acknowledges to each of the Vendor’s Indemnified Persons their direct rights against it under Section 10.4 of this Agreement. To the extent required by law to give full effect to these direct rights, the Vendor, and the Purchaser agree and acknowledge that they are acting as agent of their respective Indemnified Persons. The Parties reserve their right to vary or rescind the rights at any time and in any way whatsoever, if any, granted by or under this Agreement to any Person who is not a Party, without notice to or consent of that Person, including any Indemnified Person.

Section 14.6 Expenses.

Except as otherwise expressly provided in this Agreement, each Party will pay for its own costs and expenses incurred in connection with this Agreement, the Ancillary Agreements and the transactions contemplated by them and the Business will not bear any such costs or expenses. The costs and expenses referred to in this

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Section are those which are incurred in connection with the negotiation, preparation, execution and performance of this Agreement, and the transactions contemplated by this Agreement, including the fees and expenses of legal counsel, investment advisers (other than Oberfeld Snowcap, to be paid in accordance with Section 14.3) and accountants. In the event the approval of the Toronto Stock Exchange to the issuance of the Issued Shares is not obtained, or if the financing is not obtained by the Purchaser, or the Required Authorizations are not obtained by the Purchaser, the Purchaser shall reimburse the Vendor all reasonable legal and accounting fees and expenses incurred by the Vendor in respect of the transactions contemplated by this Agreement.

Section 14.7 Amendments.

Subject to Section 14.9, this Agreement may only be amended, supplemented or otherwise modified by written agreement signed by the Parties.

Section 14.8 Waiver.

No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the Party to be bound by the waiver. A Party’s failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right.

Section 14.9 Non-Merger.

Except as otherwise expressly provided in this Agreement, the covenants, representations and warranties shall not merge on and shall survive the Closing. Notwithstanding the Closing and any investigation made by or on behalf of any Party, the covenants, representations and warranties shall continue in full force and effect. Closing shall not prejudice any right of one Party against any other Party in respect of anything done or omitted under this Agreement or in respect of any right to damages or other remedies.

Section 14.10 Entire Agreement.

This Agreement, together with the Ancillary Agreements, constitutes the entire agreement between the Parties with respect to the transactions contemplated by this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties, including in respect of the Deposit. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, including implied warranties or conditions of merchantability or fitness for a particular purpose, between the Parties in connection with the subject matter of this Agreement or concerning any of the Purchased Assets, except as specifically set forth in this Agreement or the confidentiality agreement between the Parties. The

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Parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement and the Ancillary Agreements.

Section 14.11 Successors and Assigns.

(1) This Agreement becomes effective only when executed by the Parties. After that time, it will be binding upon and enure to the benefit of the Parties and their respective successors and permitted assigns.
(2) Except as provided in this Section 14.11, neither this Agreement nor any of the rights or obligations under this Agreement are assignable or transferable by any Party without the prior written consent of the other Parties. Upon giving notice to the Vendor at any time on or prior to Closing Date, the Purchaser is entitled to assign this Agreement or any of its rights (but without affecting its obligations) under this Agreement to any of its affiliates (as such term is defined under the Business Corporations Act (Ontario)).
(3) The Purchaser may hypothecate and assign the benefits of this Agreement, in whole or in part to a lender or lenders as continuing collateral security for obligations owed to it or them without consent of the other Parties. Upon receipt of an appropriate notice, the Vendor will make payment of any amounts due to the Purchaser to any hypothecary creditor or assignee or as any hypothecary creditor or assignee may direct.
(4) The Purchaser may assign its rights and obligations under this Agreement, in whole or in part, to any subsequent purchaser of the Purchaser or any material portion of its assets, whether such sale is structured as a sale of shares, a sale of assets, a merger or otherwise.

Section 14.12 Severability.

If any provision of this Agreement is determined to be illegal, invalid or unenforceable by an arbitrator or any court of competent jurisdiction, that provision will be severed from this Agreement and the remaining provisions shall remain in full force and effect.

Section 14.13 Governing Law.

This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of Quebec and the federal laws of Canada applicable therein.

Section 14.14 Language.

The Parties to this Agreement have agreed that this Agreement as well as any document or instrument relating to it be drawn up in English only but without

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prejudice to any such document or instrument which may from time to time be drawn up in French only or in both French and English. Les Parties aux présentes ont convenu que la présente Convention ainsi que tous autres actes ou documents s’y rattachant soient rédigés en anglaise seulement mais sans préjudice à tous telles actes ou documents qui pourraient à l’occasion être rédigés en français seulement ou à la fois en anglaise et en français.

Section 14.15 Counterparts.

This Agreement may be executed in any number of counterparts (including counterparts by facsimile) and all such counterparts taken together shall be deemed to constitute one and the same instrument.

IN WITNESS WHEREOF the Parties have executed this Asset Purchase Agreement.

MODES FREEDOM INC.

Per: Tony Raimondo (Signed) Name: Tony Raimondo Title: President

WEST 49 INC.

Per: Peter Pigott (Signed) Name: Peter Pigott Title: Chief Operating Officer

AI assistant

West 49 Inc. — Merger & Acquisition 2005

42519_rns_2005-10-11_9b529a2f-e54e-4d3a-b9d7-7cab16a33c4e.pdf

MODES FREEDOM INC.

WEST 49 INC.

ASSET PURCHASE AGREEMENT

TABLE OF CONTENTS

ARTICLE 1 INTERPRETATION

ARTICLE 3 ASSUMED LIABILITIES

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE VENDOR

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

ARTICLE 11 POST-CLOSING COVENANTS

ARTICLE 12 EMPLOYEES

ARTICLE 13

ARBITRATION

ARTICLE 14 MISCELLANEOUS

ASSET PURCHASE AGREEMENT

RECITAL:

Section 1.1 Defined Terms.

Section 1.2 Gender and Number.

Section 1.3 Headings, etc.

Section 1.4 Currency.

Section 1.5 Certain Phrases, etc.

Section 1.6 Knowledge.

Section 1.7 Accounting Terms.

Section 1.8 Incorporation of Schedules.

Section 1.9 References to Persons and Agreements.

Section 1.10 Statutes.

Section 1.11 Non-Business Days.

Section 2.1 Purchase and Sale.

Section 2.2 Excluded Assets.

Section 2.3 Assignment of Contracts.

Section 2.4 Purchase Price.

Section 2.5 Allocation.

Section 2.6 Deposit

Section 2.7 Payment of the Purchase Price.

Section 2.8 No Effect on Other Rights.

Section 2.9 Payment of Sales Tax, and GST/QST and Income Tax Elections.

Section 2.10 New Store Adjustment.

Section 2.11 Inventory Adjustment.

Section 2.12 Prepaid Expense Adjustment.

Section 2.13 Purchase Price Adjustment Determination.

ARTICLE 3 ASSUMED LIABILITIES

Section 3.1 Assumed Liabilities.

Section 3.2 Excluded Liabilities

Section 3.3 Assumption of Contractual Liabilities.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE VENDOR

Section 4.1 Representations and Warranties of the Vendor

Corporate Matters

General Matters Relating to the Business

Matters Relating to the Purchased Assets

Financial Matters

Particular Matters Relating to the Business

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

Section 5.1 Representations and Warranties of the Purchaser.

ARTICLE 6

PRE-CLOSING COVENANTS OF THE PARTIES

Section 6.1 Conduct of Business Prior to Closing.

Section 6.2 Access for Due Diligence.

Section 6.3 Purchaser Confidentiality.

Section 6.4 Actions to Satisfy Closing Conditions.

Section 6.5 Transfer of the Purchased Assets.

Section 6.6 Request for Consents.

Section 6.7 Filings and Authorizations.

Section 6.8 Notice of Untrue Representation or Warranty.

Section 6.9 Exclusive Dealing.

Section 6.10 Use of Name.

ARTICLE 7 CONDITIONS OF CLOSING

Section 7.1 Conditions for the Benefit of the Purchaser.

Section 7.2 Conditions for the Benefit of the Vendor.

ARTICLE 8 CLOSING

Section 8.1 Date, Time and Place of Closing.

Section 8.2 Closing Procedures.

Section 8.3 Risk of Loss.

ARTICLE 9 TERMINATION

Section 9.1 Termination Rights.

Section 9.2 Effect of Termination.

West 49 Inc. Merger & Acquisition 2005