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Settlement agreement: Jean Brault and Groupaction et al

January 31, 2008

This document is a translation

TRANSACTION AGREEMENT entered into on the dates and in the places mentioned hereinafter:

BETWEEN:

THE ATTORNEY GENERAL OF CANADA, on behalf of Her Majesty the Queen in right of Canada, c/o the Department of Justice Canada, 200 René-Lévesque Blvd. West, 5th Floor, City of Montréal, Province of Quebec, H2Z 1X4, herein acting and represented by Micheline Van Erum, her representative, duly authorized to act herein;

("Government of Canada")

AND:

GROUPACTION MARKETING INC., a legal person having its head office at 500 Place d'Armes, Suite 2420, City of Montréal, Province of Quebec, H2Y 2W2;

("Groupaction Marketing");

GOSSELIN RELATIONS PUBLIQUES INC., a legal person having its head office at 500 Place d'Armes, Suite 2420, City of Montréal, Province of Quebec, H2Y 2W2;

("Gosselin Relations Publiques")

CPPC – CENTRE DE PLACEMENT DE PROFESSIONNELS EN COMMUNICATION INC., a legal person having its head office at 130 Albert Street, City of Ottawa, Province of Ontario, K1P 5G4;

("CPPC");

ALLÉLUIA DESIGN INC., a legal person having its head office at 500 Place d'Armes, Suite 2420, City of Montréal, Province of Quebec, H2Y 2W2;

("Alléluia");

GROUPAXION NOUVEAUX MÉDIAS INC., a legal person having its head office at 500 Place d'Armes, Suite 2420, City of Montréal, Province of Quebec, H2Y 2W2;

("Groupaxion");

JEAN BRAULT, 330 Savoie Street, City of Longueuil, Province of Quebec, J4H 1Y2;

("Brault");

WHEREAS GROUPACTION MARKETING, GOSSELIN RELATIONS PUBLIQUES, CPPC, ALLÉLUIA, GROUPAXION, GROUPACTION COMMUNICATIONS INC. AND IMPACT SPLASH INC. are communications agencies, certain of which contracted to provide the Department of Public Works and Government Services Canada ("PWGSC") and other departments, acting on behalf of the Government of Canada, with services related to sponsorships and advertising. For the purposes of this transaction agreement, PWGSC is understood as referring to the Government of Canada;

WHEREAS on March 10, 2005, the Government of Canada instituted civil proceedings against, among others, Groupaction Marketing, Gosselin Relations Publiques, Alléluia, CPPC ("Groupaction et al.") and Brault in the matter of sponsorship and advertising contracts with PWGSC and invoices issued by Groupaction et al., as appears from docket No. 500-17-024768-056 of the Quebec Superior Court, District of Montréal ("Proceedings");

WHEREAS Brault and Groupaction et al. are being sued solidarily with other co-defendants who are not parties to this transaction agreement ("Agreement"), among others Luc Lemay, Malcom Média Inc., Group Polygone Éditeurs Inc., Jacques Corriveau, Pluridesign Inc., Joseph-Charles Guité, Benoît Renaud, Art Tellier, Gilles-André Gosselin, Andrée Côté-Gosselin, Nicholas Gosselin and Gosselin Communications stratégiques Inc. ("Other Solidary Defendants");

WHEREAS following the last amendments in June 2007, the claim in the Proceedings against Brault solidarily with the Other Solidary Defendants totals $42,991,782 ("Solidary Claim"), as appears from Appendix A to this Agreement;

WHEREAS the Government of Canada waives any conclusions of solidary liability against Brault and Groupaction et al. in the Solidary Claim where Brault and Groupaction et al. did not directly profit from the sums of money claimed;

WHEREAS the Government of Canada would abandon its claim in the share of liability of Brault and Groupaction et al. in favour of the Other Solidary Defendants in the event that this share of liability were to be greater than the sums of money from which Brault and Groupaction et al. profited;

WHEREAS the Government of Canada maintains its claims with regard to the Other Solidary Defendants for the sums of money from which Brault and Groupaction et al. did not directly profit;

WHEREAS in renouncing the conclusions of solidary liability against Brault and Groupaction et al. in the Solidary Claim, the claim in the Proceedings against Brault and Groupaction et al. totals $7,685,062 ("Claim Based on Amounts Received"), as appears from Appendix A;

WHEREAS Brault undertakes to provide access to any information and documentation required for pursuing the claims against the Other Solidary Defendants in the Proceedings;

WHEREAS the following four lawsuits involving claims totalling $2,988,220.84 in principal and interest were instituted against the Attorney General of Canada for services rendered in respect of sponsorship and advertising contracts with PWGSC and other departments:

  1. Groupaction Marketing Inc. c. Procureur général du Canada (500-17-024892-054)
    Amount at issue: $687,803.62, for a total amount of $1,731,246.52 with interest as of November 30, 2007;
  2. Groupaxion Nouveaux Médias Inc. c. Vickers and Benson Companies et Procureur général du Canada (500-17-022406-048)
    Amount at issue: $84,198.30, for a total amount of $242,321.71 with interest as of November 30, 2007;
  3. Gosselin relations publiques Inc. c. Procureur général du Canada (500-22-104233-047)
    Amount at issue: $30,822.42, for a total amount of $77,582.07 with interest as of November 30, 2007;
  4. Groupaction Marketing Inc. c. Procureur général du Canada (500-22-102200-048)
    Amount at issue: $335,445.00, for a total amount of $937,070.54 with interest as of November 30, 2007;

(hereinafter "Groupaction's lawsuits");

WHEREAS the Government of Canada acknowledges that it owes Groupaction certain sums related to the abovementioned claims;

WHEREAS the Government of Canada has received $1,142,818 from the Liberal Party of Canada, including an amount between $470,000 and $900,000 identified as coming directly or indirectly from Brault and Groupaction et al.;

WHEREAS Brault and Groupaction et al. have stated in an affidavit dated December 7, 2007, that all financial information disclosed to the Government of Canada was, to the best of their knowledge, complete and representative of the financial situation of Brault and Groupaction et al.;

WHEREAS Jean Brault attests that Groupaction et al. paid GST on all sums collected by Groupaction et al. in relation to the Claim Based on Amounts Received;

WHEREAS the parties wish to settle amongst themselves the Proceedings and Groupaction's lawsuits according to the terms and conditions set out in this Agreement, which form an indivisible whole, and the parties hereby acknowledge that the transaction and release agreement is entered into without prejudice or any admission of liability, and for the sole purpose of avoiding the costs and inconvenience of litigation.

NOW THEREFORE, FOR GOOD AND VALID CONSIDERATION, THE EXISTENCE AND SUFFICIENCY OF WHICH ARE HEREIN ACKNOWLEDGED, THE PARTIES TO THIS AGREEMENT AGREE TO THE FOLLOWING:

  1. The above preamble and the appendices are part of this Agreement.
  2. The parties hereto declare to have settled among them the Proceedings and Groupaction's lawsuits, with each party paying its own costs.
  3. The parties hereto declare to have settled the principal, interest, additional indemnity and costs of the Claim Based on Amounts Received for the sum equivalent to the value of all assets directly or indirectly possessed by Brault as of the date of this Agreement, as described in the affidavit dated December 7, 2007.
  4. Brault undertakes to sign and execute any document allowing the transfer of the value, after-tax, of all of his assets.
  5. It is also agreed that this transaction will be carried out on the basis of the least taxation rule.
  6. Brault and the corporations he directly or indirectly controls, some of which are described in Appendix B (hereinafter "Brault's Companies") abandon all claims arising from Groupaction's lawsuits, which total, with interest, $2,988,220.84.
  7. The Government of Canada acknowledges that it has received the value of all assets in full and final settlement of the Claim Based on Amounts Received, for which full and final release is given.
  8. The Government of Canada acknowledges that it has received from the Liberal Party of Canada the sum of $1,142,818, of which an amount between $470,000 and $900,000 was identified as coming directly or indirectly from Brault and Groupaction et al.
  9. The Government of Canada releases Brault and Brault's Companies (and any related or affiliated persons, related or affiliated corporations and their subsidiaries, as well as their predecessors, successors, servants, agents/mandataries and their respective current or former officers, directors, employees, servants and agents/mandataries) from any and all actions, judicial proceedings, suits, claims, demands, debts, dues, whether expressed or implied, and for damages, indemnities, costs, interest, loss of every nature and kind whatsoever and howsoever arising which the Government of Canada may have had, may now have or may in the future have for or by reason of any cause, matter or thing whatsoever existing, in any way connected, directly or indirectly, with the issues referred to in the Proceedings or Groupaction's lawsuits or in the exhibits filed in support of the Proceedings or Groupaction's lawsuits, as well as under, or stemming directly or indirectly from, the sponsorship and advertising contracts that are the subjects of the Proceedings or Groupaction's lawsuits or of any contract, agreement or obligation of any nature whatsoever that may have been entered into by, or exists between, the parties with regard to sponsorship or advertising services, or relating thereto, whether or not they have been the subjects of the Proceedings or Groupaction's lawsuits. The Government of Canada declares that it will sign, after the signing of this Agreement, a Declaration of Settlement Out of Court for the Proceedings and Groupaction lawsuits, on the basis of each party paying its own costs, the original of which will be entered into the Court record.
  10. Brault and Brault's Companies release the Government of Canada from any and all actions, judicial proceedings, suits, claims, demands, debts, dues, whether expressed or implied, and for damages, indemnities, costs, interest, loss of every nature and kind whatsoever and howsoever arising which Brault or Brault's Companies may have had, may now have or may in the future have for or by reason of any cause, matter or thing whatsoever existing, in any way connected, directly or indirectly, with the issues referred to in the Proceedings or Groupaction's lawsuits or in the exhibits filed in support of the Proceedings or Groupaction's lawsuits, as well as under, or stemming directly or indirectly from, the sponsorship and advertising contracts that are the subjects of the Proceedings or Groupaction's lawsuits or of any contract, agreement or obligation of any nature whatsoever that may have been entered into by, or exists between, the parties with regard to sponsorship or advertising services, or relating thereto, whether or not they have been the subjects of the Proceedings or Groupaction's lawsuits. Brault and Brault's Companies declare that they will sign, after the signing of this Agreement, a Declaration of Settlement Out of Court for the Proceedings and Groupaction lawsuits, on the basis of each party paying its own costs, the original of which will be entered into the Court record.
  11. In consideration for the signing of this Agreement, the Government of Canada, on the one hand, and Brault and Brault's Companies, on the other hand, hereby give full and final release to each other and to their respective representatives, employees, agents, organizations, administrators, officers, shareholders, assignees or successors as concerns all past, present and future rights, claims, remedies or indemnities of any nature whatsoever that they have, could have, or could claim to have against the other party or its representatives, employees, agents/mandataries, directors, officers, shareholders, assignees or assigns under, or stemming directly or indirectly from, the sponsorship and advertising contracts that are the subjects of the Proceedings and Groupaction's lawsuits or of any contract, agreement or obligation of any nature whatsoever that may have been entered into by, or exists between, the parties with regard to sponsorship or advertising services, or relating thereto, whether or not they have been the subjects of the Proceedings or Groupaction's lawsuits.
  12. The Government of Canada undertakes to refrain from instituting or maintaining any action or proceeding against anyone who could be liable for the amount of $7,685,062, as described and divided up in Appendix A under the column "Claim Based on Amounts Received," for which the Government of Canada releases to Brault and Brault's Companies, or against anyone who could institute an action against Jean Brault and Groupaction et al., or against any of their related or affiliated persons, related or affiliated corporations and their subsidiaries, as well as their predecessors, successors, servants, agents/mandataries and their respective current or former officers, directors, employees, servants and agents/mandataries with respect to that amount.
  13. The Government of Canada abandons its claim in the share of liability of Brault and Groupaction et al. with respect to the Proceedings in favour of the Other Solidary Defendants in the event that this share of liability were to be greater than the sums of money from which Brault and Groupaction et al. profited. The Government of Canada also maintains its claims with regard to the Other Solidary Defendants for the sums of money from which Brault and Groupaction et al. did not directly profit.
  14. Brault undertakes to provide any information that may be of use in support of the Proceedings. He declares that the testimony he gave before the Gomery Commission is true.
  15. This Agreement is not confidential, and Brault and Brault's Companies are hereby informed that the Government of Canada intends to make it public by posting it on the government Web site. However, all communications between the parties and their legal counsel and representatives, including all documents and information leading to the conclusion of this Agreement, remain privileged and confidential and shall not be disclosed by anyone of the parties hereto, unless the parties agree otherwise, or a party is ordered to do so by a court with jurisdiction to compel the production of the information.
  16. This Agreement shall be binding on the parties and their respective successors and assigns.
  17. The parties hereby declare and warrant that they have not assigned, and will not assign, to any person, their rights under the contracts at issue in the Proceedings, the Government's additional claims and Groupaction's lawsuits, as well as under sponsorship and advertising contracts with PWGSC, nor any related right of action, claim, remedy or indemnity with respect to the claims for which acquittance has been given.
  18. The parties hereby give their counsel irrevocable instructions to file the Declaration of Settlement Out of Court for the Proceedings in the Court record as soon as possible following the signing of this Agreement by the parties.
  19. The parties shall take all necessary steps to give effect to the Agreement.
  20. The parties hereby acknowledge and declare that they have read and understood the terms and conditions of this Agreement, and that they have sought and obtained legal advice.
  21. The parties hereby declare and guarantee that they have the right, power and authority to enter into this Agreement.
  22. This Agreement constitutes a transaction agreement within the meaning of articles 2631 et seq. of the Civil Code of Québec.

MONTRÉAL, December 7, 2007
ATTORNEY GENERAL OF CANADA
Per: [Signature of Micheline Van Erum]
Micheline Van Erum
and
Per: [Signature of Sylvain Lussier]
Sylvain Lussier

MONTRÉAL, December 7, 2007
GROUPACTION MARKETING INC.
Per: [Signature of Jean Brault]
Jean Brault

GOSSELIN RELATIONS PUBLIQUES INC.
Per: [Signature of Jean Brault]
Jean Brault

CPPC – CENTRE DE PLACEMENT DE PROFESSIONNELS INC.
Per: [Signature of Jean Brault]
Jean Brault

ALLÉLUIA DESIGN INC.
Per: [Signature of Jean Brault]
Jean Brault

GROUPAXION NOUVEAUX MÉDIAS INC.
Per: [Signature of Jean Brault]
Jean Brault

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